<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 001-13973
UNICAPITAL CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 65-0788314
-------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10800 BISCAYNE BOULEVARD, SUITE 800, MIAMI, FLORIDA 33161
- --------------------------------------------------- ----------
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (305) 899-5000
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
On May 11, 2000, there were 56,977,224 shares of Common Stock outstanding.
<PAGE> 2
UNICAPITAL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements.............................. 3
Consolidated Balance Sheets.................. ................................... 3
Consolidated Statements of Operations........ ................................... 4
Consolidated Statements of Stockholders' Equity ................................. 5
Consolidated Statements of Cash Flows............................................ 6
Notes to Unaudited Consolidated Financial Statements............................. 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................. 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk............... 23
PART II. OTHER INFORMATION............................................................ 26
Item 1. Legal Proceedings........................................................ 26
Item 6. Exhibits and Reports on Form 8-K......................................... 26
Signature........................................................................ 27
Statement Regarding Computation of Per Share Loss................................ 28
Financial Data Schedule.......................................................... 29
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents ........................... $ 26,366 $ 25,849
Restricted cash ..................................... 77,024 126,637
Accounts receivable, net ............................ 52,662 60,870
Notes receivable .................................... 55,996 45,097
Net investment in finance contracts ................. 884,384 856,527
Equipment under operating leases, net ............... 549,209 1,908,686
Equipment held for sale or lease .................... 228,953 264,714
Investments ......................................... 40,981 20,981
Property and equipment, net ......................... 19,091 18,601
Goodwill, net of accumulated amortization of
$272,648 and $28,752, respectively ................ 390,101 625,180
Income taxes receivable ............................. 6,395 5,872
Deposits and other assets ........................... 35,820 45,567
----------- -----------
Total assets ................................... $ 2,366,982 $ 4,004,581
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Recourse debt ....................................... $ 392,182 $ 455,900
Non-recourse and limited recourse debt .............. 1,200,714 2,412,233
Accounts payable and accrued expenses ............... 98,515 115,210
Security and other deposits ......................... 32,062 61,185
Accrued restructuring ............................... 962 --
Income taxes payable ................................ 53 --
Deferred income taxes ............................... 61,100 82,772
Other liabilities ................................... 10,787 14,988
----------- -----------
Total liabilities .............................. 1,796,375 3,142,288
----------- -----------
Minority interest ................................... -- 23,725
Commitments and contingencies ....................... -- --
Stockholders' equity:
Preferred stock, $.001 par value, 20,000,000 shares
authorized, no shares issued and outstanding ... -- --
Common stock, $.001 par value, 200,000,000 shares
authorized, 56,891,878 and 53,512,308 shares
issued and outstanding, respectively ........... 57 53
Additional paid-in capital ........................ 817,425 808,657
Stock subscription notes receivable ............... (3,210) (3,210)
Accumulated other comprehensive income ............ 290 430
Retained earnings (deficit) ....................... (243,955) 32,638
----------- -----------
Total stockholders' equity ..................... 570,607 838,568
----------- -----------
Total liabilities and stockholders' equity ..... $ 2,366,982 $ 4,004,581
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE> 4
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
------------ ------------
<S> <C> <C>
Income from finance contracts ... $ 27,056 $ 11,625
Rental income from operating
leases ........................ 40,967 33,027
Sales of equipment .............. 264,188 48,555
Gain on sale of finance
contracts ..................... 5,727 283
Fees, commissions and
remarketing income ............ 4,684 6,112
Interest and other income ....... 550 2,984
------------ ------------
Total revenues ............. 343,172 102,586
------------ ------------
Cost of operating leases ........ 21,298 16,074
Cost of equipment sold .......... 282,005 36,564
Interest expense ................ 44,496 18,806
Selling, general and
administrative expenses ....... 48,300 25,169
Restructuring charges ........... 1,908 --
Goodwill amortization and
impairment .................... 243,896 4,590
------------ ------------
Total expenses ............. 641,903 101,203
------------ ------------
Income (loss) from operations ... (298,731) 1,383
Equity in income from
minority-owned affiliates........ 441 --
------------ ------------
Income (loss) before taxes ...... (298,290) 1,383
Provision (benefit) for ......... (21,697) 2,270
------------ ------------
income taxes
Net loss ........................ $ (276,593) $ (887)
============ ============
Loss per common
share, basic .................. $ (5.04) $ (0.02)
Loss per common
share, diluted ................ $ (5.04) $ (0.02)
Weighted average shares
outstanding, basic ............ 54,873,166 51,915,588
Weighted average shares
outstanding, diluted .......... 54,873,166 51,915,588
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 5
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
STOCK ACCUMULATED
ADDITIONAL SUBSCRIPTION OTHER RETAINED
COMMON PAID-IN NOTES COMPREHENSIVE EARNINGS COMPREHENSIVE
STOCK CAPITAL RECEIVABLE INCOME (DEFICIT) INCOME TOTAL
------ ---------- ------------ ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999..... $53 $808,657 $ (3,210) $ 430 $32,638 $ 838,568
Issuance of 3,340,971 shares of
common stock in connection
with earnouts for companies
acquired in 1998............. 4 8,656 -- -- -- 8,660
Issuance of 38,599 shares of
common stock in connection
with employee stock purchase
plan........................... -- 112 -- -- -- 112
Comprehensive income:
Net loss....................... -- -- -- -- (276,593) $(276,593) (276,593)
Other comprehensive income:
Change in net unrealized
gain on securities (net of
deferred taxes of $86)..... -- -- -- (140) -- (140) (140)
---------
Total comprehensive income .. $(276,733)
--- -------- -------- ------- --------- ========= ---------
Balance at March 31, 2000........ $57 $817,425 $ (3,210) $ 290 $(243,955) $ 570,607
=== ======== ======== ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE> 6
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ....................................................... $(276,593) $ (887)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization .............................. 34,301 24,612
Impairment of goodwill ..................................... 239,102 --
Write-down of long-lived assets ............................ 37,504 --
Deferred income tax expense (benefit) ...................... (21,672) 1,988
Provision for credit losses ................................ 17,817 1,541
Gain on sale of finance contracts .......................... (5,727) (283)
Gain on sale of equipment .................................. (19,687) (11,991)
Gain on sale of beneficial interest in subsidiary .......... (220) --
Equity in net earnings of minority-owned affiliates ........ (441) --
Changes in other assets and liabilities:
Notes and accounts receivable ......................... (2,639) (7,695)
Income taxes receivable ............................... (523) --
Deposits and other assets ............................. 6,202 (10,100)
Accounts payable and accrued expenses ................. (3,679) (2,965)
Security and other deposits ........................... 3,648 7,253
Accrued restructuring ................................. 962 --
Income taxes payable .................................. 53 (6,353)
Other liabilities ..................................... 2,830 163
--------- ---------
Net cash provided by (used in) operating activities.... 11,238 (4,717)
--------- ---------
Cash flows from investing activities:
Capital expenditures ........................................... (2,023) (3,031)
Proceeds from sale of finance contracts ........................ 117,375 31,574
Proceeds from sale of equipment ................................ 215,515 22,628
Proceeds from sale of beneficial interest in subsidiary ........ 779 --
Collection of finance contracts, net of finance income earned .. 49,059 47,141
Investment in finance contracts and purchases of
equipment for sale or lease .................................. (255,477) (370,756)
Cash paid under earnout agreements for companies acquired
in 1998....................................................... (6,916) (10,951)
Decrease in investments, net ................................... 3,728 11,427
--------- ---------
Net cash provided by (used in) investing activities.... 122,040 (271,968)
--------- ---------
Cash flows from financing activities:
Proceeds from recourse debt .................................... 217,065 292,765
Repayment of recourse debt ..................................... (280,782) (181,754)
Proceeds from non-recourse and limited recourse debt ........... 541,161 265,347
Repayment of non-recourse and limited recourse debt ............ (567,668) (96,559)
Change in restricted cash ...................................... (42,537) --
--------- ---------
Net cash provided by (used in) financing activities.... (132,761) 279,799
--------- ---------
Increase in cash and cash equivalents .......................... 517 3,114
Cash and cash equivalents at beginning of period ............... 25,849 9,772
--------- ---------
Cash and cash equivalents at end of period ..................... $ 26,366 $ 12,886
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE> 7
UNICAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
Supplemental disclosure of cash flow information
for non-cash items:
Debt assumed in connection with acquisition of aircraft
and aircraft engines.......................................... $ -- $24,763
======== =======
Notes received as partial consideration on sales of
aircraft and aircraft engines ................................ $ 17,235 $ 9,200
======== =======
Debt assumed by buyers as partial consideration on
sales of equipment.............................................. $ 9,558 $ --
======== =======
Common stock issued in connection with earnouts
for companies acquired in 1998 ............................... $ 8,659 $ 6,656
======== =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
7
<PAGE> 8
UNICAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION AND NATURE OF BUSINESS
UniCapital Corporation, incorporated in Delaware, was founded in October
1997 to create a national operator and integrator of equipment leasing,
specialty finance and related businesses serving the commercial market.
UniCapital Corporation acquired twelve equipment leasing, specialty finance and
related businesses (the "Founding Companies") upon consummation of an initial
public offering (the "Offering") of its common stock ("Common Stock") in May
1998. Subsequent to the Offering, UniCapital Corporation acquired, through
merger or purchase, five additional companies, continuing the expansion of its
national operations. UniCapital Corporation, the Founding Companies and the
subsequently acquired companies are referred to collectively as the "Company."
The Company originates, acquires, sells and services equipment leases and
arranges structured financing in the computer and telecommunications equipment,
large ticket and structured finance, middle market and small ticket areas of the
equipment leasing industry. In addition, the Company provides lease
administration and processing services, which include the servicing of certain
leases sold to third parties. The Company's leases and structured financing
arrangements cover a broad range of equipment, including aircraft, aircraft
engines and other aircraft equipment, computer and telecommunications equipment,
construction and manufacturing equipment, office equipment, tractor trailers,
printing equipment, car washes, and petroleum retail equipment.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and the
rules and regulations of the Securities and Exchange Commission for interim
financial statements. Accordingly, the interim statements do not include all of
the information and disclosures required for annual financial statements. In the
opinion of the Company's management, all adjustments (consisting solely of
adjustments of a normal recurring nature) necessary for a fair statement of
these interim results have been included. Intercompany accounts and transactions
have been eliminated. The results for the interim periods are not necessarily
indicative of the results to be expected for the entire year.
The financial statements should be read in conjunction with the Company's
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 filed with the Securities and
Exchange Commission.
Certain reclassifications have been made to prior period amounts to conform
to the current presentation.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
For a description of the Company's accounting policies, refer to the Notes
to Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 filed with the Securities and
Exchange Commission.
NOTE 3--INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under this method,
deferred tax assets and liabilities are determined based on the differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Valuation allowances are provided to reduce
deferred taxes to the amount expected to be realized based on available
evidence. The Company's effective tax rate differs from that computed at the
statutory rate principally as a result of non-deductible goodwill amortization
and write-offs of certain goodwill amounts in 2000.
8
<PAGE> 9
NOTE 4--STOCKHOLDERS' EQUITY
During the three months ended March 31, 2000, the Company issued 3,340,971
shares of Common Stock to the former owners of certain companies acquired in
1998. These shares were issued in connection with earnout arrangements and have
been recorded as additional purchase price in the amount of $8.7 million.
In 1999, the Company implemented an employee stock purchase plan. During the
three months ended March 31, 2000, the Company issued 38,599 shares of Common
Stock to employees under the plan.
NOTE 5--LOSS PER SHARE
Loss per share has been calculated and presented in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share", which
requires the Company to compute and present basic and diluted earnings per
share. Dilutive securities are excluded from the computation in periods in which
they have an anti-dilutive effect.
NOTE 6--SEGMENT INFORMATION
The following tables present selected financial information for the
Company's reporting segments as of and for the three months ended March 31, 2000
and 1999 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
------------------------------------------------------------------------------------
TECHNOLOGY
AND BUSINESS
BIG TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
---------- ----------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Income from finance contracts... $ 1,949 $ 17,209 $ 7,897 $ 1 $ 27,056
Rental income from operating
leases ....................... 23,754 17,230 (17) -- 40,967
Sales of equipment ............. 219,519 44,669 -- -- 264,188
Gain on sale of finance
contracts....................... -- 3,583 2,144 -- 5,727
Fees, commissions and
remarketing income ........... 18 2,806 1,665 195 4,684
Interest and other income ...... 1,046 (803) (311) 618 550
--------- ----------- --------- --------- -----------
Total revenues ............ 246,286 84,694 11,378 814 343,172
--------- ----------- --------- --------- -----------
Cost of operating leases ....... 9,278 12,018 2 -- 21,298
Cost of equipment sold ......... 240,130 41,873 2 -- 282,005
Interest expense ............... 25,554 10,578 4,717 3,647 44,496
Selling, general and
administrative expenses ...... 15,925 20,757 9,181 2,437 48,300
Restructuring charges .......... 25 1,339 217 327 1,908
Goodwill amortization and
impairment .................. 226,155 14,009 3,657 75 243,896
--------- ----------- --------- --------- -----------
Total expenses ............ 517,067 100,574 17,776 6,486 641,903
--------- ----------- --------- --------- -----------
Equity in income from
minority-owned affiliates....... 441 -- -- -- 441
--------- ----------- --------- --------- -----------
Income (loss) before taxes ..... $(270,340) $ (15,880) $ (6,398) $ (5,672) $ (298,290)
========= =========== ========= ========= ===========
Net investment in
finance contracts.............. $ 64,622 $ 571,047 $ 259,140 $ (10,425) $ 884,384
========= =========== ========= ========= ===========
Equipment under operating
leases, net .................. $ 437,681 $ 111,512 $ 16 $ -- $ 549,209
========= =========== ========= ========= ===========
Total assets .............. $ 771,487 $ 1,130,536 $ 346,215 $ 118,744 $ 2,366,982
========= =========== ========= ========= ===========
Total debt ................ $ 444,425 $ 599,892 $ 240,430 $ 308,149 $ 1,592,896
========= =========== ========= ========= ===========
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
---------------------------------------------------------------------------------
TECHNOLOGY
AND BUSINESS
BIG TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
---------- ----------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Income from finance contracts...... $ 105 $ 8,911 $ 2,609 $ -- $ 11,625
Rental income from operating
leases .......................... 18,050 14,827 150 -- 33,027
Sales of equipment ................ 24,501 24,054 -- -- 48,555
Gain on sale of finance contracts . -- 283 -- -- 283
Fees, commissions and remarketing
income .......................... 26 3,699 1,722 665 6,112
Interest and other income ......... 591 1,232 559 602 2,984
-------- -------- --------- --------- ----------
Total revenues ............... 43,273 53,006 5,040 1,267 102,586
-------- -------- --------- --------- ----------
Cost of operating leases .......... 7,234 8,782 58 -- 16,074
Cost of equipment sold ............ 16,255 20,309 -- -- 36,564
Interest expense .................. 8,218 5,509 1,094 3,985 18,806
Selling, general and
administrative expenses............ 3,884 10,936 6,832 3,517 25,169
Goodwill amortization ............. 1,895 2,167 451 77 4,590
-------- -------- --------- --------- ----------
Total expenses ............... 37,486 47,703 8,435 7,579 101,203
Equity in income from
minority-owned affiliates ....... -- -- -- -- --
-------- -------- --------- --------- ----------
Income (loss) before taxes ........ $ 5,787 $ 5,303 $ (3,395) $ (6,312) $ 1,383
======== ======== ========= ========= ==========
Net investment in
finance contracts................ $ 12,663 $350,323 $ 96,157 $ 660 $ 459,803
======== ======== ========= ========= ==========
Equipment under operating leases,
net ............................ $434,031 $ 79,088 $ 235 $ -- $ 513,354
======== ======== ========= ========= ==========
Total assets ................. $842,415 $892,485 $ 193,413 $ 40,665 $1,968,978
======== ======== ========= ========= ==========
Total debt ................... $339,266 $329,171 $ 66,341 $ 237,106 $ 971,884
======== ======== ========= ========= ==========
</TABLE>
10
<PAGE> 11
NOTE 7--NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS No. 133"), which
establishes accounting and reporting standards for derivative instruments,
including derivative instruments embedded in other contracts, and for hedging
activities. As issued, SFAS No. 133 was effective for fiscal years beginning
after June 15, 1999. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133." SFAS No. 137 deferred the effective date of SFAS No.
133 for one year to fiscal years beginning after June 15, 2000. SFAS 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. The Company is in the process of evaluating the impact of
adopting SFAS 133 and the effect that the adoption of SFAS 133 will have on its
results of operations and financial position.
NOTE 8--SALES OF FINANCE CONTRACTS
The Company transfers finance contracts to third parties in the normal
course of business, which are accounted for as sales of finance contracts under
the provisions of SFAS 125. In these transactions, the Company records a gain on
the sale of finance contracts and may additionally retain interests in the
residual cash flows of the underlying receivables. Under the provisions of SFAS
125, gain on sale of finance contracts is calculated as the difference between
the proceeds received, net of related selling expenses, and the allocable
carrying amount of the related finance contracts, determined using the fair
value approach.
During the three months ended March 31, 2000, the Company transferred
finance contracts with a net book value of $46.8 million to third parties in
sales transactions, received proceeds of $49.6 million and recognized a gain of
$2.8 million.
During the three months ended March 31, 2000, the Company transferred
finance contracts with a net book value of $16.7 million to its Revolving
Purchase Facility with Key Global Finance in sales transactions, received
proceeds of $17.8 million and recognized a gain of $1.1 million.
During the three months ended March 31, 2000, in connection with a
securitization transaction, the Company transferred finance contracts with a net
book value of $58.9 million and recognized a gain of $1.8 million. From this
transaction the Company received cash of $59.5 million and recorded retained
interests of $1.2 million.
NOTE 9--RESTRICTED CASH
At March 31, 2000, the Company reported $77.0 million of restricted cash,
which relates to reserve accounts established in September 1999 and March 2000
under securitization and other credit facilities.
NOTE 10--RESTRUCTURING CHARGES
During the three months ended March 31, 2000, the Company implemented a
restructuring program and recorded certain restructuring charges related to
headcount reductions and the elimination of duplicative expenses and non-core
activities and businesses. The restructuring charge is shown as a separate
component of operating expenses. Cash outlays during the quarter were
principally for severance and the remaining cash outlays are expected to be
funded from cash flows from operations or through credit facilities.
A summary of the restructuring charges is as follows:
<TABLE>
<CAPTION>
TOTAL ACCRUAL AT
EXPENSE CASH OUTLAYS MARCH 31, 2000
------- ----------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Severance ........................... $1.4 $0.9 $0.5
Future lease obligations on
facility closures ................... 0.2 0.2
Other costs ......................... 0.3 0.1 0.2
---- ---- ----
Total restructuring charges.......... $1.9 $1.0 $0.9
==== ==== ====
</TABLE>
11
<PAGE> 12
The severance costs are related to the termination of personnel in two
non-core businesses and other headcount reductions including positions ranging
from executive to administrative. At March 31, 2000 the accrual represents the
severance costs associated with the remaining employees to be terminated, which
will be completed by the end of the second quarter of 2000.
The other costs include costs associated with the early termination of
contractual arrangements as well as incremental costs associated with the
elimination of the two non-core businesses.
NOTE 11--ADJUSTMENTS TO CARRYING VALUE OF CERTAIN ASSETS
During the three months ended March 31, 2000, the Company recorded
impairment adjustments of $33.5 million to the carrying value of certain
aircraft engines and $4.0 million for certain aircraft due to a decline in the
market value of such assets determined by the Company to be permanent. These
asset impairment charges, totaling $37.5 million, are included in the
accompanying unaudited Consolidated Statement of Operations in the caption
entitled "Cost of Equipment Sold."
Beginning in the second half of 1999 and continuing into the first quarter
of 2000, there has been a continued decline in the market value of JT9D-7A type
aircraft engines due to the limited demand for these aircraft engines in the
worldwide market and the significant increase in the number of these aircraft
engines currently available in the marketplace. As a result of these factors,
the Company has recorded an impairment charge on these and other types of
aircraft engines of $33.5 million, representing the difference between the
values at which such aircraft engines were carried on the Company's books and
the Company's estimate of their actual fair value as of March 31, 2000.
Estimated fair values were determined through the use of current independent
appraisals. In connection with the Company's recent decision to exit the Big
Ticket Division over time, these aircraft engines are held for sale and the
Company intends to sell these aircraft engines in an orderly manner.
During the three months ended March 31, 2000, the Company also recorded a
$4.0 million impairment charge related to five aircraft representing the
difference between the values at which such aircraft were carried on the
Company's books and the Company's estimate of their actual fair market value as
of March 31, 2000. Estimated fair values were determined through the use of
current independent appraisals.
NOTE 12--IMPAIRMENT OF GOODWILL
During the three months ended March 31, 2000, the Company determined that
$239.1 million of goodwill was impaired and fully amortized these amounts during
the quarter. The impairment related to one company in the Business Credit Group,
one company in the Technology and Finance Group and the entire Big Ticket
Division.
A summary of the impairment of goodwill is as follows:
<TABLE>
<CAPTION>
IMPAIRMENT OF
GOODWILL
-------------
(DOLLARS IN MILLIONS)
<S> <C>
Big Ticket Division .............. $224.1
Business Credit Group ............ 3.2
Technology and Finance Group...... 11.8
------
Total impairment of goodwill...... $239.1
======
</TABLE>
The impairment write-off of goodwill in the Big Ticket Division is based on
the Company's recent decision to dispose of its existing inventory of aircraft
and aircraft engines over time as it implements an orderly exit from this
segment. Pending exit from the segment, the Company will continue to operate its
Big Ticket Division, and may buy and sell aircraft as appropriate to that
business, subject to limitations imposed by the Company's credit facilities and
otherwise. The impairment write-off of goodwill in the Business Credit Group and
the Technology and Finance Group was a result of the Company's decision to close
certain unprofitable companies and redeploy capital to more profitable
activities. Since the Company has decided to exit the operations conducted by
these particular entities, the Company does not expect to realize any continuing
benefit from the goodwill associated with these entities and, accordingly, has
recorded the impairment charge.
12
<PAGE> 13
NOTE 13--AIRCRAFT FINANCE TRUST
Aircraft Finance Trust, which was formed on April 13, 1999, was initially
wholly-owned by UniCapital AFT-I, Inc. (51% equity interest) and UniCapital
AFT-II, Inc. (49% equity interest), each of which is a wholly-owned subsidiary
of the UniCapital Air Group, Inc. During 1999, the Company sold a 49.9% interest
in Aircraft Finance Trust to six financial services companies. On March 28,
2000, the Company sold all of the common stock in UniCapital AFT-I, Inc., which
held 1.1% of the beneficial interest in Aircraft Finance Trust, for proceeds of
$.8 million. As a result, the Company now owns a 49% beneficial interest in
Aircraft Finance Trust and accounts for its remaining investment in Aircraft
Finance Trust under the equity method of accounting. Equipment under operating
leases and other assets totaling $1,256.8 million, and non-recourse debt and
other liabilities totaling $1,208.4 million, have been eliminated from the
Company's Consolidated Balance Sheet, and the Company's results of operations
reflect only the Company's proportionate share of the net results from Aircraft
Finance Trust as equity in income from minority-owned affiliates. The carrying
value of this interest was $23.7 million as of March 31, 2000 and is presented
as investments in the accompanying unaudited Consolidated Balance Sheets.
Aircraft Finance Trust's condensed statement of operations for the three
months ended March 31, 2000 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 2000
--------------
(DOLLARS IN THOUSANDS)
<S> <C>
Operating revenues..... $36,915
Operating expenses..... $36,034
Net income ............ $ 881
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The following discussion should be read in conjunction with the unaudited
consolidated financial statements, including the related notes thereto,
appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the
audited consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 filed with the
Securities and Exchange Commission.
UniCapital was founded in October 1997 as a Delaware corporation. We
commenced operations in May 1998 in conjunction with the consummation of our
initial public offering and the acquisition of twelve equipment leasing,
specialty finance and related businesses. In June, July and August 1998, we
completed the acquisition of five additional equipment leasing, specialty
finance and related businesses. We have integrated and intend to continue to
integrate the businesses, operations and administrative functions of the
businesses that we acquired over a period of time. Integration may present
opportunities to reduce costs through the elimination of duplicate functions and
through economies of scale, and may necessitate additional costs and
expenditures for corporate management and administration, corporate expenses
related to being a public company, systems integration, employee relocation and
severance and facilities expansion or contraction. These various costs and
possible cost-savings make comparison of future operating results with
historical operating results difficult.
We use the term "leases" to refer to both leases and finance contracts. We
derive the majority of our revenue from lease payments on leases originated and
held by the Company and sales of equipment, including sales of equipment
off-lease and the sale of new and used equipment. In addition, we derive revenue
from servicing fees, late charges and administrative fees. We also receive
remarketing fees for the sale of off-lease equipment on behalf of equity
investors in leases and we may obtain a premium for sales prices in excess of an
agreed-upon amount.
We intend to retain as on-balance-sheet leases those leases that we transfer
to our warehouse facilities, as well as leases to be transferred in connection
with future securitizations, as those transfers will no longer be structured to
meet the criteria to be accounted for as sales. We intend to continue our core
business practice of selling certain leases to third parties on a whole-loan
basis. These sales are typically non-recourse, and we generally maintain no
retained interest in those leases. In addition, to the extent that the
13
<PAGE> 14
leases we substitute or otherwise transfer into our warehouse facilities or a
securitization should generate any surplus gain amounts over those leases that
were repurchased, in connection with either our warehouse facilities or
securitization transactions, those surpluses will be presented as a component of
gain on sale of finance contracts in our Consolidated Statement of Operations.
We expect to fund the majority of the leases that we originate through
credit facilities. We may sell leases to third parties or refinance them through
a securitization program or other structured finance products. On March 28,
2000, we completed a $301.5 million term securitization transaction. Should we
be unable to sell or securitize leases going forward our business, financial
condition and results of operations would be materially and adversely affected.
In addition, should we be unable to sell or securitize leases going forward with
satisfactory fixed interest rates within a reasonable period of time after
funding, our operating margins could be adversely affected by any increase in
interest rates to the extent that we have not effectively hedged our interest
rate exposure on variable rate debt. Moreover, increases in interest rates,
which cause us to raise the implicit interest rate charged to our customers,
could decrease demand for our lease and other financial products.
The leases we acquire or originate generally are noncancelable for a
specified term, during which we generally receive scheduled payments sufficient,
in the aggregate, to cover our borrowing costs and, when aggregated with the
residual, the costs of the underlying equipment. The noncancelable term of each
lease is generally equal to or less than the equipment's estimated economic
life. Initial terms of the leases in our portfolio generally range from 12 to 84
months. Certain of the leases we acquire or originate carry a $1.00 buy-out
provision upon the maturity of the lease.
Our leases are collateralized by the equipment leased as well as, in some
cases, a personal guarantee provided by a principal of the lessee. We manage
credit risk through diversifying our business customer base, geographic location
of lessees and the type of business equipment leased. We believe that prepayment
risks are mitigated by the noncancelable nature of the majority of our leases.
We have implemented Phase I of our previously announced expense reduction
program. We are currently planning Phase II of our expense reduction program,
which we expect to implement during 2000. Our expense reduction program involves
the elimination of duplicative expenses and non-core activities and businesses
as well as other possible expense reductions. We expect additional restructuring
expenses to be incurred in 2000 related to Phase II of our expense reduction
program. There can be no assurance that these expense reductions will result in
a reduction in our selling, general and administrative expenses in 2000, or an
increase in our pre-tax income in 2000 or any subsequent year. In addition,
unforeseen delays and expenses may affect our ability to implement our expense
reduction program in a timely manner or to realize savings therefrom in 2000.
During 1999, we entered into new employment agreements with certain of our
officers and subsidiary executives which provided for increases in base salary,
and in certain instances, performance based compensation. We expect that Phase I
of the expense reduction program will generate more than $5.0 million in
annualized expense savings, net of increases in compensation pursuant to those
new employment agreements and before any special charges associated with Phase I
of the expense reduction program, before the end of 2000.
We recorded a restructuring charge of $1.9 million for the three months
ended March 31, 2000. The Company's decision to record this charge in the first
quarter of 2000 was attributable to closing unprofitable businesses and the
reduction of overhead expense in order to achieve our expense reduction
objectives. The restructuring charge related to severance, future lease
obligations and other costs. Restructuring costs recorded in the first quarter
of 2000 included $1.4 million of severance, $0.2 million of future lease
obligations on leased facilities and $0.3 million of other costs. Approximately
$1.2 million related to the closure of non-core activities and businesses due to
poor operating performance. The remaining $0.7 million relates to severance due
to the elimination of personnel in connection with our expense reduction
program. We paid approximately $1.0 million of the costs included in the
restructuring charge in the first quarter of 2000 and anticipate paying most of
the remaining $0.9 million in the second quarter of 2000.
During the three months ended March 31, 2000, we determined that $239.1
million of goodwill was permanently impaired and wrote off that amount of
goodwill. The goodwill impairment related to the entire Big Ticket Division, one
company in the Business Credit Group and one company in the Technology and
Finance Group. Goodwill impairment of $224.1 million related to the Big Ticket
Division and resulted from our decision to exit this segment in an orderly
manner over time. Pending exit from the segment, we will continue to operate our
Big Ticket Division, and may buy and sell aircraft as appropriate to that
business, subject to limitations imposed by our credit facilities. We analyzed
the expected future cash flows of the Big Ticket Division and determined that
there was no future benefit related to the goodwill. Goodwill impairment of
$15.0 million related to one company in the Business Credit Group and one
company in the Technology and Finance Group. We decided to close these
operations because they have not produced sufficient operating profits and are
not expected to do so in the foreseeable future. We expect to close these
businesses during the second quarter of 2000. This decision is consistent with
our strategy to re-deploy capital to profitable businesses in the Technology and
Finance Group and the Business Credit Group.
14
<PAGE> 15
During the three months ended March 31, 2000, we recorded $37.5 million in
asset impairment charges related to the carrying value of certain aircraft and
aircraft engines due to a decline in the market value of these assets which we
have determined to be permanent. We determined impairment by obtaining current
fair market value appraisals from an independent third party. Asset impairment
charges of $33.5 million related to aircraft engines. Beginning in the second
half of 1999 and continuing into the first quarter of 2000, there has been a
continued decline in the market value of JT9D-7A type engines, which compose a
significant portion of our existing engine inventory, due to the limited demand
for these aircraft engines worldwide and the significant increase in the number
of these aircraft engines currently available in the marketplace. We intend to
dispose of our aircraft engine portfolio in an orderly manner over time. During
the quarter, $4.0 million of asset impairment write downs were recorded relating
to five aircraft as a result of current market conditions. In addition, there
has been a recent decline in the market for the 747-300 type aircraft. We own
one 747-300 aircraft currently configured for combined passenger/freighter use.
Although we are in the process of converting this aircraft to full freighter use
and a five-year lease is expected to be executed for such use of this aircraft,
we may be unable to recover the full carrying costs of this aircraft if it is
sold under current market conditions for this type of aircraft.
Although we have recorded $37.5 million in impairment charges to reduce
aircraft and aircraft engines to their estimated fair value, there is a
potential for future significant additional losses in connection with the sale
of our aircraft and aircraft engines, particularly if it is necessary to sell
such assets on an expedited basis. We cannot now predict the actual sale prices
of these assets at the time of any future sale. If market conditions continue to
deteriorate, then the values of these assets may ultimately be considerably
lower than their current carrying values on our books. In addition, a
significant portion of our aircraft inventory is financed with a term loan which
expires on December 31, 2000. We are currently exploring various options for the
sale or refinancing of these assets, prior to December 31, 2000, including a
possible securitization transaction. We have agreed to pay fees to investment
banks of up to $5.4 million in the event that we do not proceed, for any reason,
with the securitization transaction. Should we complete the contemplated
securitization transaction under current market conditions, it is likely we
would incur substantial losses, which could result in a violation of one or more
of the financial covenants contained in our credit facilities. Should we be
unable to otherwise refinance these assets on similar terms and with comparable
advance rates, or be unable to sell these assets in an orderly fashion which
would allow for full recovery of carrying costs, significant additional losses
would be incurred, which could result in a violation of one or more of the
financial covenants contained in our credit facilities. We are currently in the
process of developing an orderly plan to dispose of these assets.
On February 29, 2000, Tower Air filed a petition in bankruptcy under the
United States Bankruptcy Code. UniCapital Aircraft Engine Group had 16 aircraft
engines subject to sale and lease transactions with Tower Air. At March 31,
2000, we had lease receivables, notes and other receivables from Tower Air of
approximately $27.3 million. Of the 16 aircraft engines, UniCapital Aircraft
Engine Group has to date recovered seven. Based on appraisals from independent
third parties, the current market value of the 16 aircraft engines is
approximately $15.6 million. In the first quarter of 2000, we recorded a $11.7
million charge to reserve for the difference between the total receivables and
the net realizable value of the aircraft engines as determined by an independent
third party appraiser.
On March 28, 2000, we sold our entire interest in UniCapital AFT-I, Inc.,
which held 1.1% of the beneficial interest in Aircraft Finance Trust. As a
result of this sale, we own a 49% beneficial interest in Aircraft Finance Trust
and account for our remaining interest in Aircraft Finance Trust under the
equity method of accounting. During the three months ended March 31, 2000,
equipment under operating leases and other assets totaling $1,256.8 million, and
non-recourse debt and other liabilities totaling $1,208.4 million, were
eliminated from our Consolidated Balance Sheet and our results of operations
reflect only our proportionate share of the net results from Aircraft Finance
Trust as equity in income from minority-owned affiliates.
15
<PAGE> 16
RESULTS OF OPERATIONS
The following table sets forth selected financial data for the Company and
its subsidiaries as a percentage of revenues for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------------- -------------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Income from finance contracts ............... $ 27,056 7.9% $ 11,625 11.3%
Rental income from operating leases ......... 40,967 11.9 33,027 32.2
Sales of equipment .......................... 264,188 77.0 48,555 47.3
Gain on sale of finance contracts ........... 5,727 1.7 283 0.3
Fees, commissions and remarketing income .... 4,684 1.4 6,112 6.0
Interest and other income ................... 550 0.1 2,984 2.9
--------- ----- --------- -----
Total revenues ......................... 343,172 100.0 102,586 100.0
--------- ----- --------- -----
Cost of operating leases .................... 21,298 6.2 16,074 15.7
Cost of equipment sold ...................... 282,005 82.2 36,564 35.6
Interest expense ............................ 44,496 12.9 18,806 18.4
Selling, general and administrative expenses. 48,300 14.1 25,169 24.5
Restructuring charges ....................... 1,908 0.5 -- --
Goodwill amortization and impairment ........ 243,896 71.1 4,590 4.5
--------- ----- --------- -----
Total expenses ......................... 641,903 187.0 101,203 98.7
--------- ----- --------- -----
Income (loss) from operations ............... (298,731) (87.0) 1,383 1.3
Equity in income from minority-owned
affiliates ................................ 441 0.1 -- 0.0
--------- ----- --------- -----
Income (loss) before taxes .................. (298,290) (86.9) 1,383 1.3
Provision (benefit) for income taxes ........ (21,697) (6.3) 2,270 2.2
--------- ----- --------- -----
Net loss .................................... $(276,593) (80.6)% $ (887) (0.9)%
========= ===== ========= =====
</TABLE>
16
<PAGE> 17
The following tables set forth selected financial data for the Company by
reported business segment for the three months ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
-------------------------------------------------------------------------------
TECHNOLOGY
AND BUSINESS
BIG TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
---------- ---------- --------- --------- ------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income from finance contracts ......... $ 1,949 $ 17,209 $ 7,897 $ 1 $ 27,056
Rental income from operating leases 23,754 17,230 (17) -- 40,967
Sales of equipment .................... 219,519 44,669 -- -- 264,188
Gain on sale of finance contracts ..... -- 3,583 2,144 -- 5,727
Fees, commissions and remarketing
income .............................. 18 2,806 1,665 195 4,684
Interest and other income ............. 1,046 (803) (311) 618 550
--------- --------- -------- ------- ---------
Total revenues ................... 246,286 84,694 11,378 814 343,172
--------- --------- -------- ------- ---------
Cost of operating leases .............. 9,278 12,018 2 -- 21,298
Cost of equipment sold ................ 240,130 41,873 2 -- 282,005
Interest expense ...................... 25,554 10,578 4,717 3,647 44,496
Selling, general and administrative
expenses ............................ 15,925 20,757 9,181 2,437 48,300
Restructuring charges ................. 25 1,339 217 327 1,908
Goodwill amortization and impairment... 226,155 14,009 3,657 75 243,896
--------- --------- -------- ------- ---------
Total expenses ................... 517,067 100,574 17,776 6,486 641,903
Equity in income from minority-owned
affiliates .......................... 441 -- -- -- 441
--------- --------- -------- ------- ---------
Income (loss) before taxes ............ $(270,340) $ (15,880) $ (6,398) $(5,672) $(298,290)
========= ========= ======== ======= =========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
-------------------------------------------------------------------------
TECHNOLOGY
AND BUSINESS
BIG TICKET FINANCE CREDIT CORPORATE
DIVISION GROUP GROUP DIVISION CONSOLIDATED
---------- ---------- --------- --------- ------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income from finance contracts ......... $ 105 $ 8,911 $ 2,609 $ -- $ 11,625
Rental income from operating leases ... 18,050 14,827 150 -- 33,027
Sales of equipment .................... 24,501 24,054 -- -- 48,555
Gain on sale of finance contracts ..... -- 283 -- -- 283
Fees, commissions and remarketing
income .............................. 26 3,699 1,722 665 6,112
Interest and other income ............. 591 1,232 559 602 2,984
------- ------- ------- ------- --------
Total revenues .................... 43,273 53,006 5,040 1,267 102,586
------- ------- ------- ------- --------
Cost of operating leases .............. 7,234 8,782 58 -- 16,074
Cost of equipment sold ................ 16,255 20,309 -- -- 36,564
Interest expense ...................... 8,218 5,509 1,094 3,985 18,806
Selling, general and administrative
expenses ............................ 3,884 10,936 6,832 3,517 25,169
Goodwill amortization ................. 1,895 2,167 451 77 4,590
------- ------- ------- ------- --------
Total expenses .................... 37,486 47,703 8,435 7,579 101,203
Equity in income from minority-owned
affiliates .......................... -- -- -- -- --
------- ------- ------- ------- --------
Income (loss) before taxes ............ $ 5,787 $ 5,303 $(3,395) $(6,312) $ 1,383
======= ======= ======= ======= ========
</TABLE>
17
<PAGE> 18
RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Income from finance contracts. Income from finance contracts for the three
months ended March 31, 2000 increased by $15.4 million, or 132.7%, to $27.0
million from $11.6 million for the three months ended March 31, 1999. This
increase is primarily due to the $383.7 million increase in the finance contract
portfolios of the Technology and Finance Group and Business Credit Group
attributable to the Company's decision to retain, for its own portfolio, a
greater portion of the leases that it originates.
Rental income from operating leases. Rental income from operating leases for
the three months ended March 31, 2000 increased by $7.9 million, or 24.0%, to
$40.9 million from $33.0 million for the three months ended March 31, 1999. This
increase is largely due to the $5.7 million increase in rental income in the Big
Ticket Division, which is primarily a result of an increase in aircraft under
operating leases. Included in rental income from operating leases for the three
months ended March 31, 2000 is $5.6 million of rental income that relates to
certain aircraft that were sold at the end of March 2000. Additionally, there is
a $2.4 million increase in rental income in the Technology and Finance Group,
due to a $32.4 million increase in equipment under operating leases.
Sales of equipment. Sales of equipment for the three months ended March 31,
2000 increased by $215.6 million, or 444.1%, to $264.1 million from $48.5
million for the three months ended March 31, 1999. This increase is primarily
due to increased sales in the Big Ticket Division. Sales of aircraft increased
in the amount of $219.5 million. This increase was partially offset by a $24.5
million decline in sales of aircraft engines from the three months ended March
31, 1999. Only one engine was sold in the three months ended March 31, 2000 as
compared to nine for the three months ended March 31, 1999. The Company expects
the current unfavorable market conditions for the sale of certain aircraft
engines to continue for the foreseeable future. Increased sales of equipment in
two of the companies in the Technology and Finance Group account for the balance
of the increase.
Gain on sale of finance contracts. Gain on sale of finance contracts for the
three months ended March 31, 2000 increased by $5.4 million, or 1923.7%, to $5.7
million from $.3 million for the three months ended March 31, 1999. This
increase is primarily attributable to an increase in sales of finance contracts
to third parties in the Technology and Finance Group, as well as a $1.8 million
gain in connection with a securitization transaction in March 2000.
Fees, commissions and remarketing income. Fees, commissions and remarketing
income for the three months ended March 31, 2000 decreased by $1.4 million, or
23.4%, to $4.7 million from $6.1 million for the three months ended March 31,
1999. This decrease is primarily due to non-recurring transactions in the
Technology and Finance Group in 1999.
Interest and other income. Interest and other income for the three months
ended March 31, 2000 decreased by $2.4 million, or 81.6%, to $.6 million from
$3.0 million for the three months ended March 31, 1999. This decrease is
partially due to a $.7 million write-down due to a change in estimates of the
value of the Company's retained interests.
Cost of operating leases. Cost of operating leases for the three months
ended March 31, 2000 increased by $5.2 million, or 32.5%, to $21.3 million from
$16.1 million for the three months ended March 31, 1999. This increase is
primarily due to the $2.0 million increase in depreciation in the Big Ticket
Division as a result of increased aircraft under operating leases and the $3.2
million increase in depreciation in the Technology and Finance Group as a result
of increases in equipment under operating leases.
Cost of equipment sold. Cost of equipment sold for the three months ended
March 31, 2000 increased by $245.4 million, or 671.3%, to $282.0 million from
$36.6 million for the three months ended March 31, 1999. $186.4 million of the
increase in cost of equipment sold is a result of the sale of aircraft in March
2000. Additional increased cost of equipment sold is related to increased sales
of equipment in two of the companies in the Technology and Finance Group. The
remaining increase is primarily related to impairment write-downs of asset
values in the Big Ticket Division totaling $37.5 million, of which $33.5 million
is attributable to the write-down of aircraft engine values as a result of the
downturn in the market for certain aircraft engine types. More specifically, the
recent oversupply and resulting price pressure, in addition to the limited
demand for the JT9D-7A type and other type aircraft engines worldwide, resulted
in the Company's decision to adjust downward the value of approximately 60
engines currently in inventory. The Company expects the resulting price
pressures and market softness for this aircraft engine type to continue for the
foreseeable future. The remaining $4.0 million of asset impairment results from
an impairment in the value of five aircraft as a result of market conditions.
Interest expense. Interest expense for the three months ended March 31, 2000
increased by $25.7 million, or 136.6%, to $44.5 million from $18.8 million for
the three months ended March 31, 1999. This increase is primarily due to
increased borrowings outstanding to finance the $460.4 million growth of the
Company's lease and equipment portfolio, resulting from the Company's decision
to retain a greater portion of the leases it originates as well as the effect of
rising interest rates.
18
<PAGE> 19
Selling, general and administrative expenses. Selling, general and
administrative expenses for the three months ended March 31, 2000 increased by
$23.1 million, or 91.9%, to $48.3 million from $25.2 million for the three
months ended March 31, 1999. $16.0 million of this increase is due to an $11.7
million incremental increase in the provision for lease losses in the Big Ticket
Division due to the Company's estimate of additional exposure under leases of,
and notes related to, aircraft engines to Tower Air, and a $4.6 million
incremental increase in the provision for lease losses in the Technology and
Finance Group and the Business Credit Group due to the Company's decision in
early 1999 to retain on balance sheet a greater portion of the leases that we
originate and the resulting increase in portfolio credit exposure. In addition,
increases in headcount, as well as the impact of new employment agreements with
certain of the Company's officers and subsidiary executives, resulted in higher
personnel costs. Certain of the new employment agreements are the result of a
recent emphasis on incentive-based compensation for subsidiary executives.
Restructuring charges. The Company incurred $1.9 million of restructuring
charges during the three months ended March 31, 2000, primarily as a result of
severance costs related to the elimination of non-core businesses and other
headcount reductions throughout the Company.
Goodwill amortization and impairment. Goodwill amortization and impairment
for the three months ended March 31, 2000 increased by $239.3 million, to $243.9
million from $4.6 million for the three months ended March 31, 1999. This
increase is primarily due to the impairment write-off of goodwill in the amount
of $239.1 million. Of that amount, $224.1 million is attributable to the
impairment write-off of all remaining unamortized goodwill in the Big Ticket
Division arising from the Company's decision to exit from this segment in an
orderly manner over time. Pending exit from the segment, the Company will
continue to operate its Big Ticket Division, and may buy and sell aircraft as
appropriate to that business, subject to limitations imposed by the Company's
credit facilities and subject to market conditions. In addition, an impairment
write-off of goodwill of $11.8 million and $3.2 million was recorded in the
Technology and Finance Group and the Business Credit Group, respectively, as a
result of the Company's decision to exit unprofitable operations and redeploy
capital to more profitable operations. The Company expects to complete closure
of these unprofitable operations during the second quarter of 2000.
Equity in income from minority-owned affiliates. As a result of the sale of
an additional 1.1% beneficial interest in Aircraft Finance Trust in March 2000,
the Company now owns a 49% beneficial interest in Aircraft Finance Trust and
will account for its remaining interest under the equity method of accounting.
Accordingly, during the three months ended March 31, 2000, the Company recorded
$0.4 million as its proportionate share of the net income from Aircraft Finance
Trust.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, we had cash and cash equivalents of approximately
$26.4 million. Our business is capital intensive and requires access to
substantial short-term and long-term credit and other capital to fund new
equipment leases and the purchase of equipment. We will continue to require
access to significant additional capital to maintain and expand the volume of
leases that we fund, as well as to fund any possible future acquisitions of
lease portfolios.
Our uses of cash include the origination of equipment leases and the
purchase of equipment, payment of interest expenses, repayment of borrowings
under our credit facilities, operating and administrative expenses, income taxes
and capital expenditures, and may include payment of the cash portion of the
earn-out arrangements with the former stockholders of certain of the acquired
companies, as well as any possible future acquisitions of lease portfolios.
Effective March 31, 2000 we amended our Revolving Facility to modify certain
financial covenants until June 22, 2000. If we had not amended this facility,
our financial condition as of March 31, 2000 and our results of operations for
the first quarter would have caused us to breach the fixed-charge coverage ratio
and tangible net worth financial covenants of this facility. Although we have
amended these financial covenants, we may not be able to remain in compliance
with these modified financial covenants or comply with the original covenants
after June 22, 2000. Our financial condition as of March 31, 2000 and our
results of operations for the first quarter would have caused us to breach the
fixed-charge coverage ratio and tangible net worth financial covenants of the
Morgan Stanley Asset Funding Warehouse Facility. Although we have obtained a
waiver of this breach, which waiver expires on June 14, 2000, we may not be able
to come into compliance with these financial covenants during the waiver period,
negotiate extensions of the waiver prior to its expiration, or negotiate
modifications of the covenants prior to the expiration of the waiver. Even if we
are able to come into compliance with the financial covenants, either directly
or through renegotiation of those covenants, we may not remain in compliance.
Any breach of the financial covenants that is not waived by our lenders
constitutes an event of default. An event of default under one of our credit
facilities could constitute an event of default under each of our other credit
facilities. If an event of default occurs under the Senior Credit Facilities,
our lenders could declare all amounts outstanding, together with accrued
interest, to be immediately due and payable. If we could not repay these
amounts, then our lenders could proceed against the collateral, which would have
a material adverse effect on our business and financial condition.
19
<PAGE> 20
Our existing financial condition will limit our ability to obtain additional
sources of financing. Although we believe that we would not be able to obtain
additional credit facilities at this time, we anticipate that we will be able to
obtain financing for specific transactions and on a non-recourse basis. Our
failure to remain in compliance with the financial covenants of our credit
facilities will have a material adverse effect on our ability to obtain any
additional sources of financing. If we are unable to obtain additional sources
of financing, or to renew, replace or modify our credit facilities prior to
their expiration with facilities of like amount, or if we are unable to
implement other alternative strategies, then we may have insufficient cash to
continue to operate our business as it is now conducted, and may be unable, in
whole or in part, to fund new equipment leases or the purchase of equipment,
fund the acquisition of lease portfolios, fund additional purchase price
consideration pursuant to the earnout provisions of various acquisition
agreements, or fund other working capital requirements. Accordingly, in such
circumstances, we would have to make choices among the various demands upon our
liquidity, and among available alternatives to increase liquidity (including
asset dispositions on then available terms), and our business, financial
condition and results of operations would be materially and adversely affected.
CREDIT FACILITIES
We have in place a series of credit facilities (the "Senior Credit
Facilities") which consist of the following: (i) a $300.0 million Corporate
Revolving Credit Facility primarily to finance working capital needs (the
"Revolving Facility"); (ii) two asset-backed commercial paper conduit facilities
totaling $400.0 million to finance small ticket and middle market leases,
consisting of a limited recourse Equipment Lease Receivable Facility (the
"Limited Recourse Conduit Facility") and a recourse Equipment Lease Receivable
Facility (the "Full Recourse Conduit Facility"); and (iii) a $200.0 million
Warehouse Facility to finance small ticket and middle market leases (the
"Warehouse Facility").
The Company paid and continues to pay financing fees in connection with
entering into or extending each of the Senior Credit Facilities, which are being
amortized as a yield adjustment over the terms of the Senior Credit Facilities
using the interest method, and will pay an annual administration fee equal to a
percentage of certain of the facilities. We expect that the aggregate fees and
expenses to be paid in connection with entering into the Senior Credit
Facilities will be paid from cash flows from operating activities as well as
borrowings under the Revolving Facility.
REVOLVING FACILITY. Under the Revolving Facility, we may borrow up to $300.0
million with a $50.0 million sublimit for letters of credit and a $15.0 million
swingline sublimit. The proceeds of the Revolving Facility may be used to
refinance loans previously incurred to fund the cash portions of acquisitions
and for general corporate purposes, subject to certain limitations. Amounts
outstanding under the Revolving Facility bear interest, at our option, at Bank
of America's base rate plus an applicable margin or a Eurodollar rate plus an
applicable margin and must be supported by a borrowing base. The borrowing base
equals the net book value of qualifying assets, at varying advance rates
depending on asset types, plus an amortizing amount contractually agreed, which
amount does not bear relationship to any asset value. Our obligations under the
Revolving Facility are guaranteed by all of our subsidiaries other than certain
special purpose entities. The Revolving Facility is secured by a pledge of all
of the capital stock of our domestic guaranteeing subsidiaries (and a pledge of
65% of the capital stock of each non-United States guaranteeing subsidiary) and
a security interest in all other assets and properties of the Company and those
subsidiaries guaranteeing the Revolving Facility, other than assets financed on
a non-recourse basis by the Company and any assets subject to liens granted in
connection with certain permitted indebtedness (including securitizations).
Borrowings under the Revolving Facility are subject to certain conditions,
including but not limited to absence of material adverse effect and absence of
material litigation. In addition, the Revolving Facility contains covenants,
including but not limited to limitations on liens other than permitted liens,
investments, dividends and other restricted payments, incurrence of recourse
indebtedness, transactions with affiliates, acquisitions other than permitted
acquisitions (as defined in the Revolving Facility) as well as various financial
covenants, including ratios of recourse and limited recourse debt to tangible
net worth, cash flow to interest and rents, and maintenance at all times of a
minimum tangible net worth. We amended the Revolving Facility as of March 31,
2000 to modify certain of our financial covenants until June 22, 2000. If we had
not amended this facility, our financial condition as of March 31, 2000 and our
results of operations for the first quarter would have caused us to breach the
fixed-charge coverage ratio and tangible net worth financial covenants of the
facility. As a condition to this amendment, we have agreed to (i) develop a plan
to sell certain of our Big Ticket Division assets, (ii) limit the maximum amount
of borrowings under the Revolving Facility to $290.0 million, (iii) appoint
independent financial consultants to assist us in evaluating our business and
financial condition and (iv) pay the costs of any financial consultants engaged
by our lender to conduct an independent investigation of our business and
financial condition. The Revolving Facility, which was entered into in June
1998, has a three-year term. We pay a quarterly fee equal to a percentage of the
unused portion of the Revolving Facility. As of March 31, 2000, the Company had
borrowings of $249.0 million outstanding under the Revolving Facility with a
weighted average interest rate of 8.5%.
LIMITED RECOURSE CONDUIT FACILITY. We have established the Limited Recourse
Conduit Facility with Bank of America, as agent, pursuant to which a commercial
paper conduit (the "CP Conduit") or, if the CP Conduit does not buy them, one or
more bank
20
<PAGE> 21
investors, which will include Bank of America (the "Bank Investors"),
will purchase beneficial interests in leases (the "Net Investment") in an amount
of up to $200.0 million (the "Facility Limit"), from a special purpose entity,
collateralized by small ticket and middle market leases meeting certain
eligibility requirements. Two indirect, bankruptcy-remote subsidiaries of the
Company (the "Transferors") may purchase the Company's interest in certain
financing leases and related leased equipment originated or purchased by the
Company or eligible subsidiaries of the Company. The CP Conduit (or, upon the
occurrence of certain events, the Bank Investors) will purchase beneficial
interests in leases from the Transferors at an amount equal to a percentage of
the present value of the remaining lease receivables. Collections on the leases
will generally be applied first to pay any amounts due under the Limited
Recourse Conduit Facility and certain other specified facilities, and then to
the Transferors. We plan to reduce the Net Investment under the Limited Recourse
Conduit Facility periodically through securitizations. Should we be unable to
securitize leases going forward, our business, financial condition and results
of operations could be materially and adversely affected. The Limited Recourse
Conduit Facility contains certain restrictions, including but not limited to
limitations on liens on the leases, indebtedness, certain lease modifications
and changes in credit and collection practices. The Limited Recourse Conduit
Facility requires payment by the Transferor of program fees, facility fees,
administration fees and commercial paper dealer fees. The term of the Limited
Recourse Conduit Facility expires in August 2000. As of March 31, 2000, the
amount outstanding under the Purchase Facility was $136.7 million with a
weighted average interest rate of 6.8%.
FULL RECOURSE CONDUIT FACILITY. We have established the Full Recourse
Conduit Facility with Bank of America, as administrative agent, pursuant to
which the CP Conduit or the Bank Investors will advance an amount up to $200.0
million. A subsidiary of the Company (the "Financing SPE") will finance the
Company's interest in certain operating and financing leases and certain leased
equipment originated or purchased by the Company or certain subsidiaries of the
Company. The CP Conduit (or, under certain limited circumstances, the Bank
Investors) will lend funds to the Financing SPE in an amount equal to a
percentage of the present value of the remaining lease receivables. Such
borrowings are secured by an interest in the Financing SPE's leases and certain
leased equipment. We plan to reduce the borrowing outstanding under the Full
Recourse Conduit Facility periodically through securitizations. Should we be
unable to securitize leases going forward, our business, financial condition and
results of operations could be materially and adversely affected. The Full
Recourse Conduit Facility contains certain restrictions and requires the payment
of various fees, generally on terms substantially equivalent to those in the
Limited Recourse Conduit Facility. We have guaranteed the amounts borrowed under
the Full Recourse Conduit Facility. The term of the Full Recourse Conduit
Facility expires in August 2000. As of March 31, 2000, the amount outstanding
under the Full Recourse Conduit Facility was $133.9 million with a weighted
average interest rate of 6.8%.
MORGAN STANLEY ASSET FUNDING WAREHOUSE FACILITY. We have established a
Warehouse Facility with Morgan Stanley Asset Funding, Inc., (the "Lender")
pursuant to which Lender will make loans to an indirect, bankruptcy-remote
subsidiary of the Company (the "SPE Borrower"). As security for these loans, the
SPE Borrower will assign all of the Borrower's right, title and interest in, to
and under certain small ticket and middle market leases and loans and related
equipment originated or purchased by the Company or eligible subsidiaries of the
Company (the "Originators"). Lender will lend against leases at an amount equal
to a percentage of the present value of the remaining lease receivables, up to a
maximum amount of $200.0 million. Amounts outstanding under the Warehouse
Facility bear interest at a rate equal to a Eurodollar rate plus an applicable
margin. Collections on the leases will generally be applied first to pay any
amounts due under the Warehouse Facility, including without limitation the
repayment of principal of and interest on all loans and all other amounts owing
to the Lender and then to the Originators. We plan to reduce the borrowing
outstanding under the Warehouse Facility periodically through securitizations.
Should we be unable to securitize leases going forward, our business, financial
condition and results of operations could be materially and adversely affected.
Borrowings under the Warehouse Facility are subject to certain conditions. In
addition, the Warehouse Facility contains certain covenants, including but not
limited to limitations on liens, investments, dividends and other restricted
payments, capital expenditures, transactions with affiliates, acquisitions,
incurrence of debt, and interest rate protection acceptable to Lender, and
various financial covenants customary for transactions of this type. The term of
the Warehouse Facility, which was entered into in December 1999, is 364 days. As
of March 31, 2000, the Company had borrowings of $16.7 million outstanding under
the Warehouse Facility with a weighted average interest rate of 6.9%. Our
financial condition as of March 31, 2000 and our results of operations for the
first quarter would have caused us to breach the fixed-charge coverage ratio and
tangible net worth financial covenants under the Morgan Stanley Asset Funding
Warehouse Facility. We have obtained a waiver of this breach, which waiver
expires on June 14, 2000. We do not have the right to make additional borrowings
under this facility during the period that the waiver is in effect.
OTHER CREDIT FACILITIES
REVOLVING PURCHASE FACILITY. In November 1999, we closed a $50.0 million
increase in our $75.0 million discretionary, revolving facility with Key Global
Finance. This facility is for the funding of eligible leases and is available to
most of the originating units in
21
<PAGE> 22
our Technology and Finance Group as well as one of the originating units in our
Business Credit Group.
TERM LOANS
AIRCRAFT FACILITY. Effective March 30, 2000, we converted our revolving
credit facility for the financing of aircraft into a term loan. As a condition
of the conversion, the Company pledged 100% of the stock of UniCapital AFT-II,
Inc., five engines and the Class C Notes related to the 1999-1 and 2000-1
securitization transactions. The Aircraft Facility is nonrecourse to the Company
and is secured by a first priority perfected pledge of all of the common stock
of each special purpose entity wholly owned by the Company which uses the
Aircraft Facility ("SPE Aircraft Borrower") and each domestic subsidiary of each
SPE Aircraft Borrower, a first priority perfected security interest in all
present and future assets and properties of each SPE Aircraft Borrower and each
of its subsidiaries and certain other assets of the Company's aircraft and
aircraft engine businesses. The aggregate net book value of the assets that are
pledged as collateral under the Aircraft Facility is $120.7 million. Borrowings
under the Aircraft Facility are subject to certain conditions, including but not
limited to absence of material adverse effect and absence of material
litigation. In addition, the Aircraft Facility contains certain covenants,
including but not limited to limitations on liens, dividends and other
restricted payments, capital expenditures, acquisitions, incurrence of debt, as
well as requirements related to annual appraisals of eligible aircraft, approved
aircraft and aircraft engine types and interest rate protection acceptable to
the lender, and various financial covenants customary for transactions of this
type, including a ratio of cash flow to interest. The Aircraft Facility expires
in December 2000. As of March 31, 2000, the Company had borrowings of $329.3
million outstanding under the Aircraft Facility with a weighted average interest
rate of 9.3%. The Company's financial condition as of March 31, 2000 and results
of operations for the first quarter would have caused the SPE Aircraft Borrower
to breach the interest coverage ratio financial covenant of the Aircraft
Facility. This financial covenant was modified in connection with the amendment
to the facility effective March 30, 2000.
SECURITIZATION TRANSACTIONS
On September 9, 1999, we completed our first securitization transaction
involving the issuance of $365.7 million of Equipment Contract Backed Notes
originated primarily by the Business Credit Group and the Technology and Finance
Group. In connection with this transaction, four tranches of Class A Notes were
sold to accredited investors under Rule 144A. The Class A-1 Notes had short term
ratings of A-1+ by Standard & Poor's, P-1 by Moody's Investor Services, Inc.,
F1+/AAA by Fitch IBCA and D-1+ by Duff & Phelps Credit Rating Co. The Class A-2
through A-4 Notes were rated AAA by Standard & Poor's, Aaa by Moody's Investor
Services, Inc., AAA by Duff & Phelps Credit Rating Co. and AAA by Fitch IBCA.
The Class A Notes benefit from a surety bond issued by Ambac Assurance Corp. In
addition, Class B and Class C Notes, rated BBB and BB, respectively by Duff &
Phelps Credit Rating Co. and Fitch IBCA, were retained by the Company. We
financed the Class B Notes pursuant to short term facilities. The weighted
average interest rate for the Class A Notes as of March 31, 2000 was 6.96%. The
weighted average interest rate will vary as Class A Notes are paid. As of March
31, 2000, the outstanding principal balance was $327.3 million.
On March 28, 2000, the Company completed its second securitization
transaction involving the issuance of $301.5 million of Equipment Contract
Backed Notes originated primarily by the Business Credit Group and the
Technology and Finance Group. In connection with this transaction, four tranches
of Class A Notes and the Class B Notes were sold to accredited investors under
Rule 144A. The Class A-1 Notes had short term ratings of A-1+ by Standard &
Poor's, P-1 by Moody's Investor Services, Inc., F1+/AAA by Fitch IBCA and D-1+
by Duff & Phelps Credit Rating Co. The Class A-2 through A-4 Notes were rated
AAA by Standard & Poor's, Aaa by Moody's Investor Services, Inc., AAA by Duff &
Phelps Credit Rating Co. and AAA by Fitch IBCA. The Class A Notes benefit from a
surety bond issued by the Ambac Assurance Corp. The Class B Notes were rated
BBB- by each of Duff & Phelps Credit Rating Co. and Fitch IBCA. In addition,
Class C Notes rated BB by Duff & Phelps Credit Rating Co and Fitch IBCA were
retained by the Company. The weighted average interest rate for the Class A and
Class B Notes as of March 31, 2000 was 7.09%. The weighted average interest rate
will vary as Class A and Class B Notes are paid.
Under the terms of these securitization transactions, if we sustain losses
for two consecutive quarters or if there are defaults or if certain financial or
portfolio triggers occur, then certain payments on subordinate securities
otherwise due to the Company may be redirected to accelerate the senior bonds
and the majority interest of the bondholders (currently controlled by the
surety) may remove the Company as servicer.
FLUCTUATIONS IN QUARTERLY RESULTS
We have experienced and may continue to experience significant fluctuations
in quarterly operating results due to a number of
22
<PAGE> 23
factors including, among others, the consummation of a transaction in a
particular calendar quarter (or the failure to complete such a transaction),
variations in the volume of leases originated, variations in interest rates and
market conditions for assets in the principal asset classes of our portfolio. In
addition, certain of our operating subsidiaries may from time to time experience
relatively large transactions for one or a few customers or relatively large
sales of equipment and/or lease portfolios, which may not recur or may not be
followed by correspondingly large transactions in subsequent periods. Moreover,
to the extent that we retain for our own portfolio a greater portion of the
leases that we acquire or originate and the equipment that we acquire, we will
not generate revenue from gain on sale for the retained leases or revenue from
sales of the retained equipment. As a result of these fluctuations, results for
any one quarter should not be relied upon as being indicative of performance in
future quarters.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Certain statements contained in this Quarterly Report on Form 10-Q
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"intend," "estimate," "anticipate," "believe," "expect" or "continue" or the
negative thereof or variations thereon or similar terminology. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from possible
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; changes in interest rates; changes in
asset values; inflation or deflation; changes in markets for financial products,
including securitized assets; changes in political, social and economic
conditions and local regulations; changes in, or failure to comply with,
government regulations; demographic changes; changes in the mix of sources of
revenues; competition; changes in business strategy or development plans;
availability of capital sufficient to meet the Company's need for capital or on
terms or at times acceptable to the Company; and availability of qualified
personnel. Factors that could cause or contribute to such differences include
those discussed under the heading "Factors that May Affect Future Operating
Results" in the Company's Annual Report on Form 10-K for the year ended December
31, 1999. Unforeseen delays and expenses may affect our ability to develop or
implement our expense-reduction program. Unforeseen delays and expenses as well
as possible unfavorable market conditions for certain of our assets, such as the
current unfavorable market condition for the sale of aircraft engines, may
affect our ability to develop or implement our asset turnover program, our
ability to refinance our debt or to secure adequate sources of liquidity, and
our ability to dispose of our Big Ticket Division assets in an orderly manner.
The Company assumes no obligation to update any forward-looking statements to
reflect actual results or changes in the factors affecting such forward-looking
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
We incur debt to fund the origination and acquisition of leases, equipment,
lease portfolios and equipment leasing businesses and for general corporate
purposes. The interest rates charged on the debt are generally determined based
on variable measures of interest rates such as the prevailing "Prime" rates in
the United States or the London Interbank Offered Rate ("LIBOR"). For
information regarding contractual interest rates on the debt and amounts
outstanding and weighted average interest rate at March 31, 2000, see the
discussion in "Liquidity and Capital Resources."
We continually monitor interest rates in order to mitigate exposure to
certain unfavorable variations. Our objectives in managing this risk include:
o achieving certain ratios of fixed-rate debt to variable-rate debt; and
o achieving certain levels of our aggregate cost of funds.
As a result, from time to time we utilize interest rate swaps to hedge some
of the Company's exposure to changing interest rates. We do not hedge all
interest rate risks. As used by the Company, interest rate swaps synthetically
alter the repricing characteristics of recorded assets and liabilities,
effectively allowing us to reduce our exposure to variations in Prime or LIBOR.
There are risks associated with the use of these instruments, including:
o the possible inability of the counterparties to meet the terms of their
contracts; and
o market movements in values and interest rates.
23
<PAGE> 24
We do not enter into interest rate swap agreements for trading purposes.
The fair value of the swaps at any particular time is determined by
calculating the difference between the contractual payments at the contract rate
and the prevailing market rate of the swap at such time, and discounting the
stream of payments at the appropriate market discount rate.
The following table presents, as of March 31, 2000, the following
information regarding interest rate swap agreements to which we are a party: (i)
the notional amount of the agreement, (ii) the fixed interest rate to be paid by
the Company or its subsidiaries, (iii) the variable rate to be paid by the
counterparty under the agreement, (iv) the fair value of the instrument, (v) the
commencement date for agreements for which the effective period does not begin
until a subsequent date, if applicable, and (vi) the maturity of the agreement.
24
<PAGE> 25
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING MARCH 31, (B)
---------------------------------------------------------------------------------------
MARCH 31, 2000 2001 2002 2003 2004 2005 THEREAFTER
---------------- ------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS
- -------------------
Amortizing notional
amount............ $20,353,572 $16,945,787 $ 9,601,358 $ 4,274,272 $ 1,150,456
Rate to be paid by the
Company........... 6.115%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ 205,192
Maturity............ October 2003
Amortizing notional
amount............ $22,408,935 $19,154,417 $16,980,864 $12,656,415 $ 5,552,217 $ 980,605
Rate to be paid by the
Company........... 6.245%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000..... $ 321,353
Maturity............ June 2004
Amortizing notional
amount............ $16,604,363 $18,964,165 $20,381,043 $17,534,077 $14,741,742 $11,891,592 $ 3,833,864
Rate to be paid by the
Company........... 6.575%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ 314,157
Maturity............ August 2009
Amortizing notional
amount............ $30,914,292 $24,779,403 $12,280,531 $ 2,877,909 $ 438,649
Rate to be paid by the
Company........... 6.326%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ 166,388
Maturity............ June 2003
Amortizing notional
amount............ $29,107,463 $26,652,985 $21,297,761 $15,942,537 $10,587,313 $ 5,232,090 $1,215,672
Rate to be paid by the
Company........... 6.880%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ 7,177
Maturity............ September 2005
Amortizing notional
amount............ $ -- $33,812,519 $22,856,736 $13,699,199 $ 8,630,629 $ 5,328,265 $1,818,265
Rate to be paid by the
Company........... 7.035%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ (74,299)
Commencement........ June 2000
Maturity............ September 2009
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
EFFECTIVE PERIOD OF INTEREST RATE SWAP
AVERAGE NOTIONAL AMOUNT FOR THE TWELVE MONTHS ENDING MARCH 31, (B)
------------------------------------------------------------------------------------
MARCH 31, 2000 2001 2002 2003 2004 2005 THEREAFTER
------------------ ------------ ------------ ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Amortizing notional
amount............ $ -- $ 25,259,704 $ 15,657,867 $ 9,176,711 $ 6,647,708 $5,624,999 $2,662,389
Rate to be paid by the
Company........... 6.995%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ (33,171)
Commencement........ June 2000
Maturity............ September 2009
Amortizing notional
amount............ $ -- $ 34,100,830 $ 22,151,686 $ 13,207,611 $ 8,875,136 $6,544,063 $2,682,639
Rate to be paid by the
Company........... 7.110%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ (134,462)
Commencement........ June 2000
Maturity............ September 2009
Amortizing notional
amount............ $17,951,990 $ 16,671,082 $ 11,907,527 $ 7,779,817 $ 6,539,233 $6,539,233 $6,539,233
Rate to be paid by the
Company........... 7.230%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ 26,537
Maturity............ July 2005
Fixed notional
amount............ $75,000,000 $ 75,000,000 $ 75,000,000 $ 75,000,000
Rate to be paid by the
Company........... 5.125%
Rate to be received by
the Company....... 3-month LIBOR
Fair value at
March 31, 2000...... $ 3,525,953
Maturity............ November 2002
Amortizing notional
amount............ $ -- $ 1,084,148 $ 1,024,181 $ 938,048 $ 843,768 $ 740,980 $ 371,057
Rate to be paid by the
Company........... 6.540%
Rate to be received by
the Company....... 30-day CP(a)
Fair value at
March 31, 2000...... $ 22,559
Commencement........ October 2000
Maturity............ January 2010
</TABLE>
- ----------
(a) The rate to be received by the Company is based on a 30-day commercial
paper rate published by the U.S. Federal Reserve (H15 report).
(b) The amortizing notional amount is based on contractual agreements with the
counterparty.
26
<PAGE> 27
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
UniCapital and its subsidiaries are from time to time parties to lawsuits
arising out of our respective operations. We believe that any pending litigation
to which we or our subsidiaries are parties will not have a material adverse
effect upon our business or financial condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.)Exhibits
4.01 Amended and Restated Credit Agreement by and among First Security
Bank, National Association, as Trustee, Lehman Commercial Paper Inc.,
as Lender and as Agent and the Lenders party thereto, dated as of
March 30, 2000.
11.01 Statement Regarding Computation of Per Share Earnings
27.01 Financial Data Schedule
(b.) Reports on Form 8-K
None.
27
<PAGE> 28
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNICAPITAL CORPORATION
Date: May 15, 2000
By: /s/ JONATHAN NEW
--------------------------------------------
Jonathan New
Chief Financial Officer
(Principal Financial and Accounting Officer)
28
<PAGE> 1
Exhibit 4.01
AMENDED AND RESTATED CREDIT AGREEMENT
by and among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity
except as expressly stated herein,
but solely as Trustee,
as Initial Borrower
and
THE OTHER BORROWERS PARTY HERETO FROM TIME TO TIME,
as Borrowers,
LEHMAN COMMERCIAL PAPER INC.
as Lender
and
LEHMAN COMMERCIAL PAPER INC.
as Agent
and
THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME
As of March 30, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions and Terms ................................................. 3
1.1 Definitions ................................................ 3
ARTICLE II
The Term Loan Facility ................................................ 31
2.1 Term Loans ................................................. 31
2.2 Payment of Interest ........................................ 33
2.3 Payment of Principal ....................................... 33
2.4 Manner of Payment .......................................... 34
2.5 Notes ...................................................... 35
2.6 Pro Rata Payments .......................................... 35
2.7 Conversions and Elections of Subsequent Interest Periods ... 35
2.8 Increase and Decrease in Amounts ........................... 36
2.9 Fees ....................................................... 36
2.10 Deficiency Advances ........................................ 36
2.11 Use of Proceeds ............................................ 37
2.12 Designation of Borrowing Affiliate; Releases ............... 37
2.13 Joint and Several Liability ................................ 38
ARTICLE III
Security .............................................................. 39
3.1 Security ................................................... 39
3.2 Further Assurances ......................................... 39
3.3 Information Regarding Collateral ........................... 40
3.4 Quiet Enjoyment ............................................ 40
ARTICLE IV
Change in Circumstances ............................................... 40
4.1 Increased Cost and Reduced Return .......................... 41
4.2 Limitation on Types of Loans ............................... 42
4.3 Illegality ................................................. 43
4.4 Treatment of Affected Loans ................................ 43
4.5 Compensation ............................................... 43
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.6 Taxes ...................................................... 44
ARTICLE V
Conditions to Effectiveness of Amendment and to Making Loans........... 46
5.1 Conditions of Effectiveness ................................ 46
5.2 Conditions of Effective Date Loans ......................... 48
5.3 Conditions of Term Loans ................................... 52
5.4 Appraisal Procedure ........................................ 53
ARTICLE VI
Representations and Warranties ........................................ 54
6.1 Organization and Authority ................................. 54
6.2 Loan Documents ............................................. 55
6.3 Solvency ................................................... 55
6.4 Subsidiaries and Stockholders .............................. 55
6.5 Ownership Interests ........................................ 55
6.6 Financial Condition ........................................ 55
6.7 Title to Properties ........................................ 56
6.8 Taxes ...................................................... 56
6.9 Other Agreements ........................................... 57
6.10 Litigation ................................................. 57
6.11 Margin Stock ............................................... 57
6.12 Investment Company ......................................... 57
6.13 Patents, Etc ............................................... 57
6.14 No Untrue Statement ........................................ 58
6.15 No Consents, Etc ........................................... 58
6.16 Employee Benefit Plans ..................................... 58
6.17 No Default ................................................. 59
6.18 Environmental Laws ......................................... 59
6.19 Employment Matters ......................................... 60
6.20 RICO ....................................................... 60
6.21 Liens ...................................................... 60
ARTICLE VII
Affirmative Covenants ................................................. 60
7.1 Financial Reports, Etc ..................................... 60
7.2 Maintain Properties ........................................ 62
7.3 Existence, Qualification, Etc .............................. 62
</TABLE>
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7.4 Regulations and Taxes ...................................... 62
7.5 Insurance .................................................. 62
7.6 True Books ................................................. 62
7.7 Right of Inspection ........................................ 62
7.8 Observe all Laws ........................................... 63
7.9 Governmental Licenses ...................................... 63
7.10 Covenants Extending to Other Persons ....................... 63
7.11 Officer's Knowledge of Default ............................. 63
7.12 Suits or Other Proceedings ................................. 63
7.13 Notice of Environmental Complaint or Condition ............. 63
7.14 Environmental Compliance ................................... 64
7.15 Indemnification ............................................ 64
7.16 Further Assurances ......................................... 64
7.17 Swap Agreements ............................................ 64
7.18 Continued Operations ....................................... 65
7.19 Semi-Annual Appraisal of Aircraft and Leases ............... 65
7.20 Semi-Annual Review of Rated Carriers and Aircraft Models ... 65
7.21 Maintenance of Aircraft; Other Covenants and Restrictions;
Non-Discrimination ...................................... 66
7.22 Re-registration of Aircraft ................................ 66
7.23 Servicer ................................................... 66
7.24 Employee Benefit Plans ..................................... 66
7.25 Collection Account ......................................... 67
ARTICLE VIII
Negative Covenants .................................................... 67
8.1 EBITDA-to-Interest Ratio ................................... 67
8.2 Acquisitions ............................................... 67
8.3 Capital Expenditures ....................................... 68
8.4 Liens ...................................................... 68
8.5 Indebtedness ............................................... 68
8.6 Transfer of Assets ......................................... 69
8.7 Subsidiaries; Investments .................................. 69
8.8 Merger or Consolidation .................................... 69
8.9 Transactions with Affiliates ............................... 69
8.10 Employee Benefit Plans; ERISA Affiliates; Employees ........ 70
8.11 Fiscal Year ................................................ 71
8.12 Dissolution, etc ........................................... 71
8.13 Change in Control .......................................... 71
8.14 Negative Pledge Clauses .................................... 71
8.15 Partnerships ............................................... 71
</TABLE>
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8.16 Business and Operations .................................... 71
8.17 Ownership, Operation and Leasing of Financed Aircraft ...... 71
8.18 Servicing Agreement ........................................ 72
8.19 Representations regarding Agent and Lenders ................ 72
8.20 Earnout Payments ........................................... 72
ARTICLE IX
Events of Default and Acceleration..................................... 72
9.1 Events of Default .......................................... 73
9.2 Agent to Act ............................................... 76
9.3 Cumulative Rights .......................................... 76
9.4 No Waiver .................................................. 76
9.5 Allocation of Proceeds ..................................... 76
9.6 Activities of Eligible Carriers ............................ 77
ARTICLE X
The Agent .............................................................. 78
10.1 Appointment, Powers, and Immunities ........................ 78
10.2 Reliance by Agent .......................................... 79
10.3 Defaults ................................................... 79
10.4 Rights as Lender ........................................... 79
10.5 Indemnification ............................................ 80
10.6 Non-Reliance on Agent and Other Lenders .................... 80
10.7 Resignation of Agent ....................................... 80
10.8 Fees ....................................................... 81
ARTICLE XI
Miscellaneous ............................................................. 81
11.1 Assignments and Participations ............................. 81
11.2 Notices .................................................... 83
11.3 Right of Set-off; Adjustments .............................. 84
11.4 Survival ................................................... 85
11.5 Expenses ................................................... 85
11.6 Amendments and Waivers ..................................... 86
11.7 Counterparts ............................................... 86
11.8 Return of Funds ............................................ 86
11.9 Indemnification; Limitation of Liability ................... 86
11.10 Severability ............................................... 88
11.11 Entire Agreement ........................................... 88
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11.12 Usury Savings Clause ....................................... 88
11.13 Payments ................................................... 89
11.14 Confidentiality ............................................ 89
11.15 GOVERNING LAW; WAIVER OF JURY TRIAL ........................ 89
</TABLE>
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<PAGE> 7
EXHIBIT A Applicable Commitment Percentages
EXHIBIT B Form of Assignment and AcceptanceB-1
EXHIBIT C Notice of Appointment (or Revocation) of
Authorized Representative)
EXHIBIT D Form of Borrowing Notice
EXHIBIT E Form of Interest Rate Selection Notice
EXHIBIT F Form of Note
EXHIBIT G Compliance Certificate
EXHIBIT H Form of Facility Guaranty
EXHIBIT I Form of Security Agreement
EXHIBIT J List of Rated Carriers
EXHIBIT K List of Approved Aircraft Models
EXHIBIT L Required Insurance on Each Aircraft
EXHIBIT M Form of Lessee Estoppel Certificate
EXHIBIT N Form of UniCapital Parent Support Agreement
EXHIBIT O Description of Sabena Portfolio
EXHIBIT P Form of Servicing Agreement
EXHIBIT Q Form of Assumption Letter
EXHIBIT R Borrowing Base Certificate
EXHIBIT S-1 Form of Pledge and Security Agreement(for
pledged beneficial interest in UniCapital Subsidiary Trust)
EXHIBIT S-2 Form of Pledge and Security Agreement (for pledged
interest in UniCapital Special Purpose Corporation,
Beneficial Owner, Applicable Intermediary or other
Subsidiary)
EXHIBIT T Form of Lockbox Agreement
Schedule 1 Loan Commitment Amounts
Schedule 2 Existing Loans
Schedule 3 Borrowing Bases and Additional Collateral
Schedule 3.3 Information Regarding Collateral
Schedule 6.7 Transfer Restrictions to Sale or Assignment of Financed
Aircraft
Schedule 6.8 Tax Matters
Schedule 6.10 Litigation
Schedule 7.2 Maintenance
Schedule 7.21(a) Maintenance, Return, Alteration, Replacement, Pooling and
Lease
-vi-
<PAGE> 8
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 30,
2000, is made by and among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association not in its individual capacity but solely as trustee on
behalf of that certain trust created under the Trust Agreement (22222), dated as
of September 28, 1998, between First Security Bank, National Association and
Aircraft 22222, Inc., a Delaware corporation (together with any successor
Qualified Trustee, the "Initial Borrower"), FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement (53015) dated as of August
28, 1998 by and between First Security Bank, National Association and Aircraft
53015, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement (24837) dated as of October 30, 1998 by and between First
Security Bank, National Association and Aircraft 24837, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
under the Amended and Restated Trust Agreement (347) dated as of October 30,
1998 by and between First Security Bank, National Association and Aircraft 347,
Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as trustee on behalf of that trust created by Trust Agreement (23377)
dated as of June 24, 1998 by and between First Security Bank, National
Association and Aircraft 23377, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that trust
created by Trust Agreement (23830) dated as of July 10, 1998 by and between
First Security Bank, National Association and Aircraft 23830, Inc., WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as trustee on behalf of
that certain trust created under the Trust Agreement, dated as of November 14,
1984 between Aircraft 49262, Inc. (as assignee of CCD Air Ten, Inc.) and
Wilmington Trust Company, WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as trustee on behalf of that certain trust created under the
Trust Agreement, dated as of November 15, 1984 between Aircraft 49263, Inc. (as
assignee of CCD Air Ten, Inc.) and Wilmington Trust Company, FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner
trustee on behalf of that certain trust created by Trust Agreement (24474),
dated as of April 1, 1999 between First Security Bank, National Association and
Aircraft 24474, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as owner trustee on behalf of that certain trust
created by Trust Agreement (25262), dated as of April 25, 1999 between First
Security Bank, National Association and Aircraft 25262, Inc., FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely as trustee
on behalf of that certain trust created by Trust Agreement (49368), dated as of
April 25, 1999 between First Security Bank, National Association and Aircraft
49368, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as trustee on behalf of that certain trust created by Trust
Agreement (53623), dated as of August 18, 1999 between First Security Bank,
National Association and Aircraft 53623, Inc., FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (53624), dated as of August 18,
1999 between First Security Bank, National Association and Aircraft 53624, Inc.,
FIRST SECURITY BANK, NATIONAL
<PAGE> 9
2
ASSOCIATION, not in its individual capacity but solely as trustee on behalf of
that certain trust created by Trust Agreement (23771), dated as of April 7, 1999
between First Security Bank, National Association and Aircraft 23771, Inc.,
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as trustee on behalf of that certain trust created by Trust Agreement
(23772), dated as of April 1, 1999 between First Security Bank, National
Association and Aircraft 23772, Inc., FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as trustee on behalf of that certain
trust created by Trust Agreement (24355), dated as of April 7, 1999 between
First Security Bank, National Association and Aircraft 24355, Inc., FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but solely
as trustee on behalf of that certain trust created by Trust Agreement (24356),
dated as of April 7, 1999 between First Security Bank, National Association and
Aircraft 24356, Inc. and Aircraft 24813, Inc. (collectively, with the Initial
Borrower, the "Existing Borrowers"), certain other UniCapital Subsidiary Trusts
and UniCapital Special Purpose Corporations designated as Borrowing Affiliates
thereunder (the Existing Borrowers and such UniCapital Subsidiary Trusts and
UniCapital Special Purpose Corporations being referred to individually as a
"Borrower" or collectively as the "Borrowers"), LEHMAN COMMERCIAL PAPER INC., a
New York corporation in its capacity as a Lender ("Lehman"), and each other
financial institution executing and delivering a signature page hereto and each
other financial institution which may hereafter execute and deliver an
instrument of assignment with respect to this Agreement pursuant to Section 11.1
(such financial institutions hereinafter being referred to individually as a
"Lender" or collectively as the "Lenders"), and LEHMAN COMMERCIAL PAPER INC. in
its capacity as agent for the Lenders (in such capacity, and together with any
successor agent appointed in accordance with the terms of Section 10.7, the
"Agent");
W I T N E S S E T H:
WHEREAS, the captioned parties are parties to that certain Credit
Agreement dated as of October 6, 1998, as amended by Amendment dated March 26,
1999, by the Second Amendment dated April 28, 1999, by the Third Amendment dated
August 19, 1999, by the Fourth Amendment dated October 4, 1999, by the Fifth
Amendment dated October 21, 1999, by the Sixth Amendment dated as of October 28,
1999, by the Seventh Amendment dated November 4, 1999, by the Eighth Amendment
dated November 18, 1999 and by the Ninth Amendment dated as of March 16, 2000
(such Credit Agreement as so amended, the "Existing Credit Agreement"), pursuant
to which the Lenders have extended revolving credit commitments in the amount of
up to $400,000,000, the proceeds of which were used to provide interim financing
for the purchase or refinancing by the Borrowers of Eligible Aircraft;
WHEREAS, Lenders have made the Loans described on Schedule 2
attached hereto with respect to the Aircraft listed on such schedule; and
WHEREAS, the parties hereto have agreed to amend and restate the
Existing Credit Agreement on the terms set forth herein;
<PAGE> 10
3
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree to amend and
restate the Existing Credit Agreement in its entirety (as a continuation of the
loans and commitments thereunder and not as a novation thereof), effective on
the Amendment Effective Date, as follows:
ARTICLE I
Definitions and Terms
1.1 Definitions. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of any beneficial interest,
equity interest or other ownership interest in another Person (including
the purchase of an option, warrant or convertible or similar type
security to acquire such interest at the time it becomes exercisable by
the holder thereof), whether by purchase of such interest or upon
exercise of an option or warrant for, or conversion of securities into,
such interest.
"Additional Collateral" means the Eligible Engines, promissory
notes and stock or other equity ownership interests described on Schedule
3.
"Additional Collateral Provider" means an owner of Additional
Collateral.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with any Guarantor or any Borrower; or (ii) which
beneficially owns or holds 10% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation, 10%
or more of the equity interest or beneficial interest) of any Guarantor
or any Borrower; or 10% or more of any class of the outstanding voting
stock (or in the case of a Person which is not a corporation, 10% or more
of the equity interest or beneficial interest) of which is beneficially
owned or held by any Guarantor or any Borrower; provided, however, at the
time any Guarantor registers any security issued by it pursuant to the
Securities Act of 1933, as amended, the figure "10%" used in this
definition shall automatically change to "5%" without further action. The
term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting stock, by contract or
otherwise.
"Affiliate Bridge Credit Agreement": the Credit Agreement dated
as of April 28, 1999, among UCP Engines, Inc., UCP Engines Trust, a
Delaware business trust, State Street Bank and Trust Company, as Trustee,
Aircraft 22067 Trust, a Delaware business trust, and Aircraft 20527
Trust, a Delaware business trust, any other borrowers thereunder from
time to time,
<PAGE> 11
4
Lehman Commercial Paper Inc. ("LCPI"), in its capacity as a lender
thereunder and each other financial institution executing and delivering
a signature page thereto and each other financial institution which may
from time to time become a Lender thereunder as provided therein, LCPI in
its capacity as Administrative Agent for the Lenders thereunder, LCPI in
its capacity as Syndication Agent thereunder and Lehman Brothers Inc., as
Arranger thereunder, as such Credit Agreement may be amended from time to
time.
"Aircraft" means any Stage III fixed wing airframe together with
the jet Engines therefor (whether or not) affixed thereto.
"Amended and Restated Fee Letters" means the two letter
agreements of even date herewith between the Borrowers and the Agent with
respect to fees payable in connection with this Agreement.
"Amended and Restated Securitization Advisory Letter" means the
letter agreement between UniCapital and Lehman Brothers Inc. pursuant to
which Lehman Brothers Inc. is retained to act as lead manager of a
Permanent Capital Markets Transaction.
"Amendment Effective Date" means the date on which all of the
conditions precedent in Section 5.1 have been fulfilled or have been
waived by the Lenders.
"Applicable Aircraft Borrowing Base" with respect to any Eligible
Aircraft or Engine means the lesser of the following amounts: (a) the
amount shown for such Eligible Aircraft or Engine in the column entitled
"Borrowing Base" on Schedule 3 hereto and (b) at any time on or after
September 30, 2000, 80% of the Fair Market Value of such Eligible
Aircraft.
"Applicable Borrower" means, with respect to any Financed
Aircraft, the Borrower that has requested or received a Loan to enable
such Borrower to purchase or refinance such Financed Aircraft.
"Applicable Carrier" means, with respect to any Financed
Aircraft, the Eligible Carrier that has leased such Financed Aircraft
from the Applicable Borrower, or from the Applicable Intermediary in
accordance with Section 2.14.
"Applicable Commitment Percentage" means, with respect to each
Lender at any time, a fraction, the numerator of which shall be such
Lender's Term Loan Commitment and the denominator of which shall be the
Total Term Loan Commitment, which Applicable Commitment Percentage for
each Lender as of the applicable Closing Date is as set forth in Schedule
1; provided that the Applicable Commitment Percentage of each Lender
shall be increased or decreased to reflect any assignments to or by such
Lender effected in accordance with Section 11.1.
<PAGE> 12
5
"Applicable Foreign Aviation Law" means, with respect to any
Aircraft, any applicable law (other than the FAA Act) of any country or
subdivision thereof, governing the registration, ownership, operation, or
leasing of all or any part of such Aircraft, or the creation,
recordation, maintenance, perfection or priority or Liens on all or any
part of such Aircraft.
"Applicable Foreign Jurisdiction" means, with respect to any
Aircraft, any jurisdiction that administers an Applicable Foreign
Aviation Law.
"Applicable Intermediary" means, with respect to any Financed
Aircraft, the Eligible Intermediary that has leased such Aircraft from
the Applicable Borrower, and has leased such Aircraft to the Applicable
Carrier, in each case in accordance with Section 2.14.
"Applicable Lease Cure Period" has the meaning assigned thereto
in Section 9.6.
"Applicable Lending Office" means, for each Lender and for each
Type of Loan, the "Lending Office" for such Lender (or of an affiliate of
such Lender) designated for such Type of Loan on the signature pages
hereof or such other office of such Lender (or an affiliate of such
Lender) as such Lender may from time to time specify to the Agent and the
Borrowers by written notice in accordance with the terms hereof as the
office by which its Loans are to be made and maintained.
"Applicable Margin" means:
(a) with respect to the Eurodollar Rate, 3.25%; and
(b) with respect to the Base Rate, 2.25%.
"Appraisal Procedure" has the meaning given in Section 5.4.
"Assignment and Acceptance" means an Assignment and Acceptance in
the form of Exhibit B (with blanks appropriately filled in) delivered to
the Agent in connection with an assignment of a Lender's interest under
this Agreement pursuant to Section 11.1.
"Assumption Letter" means an Assumption Letter in substantially
the form of Exhibit Q.
"Authorized Representative" means any of the President, Executive
Vice President, Senior Vice President or Vice President of UniCapital,
any Beneficial Owner or any UniCapital Special Purpose Subsidiary, in
each case as authorized representative for each of the Borrowers, or any
other Person expressly designated by the Board of Directors of each of
the Borrowers (or the appropriate committee thereof) as an Authorized
Representative of each of the Borrowers as set forth from time to time in
a certificate in the form of Exhibit C.
<PAGE> 13
6
"Available Liquidity" means, with respect to UniCapital, the sum
of (a) all Cash Equivalents not subject to a Lien (other than a Lien in
favor of Bank of America, N.A., as agent, in respect of the NationsBank
Revolving Credit Agreement) owned and held in the name of UniCapital and
its consolidated Subsidiaries, excluding cash from transactions having
the effect of increasing UniCapital's Cash Equivalent position on a short
term basis in a manner not fairly indicative of its financial performance
and (b) amounts available to be drawn by UniCapital for general corporate
purposes under the NationsBank Revolving Credit Agreement.
"Base Rate" means, for any day, the rate per annum equal to the
sum of (a) the higher of (i) the Federal Funds Rate for such day plus
one-half of one percent (0.5%) and (ii) the Prime Rate for such day, plus
(b) the Applicable Margin. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"Beneficial Owner" means, with respect to any UniCapital
Subsidiary Trust, any Person holding a beneficial interest in such
UniCapital Subsidiary Trust.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Boeing 737 Model" means a Boeing Aircraft that is any of the
following models: 737-300, 737-400, 737-600, 737-700, 737-800 or
737-900.
"Borrowing Affiliate" means any UniCapital Subsidiary Trust or
UniCapital Special Purpose Corporation that is designated as a Borrowing
Affiliate hereunder pursuant to Section 2.12 hereof.
"Borrowing Base" means, as of any date of determination, the
aggregate of the Applicable Aircraft Borrowing Bases for all Eligible
Aircraft. However, (x) if Lease Events of Default exist under Eligible
Leases of Aircraft with respect to which the aggregate attributable
Borrowing Base equals or exceeds the lesser of (A) 10% of the then
outstanding principal balance of the Loans (provided such Lease Events of
Default exist with respect to more than one Aircraft) or (B) $50,000,000,
the Borrowing Base shall be deemed reduced by such excess and (y) if a
Lease Event of Default relating to non-payment of sums payable by a
lessee exists under a Lease and remains uncured for a period of 150 days,
then the Borrowing Base shall be deemed reduced by the Borrowing Base
attributable to such Lease.
<PAGE> 14
7
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with a Loan under the Term Loan Facility, in
the form of Exhibit D.
"Business Day" means, (i) with respect to any Base Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the State
of New York are authorized or obligated by law, executive order or
governmental decree to be closed and, (ii) with respect to any Eurodollar
Rate Loan, any day which is a Business Day, as described above, and on
which the relevant international financial markets are open for the
transaction of business contemplated by this Agreement in London, England
and New York, New York.
"Capital Expenditures" means, with respect to the Borrowers and
their respective Subsidiaries, for any period the sum of (without
duplication) (i) all expenditures (whether paid in cash or accrued as
liabilities) by any Borrower or any Subsidiary during such period for
items that would be classified as "property, plant or equipment" or
comparable items on the consolidated balance sheet of any Borrowers and
its respective Subsidiaries, including without limitation all
transactional costs incurred in connection with such expenditures
provided the same have been capitalized, excluding, however, the amount
of any Capital Expenditures paid for with proceeds of casualty insurance
as evidenced in writing and submitted to the Agent together with any
compliance certificate delivered pursuant to Section 7.1(a) or (b), and
(ii) with respect to any Capital Lease entered into by any Borrower or
its Subsidiaries during such period, the present value of the lease
payments due under such Capital Lease over the term of such Capital Lease
applying a discount rate equal to the interest rate provided in such
lease (or in the absence of a stated interest rate, that rate used in the
preparation of the financial statements described in Section 7.1(a)), all
the foregoing in accordance with GAAP applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Cash Equivalents": means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government
or issued by any agency thereof and backed by the full faith and credit
of the United States, in each case maturing within one year from the date
of acquisition; (b) certificates of deposit, time deposits, eurodollar
time deposits or overnight bank deposits having maturities of six months
or less from the date of acquisition issued by any commercial bank
organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c) cash
demand deposits in accounts at any bank satisfying the requirements of
clause (b); or (d) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a)
through (c) of this definition.
<PAGE> 15
8
"Cauff Lippman" means Cauff, Lippman Aviation, Inc., a Florida
corporation that is a direct or indirect, wholly-owned subsidiary of
UniCapital.
"Change of Control" means, at any time, 100% of the beneficial
ownership of any Guarantor or any Borrower or any Eligible Intermediary
is not owned, directly or indirectly, by UniCapital.
"CLA" means CLA Holdings, Inc., a Delaware corporation that is a
direct, wholly- owned subsidiary of UniCapital.
"Closing Date" means, as to any Term Loan hereunder, the date as
of which the Term Loan is or was advanced to the applicable Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
"Collateral" means, collectively, all property of any Borrower,
any Subsidiary, any Eligible Intermediary or any other Person in which
the Agent or any Lender is granted a Lien as security for all or any
portion of the Obligations under any Security Instrument.
"Collection Account" has the meaning given in the Lockbox
Agreement.
"Collection Bank" means a bank, trust company or other Person,
satisfactory to the Agent, that executes a Lockbox Agreement in the
capacity of "Collection Bank" thereunder.
"Consistent Basis" in reference to the application of GAAP means
the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the pro forma combined financial statements of UniCapital, Cauff
Lippman and certain affiliates thereof, NSJ and the other Founding
Companies for the year ended December 31, 1997, which financial
statements are contained in the UniCapital Registration Statement.
"Consolidated EBITDA" means, with respect to the Borrowers and
their respective Subsidiaries for any Quarterly Period ending on the date
of computation thereof, the sum of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income,
(iv) amortization of long-term Indebtedness, and (v) depreciation, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated EBITDA-to-Interest Ratio" means, with respect to
the Borrowers and their respective Subsidiaries for any Quarterly Period
ending on the date of computation thereof, the ratio of (i) Consolidated
EBITDA for such Borrowers and their respective
<PAGE> 16
9
Subsidiaries for such period, to (ii) Consolidated Interest Expense for
such Borrowers and their respective Subsidiaries for such period.
"Consolidated Interest Expense" means, with respect to any period
of computation thereof, the gross interest expense of the Borrowers and
their respective Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Swap Agreement) payable in
connection with the incurrence of Indebtedness to the extent included in
gross interest expense and (iii) the portion of any payments made in
connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrowers and their
respective Subsidiaries (including payments received by the Borrowers and
their respective Subsidiaries of (i) interest income, and (ii) dividends
and distributions made in the ordinary course of their businesses by
Persons in which investment is permitted pursuant to this Agreement and
not related to an extraordinary event), less all operating and
non-operating expenses of the Borrowers and their respective Subsidiaries
including taxes on income, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis; but excluding as
income: (i) net gains on the sale, conversion or other disposition of
capital assets, (ii) net gains on the acquisition, retirement, sale or
other disposition of capital stock and other securities of any Borrower
or its Subsidiaries, (iii) net gains on the collection of proceeds of
life insurance policies, (iv) any write-up of any asset, and (v) any
other net gain or credit of an extraordinary nature as determined in
accordance with GAAP applied on a Consistent Basis.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the financial statements (including
footnotes) of such Person in accordance with GAAP applied on a Consistent
Basis, including Statement No. 5 of the Financial Accounting Standards
Board, all Rate Hedging Obligations and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including obligations of such
Person however incurred:
(1) to purchase such Indebtedness or other obligation or
any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other
balance sheet condition or any income statement condition of the
primary obligor;
<PAGE> 17
10
(3) to grant or convey any lien, security interest, pledge,
charge or other encumbrance on any property or assets of such
Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner or holder of such Indebtedness or obligation of the ability
of the primary obligor to make payment of such Indebtedness or
other obligation; or
(5) otherwise to assure the owner of the Indebtedness or
such obligation of the primary obligor against loss in respect
thereof.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.7 hereof of a Eurodollar Rate Loan of
one Type as a Eurodollar Rate Loan of the same Type from one Interest
Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to Section 2.7 or Article IV of one Type of Loan into
another Type of Loan.
"Credit Party" means, collectively, each Borrower, each Eligible
Intermediary, each Additional Collateral Provider, each Guarantor, and
each other Person (if any) providing Collateral pursuant to any Security
Instrument. UniCapital shall be deemed not to be a Credit Party.
"Custodian" means, initially, Lehman, in its capacity as
custodian under the Custodian Agreement and any successor custodian under
a Custodian Agreement.
"Custodian Agreement" means the Custodian Agreement of even date
herewith between the Lender, the Custodian and the Initial Borrower and
any replacement Custodian Agreement to which the Agent may become a party
with respect to the transactions contemplated herein.
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of
Default hereunder, provided that if, pursuant to Section 9.6, such event
or condition is not deemed to be a breach of the Credit Parties'
obligations under this Agreement and the other Loan Documents and each of
the conditions set forth in Section 9.6 is satisfied, then during the
Applicable Lease Cure Period referred to in Section 9.6(d), such event or
condition shall not be deemed to be a "Default" except for the purposes
of Section 7.1(c), Section 7.11, the first two sentences of Section 10.4,
Section 2 of the Compliance Certificate in the form of Exhibit G, and
Section 4 of the Borrowing Base Certificate in the form of Exhibit R; and
provided further that if the requirements of
<PAGE> 18
11
Section 9.6(d) are not satisfied within such Applicable Lease Cure
Period, then an "Event of Default" shall be deemed to have occurred on
the day after the last day of such period.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate of
two percent (2%) above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall be two percent
(2%) above the Base Rate, (ii) with respect to Base Rate Loans, at a rate
of interest per annum which shall be two percent (2%) above the Base Rate
and (iii) in any case, the maximum rate permitted by applicable law, if
lower.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Effective Date Loans" shall mean the Term Loans to be advanced
to the Borrowers on the Amendment Effective Date, in the amount for each
Borrower specified on Schedule 2.
"Eligible Aircraft" means any Aircraft which satisfies each of
the following requirements:
(a) such Aircraft is (i) owned by the Applicable Borrower
and is subject to an Eligible Lease between such Applicable
Borrower (as lessor) and an Eligible Carrier (as lessee), or (ii)
is owned by the Applicable Borrower, is subject to an Eligible
Lease between such Applicable Borrower (as lessor) and the
Applicable Intermediary (as lessee), and is subject to an
Eligible Lease between such Applicable Intermediary (as lessor)
and an Eligible Carrier as (lessee);
(b) such Aircraft is covered by all of the insurance
described on Exhibit L attached hereto, and the Agent (for itself
and on behalf of the Lenders) is named as loss payee and is named
as an additional insured on such insurance;
(c) neither the Applicable Carrier nor the Applicable
Intermediary (if any) is organized under the laws of, or
domiciled in, any Prohibited Country;
(d) the Agent (for itself and on behalf of the Lenders) has
a duly perfected, first priority Lien and security interest
(subject only to Permitted Liens) on such Aircraft under (i) the
FAA Act (in the case of an Aircraft registered in the United
States) or (ii) all Applicable Foreign Aviation Laws (in the case
of an Aircraft registered outside the United States); provided,
however, that to the extent that a duly perfected, first priority
Lien and security interest on such Aircraft is not possible, or
is impractical (commercially or otherwise), then with the Agent's
consent (which consent shall not be unreasonably withheld), the
Security Agreement with respect to such Aircraft shall not be
required or shall be modified to provide such Lien, such priority
and such perfection, if any, as shall not be impossible or
impractical (commercially or otherwise);
<PAGE> 19
12
(e) the Agent has received opinions of FAA Counsel (if such
Aircraft is registered in the United States) or counsel in the
Applicable Foreign Jurisdiction (if such Aircraft is registered
outside the United States), which counsel is reasonably
acceptable to the Agent, and which opinions are addressed to the
Agent (on behalf of itself and the Lenders) opining as to the
creation, perfection and priority of the Agent's mortgage Lien
and security interest on such Aircraft, in form and substance
reasonably satisfactory to the Agent or otherwise in form and
substance reasonably acceptable to the Agent; and (in the case of
Aircraft registered in the United States) within a reasonable
period after the registration of the Agent's Lien, the Agent has
received a post-closing opinion of FAA counsel reasonably
acceptable to the Agent;
(f) the Agent has received three (3) Qualified Appraisals
of the Fair Market Value of such Aircraft, each such appraisal
prepared by a separate Qualified Appraiser and dated as of a date
reasonably close to the date of the Loan hereunder with respect
to such Aircraft; and based on the Appraisal Procedure, the
Agent, in accordance with the Appraisal Procedure, has calculated
the initial Fair Market Value of such Aircraft; and
(g) such Aircraft is listed on Schedule 3 hereto.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other financial institution approved by the Agent;
provided, however, that neither any Borrower nor an affiliate of any
Borrower shall qualify as an Eligible Assignee.
"Eligible Carrier" means any air carrier duly licensed to carry
passengers or cargo under applicable law, foreign or domestic.
"Eligible Engine" shall have the meaning provided in Section 2.1.
"Eligible Intermediary" means, with respect to any Financed
Aircraft, a corporation that is a direct, wholly-owned subsidiary of the
Applicable Borrower.
"Eligible Lease" means a fully-executed Lease by a Borrower (as
lessor) to an Eligible Carrier (as lessee) of an Eligible Aircraft, which
Lease satisfies each of the following requirements:
(a) such Lease is a "triple net lease" (subject to any
arrangement whereby the Borrower and the Eligible Carrier agree
to share certain expenses relating to aircraft or engine
directives, service bulletins or similar items) and requires the
lessee to maintain the insurance described in Exhibit L attached
hereto with respect to such Aircraft, and to bear all risk of
loss, damage or liability with respect to such Aircraft;
<PAGE> 20
13
(b) not more than twelve (12) years of the Lease term is
remaining under such Lease at the time of any Loan hereunder
relating to such Aircraft;
(c) the lessor is entitled to the benefits of Section 1110
of the U.S. Bankruptcy Code (or other applicable bankruptcy or
insolvency law reasonably acceptable to the Agent) with respect
to the lessor's rights against the lessee, including without
limitation the rights to require performance of the lessee's
obligations under the Lease or return of such Aircraft during the
lessee's bankruptcy or insolvency;
(d) such Lease requires the lessee to comply with covenants
and restrictions regarding the maintenance, return, alteration,
replacement, pooling and sublease of such Aircraft, which
covenants and restrictions satisfy the requirements of Section
7.21(a) and Schedule 7.21(a) hereto;
(e) if such Lease contains a purchase option, the expected
exercise price is equal to or greater than the expected
outstanding principal and accrued interest on all Loans relating
to such Aircraft as of the date of exercise of such option;
(f) such Lease prohibits the lessee from flying or locating
such Aircraft in any country in violation of the applicable laws
of any jurisdiction;
(g) such Lease contains customary covenants and
restrictions relating to re-registration of such Aircraft; which
covenants and restrictions satisfy the requirements of the
Security Agreement;
(h) at the time of any Loan hereunder relating to such
Aircraft, no prepayment shall have been made under such Lease,
and no Lease payment obligation shall have been accelerated,
provided that it is understood that a scheduled rental payment to
be paid in advance for a rental period in accordance with the
Lease terms is not deemed to be a prepayment;
(i) at the time of any Loan relating to such Aircraft, the
Agent shall have received a Lessee Estoppel Certificate executed
by such lessee with respect to such Lease, or other evidence
reasonably satisfactory to the Agent that such Lease is valid and
binding;
(j) either (i) such Lease is a "true lease" lease (and not
a lease intended as security) under applicable commercial law and
other applicable law relating to creditors' rights and
bankruptcy; or (ii) such Lease grants to such Borrower, and such
Borrower has at all times under the FAA Act (in the case of
Aircraft registered in the United States) or Applicable Foreign
Aviation Laws (in the case of all other Aircraft), a
<PAGE> 21
14
perfected first priority mortgage Lien on such Aircraft (subject
only to Permitted Liens), which Lien has been assigned to the
Agent; and
(k) such Lease does not contain, or omit to include, any
provisions that violate any affirmative statement or policy
(whether or not in writing) of Moody's or S&P, in existence on or
prior to the date that the Applicable Borrower has agreed to
acquire the applicable Aircraft, that would preclude such Lease
from (x) being included in any Permanent Capital Markets
Financing or (y) generating net proceeds in such Permanent
Capital Markets Financing attributable to such Financed Aircraft
sufficient to repay the Loan made with respect to such Financed
Aircraft;
provided, however, that in the circumstances described in Section 2.14,
"Eligible Lease" means, individually and collectively, (X) a
fully-executed Lease by a Borrower (as lessor) to the Applicable
Intermediary (as lessee) of an Eligible Aircraft, which Lease satisfies
each of the requirements for an "Eligible Lease" set forth in clauses (a)
through (l) above except that the lessee is not an Eligible Carrier, and
(Y) a fully-executed sublease by such Applicable Intermediary (as
sublessor) to an Eligible Carrier (as sublessee) of such Financed
Aircraft, which Eligible Carrier is not a U.S. Carrier, and which Lease
is identical in all respects (other than the Persons that are lessor and
lessee) to the Lease described in clause (X) above, and which Lease
satisfies all the requirements for an "Eligible Lease" set forth in
clauses (a) through (k) above, except that the lessor is not a Borrower.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of any Guarantor or any Borrower or any of their respective
ERISA Affiliates or is assumed by any Guarantor or any Borrower or any of
their respective ERISA Affiliates in connection with any Acquisition or
(ii) has at any time been maintained for the employees of any Guarantor
or any Borrower or any current or former ERISA Affiliate.
"Engine" means any aircraft jet engine.
"Environmental Laws" means any federal, state or local statute,
law, ordinance, code, rule, regulation, order, decree, permit or license
regulating, relating to, or imposing liability or standards of conduct
concerning, any environmental matters or conditions, environmental
protection or conservation, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended; the Superfund Amendments and Reauthorization Act of
1986, as amended; the Resource Conservation and Recovery Act, as amended;
the Toxic Substances Control Act, as amended; the Clean Air Act, as
amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
<PAGE> 22
15
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Guarantor or any Borrower,
means any Person or trade or business which is a member of a group which
is under common control with such Guarantor or Borrower, who together
with such Guarantor or Borrower, is treated as a single employer within
the meaning of Section 414(b) and (c) of the Code.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
Rate ----------------------- Margin
1- Reserve Requirement
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Event of Default" means any of the occurrences set forth as such
in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning given in the recitals
to this Agreement.
"Existing Loans" means the loans outstanding immediately prior to
the Amendment Effective Date under the Existing Credit Agreement, as more
particularly described on Schedule 2.
"FAA" means the United States Federal Aviation Administration.
"FAA Act" means 49 U.S.C. Subtitle VII, Sections 40101 et seq.,
as amended from time to time, any regulations promulgated thereunder and
any successor provision.
"FAA Counsel" means DeBee & Gilchrist, Daugherty, Fowler and
Peregrin, Crowe & Dunlevy, or any other law firm having nationally
recognized expertise in FAA matters acceptable to the Agent.
"FAA Recording Office" means the office of the FAA in Oklahoma
City, Oklahoma, maintained as the office for the recordation of Liens on
Aircraft and pursuant to the FAA Act, and any successor or additional
office performing the same or a comparable function.
<PAGE> 23
16
"Facility Guaranty" means each Guaranty Agreement between one or
more Guarantors and the Agent for the benefit of the Lenders
(substantially in the form of Exhibit H attached hereto), delivered as of
the applicable Closing Date and otherwise pursuant to Section 2.12, 5.2
or 5.3, as the same may be amended, modified or supplemented from time to
time.
"Facility Termination Date" means such date as all of the
following shall have occurred: (a) the Borrowers shall have permanently
terminated the Term Loan Facility by payment in full of all Term Loan
Outstandings, together with all accrued and unpaid interest thereon, (b)
all Term Loan Commitments shall have terminated or expired and (c) the
Borrowers shall have fully, finally and irrevocably paid and satisfied in
full all Obligations (other than Obligations consisting of continuing
indemnities and other contingent Obligations of any Borrower or any
Guarantor that may be owing to the Lenders pursuant to the Loan Documents
and expressly survive termination of this Agreement).
"Fair Market Value" or "FMV" with respect to any Aircraft means
the current fair market value (as opposed to so-called "base value")
ascribed thereto by the respective Qualified Appraiser in a Qualified
Appraisal; provided that (x) for the purpose of determining the Fair
Market Value of such Aircraft at the time of any Loan with respect
thereto, such Fair Market Value shall be determined using an Appraisal
Procedure and (y) if such Qualified Appraisal is dated more than six (6)
months prior to the applicable date of determination of Fair Market
Value, then Fair Market Value shall be deemed to be zero ($0).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is
so published on such next succeeding Business Day, the Federal Funds Rate
for such day shall be the average rate charged to the Agent (in its
individual capacity) on such day on such transactions as determined by
the Agent.
"Fee Letter" means the Fee Letter dated the date hereof by Lehman
Brothers Inc. accepted and agreed to by UniCapital.
"Financed Aircraft" with respect to any Loan means, collectively,
each Aircraft, or part thereof, the acquisition of which was or is to be
financed or refinanced in whole or in part by such Loan.
<PAGE> 24
17
"Fiscal Year" means the twelve month fiscal period of UniCapital,
the Borrowers and their Subsidiaries commencing on January 1 of each
calendar year and ending on December 31 of each calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign nation
or any province, state, territory, protectorate or other political
subdivision thereof regulating, relating to, or imposing liability or
standards of conduct concerning, any Employee Benefit Plan.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants
or which have other substantial authoritative support and are applicable
in the circumstances as of the date of a report.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission, board,
bureau, court, agency or instrumentality or political subdivision thereof
or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government
or any court, in each case whether associated with a state of the United
States, the United States, or a foreign entity or government.
"Guaranties" means the Facility Guaranties and all other
obligations of any Borrower or any other Person directly or indirectly
guaranteeing, or in effect guaranteeing, any Indebtedness or other
obligation of any other Person.
"Guarantors" means, at any date, the Beneficial Owners, Eligible
Intermediaries and Subsidiaries who are required to be parties to a
Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials and lead), the generation, handling,
storage, transportation, disposal, treatment, release, discharge or
emission of which is subject to any Environmental Law.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate Hedging
Obligations, all indebtedness secured by any Lien on the property of such
Person whether or not such indebtedness is assumed, all liability of such
Person by way of endorsements (other than for collection or deposit in
the ordinary course of business), all Contingent Obligations, and other
items which in accordance with GAAP is required to be classified as a
liability on a balance sheet; but excluding all accounts payable in the
ordinary
<PAGE> 25
18
course of business so long as payment therefor is due within one year;
provided that in no event shall the term Indebtedness include surplus and
retained earnings, lease obligations (other than pursuant to Capital
Leases), reserves for deferred income taxes and investment credits, other
deferred credits or reserves or deferred compensation obligations.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, as reflected on the balance sheet of such Person in accordance
with GAAP, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including conditional sales or similar title retention
agreements), other than trade payables incurred in the ordinary course of
business.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the rate per annum
(rounded upwards, if necessary), to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period (or, if no such comparable
term is quoted, an interpolated rate as reasonably determined by the
Agent). If for any reason such rate is not available, the term "Interbank
Offered Rate" shall mean, with respect to any Eurodollar Rate Loan for
the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable to such
Interest Period, provided, however; if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic
mean of all such rates (rounded upwards, if necessary, to the nearest
1/100 of 1%).
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or Converted or
on the last day of the preceding Interest Period, as the case may be, and
ending on (x) the next occurring day that is the fifteenth day of a
calendar month or (y) in the case of an Interest Period of one week, the
last day of such week (provided, that Interest Periods of one week in
duration may not be selected by a Borrower other than in anticipation of
a prepayment of a Loan); provided, that,
(a) if an Interest Period for a Eurodollar Rate Loan would
end on a day which is not a Business Day, such Interest Period
shall be extended to the next Business Day (unless such extension
would cause the applicable Interest Period to end in the
succeeding calendar month, in which case such Interest Period
shall end on the next preceding Business Day);
<PAGE> 26
19
(b) except in the case of a one-week Interest Period, any
Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar
month;
(c) no Interest Period shall extend past the Stated
Termination Date for Term Loans; and
(d) there shall not be more than six (6) Interest Periods
in effect on any day.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the election
of a subsequent Interest Period for any Eurodollar Rate Loan or the
Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in the form
of Exhibit E.
"Lease" shall have the meaning given in the Security Agreement.
"Lease Event of Default" means any event characterized as an
"event of default" (or the equivalent) under any Lease of any Aircraft
(or that would be so characterized assuming the sending of any required
notice by the lessor in a timely manner).
"Lehman" means Lehman Commercial Paper Inc.
"Lessee Estoppel Certificate" means a certificate in form and
substance reasonably acceptable to the Agent, duly completed and executed
by an Applicable Carrier with respect to an Aircraft; and the Agent
agrees that the form of Lessee Estoppel Certificate attached hereto as
Exhibit M is acceptable.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, any Borrower and any
Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, financing
lease, or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"Loan" or "Loans" means any of the Term Loans.
<PAGE> 27
20
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the UniCapital Support Agreement,
the Assumption Letters, the Custodian Agreement, and all other
instruments and documents heretofore or hereafter executed or delivered
to or in favor of any Lender or the Agent in connection with the Loans
made and transactions contemplated under this Agreement, as the same may
be amended, supplemented or replaced from the time to time.
"Lockbox Agreement" means a Security Deposit and Cash Collateral
Agreement between each Borrower, the Collection Bank and the Agent
substantially the form of Exhibit T hereto, as supplemented from time to
time in accordance with the terms thereof.
"Manufacturer" means any manufacturer of any Financed Aircraft.
"Manufacturer's Warranty" means any warranty made or offered by
any Manufacturer with respect to any Financed Aircraft.
"Material Adverse Effect" means a material adverse effect on (i)
the business, properties, prospects, operations or condition, financial
or otherwise, of the Borrowers and their respective Subsidiaries (if
any), taken as a whole, (ii) the ability of any Credit Party to pay or
perform its respective obligations, liabilities and indebtedness under
the Loan Documents as such payment or performance becomes due in
accordance with the terms thereof, or (iii) the rights, powers and
remedies of the Agent or any Lender under any Loan Document or the
validity, legality or enforceability thereof.
"Monthly Amortization Amount" shall have the meaning, with
respect to each Loan, set forth in the Lockbox Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage Convention" means the Convention on the International
Recognition of Rights in Aircraft signed initially at Geneva in 1948, as
the same may be amended, modified or supplemented from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate
is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions within the preceding six
(6) Fiscal Years.
"NationsBank" means NationsBank, National Association.
<PAGE> 28
21
"NationsBank Facility" shall mean any of the facilities pursuant
to (a) the NationsBank Warehouse Credit Agreement, (b) the NationsBank
Revolving Credit Agreement, (c) the NationsBank TAA or (d) the
NationsBank Securitization Loan Agreement.
"NationsBank Revolving Credit Agreement" means the Credit
Agreement dated as of June 10, 1998, among UniCapital, NationsBank, as
agent, and the lenders party thereto, as such agreement may be amended,
modified or restated from time to time.
"NationsBank Securitization Loan Agreement" means the Loan and
Security Agreement dated as of July 1, 1998 among UCP Borrowing SPE
1998-1 Limited Partnership, Portfolio Financial Services Company, L.P.,
Kitty Hawk Funding Corporation, NationsBank as agent and lender and each
of the other lenders party thereto.
"NationsBank TAA" means a Transfer and Administration Agreement
dated as of June 22, 1998 among UCP Qualifying SPE 1998-1 Limited
Partnership, UCP Operating SPE 1998-1 Limited Partnership, Portfolio
Financial Services Company, L.P., Kitty Hawk Funding Corporation,
NationsBank, as agent and lender and each of the other lenders party
thereto.
"NationsBank Warehouse Credit Agreement" means the Credit
Agreement dated as of June 10, 1998 among First Security Bank, National
Association, as trustee on behalf of that certain trust created under the
Trust Agreement (11111) dated as of June 9, 1998 between First Security
Bank, National Association and Aircraft 11111, Inc., a Delaware
corporation, the other borrowers referred to therein, NationsBank, as
agent, and the lenders referred to therein.
"Non-SPE Credit Party" means any owner (other than a Beneficial
Owner) of a Borrower or of a Beneficial Owner, if such owner in either
case is not required to be a Guarantor hereunder.
"Notes" means, collectively, the promissory notes of the
Borrowers evidencing Term Loans executed and delivered to the Lenders as
provided in Section 2.5 substantially in the form of Exhibit F, with
appropriate insertions as to amounts, dates and names of Lenders.
"NSJ" means The NSJ Group, Inc., a Delaware corporation that is
the direct or indirect, wholly-owned subsidiary of UniCapital.
"Obligations" means the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the
Loans and all other obligations and liabilities of any Borrower to the
Agent (acting in any capacity) or to any Lender (or, in the case of Rate
<PAGE> 29
22
Hedging Obligations, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document, any Rate Hedging
Obligation entered into with any Lender or any affiliate of any Lender or
any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement
obligations, fees (including, without limitation, fees payable under the
Amended and Restated Fee Letters and sums payable under the Amended and
Restated Securitization Advisory Letter), indemnities, costs, expenses
(including, without limitation, all fees, charges and disbursements of
counsel to the Agent (acting in any capacity) or to any Lender that are
required to be paid by any Borrower pursuant thereto) or otherwise.
"Off-Lease 747" means the Boeing 747, manufacturers serial number
24837, with respect to which an Existing Loan is outstanding.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership, trust or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership, trust or other legally authorized incorporated or
unincorporated entity, any corporate, organizational or partnership
action (including any required shareholder, trustee, member or partner
action), or other similar official action, as applicable, taken by such
entity.
"Organizational Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership, trust or other legally authorized incorporated or
unincorporated entity, the articles of incorporation, certificate of
incorporation, articles of organization, certificate of limited
partnership, trust agreement or other applicable organizational or
charter documents relating to the creation of such entity.
"Original Qualified Appraisal" has the meaning assigned thereto
in Section 5.4.
"Partnership Interests" shall have the meaning therefor provided
in the Pledge Agreement.
"Payment Date" means any date provided for herein on which the
principal of, interest on or other amounts in respect of the Loans is due
and payable.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
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23
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which
is subject to the provisions of Title IV of ERISA or Section 412 of the
Code and which (i) is maintained for employees of any Borrower, any
Guarantor or any of their respective ERISA Affiliates or is assumed by
any Borrower, any Guarantor or any of their respective ERISA Affiliates
in connection with any Acquisition or (ii) has at any time been
maintained for the employees of any Borrower, any Guarantor or any
current or former ERISA Affiliate.
"Permanent Capital Markets Financing" shall mean an aircraft
lease securitization, enhanced equipment trust certificate or other
permanent aircraft-secured public or private capital markets transaction
(which, in each case, does not constitute bridge or interim financing)
for the benefit of UniCapital or a subsidiary of UniCapital, occurring
after the date hereof and producing net proceeds of at least
$200,000,000, excluding any secondary offering of UniCapital stock.
"Permitted Lien" means any Lien permitted by Section 8.4.
"Person" means an individual, partnership, corporation, limited
liability company, limited liability partnership, trust, unincorporated
organization, association, joint venture or a government or agency or
political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Pledge and Security Agreement
dated as of the Original Closing Date between Cauff Lippman and the Agent
(for the benefit of the Agent and the Lenders), (ii) that certain Pledge
and Security Agreement dated as of the Original Closing Date between
Aircraft 22222, Inc. and the Agent (for the benefit of the Agent and the
Lenders), and (iii) any additional Pledge and Security Agreement
(substantially in the form of Exhibit S-1 or S-2 attached hereto, as
applicable), delivered to the Agent pursuant to Section 5.2, 5.3 or 2.12,
as hereafter amended, supplemented or replaced from time to time.
"Pledged Interests" has the meaning given to such term in the
Pledge Agreement.
"Prime Rate" means the per annum rate of interest established
from time to time by the Reference Bank as its prime or reference rate,
which rate may not be the lowest rate of interest charged by the
Reference Bank to its customers.
"Principal Office" means the principal office of the Agent
presently located at 3 World Financial Center New York, New York 10285 or
such other office and address as the Agent may from time to time
designate. Payments shall be made to the account specified in the Lockbox
Agreement or to such other account as the Agent may from time to time
specify in writing.
<PAGE> 31
24
"Prohibited Countries" means those countries, as determined by
the Agent from time to time, in which Aircraft may not be operated by
lessees domiciled in such countries without procuring insurance
consistent with industry and securitization standards, which countries
presently include Afghanistan, Albania, Bosnia, Burma, Burundi, Cambodia,
Cote d'Ivoire, Croatia, Cuba, Haiti, Herzegovina, Iran, Iraq, North
Korea, Laos, Lebanon, Libya, Montenegro, Nigeria, Rwanda, Serbia, the
former Soviet Republics, Syria, Vietnam, Yemen, and Zaire.
"Purchase Price" with respect to any Aircraft means the actual
purchase price paid for such Aircraft by the Applicable Borrower,
together with the estimated out-of-pocket costs to be incurred by such
Applicable Borrower in such purchase (provided that such estimated out-
of-pocket costs shall not exceed 1% of such Purchase Price).
"Qualified Appraisal" means, with respect to any Financed
Aircraft, an appraisal of such Aircraft by a Qualified Appraiser, which
appraisal is prepared in accordance with ISTAT standards and opines as to
the Fair Market Value of such Aircraft, taking into account the actual
maintenance status of such Aircraft.
"Qualified Appraiser" means any of the following appraisal firms
selected and retained by UniCapital and reporting to UniCapital and the
Agent: Aircraft Information Services, Inc., BK Associates, Inc., Morten
Beyer, Simat, Helliesen & Eichner, Inc., Airclaims Limited or Avitas,
Inc.
"Qualified Trustee" means (i) Wilmington Trust Company, First
Security Bank, National Association, or another bank or trust company
having a combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000) or (ii) any other Person acceptable to the Agent.
"Quarterly Period" means a fiscal quarter of the Borrowers and
their Subsidiaries.
"Rated Carrier" means any Eligible Carrier identified on Exhibit
J attached hereto, as such Exhibit may be amended from time to time
pursuant to Section 7.20.
"Rate Hedging Obligations" means any and all obligations of any
Borrower or any Subsidiary, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, Dollar-denominated or cross-currency
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency
or interest rate options, puts, warrants and those commonly known as
<PAGE> 32
25
interest rate "swap" agreements; and (ii) any and all cancellations,
buybacks, reversals, terminations or assignments of any of the foregoing.
"Reference Bank" means Citibank, N.A.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change effective after the Original
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign laws
or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof or compliance by any Lender with
any request or directive regarding capital adequacy, including those
relating to "highly leveraged transactions," whether or not having the
force of law, and whether or not failure to comply therewith would be
unlawful and whether or not published or proposed prior to the date
hereof.
"Repurchase Agreement" means a repurchase agreement entered into
with any financial institution whose debt obligations or commercial paper
are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by
Moody's.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating more than 50% of
the aggregate Credit Exposures of all the Lenders on such date. For
purposes of the preceding sentence, the amount of the "Credit Exposure"
of each Lender shall be equal at all times (a) other than following the
occurrence and during the continuance of an Event of Default, to the
amount of its Term Loan Commitment; and (b) following the occurrence and
during the continuance of an Event of Default, to the aggregate principal
amount of such Lender's Applicable Commitment Percentage of Term Loan
Outstandings; provided that, for the purpose of this definition only, if
any Lender shall have failed to fund its Applicable Commitment Percentage
of any Loan, the Term Loan Commitment of such Lender shall be deemed
reduced by the amount it so failed to fund for so long as such failure
shall continue and such Lender's Credit Exposure attributable to such
failure shall be deemed held by any Lender making more than its
Applicable Commitment Percentage of such Loan to the extent it covers
such failure.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) by member banks of the Federal
Reserve System against "Eurocurrency liabilities" (as such term is used
in Regulation D). Without
<PAGE> 33
26
limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks
with respect to (i) any category of liabilities which includes deposits
by reference to which the Eurodollar Rate is to be determined, or (ii)
any category of extensions of credit or other assets which include
Eurodollar Rate Loans. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Reserve Requirement.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill.
"Sabena Portfolio" means the group of Eligible Aircraft listed on
Exhibit O attached hereto.
"Security Agreement" means, collectively (or individually as the
context may indicate), any Mortgage and Security Agreement (substantially
in the form of Exhibit I attached hereto) delivered to the Agent pursuant
to Section 5.2, 5.3 or 2.12, as hereafter modified, amended or
supplemented from time to time.
"Security Instruments" means, collectively, the Pledge Agreement,
Security Agreement, the Lockbox Agreement and all other agreements,
instruments and other documents, whether now existing or hereafter in
effect, pursuant to which any Borrower, any Beneficial Owner, any
Subsidiary, any Intermediary or any other Person shall grant or convey to
the Agent or the Lenders a Lien in property as security for all or any
portion of the Obligations, as any of them may be amended, modified or
supplemented from time to time.
"Servicing Agreement" means the Servicing Agreement of even date
herewith between the Servicer and the Agent, in substantially the form of
Exhibit P attached.
"Servicer" means Cauff, Lippman Aviation, Inc.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which any Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA and
which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair valuation
and at present fair saleable value on an orderly basis) is in
excess of the total amount of its liabilities, including
Contingent Obligations; and
(ii) it is then able and expects to be able to pay its
debts as they mature; and
<PAGE> 34
27
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Stated Termination Date" means December 31, 2000.
"Subsidiary" means any corporation or other entity in which more
than 50% of its outstanding voting stock or more than 50% of all equity
interests is owned directly or indirectly by one or more Guarantors,
Borrowers and/or by one or more of any Guarantor's Subsidiaries or any
Borrower's Subsidiaries. With respect to any specified Guarantor or
Borrower, the "Subsidiaries" of such Guarantor or Borrower shall mean (y)
any Subsidiary owned directly or indirectly by such Guarantor or Borrower
or by any of its Subsidiaries, or (z) any trust with respect to which
such Guarantor or such Borrower or any of its Subsidiaries has a
beneficial interest.
"Swap Agreement" means one or more agreements between any
Borrower and any Person with respect to Indebtedness evidenced by any or
all of the Notes, on terms mutually acceptable to such Borrower and such
Person, which agreements create Rate Hedging Obligations.
"Term Loan Commitment" means, with respect to each Lender, the
obligation of such Lender to make Term Loans to the Borrowers up to an
aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Term Loan
Commitment.
"Term Loan Facility" means the facility described in Article II
hereof providing for Loans to the Borrowers by the Lenders in the
aggregate principal amount of the Total Term Loan Commitment.
"Term Loan Outstandings" means, as of any date of determination,
the aggregate principal amount of all Term Loans then outstanding.
"Term Loan Termination Date" means the earliest of (i) the Stated
Termination Date, (ii) the date of termination of Lenders' obligations
pursuant to Section 9.1 upon the occurrence of an Event of Default, or
(iii) such date as the Borrowers may voluntarily and permanently
terminate the Term Loan Facility by payment in full of all Term Loan
Outstandings, together with all accrued and unpaid interest thereon.
"Term Loan" means any borrowing pursuant to a Loan under the Term
Loan Facility in accordance with Article II.
"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived
<PAGE> 35
28
by applicable regulation); or (ii) the withdrawal of any Borrower or any
ERISA Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was
deemed such under Section 4068(f) of ERISA; or (iii) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension
Plan or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan; or (vi) the partial or complete withdrawal of any Borrower
or any ERISA Affiliate from a Multiemployer Plan; or (vii) the imposition
of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA; or
(viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of
ERISA, respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
"Total Term Loan Commitment" means a principal amount equal to
$378,700,000, as reduced from time to time as a result or prepayments of
Term Loans.
"Trust Agreement" means each of the Trust Agreements between a
Beneficial Owner and a Qualified Trustee.
"Trust Estate" means all estate, right, title and interest of
each Trustee in and to each Aircraft, each lease and all related
documents and all other property of the Trustee, including, without
limitation, all amounts of rent, insurance proceeds (other than liability
insurance proceeds payable to or for the benefit of any Borrower, any
Beneficial Owner, any Lender or the Agent) and requisition, indemnity or
other payments or any kind for or with respect to each Aircraft.
"Trustee" means a Qualified Trustee, solely in its capacity as
trustee under a Trust Agreement.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or a
Eurodollar Rate Loan).
"UniCapital" means UniCapital Corporation, a Delaware
corporation.
"UniCapital Registration Statement" means that certain
Registration Statement of UniCapital on Form S-1, Registration No.
333-46603, as filed with the Securities and Exchange Commission on
February 20, 1998, as amended, including all documents incorporated
therein by reference.
<PAGE> 36
29
"UniCapital Special Purpose Corporation" means any corporation
(a) that is organized under the laws of any state of the United States
and has its principal place of business in the United States and (b)
which is a direct or indirect, wholly-owned Subsidiary of Cauff Lippman
or NSJ.
"UniCapital Subsidiary Trust" means any trust (a) that is
organized under the laws of a state of the United States and has its
principal place of business in the United States, (b) whose trustee is a
Qualified Trustee and (c) in which 100% of all beneficial interests are
owned directly by a direct or indirect wholly-owned Subsidiary of Cauff
Lippman or NSJ.
"UniCapital Support Agreement" means the Support Agreement
executed by UniCapital, substantially in the form of Exhibit N.
"U.S. Carrier" means any Eligible Carrier principally located in
the United States of America.
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote
for the election of directors (or persons performing similar functions)
of such Person, even if the right so to vote has been suspended by the
happening of such a contingency.
"Weighted Average Lease Factor" means, as of any date of
determination, the ratio of (a) one-twelfth of the aggregate amount of
base rent scheduled to accrued under all Leases of Financed Aircraft
during the one-year period immediately succeeding such date of
determination divided by (b) the aggregate Fair Market Value of all
Financed Aircraft.
1.2 Rules of Interpretation. (a) All accounting terms not
specifically defined herein shall have the meanings assigned to such terms and
shall be interpreted in accordance with GAAP applied on a Consistent Basis.
(b) Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of another
jurisdiction is controlling, in which case such terms shall have the meaning
given in the Uniform Commercial Code of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used herein
or in any other Loan Document are solely for convenience of reference and shall
not constitute a part of any such document or affect the meaning, construction
or effect of any provision thereof.
<PAGE> 37
30
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses, annexes,
appendices, exhibits and schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such defined
term, and all references to the masculine gender shall include reference to the
feminine or neuter gender, and vice versa, as the context may require.
(f) When used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the whole
of the applicable document and not to any particular article, section,
subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes hereof
the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters, to
matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times in New York, New York.
(i) Each of the parties to the Loan Documents and their counsel
have reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that ambiguities
are to be resolved against the drafting party shall be inapplicable in the
construing and interpretation of the Loan Documents and all exhibits, schedules
and appendices thereto.
(j) Any reference to an officer of any Borrower or any other
Person by reference to the title of such officer shall be deemed to refer to
each other officer of such Person, however titled, exercising the same or
substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such document
or agreement, as the case may be, as amended, modified or supplemented from time
to time only as and to the extent permitted therein and in the Loan Documents.
<PAGE> 38
31
ARTICLE II
The Term Loan Facility
2.1 Term Loans. (a) Commitment. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make (and, in the
case of the Existing Loans, to continue as Term Loans subject to the terms and
conditions of this Agreement) Loans to any of the Borrowers under the Term Loan
Facility from time to time from the Amendment Effective Date until the Term Loan
Termination Date on a pro rata basis as to the total borrowing requested by the
applicable Borrower on any day determined by such Lender's Applicable Commitment
Percentage up to but not exceeding the Term Loan Commitment of such Lender,
provided, however, that (A) the proceeds of such Loan shall be used solely to
finance or refinance the purchase by such Borrower of an Eligible Aircraft (or,
in the case of the Engines shown on Schedule 3 (the "Eligible Engines"), to
refinance such Engines and in the case of the Off-Lease 747, for the purposes
described in Section 2.1(b) below), and (B) the amount of such Loan (together
with any other Loans relating to such Aircraft) shall not exceed the Applicable
Aircraft Borrowing Base of such Aircraft or of such Engine and (C) amounts
prepaid on the Term Loan Facility may not be reborrowed; and provided, further,
that the Lenders will not be required and shall have no obligation to make any
such Loan (i) so long as a Default or an Event of Default has occurred and is
continuing or (ii) if the Agent has accelerated the maturity of any of the Notes
as a result of an Event of Default; and provided further, that immediately after
giving effect to each such Loan, the amount of Term Loan Outstandings shall not
exceed the lesser of the Borrowing Base or the Total Term Loan Commitment.
Within such limits, the Borrowers may borrow under the Term Loan Facility on a
Business Day from the Amendment Effective Date until, but (as to borrowings) not
including, the Term Loan Termination Date; provided, however, that (1) no Term
Loan that is a Eurodollar Rate Loan shall be made which has an Interest Period
that extends beyond the Stated Termination Date and (2) each Term Loan that is a
Eurodollar Rate Loan may be repaid only on the last day of the Interest Period
with respect thereto unless such payment is accompanied by the additional
payment, if any, required by Section 4.5.
(b) Loans to Reconfigure Off-Lease 747. If the Borrower with
respect to the Off-Lease 747 presents to the Agent an Eligible Lease, pursuant
to which such Lessee will lease the Off-Lease 747 and in connection with which
the Applicable Borrower will be obligated to contribute not more than
$16,000,000 toward the cost of the refurbishment and reconfiguration of the
Off-Lease 747 (the "Reconfiguration Lease Arrangement"), all on terms
satisfactory to the Agent in its reasonable discretion, the Agent may lend a
portion of the Total Term Loan Commitment not to exceed $16,000,000 as required
to pay the portion of costs of refurbishment of the Off-Lease 747 required to be
paid by the applicable Borrower, provided, that the total of all Loans made with
respect to the Off-Lease 747 shall not exceed the Applicable Aircraft Borrowing
Base of the Off-Lease 747. Such $16,000,000 portion of the Total Term Loan
Commitment shall not be loaned hereunder for any other purpose. If a
Reconfiguration Lease Arrangement satisfactory to the Agent in its reasonable
discretion is not executed and delivered on or before May 14, 2000, the Agent
shall have the right to require a
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32
mandatory prepayment of the Loans in an amount not to exceed the Borrowing Base
of the Off-Lease 747.
(c) Amounts. Except as otherwise permitted by the Lenders from
time to time, the amount of Term Loan Outstandings shall not exceed at any time
the lesser of the Borrowing Base or the Total Term Loan Commitment; and, in the
event there shall be outstanding any such excess, the Borrowers, jointly and
severally, shall immediately make such payments and prepayments as shall be
necessary to comply with these restrictions. Each Term Loan hereunder and each
Conversion under Section 2.7, shall be in an amount of at least $1,000,000.
(d) Procedures. An Authorized Representative shall give the Agent
(i) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of an Interest Rate Selection Notice with appropriate
insertions, effective upon receipt, of each Term Loan that is to be Converted
into a Eurodollar Rate Loan prior to 10:30 A.M. and (ii) at least one (1)
Business Day's written notice, revocable only on or before noon the following
Business Day, by telefacsimile transmission of a Borrowing Notice with
appropriate insertions, effective upon receipt, of each Term Loan (which shall
be borrowed as a Base Rate Loan) prior to 10:30 A.M. and (iii) at least one (1)
Business Day's irrevocable written notice by telefacsimile transmission of an
Interest Rate Selection Notice with appropriate insertions, effective upon
receipt, of each Term Loan that is to be Converted into a Base Rate Loan prior
to 10:30 A.M. Each such notice shall (A) specify the name of the respective
Borrower, the amount of the borrowing, the date of borrowing or Conversion (as
applicable), type of Term Loan (Base Rate or Eurodollar Rate), the date of
borrowing and, if a Eurodollar Rate Loan, the Interest Period to be used in the
computation of interest and (B) identify the Financed Aircraft the acquisition
of which is to be financed with the proceeds of the borrowing. Notice of receipt
of such Borrowing Notice or Interest Rate Selection Notice, as the case may be,
together with the amount of each Lender's portion of a Loan requested
thereunder, shall be provided by the Agent to each Lender by telefacsimile
transmission with reasonable promptness, but (provided the Agent shall have
received such notice by 10:30 A.M.) not later than 1:00 P.M. on the same day as
the Agent's receipt of such notice.
(i) Promptly (and, to the extent feasible, not later than
2:00 P.M.) on the date specified for each borrowing under this Section
2.1, each Lender shall, pursuant to the terms and subject to the
conditions of this Agreement, make the amount of the Loan or Loans to be
made by it on such day available by wire transfer to the Agent in the
amount of its pro rata share, determined according to such Lender's
Applicable Commitment Percentage of the Term Loan or Term Loans to be
made on such day. Such wire transfer shall be directed to the Agent at
the Principal Office and shall be in the form of Dollars constituting
immediately available funds. The amount so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made available
to the applicable Borrower by delivery of the proceeds thereof to the
Borrowers' Account or otherwise as shall be directed in the applicable
Borrowing Notice by an Authorized Representative and reasonably
acceptable to the Agent.
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33
(ii) Each Loan will be made initially as a Base Rate Loan. The
Borrowers shall have the option to elect the duration of the initial and
any subsequent Interest Periods and to Convert the Term Loans in
accordance with Section 2.7, provided that any Base Rate Loan must be
Converted within seven (7) Business Days after the date on which it is
borrowed into a Eurodollar Rate Loan and may thereafter be Converted into
a Base Rate Loan only in anticipation of a prepayment of such Loan within
one week after such Conversion into a Base Rate Loan. Eurodollar Rate
Loans and Base Rate Loans may be outstanding at the same time, provided,
however, there shall not be outstanding at any one time Eurodollar Rate
Loans for any or all of the Borrowers having more than six (6) different
Interest Periods. If the Agent does not receive an Interest Rate
Selection Notice giving notice of election of the duration of an Interest
Period by the time prescribed by Section 2.7, the applicable Borrower
shall be deemed to have elected for any Eurodollar Loan an Interest
Period of the duration provided in clause (x) of the definition of
Interest Period.
2.2 Payment of Interest. (a) The Borrowers, jointly and
severally, shall pay interest to the Agent for the account of each Lender on the
outstanding and unpaid principal amount of each Loan made by such Lender for the
period commencing on the date of such Loan until such Loan shall be due at the
then applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for
Eurodollar Rate Loans, as designated by the Authorized Representative pursuant
to Section 2.1; provided, however, that if any Event of Default shall occur and
be continuing, all amounts outstanding hereunder shall bear interest thereafter
at the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a
year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Loan shall be paid (x) monthly in arrears on the
fifteenth (15th) calendar day of each calendar month (or, if such day is not
Business Day, on the next succeeding Business Day), (y) upon payment or
prepayment of the principal amount of any Loan or any portion thereof, on the
amount so paid or prepaid and (z) at the Term Loan Termination Date.
2.3 Payment of Principal. (a) Scheduled Repayments; Voluntary
Prepayments. The principal amount of each Term Loan shall be due and payable to
the Agent for the benefit of each Lender in full on the Term Loan Termination
Date, or earlier as specifically provided herein. The Borrower may prepay the
outstanding principal amount of any Loan, in whole or in part, upon one Business
Day's notice to the Lender. All such prepayments must be accompanied by accrued
interest up to, and including, the date of such prepayment and any compensation
due under Section 4.5 hereof.
(b) Mandatory Prepayments. (i) Upon the sale of any Aircraft,
Engine or other asset by any Borrower, or any Additional Collateral, or upon the
refinancing of any Indebtedness of any Borrower arising from any Loan hereunder,
the Borrowers, jointly and severally, shall immediately pay to the Agent an
amount equal to the net proceeds of such sale or refinancing, which amount shall
be applied by the Agent to reduce outstanding principal and accrued interest on
any Loans made to, or for the benefit of, such Borrower. If any net proceeds of
such sale or refinancing remain after the
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repayment in full of all outstanding principal and accrued interest on such
Loans, such excess proceeds shall be applied pro rata to the partial prepayment
of all unpaid Term Loans in respect of the remaining Financed Aircraft until the
aggregate outstanding principal balance of the Term Loans has been reduced to
zero.
(ii) The Borrowers, jointly and severally, shall be required to
prepay the Loans, upon five Business Days' prior notice, (A) in an amount equal
to any amount by which the aggregate outstanding principal amount of the Loans
exceeds the Borrowing Base at any time (provided, that no such prepayment shall
be required prior to September 30, 2000 as a result of a reduction in the Fair
Market Value of the Financed Aircraft (as determined by the appraisals to be
delivered pursuant to Section 7.19) and (B) if required under Section 2.1(b).
Alternatively, a Borrower may pledge additional Collateral (valued in a manner
reasonably acceptable to the Agent) to increase the Borrowing Base and avoid
such mandatory prepayment.
(iii) The Borrowers, jointly and severally, shall be required to
prepay the Loan relating to a Financed Aircraft, upon five Business Days' prior
notice, in an amount equal to any amount by which the estimated out-of-pocket
costs incurred by the Applicable Borrower in acquiring such Financed Aircraft
that were included in such Loan exceed the actual amount of such expenses.
(iv) The Borrowers, jointly and severally, shall be required to
prepay the Loans upon the occurrence of an Event of Loss as, and on the date,
required by Section 3.8(b) of the Security Agreement.
(v) Notwithstanding anything to the contrary in the Lockbox
Agreements, the Borrowers, jointly and severally, shall be required to prepay
the Loans monthly in an amount equal to (A) all cash receipts of such Borrower
remaining after payment of other sums due hereunder and (B) all amounts received
by or on behalf of the respective owners of the Additional Collateral thereof as
dividends, lease rentals or other cash receipts from the Additional Collateral.
2.4 Manner of Payment. Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds without setoff, deduction or counterclaim before
12:30 P.M. on the date such payment is due.
(i) The Agent shall deem any payment made by or on behalf of any
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment.
Any such payment shall not be deemed to be received by the Agent until
the time such funds become available funds. Any non-conforming payment
may constitute or become a Default or Event of Default. Interest shall
continue to accrue on any principal as to which a non-conforming payment
is made until the later of (x) the date such
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35
funds become available funds or (y) the next Business Day at the Default
Rate from the date such amount was due and payable.
(ii) In the event that any payment hereunder or under the Notes
becomes due and payable on a day other than a Business Day, then such due
date shall be extended to the next succeeding Business Day unless
provided otherwise under clause (ii) of the definition of "Interest
Period"; provided that interest shall continue to accrue during the
period of any such extension and provided further, that in no event shall
any such due date be extended beyond the Term Loan Termination Date.
(iii) Any payment or prepayment of any principal or interest on
any Loan hereunder shall be accompanied by a certificate signed by an
Authorized Representative and delivered to the Agent, which certificate
shall identify such Loan, the amount of principal and interest paid
thereon, and the Borrower to whom, or for whose benefit, such Loan was
originally advanced.
2.5 Notes. Term Loans made by each Lender shall be evidenced by
the Note payable to the order of such Lender in the respective amount of its
Applicable Commitment Percentage of the Term Loan Commitment, which Term Note
shall be dated the applicable Closing Date or a later date pursuant to an
Assignment and Acceptance and shall be duly completed, executed and delivered by
the Borrowers.
2.6 Pro Rata Payments. Except as otherwise provided herein, (a)
each payment on account of the principal of and interest on the Loans and the
fees described in Section 2.9 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by any Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from any Borrower.
2.7 Conversions and Elections of Subsequent Interest Periods.
Subject to the limitations set forth below and in Article IV, the Borrowers may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30
A.M. on any Business Day, Convert all or a part of Eurodollar Rate Loans
to Base Rate Loans on the last day of the Interest Period for such
Eurodollar Rate Loans; provided, that a Conversion of Eurodollar Rate
Loans into Base Rate Loans shall be made by Borrower only in anticipation
of a prepayment of such Base Rate Loans within one week after such
Conversion; and
(b) provided that no Default or Event of Default shall have
occurred and be continuing and upon delivery, effective upon receipt, of
a properly completed Interest Rate Selection
<PAGE> 43
36
Notice to the Agent on or before 10:30 A.M. three (3) Business Days'
prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or a
portion of Eurodollar Rate Loans to begin on the last day of the
then current Interest Period for such Eurodollar Rate Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans on
any Business Day (and shall so Convert any Base Rate Loan to a
Eurodollar Rate Loan within one week after the borrowing date
therefor).
Each election and Conversion pursuant to this Section 2.7 shall
be subject to the limitations on Eurodollar Rate Loans set forth in the
definition of "Interest Period" herein and in Sections 2.1, 2.3 and Article IV.
The Agent shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.
2.8 Increase and Decrease in Amounts. The amount of the Total
Term Loan Commitment which shall be available to the Borrowers as Loans shall be
reduced by the aggregate amount of Term Loan Outstandings.
2.9 Fees. Borrower shall pay the fees specified in the Fee Letter
on the dates specified therein.
2.10 Deficiency Advances. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to make
any Loan hereunder nor shall the Term Loan Commitment of any Lender hereunder be
increased as a result of such default of any other Lender. Without limiting the
generality of the foregoing, in the event any Lender shall fail to advance funds
to any Borrower as herein provided, the Agent may in its discretion, but shall
not be obligated to, advance under the applicable Note in its favor as a Lender
all or any portion of such amount or amounts (each, a "deficiency advance") and
shall thereafter be entitled to payments of principal of and interest on such
deficiency advance in the same manner and at the same interest rate or rates to
which such other Lender would have been entitled had it made such Loan under its
Note; provided that, (i) such defaulting Lender shall not be entitled to receive
payments of principal, interest or fees with respect to such deficiency advance
until such deficiency advance shall be paid by such Lender and (ii) upon payment
to the Agent from such other Lender of the entire outstanding amount of each
such deficiency advance, together with accrued and unpaid interest thereon, from
the most recent date or dates interest was paid to the Agent by a Borrower on
each Loan comprising the deficiency advance at the interest rate per annum for
overnight borrowing by the Agent from the Federal Reserve Bank, then such
payment shall be credited against the applicable Note of the Agent in full
payment of such deficiency advance and such Borrower shall be deemed to have
borrowed the amount of such
<PAGE> 44
37
deficiency advance from such other Lender as of the most recent date or dates,
as the case may be, upon which any payments of interest were made by such
Borrower thereon.
2.11 Use of Proceeds. The proceeds of each Loan made pursuant to
the Term Loan Facility hereunder shall be used by the Applicable Borrower to
finance or to refinance the purchase by such Borrower of an Eligible Aircraft.
2.12 Designation of Borrowing Affiliate; Releases. (a) An
Authorized Representative may from time to time designate any UniCapital
Subsidiary Trust or UniCapital Special Purpose Corporation which has not joined
in the execution of this Agreement as a "Borrowing Affiliate" hereunder by
causing such UniCapital Subsidiary Trust or UniCapital Special Purpose
Corporation to execute and deliver a duly completed Assumption Letter (in the
form attached hereto as Exhibit Q) to the Agent with the written acknowledgment
of the Borrowers and the Agent at the foot thereof, together with (a) Facility
Guaranties executed by each Beneficial Owner of any such UniCapital Subsidiary
Trust, by each Subsidiary of any such Beneficial Owner (other than such
UniCapital Subsidiary Trust), by each Subsidiary of such UniCapital Subsidiary
Trust or of such UniCapital Special Purpose Corporation, and by the Applicable
Intermediary (if any), (b) Security Agreements signed by such UniCapital
Subsidiary Trust or UniCapital Special Purpose Corporation, by each Beneficial
Owner of any such UniCapital Subsidiary Trust, by each Subsidiary of any such
Beneficial Owner, by each Subsidiary of such UniCapital Subsidiary Trust or
UniCapital Special Purpose Corporation, and by the Applicable Intermediary (if
any), (c) Pledge Agreements signed by the respective Beneficial Owners and other
owners, granting a security interest in the Pledged Interests in such UniCapital
Subsidiary Trust or UniCapital Special Purpose Corporation, in any Subsidiary
thereof, in any Beneficial Owner and in any Subsidiary thereof, and in the
Applicable Intermediary (if any), and (d) all additional documents required
under such Assumption Letter. Upon such execution, delivery and consent, such
UniCapital Subsidiary Trust or UniCapital Special Purpose Corporation (as the
case may be) shall for all purposes be a party hereto as a Borrower as fully as
if it had executed and delivered this Agreement.
(b) So long as (w) all Loans made to or on behalf of any
Borrower, together with all accrued interest on such Loans, have been paid in
full, (x) all other outstanding Obligations of such Borrower (except Obligations
to pay principal and interest on Loans other than those Loans described in
clause (w)) have been paid in full, (y) no Default or Event of Default has
occurred and will be continuing after giving effect to such termination, and (z)
any prepayment required under Section 2.3(b) has been made, then such Borrower
may, by not less than fourteen (14) days prior notice to the Agent (which shall
promptly notify the Lenders thereof), (i) terminate its status as a "Borrowing
Affiliate" and "Borrower" hereunder and under the other Loan Documents, and (ii)
(with respect to any Beneficial Owner of such Borrower) unless such Person also
holds a beneficial interest in any other Borrower, to terminate the status of
such Person and any other Subsidiary of such Person as a "Guarantor" hereunder
and under the other Loan Documents, and (iii) to terminate the status of the
Applicable Intermediary (if any) and any other Subsidiary of such Borrower as a
"Guarantor" hereunder and under the other Loan Documents. Upon such terminations
(provided the conditions to such terminations are
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38
satisfied), the Agent shall take all actions reasonably requested by such
Borrower (A) to release the Liens of the Agent on all Aircraft and other
Collateral owned by such Borrower and its Subsidiaries (including the Applicable
Intermediary, if any) and to release such Borrower and such Subsidiaries from
all of their respective obligations under the Loan Documents (including without
limitation a written release to such effect), (B) unless such Beneficial Owner
also holds a beneficial interest in any other Borrower, to release the Liens of
the Agent on all Collateral owned by such Beneficial Owner and its other
Subsidiaries and to release such Beneficial Owner and such other Subsidiaries
from all of their respective obligations under the Loan Documents (including
without limitation a written release to such effect), (C) to release the Lien of
the Agent with respect to any Pledged Interests in such Borrower, its
Subsidiaries and the Applicable Intermediary, and (D) (unless such Beneficiary
Owner also holds a beneficial interest in any other Borrower) to release the
Lien of the Agent with respect to any Pledged Interests in such Beneficial
Owner. For the purposes of this Section 2.12, the Initial Borrower shall not be
deemed to be a "Borrowing Affiliate." Any provision of this Section 2.12 or any
other provision of any Loan Document notwithstanding, in no event shall
UniCapital be released from its obligations to pay indemnification to, or
reimburse any costs or expenses of, the Agent or any Lender (including without
limitation the obligations under Article IV and Sections 4.6, 7.15, 11.5 and
11.9), which agreements and obligations shall survive any release or termination
of any Credit Party pursuant to this Section 2.12.
(c) Any Additional Collateral Provider may sell its Additional
Collateral for a price that, in the good faith judgment of the Agent, is a fair
market value price or such other price to which Agent may agree. So long as (y)
no Default or Event of Default has occurred and will be continuing after giving
effect to such termination, and (z) any prepayment required under Section 2.3(b)
has been made, then any Additional Collateral Provider may, by not less than
five (5) Business Days prior notice to the Agent (which shall promptly notify
the Lenders thereof), (i) terminate its status as an Additional Collateral
Provider hereunder and under the other Loan Documents, and (ii) obtain from the
Agent a release of its pledge, mortgage or other security interest with respect
to such Additional Collateral.
2.13 Joint and Several Liability. Each Borrower (including
without limitation the Initial Borrower and each Borrowing Affiliate) agrees and
acknowledges that the Obligations constitute and will constitute joint and
several obligations and liabilities of the Borrowers; provided, however, that
anything herein or in any other Loan Document to the contrary notwithstanding,
the maximum liability of each Borrower with respect to the joint and several
liability under this Section 2.13 shall in no event exceed the amount which can
be guaranteed by such Borrower under applicable federal and state laws relating
to the insolvency of debtors. Each Borrower further agrees and acknowledges that
all actions taken, elections made and notices and certificates furnished or
received by it under or pursuant to the Loan Documents shall constitute the
action, election, notice or certification of all of the Borrowers under the Loan
Documents, and that each Authorized Representative shall have full authority to
act for and on behalf of all of the Borrowers for all purposes of the Loan
Documents. Each Borrower agrees that the joint and several liability of the
Borrowers shall not be impaired or affected by any modification, supplement,
extension or amendment of any contract or agreement to which the parties thereto
may hereafter agree, nor by any modification, release or other alteration of any
of the rights of the Agent or
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39
any Lender with respect to the Collateral other than as provided in Section
2.12(b) hereof, nor by any delay, extension of time, renewal, compromise or
other indulgence granted by the Agent, any Lender or any other Person with
respect to any of the Obligations, nor by any other agreements or arrangements
whatever with any other Borrower or with anyone else, each Borrower hereby
waiving all notice of any such delay, extension, release, substitution, renewal,
compromise or any such delay, extension, release, substitution, renewal,
compromise or other indulgence, and hereby consenting to be bound thereby as
fully and effectually as if it had expressly agreed thereto in advance. The
liability of each Borrower hereunder is direct and unconditional as to all of
the Obligations hereunder, and may be enforced without requiring the Agent, any
Lender or any other Person first to resort to any other right, remedy or
security; no Borrower shall have any right of subrogation, reimbursement or
indemnity whatsoever, nor any right of recourse to security for indemnity
whatsoever, nor any right of recourse to security for any of the Obligations
hereunder, unless and until all of said Obligations have been paid in full;
except as provided in Section 2.12(b) hereof and subject to the proviso to the
first sentence of this Section 2.13, nothing shall discharge or satisfy the
liability of any Borrower hereunder except the full payment and performance of
all of the Obligations; any and all present and future debts and obligations of
each Borrower to the other Borrowers are hereby waived and postponed in favor of
and subordinated to the full payment and performance of all present and future
Obligations of the Borrowers to the Agent, the Lenders and any other Person.
ARTICLE III
Security
3.1 Security. As security for the full and timely payment and
performance of all Obligations, the Credit Parties shall on or before the date
of the initial Loan do or cause to be done all things necessary in the opinion
of the Agent and its counsel to grant to the Agent for the benefit of the
Lenders a duly perfected first priority security interest under all applicable
laws (including without limitation under the FAA Act (in the case of an Aircraft
registered in the United States), or any Applicable Foreign Aviation Laws (in
the case of any other Aircraft)) in all Collateral subject to no prior Lien or
other encumbrance (that, in each case, has not previously been satisfied in
full) or restriction on transfer (other than Permitted Liens and restrictions on
transfer imposed by applicable laws or referred to in Schedule 6.7); provided,
however, that to the extent that a duly perfected, first priority Lien and
security interest on such Aircraft is not possible, or is impractical
(commercially or otherwise), then with the Agent's consent (which consent shall
not be unreasonably withheld), the Security Agreement with respect to such
Aircraft shall not be required or shall be modified to provide such Lien, such
priority and such perfection, if any, as shall not be impossible or impractical
(commercially or otherwise)
3.2 Further Assurances. At the request of the Agent, each
Borrower will, or will cause other Credit Parties (as the case may be), to,
execute, by its duly authorized officers, alone or
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40
with the Agent, any certificate, instrument, statement or document, or to
procure any such certificate, instrument, statement or document, or to take such
other action (and pay all connected costs) which the Agent reasonably deems
necessary from time to time to create, continue or preserve the liens and
security interests in Collateral (and the perfection and priority thereof) of
the Agent contemplated hereby and by the other Loan Documents and specifically
including all Collateral acquired by any Borrower or any Guarantor or any other
Credit Party after the Original Closing Date.
3.3 Information Regarding Collateral. Each Borrower represents,
warrants and covenants that (i) the chief executive office of each Borrower and
each other Person providing Collateral pursuant to a Security Instrument (each,
a "Grantor") at the Amendment Effective Date is located at the address or
addresses specified on Schedule 3.3, and (ii) Schedule 3.3 contains a true and
complete list of (a) the name and address of each Grantor and of each other
Person that has effected any merger or consolidation with a Grantor or
contributed or transferred to a Grantor any property constituting Collateral at
any time since January 1, 1997 (excluding Persons making sales in the ordinary
course of their businesses to a Grantor of property constituting inventory in
the hands of such seller), (b) each location of the chief executive office and
principal place of business of each Grantor at any time since January 1, 1997,
(c) each location in which goods constituting Collateral (other than Aircraft)
are or have been located since January 1, 1997, (d) the country of registration
(if applicable) of each Aircraft; and (e) each trade name used by any Grantor
since January 1, 1997 and the purposes for which it was used. No Borrower shall
change, or permit any other Grantor to change, the location of its chief
executive office or principal place of business or any location specified in
clause (c) of the immediately preceding sentence, or use or permit any other
Grantor to use, any additional trade style, except upon giving not less than
thirty (30) days' prior written notice to the Agent and taking or causing to be
taken all such action at the Borrowers' or such other Grantor's expense as may
be reasonably requested by the Agent to perfect or maintain the perfection of
the Lien of the Agent in Collateral.
3.4 Quiet Enjoyment. The Agent and each Lender hereby agree that,
so long as no Lease Event of Default shall have occurred and be continuing under
an Eligible Lease, it will not interfere with the quiet enjoyment of the
possession and use of the Aircraft by the Applicable Carrier during the term of
such Eligible Lease and it will (subject to any requirements or restrictions
imposed by applicable law) dispose of its interest in the Eligible Aircraft
leased under such Eligible Lease expressly subject to such Eligible Lease and on
terms such that the purchaser provides a similar right of quiet enjoyment to
such Applicable Carrier. Upon the request of any Borrower, the Agent (on behalf
of itself and the Lenders) will confirm the immediately preceding sentence in
writing to any Applicable Carrier.
ARTICLE IV
Change in Circumstances
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4.1 Increased Cost and Reduced Return. (a) If, after the date
hereof, the adoption of any applicable law, rule, or regulation, or any change
in any applicable law, rule, or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such governmental
authority, central bank, or comparable agency issued after the date hereof:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any Eurodollar
Rate Loans, its Note, or its obligation to make Eurodollar Rate Loans, or
change the basis of taxation of any amounts payable to such Lender (or
its Applicable Lending Office) under this Agreement or its Note in
respect of any Eurodollar Rate Loans (other than taxes covered by Section
4.6 and changes in the rate of tax imposed on the overall net income of
such Lender by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar requirement
(other than the Reserve Requirement utilized in the determination of the
Eurodollar Rate) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities or commitments of, such Lender
(or its Applicable Lending Office), including the Term Loan Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the London interbank market any other condition affecting
this Agreement or its Loans or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Loans or to reduce any sum received or receivable by such Lender
(or its Applicable Lending Office) under this Agreement or its Note with respect
to any Eurodollar Rate Loans, then UniCapital and the Borrowers, jointly and
severally, shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction, provided that in
determining such costs, no Lender shall treat the Borrowers less favorably than
other borrowers of similar size and circumstances. If any Lender requests
compensation by UniCapital or any Borrower under this Section 4.1(a), the
Borrowers may, by notice to such Lender (with a copy to the Agent), suspend the
obligation of such Lender to make or Continue Loans of the Type with respect to
which such compensation is requested, or to Convert Loans of any other Type into
Loans of such Type, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 4.4 shall be
applicable); provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
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(b) If, after the date hereof, any Lender shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency issued after the date
hereof, has or would have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder to a level below that which
such Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies with
respect to capital adequacy), then from time to time upon demand UniCapital and
the Borrowers, jointly and severally, shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction.
(c) Each Lender shall promptly notify UniCapital, the Borrowers and the
Agent of any event of which it has knowledge occurring after the date hereof,
which will entitle a Lender to compensation pursuant to this Section 4.1, and
such Lender shall, upon written request by UniCapital or any Borrower, designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 4.1 shall furnish to the Borrowers and the Agent
a statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
4.2 Limitation on Types of Loans. If on or prior to the first day
of any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrowers prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type or to Convert Loans
of any other Type into Loans of such Type, and the Borrowers shall, jointly and
severally, on the last day(s) of the then current Interest Period(s) for the
outstanding Loans of the affected Type, either prepay such Loans or Convert such
Loans into Base Rate Loans in accordance with the terms of this Agreement.
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4.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrowers thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of Section 4.4 shall be applicable).
4.4 Treatment of Affected Loans. If the obligation of any Lender
to make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section 4.1
or 4.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 4.3 hereof, on such earlier date as such Lender
may specify to the Borrowers with a copy to the Agent) and, unless and until
such Lender gives notice as provided below that the circumstances specified in
Section 4.1 or 4.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Loans of the Affected Type shall be made or Continued instead
as Base Rate Loans, and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead into
(or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrowers (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Term Loan
Commitments.
4.5 Compensation. Upon the request of any Lender, UniCapital and
the Borrowers, jointly and severally, shall pay to such Lender such amount or
amounts as shall be sufficient (in the reasonable opinion of such Lender) to
compensate it for any loss, cost, or expense incurred by it as a result of:
<PAGE> 51
44
(a) any payment, prepayment, or Conversion of a Eurodollar Rate
Loan for any reason (including, without limitation, the acceleration of
the Loans pursuant to Section 9.1) on a date other than the last day of
the Interest Period for such Loan; or
(b) any failure by any Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
Article V to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this Agreement.
4.6 Taxes. (a) Any and all payments by any Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, adopted after the date hereof, excluding, in
the case of each Lender and the Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender (or its Applicable Lending Office) or the Agent (as the case may be) is
organized or any political subdivision thereof (all such non-excluded taxes,
duties, levies, imposts, deductions, charges, withholdings, and liabilities
being hereinafter referred to as "Taxes"). If any Borrower shall be required by
law to deduct any Taxes adopted after the date hereof from or in respect of any
sum payable under this Agreement or any other Loan Document to any Lender or the
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 4.6) such Lender or the Agent receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Borrower shall make such deductions, (iii) such Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) such Borrower shall furnish to the
Agent, at its address referred to in Section 11.2, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, UniCapital and the Borrowers agree, jointly and
severally, to pay any and all present or future stamp or documentary taxes and
any other excise or property taxes or charges or similar levies which arise from
any payment made under this Agreement or any other Loan Document or from the
execution or delivery of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) UniCapital and the Borrowers agree, jointly and severally, to
indemnify each Lender and the Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 4.6) paid by such Lender
or the Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Lender listed
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45
on the signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time thereafter if
requested in writing by any Borrower or the Agent (unless such failure is due to
a change in treaty, law or regulation occurring subsequent to the date on which
a form originally was required to be provided), shall provide the Borrowers and
the Agent with (i) Internal Revenue Service Form W-8BEN (or Form 1001) or Form
W-8ECI (or Form 4224), as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States and (ii) Internal Revenue
Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service.
(e) For any period with respect to which a Lender has failed to
provide the Borrowers and the Agent with the appropriate form pursuant to
Section 4.6(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to indemnification
under Section 4.6(a) or 4.6(b) with respect to United States withholding taxes;
provided, however, that should a Lender, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes because of
its failure to deliver a form required hereunder, each Borrower shall take such
steps as such Lender shall reasonably request to assist such Lender to recover
such Taxes.
(f) If UniCapital or any Borrower is required to pay additional
amounts to or for the account of any Lender pursuant to this Section 4.6, then
such Lender will agree to use reasonable efforts to change the jurisdiction of
its Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the sole judgment of such
Lender, is not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, UniCapital or the applicable Borrower shall furnish to the Agent the
original or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
UniCapital or any Borrower hereunder, the agreements and obligations of
UniCapital and each Borrower contained in this Section 4.6 shall survive the
termination of the Term Loan Commitments and the payment in full of the Loans.
(i) UniCapital has executed this Credit Agreement to indicate its
agreement to be bound by the terms of this Article IV, Sections 2.12, 7.15, 11.5
and 11.9, and any other provision of this Agreement that is applicable to
UniCapital.
<PAGE> 53
46
ARTICLE V
Conditions to Effectiveness of Amendment and to Making Loans
5.1 Conditions of Effectiveness. This Agreement shall be
effective, the existing Term Loans shall be continued under and governed by this
Agreement, and the Lenders shall make the Term Loan Facility available to the
Borrowers pursuant to the terms of this Agreement only upon fulfillment of the
following conditions precedent:
(a) the Agent shall have received on or before the Amendment
Effective Date, in form and substance satisfactory to the Agent and
Lenders, the following:
(i) executed originals of each of this Agreement, the
Notes, the initial Facility Guaranties, the initial Security
Instruments, the UniCapital Support Agreement and the other Loan
Documents, together with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions contemplated
thereby of special counsel to the Credit Parties dated the
applicable Closing Date, addressed to the Agent (on behalf of
itself and the Lenders) reasonably satisfactory to special
counsel to the Agent;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of UniCapital and each Credit Party (or, in the case of
a Credit Party that is a trust, resolutions of the appropriate
board or committee of each trustee thereof) certified by its
secretary or assistant secretary as of the applicable Closing
Date, approving and adopting the Loan Documents to be executed by
such Person, and authorizing the execution and delivery thereof;
(iv) specimen signatures of officers of UniCapital and
each of the Credit Parties executing the Loan Documents on behalf
of UniCapital or such Credit Party, certified by the secretary or
assistant secretary of UniCapital or such Credit Party;
(v) to the extent current versions have not been
previously delivered to the Agent, the Organizational Documents
of UniCapital and each of the Credit Parties and each of the
trustees for each UniCapital Subsidiary Trust certified as of a
recent date by the Secretary of State or comparable official of
its jurisdiction of organization (provided that the trust
agreement of a UniCapital Subsidiary Trust may be certified by
the secretary or assistant secretary of its Beneficial Owner);
(vi) to the extent current versions have not been
previously delivered to the Agent, Operating Documents of
UniCapital and each of the Credit Parties and each of
<PAGE> 54
47
the trustees for each UniCapital Subsidiary Trust certified as of
the Original Closing Date as true and correct by its secretary or
assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State or comparable officials of the respective
jurisdictions of formation of UniCapital and each of the Credit
Parties (excluding UniCapital Subsidiary Trusts, but including
each trustee thereof) as to the due existence and good standing
of such Person;
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to
conduct business under assumed name, issued in respect of
UniCapital and each of the Credit Parties (excluding UniCapital
Subsidiary Trusts, but including each trustee thereof) as of a
recent date by the Secretary of State or comparable official of
each jurisdiction in which the failure to be qualified to do
business or authorized so to conduct business could have a
Material Adverse Effect;
(ix) to the extent the Authorized Representations will not
continue to the Authorized Representatives designated under the
Existing Credit Agreement, notice of appointment of the initial
Authorized Representative(s);
(x) fully-executed Uniform Commercial Code financing
statements appropriate for filing in all places required by
applicable law to perfect the Liens of the Agent under the
Security Instruments as a first priority Lien as to items of
Collateral in which a security interest may be perfected by the
filing of financing statements, and such other documents and/or
evidence of other actions as may be necessary under applicable
law to perfect the Liens of the Agent under the Security
Instruments as a first priority Lien in and to such other
Collateral as the Agent may require, including without
limitation:
(1) the delivery by the Borrowers of all stock
certificates and other certificates, if any, evidencing
ownership of any Pledged Interests, accompanied in each
case by duly executed stock or transfer powers (or other
appropriate transfer documents) in blank affixed thereto;
and
(2) the delivery by the Borrowers of "control
agreements" that have been executed by the respective
issuers (and consented to by the respective Credit Parties)
with respect to any uncertificated Pledged Interests; and
(xi) the Amended and Restated Fee Letters and evidence that
all fees payable by the Borrowers thereunder on the Amendment
Effective Date to the Agent and the Lenders have been paid in
full; and
(xii) the Amended and Restated Securitization Advisory
Letter;
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48
(b) the Agent shall be satisfied that the conditions precedent to
closing the Effective Date Loans under Section 5.2 will be fulfilled on
the Amendment Effective Date;
(c) In the good faith judgment of the Agent and the Lenders:
(i) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending
or threatened which could reasonably be likely to result in a
Material Adverse Effect; and
(ii) UniCapital and the Credit Parties shall have received
all approvals, consents and waivers, and shall have made or given
all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the
occurrence of any default under, conflict with or violation of
(A) any applicable law, rule, regulation, order or decree of any
Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Credit
Parties is a party or by which any of them or their properties is
bound.
5.2 Conditions of Effective Date Loans. The obligation of the
Lenders to make the Effective Date Loans under the Term Loan Facility is subject
to the conditions precedent that:
(a) each of the conditions to making the Term Loan Facility
available to the Borrowers, as set forth in Section 5.1, shall have been
satisfied on or prior to the date of the Effective Date Loans;
(b) the representations and warranties of UniCapital and the
Credit Parties set forth in Article VI and in each of the other Loan
Documents shall be true and correct in all material respects on and as of
the date of such Loan, with the same effect as though such
representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties expressly
relate to an earlier date;
(c) the Borrowing Affiliate with respect to such Loan shall have
executed and delivered to the Agent an Assumption Letter, and each
Borrower and the Agent shall have executed such Assumption Letter and the
Borrowing Affiliate shall have delivered to the Agent all other
agreements, instruments and documents required by such Assumption Letter;
(d) the Borrowing Affiliate with respect to such Loan shall have
delivered to the Agent (i) Facility Guaranties fully executed by any
Beneficial Owner of such Borrowing Affiliate, by each Subsidiary of any
such Beneficial Owner (other than such Borrowing Affiliate), by each
Subsidiary of such Borrowing Affiliate and by the Applicable Intermediary
(if any); (ii) Pledge Agreements fully executed by the appropriate
pledgors, granting a security interest in all Pledged Interests with
respect to each such Beneficial Owner, such Borrowing Affiliate, each
Subsidiary of any Beneficial Owner, each Subsidiary of such Borrowing
Affiliate, and the
<PAGE> 56
49
Applicable Intermediary (if any); (iii) Security Agreements fully
executed by such Borrowing Affiliate, any Beneficial Owner of such
Borrowing Affiliate, each Subsidiary of any Beneficial Owner, each
Subsidiary of such Borrowing Affiliate, and the Applicable Intermediary
(if any) and (iv) in the case of the Additional Collateral, a mortgage on
any Additional Collateral consisting of Engines and a Pledge Agreement on
any Additional Collateral consisting of notes, stock or other beneficial
interests, all in form satisfactory to the Agent, together with opinions
of counsel to the applicable Borrowers in appropriate jurisdictions, in
form reasonably satisfactory to special counsel to the Agent;
(e) the Agent shall have received substantially final drafts of
the following a reasonable period of time prior to the date of the Loan,
an organized pre-closing of the required documentation shall have
occurred at least one Business Day prior to the date of the Loan, and the
Agent shall have received final versions of the following, in form and
substance satisfactory to the Agent and the Lenders, on or prior to the
date of the Loan:
(i) each of the documents and instruments (including
without limitation the opinions of counsel, the resolutions of
boards of directors or other appropriate governing bodies or
committees, the specimen signatures, officer's certificates,
Organizational Documents, Operating Documents, and governmental
certificates of existence, qualification, good standing and
assumed name) required by Section 5.1 as if such Borrowing
Affiliate had been a Borrowing Affiliate (and its Beneficial
Owner, their respective Subsidiaries and the Applicable
Intermediary (if any) had been in such positions) on the Original
Closing Date, provided that if UniCapital or any Non-SPE Credit
Party has previously delivered such opinions, resolutions,
specimen signatures, officer's certificates and governmental
certificates in connection with a prior Closing Date or a Loan,
it shall not be required to re-submit any such documents in
connection with a subsequent Loan except to the extent (1) the
prior opinions or resolutions did not cover any additional Loan
Documents executed by UniCapital or Non-SPE Credit Party in
connection with such subsequent Loan, or (2) the specimen
signatures or officer's certificates are no longer accurate, or
(3) any Organizational Document or Operating Agreement has been
amended, modified or supplemented or there are any additional
Organizational Documents or Operating Agreements;
(ii) with respect to each Financed Aircraft or Engine
registered in the United States, the favorable written opinion
with respect to the Loan Documents and the transactions
contemplated thereby of FAA Counsel dated the Closing Date,
addressed to the Agent (on behalf of itself and the Lenders),
reasonably satisfactory to special counsel to the Agent;
(iii) with respect to every other Financed Aircraft, the
favorable written opinion with respect to the Loan Documents and
the transactions contemplated thereby of local counsel in each
Applicable Foreign Jurisdiction dated the applicable Closing
Date,
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50
addressed to the Agent (on behalf of itself and the Lenders),
reasonably satisfactory to special counsel to the Agent;
(iv) certificates of insurance from qualified brokers of
aircraft insurance or other evidence satisfactory to the Agent,
evidencing all insurance required by the Loan Documents
(including without limitation all insurance required by Exhibit L
with respect to each Aircraft that is to be a Financed Aircraft
and the Engine);
(v) a Borrowing Notice;
(vi) a certificate of an Authorized Representative
providing information about the Financed Aircraft;
(vii) fully-executed Uniform Commercial Code financing
statements appropriate for filing in all places required by
applicable law to perfect the Liens of the Agent under the
Security Instruments as a first priority Lien as to items of
Collateral in which a security interest may be perfected by the
filing of financing statements, and such other documents and/or
evidence of other actions as may be necessary under applicable
law to perfect the Liens of the Agent under the Security
Instruments as a first priority Lien in and to such other
Collateral as the Agent may require, including without
limitation:
(1) the delivery by the Borrowers of all stock
certificates and other certificates, if any, evidencing
ownership of any Pledged Interests, accompanied in each
case by duly executed stock or transfer powers (or other
appropriate transfer documents) in blank affixed thereto;
(2) the delivery by the Borrowers of "control
agreements" that have been executed by the respective
issuers (and consented to by the respective Credit Parties)
with respect to any uncertificated Pledged Interests;
(3) with respect to each Financed Aircraft registered
in the United States or the Lien on which is to be recorded
in the United States, evidence of the filing with the FAA
Recording Office of the Security Agreement (and all
supplements thereto) executed by the Applicable Borrower
and any Applicable Intermediary and all other documents
required by such office or applicable law in order to
maintain a first priority perfected Lien on such Financed
Aircraft, and the Eligible Lease thereof;
(4) with respect to each other Financed Aircraft,
evidence of the filing with each applicable recording
office in each Applicable Foreign Jurisdiction of all
documents required by such office or any Applicable Foreign
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51
Aviation Law in order to maintain a first priority
perfected Lien on such Financed Aircraft, the Eligible
Lease thereof or, if applicable, the stock or beneficial
interest in the Applicable Borrower;
(5) a copy of the executed purchase agreement and
executed bill of sale evidencing the purchase by the
Applicable Borrower of each Financed Aircraft;
(6) copies of the certificates of aircraft
registration issued by the FAA and certificates of
airworthiness issued by the FAA, in each case with respect
to each Aircraft registered in the United States; and
(7) evidence of registration and other applicable
qualification issued by any Applicable Foreign Jurisdiction
to the extent such registration or qualification is
required by an Applicable Foreign Aviation Law, in each
case with respect to each Aircraft not registered in the
United States;
(viii) results of a search of Liens filed with the FAA or
any Applicable Foreign Jurisdiction with respect to any Aircraft
that is or is to be a Financed Aircraft under the Effective Date
Loans;
(ix) three (3) Qualified Appraisals, each prepared by a
separate Qualified Appraiser and opining as to the Fair Market
Value of each Aircraft that is or is to be a Financed Aircraft
under the Effective Date Loans;
(x) the fully-executed originals of the Eligible Lease
relating to each Aircraft that is or is to be a Financed Aircraft
under the Effective Date Loans and the chattel paper originals
thereof pursuant to Section 3.5 of Security Agreement;
(xi) a Lessee Estoppel Certificate or other evidence
reasonably satisfactory to the Agent that any such Eligible Lease
is valid and binding; and
(xii) a fully-executed copy of the Servicing Agreement
certified by a Secretary or Assistant Secretary of the Initial
Borrower, and certification of the amount of fees to be payable
to UniCapital, CLA, Cauff Lippman or any Affiliate in connection
with such Servicing Agreement, which agreement and fees shall be
acceptable to the Agent in its sole reasonable discretion;
(xiii) an irrevocable payment instruction directing a
portion of the proceeds of the Effective Date Loans to be applied
to pay in full the loans outstanding under the Affiliate Bridge
Credit Agreement.
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52
(f) at the time of (and after giving effect to) the Effective
Date Loans, no Default or Event of Default specified in Article IX shall
have occurred and be continuing; and
(g) immediately after giving effect to the Effective Date Loans;
(i) the aggregate principal balance of all outstanding Term
Loans for each Lender shall not exceed such Lender's Term Loan
Commitment;
(ii) the Term Loan Outstandings shall not exceed the lesser
of the Borrowing Base or the Total Term Loan Commitment; and
(iii) no Concentration Restriction shall be exceeded or
otherwise violated.
5.3 Conditions of Term Loans. The obligations of the Lenders to
make any Term Loans hereunder on or subsequent to the Amendment Effective Date
are subject to the satisfaction of the following conditions:
(a) the Agent shall have received (1) a Borrowing Notice if
required by Article II and (2) a certificate of an Authorized
Representative providing information about the Financed Aircraft;
(b) the representations and warranties of the Credit Parties set
forth in Article VI, in Section 3.6(g) of the Security Agreement with
respect to the Eligible Lease of the Financed Aircraft being financed on
such borrowing date, and elsewhere in the Loan Documents shall be true
and correct in all material respects on and as of the date of such Loan,
with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that (from the date that financial statements are delivered to the
Agent and the Lenders pursuant to Section 7.1) the representation and
warranty contained in Section 6.6(a) shall be deemed to be a
representation and warranty that the financial statements of the
Borrowers and their respective Subsidiaries most recently delivered to
the Agent and the Lender pursuant to Section 7.1 present fairly the
financial condition of such Borrowers and Subsidiaries as of the period
reported therein, all in conformity with GAAP applied on a Consistent
Basis;
(c) at the time of the initial Loan to any Borrowing Affiliate,
such Borrowing Affiliate (including the Borrower with respect to such
Loan) shall have executed and delivered to the Agent an Assumption
Letter, and each of the Borrowers and the Agent shall have executed each
such Assumption Letter;
(d) at the time of the initial Loan to any Borrowing Affiliate,
such Borrowing Affiliate shall have delivered to the Agent (i) Facility
Guaranties fully executed by each Beneficial Owner of such Borrowing
Affiliate, by each Subsidiary of any such Beneficial Owner (other than
such
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Borrowing Affiliate), by each Subsidiary of such Borrowing Affiliate and
by each Applicable Intermediary (if any); (ii) Pledge Agreements fully
executed by the appropriate pledgors, granting a security interest in all
Pledged Interests with respect to each such Beneficial Owner, such
Borrowing Affiliate, each Subsidiary of any such Beneficial Owner, each
Subsidiary of such Borrowing Affiliate, and each Applicable Intermediary
(if any); (iii) Security Agreements fully executed by such Borrowing
Affiliate, each Beneficial Owner of such Borrowing Affiliate, each
Subsidiary of any such Beneficial Owner, each Subsidiary of each such
Borrowing Affiliate, and each Applicable Intermediary (if any); and (iv)
Collateral Assignments with respect to any Eligible Lease fully executed
by such Borrowing Affiliate, each Applicable Intermediary (if any) and
each Applicable Carrier;
(e) at the time of the initial Loan to any Borrowing Affiliate,
such Borrowing Affiliate (including the Borrower with respect to such
Loan) shall have delivered to the Agent all other agreements, instruments
and documents required by each such Assumption Letter;
(f) without limiting the generality of the foregoing, the Agent
shall have received on or prior to the date of such advance, each of the
documents and instruments required by Section 5.2 as if such Borrowing
Affiliate had been a Borrower at the time of the initial Loan, and as if
each Financed Aircraft financed by such Loan had been financed by the
initial Loan;
(g) at the time of (and after giving effect to) each Loan, no
Default or Event of Default specified in Article IX shall have occurred
and be continuing; and
(h) immediately after giving effect to a Term Loan:
(i) the aggregate principal balance of all outstanding Term
Loans for each Lender shall not exceed such Lender's Term Loan
Commitment; and
(ii) the Term Loan Outstandings shall not exceed the lesser
of the Borrowing Base or the Total Term Loan Commitment.
5.4 Appraisal Procedure. In order to determine the Fair Market
Value of any Financed Aircraft at the time of any Loan hereunder with respect to
such Aircraft, the Applicable Borrower and the Agent shall follow the following
procedure (an "Appraisal Procedure"): Prior to the date of such Loan, the
Applicable Borrower shall deliver to the Agent three (3) Qualified Appraisals of
such Aircraft, each prepared by a separate Qualified Appraiser and dated as of a
date reasonably close to the date of such Loan, and each opining as to the Fair
Market Value of such Aircraft. If all three Qualified Appraisals state the same
Fair Market Value, then such value shall be deemed to be the Fair Market Value
of such Aircraft at the time of such Loan; and, for the purposes of this
Agreement, the latest of such appraisals stating the same value shall be
referred to as the "Original Qualified Appraisal" for such Aircraft. If the
three Qualified Appraisals do not state the same Fair Market Value, then the
lower of (a) the arithmetic mean of the Fair Market Values in the three (3)
Qualified Appraisals and (b)
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the median value of the Fair Market Values in the three (3) Qualified Appraisals
shall be deemed to be the Fair Market Value of such Aircraft at the time of such
Loan; and the Qualified Appraisal stating such value (or, if such value is based
on the arithmetic mean of such Qualified Appraisals, the latest such Qualified
Appraisal having a value not exceeding such value and which shall be deemed to
state such arithmetic mean value) shall be referred to as the "Original
Qualified Appraisal" for such Aircraft.
ARTICLE VI
Representations and Warranties
Each Borrower represents and warrants with respect to itself, its
Subsidiaries (if any) and each other Credit Party (which representations and
warranties shall survive the delivery of the documents mentioned herein and the
making of Loans), that:
6.1 Organization and Authority.
(a) Each Borrower, each Subsidiary, each other Credit Party and
UniCapital is a trust, corporation, partnership or limited liability
company duly organized and validly existing under the laws of the
jurisdiction of its formation;
(b) Each Borrower, each Subsidiary, each other Credit Party and
UniCapital (x) has the requisite power and authority to own its
properties and assets and to carry on its business as now being conducted
and as contemplated in the Loan Documents, and (y) is qualified to do
business in every jurisdiction in which failure so to qualify would have
a Material Adverse Effect;
(c) Each Borrower has the power and authority to execute, deliver
and perform this Agreement and the Notes, and to borrow hereunder, and to
execute, deliver and perform each of the other Loan Documents to which it
is a party;
(d) Each Credit Party (other than the Borrowers) and UniCapital
has the power and authority to execute, deliver and perform each of the
Loan Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which any Credit Party or UniCapital is a party will be the legal, valid
and binding obligation or agreement, as the case may be, of such Credit
Party or UniCapital (as the case may be), enforceable against such Credit
Party or UniCapital (as the case may be) in accordance with its terms,
subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of
general principles of equity (whether considered in a proceeding at law
or in equity);
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6.2 Loan Documents. The execution, delivery and performance by
each Credit Party and UniCapital of each of the Loan Documents to which it is a
party:
(a) have been duly authorized by all requisite Organizational
Action of such Credit Party or UniCapital (as the case may be) required
for the lawful execution, delivery and performance thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority
binding on such Credit Party or UniCapital or their respective
properties, or (iii) the Organizational Documents or Operating Documents
of such Credit Party or UniCapital;
(c) does not conflict with, result in a breach of or constitute
an event of default, or an event which, with notice or lapse of time or
both, would constitute an event of default, under any contract,
indenture, agreement or other instrument or document to which such Credit
Party or UniCapital is a party, or by which the properties or assets of
such Credit Party or UniCapital are bound (except to the extent Section
8.20 prevents payment of certain earnout payments that may currently be
due and payable); and
(d) does not and will not result in the creation or imposition of
any Lien upon any of the properties or assets of such Credit Party or
UniCapital or any Subsidiary except any Liens in favor of the Agent and
the Lenders created by the Security Instruments;
6.3 Solvency. At the time of each Loan to a Borrower, such
Borrower and each Beneficial Owner of such Borrower and each Eligible
Intermediary, if any, is Solvent after giving effect to the transactions
contemplated by the Loan Documents;
6.4 Subsidiaries and Stockholders. No Borrower or Guarantor has
any Subsidiaries, except that a Guarantor may have a beneficial interest in a
Borrower, and a Borrower may own an Eligible Intermediary;
6.5 Ownership Interests. No Borrower or Guarantor owns any
interest in any Person, except that a Guarantor may have a beneficial interest
in a Borrower, and a Borrower may own an Eligible Intermediary;
6.6 Financial Condition.
(a) The Initial Borrower has heretofore furnished to each Lender
(i) the unaudited pro forma combined balance sheet and related statement of
operations for UniCapital, Cauff Lippman and certain affiliates thereof, NSJ and
certain of their Affiliates for the year ended December 31, 1998, (ii) the
audited balance sheet of UniCapital at December 31, 1998, (iii) the audited
combined balance sheet and related statements of income, changes in equity and
cash flows for Cauff Lippman and certain
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affiliates thereof for the year ended December 31, 1998, and (iv) the audited
combined balance sheet and related statements of operations, stockholders'
equity and cash flows for NSJ for the year ended December 31, 1998, and (iv) the
unaudited combined balance sheet and related statement of operations for
UniCapital for the year ended December 31, 1999. Such balance sheets, statements
of operations and income and other financial statements (including the notes
thereto) present fairly the financial condition of UniCapital, Cauff Lippman and
NSJ as of the period reported therein, all in conformity with GAAP;
(b) since December 31, 1999 there has been no material adverse
change in the (1) the business, properties, prospects, operations or condition,
financial or otherwise, of NSJ and its Subsidiaries, taken as a whole, Cauff
Lippman and its Subsidiaries, taken as a whole, or of the Borrowers and their
respective Subsidiaries (if any), taken as a whole, (2) the ability of any
Credit Party to pay or perform its respective obligations, liabilities and
indebtedness under the Loan Documents as such payment or performance becomes due
in accordance with the terms thereof, or (3) the rights, powers and remedies of
the Agent or any Lender under any Loan Document or the validity, legality or
enforceability thereof; and
(c) except as set forth in the financial statements referred to
in Section 6.6(a) or permitted by Section 8.5, neither any Borrower nor any
Beneficial Owner or any Subsidiary has incurred, other than in the ordinary
course of business, any material Indebtedness, Contingent Obligation or other
commitment or liability which remains outstanding or unsatisfied;
6.7 Title to Properties. (a) Each Borrower and each of its
Subsidiaries and each other Credit Party has good and marketable title to all
its real and personal properties, subject to no transfer restrictions or Liens
of any kind, except for the transfer restrictions and Liens described in
Schedule 6.7 and Permitted Liens; and
(b) each Non-SPE Credit Party has good and marketable title to
all Collateral under the Security Instruments to which it is a party, subject to
no transfer restrictions or Liens of any kind, except for the transfer
restrictions and Liens described in Schedule 6.7 and Permitted Liens;
6.8 Taxes. Except as set forth in Schedule 6.8, each Borrower,
each of its Subsidiaries and each Credit Party (other than Non-SPE Credit
Parties) has filed or caused to be filed all federal, state and local tax
returns (and each Non-SPE Credit Party has filed or caused to be filed all
federal and state income tax returns and all other material federal, state and
local tax returns) in each case which are required to be filed by it and, except
for taxes and assessments being contested in good faith by appropriate
proceedings diligently conducted and against which reserves reflected in the
financial statements described in Section 6.6(a) (or the financial statements
most recently delivered pursuant to Section 7.1(a)) and satisfactory to the
Borrowers' independent certified public accountants have been established, have
paid or caused to be paid all taxes as shown on said returns or on any
assessment received by it, to the extent that such taxes have become due;
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6.9 Other Agreements. No Credit Party nor any Subsidiary is
(i) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(ii) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any
agreement or instrument to which such Credit Party or any Subsidiary is a
party, which default has, or if not remedied within any applicable grace
period could reasonably be likely to have, a Material Adverse Effect;
6.10 Litigation. Except as set forth in Schedule 6.10, there is
no action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of any Borrower, threatened by or against any Borrower or any
Subsidiary or other Credit Party or affecting any Borrower or any Subsidiary or
other Credit Party or any properties or rights of any Borrower or any Subsidiary
or other Credit Party, which could reasonably be likely to have a Material
Adverse Effect;
6.11 Margin Stock. The proceeds of the borrowings made hereunder
will be used by the Borrowers only for the purposes expressly authorized herein.
None of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither any Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof;
6.12 Investment Company. No Credit Party is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (15 U.S.C. Section 80a-1, et seq.). The
application of the proceeds of the Loans and repayment thereof by each Borrower
and the performance by each Borrower and the other Credit Parties of the
transactions contemplated by the Loan Documents will not violate any provision
of said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder, in each case as in effect on the date hereof;
6.13 Patents, Etc. Each Borrower and each other Credit Party
(other than a Non- SPE Credit Party) owns or has the right to use, under valid
license agreements or otherwise, all material patents, licenses, franchises,
trademarks, trademark rights, trade names, trade name rights, trade secrets and
copyrights necessary to or used in the conduct of its businesses as now
conducted and as
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contemplated by the Loan Documents, without known conflict with any patent,
license, franchise, trademark, trade secret, trade name, copyright, other
proprietary right of any other Person;
6.14 No Untrue Statement. Neither (a) this Agreement nor any
other Loan Document or certificate or document executed and delivered by or on
behalf of any Borrower or any other Credit Party in accordance with or pursuant
to any Loan Document nor (b) any statement, representation, or warranty provided
to the Agent in connection with the negotiation or preparation of the Loan
Documents contains any misrepresentation or untrue statement of material fact or
omits to state a material fact necessary, in light of the circumstance under
which it was made, in order to make any such warranty, representation or
statement contained therein not misleading;
6.15 No Consents, Etc. Neither the respective businesses or
properties of the Credit Parties or any Subsidiary, nor any relationship among
the Credit Parties or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of any Credit Party as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by the Loan Documents, which, if not obtained or
effected, would be reasonably likely to have a Material Adverse Effect, or if
so, such consent, approval, authorization, filing, registration or qualification
has been duly obtained or effected, as the case may be;
6.16 Employee Benefit Plans. (a) Neither any Guarantor nor any
Borrower or any of their respective Subsidiaries has or has ever had any
Employee Benefit Plan, any Multiemployer Plan or any Pension Plan, or any
obligation to fund any such plan;
(b) Each Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit Laws with
respect to all Employee Benefit Plans except for any required amendments for
which the remedial amendment period as defined in Section 401(b) of the Code has
not yet expired. Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. No material liability
has been incurred by any Borrower or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan
or any Multiemployer Plan;
(c) Neither any Borrower nor any ERISA Affiliate has (i) engaged
in a nonexempt prohibited transaction described in Section 4975 of the Code or
Section 406 of ERISA affecting any of the Employee Benefit Plans or the trusts
created thereunder which could subject any such Employee Benefit Plan or trust
to a material tax or penalty on prohibited transactions imposed under Internal
Revenue Code Section 4975 or ERISA, (ii) incurred any accumulated funding
deficiency with respect to any Employee Benefit Plan, whether or not waived, or
any other liability to the PBGC which remains
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59
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid, (iii) failed to make a required contribution or
payment to a Multiemployer Plan, or (iv) failed to make a required installment
or other required payment under Section 412 of the Code, Section 302 of ERISA or
the terms of such Employee Benefit Plan;
(d) No Termination Event has occurred or is reasonably expected
to occur with respect to any Pension Plan or Multiemployer Plan, and neither any
Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal liability
with respect to any Multiemployer Plan;
(e) The present value of all vested accrued benefits under each
Employee Benefit Plan which is subject to Title IV of ERISA, did not, as of the
most recent valuation date for each such plan, exceed the then current value of
the assets of such Employee Benefit Plan allocable to such benefits;
(f) To the best of each Borrower's knowledge, each Employee
Benefit Plan subject to Title IV of ERISA, maintained by any ERISA Affiliate,
has been administered in accordance with its terms in all material respects and
is in compliance in all material respects with all applicable requirements of
ERISA and other applicable laws, regulations and rules;
(g) The consummation of the Loans provided for herein will not
involve any prohibited transaction under ERISA which is not subject to a
statutory or administrative exemption; and
(h) No material proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of any Borrower after due inquiry, is
threatened concerning or involving any Employee Benefit Plan;
6.17 No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder;
6.18 Environmental Laws. Except as listed on Schedule 6.18, each
Borrower, each Guarantor and each Subsidiary is in compliance with all
applicable Environmental Laws and has been issued and currently maintains all
required federal, state and local permits, licenses, certificates and approvals.
Except as listed on Schedule 6.18, neither any Borrower, any Guarantor nor any
Subsidiary has been notified of any pending or threatened action, suit,
proceeding or investigation, and neither any Borrower, any Guarantor nor any
Subsidiary is aware of any facts, which (a) calls into question, or could
reasonably be expected to call into question, compliance by any Borrower, any
Guarantor or any Subsidiary with any Environmental Laws, (b) seeks, or could
reasonably be expected to form the basis of a meritorious proceeding, to
suspend, revoke or terminate any license, permit or approval necessary for the
operation of any Borrower's, any Guarantor's or any Subsidiary's business or
facilities or for the generation, handling, storage, treatment or disposal of
any Hazardous Materials, or (c) seeks to cause, or could reasonably be expected
to form the basis of a meritorious proceeding to cause, any property of any
Borrower, any Guarantor or any Subsidiary or other Credit Party to be subject to
any restrictions on ownership, use, occupancy or transferability under any
Environmental Law;
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6.19 Employment Matters. No Borrower or Guarantor has or has ever
had any employee other than officers thereof;
6.20 RICO. Neither any Borrower nor any Subsidiary is engaged in
or has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws; and
6.21 Liens. Subject to the proviso to clause (f) of the
definition of "Eligible Aircraft" in Section 1.1, the Agent (for itself and on
behalf of the Lenders) has a first priority perfected Lien (subject to Permitted
Liens) on all Financed Aircraft and all other Collateral under the Security
Instruments.
ARTICLE VII
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders
shall otherwise consent in writing, each Borrower will, and where applicable
will cause each Guarantor and each Subsidiary (if any) to:
7.1 Financial Reports, Etc. (a) As soon as practical and in any
event within 90 days after the end of each Fiscal Year, deliver or cause to be
delivered to the Agent and each Lender (i) audited consolidated balance sheets
of UniCapital and its Subsidiaries as at the end of such Fiscal Year, and the
notes thereto (if any), and the related audited consolidated statements of
income, changes in stockholders' equity and cash flows, and the respective notes
thereto (if any), for such Fiscal Year, setting forth comparative financial
statements for the preceding year, reported on by PriceWaterhouse Coopers or
other independent certified public accountants of nationally recognized
standing, together with the unaudited consolidating income statements relating
to such audited income statements, all prepared in accordance with GAAP applied
on a Consistent Basis, and in the case of unaudited consolidating statements
accompanied by a certificate of an Authorized Representative to the effect that
such financial statements present fairly the financial position of UniCapital
and its Subsidiaries as of the end of such Fiscal Year and the results of their
operations for such Fiscal Year, (ii) consolidated balance sheets of the
Borrowers and their respective Subsidiaries as at the end of such Fiscal Year,
and the notes thereto (if any), and the related consolidated statements of
income and the respective notes thereto (if any), for such Fiscal Year,
accompanied by a certificate of an Authorized Representative to the effect that
such financial statements present fairly the financial position of the Borrowers
and their respective Subsidiaries as of the end of such Fiscal Year and the
results of their operations for such Fiscal Year and (iii) a certificate of an
Authorized Representative demonstrating compliance with Section 8.1, and
providing information about the Financed Aircraft, which certificate shall be in
the form of Exhibit G;
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(b) as soon as practical and in any event within 60 days after
the end of each fiscal quarter (except the last fiscal quarter of the Fiscal
Year), deliver to the Agent and each Lender (i) consolidated and consolidating
income statements of UniCapital and its Subsidiaries and consolidated income
statements of the Borrowers and their respective Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current Fiscal Year
through the end of such reporting period, all prepared in accordance with GAAP
applied on a Consistent Basis and accompanied by a certificate of an Authorized
Representative to the effect that such financial statements present fairly the
financial position of UniCapital and its Subsidiaries and of the Borrowers and
their respective Subsidiaries as of the end of such fiscal period and the
results of their operations for such fiscal period, and (ii) a certificate of an
Authorized Representative containing computations for such quarter comparable to
that required pursuant to Section 7.1(a)(iii);
(c) together with each delivery of the financial statements
required by Section 7.1(a)(i), deliver to the Agent and each Lender a letter
from the independent certified accountants of UniCapital stating that in
performing the audit necessary to render an opinion on the financial statements
of UniCapital for such Fiscal Year, they obtained no knowledge of any Default or
Event of Default by any Borrower in the fulfillment of the terms and provisions
of this Agreement insofar as they relate to financial covenants (which at the
date of such statement remains uncured); or if the accountants have obtained
knowledge of such Default or Event of Default, a statement specifying the nature
and period of existence thereof;
(d) as soon as practical and in any event within 30 days after
the end of each calendar month, deliver or cause to be delivered to the Agent
and each Lender a certificate of an Authorized Representative providing
information about the Financed Aircraft, and stating that each Borrower is in
compliance with the covenants and terms hereof and that no Event of Default has
occurred and is continuing, in each case as of the end of such month, which
certificate shall be in the form of Exhibit R;
(e) promptly upon their becoming available to any Borrower, such
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular or
special reports or effective registration statements which any Borrower, any
Guarantor or any Subsidiary shall file with the Securities and Exchange
Commission (or any successor thereto) or any securities exchange, (ii) any proxy
statement distributed by any Borrower, any Guarantor or any Subsidiary to its
shareholders, bondholders or the financial community in general, and (iii) any
management letter or other report submitted to any Borrower, any Guarantor or
any Subsidiary by independent accountants in connection with any annual, interim
or special audit of any Borrower or any Subsidiary; and
(f) promptly, from time to time, deliver or cause to be delivered
to the Agent and each Lender such other information regarding any Borrower's,
any Guarantor's and any Subsidiary's operations, business affairs and financial
condition as the Agent or such Lender may reasonably request.
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Subject to Section 11.15, the Agent and the Lenders are hereby
authorized to deliver a copy of any such financial or other information
delivered hereunder to the Lenders (or any affiliate of any Lender) or to the
Agent, to any Governmental Authority having jurisdiction over the Agent or any
of the Lenders pursuant to any written request therefor or in the ordinary
course of examination of loan files, or to any other Person who shall acquire or
consider the assignment of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement;
7.2 Maintain Properties. Maintain or cause each Applicable
Carrier to maintain and make repairs to each Financed Aircraft in compliance
with the requirements set forth in Schedule 7.2 hereto; and each Borrower,
Guarantor and Subsidiary shall maintain all other properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such other properties, and maintain free from Liens
all trademarks, trade names, patents, copyrights, trade secrets, know-how, and
other intellectual property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated hereby, all in accordance with customary
and prudent business practices;
7.3 Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 8.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary;
7.4 Regulations and Taxes. Comply in all material respects with
or contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien other than a
Permitted Lien against any of its properties;
7.5 Insurance. Maintain or cause to be maintained with respect to
each Financed Aircraft and all other Collateral the insurance described on
Exhibit L;
7.6 True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by GAAP
with respect to doubtful accounts and all taxes, assessments, charges, levies
and claims and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements;
7.7 Right of Inspection. Permit any Person designated by any
Lender or the Agent to visit and inspect any Aircraft, or any other property,
corporate book or financial report of any Borrower or any Subsidiary and to
discuss its affairs, finances and accounts with its principal officers and
independent certified public accountants; and cause each Eligible Carrier to
permit any Person designated by any Lender or any Agent to inspect any Financed
Aircraft, all at reasonable times, at
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reasonable intervals and with reasonable prior notice, subject to any
restriction on inspection contained in an Eligible Lease with respect to such
Financed Aircraft, provided that notwithstanding any such Lease, (a) any Person
designated by a Lender or the Agent may inspect such Financed Aircraft at any
reasonable time upon an event of default under such Lease, and (b) upon any
Event of Default, the Applicable Borrower will use its best efforts to cause the
Applicable Carrier (and any other Person) to permit any Person designated by a
Lender or the Agent to inspect such Financed Aircraft at any time;
7.8 Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business;
7.9 Governmental Licenses. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental Authorities
as are required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents;
7.10 Covenants Extending to Other Persons. Cause each Guarantor
and each of their respective Subsidiaries (if any) to do with respect to itself,
its business and its assets, each of the things required of any Borrower in
Sections 7.2 through 7.9, and 7.18 inclusive;
7.11 Officer's Knowledge of Default. Upon any officer of any
Guarantor or any Borrower obtaining knowledge of any Default or Event of Default
hereunder or under any other obligation of any Borrower or any Subsidiary or
other Credit Party to any Lender, or any event, development or occurrence which
could reasonably be expected to have a Material Adverse Effect, cause such
officer or an Authorized Representative to promptly notify the Agent of the
nature thereof, the period of existence thereof, and what action such Borrower
or such Subsidiary or other Credit Party proposes to take with respect thereto;
7.12 Suits or Other Proceedings. Upon any officer of any
Guarantor or any Borrower obtaining knowledge of any action, suit, litigation,
investigation, or other proceeding being instituted or threatened against any
Borrower or any Subsidiary or other Credit Party, in any court or before any
Governmental Authority, or any attachment, levy, execution or other process
being instituted against any assets of any Borrower or any Subsidiary or other
Credit Party, making a claim or claims in an aggregate amount greater than
$100,000 (or, in the case of a Non-SPE Credit Party, greater than $2,000,000),
in each case exclusive of punitive damages, not otherwise covered by insurance
or that would otherwise be reasonably expected to have a Material Adverse
Effect, promptly deliver to the Agent written notice thereof stating the nature
and status of such action, suit, litigation, investigation, dispute, proceeding,
levy, execution or other process;
7.13 Notice of Environmental Complaint or Condition. Promptly
provide to the Agent true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims or citations received by any Borrower,
any Guarantor or any Subsidiary relating to any (a) violation or alleged
violation by any Borrower, any Guarantor or any Subsidiary of any applicable
Environmental
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Law; (b) release or threatened release by any Borrower, any Guarantor or any
Subsidiary, or by any Person handling, transporting or disposing of any
Hazardous Material on behalf of any Borrower, any Guarantor or any Subsidiary,
or at any facility or property owned or leased or operated by any Borrower, any
Guarantor or any Subsidiary, of any Hazardous Material, except where occurring
legally pursuant to a permit or license; or (c) liability or alleged liability
of any Borrower, any Guarantor or any Subsidiary for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials;
7.14 Environmental Compliance. If any Borrower, any Guarantor or
any Subsidiary shall receive any letter, notice, complaint, order, directive,
claim or citation alleging that any Borrower, any Guarantor or any Subsidiary
has violated any Environmental Law, has released any Hazardous Material, or is
liable for the costs of cleaning up, removing, remediating or responding to a
release of Hazardous Materials, any Borrower, any Guarantor and any Subsidiary
shall, within the time period permitted and to the extent required by the
applicable Environmental Law or the Governmental Authority responsible for
enforcing such Environmental Law, remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation or release or satisfy such
liability;
7.15 Indemnification. Without limiting the generality of Section
11.9, UniCapital and each Borrower hereby agrees jointly and severally to
indemnify and hold the Agent and the Lenders, and their respective officers,
directors, employees and agents, harmless from and against any and all claims,
losses, penalties, liabilities, damages and expenses (including assessment and
cleanup costs and reasonable attorneys', consultants' or other expert fees,
expenses and disbursements) arising directly or indirectly from, out of or by
reason of (a) the violation of any Environmental Law by any Borrower or any
Subsidiary or with respect to any property owned, operated or leased by any
Borrower or any Subsidiary or (b) the handling, storage, transportation,
treatment, emission, release, discharge or disposal of any Hazardous Materials
by or on behalf of any Borrower or any Subsidiary, or on or with respect to
property owned or leased or operated by any Borrower or any Subsidiary. The
provisions of this Section 7.15 shall survive repayment of the Obligations and
expiration or termination of this Agreement;
7.16 Further Assurances. At the Borrowers' cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents;
7.17 Swap Agreements. The Borrowers shall maintain Swap
Agreements in an amount mutually agreed to by the Agent and the Borrowers;
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7.18 Continued Operations. Subject to Section 8.16, continue at
all times to conduct its business and engage principally in the same line or
lines of business substantially as heretofore conducted;
7.19 Semi-Annual Appraisal of Aircraft and Leases. On or within
30 days prior to September 30, 2000, deliver or cause to be delivered to the
Agent and each Lender three separate Qualified Appraisals, dated no earlier than
30 days prior to the date of delivery, of each Financed Aircraft. Such
appraisals shall be conducted every 6 months unless (on or within 30 days prior
to each date that is an even multiple of six months from the date of Loan with
respect to such Financed Aircraft), in the Agent's sole discretion, it becomes
advisable to have such appraisals conducted every 3 months, in which case the
Agent shall notify Borrower of same and the Agent shall pay the cost of the
additional appraisals.) If all three Qualified Appraisals state the same Fair
Market Value, then such value shall be deemed to be the Fair Market Value of
such Aircraft. If the three Qualified Appraisals do not state the same Fair
Market Value, then the lower of (a) the arithmetic mean of the Fair Market
Values in the three (3) Qualified Appraisals and (b) the median value of the
Fair Market Values in the three (3) Qualified Appraisals shall be deemed to be
the Fair Market Value of such Aircraft at the time of such Loan.
7.20 Semi-Annual Review of Rated Carriers and Aircraft Models.
Permit the Agent to conduct, and cooperate with the Agent in conducting, a
semi-annual review of each Rated Carrier and each model of Aircraft listed on
Exhibit K, such review to be conducted during the 30 days prior to April 5 and
October 5 of each year. In the event that the Agent determines, based on an
affirmative statement of Moody's or S&P, that any such Rated Carrier or Aircraft
model is no longer acceptable for the purposes of this Agreement, the Agent may
amend Exhibit J or Exhibit K (as the case may be) to remove such Rated Carrier
or Aircraft model from the respective Exhibit. Thereafter, any Rated Carrier or
Aircraft model removed from such a list shall cease to qualify as a Rated
Carrier or model of Eligible Aircraft, and the Borrowing Base and Eligible
Aircraft Borrowing Bases shall be reduced accordingly. In the event that the
Agent reasonably determines that any carrier should be added as a Rated Carrier
or that any Aircraft model should be added to the list of permitted equipment,
the Agent may amend Exhibit J or Exhibit K (as the case may be) to add such
carrier or model of Aircraft to the respective Exhibit. Thereafter, any carrier
Aircraft added or moved to such a list shall qualify as a Rated Carrier or
Eligible Aircraft, and the Borrowing Base and Eligible Aircraft Borrowing Bases
shall be modified accordingly. The Borrowers may from time to time request a
review of Rated Carriers or Aircraft types and seek the consent of the Agent to
the modification of Exhibits J or K (as the case may be) to add or move carriers
or Aircraft types, which consent the Agent may withhold in its sole discretion.
Adjustments of the Borrowing Base pursuant to this Section 7.20 shall be
applicable to any advance of Loans subsequent to such adjustment but shall not
be applied to require a prepayment of Loans under Section 2.3(b)(ii).
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7.21 Maintenance of Aircraft; Other Covenants and Restrictions;
Non-Discrimination.
(a) Ensure that any Lease with respect to any Financed Aircraft
contains covenants and restrictions regarding the maintenance, alteration,
replacement, pooling, sublease and (in the case of a Lease) return of such
Aircraft by the Applicable Carrier, which covenants and restrictions satisfy the
requirements of Schedule 7.21(a) hereto;
(b) Promptly and diligently take or cause to be taken all steps
which a prudent international aircraft lessor or financier would reasonably take
in light of all of the relevant circumstances to compel the relevant Eligible
Carrier to comply with the terms of any Lease, or, if applicable and the
Applicable Borrower is entitled to do so, to repossess the applicable Financed
Aircraft (and, if a prudent international aircraft lessor or financier would
determine it necessary or desirable, to de-register and export the same to a
safe location) if any failure to comply with such Lease is not promptly
remedied.
7.22 Re-registration of Aircraft. Ensure that any Lease with
respect to any Aircraft contain covenants and restrictions regarding
re-registration of such Aircraft, which covenants and restrictions satisfy the
requirements of the Security Agreement.
7.23 Servicer. Ensure that the Servicer continues to serve in
compliance with the Servicing Agreement.
7.24 Employee Benefit Plans.
(a) (Without limiting the generality of Section 8.10(a)) with
reasonable promptness, and in any event within thirty (30) days thereof, give
notice to the Agent of (a) the establishment of any new Pension Plan (which
notice shall include a copy of such plan), (b) the commencement of contributions
to any Employee Benefit Plan to which any Borrower or any of its ERISA
Affiliates was not previously contributing, (c) any material increase in the
benefits of any existing Employee Benefit Plan, (d) each funding waiver request
filed with respect to any Employee Benefit Plan and all communications received
or sent by any Borrower or any ERISA Affiliate with respect to such request and
(e) the failure of any Borrower or any ERISA Affiliate to make a required
installment or payment under Section 302 of ERISA or Section 412 of the Code by
the due date;
(b) (Without limiting the generality of Section 8.10(a)) promptly
and in any event within fifteen (15) days of becoming aware of the occurrence or
forthcoming occurrence of any (a) Termination Event or (b) nonexempt "prohibited
transaction," as such term is defined in Section 406 of ERISA or Section 4975 of
the Code, in connection with any Pension Plan or any trust created thereunder,
deliver to the Agent a notice specifying the nature thereof, what action any
Borrower or any ERISA Affiliate has taken, is taking or proposes to take with
respect thereto and, when known, any
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action taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto; and
(c) (Without limiting the generality of Section 8.10(a)) with
reasonable promptness but in any event within fifteen (15) days for purposes of
clauses (a), (b) and (c), deliver to the Agent copies of (a) any unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a) of the Code, (b)
all notices received by any Borrower or any ERISA Affiliate of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (c) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by any Borrower or any ERISA Affiliate with the
Internal Revenue Service with respect to each Pension Plan and (d) all notices
received by any Borrower or any ERISA Affiliate from a Multiemployer Plan
sponsor concerning the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA. Each Borrower will notify the Agent in writing within
five (5) Business Days of such Borrower or any ERISA Affiliate obtaining
knowledge or reason to know that such Borrower or any ERISA Affiliate has filed
or intends to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA.
7.25 Collection Accounts. The Borrowers shall establish the
Collection Account and the Cash Collateral Account as provided in the Lockbox
Agreement. Each Borrower shall immediately deposit in the Collection Account as
provided in the Lockbox Agreement all proceeds (including without limitation
rent) from any Lease of any Financed Aircraft.
ARTICLE VIII
Negative Covenants
Until the Obligations have been paid and satisfied in full and
this Agreement has been terminated in accordance with the terms hereof, unless
the Required Lenders shall otherwise consent in writing, no Borrower will, nor
will it permit any Guarantor or any Subsidiary (if any) to:
8.1 EBITDA-to-Interest Ratio. Permit the Consolidated
EBITDA-to-Interest Ratio for the Borrowers and their respective Subsidiaries
(other than any Borrower that acquired its Eligible Aircraft during such
Quarterly Period) as of the end of any Quarterly Period to be less than 1.75 to
1.00;
8.2 Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, except for Acquisition of a Subsidiary as
permitted by Section 8.7;
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8.3 Capital Expenditures. Make or become committed to make any
Capital Expenditures, except for Capital Expenditures to maintain or purchase
Eligible Aircraft;
8.4 Liens. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to (a) any property or
assets now owned or hereafter acquired by any Borrower, any Guarantor or any
Subsidiary or (b) any Financed Aircraft, other than
(i) Liens created under the Security Instruments in favor of the
Agent and the Lenders; and Liens arising under the Eligible Leases in
favor of the Applicable Intermediary (as lessor) or the Applicable
Borrower which Liens in each case have been assigned to the Agent;
(ii) Liens set forth in Schedule 6.7;
(iii) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted,
each of which Liens shall be fully bonded over, to the reasonable
satisfaction of the Agent;
(iv) statutory Liens of landlords and Liens of mechanics,
materialmen and other Liens imposed by law or created in the ordinary
course of business and (i) in existence less than 90 days from the date
of creation thereof for amounts not yet due or (ii) which are being
contested in good faith by appropriate proceedings diligently conducted,
which are inferior in respect of the Collateral to the Liens conferred
under the Security Instruments or have been fully bonded over to the
reasonable satisfaction of the Agent, and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(v) Liens arising out of any judgment or award with respect to
which an appeal or proceeding for review is being prosecuted in good
faith by appropriate proceedings diligently conducted, and with respect
to which a stay of execution is in effect;
(vi) Liens created by the Applicable Carrier under an Eligible
Lease, which Liens are created without the knowledge of the Applicable
Borrower and are released or fully bonded over to the reasonable
satisfaction of the Agent within 30 days after the Applicable Borrower
has notice or knowledge of any such Lien; and
(vii) Liens securing Indebtedness described in Section 8.5(b).
8.5 Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of any Borrower, any Guarantor or any Subsidiary, howsoever
evidenced, except:
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(a) Indebtedness owing to (including guaranties in favor of) the
Agent or any Lender in connection with this Agreement, any Note or other
Loan Document;
(b) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(c) Indebtedness arising from Swap Agreements permitted under
Section 7.17; and
(d) unsecured intercompany Indebtedness for loans and advances
made by UniCapital, CLA, Cauff Lippman or NSJ or any Beneficial Owner to
a Borrower or a Guarantor, provided that such intercompany Indebtedness
is evidenced by a promissory note or similar written instrument
acceptable to the Agent which provides that such Indebtedness is
subordinated to obligations, liabilities and undertakings of the holder
or owner thereof under the Loan Documents on terms acceptable to the
Agent.
8.6 Transfer of Assets. Sell, lease, transfer or otherwise
dispose of any assets of any Borrower, any Guarantor or any Subsidiary other
than (a) leases of Aircraft under Eligible Leases, (b) sales of Aircraft, or
sales of the beneficial interest or ownership of a Beneficial Owner or a
Borrower or (c) sales of Additional Collateral for a price approved pursuant to
Section 2.12(c), provided in each case that (i) the net proceeds of such sales
are promptly applied in accordance with Section 2.3(b), and (ii) at the time of
any such sale the requirements of Section 2.12 for release of the respective
Borrower, Guarantor or Additional Collateral Provider have been satisfied.
8.7 Subsidiaries; Investments. Own, create or permit to exist any
Subsidiary (except that a Guarantor may own beneficial interests in, or (subject
to Section 8.5(d)) make advances to, a Borrower and a Borrower may own the
Applicable Intermediary), or otherwise purchase, own, invest in or otherwise
acquire, directly or indirectly, any stock or other securities, or make or
permit to exist any interest whatsoever in any other Person or permit to exist
any loans or advances to any Person, other than loans referred to in Section
8.5(d);
8.8 Merger or Consolidation. (a) Consolidate with or merge into
any other Person, or (b) permit any other Person to merge into it, or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise dispose
of all or a substantial part of its assets without the consent of the Agent,
except as permitted by Section 8.6 and except in the case of a Borrower or
Guarantor that simultaneously terminates its status as a Borrower or Guarantor
hereunder in accordance with Section 2.12.
8.9 Transactions with Affiliates. Other than transactions
permitted under Section 8.8, enter into any transaction after the Original
Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of any Borrower or of any Guarantor, except (a) that such Persons
may render services to
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a Borrower, a Guarantor or their Subsidiaries for compensation at the same rates
generally paid by Persons engaged in the same or similar businesses for the same
or similar services, (b) that a Borrower, a Guarantor or any Subsidiary may
render services to such Persons for compensation at the same rates generally
charged by such Borrower, such Guarantor or such Subsidiary, (c) in either case
in the ordinary course of business and pursuant to the reasonable requirements
of a Borrower's (or a Guarantor's or any Subsidiary's) business consistent with
past practice of such Borrower or such Guarantor and its Subsidiaries and upon
fair and reasonable terms no less favorable to such Borrower (or such Guarantor
or any Subsidiary) than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate, and (d) subject to Section 8.18, the
Manager may render the services described in the Servicing Agreement for the
fees set forth therein.
8.10 Employee Benefit Plans; ERISA Affiliates; Employees.
(a) Have (i) any Employee Benefit Plan, any Multiemployer Plan or
any Pension Plan, or any obligation to fund any such plan, or (ii) any employee
other than officers thereof; or
(b) (without limiting the generality of Section 8.10(a)) with
respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan:
(c) permit the occurrence of any Termination Event which would
result in a liability on the part of any Borrower or any ERISA Affiliate to the
PBGC; or
(d) permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension Plans
allocable to such benefit liabilities; or
(e) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any Pension
Plan, whether or not waived; or
(f) permit any ERISA Affiliate to fail to make any contribution
or payment to any Multiemployer Plan which such ERISA Affiliate may be required
to make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(g) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or Sections
4975 of the Code for which a civil penalty pursuant to Section 502(I) of ERISA
or a tax pursuant to Section 4975 of the Code may be imposed; or
(h) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any Employee
Benefit Plan which establishment or amendment could result in liability to any
Borrower or any ERISA Affiliate or any obligation of any Borrower to any
Multiemployer Plan or increase the obligation of any ERISA Affiliate to a
Multiemployer Plan; or
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(i) fail, or permit any Borrower or any ERISA Affiliate to fail,
to establish, maintain and operate each Employee Benefit Plan in compliance in
all material respects with the provisions of ERISA, the Code, all applicable
Foreign Benefit Laws and all other applicable laws and the regulations and
interpretations thereof;
8.11 Fiscal Year. Change its Fiscal Year, or have any fiscal year
other than the Fiscal Year;
8.12 Dissolution, etc. Wind up, liquidate or dissolve
(voluntarily or involuntarily) or commence or suffer any proceedings seeking any
such winding up, liquidation or dissolution, except in connection with a
transaction permitted pursuant to Section 8.8;
8.13 Change in Control. Cause, suffer or permit to exist or occur
any Change of Control;
8.14 Negative Pledge Clauses. Enter into or cause, suffer or
permit to exist any agreement with any Person other than the Agent and the
Lenders pursuant to this Agreement or any other Loan Documents which prohibits
or limits the ability of any Borrower or any Subsidiary to create, incur, assume
or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired; provided that any Eligible Lease may
contain such a prohibition or limitation so long as the prohibition or
limitation does not apply to any Lien granted in favor of the Agent or any
Lender pursuant to the Loan Documents;
8.15 Partnerships. Become a general partner in any general or
limited partnership;
8.16 Business and Operations. Engage in any business or
operations other than the ownership, financing and leasing of Aircraft or the
ownership of a Borrower or Applicable Intermediary engaged in such business or
operations, or matters reasonably incidental thereto, or the performance of the
Loan Documents, provided, however, that no Borrower that owns or is the
Applicable Borrower with respect to any Aircraft may own or be the Applicable
Borrower with respect to any other Aircraft;
8.17 Ownership, Operation and Leasing of Financed Aircraft. (a)
Permit any Person other than a Borrower (or a Beneficial Owner solely by virtue
of its beneficial interest in the respective Borrower) to own beneficially or of
record any Financed Aircraft;
(b) Permit any Financed Aircraft to be leased, subleased or
chartered to any Person other than the Applicable Carrier or the Applicable
Intermediary, or to be operated by any Person other than the Applicable Borrower
or the Applicable Carrier, except as permitted in the Security Agreement;
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(c) Permit any Financed Aircraft to be leased to an Eligible
Carrier except under the terms of an Eligible Lease;
(d) Permit any Financed Aircraft to be flown into or located in
any country (or part thereof) designated by any insurance company providing
insurance with respect to such Aircraft as a war zone, a recognized area of
hostilities or an area threatened with war or hostilities unless (in addition to
any other insurance that may be required by Section 3.7 of the Security
Agreement) such Aircraft is covered by hijacking (air piracy), governmental
confiscation, nationalization, expropriation and restraint insurance, in each
case in the amount (and with the provisions) required by Section 3.7 of the
Security Agreement (as if the Applicable Carrier were not a Rated Carrier,
except that a Rated Carrier may self-insure for such risks to the extent
permitted by (and subject to the overall limits on self-insurance contained in)
Section 3.7(c) of the Security Agreement);
(e) enter into a new Lease with respect to any Financed Aircraft
or Eligible Engine without the prior written consent of the Agent;
8.18 Servicing Agreement. (a) Amend, modify or supplement the
Servicing Agreement in any material respect without the consent of the Agent;
(b) Pay any management or other fee to UniCapital, CLA, Cauff
Lippman or any Affiliate other than payment of servicing fees under the
Servicing Agreement to the extent permitted in the Lockbox Agreement; or
(c) Commit or permit any material breach of the Servicing
Agreement;
8.19 Representations regarding Agent and Lenders. Represent or
hold out, or permit any Applicable Carrier to represent or hold out, the Agent
or any Lender as (a) the owner of any Financed Aircraft, (b) carrying goods or
passengers on any such Financed Aircraft, or (c) being in any way responsible
for any operation of carriage (whether for hire or reward or gratuitously) which
may be undertaken by any Borrower, Guarantor, Subsidiary or Applicable Carrier.
8.20 Earnout Payments. None of UniCapital and its Subsidiaries
shall pay or cause to be paid the cash portion of any "earnout" payment or
similar distribution to any Affiliate, officer or employee; provided, that such
distributions may be made, in an aggregate amount not to exceed $8,000,000, at
such time as UniCapital and its consolidated subsidiaries have Available
Liquidity in an amount of at least $70,000,000 for a continuous period of at
least 14 calendar days.
ARTICLE IX
Events of Default and Acceleration
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9.1 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment of
the principal of any Loan or other Obligation, when and as the same shall
be due and payable whether pursuant to any provision of Article II, at
maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment of
any amount of interest on any Loan or other Obligation or of any fees or
other amounts payable to any of the Lenders or the Agent within three (3)
Business Days after the date on which the same shall be due and payable;
or
(c) if default shall be made in the performance or observance of
any covenant set forth in Section 7.5, 7.11, 7.12, 7.19 or Article VIII;
(d) if a default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision contained
in this Agreement or the Notes (other than as described in clauses (a),
(b) or (c) above), or if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or provision
contained in any of the other Loan Documents (beyond any applicable grace
period, if any, contained therein) or in any instrument or document
evidencing or creating any obligation, guaranty, or Lien in favor of the
Agent (acting in any capacity) or any of the Lenders or delivered to the
Agent (acting in any capacity) or any of the Lenders in connection with
or pursuant to this Agreement or any of the Obligations, and such default
shall continue for 30 or more days after the earlier of receipt of notice
of such default to an Authorized Representative from the Agent (acting in
any capacity) or an officer of any Borrower becomes aware of such
default, or if any Loan Document ceases to be in full force and effect
(other than by reason of any action by the Agent (acting in any
capacity)), or if without the written consent of the Lenders, this
Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void or unenforceable
for any reason whatsoever (other than in accordance with its terms in the
absence of default or by reason of any action by the Lenders or the Agent
(acting in any capacity)); or
(e) if there shall occur (i) a default, which is not waived, in
the payment of any principal, interest, premium or other amount with
respect to any Indebtedness or Rate Hedging Obligation (other than the
Loans and other Obligations) of any Borrower or any Subsidiary, or (ii) a
default, which is not waived, in the performance, observance or
fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness or Rate
Hedging Obligation may have been issued, created, assumed, guaranteed
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or secured by any Borrower or any Subsidiary, or (iii) any other event of
default as specified in any agreement or instrument under or pursuant to
which any such Indebtedness or Rate Hedging Obligation may have been
issued, created, assumed, guaranteed or secured by any Borrower or any
Subsidiary, and such default or event of default under clause (i), (ii)
or (iii) above shall continue for more than the period of grace, if any,
therein specified, or such default or event of default under clause (i),
(ii) or (iii) above shall permit the holder of any such Indebtedness (or
any agent or trustee acting on behalf of one or more holders) to
accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Agent (acting in any capacity) or
any Lender by or on behalf of any Borrower or any other Credit Party
pursuant to or in connection with any Loan Document, or otherwise, shall
be false or misleading in any material respect when given; or
(g) if any Borrower, any Subsidiary or other Credit Party shall
be unable to pay its debts generally as they become due; file a petition
to take advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole or
any substantial part of its property; file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator
or conservator of any Borrower, any Subsidiary or other Credit Party or
of the whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of sixty
(60) days, or approve a petition filed against any Borrower, any
Subsidiary or other Credit Party seeking liquidation, reorganization or
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state, which petition is not dismissed within sixty (60) days; or if,
under the provisions of any other law for the relief or aid of debtors, a
court of competent jurisdiction shall assume custody or control of any
Borrower, any Subsidiary or other Credit Party or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against any Borrower,
any Subsidiary or other Credit Party any proceeding or petition seeking
reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state which proceeding or petition remains
undismissed for a period of sixty (60) days; or if any Borrower, any
Subsidiary or other Credit Party takes any action to indicate its consent
to or approval of any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $10,000 is
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rendered against any Borrower or any Subsidiary, or (ii) there is any
attachment, injunction or execution against any of a Borrower's or
Subsidiaries' properties for any amount in excess of $10,000 in the
aggregate; and such judgment, attachment, injunction or execution remains
unpaid, unstayed, undischarged, unbonded or undismissed for a period of
thirty (30) days; or
(j) if any Borrower or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend
all or any part of its operations material to the conduct of the business
of any Borrower or such Subsidiary for a period of more than 60 days; or
(k) if there shall occur and not be waived an "Event of Default"
as defined in any of the other Loan Documents or in any credit agreement
or other document evidencing or securing the NationsBank Facility or in
one or more other documents or instruments evidencing or securing any
Indebtedness for Money Borrowed of NSJ, Cauff Lippman or any of their
respective Subsidiaries in an aggregate amount of $10,000,000 or more; or
(l) if this Agreement or any other Loan Document shall for any
reason not be, or be asserted by any Borrower or any other Credit Party
or Subsidiary not to be, a legal, valid and binding obligation of any
Borrower or any Credit Party (as the case may be) enforceable in
accordance with its terms; or
(m) if any Lien of the Agent pursuant to any Loan Document shall
for any reason not be, or be asserted by any Borrower or any other Credit
Party or Subsidiary not to be, a valid, first priority perfected Lien on
the Collateral identified therein (except to the extent that such Lien is
not required hereunder to be a valid, first priority perfected Lien on
such Collateral), subject to no other Liens except Permitted Liens;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be taken:
(i) the Agent, with the consent of the Required Lenders, may, and
at the direction of the Required Lenders shall, declare any
obligation of the Lenders to make further Loans terminated,
whereupon the obligation of each Lender to make further Loans
hereunder shall terminate immediately, and (ii) the Agent shall
at the direction of the Required Lenders, at their option,
declare by notice to the Borrowers any or all of the Obligations
to be immediately due and payable, and the same, including all
interest accrued thereon and all other obligations of any
Borrower to the Agent and the Lenders, shall forthwith become
immediately due and payable without presentment, demand, protest,
notice or other formality of any kind, all of which are hereby
expressly waived, anything contained herein or in any instrument
evidencing the Obligations to the contrary notwithstanding;
provided, however, that notwithstanding the above, if there shall
occur
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an Event of Default under clause (g) or (h) above, then the
obligation of the Lenders to make Loans hereunder shall
automatically terminate and any and all of the Obligations shall
be immediately due and payable without the necessity of any
action by the Agent or the Required Lenders or notice to the
Agent or the Lenders;
(B) each Borrower shall, upon demand of the Agent or the
Required Lenders, promptly cause to be performed at Borrowers'
expense by independent certified public accountants acceptable to
the Agent an audit of all Financed Aircraft; and
(C) the Agent and each of the Lenders shall have all of the
rights and remedies available under the Loan Documents or under
any applicable law, including without limitation all of the
rights and remedies of a secured party under any applicable
Uniform Commercial Code, the FAA Act, the Mortgage Convention or
any Applicable Foreign Aviation Law.
9.2 Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
9.3 Cumulative Rights. No right or remedy herein conferred upon
the Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right or
remedy shall be cumulative and shall be in addition to every other such right or
remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute, or otherwise.
9.4 No Waiver. No course of dealing between any Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
9.5 Allocation of Proceeds. If an Event of Default has occurred
and not been waived, and the maturity of the Loans has been accelerated pursuant
to Article IX hereof, all payments received by the Agent hereunder, in respect
of any principal of or interest on the Obligations or any other amounts payable
by any Borrower hereunder, shall be applied by the Agent in the following order
(or in such manner as the Required Lenders may determine):
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77
(a) amounts due to the Lenders pursuant to Sections 2.9 and 11.5;
(b) amounts due to the Agent pursuant to Section 10.8;
(c) payments of interest on Loans, to be applied for the ratable
benefit of the Lenders;
(d) payments of principal of Loans, to be applied for the ratable
benefit of the Lenders;
(e) amounts due to the Lenders pursuant to Sections 7.15 and
11.9;
(f) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
(g) amounts due to any of the Lenders in respect of Obligations
consisting of liabilities under any Swap Agreement with any of the
Lenders on a pro rata basis according to the amounts owed; and
(h) any surplus remaining after application as provided for
herein, to any Borrower or otherwise as may be required by applicable
law.
9.6 Activities of Eligible Carriers. Notwithstanding anything
contained in this Agreement or any other Loan Document, the Credit Parties shall
not be deemed to be in breach of their respective obligations hereunder or
thereunder with respect to the care, maintenance, alteration, possession,
return, replacement, pooling, subleasing, use or operation of any Financed
Aircraft or any part thereof subject to an Eligible Lease by virtue of a default
by the Applicable Carrier under such Eligible Lease so long as each of the
following conditions is satisfied:
(a) such default by the Applicable Carrier is not within the
control of any Credit Party,
(b) the Credit Parties are in compliance with Section 7.21,
(c) such default does not relate to any use or location of an
Aircraft in any jurisdiction that constitutes an Event of Default
hereunder, any failure to make any payment required by this Agreement or
any other Loan Document when due hereunder or thereunder, or any failure
to maintain any insurance required under this Agreement or any other Loan
Document, or any failure to maintain perfection of the Agent's Lien on
any Collateral,
(d) within 60 days (or, if the Applicable Carrier is a U.S.
Carrier, 90 days) after any Credit Party has notice or knowledge of such
default (such 60 or 90-day period, as the
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78
case may be, being referred to as the "Applicable Lease Cure Period"),
such default is completely cured or all conditions under Section 2.12 for
the release of the Applicable Borrower with respect to such Aircraft
(including without limitation all payments required under such Section
with respect to Loans, other Obligations, equity contributions and other
loans and interest) have been satisfied in full, and
(e) during the Applicable Lease Cure Period, the Applicable
Borrower shall not request or receive any Loan hereunder.
ARTICLE X
The Agent
10.1 Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents, as "Mortgagee" under each Security
Agreement and as "Security Agent" under each Lockbox Agreement (references in
this Article X to the term "Agent" being deemed to include as well such other
capacities), with such powers and discretion as are specifically delegated to
the Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 10.5 and the first sentence of
Section 10.6 hereof shall include its affiliates and its own and its affiliates'
officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in the Loan Documents and shall not be a trustee or
fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made in
or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them
under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or any
other document referred to or provided for therein or for any failure by
any Credit Party or any other Person to perform any of its obligations
thereunder;
(c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by any Credit Party or the satisfaction of any condition or to
inspect the property (including the books and records) of any Credit
Party or any of its Subsidiaries or affiliates;
(d) shall not be required to initiate or conduct any litigation
or collection proceedings under any Loan Document; and
<PAGE> 86
79
(e) shall not be responsible for any action taken or omitted to
be taken by it under or in connection with any Loan Document, except for
its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
10.2 Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telefacsimile)
believed by it to be genuine and correct and to have been signed, sent or made
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel for any Credit Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Agent receives and accepts an Assignment and Acceptance executed
in accordance with Section 11.1 hereof. As to any matters not expressly provided
for by the Loan Documents, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding on all of the Lenders; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Loan Document or applicable law or unless it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking any such action.
10.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or a Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 10.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
10.4 Rights as Lender. With respect to its Term Loan Commitment
and the Loans made by it, Lehman (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent and
its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or affiliates as if it were not acting
as Agent, and Lehman (and any successor
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80
acting as Agent) and its affiliates may accept fees and other consideration from
any Credit Party or any of its Subsidiaries or affiliates for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
10.5 Indemnification. The Lenders agree to indemnify the Agent
(to the extent not reimbursed under Section 11.9 hereof, but without limiting
the obligations of any Borrower under such Section) ratably in accordance with
their respective Term Loan Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
the Agent (including by any Lender) in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by any
Borrower under Section 11.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by any Borrower. The agreements contained
in this Section 10.5 shall survive payment in full of the Loans and all other
amounts payable under this Agreement.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Loan Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or any of its Subsidiaries or
affiliates that may come into the possession of the Agent or any of its
affiliates.
10.7 Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent, subject (so long as no Default or Event of Default has occurred and is
continuing) to the written consent of an Authorized Representative, which
consent shall not be unreasonably withheld. If no successor Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Agent's giving of notice
of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a commercial bank organized under the laws of the
United States of America having combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor shall thereupon succeed to and become vested with all
the rights, powers, discretion, privileges, and duties of the retiring Agent,
and the retiring Agent shall be
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discharged from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article X shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Agent.
10.8 Fees. The Borrowers agree, jointly and severally, to pay to
the Agent, for its individual account, an annual Agent's fee as from time to
time agreed to by any Borrower and Agent in writing.
ARTICLE XI
Miscellaneous
11.1 Assignments and Participations. (a) Each Lender may assign
to one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Note, and its Term Loan Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least
equal to $5,000,000 or an integral multiple of $1,000,000 in excess
thereof;
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under
this Agreement and the Note;
(iv) the parties to such assignment shall execute and deliver to
the Agent for its acceptance an Assignment and Acceptance in the form of
Exhibit B hereto, together with any Note subject to such assignment and a
processing fee of $3,500 (which amount shall not be payable by any
Borrower);
(v) any assignment of all or any portion of the Term Loan
Commitment shall require the consent of an Authorized Representative,
such consent not to be unreasonably withheld; and
(vi) neither any Borrower nor UniCapital shall incur any greater
expense or liabilities (including, without limitation, indemnities and
increased costs) than it would have incurred had such assignment not
taken place.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and
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benefits of a Lender hereunder and the assigning Lender shall, to the extent of
such assignment, relinquish its rights and be released from its obligations
under this Agreement. Upon the consummation of any assignment pursuant to this
Section, the assignor, the Agent and the Borrowers shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and the
assignee. If the assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to the Borrowers and the
Agent certification as to exemption from deduction or withholding of Taxes in
accordance with Section 4.6.
(b) The Agent shall maintain at its address referred to in
Section 11.2 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Term Loan Commitment of, and principal amount of the Loans owing
to, each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(c) Upon its receipt of an Assignment and Acceptance executed by
the parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit B
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Term Loan Commitment or its Loans);
provided, however, that (i) such Lender s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection provisions contained in
Article IV and the right of set-off contained in Section 11.3, and (iv) each
Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender s rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of any
Borrower relating to its Loans and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other than
amendments, modifications, or waivers decreasing the amount of principal of or
the rate at which interest or fees are payable on such Loans or Note, extending
any scheduled principal payment date or date fixed for the payment of interest
on such Loans or Note, releasing all or substantially all of the Collateral
(except for a release of Collateral in accordance with Section 2.12), releasing
any Guarantor (except for a release of a Guarantor in accordance with Section
2.12), or extending or increasing its Term Loan Commitment).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any portion of
its Loans and its Note to any Federal Reserve
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Bank as collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the
assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning any
Borrower or any of its Subsidiaries in the possession of such Lender from time
to time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 11.15.
11.2 Notices. Any notice shall be conclusively deemed to have
been received by any party hereto and be effective (i) on the day on which
delivered (including hand delivery by commercial courier service) to such party
(against receipt therefor), (ii) on the date of receipt at such address,
telefacsimile number or telex number as may from time to time be specified by
such party in written notice to the other parties hereto or otherwise received),
in the case of notice by telegram, telefacsimile or telex, respectively (where
the receipt of such message is verified by return), or (iii) on the fifth
Business Day after the day on which mailed, if sent prepaid by certified or
registered mail, return receipt requested, in each case delivered, transmitted
or mailed, as the case may be, to the address, telex number or telefacsimile
number, as appropriate, set forth below or such other address or number as such
party shall specify by notice hereunder:
(a) if to UniCapital or any Borrower:
to UniCapital or such Borrower
c/o UniCapital Corporation
10800 Biscayne Boulevard
Miami, Florida 33161
Attn: Treasurer
Telephone: (305) 899-5000
Telefacsimile: (305) 899-5050
with a copy to:
Cauff, Lippman Aviation, Inc.
c/o UniCapital Corporation
10800 Biscayne Boulevard
Miami, Florida 33161
Attn: Wayne Lippman
Telephone: (305) 899-5123
Telefacsimile: (305) 899-5041
and, if such Borrower is a UniCapital Subsidiary Trust,
a copy to:
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First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telephone: (801) 246-5630
Telefacsimile: (801) 246-5053
(b) if to the Agent:
Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attn: Vincent Primiano
with a copy to:
Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attn: Chris Czako
(c) if to the Lenders:
At the addresses set forth on the signature pages hereof
and on the signature page of each Assignment and
Acceptance;
(d) if to any other Credit Party, at the address set forth on the
signature page of the Facility Guaranty or Security Instrument executed by such
Credit Party, as the case may be.
11.3 Right of Set-off; Adjustments. (a) Upon the occurrence and
during the continuance of any Event of Default, each Lender (and each of its
affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its affiliates)
to or for the credit or the account of any Borrower against any and all of the
obligations of any Borrower now or hereafter existing under this Agreement and
the Note held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Lender agrees promptly to notify the applicable Borrower
after any such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender under this Section 11.3 are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
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(b) If any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of the Loans owing to it, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Loans owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loans owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. Each Borrower agrees that any
Lender so purchasing a participation from a Lender pursuant to this Section 11.3
may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of the Borrowers in the amount
of such participation.
11.4 Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this Agreement and the Notes and
shall continue in full force and effect so long as any of Obligations remain
outstanding or any Lender has any Loan hereunder or any Borrower has continuing
obligations hereunder unless otherwise provided herein. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of any Borrower which are
contained in the Loan Documents shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.
11.5 Expenses. UniCapital and each Borrower agrees, jointly and
severally, to pay on demand (subject, in the case of preparation, execution,
delivery and administration costs, to the Fee Letter), all costs and expenses of
the Agent in connection with the preparation, execution, delivery,
administration, modification, and amendment of this Agreement, the other Loan
Documents, and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of counsel for the Agent (excluding
the cost of internal counsel) with respect thereto and with respect to advising
the Agent as to its rights and responsibilities under the Loan Documents;
provided, however, that UniCapital and the Borrower shall not be obligated to
reimburse the Agent for the fees of Simpson Thacher & Bartlett related to the
documentation and negotiation of the initial Loan Documents in an amount in
excess of $75,000 plus disbursements. UniCapital and each Borrower further
agrees, jointly and severally, to pay on demand all costs and expenses of the
Agent and the Lenders, if any (including, without limitation, reasonable
external attorneys' fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of the Loan
Documents and the other documents to be delivered hereunder.
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11.6 Amendments and Waivers. Any provision of this Agreement or
any other Loan Document may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrowers and the Required Lenders
(and, if Article X or the rights or duties of the Agent are affected thereby, by
the Agent); provided that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase the Term Loan Commitment of the Lenders, (ii)
reduce the principal of or rate of interest on any Loan or any fees or other
amounts payable hereunder, (iii) postpone any date fixed for the payment of any
scheduled installment of principal of or interest on any Loan or any fees or
other amounts payable hereunder or for termination of any Term Loan Commitment,
or (iv) change the percentage of the Term Loan Commitment or of the unpaid
principal amount of the Notes, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this Section 11.6 or any
other provision of this Agreement or (v) release any Guarantor or all or
substantially all of the Collateral (except for a release of a Guarantor or
Collateral in accordance with Section 2.13);
No notice to or demand on any Borrower in any case shall entitle
such Borrower or any other Borrower to any other or further notice or demand in
similar or other circumstances, except as otherwise expressly provided herein.
No delay or omission on any Lender's or the Agent's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any Default or Event of Default.
11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
11.8 Return of Funds. If after receipt of any payment of all or
any part of the Obligations, any Lender is for any reason compelled to surrender
such payment to any Person because such payment is determined to be void or
voidable as a preference, impermissible setoff, a diversion of trust funds or
for any other reason, this Agreement shall continue in full force and each
Borrower, jointly and severally, shall be liable to, and shall indemnify and
hold the Agent or such Lender harmless for, the amount of such payment
surrendered until the Agent or such Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or the Lenders in reliance upon such payment, and any such contrary
action so taken shall be without prejudice to the Agent or the Lenders' rights
under this Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable.
11.9 Indemnification; Limitation of Liability. (a) UniCapital and
each Borrower, jointly and severally, agrees to indemnify and hold harmless the
Agent (which term for purposes of this Section 11.9 includes the "Mortgagee"
under each Security Agreement and the "Security Agent" under each Lockbox
Agreement) and each Lender and each of their affiliates and their respective
officers, directors, employees, agents, and advisors (each, an "Indemnified
Party") from and against any and all
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claims, damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable external attorneys' fees, but excluding principal and
accrued interest on any Loan) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of defense in connection
therewith) the Loan Documents, any of the transactions contemplated herein, any
Aircraft or other Collateral, any possession, performance, transportation,
management, sale, ownership, registration, mortgage, charging, control,
maintenance, service, repair, design, testing, defect, overhaul, purchase,
bearing, use or operation of any Aircraft or other Collateral, or the actual or
proposed use of the proceeds of the Loans, except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 11.9 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by UniCapital, any Borrower,
its directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated. UniCapital and each
Borrower agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to it, any of its
Subsidiaries, any Guarantor or any security holders or creditors thereof arising
out of, related to or in connection with the transactions contemplated in any
Loan Document, except to the extent that such liability directly results from
such Indemnified Party's gross negligence or willful misconduct. UniCapital and
each Borrower agrees not to assert any claim against the Agent, any Lender, any
of their affiliates, or any of their respective directors, officers, employees,
attorneys, agents, and advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to the Loan Documents, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Loans.
(b) Without prejudice to the survival of any other agreement of
UniCapital or any Borrower hereunder, the agreements and obligations of
UniCapital and each Borrower contained in this Section 11.9 shall survive the
payment in full of the Loans and all other amounts payable under this Agreement.
(c) Except as expressly provided herein, each Lender, each
Borrower and the Agent agree that this Agreement and each other Loan Document
entered into by a Borrower is executed by a Qualified Trustee, not individually
but solely as Trustee under a Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Trustee, that each and all of the
representations, undertakings and agreements by a Qualified Trustee, or for the
purpose or with the intention of binding a Qualified Trustee, are made and
intended for the purpose of binding only the Trust Estates (and, to the extent
any Lender, Borrower or Agent has an interest therein, any liability insurance
proceeds), and that in no case whatsoever shall any Qualified Trustee be
personally liable for any loss in respect of such representations, undertakings
and agreements, that nothing herein contained shall be construed as creating any
liability on any Qualified Trustee individually or personally, to perform any
covenant, either express or implied, herein, all such liability, if any, being
expressly waived by each
<PAGE> 95
88
Lender, each Borrower and the Agent and by each and every Person now or
hereafter claiming by, through or under such Persons except with respect to the
gross negligence or willful misconduct of such Qualified Trustee or for any
Liens on the Collateral arising from, through or under such Qualified Trustee in
its individual capacity, and that so far as any Qualified Trustee, individually
or personally is concerned, each Lender, each Borrower and the Agent and any
Person claiming by, through or under such Persons shall look solely, except as
provided above, to the Trust Estates (and, to the extent any Lender, Borrower or
Agent has an interest therein, any liability insurance proceeds), for the
performance of any obligation under this Credit Agreement and the other Loan
Documents. The term "Trustee" as used in this Section 11.9(c) shall include any
Qualified Trustee succeeding a Qualified Trustee, as trustee under a Trust
Agreement. Any obligation of any Borrower hereunder or under the other Loan
Documents may be performed by a Beneficial Owner, and any such performance shall
not be construed as revocation of the trust created by any Trust Agreement.
11.10 Severability. If any provision of this Agreement or the
other Loan Documents shall be determined to be illegal or invalid as to one or
more of the parties hereto, then such provision shall remain in effect with
respect to all parties, if any, as to whom such provision is neither illegal nor
invalid, and in any event all other provisions hereof shall remain effective and
binding on the parties hereto.
11.11 Entire Agreement. This Agreement, together with the other
Loan Documents, constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all previous proposals,
negotiations, representations, and other communications between or among the
parties, both oral and written, with respect thereto.
11.12 Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes or this
Agreement, including all charges or fees in connection therewith deemed in the
nature of interest under applicable law shall not exceed the Highest Lawful Rate
(as such term is defined below). If the rate of interest (determined without
regard to the preceding sentence) under any Note or this Agreement at any time
exceeds the Highest Lawful Rate (as defined below), the outstanding amount of
the Loans made hereunder shall bear interest at the Highest Lawful Rate until
the total amount of interest due hereunder equals the amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect. In addition, if when the Loans made
hereunder are repaid in full the total interest due hereunder (taking into
account the increase provided for above) is less than the total amount of
interest which would have been due hereunder if the stated rates of interest set
forth in this Agreement had at all times been in effect, then to the extent
permitted by law, the Borrowers, jointly and severally, shall pay to the Agent
an amount equal to the difference between the amount of interest paid and the
amount of interest which would have been paid if the Highest Lawful Rate had at
all times been in effect. Notwithstanding the foregoing, it is the intention of
the Lenders and the Borrowers to conform strictly to any applicable usury laws.
Accordingly, if any Lender contracts for, charges, or receives any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at such
Lender's option be applied to the
<PAGE> 96
89
outstanding amount of the Loans made hereunder or be refunded to the applicable
Borrower. As used in this paragraph, the term "Highest Lawful Rate" means the
maximum lawful interest rate, if any, that at any time or from time to time may
be contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
11.13 Payments. All principal, interest, and other amounts to be
paid by any Borrower under this Agreement and the other Loan Documents shall be
paid to the Agent at the Principal Office in Dollars and in immediately
available funds, without setoff, deduction or counterclaim. Subject to the
definition of "Interest Period" herein, whenever any payment under this
Agreement or any other Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of interest and fees, as applicable, and as the case may be.
11.14 Confidentiality. The Agent and each Lender (each, a
"Lending Party") agrees to keep confidential any information furnished or made
available to it by UniCapital or any Affiliate of UniCapital pursuant to or in
connection with this Agreement or the other Loan Documents which is clearly
labeled as "confidential material"; provided that nothing herein shall prevent
any Lending Party from disclosing such information (a) to any other Lending
Party or any affiliate of any Lending Party, or any officer, director, employee,
agent, or advisor of any Lending Party or affiliate or any Lending Party, (b) to
any other Person if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any law, rule, or regulation, (d)
upon the order of any court or administrative agency, (e) upon the request or
demand of any regulatory agency or authority, (f) that is or becomes available
to the public or that is or becomes available to any Lending Party other than as
a result of a disclosure by any Lending Party prohibited by this Agreement, (g)
in connection with any litigation to which such Lending Party or any of its
affiliates may be a party, (h) to the extent necessary in connection with the
exercise of any remedy under this Agreement or any other Loan Document, and (i)
subject to provisions substantially similar to those contained in this Section,
to any actual or proposed participant or assignee.
11.15 GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) UNICAPITAL AND EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY
<PAGE> 97
90
OF THIS AGREEMENT, UNICAPITAL AND EACH BORROWER EXPRESSLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE
OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND UNICAPITAL AND EACH BORROWER HEREBY IRREVOCABLY
SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) UNICAPITAL AND EACH BORROWER AGREES THAT SERVICE OF PROCESS
MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF UNICAPITAL OR SUCH BORROWER
PROVIDED IN SECTION 11.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.
(d) NOTHING CONTAINED IN SUBSECTIONS (a) OR (b) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY OTHER
JURISDICTION. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, UNICAPITAL AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT
AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE
AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, UNICAPITAL, THE BORROWERS, THE AGENT AND THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY
IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
<PAGE> 98
91
[SIGNATURE PAGES FOLLOW]
<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written above.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (22222) DATED AS
OF SEPTEMBER 28, 199 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 22222, INC., as Initial
Borrower
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (53015) DATED AS
OF AUGUST 28, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 53105, INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 100
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED UNDER THE
TRUST AGREEMENT (24837) DATED AS
OF OCTOBER 30, 1998 BY AND
BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 24837, INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE UNDER THE AMENDED AND
RESTATED TRUST AGREEMENT (347)
DATED AS OF OCTOBER 30, 1998 BY
AND BETWEEN FIRST SECURITY BANK,
NATIONAL ASSOCIATION AND
AIRCRAFT 347, INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 101
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23377) DATED AS OF JUNE 24,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23377,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
TRUST CREATED BY TRUST AGREEMENT
(23830) DATED AS OF JULY 10,
1998 BY AND BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23830,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 102
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (24474), DATED
AS OF APRIL 1, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24474,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS OWNER TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED BY
TRUST AGREEMENT (25262), DATED
AS OF APRIL 25, 1999 BETWEEN
FIRST SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 25262,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 103
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (49368), DATED AS OF
APRIL 25, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 49368,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53623), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53623,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 104
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (53624), DATED AS OF
AUGUST 18, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 53624,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23771), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23771,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 105
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (23772), DATED AS OF
APRIL 1, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 23772,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24355), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24355,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 106
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY
AS TRUSTEE ON BEHALF OF THAT
CERTAIN TRUST CREATED BY TRUST
AGREEMENT (24356), DATED AS OF
APRIL 7, 1999 BETWEEN FIRST
SECURITY BANK, NATIONAL
ASSOCIATION AND AIRCRAFT 24356,
INC.
By: /s/ Brett R. King
-----------------------------
Name: Brett R. King
Title: Vice President
<PAGE> 107
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 14, 1984 BETWEEN
AIRCRAFT 49262, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
----------------------------
Name: Monica M. Henry
Title: Financial Services
Officer
WILMINGTON TRUST COMPANY, NOT IN
ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE ON BEHALF OF
THAT CERTAIN TRUST CREATED UNDER
THE TRUST AGREEMENT, DATED AS OF
NOVEMBER 15, 1984 BETWEEN
AIRCRAFT 49263, INC. (AS
ASSIGNEE OF CCD AIR TEN, INC.)
AND WILMINGTON TRUST COMPANY
By: /s/ Monica M. Henry
----------------------------
Name: Monica M. Henry
Title: Financial Services
Officer
AIRCRAFT 24813, INC.
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Vice President
<PAGE> 108
UNICAPITAL CORPORATION
By: /s/ Daniel M. Chait
----------------------------
Name: Daniel M. Chait
Title: Senior Vice
President &
Treasurer
<PAGE> 109
LEHMAN COMMERCIAL PAPER INC.,
as Agent and as a Lender
By: /s/ Vincent Primiano
----------------------------
Name: Vincent Primiano
Title: Vice President
<PAGE> 110
Schedule 1
Applicable Commitment Percentages
<TABLE>
<CAPTION>
Applicable
Term Loan Commitment
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
Lehman Commercial $378,700,000 100%
Paper Inc.
</TABLE>
<PAGE> 111
Schedule 2
Existing Loans and Effective Date Loans
<TABLE>
<CAPTION>
Financed Aircraft Principal Balance Additional Amount
- ----------------- of Existing Loan of Effective Date
---------------- Loan
-----------------
<S> <C> <C>
(Model, Serial No.
and Lessee) $ $
Additional
Equity Collateral
- -----------------
[description] (zero) $
Engine
- ------
(Serial No. and Mfgr.) (zero) $
</TABLE>
<PAGE> 112
Schedule 3
Collateral and Borrowing Bases
Financed Aircraft Borrowing Base (as of
- ----------------- Amendment Effective Date)
-------------------------
<PAGE> 113
Schedule 6.7
Transfer Restrictions to Sale or Assignment of Financed Aircraft
1. Transfer will be subject to the Applicable Carrier's right of
quiet enjoyment described in Section 3.4 hereof.
2. Such transfer shall not violate, and shall be in accordance
with, any applicable laws.
3. Transferee may be required to be an institutional investor
and/or have a specified minimum net worth or have its obligations
guaranteed by a Person with a specified minimum net worth.
4. Transfers to competitors or other restricted persons may be
prohibited.
5. Transferee may be required to make customary covenants and
representations and provide counsel opinions.
6. Transfers may be limited as to aggregate number of persons who
may hold interests in the Financed Aircraft.
7. Transfers may be limited to persons organized, domiciled or
resident in certain jurisdictions or so as otherwise to prevent or limit
taxes.
8. Transferee may be required to pay all fees, costs and taxes
related to the transfer.
9. Transferee may be required to make certain filings and
recordations.
10. Transferee may be required to provide certain indemnities in
connection with the transfer.
The foregoing notwithstanding, the restrictions in items 3
through 10 shall only apply to a transfer of an Aircraft, or an interest in the
owner of an Aircraft, to the extent (a) such Aircraft is subject to an Eligible
Lease, (b) such Eligible Lease contains such restrictions, and (c) such Eligible
Lease has not been terminated.
<PAGE> 114
Schedule 7.21(a)
Maintenance, Return, Alteration, Replacement, Pooling and Lease
Any Lease respect to any Financed Aircraft shall require the
Applicable Carrier to meet standards with respect to the maintenance and
alteration of such Financed Aircraft, and with respect to the replacement of
parts and pooling of parts and engines, which standards in each case meet the
requirements of the Security Agreement and are at least as restrictive as the
obligations of the Applicable Borrower with respect to such Aircraft under the
Security Agreement.
Any Lease with respect to any Financed Aircraft shall also
require that such Financed Aircraft be returned to the Applicable Borrower (i)
in compliance with the maintenance requirements set forth in the Security
Agreement, and (ii) in the case of an Aircraft, in such condition as to enable
an airworthiness certificate to be obtained from the FAA or (in the case of
Aircraft not registered in the United States) any Applicable Foreign
Jurisdiction with respect to such Aircraft.
Any Lease with respect to any Financed Aircraft shall also
contain restrictions on the leasing, subleasing and chartering of such Financed
Aircraft that are at least as restrictive as the terms of Section 8.17 and the
Security Agreement.
<PAGE> 1
EXHIBIT 11.01
STATEMENT REGARDING COMPUTATION OF PER SHARE LOSS
(In thousands, except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
----------- -----------
<S> <C> <C>
BASIC:
Weighted average common shares outstanding 54,873,166 51,915,588
Loss available to common shareholders $ (276,593) $ (887)
Basic loss per share $ (5.04) $ (0.02)
DILUTED:
Weighted average common shares outstanding 54,873,166 51,915,588
Assumed exercise of stock options -- --
Contingently issuable shares -- --
Total shares used in computation 54,873,166 51,915,588
Loss available to common shareholders $ (276,593) $ (887)
Diluted loss per share $ (5.04) $ (0.02)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 26,366
<SECURITIES> 13,464
<RECEIVABLES> 999,437
<ALLOWANCES> 23,181
<INVENTORY> 228,953
<CURRENT-ASSETS> 0
<PP&E> 24,211
<DEPRECIATION> 5,120
<TOTAL-ASSETS> 2,366,982
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 57
<OTHER-SE> 570,550
<TOTAL-LIABILITY-AND-EQUITY> 2,366,982
<SALES> 264,188
<TOTAL-REVENUES> 343,172
<CGS> 282,005
<TOTAL-COSTS> 641,903
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17,817
<INTEREST-EXPENSE> 44,496
<INCOME-PRETAX> (298,731)
<INCOME-TAX> (21,697)
<INCOME-CONTINUING> (276,593)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (276,593)
<EPS-BASIC> (5.04)
<EPS-DILUTED> (5.04)
</TABLE>
