SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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: January 31, 1998
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 0-9827
PETROLEUM HELICOPTERS, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0395707
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2121 Airline Highway, Suite 400
P. O. Box 578
Metairie, Louisiana 70001-5979
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504)828-3323
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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 11, 1998
----- -----------------------------
Voting Common Stock 2,800,886 shares
Non-Voting Common Stock 2,352,935 shares
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except share data)
(Unaudited)
January 31, April 30,
----------- ----------
1998 1997(1)
ASSETS -------- --------
Current assets:
Cash and cash equivalents $ 3,424 $ 2,437
Accounts receivable - net of allowance 42,422 35,547
Inventory 35,127 30,202
Prepaid expenses 1,345 1,115
Refundable income taxes - 1,344
Notes receivable - investee companies 445 1,313
---------- ---------
Total current assets 82,763 71,958
---------- ---------
Investments 2,653 2,480
Property and equipment:
Cost 255,640 244,047
Less accumulated depreciation (120,647) (122,220)
---------- ---------
134,993 121,827
---------- ---------
Other 593 366
---------- ---------
$ 221,002 $ 196,631
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 20,925 $ 21,059
Accrued vacation pay 5,305 4,784
Income taxes payable 1,579 -
Current maturities of long-term debt 4,915 4,868
---------- ---------
Total current liabilities 32,724 30,711
---------- ---------
Long-term debt, net of current
maturities 71,300 57,592
Deferred income taxes 18,239 18,239
Other long-term liabilities 6,197 2,673
Minority interest 177 -
Shareholders' equity:
Voting common stock - par value of
$0.10; authorized 12,500,000;
issued shares of 2,800,866 at
January 31 and April 30 280 280
Non-voting common stock - par value of
$ 0.10; authorized 12,500,000;
issued shares of 2,319,082 and
2,294,066 at January 31 and
April 30, respectively 232 229
Additional paid-in capital 11,119 10,810
Retained earnings 80,734 76,097
---------- ---------
92,365 87,416
---------- ---------
$ 221,002 $ 196,631
========== =========
(1)The balance sheet at April 30, 1997 is condensed from the
audited financial statements at that date. The accompanying
notes are an integral part of these condensed consolidated
financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands of dollars, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
January 31, January 31,
------------------- -------------------
1998 1997 1998 1997
------- ------- ------- -------
REVENUES:
Operating revenues $ 58,803 $ 53,269 $ 172,238 $ 158,670
Other income(deductions) 679 (701) 1,195 (451)
------- ------- ------- -------
59,482 52,568 173,433 158,219
------- ------- ------- -------
EXPENSES:
Direct expenses 51,081 46,181 149,065 135,992
Selling, general
and administrative 4,021 2,953 11,906 9,198
Interest expense 1,325 1,181 3,751 3,200
------- ------- ------- -------
56,427 50,315 164,722 148,390
------- ------- ------- -------
Earnings before
income taxes 3,055 2,253 8,711 9,829
Income taxes 1,235 939 3,562 3,952
------- ------- ------- -------
Net earnings $ 1,820 $ 1,314 $ 5,149 $ 5,877
======= ======= ======= =======
BASIC:
Earnings per common
share $ 0.36 $ 0.26 $ 1.01 $ 1.16
======= ======= ======= =======
DILUTED:
Earnings per common
share $ 0.35 $ 0.25 $ 0.99 $ 1.14
======= ======= ======= =======
Weighted average common
shares outstanding 5,118 5,078 5,106 5,077
Incremental common shares
from stock options and
restricted shares 84 89 87 89
------- ------- ------- -------
Weighted average common
shares and equivalents 5,202 5,167 5,193 5,166
======= ======= ======= =======
Dividends paid
per common share $ 0.05 $ 0.05 $ 0.15 $ 0.15
======= ======= ======= =======
The accompanying notes are an integral part of these condensed
consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Nine Months Ended January 31,
-----------------------------
1998 1997
-------- --------
Cash flows from operating activities:
Net earnings $ 5,149 $ 5,877
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation 9,210 7,277
Gain on equipment disposals (2,027) (93)
Equity in net earnings of
investee companies (167) 544
Changes in operating assets and
liabilities (8,647) (10,159)
Other 436 254
-------- --------
Net cash provided by operating
activities 3,954 3,700
-------- --------
Cash flows from investing activities:
Investments/acquisitions (8,754) (957)
Purchases of property and equipment (19,568) (30,657)
Proceeds from asset dispositions 12,063 2,065
-------- --------
Net cash used in investing
activities (16,259) (29,549)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 30,150 38,425
Payments on long-term debt (16,395) (11,587)
Proceeds from exercise of stock
options 328 63
Dividends paid (767) (762)
Other, net (24) (37)
-------- --------
Net cash provided by financing
activities 13,292 26,102
-------- --------
Increase in cash and cash equivalents 987 253
Cash and cash equivalents at
beginning of period 2,437 1,899
-------- --------
Cash and cash equivalents at end
of period $ 3,424 $ 2,152
======== ========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1998 AND 1997
(Unaudited)
(1) General
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with Form 10-Q
instructions of the Securities and Exchange Commission ("SEC")
from the books and records of Petroleum Helicopters, Inc. and
Subsidiaries ("PHI" or the "Company"). In the opinion of
management, these financial statements reflect all adjustments,
consisting of only normal, recurring adjustments, necessary to
present fairly the financial results for the interim periods
presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations of the SEC;
however, the Company believes that this information is fairly
presented. These condensed consolidated financial statements
should be read in conjunction with the financial statements
contained in the Company's Annual Report on Form 10-K for the
year ended April 30, 1997 and the accompanying notes and
Management's Discussion and Analysis of Financial Condition and
Results of Operations. Certain reclassifications have been made
to the prior year's financial statements in order to conform to
the classifications adopted for reporting in fiscal 1998. These
reclassifications had no impact on net income or shareholders'
equity.
The Company's financial results, particularly as it relates
to its domestic oil and gas operations, are influenced by
seasonal fluctuations. During the winter, there are more days of
adverse weather conditions and fewer hours of daylight than the
other months of the year. Consequently, flight hours are
generally lower during the Company's third fiscal quarter than at
other times of the year. This produces a seasonal aspect to the
Company's business and typically results in reduced revenues from
operations during those months. Therefore, the results of
operations for interim periods are not necessarily indicative of
the operating results that may be expected for the full fiscal
year.
(2) Commitments and Contingencies
On Monday, June 2, 1997, the Company was notified by the
National Mediation Board ("NMB") that the Office and Professional
Employees International Union ("OPEIU") filed an application to
represent flight deck crew members (helicopter pilots) of PHI.
On September 4, 1997 the NMB reported that the Company's
helicopter pilots voted to reject union representation. The
OPEIU filed objections with the NMB seeking a new election. This
reelection request was granted on January 30, 1998. The ballots
will be counted by the NMB on March 31, 1998.
(3) New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share ("FAS 128"). FAS 128 changes the
computation, presentation and disclosure requirements for
earnings per share amounts. FAS 128 requires presentation of
"basic" and "diluted" earnings per share, as defined, on the face
of the income statement for all entities with complex capital
structures. The Company adopted FAS 128 effective with the
quarter ended January 31, 1998 on a retroactive basis;
accordingly, per share amounts for the quarter and nine-month
period ended January 31, 1997, have been restated to conform to
the requirements of FAS No. 128.
(4) AirEvac Services, Inc. Acquisition
On December 31, 1997, PHI purchased the assets of Samaritan
AirEvac for approximately $ 8.8 million. The purchase involved
all of the operating assets and business of Samaritan AirEvac, an
aeromedical services division of Samaritan Health System based in
Arizona and a customer of PHI's since June 12, 1993.
The assets were acquired by a new wholly-owned subsidiary of
PHI, AirEvac Services, Inc. (AirEvac), including one Lear Jet and
five Cessna 441's equipped for medical transportation.
The cost of the acquisition was allocated under the purchase
method of accounting based upon the fair value of the assets
acquired and liabilities assumed. The results of AirEvac's
operations have been consolidated with the Company's results
effective January 1, 1998. The pro-forma effects of this
acquisition, as if it occurred on May 1, 1996, are not material.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is engaged in providing helicopter transporta
tion and related services. The predominant portion of its
revenue is derived from transporting offshore oil and gas
production and drilling workers on a worldwide basis. The
Company also performs helicopter transportation services for a
variety of hospital and medical programs and aircraft maintenance
to outside parties.
This discussion should be read in conjunction with the
accompanying financial statements and with the financial
statements for the year ended April 30, 1997 together with the
related notes and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
RESULTS OF OPERATIONS
Revenues
The Company generates flight revenues from both ongoing
service contracts with established customers and non-contract
flights referred to as Specials. Oil and Gas Aviation Services
contracts are generally on a month to month basis and consist of
a fixed fee plus an hourly charge for actual flight time.
Specials are customer flights, provided on an as needed basis
that are not provided pursuant to contractual commitments and
which generally reflect higher rates. Oil and Gas Aviation
Services are provided primarily in the United States and also
consists of third party maintenance services.
Aeromedical contracts also provide for fixed and hourly
charges, but are generally for longer terms and impose early
cancellation fees to encourage customers to fulfill the contract
term and cover the Company's additional up-front costs in the
event of early termination. AirEvac, which operates in Arizona,
primarily derives its revenues from third party payors based on
per hour or per seat charges. These contracts are predominantly
short-term in nature.
Third Quarter Fiscal 1998 to Third Quarter Fiscal 1997
- -------------------------------------------------------
The following table summarizes and compares the Company's
operating revenues by certain markets for the quarters ended
January 31, 1998 and 1997:
Operating Revenues for the Quarter
----------------------------------
Ended January 31,
(Thousands of dollars, -----------------
except percentages and
flight hours)
Increase
1998 1997 $ %
-------- -------- ----- ---
Oil and Gas Aviation
Services $ 50,436 $ 45,948 $ 4,488 10
Aeromedical Services 8,367 7,321 1,046 14
-------- -------- -----
Total Operating
Revenues $ 58,803 $ 53,269 $ 5,534 10
======== ======== ===== ===
Total Flight Hours 60,201 55,837 4,364 8
======== ======== ===== ===
Oil and Gas Aviation Services
Oil and Gas revenues for the quarter ended January 31, 1998
increased 10% to $ 50.4 million from $ 45.9 million. Flight
hours increased 8% to 55,828 hours from 51,789 hours for the
quarter ended January 31, 1998. Strong activity levels in the
Gulf of Mexico coupled with rate increases in the third quarter
resulted in higher revenues. The Company anticipates that these
rate increases, when fully effective, will increase revenues by
approximately $ 13 million per year assuming current activity
levels. The 1998 quarter revenues reflected approximately $ 2.0
million due to rate increases.
Aeromedical Services
Aeromedical revenues increased to $ 8.4 million, or 14%,
from $ 7.3 million. Total Aeromedical programs and aircraft as
of January 31, 1998 were 14 and 46, respectively, including the
recently acquired aircraft through the AirEvac acquisition,
versus 15 Aeromedical programs and 40 aircraft at January 31,
1997. Aeromedical flight hours for the quarter increased 325
hours to 4,373 hours. Of the increase in flight hours and
revenues, AirEvac accounted for 433 hours and $ 1.0 million,
respectively.
Direct Expenses
Direct expenses increased $ 4.9 million, or 11%, to $ 51.1
million primarily as a result of increased activity levels.
Direct expenses as a percentage of operating revenues remained
relatively constant with the Company maintaining an operating
margin of 13%.
Human Resource costs including employee benefit costs,
increased $ 1.5 million, or 8%, to $ 19.9 million. Salary
expense increased by $ 1.4 million due to additional employees
needed to support increased flight activity and the addition of
approximately 200 employees with the purchase of AirEvac. This
increase was offset by a decline in the Company's gain sharing
program expense which was $ 0.6 million lower than the previous
year period due to lower than planned earnings. Future human
resource costs are expected to increase as all employees received
a 4% general wage increase effective January 1, 1998. Due to the
continued pressure to attract and retain qualified personnel, a
new pay plan was also implemented in February which is expected
to increase salary expense by an additional 6.5% over the next
twelve months.
Spare parts usage and repairs and maintenance costs
increased $ 1.2 million, or 11%, to $ 12.4 million. The Company
is incurring higher than expected maintenance costs due to fleet
expansion over the past year. In order to meet current aircraft
utilization requirements, the Company has significantly increased
the amount of outside repair work which is more costly than
performing the work in-house. The Company is in the process of
developing plans with the objective of restoring these costs to
their historical relationships.
Aircraft depreciation increased $ 0.6 million, or 23%, to
$ 3.1 million due to the purchase/acquisition of additional
aircraft. The Company purchased twenty-eight aircraft in fiscal
year 1997 and has acquired an additional fifteen aircraft during
fiscal year 1998, including one Lear Jet and five Cessna 441's
ascribable to the AirEvac acquisition.
Helicopter rental expense increased $ 0.6 million, or 19%,
to $ 3.8 million due to the addition of several newly leased
aircraft. There were ninety-one leased aircraft as of January
31, 1998 as compared to seventy-two at January 31, 1997.
All other aircraft costs increased $ 1.0 million, or 12%, to
$ 9.7 million, including $ 0.6 million due to higher aircraft
insurance costs.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses increased $ 1.1
million to $ 4.0 million. This increase was principally
attributable to the following: $ 0.2 million due to consulting fees
primarily related to the information system upgrade programs,
which commenced in 1996 and will continue into fiscal 1999; and
$ 0.7 million due to legal and other consulting fees.
Interest Expense
Interest expense increased $ 0.1 million, or 12%, to $ 1.3
million. This was primarily related to the increase in the
Company's long-term debt. Average long-term debt increased $ 8.6
million over the prior year's third quarter.
First Nine Months Fiscal 1998 to First Nine Months Fiscal 1997
- --------------------------------------------------------------
Revenues
The following table summarizes and compares the Company's
revenues by certain markets for the nine months ended January 31,
1998 and 1997:
Operating Revenues for the Nine
-------------------------------
Months Ended January 31,
------------------------
(Thousands of dollars,
except percentages and
flight hours)
Increase
1998 1997 $ %
------- ------- ------ ----
Oil and Gas Aviation
Services $ 148,222 $ 136,234 $ 11,988 9
Aeromedical Services 24,016 22,436 1,580 7
------- ------- ------
Total Operating
Revenues $ 172,238 $ 158,670 $ 13,568 9
======= ======= ====== ====
Total Flight Hours 194,750 183,661 11,089 6
======= ======= ====== ====
Oil and Gas Aviation Services
Oil and Gas revenues for the nine months ended January 31,
1998 increased 9% to $ 148.2 million from $ 136.2 million.
Flight hours increased 6% to 180,912 hours from 170,435 hours for
the nine months ended January 31, 1998. Strong activity levels
coupled with rate increases in the third quarter resulted in
higher revenues. The Company anticipates that these rate increases
will continue to have a positive impact on revenues, and will help
to offset anticipated increases in salary and other expenses.
Aeromedical Services
The Company operates 14 programs and a total of 46 aircraft
in the Aeromedical Services industry. Aeromedical revenues
increased to $ 24.0 million, or 7%, from $ 22.4 million.
Aeromedical flight hours increased 612 hours, or 5%, to 13,838
hours. Of the increase in flight hours and revenues, AirEvac
accounted for 433 hours and $ 1.0 million, respectively.
Direct Expenses
Direct expenses increased $ 13.1 million, or 10%, to $ 149.1
million associated with increased activity levels. Direct
expenses as a percentage of operating revenues increased slightly
decreasing the Company's operating margin to 13.5% from 14.3% in
the prior year. The Company is incurring higher than expected
maintenance costs as rapid fleet expansion caused more
maintenance to be performed at outside vendors.
Human Resource costs, including employee benefit costs,
increased $ 1.6 million to $ 57.9 million. Salary expense
increased by $ 2.8 million due to additional employees needed to
support increased flight activity. This increase was primarily
offset by a decline in the Company's gain sharing program expense
which was $ 1.9 million lower than the previous year period due
to lower than planned earnings. Future human resource costs are
expected to increase as all employees received a 4% general wage
increase effective January 1, 1998. Due to the continued
pressure to attract and retain qualified personnel, a new pay
plan was also implemented in February which is expected to
increase salary expense by an additional 6.5% over the next
twelve months.
Spare parts usage and repairs and maintenance costs
increased $ 6.1 million, or 20%, to $ 37.0 million. The Company
is incurring higher than expected maintenance costs due to the
increase in fleet size over the past year. In order to meet
current aircraft utilization requirements, the Company has
significantly increased the amount of work sent for outside
repair, which is more costly than performing the work in-house.
The Company is in the process of developing plans with the
objective of restoring these costs to their historical relationships.
Aircraft depreciation increased $ 1.6 million, or 22%, to
$ 8.7 million due to the purchase of additional aircraft. The
Company purchased twenty-eight aircraft in fiscal year 1997 and
has acquired fifteen aircraft during fiscal year 1998, including
one Lear Jet and five Cessna 441's with the AirEvac acquisition.
Helicopter rental expense increased $ 1.7 million, or 19%,
to $ 10.9 million due to the addition of several newly leased
aircraft. There were ninety-one leased aircraft as of January
31, 1998 as compared to seventy-two at January 31, 1997.
All other aircraft costs increased $ 1.7 million, or 6%, to
$ 28.0 million. These increases were primarily due to increased
flight activity and insurance costs partially offset by a decline
in fuel prices.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses increased $ 2.7
million, or 29%, to $ 11.9 million. This increase was ascribable
to the following: $ 0.7 million due to consulting fees and an
additional $ 0.4 million of depreciation primarily related to
information system upgrade programs, which commenced in 1996 and
will continue through fiscal 1999; and $ 1.2 million due to legal
and other consulting fees.
Interest Expense
Interest expense increased $ 0.6 million, or 17%, to $ 3.8
million. This was primarily related to the increase in the
Company's long-term debt. Average long-term debt increased $ 12.7
million over the prior year period.
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the first nine months of
the fiscal year ending April 30, 1998 with the year ended April
30, 1997.
The Company's cash position as of January 31, 1998 was $ 3.4
million compared to $ 2.4 million at April 30, 1997, the
Company's fiscal year end. Working capital increased $ 8.8
million from $ 41.2 million at fiscal year end to $ 50.0 million.
The increase was primarily related to an increase in cash,
accounts receivable, prepaid expenses and inventory of $ 1.0
million, $ 6.9 million, $ 0.2 million, and $ 4.9 million,
respectively, and a decrease in accounts payable and accrued
expenses of $ 0.1 million. This was partially offset by the
combined changes in refundable income taxes/income taxes payable
and notes receivable of $ 3.8 million.
Total long-term debt increased $ 13.7 million to $ 71.3
million as a result of the investing activities described below.
The Company's current debt obligation totals $ 4.9 million,
payable in equal quarterly installments, which the Company
intends to pay with cash flow from operations. On December 31,
1997 the Company's wholly-owned subsidiary, AirEvac Services
Inc., and the Company's principal lending group ratified a loan
agreement. This agreement provides $ 5.0 million and $ 6.25
million revolver and term credit facilities, respectively.
This loan is secured by certain assets of AirEvac and is guaranteed
by the Company. Inclusive of this new agreement, the Company at
February 27, 1998 had $ 21.0 million of credit capacity available
under its credit facilities. The Company believes its cash flow
from operations in conjunction with its credit capacity is
sufficient to meet its planned requirements for the foreseeable
future. The Company is in compliance with the provisions of its
loan agreements.
Cash provided by operating activities was $ 4.0 million.
Investing activities included the purchase and completion of
several aircraft, aircraft improvements, and engines for $ 19.6
million. Additionally, the Company acquired all of the operating
assets of Samaritan AirEvac from Samaritan Health System for
$ 8.8 million. The purchase included one Lear Jet and five
Cessna 441 aircraft. Proceeds from asset dispositions were
primarily due to the sale of four S76s, two BK117s and several
other aircraft that no longer met PHI fleet requirements. A gain
of $ 2.2 million was recognized relating to these sale
transactions and is included in the Consolidated Statement of
Earnings caption, "Other income (deductions)." Investing
activities were primarily funded through increased borrowings
under the Company's credit facilities. The Company also paid
dividends of $ 0.05 per share during the first, second, and third
quarters of fiscal 1998.
The Company continues to review selected domestic bases for
possible fuel contamination resulting from routine flight
operations. The Company has expensed, including provisions for
environmental costs, $ 1.2 million for the nine months ended
January 31, 1998 as compared to $ 1.6 million for the comparable
period in fiscal year 1997. The aggregate accrual for
environmental related costs at January 31, 1998 is $ 2.3 million
which the Company believes is adequate for probable and estimable
environmental costs. The Company will make additional provisions
in future periods to the extent appropriate as further
information regarding these costs becomes available.
The Company has considered the impact of Year 2000 issues on
its computer systems and applications. A remediation plan has
been developed and conversion activities are in process in
conjunction with the current information systems upgrade and is
expected to be completed and tested in 1998. The Company is
unable to state at this time whether the impact of the Year 2000
issues will or will not be material.
FORWARD LOOKING STATEMENTS
All statements other than statements of historical fact
contained in this Form 10-Q, other periodic reports filed by the
Company under the Securities Act of 1934 and other written or
oral statements made by it or on its behalf, are forward looking
statements. When used herein, the words "anticipates",
"expects", "believes", "intends", "plans", or "projects" and
similar expressions are intended to identify forward looking
statements. It is important to note that forward looking
statements are based on a number of assumptions about future
events and are subject to various risks, uncertainties and other
factors that may cause the Company's actual results to differ
materially from the views, beliefs and estimates expressed or
implied in such forward looking statements. Although the Company
believes that the assumptions reflected in forward looking
statements are reasonable, no assurance can be given that such
assumptions will prove correct. Factors that could cause the
Company's results to differ materially from the results discussed
in such forward looking statements include but are not limited to
the following: flight variances from expectations, volatility of
oil and gas prices, the substantial capital expenditures required
to fund its operations, environmental risks, competition,
government regulation, unionization and the ability of the
Company to implement its business strategy. All forward looking
statements in this document are expressly qualified in their
entirety by the cautionary statements in this paragraph. PHI
undertakes no obligation to update publicly any forward looking
statements, whether as a result of new information, future events
or otherwise.
RESULTS AT A GLANCE (Unaudited)
The following table provides a summary of critical operating
and financial statistics (thousands of dollars, except per share
amounts, financial ratios, flight hours and general statistics):
Nine Months Ended January 31,
--------------------------------
Operations 1998 1997
--------- ---------
Operating revenues $ 172,238 $ 158,670
Net earnings 5,149 5,877
Net earnings per diluted share 0.99 1.14
Book value per diluted share 17.31 16.28
Annualized return on
shareholders' equity 7.6% 9.3%
Total flight hours -
operated 194,750 183,661
Financial Summary January 31, 1998 April 30, 1997
---------------- --------------
Net working capital $ 50,039 $ 41,247
Net book value of property
and equipment 134,993 121,827
Long-term debt 71,300 57,592
General Statistics
Aircraft operated 317 314
Employees 2,111 1,851
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 (i) Articles of Incorporation of the Company (incorporated
by reference to Exhibit No. 3.1 (i) to PHI's Report
on Form 10-Q for the quarterly period ended October 31,
1994).
(ii) By-laws of the Company (incorporated by reference
to Exhibit No. 3.1 (ii) to PHI's Report on Form 10-Q
for the quarterly period ended July 31, 1996).
10.1 Loan Agreement dated as of December 31, 1997 among AirEvac
Services Inc., Whitney National Bank, First National Bank of
Commerce, and NationsBank of Texas, N.A.
10.2 Asset Purchase Agreement between Samaritan Health System
and AirEvac Services, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ending
January 31, 1998.
SIGNATURES
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.
Petroleum Helicopters, Inc.
March 13, 1998 By: /s/ Carroll W. Suggs
-------------------------
Carroll W. Suggs
Chairman of the Board,
President and Chief
Executive Officer
(duly authorized officer)
March 13, 1998 By: /s/ John H. Untereker
-------------------------
John H. Untereker
Vice President and Chief
Financial Officer
(principal financial officer)
EXHIBIT 10.1
LOAN AGREEMENT
AMONG
AIR EVAC SERVICES, INC.,
WHITNEY NATIONAL BANK,
FIRST NATIONAL BANK OF COMMERCE,
NATIONSBANK OF TEXAS, N.A.
AND
NATIONSBANK OF TEXAS, N.A.,
as the Agent
Dated Effective as of December 31, 1997
TABLE OF CONTENTS
Page
1. DEFINITIONS AND ACCOUNTING TERMS 1
1.01 Certain Definitions 1
1.02 Other Definitional Provisions 17
2. THE LOANS 18
2.01 Term Loans 18
2.02 Revolving Credit Loans 18
2.03 Borrowing Procedure 19
2.04 Rates of Interest 20
2.05 Increased Costs - Reserve Requirements, Etc. 21
2.06 Recapture 22
2.07 Commitment Fees 22
2.08 Payments, Notice of Certain Repayments, and
Computations 22
2.09 Set-Off, Counterclaims and Taxes 23
2.10 Termination or Reduction of Commitments 23
2.11 Application of Proceeds 23
2.12 Conversion and Continuation 23
2.13 Provisions Relating to LIBOR Loans 24
3. PREPAYMENT. 26
3.01 Optional Prepayments 26
3.02 Mandatory Prepayments 27
4. PAYMENTS MADE ON BUSINESS DAYS 28
5. REPRESENTATIONS AND WARRANTIES 28
5.01 Organization and Qualification 28
5.02 Capitalization 29
5.03 Actions Pending 29
5.04 No Default 29
5.05 Warranty of Title; Leases 29
5.06 Payment of Taxes 30
5.07 Conflicting or Adverse Agreements or Restrictions30
5.08 Purpose of Borrowings 30
5.09 Patents, Etc. 30
5.10 Authorization, Validity, Etc. 30
5.11 Franchises, Permits, Etc. 31
5.12 Governmental Approvals 31
5.13 Description of and Title to Single-Wing Aircraft
and Engines 31
5.14 Registered Office of Company, Etc. 32
5.15 Title to Parts and Receivables 32
5.16 Section 1110 of Bankruptcy Reform Act of 1978 32
5.17 Environmental Protection Statutes 32
5.18 EMTALA 33
5.19 Medicare and Medicaid Programs; Licensure, etc. 33
5.20 Fraud and Abuse and Stark Law 34
6. CONDITIONS OF LENDING 35
6.01 Conditions Precedent to this Agreement 35
6.02 Conditions Precedent to each Borrowing 36
7. AFFIRMATIVE COVENANTS 37
7.01 Financial Statements and Information 37
7.02 Books and Records 39
7.03 General Insurance 39
7.04 Maintenance of Property 39
7.05 Inspection of Property and Records 39
7.06 Existence, Laws, Obligations, etc. 39
7.07 Notification of Defaults 41
7.08 Election and Incumbency Certificate 41
7.09 Registration, Maintenance, Operation, Foreign
Operations and Marking 41
7.10 Insurance with Respect to the Aircraft 43
7.11 Recording, Etc. 45
7.12 Material Adverse Change 46
7.13 Further Assurances 46
7.14 Change of Control 46
7.15 Location of Parts 47
8. NEGATIVE COVENANTS 47
8.01 Limitation on Amendments 47
8.02 Restricted Payments 47
8.03 Capital Expenditures 47
8.04 Intentionally Deleted 48
8.05 Liens, Etc 48
8.06 Limitations on Indebtedness for Money Borrowed 49
8.07 Investments 49
8.08 Nature of Business 49
8.09 Stock of Subsidiaries, Merger, Sale of Assets,
Etc. 49
8.10 Change in Accounting Method 49
8.11 Sale of Receivables and Parts 50
8.12 Tax Consolidation 50
8.13 Chief Executive Office; Registered Office 50
8.14 Transactions with Affiliates 50
8.15 Leasing 50
8.16 Limitation on Amount of Revolving Credit Loans 50
8.17 Limitation on Prepayments on Funded Indebtedness50
8.18 Loans and Advances to Other Persons 51
8.19 Hazardous Materials 51
9. POSSESSION, USE, VALUATION AND RELEASE OF COLLATERAL;
APPLICATION OF PROCEEDS THEREOF; ADDITIONS TO
COLLATERAL 51
9.01 Possession and Use of Collateral 51
9.02 Loss, Restriction, Requisition, Etc. 52
9.03 Valuation of Aircraft, Etc. 55
9.04 Protection of Purchasers 56
9.05 Other Additions to Collateral; Releases of
Collateral 57
10. EVENTS OF DEFAULT AND REMEDIES 58
10.01 Events of Default 58
10.02 Acceleration of Maturity 61
10.03 Right of Set-off 62
10.04 Sharing of Payments, Etc. 62
10.05 Application of Proceeds of Collateral 62
11. THE AGENT 64
11.01 Appointment of Agent; Authority 64
11.02 INDEMNIFICATION OF AGENT 64
11.03 LIABILITY OF AGENT 65
11.04 Independent Credit Decision 66
11.05 Agent and Affiliates; Multiple Capacities 66
11.06 Successor Agent 66
12. MISCELLANEOUS 67
12.01 No Waiver; Remedies 67
12.02 Amendments, Etc. 67
12.03 Duty With Respect to Collateral 67
12.04 Performance of Company's Covenants 67
12.05 INDEMNITIES 67
12.06 Notices 70
12.07 Binding Effect 71
12.08 Interest 71
12.09 Survival of Representations and Warranties 72
12.10 Severability 72
12.11 Descriptive Headings 72
12.12 Counterparts 72
12.13 GOVERNING LAW 73
Schedule I Description of Aircraft
Schedule II Liens of the Company and the Subsidiaries
Existing on December 31, 1997
Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Revolving Credit Note
Exhibit B Subsidiaries
Exhibit C Form of Borrowing Base Certificate
Exhibit D-1 Form of Opinion of Locke Purnell Rain Harrell
(A Professional Corporation)
Exhibit D-2 Form of Opinion of Correro, Fishman, Haygood,
Phelps, Weiss, Walmsley & Casteix, L.L.P.
Exhibit D-3 Form of Opinion of Lytle, Soule & Curlee
Exhibit E Form of Officer's Certificate as to Release of
Collateral
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 31,
1997, (the "Effective Date"), by and among AIR EVAC
SERVICES, INC., a Louisiana corporation (hereinafter
referred to as the "Company"), NATIONSBANK OF TEXAS, N.A.
("NationsBank"), WHITNEY NATIONAL BANK ("Whitney") and
FIRST NATIONAL BANK OF COMMERCE ("FNBC") (hereinafter
individually referred to as a "Bank" and collectively
referred to as the "Banks") and NationsBank, as agent for
the Creditors (as hereinafter defined) under this Agreement
(hereinafter in such capacity referred to as the "Agent"),
W I T N E S S E T H:
WHEREAS, the Company has requested the Banks to
furnish the extensions of credit provided for herein, which
shall be used by the Company (a) to finance (i) the purchase
of certain assets and properties relating to an air medical
transport business (the "Business") operated by Samaritan
Health System, an Arizona non-profit corporation
("Samaritan"), pursuant to the Acquisition Agreement
(hereinafter defined) and (ii) working capital needs and (b)
for general corporate purposes.
NOW, THEREFORE, in consideration of the premises
and of the mutual covenants and agreements herein contained,
the parties hereto agree as follows:
1. DEFINITIONS AND ACCOUNTING TERMS.
1.1 Certain Definitions. As used in this Agreement,
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and
plural form of the terms defined).
"Acquisition Agreement" shall mean that certain
Asset Purchase Agreement between Samaritan and the Company,
dated as of December 15, 1997, as the same may be amended
from time to time.
"Affiliate" shall mean a person (other than the
Company) which directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, the Company or any Subsidiary, which
beneficially owns or holds 5% or more of the shares of any
class of Voting Stock of the Company or any Subsidiary or
5% or more of the shares of any class of Voting Stock of
which is beneficially owned or held by the Company or any
Subsidiary. "Control" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Agent" shall have the meaning given such term in
the introductory paragraph of this Agreement.
"Agreement" shall mean this Loan Agreement, as the
same may be amended, supplemented, extended, restated or
otherwise modified from time to time.
"Aircraft" shall mean the 6 fixed-wing aircraft
described in Schedule I of this Agreement, together with all
aircraft engines, airframes, propellers, rotors, appliances,
instruments, mechanisms, equipment (including communications
equipment), parts, apparatus, appurtenances and accessories
(including without limitation property which consists of, or
which may from time to time hereafter consist of, one or
more aircraft engines of 750 or more rated takeoff
horsepower or the equivalent of that horsepower, and one or
more propellers capable of absorbing 750 or more rated
takeoff shaft horsepower) now or from time to time hereafter
incorporated or installed in or attached or appertaining to
one or more of said fixed-wing aircraft, in each case so
long as the same shall be subject or required or intended to
be subject to the Security Interest, including without
limitation those aircraft engines described in Schedule I of
this Agreement, and shall include any fixed-wing aircraft or
other Aviation Units from time to time hereafter owned by
the Company and subject or required or intended to be
subject to the Security Interest, together with all aircraft
engines, airframes, propellers, rotors, appliances,
instruments, mechanisms, equipment (including communications
equipment), parts, apparatus, appurtenances and accessories
(including property which consists of, or which may from
time to time hereafter consist of, one or more aircraft
engines of 750 or more rated takeoff horsepower or the
equivalent of that horsepower, and one or more propellers
capable of absorbing 750 or more rated takeoff shaft
horsepower) from time to time incorporated or installed in
or attached or appertaining to any thereof and subject or
required or intended to be subject to the Security Interest.
"Aircraft Registry" shall mean the Federal
Aviation Administration Aircraft Registry located in
Oklahoma City, Oklahoma, or such different office or
location of said Registry, or the office of any successor to
said Registry, as may be duly designated by the Secretary of
Transportation (or his successor or designee) for receipt
and recording of "conveyances" (as defined in the Federal
Aviation Act) to preserve and protect their validity as
against, and to publish notice to, third parties.
"Applicable Margin" shall mean, at the time of any
determination thereof, for purposes of all Loans, the margin
of interest over the Prime Rate or the LIBOR Rate, as the
case may be, which is applicable at the time of any
determination of interest rates under this Agreement, which
Applicable Margin shall be subject to adjustment (upwards or
downwards, as appropriate) based on the Leverage Ratio, as
follows:
Applicable Margin Applicable Margin
Leverage Ratio for Prime Rate for LIBOR Loans
Loans
Greater than 4.75 0.500% 1.500%
Less than or equal
to 4.75 to 1.00 but 0.000% 1.375%
greater than 4.50
to 1.00
Less than or equal
to 4.50 to 1.00 but 0.000% 1.250%
greater than 4.25
to 1.00
Less than or equal
to 4.25 to 1.00 but 0.000% 1.125%
greater than 4.00
to 1.00
Less than or equal 0.000% 1.000%
to 4.00
For the purposes of this definition, the Applicable
Margin shall be determined as at the end of each of the
first three quarterly periods of each fiscal year of
PHI and as at the end of each fiscal year of PHI, based
on the relevant financial statements delivered pursuant
to the PHI Loan Agreement; changes in the Applicable
Margin shall become effective on the date which is the
earlier of (i) two Business Days after the date the
Agent receives such financial statements and (ii) the
60th day after the end of each of the first three
quarterly periods of each fiscal year or the 120th day
after the end of each fiscal year, as the case may be,
and shall remain in effect until the next change to be
effected pursuant to this definition; provided, that
(a) until the first such financial statements are
delivered after the date hereof, the Applicable Margin
shall be determined by reference to the last Officers'
Certificate delivered to the Agent by PHI pursuant to
the PHI Loan Agreement pursuant to Section 7.01(f)
thereof and (b) if any financial statements referred to
above are not delivered within the time periods
specified above, then, for the period from and
including the date on which such financial statements
are required to be delivered under the PHI Loan
Agreement, to but not including the date on which such
financial statements are delivered, the Applicable
Margin as at the end of the fiscal period that would
have been covered thereby shall be deemed to be the
Applicable Margin which would be applicable when the
Leverage Ratio is greater than 4.75 to 1.00.
"Applicable Prime Rate" means a fluctuating rate
per annum (based on a year of 365 or 366 days, as the case
may be, and actual days elapsed) equal to the sum of the
Prime Rate plus the Applicable Margin.
"Appraised Value" shall mean (i) with respect to
any of the Aircraft that shall at the time be new or not
more than one year old, the purchase price thereof, as
certified by the Company in Officers' Certificates delivered
to the Agent and the Banks at the times and under the
circumstances contemplated by this Agreement and (ii) with
respect to any of the Aircraft that shall at the time be
more than one year old, the purchase price thereof that
would be agreed to in an arm's-length transaction between an
informed and willing buyer-user (other than a user currently
in possession or a used equipment or scrap dealer) and an
informed and willing seller under no compulsion to sell or
lease (the costs of removal from the location of current use
being deductions from such value), as specified by the
Independent Appraiser (after consultation with the Company
and after such physical inspection, if any, of such Aircraft
as the Independent Appraiser shall deem to be necessary or
appropriate) in written opinions addressed and delivered to
the Agent and the Banks at the times and under the
circumstances contemplated by this Agreement. For the
purpose of determining whether clause (i) or (ii) of the
first sentence of this definition of "Appraised Value" shall
apply to any particular Aircraft, the Aircraft in question
shall be deemed to be one year old upon the expiration of
one year from the delivery by the original manufacturer to,
and acceptance by, the first user thereof (or the person
anticipated to be the first user thereof), whether or not
the Company shall have been such first user or other person.
For the purpose of determining the "Appraised Value" of any
Aircraft that shall be new or not more than one year old,
the term "purchase price" with respect thereto shall mean
the actual purchase price thereof that shall appear on the
invoice issued by the manufacturer of said Aircraft and by
the manufacturer or distributor of any instruments or other
equipment added thereto after the date of the invoice issued
by the manufacturer of said Aircraft (excluding, however,
any freight or transportation charges, erection costs or
other charges or costs that do not reflect the price of
materials and components used in the manufacture of said
Aircraft or instruments or equipment, whether or not such
charges or costs shall be separately stated on the invoice).
"Appropriate Actions" shall mean, with respect to
the inclusion of an Aviation Unit in the Security Interest,
(a) filing or causing to be filed a proper bill or bills of
sale covering said Aviation Unit (on FAA Form 8050-2,
"Aircraft Bill of Sale", or on any other appropriate form)
in the Aircraft Registry and in any other public office
necessary for full compliance by the Company with the terms
hereof; (b) causing said Aviation Unit to be free and clear
of all Liens (other than Permitted Liens), making the
appropriate filings, registrations and recordings (including
the filing of FAA Form 8050-41 and any appropriate
termination statements or releases) necessary to release any
existing Liens of record and otherwise causing said Aviation
Unit to be in full compliance with all the terms and
provisions of this Agreement with the same effect as if the
same were a portion of the original Aircraft described in
this Agreement; (c) executing and delivering
any registration, recordation or filing documents and any
other appropriate security documentation as the Agent or
any Creditor through the Agent may request for the purpose
of describing said Aviation Unit (including all aircraft
engines, airframes, propellers, rotors, appliances,
instruments, mechanisms, equipment (including communications
equipment), parts, apparatus, appurtenances and accessories)
in reasonable detail, and expressly and specifically
subjecting the same to the Security Interest; (d) delivering
or causing to be delivered to the Agent and each Creditor an
opinion of counsel (dated the date of the filing for
recordation in the Aircraft Registry of the security
documentation referred to in clause (c) above) to the effect
that the Company has good and marketable title to said
Aviation Unit free of all Liens (other than Permitted Liens)
and that said Aviation Unit has been duly subjected to the
Security Interest and constitutes a portion of the
Collateral; and (e) delivering to the Agent and each
Creditor an Officers' Certificate certifying that the
Company is in full compliance with all provisions of this
Agreement with respect to the same.
"Available PHI Borrowing Base" shall mean at any
time an amount equal to the difference between (a) the
Borrowing Base (as such term is defined in the PHI Loan
Agreement) under the PHI Loan Agreement, minus (b) the sum
of (i) the then aggregate outstanding principal amount of
all Revolving Credit Loans (as such term is defined under
the PHI Loan Agreement) under the PHI Loan Agreement, plus
(ii) the aggregate amount of Permitted Letter of Credit
Amounts (as such term is defined under the PHI Loan
Agreement) under the PHI Loan Agreement.
"Aviation Unit" shall mean any engine-powered
device that is owned by the Company and is used or intended
to be used for flight in the air and shall include within
each such device all aircraft engines, airframes,
propellers, rotors, appliances, instruments, mechanisms,
equipment (including without limitation communications
equipment), parts, apparatus, appurtenances and accessories
from time to time incorporated or installed therein or
attached or appertaining thereto.
"Bank" and "Banks" shall have the meanings given
such terms in the introductory paragraph of this Agreement.
"Borrowing" shall mean a Term Loan Borrowing or a
Revolving Credit Borrowing.
"Borrowing Base" shall mean at any time an amount
equal to (a) (i) 50% of the amount of Eligible Receivables,
plus (ii) 50% of the Appraised Value of the Aircraft, plus
(iii) 50% of the value of Eligible Parts (valued at
the lower of average cost or market), in which each of the
Creditors shall have a valid equal and ratable perfected
first priority Security Interest, pursuant to the Security
Documents, minus (b) the aggregate principal amount of the
Term Loans, at the time of such determination.
"Borrowing Base Certificate" shall mean an
Officers' Certificate in the form of Exhibit C attached
hereto and made a part hereof, with the blanks appropriately
completed.
"Borrowing Date" shall mean, with respect to a
Borrowing, the date designated in a Notice of Borrowing with
respect thereto upon which the proceeds of such Borrowing
are to be paid or delivered to the Company.
"Business" shall have the meaning given such term
in the introductory paragraph of this Agreement.
"Business Day" shall mean (a) for all purposes
other than as provided in clause (b) below, any day other
than a Saturday, Sunday or other day on which banking
institutions in Dallas, Texas or New Orleans, Louisiana are
permitted or required by law or executive order to be closed
and (b) with respect to all notices and determinations in
connection with any borrowings consisting of payments of
principal and interest in respect of LIBOR Loans, any day
that is a Business Day described in clause (a) above and
that is also a day for trading between prime banks in the
London interbank market.
"Capital Lease" shall mean with respect to any
person any lease which should, in accordance with generally
accepted accounting principles, be required to be
capitalized on a balance sheet of the lessee or, if not so
capitalized, for which the amounts of the asset and
liability (had such lease been capitalized) be required to
be disclosed in a note to such a balance sheet.
"CERCLA" shall have the meaning given in the
definition of "Environmental Protection Statute."
"Code" shall mean the Internal Revenue Code of
1986, as amended, and all regulations promulgated
thereunder.
"Collateral" shall mean (a) the Aircraft,
including all substitutions, renewals and replacements of
any portion thereof and all additions, improvements,
accessions and accumulations to any portion thereof, whether
now owned or held or hereafter acquired or now or from time
to time hereinafter incorporated or installed in or attached
or appertaining to any portion of the Aircraft (whether or
not the same shall be or remain incorporated or installed in
or attached to any portion of such property), whether now
owned or held or hereafter acquired, (b) the Receivables of
the Company, (c) the Parts, (d) all estates, rights, power
and privileges of the Company, whether now held or enjoyed
or hereafter acquired, in respect of any of the foregoing,
but specifically excluding licenses and permits that cannot
be encumbered or assigned under applicable law, and (e) any
and all proceeds of the conversion, voluntary or
involuntary, of any portion of the property now or from time
to time hereafter subject or required or intended to be
subject to the Security Interest, into cash, negotiable
instruments or other instruments for the payment of money,
chattel paper, security agreements, documents, liquidated
claims or any other form of proceeds, including proceeds of
insurance and of any governmental takings, subject, however,
to the further provisions of this Agreement and the Security
Documents (it being understood and agreed that the inclusion
of proceeds in the Collateral does not authorize the Company
to sell, dispose of or otherwise use the Collateral in a
manner that is not expressly permitted by this Agreement or
the Security Documents).
"Commitment" shall mean for each Bank, that Bank's
Ratable Share of $5,000,000, as such amount is reduced from
time to time pursuant to Section 2.10 and Section 3.02.
"Commitment Fee" means a fee payable by the
Company pursuant to Subsection 2.07(a) in the amount of
0.375% (based on a year of 365 or 366 days, as the case may
be, and actual days elapsed) on the daily average unused
amounts of the Commitments.
"Company" shall have the meaning given such term
in the introductory paragraph of this Agreement.
"Consolidated Subsidiary" or "Consolidated
Subsidiaries" shall mean a Subsidiary or Subsidiaries,
respectively, whose financial statements are prepared on a
consolidated basis with those of the Company in accordance
with generally accepted accounting principles.
"Conversion Date" shall mean October 31, 1999.
"Creditors" shall mean the Banks.
"Default" shall mean any of the events specified
in Subsections 10.01(a) through 10.01(o), whether or not any
requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any
further condition, event or act has been satisfied.
"Direct Expenses" shall mean all expenses incurred
by the Company and the Consolidated Subsidiaries in the
operation of their respective single-wing aircraft fleets
determined in accordance with generally accepted accounting
principles consistently applied excluding (a) depreciation
and amortization, (b) lease rental expense arising under
Operating Leases, (c) general and administrative expenses,
(d) interest expense and (e) profit sharing plan
contributions.
"Dollars" and "$" shall mean lawful currency of
the United States of America.
"Effective Date" shall have the meaning given such
term in the introductory paragraph of this Agreement.
"Eligible Parts" shall mean all Parts on the books
of account of the Company on the date any determination is
made, located within the State of Arizona, and in which the
Agent shall have a perfected first priority security
interest for the benefit of the Creditors.
"Eligible Receivables" shall mean Receivables of
the Company carried on its books of account which, on the
date as of which the determination is being made (a) arose
in the ordinary course of business, (b) arose from the sale
or lease of goods or performance of services by the Company,
(c) are evidenced by an "Invoice" (i.e., an invoice,
shipping order or similar writing) dated no later than the
last day of the calendar month in which the sale or lease of
goods or performance of services occurred, and which Invoice
provides for payment within 30 days or less from the date of
such Invoice, (d) are not subject to set-off, counterclaim
or defense, (e) are not more than 210 days old, (f) are
payable by persons other than any person who is an officer
or a director of the Company or an officer or director of an
Affiliate, (g) are not payable by the United States of
America or any agency or department thereof, provided,
however, that Receivables owing by the United States of
America or any agency or department thereof to the Company
shall not be so excluded if (i) such Receivables are
assignable under the Assignment of Claims Act of 1940 as
amended, and in effect from time to time, and all
regulations issued pursuant thereto (the "Act"), or if a
valid security interest therein may be created under all
other applicable laws and regulations, including, without
limitation, those applicable to Government Receivables, (ii)
Agent receives appropriate documentation, in form and
substance satisfactory to the Agent for the ratable benefit
of the Banks and under the other loan documents in
compliance with the notification and other provisions for
assignment set forth in such Act and other laws and
regulations, and (iii) agreement, acknowledgment and consent
to such assignment by the appropriate contracting agent(s),
disbursing agent(s), if any, and surety(ies) upon the
bond(s), if any, and (h) does not by its terms prohibit the
assignment thereof or require the consent of the obligor
thereon to any assignment thereof; provided, however,
Receivables of the Company due from persons who are
Affiliates or persons located outside the United States
shall not constitute in the aggregate more than 10% of the
Eligible Receivables; and further, provided, that if any
Receivable of the Company is more than 210 days old, upon
receipt by the Company of a notice from the Agent, acting at
the request of the Majority Banks, specifying that no
Receivables of the Company due from the obligor of such
Receivable be included as an Eligible Receivable, no such
Receivable of the Company shall be included as an Eligible
Receivable unless the prior written consent of the Majority
Banks is obtained. For purposes of this Agreement, a
Receivable is 210 days old on the 210th day after the date
of the Invoice evidencing such Receivable, and the age of
any other Receivable is likewise the number of days since
the date of its Invoice.
"Environmental Protection Statute" means (a) the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C.A.
9601 et seq.), as amended from time to time, and any and
all rules and regulations issued or promulgated thereunder
("CERCLA"); (b) the Resource Conservation and Recovery Act,
(as amended by the Hazardous and Solid Waste Amendment of
1984, 42 U.S.C.A. 6901 et seq.), as amended from time to
time, and any and all rules and regulations promulgated
thereunder ("RCRA"); (c) the Clean Air Act, 42 U.S.C.A.
7401 et seq., as amended from time to time, and any and
all rules and regulations promulgated thereunder; (d) the
Clean Water Act of 1977, 33 U.S.C.A. 1251 et seq., as
amended from time to time, and any and all rules and
regulations promulgated thereunder; (e) the Toxic Substances
Control Act, 15 U.S.C.A. 2601 et seq., as amended from
time to time, and any and all rules and regulations
promulgated thereunder; or (f) any other federal or state
law, statute, rule, or regulation enacted in connection with
or relating to the protection or regulation of the
environment (including, without limitation, those laws,
statutes, rules, and regulations regulating the disposal,
removal, production, storing, refining, handling,
transferring, processing, or transporting of Hazardous
Materials) and any rules and regulations issued or
promulgated in connection with any of the foregoing by any
governmental authority, and "Environmental Protection
Statutes" means each of the foregoing.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" shall mean PHI, any PHI
Subsidiary and any trade or business (whether or not
incorporated) which is a member of a group of which the
Company is a member and which is under common control within
the meaning of Section 414 of the Code (such rules and
regulations shall also be deemed to apply to foreign
corporations and entities).
"Event of Default" shall mean any of the events
specified in Subsections 10.01(a) through 10.01(o), provided
that there has been satisfied any requirement in connection
with such event for the giving of notice, or the lapse of
time, or the happening of any further condition, event or
act.
"Event of Loss" shall mean any of the following
events: (a) the total destruction of any single-wing
aircraft or other Aviation Unit constituting a portion of
the Aircraft, or damage thereto to an extent which, in the
opinion of the Company (as evidenced by an Officers'
Certificate to such effect delivered to the Agent with a
copy to each Bank, together with, if requested by any Bank,
a certificate of the Independent Appraiser addressed and
delivered to the Agent with a copy to each Bank), shall
render repair impracticable or uneconomical; or (b) the
condemnation, confiscation, theft or seizure of, or the
requisition of title to or use of, any such single-wing
aircraft or other Aviation Unit constituting a portion of
the Aircraft, or any portion thereof, as shall result in the
loss of use or possession of such single-wing aircraft or
other Aviation Unit by the Company for a period of 90 days
or longer.
"Federal Aviation Act" shall mean the Federal
Aviation Act of 1958, as amended and in effect at the
particular time, or comparable provisions of any successor
statute.
"FNBC" shall have the meaning given such term in
the introductory paragraph of this Agreement.
"Funded Indebtedness" shall mean, with respect to
any person, all Indebtedness for Money Borrowed of such
person which has a final maturity (or, pursuant to the terms
of the agreement under which it has been issued, an
anticipated maturity) more than one year after the date of
creation thereof (or which is renewable or extendible at the
option of the obligor for more than one year from the date
of creation thereof), and shall include the obligation of
such person to make payments in respect thereof required to
be made less than one year after the date of creation
thereof, notwithstanding the fact that the obligation of
such person to make such payments may at the time also be
included in current liabilities under generally accepted
accounting principles.
"Government Receivables" shall mean Receivables
now or hereafter owing from the United States or from State
Medicaid programs.
"Guaranty" shall mean, with respect to any person,
without duplication for such person, all obligations 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 incurred
through an agreement, contingent or otherwise, by such
person (a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (b)
to advance or supply funds (i) for the purchase or payment
of such Indebtedness or obligation or (ii) to maintain
working capital or equity capital, or otherwise to advance
or make available funds for the purchase or payment of such
Indebtedness or obligation, (c) to purchase property,
securities or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability
of the primary obligor to make payment of such Indebtedness
or obligation or (d) otherwise to assure the owner of such
Indebtedness or obligation against loss in respect thereof;
provided, however, that, with respect to the Company, the
term "Guaranty" shall not be construed to include
obligations of the Company under provisions of any flight
service agreement between the Company and a customer whereby
the Company indemnifies such customer against tort claims
for injury to persons or loss of property arising
thereunder, or against contract claims where the maximum
amount of the Company's liability is not indicated (whether
directly or by implication).
"Guaranty Agreement" shall mean that certain
Guaranty Agreement, of even date herewith, executed by PHI,
as guarantor, in favor of the Agent for the benefit of the
Banks, guaranteeing the unpaid principal of and interest on
the Loans and all other obligations and liabilities of the
Company to the Agent and the Banks, in form and substance
satisfactory to the Banks.
"Hazardous Materials" shall mean (a) any
"hazardous waste" as defined by RCRA, (b) any "hazardous
substance" as defined by CERCLA, (c) asbestos,
(d) polychlorinated biphenyls, (e) any substance the
presence of which on any of the Company's or any of the
Subsidiaries' properties is prohibited by any government,
board, court, agency, or political subdivision thereof, and
(f) any other substance which requires special handling
pursuant to any Environmental Protection Statute.
"Highest Lawful Rate" shall mean, as of a
particular date and with respect to any Bank, the maximum
nonusurious interest rate that may under applicable Federal
and Texas law then be contracted for, charged, received,
taken or reserved by such Bank in connection with the
Borrowings.
"Indebtedness" shall mean, with respect to any
person, all items (other than capital stock and surplus)
which, in accordance with generally accepted accounting
principles consistently applied, would be shown on the
liability side of a balance sheet of such person as of the
date on which Indebtedness is to be determined. Except as
otherwise agreed in writing by the Majority Banks,
"Indebtedness" shall also mean, whether or not so reflected,
(a) all debt, obligations and liabilities secured by any
Lien existing on property owned by such person if such
property shall be subject to such Lien, whether or not the
debt, obligations or liabilities secured thereby shall have
been assumed; (b) all obligations of such person under any
lease which is a Capital Lease or any lease which, whether
or not such lease is a Capital Lease, contains terms that
require the payment of lease rentals whether or not the
property leased thereunder shall exist or can be used for
the purpose for which it shall have been leased, or provide
for a termination payment calculated to be sufficient to
retire any debt, obligations or liabilities secured by a
Lien on such lease or on the property leased thereunder; (c)
all Guaranties by such person; (d) all obligations of such
person to purchase any materials, supplies or other
property, or to obtain the services of any other person, if
the relevant contract or other related document requires
that payment for such materials, supplies or other property,
or for such services, shall be made regardless of whether or
not delivery of such materials, supplies or other property
is ever made or tendered or such services are ever performed
or tendered; and (e) all obligations of such person
(contingent or direct) in respect of letters of credit
issued for the account of such person or other extensions of
credit to such person.
"Indebtedness for Money Borrowed" shall mean, with
respect to any person, all Indebtedness of such person (a)
in respect of money borrowed or evidenced by a promissory
note, debenture or other like written obligation to pay
money, (b) in respect of letters of credit issued for the
account of such person or other extensions of credit to such
person, (c) in respect of obligations under any lease of
Aviation Units which is a Capital Lease or any lease of
Aviation Units which, whether or not such lease is a Capital
Lease, contains terms that require the payment of lease
rentals whether or not the property leased thereunder shall
exist or can be used for the purpose for which it shall have
been leased, or provide for a termination payment calculated
to be sufficient to retire any debt, obligations or
liabilities secured by a Lien on such lease or on the
property leased thereunder, (d) representing all or part of
the purchase price of any assets acquired by such person,
other than any such purchase price payable to a trade
creditor in the ordinary course of business the full payment
of which may be deferred for a period customary in the
particular trade (but in any event not exceeding 60 days)
and which is not rendered delinquent by nonpayment before
the expiration of such period and (e) in respect of
obligations of such person to purchase any Aviation Units if
the relevant contract or other related document requires
that payment for such Aviation Units shall be made
regardless of whether or not delivery of such Aviation Units
is ever made or tendered.
"Independent Appraiser" shall mean (a) Air
Associates, Inc., so long as the same shall not be an
Affiliate or have as an officer or director any Affiliate,
an officer or director of the Company or an officer,
director or partner of any Affiliate, or (b) such other
person who or which is neither an Affiliate, an officer or
director of the Company nor an officer, director or partner
of any Affiliate and which, if other than an individual,
does not have as an officer, director or partner any
Affiliate, an officer or director of the Company or an
officer, director or partner of any Affiliate, if the same
shall have been selected by the Company and shall be
acceptable to the Majority Banks; provided, however, that
the Majority Banks may for cause shown at any time and from
time to time remove any person serving as the Independent
Appraiser hereunder by an instrument in writing delivered to
the Company, such removal to become effective at the time
(which shall be after the date of delivery of such
instrument to the Company) designated in such instrument.
"Interest Payment Date" shall have the meaning set
forth in Section 2.04.
"Investment Securities" shall mean direct
certificated obligations of the United States Government
maturing within three months of issue, or such other
certificated obligations of, or guaranteed by, the United
States Government which are acceptable to the Banks.
"Letter Agreement" shall mean that certain letter
agreement, dated December 31, 1997, among the Company, the
Banks and the Agent relating to the Term Loan.
"Leverage Ratio" shall have the meaning set forth
in the PHI Loan Agreement.
"LIBOR" means, with respect to any Rate Period
relating to a LIBOR Loan, a per annum rate equal to the
annual rate of interest determined by the Agent two Business
Days prior to the first day of such Rate Period to be the
annual rate of interest at which deposits in Dollars and in
an amount substantially equal to such LIBOR Loan are offered
by the principal office of the Agent to prime banks in the
London interbank market for such Rate Period.
"LIBOR Interest Payment Date" shall have the
meaning set forth in Section 2.04.
"LIBOR Loan" means the outstanding principal
amount of any Loan that, during the Rate Period relating
thereto, bears interest at the lesser of (i) the LIBOR Rate
applicable during such Rate Period, and (ii) the Highest
Lawful Rate in effect from time to time during such Rate
Period.
"LIBOR Rate" means, with respect to any Rate
Period, a per annum rate equal to the sum of (i) (x) LIBOR
for such Rate Period divided by (y) 100% minus the LIBOR
Reserve Percentage, and (ii) the Applicable Margin which is
applicable two Business Days prior to the first day of such
Rate Period.
"LIBOR Reserve Percentage" means, with respect to
any Rate Period, the percentage determined by the Agent to
be the reserve requirement in effect for the Agent from time
to time during such Rate Period, including any basic,
supplemental and emergency reserves (expressed as a
percentage) applicable to a member bank of the Federal
Reserve System in respect of "eurocurrency liabilities"
under Regulation D of the Board of Governors of the Federal
Reserve System.
"Lien" shall mean any interest in property
securing an obligation owed to, or a claim by, any person
other than the owner of the property, whether such interest
shall be based on the common law, statute or contract, and
including the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust
receipt, or from a lease, consignment or bailment for
security purposes. "Lien" shall also include reservations,
exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting property. For the
purposes of this Agreement, the Company or any Subsidiary,
as the case may be, shall be deemed to be the owner of any
property which it shall have acquired or shall hold subject
to a conditional sale agreement or other arrangement
pursuant to which title to the property shall have been
retained by or vested in some other person for security
purposes.
"Loans" shall mean the Term Loans and the
Revolving Credit Loans.
"Majority Banks" shall mean, as of the date of
determination thereof, Banks holding 100% of the Ratable
Shares.
"Multiemployer Plan" shall mean a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA, Section 414
of the Code or Section 3(37) of ERISA (or any similar type
of plan established or regulated under the laws of any
foreign country) to which the Company or any ERISA Affiliate
is making or accruing, or has made or accrued an obligation
to make, contributions.
"Multiple Employer Plan" shall mean any employer
benefit plan within the meaning of Section 3(3) of ERISA,
other than a Multiemployer Plan, subject to Title IV of
ERISA, to which the Company or any ERISA Affiliate and an
employer other than an ERISA Affiliate or the Company
contribute.
"Note" shall mean a Term Note or a Revolving
Credit Note.
"Notice of Borrowing" shall have the meaning given
such term in Section 2.03.
"Notice of Conversion or Continuation" shall have
the meaning set forth in Subsection 2.12(b).
"Notice of Election" shall have the meaning given
such term in Subsection 9.02(a).
"Office of the Agent" shall mean the office of the
Agent located at 901 Main Street, Dallas, Texas 75201, or at
such other office of the Agent as the Agent may from time to
time specify in a notice to the parties hereto.
"Officers' Certificate" shall mean a certificate
signed in the name of the Company by the Chairman of the
Board, the Vice Chairman of the Board, the President or any
Vice President and by any other Vice President, the
Treasurer, the Secretary or any Assistant Secretary or
Assistant Treasurer of the Company.
"Operating Lease" shall mean any lease other than
a Capital Lease.
"Overadvance Amount" shall have the meaning given
such term in Section 8.16.
"Parts" shall mean, until installed in any
Aviation Unit, all aircraft engines, propellers, rotors,
appliances, tires, airframes, spare parts, radios and other
communication equipment together with all other aircraft
appliances, instruments, mechanisms, apparatus,
appurtenances, accessories and parts or components thereof,
of the Company wherever maintained, now or hereafter
existing, whether acquired by purchase or otherwise and
whether held by the Company for use in its business or held
by the Company for sale or lease or to be furnished by the
Company under contracts of service, and all proceeds and
products thereof and accessories thereto.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation or any successor thereto.
"PBGC Plan" shall mean any Plan subject to
Title IV of ERISA.
"Permitted Liens" shall have the meaning set forth
in Section 8.05.
"person" shall mean an individual, partnership,
corporation, trust, unincorporated organization or a
government or any department or agency thereof.
"PHI" shall mean Petroleum Helicopters, Inc., a
Louisiana corporation.
"PHI Loan Agreement" shall mean that certain
Amended and Restated Loan Agreement, originally dated as of
January 31, 1986, amended and restated in its entirety as of
March 31, 1997, among Petroleum Helicopters, Inc., Whitney
National Bank, First National Bank of Commerce, NationsBank
of Texas, N.A. and NationsBank of Texas, N.A., as the agent,
and as the same may from time to time be amended in
accordance with the provisions thereof.
"PHI Subsidiary" shall mean any Subsidiary (as
such term is defined in the PHI Loan Agreement) other than
the Company or a Subsidiary of the Company.
"Prime Rate" shall mean a fluctuating rate per
annum (based on a year of 365 or 366 days, as the case may
be, and actual days elapsed) equal on any given day to the
prime rate most recently announced by the Agent, which Prime
Rate shall automatically fluctuate, without special notice
to the Company or any other person, upward and downward as
and in the amount by which such prime rate shall fluctuate.
The Prime Rate is set by the Agent as a general reference
rate of interest, taking into account such factors as the
Agent may deem appropriate. The Prime Rate is not
necessarily the lowest or best rate actually charged to any
customer, and such rate may not correspond with future
increases or decreases in interest rates charged by other
lenders or market rates in general. The Agent and any of
the Banks may make various business or other loans at rates
of interest having no relationship to the Prime Rate.
Without notice to the Company or any other person, the Prime
Rate shall change automatically from time to time, as
determined by the Agent, subject always to limitation to the
Highest Lawful Rate.
"Prime Rate Interest Payment Date" shall have the
meaning set forth in Section 2.04.
"Prime Rate Loan" means the outstanding principal
amount of any Loan that bears interest at the lesser of
(i) the Applicable Prime Rate and (ii) the Highest Lawful
Rate in effect from time to time.
"Ratable Share" shall mean, in the case of
NationsBank, 37.5%, in the case of Whitney, 37.5%, and in
the case of FNBC, 25%.
"Rate Period" means with respect to any LIBOR
Loan, the period commencing on the date of Borrowing
applicable to such LIBOR Loan under Section 2.03 (or with
respect to the outstanding principal amount of any Loan that
is to be converted to, or continued as, a LIBOR Loan, the
date of such conversion or continuation) and ending 1, 2, 3,
4, 6, 9 or 12 months thereafter, as the Company may specify
in the Request for Borrowing or the Notice of Conversion or
Continuation, as the case may be;
provided, all of the foregoing provisions relating
to Rate Periods are subject to the following:
(1) if any Rate Period would otherwise end on a
day that is not a Business Day, such Rate Period shall
be extended to the next succeeding Business Day unless
the result of such extension would be to carry such
Rate Period into another calendar month in which event
such Rate Period shall end on the immediately preceding
Business Day;
(2) any Rate Period that would otherwise extend
beyond the Termination Date shall end on the
Termination Date;
(3) any Rate Period that 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 Rate Period) shall
end on the last Business Day of a calendar month;
(4) the Company shall use reasonable efforts to
select Rate Periods so as not to require a payment or
prepayment of any LIBOR Loan during a Rate Period for
such Loan;
(5) the early termination provisions set forth in
Subsection 2.13(e); and
(6) the Company may not select any Rate Period
which ends after any quarterly payment of principal
pursuant to Section 2.01(b) or Section 2.02(b) unless,
after giving effect to such selection, the Company
would be able to make such payment without violation of
the next to the last sentence of Subsection 3.01(b).
"RCRA" shall have the meaning given in the
definition of "Environmental Protection Statute".
"Receivables" shall mean, with respect to any
person, all Indebtedness presently existing or hereafter
owing to such person in connection with such person's
business, profession, occupation or undertaking, including,
but not limited to the sale of goods or the performance of
services or the leasing of property, together with all
proceeds thereof; excluding, however any Indebtedness due to
or arising out of claims in tort and Indebtedness evidenced
by a promissory note or a negotiable instrument.
"Reportable Event" shall have the meaning assigned
to that term in Section 4043 (excluding Subsection (b)(7)
and (b)(9)) of ERISA.
"Request for Borrowing" shall have the meaning
given such term in Section 6.02.
"Responsible Officer" means any Senior Vice
President within the Southwest Corporate Division of the
Agent.
"Restricted Payment" shall mean any payment in
cash, property or other assets upon or in respect of any
shares of any class of capital stock of the Company,
including payments as dividends and payments for the purpose
of purchasing, retiring or redeeming any such shares of
stock (or any warrants or options evidencing a right to
purchase any such shares of stock) or making any other
distribution in respect of any such shares of stock,
excluding, however, (a) any dividends payable solely in
common stock of the Company, (b) any dividends on the Series
A Cumulative Accruing Pay-in-Kind Preferred Stock of the
Company payable solely in other shares of the same series of
preferred stock of the Company, and (c) any stock split
whereby the issued shares of any existing class or series of
common stock or preferred stock of the Company are changed
into a greater or smaller number of shares of the same class
or series and no other consideration is distributed to
shareholders; provided, however, that the amount of any
Restricted Payment in the nature of a dividend declared or
other payment or distribution made in property other than
cash shall be deemed to be the greater of net book value or
fair market value of such property at the time of
declaration (in the case of dividends) or, in other cases,
at the time of payment or distribution, as the case may be.
"Revolving Credit Borrowing" shall mean a
borrowing consisting of a simultaneous Revolving Credit Loan
from each Bank.
"Revolving Credit Loan" shall have the meaning
given such term in Subsection 2.02(a).
"Revolving Credit Note" shall mean a note,
substantially in the form attached hereto as Exhibit A-2,
evidencing the Revolving Credit Loans made by a Bank,
including all renewals, extensions, modifications,
amendments, rearrangements and replacements thereof.
"Revolving Credit Termination Date" shall have the
meaning given such term in Subsection 2.02(b).
"Samaritan" shall have the meaning given such term
in the introductory paragraph of this Agreement.
"Security Agreement" shall mean that certain
Security Agreement, of even date herewith, executed by the
Company, as grantor, to Agent, as Secured Party, for the
equal and ratable benefit of itself, Whitney and FNBC
covering all of the Collateral (as defined therein) then
existing or thereafter acquired, wherever located, together
with any and all supplements, modifications or amendments
thereto or restatements thereof.
"Security Documents" shall mean the Security
Agreement, the Guaranty Agreement and all other documents,
agreements, instruments, financing statements, financing
statement changes and continuation statements heretofore,
now or hereafter executed or delivered by any person in
connection with, or as security for the payment of the
Loans.
"Security Interest" means, with reference to the
Collateral (or any portion thereof), mortgages, liens,
security interests, charges or other encumbrances created by
the Company in favor of the Banks and held by the Agent for
their equal and ratable benefit pursuant to the Security
Documents.
"Services Agreement" means that certain Services
Agreement entered into between the Company and Samaritan,
effective January 1, 1998, as the same may from time to time
be amended.
"Subsidiary" shall mean any corporation of which
at least a majority of the Voting Stock is at the time
directly or indirectly owned by the Company. Anything to
the contrary herein notwithstanding, the ownership of Voting
Stock of another corporation by any officers or directors of
the Company shall not, of itself, constitute indirect
ownership of such Voting Stock by the Company.
"Term Loan Borrowing" shall mean a borrowing
consisting of a simultaneous Term Loan from each Bank.
"Term Loan Note" shall mean a note, substantially
in the form attached hereto as Exhibit A-1, evidencing the
Term Loan made by a Bank, including all renewals,
extensions, modifications, amendments, rearrangements and
replacements thereof.
"Term Loans" shall have the meaning given such
term in Subsection 2.01(a).
"Termination Date" shall have the meaning given
such term in Subsection 2.01(b).
"Trade Payables" shall mean, with respect to any
person, the accounts payable or trade indebtedness payable
by such person in respect of goods or services acquired by
such person on a recurring basis and classified as accounts
or trade indebtedness payable on the balance sheet of such
person in accordance with generally accepted accounting
principles consistently applied.
"Voting Stock" shall mean the stock of a
corporation the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of
the corporate directors (or persons performing similar
functions).
"Whitney" shall have the meaning given such term
in the introductory paragraph.
"Wholly-owned Subsidiary" shall mean any
Subsidiary 100% of the stock of every class of which (except
for directors' qualifying shares) at the time as of which
any determination is being made, is owned, directly or
indirectly, by the Company.
1.2 Other Definitional Provisions. All accounting
terms used in this Agreement which are not expressly defined
herein shall be construed in accordance with generally
accepted accounting principles in the United States
consistently applied, and all financial data submitted
pursuant to this Agreement shall be prepared in accordance
with such principles. All references to "Sections",
"Subsections", "Articles", "Exhibits" and "Schedules" shall
be to sections, subsections, articles, exhibits and
schedules, respectively, of this Agreement unless otherwise
specifically provided. Unless otherwise specifically
provided for herein, the term "or" shall not be deemed to be
exclusive.
2. THE LOANS.
2.1 Term Loans.
(a) Upon the terms and conditions set forth in
this Agreement, each Bank agrees to make a one-time term
loan to the Company on the Effective Date in an amount equal
to such Bank's Ratable Share of $6,250,000 (the "Term
Loan"). Each Bank's Term Loan shall be evidenced by a Term
Loan Note, payable to the order of such Bank in installments
and bearing interest payable (except as otherwise provided
in Article 3) on each Interest Payment Date and on the date
when such Term Loan is paid in full at the rate or rates set
forth in Section 2.04.
(b) The aggregate principal amount of the Term
Loans shall be payable in quarterly installments each in an
amount equal to (i) for the first 23 quarterly installments
prior to November 10, 2003 (the "Termination Date"),
$223,214 and (ii) on the Termination Date, $1,116,078, which
quarterly installments shall be payable on the tenth (10th)
day of each February, May, August and November of each year,
commencing February 10, 1998 and ending on the first such
date on which the aggregate unpaid principal amount of the
Term Loans shall be paid in full by reason of quarterly
installments paid as aforesaid and any prepayments made
pursuant to Article 3 or otherwise (but in any event no
later than the Termination Date).
(c) Each Bank shall post on a schedule attached
to its Term Loan Note or in records relating to its Term
Loan Note (i) the rate of interest such Term Loan will bear
and (ii) each payment of principal and interest thereon;
provided, however, that neither the failure to make any such
postings nor any inaccuracy therein shall affect the
Company's obligations under any Term Loan Note or this
Agreement. The information set forth on such schedule shall
be rebuttably presumptive evidence of the matters described
in the immediately preceding sentence.
2.2 Revolving Credit Loans.
(a) Upon the terms and conditions set forth in
this Agreement, each Bank agrees to make revolving credit
loans to the Company from time to time to but not including
the Conversion Date, up to an aggregate principal amount not
exceeding at any one time outstanding such Bank's
Commitment, subject to the provisions of Section 8.16 to be
used for working capital and general corporate purposes (the
"Revolving Credit Loans"). Each Bank's Revolving Credit
Loans shall be evidenced by a Revolving Credit Note, payable
to the order of such Bank in installments and bearing
interest payable (except as otherwise provided in Article 3)
on each Interest Payment Date and on the date when such
Revolving Credit Loan is paid in full at the rate or rates
set forth in Section 2.04. Within the limits set forth
above and subject to the terms and conditions of this
Agreement, the Company may repay or prepay the Revolving
Credit Loans pursuant to Article 3 and prior to, but not on
or after the Conversion Date, borrow and reborrow under this
Subsection 2.02(a). On and after the Conversion Date, the
Revolving Credit Loans will automatically convert to a term
facility and the Commitments of the Banks will terminate so
that amounts so converted which are repaid or prepaid may
not be reborrowed.
(b) The aggregate principal amount of the
Revolving Credit Loans shall be payable in 20 equal
quarterly installments of the aggregate principal amount of
the Revolving Credit Loans outstanding as of the Conversion
Date, which quarterly installments shall be payable on the
tenth (10th) day of each February, May, August and November
of each year, commencing February 10, 2000 and ending on the
first such date (after the Conversion Date) on which the
aggregate unpaid principal amount of the Revolving Credit
Loans shall be paid in full by reason of quarterly
installments paid as aforesaid and any prepayments made
pursuant to Subsection 3.02(b) and 3.02(c) or otherwise, but
in any event no later than November 10, 2004 (the "Revolving
Credit Termination Date").
(c) Each Bank shall post on a schedule attached
to its Revolving Credit Note or in records relating to its
Revolving Credit Note (i) the date and principal amount of
each Revolving Credit Loan, (ii) the rate of interest each
such Revolving Credit Loan will bear, and (iii) each payment
of principal and interest thereon; provided, however, that
neither the failure to make any such postings nor any
inaccuracy therein shall affect the Company's obligations
under any Revolving Credit Note or this Agreement. The
information set forth on such schedule shall be rebuttably
presumptive evidence of the matters described in the
immediately preceding sentence.
2.3 Borrowing Procedure.
(a) With the exception of the Loans made on the
Effective Date, the Loans under Sections 2.01 and 2.02 shall
be made upon at least three (3) full Business Days' prior
notice from the Company to the Agent and each Bank
(a "Notice of Borrowing"). Each such Notice of Borrowing
shall specify (i) the Borrowing Date, (ii) the total amount
of the proposed Loans (which shall be for not less than
$250,000 and in an integral multiple of $250,000), and (iii)
whether such Loans are to be Prime Rate Loans or LIBOR
Loans, and if such Loans are to be LIBOR Loans, the Rate
Period applicable thereto.
(b) In connection with each Revolving Credit
Borrowing, the Company shall (i) deliver, prior to the
Borrowing Date set forth in the Notice of Borrowing related
to such Revolving Credit Borrowing, to the Agent, with a
copy to each Bank, a Borrowing Base Certificate showing a
Borrowing Base that is greater than or equal to the amount
of the Revolving Credit Borrowing referred to in such Notice
of Borrowing plus the principal amount of Revolving Credit
Loans outstanding on such date.
(c) The failure of any Bank to make the Loan(s)
to be made by it as part of any Borrowing shall not relieve
any other Bank of its obligation, if any, hereunder to make
its Loan(s) on the date of such Borrowing, but no Bank shall
be responsible for the failure of any other Bank to make the
Loan(s) to be made by such other Bank on the date of any
Borrowing.
(d) Not later than 11:00 a.m. (Dallas time) on
the Borrowing Date for each Borrowing, each Bank shall make
its Ratable Share of such Borrowing available at the Office
of the Agent in immediately available funds. On each
Borrowing Date, provided each Bank shall have made its
Ratable Share of the applicable Borrowing available to the
Agent as required by the immediately preceding sentence, the
Agent shall pay the proceeds of such Borrowing in
immediately available funds to or upon the order of the
Company no later than 2:00 p.m. (Dallas time).
(e) Unless the Agent shall have received notice
from a Bank prior to the date of any Borrowing that such
Bank will not make available to the Agent such Bank's
Ratable Share of such Borrowing, the Agent may assume that
such Bank has made such Ratable Share available to the Agent
on the date of such Borrowing in accordance with Subsection
2.03(d), and the Agent may, in reliance upon such
assumption, make available to the Company on such date a
corresponding amount. If and to the extent such Bank shall
not have so made such Ratable Share available to the Agent,
such Bank, upon demand, and the Company, within three (3)
Business Days after demand, severally agree to repay to the
Agent such corresponding amount together with interest
thereon, for each day from the date such amount is made
available to the Company until the date such amount is
repaid to the Agent, at the federal funds rate. If such
Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan as
part of such Borrowing for purposes of this Agreement.
2.4 Rates of Interest. The Loans shall bear interest
on the unpaid principal amount thereof from time to time
outstanding at a rate or rates per annum as follows:
(a) The Loans shall bear interest prior to
maturity (by acceleration or otherwise) at (i) for the Loans
maintained as Prime Rate Loans at the lesser of (A) the
Applicable Prime Rate and (B) the Highest Lawful Rate in
effect from time to time and (ii) for the Loans maintained
as LIBOR Loans, at the lesser of (A) the LIBOR Rate
applicable during such Rate Period, and (B) the Highest
Lawful Rate in effect from time to time during such Rate
Period. Interest on the Prime Rate Loans shall be due and
payable quarterly on (each a "Prime Rate Interest Payment
Date") the last day of each February, May, August and
November commencing on the tenth day of February, 1998, and
on each such date thereafter until the date (after the
Conversion Date) when all principal amounts outstanding
under the Notes shall have been paid in full and until the
obligation of each Bank to make Revolving Credit Loans shall
be terminated. Interest on each LIBOR Loan shall be due and
payable on the last day of each Rate Period (or if longer
than three months, each date which is the third month
anniversary of such Rate Period) for such LIBOR Loan (each a
"LIBOR Interest Payment Date" and, together with each Prime
Rate Interest Payment Date, an "Interest Payment Date").
(b) Overdue amounts of principal and interest on
the Notes shall bear interest payable on demand at a rate
per annum (based on a year of 365 or 366 days and actual
days lapsed) equal to the lesser of the Highest Lawful Rate
or 3% per annum above the Prime Rate, but in no event to
exceed the maximum rate allowed by La. R.S. 9:3509.1 if
and to the extent applicable.
(c) Each adjustment to the Applicable Prime Rate
and the LIBOR Rate shall be made in accordance with the
definition of the term Applicable Margin in Section 1.01.
(d) In the event any such adjustment to the
Applicable Prime Rate or the LIBOR Rate, respectively, shall
result in the amount of interest or fees paid to any Bank on
a previous Interest Payment Date being more or less than the
amount due on such Interest Payment Date calculated at the
adjusted level, the amount of any overpayment or
underpayment, as the case may be, to such Bank resulting
therefrom shall be deducted from or added to, respectively,
the amount of interest or fees due to such Bank on the next
Interest Payment Date succeeding such adjustment to the
Applicable Prime Rate or the LIBOR Rate, respectively;
provided, however that no deductions or additions shall
occur after the Termination Date with respect to interest or
fees paid on any Loan, or the Conversion Date with respect
to any fees paid with respect to the unused portion of the
Commitments, and any adjustment to the Applicable Prime Rate
or the LIBOR Rate, respectively, that would otherwise
require such deduction or addition after such date shall be
of no effect.
(e) All adjustments to the Applicable Prime Rate
or the LIBOR Rate, respectively, provided for in this
Subsection 2.04(c) and in the definition of Applicable
Margin in Section 1.01 shall be adequately supported, in the
sole but reasonable discretion of the Banks, by the
quarterly financial statements required to be delivered from
the Company to the Banks pursuant to Section 7.01.
2.5 Increased Costs - Reserve Requirements, Etc.
(a) If any Bank determines that compliance with
any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount
of capital required or expected to be maintained by such
Bank or any corporation controlling such Bank and that the
amount of such capital is increased by or based upon the
existence of such Bank's Loans or Commitment and other loans
or commitments of this type then, upon demand by such Bank
(with a copy of such demand to the Agent), the Company shall
immediately pay to such Bank from time to time as specified
by such Bank, additional amounts sufficient to compensate
such Bank or such corporation in the light of such
circumstances, to the extent that such Bank reasonably
determines such increase in capital to be allocable to the
existence of any of such Bank's Loans or Commitment
hereunder.
(b) The Company shall pay immediately upon demand
by the Agent any applicable stamp and registration taxes,
duties, official and sealed paper taxes or similar charges
due, or which under applicable law could in the future
become due, or which may in the future become due as a
result of any change in applicable law, the interpretation
thereof, or otherwise, in connection with any Borrowing or
the Notes or this Agreement or in connection with the
enforcement hereof or thereof.
(c) A certificate of any Bank seeking direct
payment, compensation or reimbursement under this Section
2.05 and setting forth a computation of the amount or
amounts to be paid by the Company shall be delivered to the
Company and shall be conclusive in the absence of manifest
error.
2.6 Recapture. Notwithstanding anything in this
Agreement to the contrary, if the rate of interest
applicable to any Borrowing or portion thereof (the
"Applicable Rate") would, but for the limitation of the rate
herein to the Highest Lawful Rate, for any period of time
exceed the Highest Lawful Rate, the rate of interest to
accrue on such Borrowing or portion thereof during such
period shall be limited to the Highest Lawful Rate, but such
Borrowing shall bear interest thereafter at the Highest
Lawful Rate until the total amount of interest accrued
thereon equals the amount of interest which would have
accrued thereon if the Applicable Rate would have at all
times been in effect during such period.
2.7 Commitment Fees. The Company agrees to pay to the
Agent for the account of the Banks the Commitment Fee, from
and including the Effective Date to and including the
Conversion Date. The Commitment Fee shall be due and
payable on each Prime Rate Interest Payment Date, and shall
be computed for the period commencing with the day on which
the Commitment Fee was last paid, as the case may be, to but
not including the day the Commitment Fee is due and payable.
2.8 Payments, Notice of Certain Repayments, and
Computations.
(a) All payments by the Company of principal,
interest and Commitment Fees hereunder and under the Notes
shall be made in Dollars to the Agent at the Office of the
Agent for the account of each of the respective Banks in
immediately available funds not later than 11:00 a.m.
(Dallas time) on the date when due. The Company hereby
authorizes each Bank, if and to the extent payment is not
made within three (3) days of the date when due pursuant to
any Note held by such Bank or the provisions of this
Agreement, to debit any account of the Company with such
Bank in an amount equal to the principal, interest,
expenses, reimbursements, compensation, Commitment Fees, and
any other amount from time to time due under any Note
payable to such Bank or hereunder or under any Security
Document. Any Bank which so debits an account of the
Company shall give the Company and the Agent prompt notice
of such debit, the amount thereof and the obligations of the
Company to which the amount so debited was applied.
All payments by the Company of agent's fees
hereunder shall be made in Dollars to the Agent at the
Office of the Agent in immediately available funds not later
than 11:00 a.m. (Dallas time) on the date when due.
(b) Interest shall be calculated on Prime Rate
Loans on the basis of a year of 365 or 366 days, as
applicable, and on LIBOR Loans on the basis of a year of 360
days. The Agent shall determine each interest rate
applicable to the Loans in accordance with this Agreement,
and the Agent's determination thereof shall be conclusive in
the absence of clearly demonstrated error.
2.9 Set-Off, Counterclaims and Taxes. All payments of
principal, interest, expenses, reimbursements, compensation
and any other amount from time to time due hereunder or
under the Notes shall be made by the Company without set-off
or counterclaim and shall be made free and clear of and
without deduction for any present or future tax, levy,
impost or any other charge, if any, of any nature whatsoever
now or hereafter imposed by any taxing authority, excluding
income and franchise taxes of the United States and any
political subdivision thereof. If the making of such
payments is prohibited by law unless such a tax, levy,
impost or other charge is deducted or withheld therefrom,
the Company shall pay to the Agent, on the date of each such
payment, such additional amounts as may be necessary in
order that the net amounts received by the Agent after such
deduction or withholding shall equal the amounts which would
have been received if such deduction or withholding were not
required. A certificate of the Agent seeking payment of
such additional amounts under this Section 2.09 and setting
forth a computation of the amount or amounts to be paid to
it by the Company shall be delivered to the Company and
shall be conclusive in the absence of manifest error. The
Company shall confirm that all applicable taxes, if any,
imposed on this Agreement or on any transaction hereunder,
shall have been properly and legally paid by it to the
appropriate taxing authorities, by sending official tax
receipts or notarized copies of such receipts to the Agent
within 30 days after payment of the payment evidenced
thereby.
2.10 Termination or Reduction of Commitments. The
Company may at any time, upon at least five (5) full
Business Days' notice to the Agent and each Bank, terminate
in whole or reduce ratably in part the unused portions of
the respective Commitments of the Banks, provided that such
termination and each such partial reduction shall be
irrevocable and that each such partial reduction shall be in
the aggregate amount of $1,000,000 or an integral multiple
thereof, and provided, further, that the Company shall not
reduce the sum of the Commitments at any time to an amount
less than the aggregate unpaid principal amount of Revolving
Credit Loans, then outstanding. On the date specified in
such notice, the respective Commitments of the Banks shall
be deemed reduced or terminated, as the case may be, as
provided in such notice.
2.11 Application of Proceeds. The proceeds of all
Borrowings under this Agreement shall be used solely for (a)
with respect to the Term Loans, the acquisition of assets
relating to the EMS business of Samaritan and (b) with
respect to Revolving Credit Loans, working capital and
general corporate purposes of the Company.
2.12 Conversion and Continuation.
(a) With respect to the principal amount of the
Loans outstanding from time to time, subject to the terms
and provisions of this Agreement, the Company shall have the
option, to (a) convert on any Business Day all or any part
of such outstanding principal amount maintained as a Prime
Rate Loan at such time to a LIBOR Loan; provided, however,
that each such LIBOR Loan shall be in a principal amount
greater than or equal to $250,000 or an integral multiple of
$250,000 in excess thereof, (b) convert all or any part of
such outstanding principal amount maintained as a LIBOR Loan
to a Prime Rate Loan on the last day of the Rate Period
relating to such LIBOR Loan, or (c) effective as of the last
day of any Rate Period during which the outstanding
principal amount of a Loan is maintained as a LIBOR Loan,
continue all or a portion of such outstanding principal
amount as a LIBOR Loan and the succeeding Rate Period of
each such continued LIBOR Loan shall commence on the last
day of the Rate Period then ended; provided, however, that
each such continued LIBOR Loan shall be in a principal
amount greater than or equal to $250,000 or an integral
multiple of $250,000 in excess thereof. Notwithstanding
anything set forth herein, none of the outstanding principal
amount of the Loans shall be converted to, or continued as,
a LIBOR Loan if (y) the last day of the Rate Period relating
to such LIBOR Loan does not occur on or before the
Termination Date or (z) a Default or an Event of Default has
occurred and is continuing.
(b) In the event the Company shall elect to
convert or continue all or any part of the outstanding
principal amount of a Loan as provided in the immediately
preceding Subsection 2.12(a), the Company shall deliver a
written notice to the Agent (each such notice, a "Notice of
Conversion or Continuation") (x) with respect to the
conversion of all or any part of a Loan to a LIBOR Loan or
the continuation of any LIBOR Loan, no later than 11:00
a.m., Dallas, Texas time three Business Days in advance of
the proposed conversion or continuation date, and (y) with
respect to the conversion of all or any part of a LIBOR Loan
to a Prime Rate Loan, no later than 11:00 a.m., Dallas,
Texas time on the Business Day immediately preceding the
proposed conversion date, specifying in each case (i) the
amount of the outstanding principal amount of each Loan that
is to be converted or continued, (ii) the date of such
proposed conversion or continuation, which date shall be a
Business Day, (iii) whether the proposed conversion is of
(A) Prime Rate Loan(s) to LIBOR Loan(s), or (B) LIBOR
Loan(s) to Prime Rate Loan(s), (iv) in the case of a
conversion to, or continuation of, a LIBOR Loan, the
requested Rate Period, (v) the aggregate principal amount of
the Loans outstanding after giving effect to such conversion
or continuation, and (vi) that no Default or Event of
Default has occurred and is continuing. Each Notice of
Conversion or Continuation shall be irrevocable and the
Company shall be bound to convert or continue in accordance
therewith.
(c) If with respect to all or any part of the
outstanding principal amount of any LIBOR Loan the Company
fails to timely submit a Notice of Conversion or
Continuation, such outstanding principal amount shall,
effective as of the last day of the Rate Period relating
thereto, automatically and without notice of any kind be
converted to a Prime Rate Loan.
2.13 Provisions Relating to LIBOR Loans.
(a) Notwithstanding anything set forth this
Agreement, the Banks shall not be obligated to convert all
or any part of the outstanding principal amount of any Loan
maintained as a LIBOR Loan to a Prime Rate Loan until the
last day of the Rate Period relating to such LIBOR Loan.
(b) If the Company shall have requested a LIBOR
Loan or requested that all or any part of the outstanding
principal amount of any Loan be converted to, or continued
as, a LIBOR Loan and the Agent in good faith determines
(which determination shall be conclusive) that extraordinary
circumstances make it impossible or impracticable to
ascertain the applicable LIBOR Rate for the applicable Rate
Period, such Loan or portion thereof shall instead be
funded, converted into or continued, as the case may be, as
a Prime Rate Loan.
(c) Notwithstanding anything set forth in this
Agreement, if at any time the Agent in good faith determines
(which determination shall be final and conclusive) that the
introduction of, or any change in, any applicable law, rule,
regulation or treaty or any change in the interpretation,
application or administration thereof by any governmental or
other regulatory authority charged with the interpretation,
application or administration thereof shall make it unlawful
for any of the Banks to maintain or fund any LIBOR Loan, the
Agent shall give notice thereof to the Company and effective
as of the date of such notice, and notwithstanding
Subsection 2.13(a), the outstanding principal amount of such
LIBOR Loan shall be converted to a Prime Rate Loan. Within
five (5) Business Days after any Bank's written notice and
demand therefor, the Company shall pay to such Bank such
amount or amounts (to the extent that such amount or amounts
would not be usurious under applicable Law and to the extent
such amount or amounts have not been included in the
determination of the LIBOR Rate) as may be necessary to
compensate such Bank for any direct or indirect costs and
losses incurred by it under, in connection with or as a
result of such conversion, but otherwise without penalty.
If notice with respect to any LIBOR Loan has been given by
the Agent pursuant to the foregoing provisions of this
Subsection 2.13(c) then, unless and until the Agent notifies
the Company that the circumstances giving rise to such
notice no longer apply, the Banks shall have no obligation
to make or convert all or any part of the outstanding
principal amount of any Loan into a LIBOR Loan. Any claim
by the Banks for compensation under this Subsection 2.13(c)
shall be accompanied by a certificate setting forth the
computation upon which such claim is based and such
certificate shall be conclusive and binding for all purposes
absent manifest error.
(d) In the event that any law, regulation, treaty
or directive or any change therein or in the interpretation,
application or administration thereof or compliance by any
Bank with any request or directive (whether or not having
the force of law) from any central bank or other
governmental authority, agency or instrumentality, does or
shall, as a result of, or with respect to, any LIBOR Loan:
(i) subject such Bank to any tax, duty or
other charge of any kind whatsoever with respect
to this Agreement, any other Loan Document or all
or any part of the outstanding principal amount of
any Loan, or change the basis of taxation of
payments to such Bank of principal, interest or
any other amount payable hereunder or under any
other Loan Document (except for changes in the
rate of any tax presently imposed on such Bank);
(ii) impose, modify or hold applicable any
reserve, special deposit, compulsory loan or
similar requirement against assets held by, or
deposits or other liabilities in or for the
account of, advances or loans by, or other credit
extended by, or any other acquisition of funds by,
any office of such Bank; or
(iii) impose on such Bank any other
condition;
and the result of any of the foregoing is to increase the
cost to such Bank of making, renewing or maintaining
advances or extensions of credit to the Company or to reduce
any amount receivable from the Company thereunder then, in
any such case (and to the extent not already included in the
calculation of the applicable LIBOR Rate), the Company shall
promptly pay to such Bank, within five (5) Business Days
after such Bank's written notice and demand therefor, any
amounts necessary to compensate such Bank for such
additional cost or reduced amount receivable. Any claim by
a Bank for compensation under this Subsection 2.13(d) shall
be accompanied by a certificate setting forth the
computation upon which such claim is based and such
certificate shall be conclusive and binding for all purposes
absent manifest error.
(e) In the event any prepayment under
Section 3.02 requires the Company to prepay a LIBOR Loan, or
any part thereof, prior to the last day of the Rate Period
relating thereto, within five (5) Business Days after the
Agent's demand therefor the Company shall pay to the Agent
such amount or amounts (to the extent that such amount or
amounts would not be usurious under applicable Law) as may
be necessary to compensate the Banks for any costs and
losses incurred by it under, in connection with or as a
result of such prepayment. Any claim by the Agent for
compensation under this Subsection 2.13(e) shall be
accompanied by a certificate setting forth the computation
upon which such claim is based and such certificate shall be
conclusive and binding for all purposes absent manifest
error.
(f) The Company may not prepay any LIBOR Loan
before the last day of the Rate Period relating thereto,
except for payments required under Section 3.02(b).
3. PREPAYMENT.
3.1 Optional Prepayments. The Company at any time and
from time to time on any Business Day may prepay the
principal amount of any Borrowings in whole or in part,
without premium or penalty; provided that:
(a) The Company shall give to the Agent and each
Bank not less than five (5) full Business Days prior notice
of each prepayment specifying the type of Borrowing (i.e.,
Term Loan Borrowing or Revolving Credit Borrowings) and the
aggregate principal amount of such Borrowings to be prepaid
and the prepayment date. The Company's notice of such
prepayment having been given as aforesaid, the principal
amount of the Loans comprising such Borrowings specified in
the notice, together with interest thereon to the date of
prepayment, shall become due and payable on such prepayment
date; and
(b) Prepayments of Revolving Credit Loans made
under this Section 3.01 on or after the Conversion Date and
prepayments of the Term Loans made under this Section 3.01
shall be applied, ratably, to such principal installments of
such Loans as the Company shall designate in its notice of
prepayment given pursuant to Subsection 3.01(a); provided
that:
(i) if the Company does not so designate the
principal installments of the Revolving Credit
Loans or Term Loans, as the case may be, to which
any of such prepayments are to be applied, such
prepayments shall be applied ratably (according to
each Bank's Ratable Share) to the principal
installments due under such Loans in the inverse
order of their respective due dates (the "Back End
Installments");
(ii) the Company may not designate the
principal installments of the Revolving Credit
Loans or Term Loans, as the case may be, to which
any of such prepayment is to be applied, other
than the Back End Installments, except in an
amount that, when added to the sum of all other
prepaid principal installments applied other than
to the Back End Installments and for which, as of
the date of determination thereof, the respective
due dates of such prepaid principal installments
shall not yet have passed, shall not exceed
$892,857; and
(iii) the Company may not designate
installments of the Revolving Credit Loans or Term
Loans, as the case may be, other than the Back End
Installments, to which any of such prepayments is
to be applied, more than two times in any one
fiscal quarter of the Company.
Notwithstanding the foregoing, the Company may not
prepay any LIBOR Loan under this Section 3.01 before the
last day of the Rate Period relating thereto. Each partial
prepayment made under this Section 3.01 designated to be
applied to the Back End Installments (unless made pursuant
to the sale of one or more Aircraft under Subsection
9.05(b)(i) or pursuant to an Event of Loss under Section
9.02) shall be in the aggregate principal amount of not less
than $500,000 and in an integral multiple of $250,000.
3.2 Mandatory Prepayments.
(a) The Company shall prepay the Loans in whole
at the option of the Majority Banks, under the circumstances
specified in Section 7.14.
(b) In the event of a Default under Section 8.16,
the Company will, within three (3) Business Days of the date
upon which the Company or any Bank determines that
such Default has occurred, either (i) make a prepayment on
the Term Loans in the amount by which the aggregate
principal then outstanding under the Revolving Credit Loans
exceeds the lesser of (x) $5,000,000 and (y) the
Borrowing Base, provided, however, if, at the time of such
prepayment, there is no aggregate principal amount
outstanding under the Term Loans, the Company may prepay the
Revolving Credit Loans and the respective Commitment of each
Bank shall be permanently and ratably reduced by the amount
of such prepayment, or (ii) comply with the provisions of
clause (i) or (ii) of Subsection 9.03(b); provided, however,
if the sole cause of such Default is the occurrence of an
Event of Loss and so long as no other Default or any Event
of Default has occurred and is continuing, the Company may
comply with the provisions of Subsection 9.02(a) within the
time periods provided therein, further provided, however,
that at no time while any Default under Section 8.16 is
continuing may the Company request any Borrowings hereunder.
(c) The Company shall prepay the Loans under the
circumstances specified in Subsection 9.05(b). Such
prepayments of Loans made under this Subsection 3.02(c)
shall be applied to the principal installment due under the
Term Loans according to the terms and conditions of
Subsection 3.01(b) , provided, however, if, at the time of
such prepayment, there is no aggregate principal amount
outstanding under the Term Loans, the Company may prepay the
Revolving Credit Loans and the respective Commitment of each
Bank shall be permanently and ratably reduced by the amount
of such prepayment.
(d) In the event the Company makes a prepayment
pursuant to this Section 3.02 or pursuant to a Notice of
Election, the Company shall designate in a notice to the
Agent and each Bank the amount of such prepayment. Except
as provided in Subsection 3.02(c), the amount of any such
prepayment shall be applied ratably to the principal
installments of the Loans in inverse order of maturity. All
prepayments under this Section 3.02 or pursuant to a Notice
of Election shall be without premium or penalty, except as
provided in Subsection 2.13(e).
4. PAYMENTS MADE ON BUSINESS DAYS. If any payment of
principal, interest, Commitment Fees, agent's fees or other
amounts hereunder, under any Security Document or any Note
shall become due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in
computing interest in connection with such payment provided,
however, if such extension would cause payment of interest
on or principal of LIBOR Loans to be made in the next
following calendar month, such payment shall be made on the
next preceding Business Day.
5. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants:
5.1 Organization and Qualification. The Company and
each Subsidiary (a) are corporations duly organized and in
good standing under the laws of the state of their
respective incorporation, have the corporate power to own
their respective property and to carry on their respective
business as now conducted, and (b) are duly qualified as a
foreign corporation to do business and are in good standing
in every jurisdiction where the failure to be so qualified
would have a material adverse effect on the business,
prospects, earnings, properties or condition, financial or
otherwise, of the Company or such Subsidiary, as the case
may be. The Company is a Louisiana corporation and is a
"citizen of the United States" within the meaning of
Section 101(13) of the Federal Aviation Act and is an
"air carrier" duly qualified as an "air taxi commercial
operator" within the meaning of said Act and the regulations
issued thereunder. The corporations named in Exhibit B are
the only Subsidiaries of the Company on the Effective Date,
and such Exhibit accurately reflects the percentage of (x)
the issued and outstanding capital stock, and (y) the Voting
Stock of each class of each Subsidiary on the Effective Date
and accurately identifies the Consolidated Subsidiaries and
the percentage of the Company's and each other Subsidiary's
ownership of the outstanding Voting Stock of each
Subsidiary. The shares of capital stock of each Subsidiary
owned by the Company have been validly issued, are
outstanding, fully-paid and non-assessable shares of such
Subsidiary and are owned by the Company free and clear of
all Liens (except statutory liens for taxes not yet due and
for salaries of clerical employees, none of which liens has
been filed or perfected).
5.2 Capitalization. (a) The authorized capital stock
of the Company consists of (a) 7,000 shares of common stock,
without par value, 1,000 shares of which are outstanding and
are owned, both beneficially and of record, by PHI
Aeromedical Services, Inc., a Louisiana corporation (all of
the issued and outstanding shares of capital stock of which
are owned, beneficially and of record, by PHI), and (b)
3,000 shares of preferred stock, par value $100 per share,
1,000 shares of which are outstanding and are owned of
record and, to the best knowledge of the Company,
beneficially by Samaritan.
5.3 Actions Pending. There is no action or proceeding
pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary before any court or
administrative agency which might result in a material
adverse change in the business or condition of the Company
and the Subsidiaries when taken as a whole. There are no
outstanding judgments or awards against the Company or any
Subsidiary.
5.4 No Default. Neither the Company nor any
Subsidiary is in default in any respect under the provisions
of any instrument evidencing any Indebtedness of the Company
or such Subsidiary or of any agreement relating thereto, or
in default in any respect under any order, writ, injunction
or decree of any court, or in default in any respect under
or in violation of any order, regulation or demand of any
governmental instrumentality, which defaults or violations
might have consequences which would materially adversely
affect the business, prospects, earnings, properties or
condition, financial or otherwise, of the Company and the
Subsidiaries, taken as a whole.
5.5 Warranty of Title; Leases. The Company and each
Subsidiary have good and marketable title to their real
property and valid and indefeasible ownership interests in
their other properties, free and clear of all Liens other
than Permitted Liens. The Company has good and marketable
title to all the Collateral and has good right and full
power and authority to subject the Collateral to the
Security Interest. The Collateral is free and clear of all
Liens other than Permitted Liens. The Security Documents
do, as of the Effective Date, constitute a first mortgage on
and first priority perfected security interest in the
Collateral subject only to Permitted Liens. There is no
financing statement, chattel mortgage or notice thereof
(including FAA Form 905, "Aircraft Chattel Mortgage") or
other security agreement or instrument or notice thereof in
which the Company (or any predecessor person) or any
Subsidiary is named as debtor or mortgagor, or which the
Company (or any predecessor person) or any Subsidiary has
signed as debtor or mortgagor, now on file in any public
office (including the Aircraft Registry) and not canceled
covering any of the Collateral other than those previously
filed, the effect of which has been terminated by
termination statements or releases (including FAA Form
8050-41) duly filed prior to the time of the filing of any
of the Security Documents for recordation in the Aircraft
Registry. The Company and each Subsidiary have the right
to, and do, enjoy peaceful and undisturbed possession under
all leases to which any of them is a party or under which
any of them is operating. All such leases are valid and
subsisting, and no default exists under any such lease.
5.6 Payment of Taxes. The Company and each Subsidiary
have filed all federal and state income and franchise tax
returns which are required to be filed and have paid all
taxes shown on said returns and all assessments which are
due. The Company and its officers know of no claims by any
governmental authority for any unpaid taxes.
5.7 Conflicting or Adverse Agreements or Restrictions.
Neither the Company nor any Subsidiary is a party to any
contract or agreement or subject to any restriction which
materially and adversely affects the business or assets or
financial condition of the Company and the Subsidiaries when
taken as a whole. Neither the execution nor delivery of
this Agreement or the Notes nor compliance with the terms
and provisions hereof or of the Notes or any of the Security
Documents will be contrary to the provisions of, or
constitute a default under, the charter or by-laws of the
Company or any Subsidiary or any law or any regulation,
order, writ, injunction or decree of any court or
governmental instrumentality or any agreement or instrument
to which the Company or any Subsidiary is a party or by
which it is bound or to which it is subject.
5.8 Purpose of Borrowings. Neither the Company nor
any Subsidiary owns any "margin stock" within the meaning of
Regulation U of the Board of Governors of the
Federal Reserve System (herein called "margin stock"). No
part of the proceeds of any Borrowing will be used 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 any margin
stock. No part of the proceeds of any Borrowing shall be
used for any purpose which might constitute the transactions
contemplated by this Agreement a "purpose" credit within the
meaning of said Regulation U, as now in effect or as it may
hereafter be amended. Neither the Company nor any agent
acting on its behalf has taken or will take any action which
might cause this Agreement, any Note or any Borrowing
hereunder to violate Regulation U, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Exchange Act of 1934, as
amended, in each case as in effect now or as the same may
hereafter be in effect on the date of any Borrowing.
5.9 Patents, Etc. The Company and each Subsidiary
have all patents, patent rights or licenses, trademarks,
trademark rights, trade names, trade name rights, and
copyrights which are required in order for the Company or
such Subsidiary to conduct its business as now conducted
without conflict with the rights of others.
5.10 Authorization, Validity, Etc. The Company has the
corporate power and authority to make and carry out this
Agreement, to make the Borrowings provided for herein, to
execute and deliver the Notes and to perform its obligations
hereunder and under the Notes and the Security Documents;
and all such action has been duly authorized by all
necessary corporate proceedings on its part. This Agreement
has been duly and validly executed and delivered by the
Company and constitutes a valid and legally binding
agreement of the Company enforceable in accordance with its
terms, and the Notes, when duly executed and delivered by
the Company pursuant to the provisions hereof, will
constitute the valid and binding obligations of the Company
enforceable in accordance with the respective terms thereof
and of this Agreement, except as limited by bankruptcy,
insolvency or other laws of general application relating to
or affecting the enforcement of creditors' rights.
5.11 Franchises, Permits, Etc. The Company and each
Subsidiary hold free from materially burdensome restrictions
all material municipal consents, franchises, permits,
licenses, rights-of-way, easements, consents and other
rights which, together with their respective corporate and
charter powers and the rights of the Company under the
Services Agreement, are sufficient for the proper and
efficient operation as a whole of their respective
businesses as presently conducted and as presently proposed
to be conducted.
5.12 Governmental Approvals. No consent, approval or
authorization of, registration with or notice to any
federal, state or local governmental or public authority or
agency or any third party creditor or supplier is or will be
required for the valid execution and delivery of the Notes
or this Agreement (except for the registrations and filings
referred to in Article 6, which, except to the extent
otherwise stated therein, have been made prior hereto) or
for the valid performance of this Agreement, the Security
Documents or the Notes, except that in the case of
Governmental Receivables the Agent or the Banks must obtain
a court order in compliance with applicable federal or state
anti-assignment laws in order for the Agent or the Banks to
receive payment thereon.
5.13 Description of and Title to Single-Wing Aircraft
and Engines. Schedule I to this Agreement contains a
correct and complete description of all of the single-wing
aircraft and other Aviation Units subject to the Security
Interest as of the Effective Date, and a correct and
complete description of each aircraft engine of 750 or more
rated takeoff horsepower, or the equivalent of that
horsepower, installed in or attached or appertaining to any
such single-wing aircraft or other Aviation Units. Without
limiting the generality of the representations and
warranties contained in Sections 5.05 and 5.12, the Company
has made all filings, registrations and recordings
(including, without limitation, the filing for recordation
in the Aircraft Registry of FAA Form 8050-2, "Aircraft Bill
of Sale", or other comparable forms, covering each such
single-wing aircraft, other Aviation Unit and engine),
necessary or advisable in order to establish, protect and
preserve its title to and interest in such single-wing
aircraft, other Aviation Units and engines as against the
respective sellers thereof and all third parties, and each
such single-wing aircraft, other Aviation Unit and engine
has been duly registered in the name of the Company pursuant
to the Federal Aviation Act. There are not now any Liens on
such single-wing aircraft, other Aviation Units and engines
other than Permitted Liens and those security interests
created by the Security Documents in favor of the Agent.
Except for the filing of UCC Continuation Statements in
accordance with the recording provisions of Louisiana and
Texas law, no further action, including, without limitation,
any filing or recording of any documents (whether under
Article 9 of the Uniform Commercial Code of any applicable
jurisdiction, or otherwise), is necessary or advisable in
order to establish, protect, perfect or preserve the
Company's title to and interest in such single-wing
aircraft, other Aviation Units and engines, and the first
priority, perfected, security interest of the Creditors in
such single-wing aircraft, other Aviation Units and engines
created by the Security Documents in such single-wing
aircraft, other Aviation Units and engines (subject only to
Permitted Liens), and in the proceeds thereof as against the
respective sellers thereof and all third parties.
5.14 Registered Office of Company, Etc. The registered
office of the Company (as shown on the records of the
Secretary of State of the State of Louisiana) is
2121 Airline Highway, Suite 400, Metairie, Louisiana 70001-
5979. The chief executive office of the Company is 2121
Airline Highway, Suite 400, Metairie, Louisiana 70001, and
the principal place of business of the Company is 2630 Sky
Harbor Boulevard, Phoenix, Arizona 85034.
5.15 Title to Parts and Receivables. There are no
Liens on the Parts (except for Permitted Liens and the Lien
resulting from the sale and subsequent leasing by the
Company from Samaritan of certain radio equipment) or on the
Company's Receivables (except for Permitted Liens of the
type described in Subsection 8.05(b)). The Security
Agreement contains a complete listing of all of the
locations at which Parts are located in the United States.
Except for the filing of UCC Continuation Statements, in
accordance with the recording provisions of the laws of the
States of Arizona and Louisiana, the Agent or the Banks
obtaining a court order in compliance with applicable
federal or state anti-assignment laws in the case of
Government Receivables in order for the Agent or the Banks
to receive payment thereon, and state law requirements
relating to the perfection of and giving of notice with
respect to the Security Interest in Receivables arising
under private insurance coverage arrangements, no further
action, including, without limitation, the filing or
recording of any additional documents (whether under
Article 9 of the Uniform Commercial Code of any applicable
jurisdiction, or otherwise), is necessary or advisable in
order to establish, protect or preserve the prior perfected
Security Interest of the Creditors in the Parts and the
Company's Receivables created by the Security Documents as
against third parties.
5.16 Section 1110 of Bankruptcy Reform Act of 1978.
The Company is "a citizen of the United States of America
holding an air carrier operating certificate issued by the
Secretary of Transportation," within the meaning of the
United States Bankruptcy Code, as amended, and it is the
intention of the Company and the Creditors that the Agent,
for the equal and ratable benefit of the Creditors, upon the
execution and delivery of this Agreement, will be a "secured
party with a purchase-money equipment security interest",
within the meaning of Section 1110, in the Aircraft and each
portion thereof now or from time to time hereafter subjected
to the Security Interest to the extent that the Security
Interest constitutes a "purchase-money equipment security
interest" therein, with the result that the Agent, for the
equal and ratable benefit of the Creditors, may take the
full benefit of the provisions of said Section 1110 with
respect to such Aircraft and each such portion thereof.
5.17 Environmental Protection Statutes.
(a) Neither the Company nor any of the
Subsidiaries has: (i) received any summons, citation,
directive, letter, notice, or other form of communication,
or otherwise learned of any claim, demand, action, event,
condition, report, or investigation indicating or concerning
any potential or actual liability which would individually,
or in the aggregate, have a material adverse effect on the
financial condition, business, properties or operations of
the Company and the Subsidiaries taken as a whole, or on the
ability of the Company to perform its obligations under this
Agreement, the Notes or any of the Security Documents,
arising in connection with (A) any non-compliance with, or
violation of, the requirements of any Environmental
Protection Statute; (B) the release, or threatened release,
of any Hazardous Materials which the Company or any
Subsidiary would have a duty to report to any governmental
authority under any Environmental Protection Statute; (C)
the existence of any environmental lien on any property of
the Company or any of the Subsidiaries resulting from the
presence of such Hazardous Materials; (ii) obtained
knowledge of any threatened or actual liability in
connection with the release or threatened release of any
Hazardous Materials which would individually, or in the
aggregate, have a material adverse effect on the financial
condition, business, properties or operations of the Company
and the Subsidiaries taken as a whole, or on the ability of
the Company to perform its obligations under this Agreement,
the Notes or any of the Security Documents; (iii) received
any notice of, or otherwise learned of, any federal or state
investigation evaluating whether any remedial action is
needed to respond to a release or threatened release of any
Hazardous Materials for which the Company or any of the
Subsidiaries may be liable; or (iv) received any notice that
the Company or any the Subsidiaries is or may be liable to
any person under any Environmental Protection Statute.
(b) The Company and each Subsidiary have obtained
all permits, licenses and authorizations which are required
under all Environmental Protection Statutes, (including,
without limitation, laws relating to emissions, discharges,
releases, or threatened releases of Hazardous Materials
(including, without limitation, ambient air, surface water,
ground water, or land) or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous
Materials), except to the extent that failure to have or
obtain any such permit, license or authorization does not
have a material adverse effect on the financial condition,
business, properties or operations of the Company and the
Subsidiaries taken as a whole, or on the ability of the
Company to perform its obligations under this Agreement, the
Notes or any of the Security Documents. The Company and
each of the Subsidiaries is in compliance with all terms and
conditions of the permits, licenses and authorizations
required to be obtained by it, and is also in compliance
with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations,
schedules, and timetables contained in those laws or
contained in any regulations, code, plan, order, injunction,
notice, or demand letter issued, entered, promulgated, or
approved thereunder, except to the extent that failure to
comply does not have a material adverse effect on the
financial condition, business, properties or operations of
the Company and the Subsidiaries taken as a whole, or on the
ability of the Company to perform its obligations under this
Agreement, the Notes or any of the Security Documents.
5.18 EMTALA. The Company is not subject to Emergency
Medical Treatment and Labor Act requirements.
5.19 Medicare and Medicaid Programs; Licensure, etc.
The Company has made all necessary filings and similar
applications that are necessary in order that each of the
Company, and the Company's medical director, nurses,
licensed employees and other individuals providing air
ambulance and patient care services on behalf of the Company
will become qualified, credentialed and licensed for
participation in the Medicare and Medicaid programs and as
otherwise required under applicable state law, so that each
will be so qualified, credentialed and licensed prior to
providing air ambulance and patient care services on behalf
of the Company. The Company is a party to supplier
agreements under the Medicare and Medicaid programs which
are in full force and effect with no defaults having
occurred thereunder. The Company has timely filed all
claims or other reports required to be filed with respect to
the services provided to Medicare, Medicaid and third party
payors, and all such claims or reports are complete and
accurate, and the Company has no liability to any payor with
respect thereto. There are no pending appeals, overpayment
determinations, adjustments, challenges, audit litigation or
notices of intent to open Medicare or Medicaid, or third
party claim determinations or other reports required to be
filed by the Company.
Neither the Company, nor any medical director,
nurses, licensed employees or other individuals providing
patient care services on behalf of the Company has been
convicted of, or pled guilty to nolo contendere to, patient
abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense
which may serve as the basis for suspension or exclusion
from the Medicare and Medicaid programs.
5.20 Fraud and Abuse and Stark Law. The Company, its
officers, directors, employees and agents have not engaged
in any activities which are prohibited under 1320a-7b or
1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or
local statutes or regulations, or which are prohibited by
rules of professional conduct including, but not limited to,
the following: (a) knowingly and willfully making or
causing to be made a false statement or representation of a
material fact in any application for any benefit or payment,
(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use
in determining rights to any benefit or payment, (c) any
failure by a claimant to disclose knowledge of the
occurrence of any event affecting the initial or continued
right to any benefit or payment on its own behalf or on
behalf of another, with the intent to fraudulently secure
such benefit or payment, and (d) knowingly and willfully
soliciting or receiving any remuneration (including any
kickback, bribe or rebate) directly or indirectly, overtly
or covertly, in cash or in kind, or offering to pay or
receive such remuneration (i) in return for referring an
individual to a person for the furnishing or arranging for
the furnishing of any item or service for which payment may
be made in whole or in part by Medicare or Medicaid, or (ii)
in return for purchasing, leasing or ordering or arranging
for, or recommending, purchasing, leasing or ordering any
good, facility, service or item for which payment may be
made in whole or in part by Medicare or Medicaid, or (e)
referring a patient for designated health services to or
providing designated health services to a patient upon
referral from an entity or person with which the physician
or an immediate family member has a financial relationship,
and to which no exception under 1395nn of Title 42 of the
United States Code applies.
6. CONDITIONS OF LENDING.
6.1 Conditions Precedent to this Agreement. This
Agreement shall be effective between the parties hereto and
the Banks shall be obligated to make Loans hereunder upon,
and shall not be effective between the parties hereto and
the Banks shall not be obligated to make Loans hereunder
until, satisfaction of the conditions precedent that the
Agent shall have received for the account of the Banks all
of the following, each dated (unless otherwise indicated)
the Effective Date, in form, scope and substance
satisfactory to the Banks:
(a) The favorable signed opinions of Locke
Purnell Rain Harrell (A Professional Corporation), Correro,
Fishman, Haygood, Phelps, Weiss, Walmsley & Casteix, L.L.P.,
counsel for PHI, and Lytle, Soule & Curlee, a professional
corporation, special Federal Aviation Act counsel for the
Company, as to the matters set forth in Exhibits D-1, D-2
and D-3, respectively, with such changes as approved by
the Banks in their sole discretion, and as to such other
matters as any Bank may reasonably require.
(b) The Notes, duly authorized, executed and
delivered by the Company.
(c) This Agreement, duly authorized, executed and
delivered by the Company, together with all Schedules and
Exhibits hereto.
(d) The Security Documents, duly authorized,
executed and delivered by the Company, together with any
necessary financing statement changes.
(e) A certificate of the president or a vice
president and of the secretary or an assistant secretary of
the Company certifying, inter alia, (i) true and correct
copies of resolutions adopted by the Board of Directors of
the Company (A) authorizing the execution, delivery and
performance by the Company of this Agreement, the Notes and
the borrowings hereunder, (B) approving the forms of this
Agreement and the Notes, and (C) authorizing officers of the
Company to execute and deliver this Agreement, the Notes and
any related documents, including, without limitation, any
agreement or security document contemplated by this
Agreement, (ii) the incumbency and specimen signatures of
the officers of the Company executing any documents on
behalf of the Company and (iii) the absence of any
proceedings for the dissolution or liquidation of the
Company.
(f) Copies of each legal opinion delivered in
connection with the Acquisition Agreement.
(g) The Articles of Incorporation of the Company,
as in effect on the Effective Date, certified by the
Secretary of State of the State of Louisiana and dated a
date within 10 days prior to the Effective Date.
(h) The Bylaws of the Company, including all
amendments thereto, certified by the secretary or an
assistant secretary of the Company.
(i) Certificates of the appropriate government
officials of the State of Louisiana as to the Company's
existence and good standing, and certificates of the
appropriate government officials in Arizona and each other
state where the Company does or intends to do business and
where failure to qualify as a foreign corporation would have
a material adverse effect on the business, prospects,
earnings, properties, operations or condition, financial or
otherwise of the Company, as to the Company's good standing
and due qualification to do business in such state, each
dated a date within 10 days prior to the Effective Date,
together with a telegram or facsimile bearing the signature
of the appropriate government official of the State of
Louisiana, certifying to the existence and good standing of
the Company as of the Effective Date.
(j) Evidence satisfactory to the Agent and the
Banks of the consummation of the transactions contemplated
by the Acquisition Agreement.
(k) Evidence satisfactory to the Agent and the
Banks that PHI, through PHI Aeromedical Services, Inc., has
contributed at least $2,150,000 in equity to the Company.
6.2 Conditions Precedent to each Borrowing. The
obligation of each Bank to make each Loan shall be subject
to the following conditions precedent that on the date of
the Borrowing consisting of the Loans then being made by the
Banks (a) the following statements shall be true and
the Agent and each Bank shall have received an Officers'
Certificate requesting such Borrowing (a "Request for
Borrowing") stating that (i) the representations and
warranties contained in Article 5, in Section 7.14 and in
the Security Documents are true on and as of the date of
such Borrowing with the same effect as though such
representations and warranties had been made on and as of
such Borrowing, (ii) the Creditors have a valid, equal and
ratable perfected first priority Security Interest in the
Collateral, subject only to Permitted Liens, (iii) there
exists on the date of such Borrowing no Event of Default or
Default, (iv) since April 30, 1997, no material adverse
change has occurred with respect to the business, prospects,
earnings, properties or condition, financial or otherwise,
of PHI or PHI and the PHI Subsidiaries taken as a whole
(including, without limitation, any material downward
valuation by PHI or any PHI Subsidiary of the Aviation
Units, as such term is defined in the PHI Loan Agreement, or
any determination by PHI or any PHI Subsidiary that a
significant portion of its Receivables, as such term is
defined in the PHI Loan Agreement, is uncollectible), (v)
since the Effective Date no material adverse change has
occurred with respect to the business, prospects, earnings,
properties or condition, financial or otherwise, of the
Company or the Company and its Subsidiaries taken as a whole
(including, without limitation, any material downward
valuation by the Company of the Aviation Units or any
determination by the Company that a significant portion of
its Receivables is uncollectible), and (vi) the business and
operations of the Company and all of the Subsidiaries as
conducted at all times relevant to the transactions
contemplated hereby to and including the close of business
on the date of such Borrowing have been and are in
compliance with applicable state and Federal laws,
regulations and orders affecting the Company and each
Subsidiary and its business and operations, or any of them,
(b) for each Borrowing, the Agent and each Bank shall have
received a Borrowing Base Certificate dated as of the date
of such Borrowing, and (c) the Agent shall have received
such other approvals, opinions or documents as the Agent, or
any Bank through the Agent, may reasonably request.
7. AFFIRMATIVE COVENANTS. So long as the principal amount
of any Borrowing or any amount of interest accrued under the
Notes or any commitment or Agent's fees, or any expense,
compensation, reimbursement or other amounts payable by the
Company shall remain unpaid or the Agent or any Bank shall
have any commitment hereunder, the Company will, unless the
Majority Banks shall otherwise consent in writing:
7.1 Financial Statements and Information. Deliver to
each Bank:
(a) within 45 days after the end of each month of
each fiscal year of the Company, a copy of (i) a
consolidated balance sheet of the Company and the
Consolidated Subsidiaries as of the end of such month, and
(ii) a consolidated statement of earnings of the Company and
the Consolidated Subsidiaries for such month and for the
portion of the fiscal year ending with such month, setting
forth, in each case in comparative form, the figures for the
corresponding periods in the previous fiscal year, all in
reasonable detail and certified as complete and correct,
subject to changes resulting from year-end adjustments, by
the principal financial officer of the Company;;
(b) promptly upon receipt thereof, one copy of
each other report submitted to the Company or any Subsidiary
by independent accountants in connection with any annual,
interim or special audit made by them of the books of the
Company or such Subsidiary (other than any auditors' comment
letter to management, unless the same shall have been
requested by any Bank through the Agent);
(c) promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to public
stockholders generally, and one copy of each regular or
periodic report, registration statement or prospectus, or
written communication (other than transmittal letters) in
respect thereof, filed by the Company or any Subsidiary
with, or received by the Company or any Subsidiary from any
securities exchange or the Securities and Exchange
Commission, or any successor to either;
(d) with each set of financial statements
delivered pursuant to Subsection 7.01(a) with respect to the
third, sixth, ninth and twelfth month of each fiscal year of
the Company, an Officers' Certificate certifying that the
signers have reviewed the relevant terms of this Agreement
(including Section 7.09) and have made, or have caused to be
made under their supervision, a review of the transactions
and condition of the Company and the Subsidiaries from the
beginning of the accounting period covered by the statement
of earnings being delivered therewith to the date of the
certificate, and that such review has not disclosed the
existence during such period of any Event of Default or
Default or, if any such Event of Default or Default existed
or exists, specifying the nature and period of existence
thereof and the action the Company has taken or proposes to
take with respect thereto; in addition, with each set of
financial statements delivered pursuant to Subsection
7.01(a) with respect to the twelfth month of each fiscal
year of the Company, an Officers' Certificate specifying (x)
the insured value of the Aircraft, (y) the existence and
nature of any changes in the insurance coverage required to
be maintained by the Company under Section 7.10 and (z) if
any Aviation Unit constituting a portion of the Aircraft is
then being leased by the Company to another person, or
operated by the Company under contract with another person,
the name of such person and the term of the relevant lease
or contract;
(e) as soon as available after the end of each
fiscal quarter of the Company, and in any event within 60
days after the end of each of the first three fiscal
quarters of the Company and within 120 days after the end of
the fourth fiscal quarter of the Company (i) a schedule of
the Direct Expenses incurred by the Company and the
Consolidated Subsidiaries during such quarter in such form
and containing such information and detail as the Agent, or
any Bank through the Agent, may request, (ii) a summary
description of the Parts, by type of Aviation Unit to which
such Parts are applicable, (iii) a list of the Receivables
of the Company as at the end of such quarter, (iv) a list of
the Trade Payables of the Company and the Consolidated
Subsidiaries as at the end of such quarter, each such
schedule, description and list to be in such form and
contain such information and detail as the Agent, or any
Bank through the Agent, may reasonably request, including,
without limitation, as to such Receivables, agings thereof
in the customary manner, identifying each obligor thereon
and designating each such Receivable that is 210 days old,
and as to such summary description of the Parts, the opening
balance, withdrawals, additions and closing balance, and as
to such Trade Payables, agings thereof in the customary
manner, the supplier and the designation of each Trade
Payable not paid pursuant to its payment terms and (iv) a
written confirmation of the make and model, manufacturer's
serial number and United States registration number of each
Aviation Unit constituting a portion of the Aircraft, the
month and year of purchase of each such Aviation Unit and
the parish (or county) and state (or, if such Aviation Unit
shall at the time be situated outside the United States, the
country and province) of the current location of each
thereof;
(f) with each set of financial statements
delivered pursuant to Subsection 7.01(a) with respect to the
ninth month of each fiscal year of the Company, a copy of a
pro forma consolidated balance sheet of the Company and the
Consolidated Subsidiaries for the next succeeding fiscal
year of the Company and pro forma consolidated statements of
earnings, stockholder's equity and cash flows of the Company
and the Consolidated Subsidiaries for the next succeeding
fiscal year of the Company;
(g) within 45 days after the end of each month of
each fiscal year of the Company, and within 45 days after
each Event of Loss, a Borrowing Base Certificate;
(h) on or before June 15 in each calendar year,
the written opinion of the Independent Appraiser as to the
Appraised Value of the Aircraft, as contemplated by
Subsection 9.03(a); and
(i) promptly upon request, such additional
financial or other information as the Agent, or any Bank
through the Agent, may reasonably request.
7.2 Books and Records. Maintain, and cause the
Subsidiaries to maintain, proper books of record and account
in accordance with generally accepted accounting practices
in which true, full and correct entries will be made of all
its dealings and business affairs.
7.3 General Insurance. (a) Maintain, and cause the
Subsidiaries to maintain insurance with responsible
companies in such amounts and against such risks as is
customarily carried on comparable businesses and properties,
and furnish to any Bank, upon request, an Officers'
Certificate containing full information as to the insurance
carried; and promptly after notice in writing from the
Agent, or any Bank through the Agent, obtain such additional
insurance as the Agent, or any Bank through the Agent, may
reasonably request and which is customarily carried on
comparable businesses or properties. All policies of
insurance maintained by the Company on the Parts shall name
the Agent as an additional insured and any payment of claims
thereunder shall be made payable to the Agent (without the
necessity for the Company's joining in endorsing any check
or otherwise accepting any payment) under a standard
mortgagee loss payable clause satisfactory to the Agent and
the Banks; provided, however, that such policies may provide
that, with respect to proceeds of any particular claim, such
proceeds not in excess of $500,000 may be paid by the
insurers directly to the Company rather than to the Agent
unless an Event of Default or Default shall have occurred
and is continuing and the Agent shall have notified the
insurer thereof.
(b) Cause Samaritan to perform its obligations
under Section IC of the Services Agreement relating to the
arrangement of professional liability and general corporate
liability insurance, or maintain on its own behalf in full
force and effect policies of professional liability and
general corporate liability insurance comparable to the
insurance to be provided by Samaritan, as aforesaid, and at
comparable cost.
7.4 Maintenance of Property. Cause its property and
the property of the Subsidiaries to be maintained,
preserved, protected and kept in good repair, working order
and condition so that the business carried on in connection
therewith may be conducted properly and efficiently.
7.5 Inspection of Property and Records. Permit any
employee of any Bank or any other person designated by such
Bank in writing to visit and inspect any of the properties,
corporate books and financial records of the Company and the
Subsidiaries and make copies and extracts therefrom and
discuss the respective affairs and finances of the Company
and the Subsidiaries with the officers, employees and
independent public accountants (who are hereby so
authorized), all at such times as such Bank may reasonably
request.
7.6 Existence, Laws, Obligations, etc. (a)
Maintain, and cause each of the Subsidiaries to maintain,
its corporate existence and its good standing and
qualification to do business as a foreign corporation in
each jurisdiction where the failure to be so qualified would
have a material adverse effect upon the business, prospects,
earnings, properties or condition (financial or otherwise)
of the Company or such Subsidiary, as the case may be; (b)
pay and cause the Subsidiaries to pay all claims for labor,
supplies, rent and other obligations which if unpaid might
become a Lien against the property of the Company or a
Subsidiary, except liabilities being contested in good faith
by appropriate proceedings, and with respect to which
adequate reserves shall have been established; (c) remain a
citizen of the United States within the meaning of Section
101(16) of the Federal Aviation Act and an "air carrier"
duly qualified as an "air taxi commercial operator" (or
equivalent status permitting the Company to continue to
conduct its business as presently conducted) under said Act;
(d) defend its title to the Collateral against the claims
and demands of all persons whomsoever other than the Agent
and the Creditors; (e) from time to time, at its own cost
and expense, promptly take such action as may be necessary
duly to discharge any Liens on the Collateral other than
Permitted Liens; (f) pay or cause to be paid all taxes
(including documentary stamp taxes), assessments and any
other governmental charges lawfully levied or assessed upon
the Notes or upon the Collateral or any portion thereof,
upon the income from the Collateral, or upon the interest of
the Agent or any Creditor in the Collateral, prior to the
time when any fine, penalty, interest or cost may be added
thereto or charged for the nonpayment thereof; (g) duly
observe and conform to all requirements of any governmental
authority relative to any portion of the Collateral and all
covenants, terms and conditions upon or under which any
portion of the Collateral shall at any time be held (except
that the Company shall not be required to observe or conform
to any such requirements of any governmental authority or to
pay or cause to be paid any such tax, assessment or
governmental charge so long as (i) the validity thereof
shall be contested by it in good faith by proceedings which,
in an opinion of counsel delivered to the Agent with a copy
to each Creditor by counsel for the Company in any case
involving an amount in excess of $25,000, are appropriate,
(ii) book reserves which, in the opinion of the Company's
independent public accountants, are adequate have been
established with respect thereto and (iii) the Company's
title to the affected portion of the Collateral shall not be
divested thereby and its right to use the affected portion
of the Collateral shall not be adversely affected thereby);
and (h) subject to the further provisions of this Section
7.06 to the extent that it is not legally prohibited from
doing so, PAY, AND SAVE THE AGENT AND THE CREDITORS HARMLESS
AGAINST any and all liability with respect to, any
intangible personal property tax or other similar tax, now
or hereafter in effect, of any jurisdiction in which any
portion of the Collateral is or may be located, to the
extent that the same may be payable by the Agent or any
Creditor in respect of the Notes or the Security Documents;
provided, however, that the Company shall not have any
obligation to pay, or to indemnify the Agent or any Creditor
against, any particular taxes, assessments or other
governmental charges of the nature referred to above which
arise solely by reason of the business, operations or
activities conducted by the Agent or such Creditor in a
particular jurisdiction or jurisdictions (other than any
actions contemplated, required or permitted to be taken by
the Agent or such Creditor by or pursuant to this Agreement
or the Security Documents, including the execution, delivery
and recording of the Security Documents, the creation of the
Security Interest and any actions taken by the Agent or such
Creditor or in respect of the Collateral, the Notes, the
Security Documents or this Agreement, whether before or
after the occurrence of a Default or Event of Default). The
obligations of the Company under this Section 7.06 shall
survive the payment or transfer of the Notes or any interest
therein and the discharge of this Agreement and, without
limiting the generality of Section 12.09, said obligations
are herein assumed expressly for the benefit of, and shall
be enforceable by, the Agent, the Creditors or any other
holder of an interest in any Note.
7.7 Notification of Defaults. Promptly, and in any
case within 5 days after the Chairman of the Board, Vice
Chairman of the Board, the Secretary or the Treasurer of the
Company learns thereof, notify the Agent and each Bank in
writing of the occurrence of a Default or an Event of
Default hereunder and of the default of the Company or any
Subsidiary under any other Indebtedness for Money Borrowed
of the Company or such Subsidiary or any contract and of the
nature thereof and what action the Company proposes to take
with respect thereto.
7.8 Election and Incumbency Certificate. Promptly
after the annual meeting of the Company's stockholders, send
to each Bank an Officers' Certificate of the election and
incumbency of the Company's officers and directors in form
and substance satisfactory to the Agent, and each Bank.
7.9 Registration, Maintenance, Operation, Foreign
Operations and Marking.
(a) At its own cost and expense: (i) forthwith
upon the delivery thereof, cause each portion of the
Aircraft to be duly registered, and at all times thereafter
to remain duly registered, in the name of the Company, under
the Federal Aviation Act; it will not register any portion
of the Aircraft under the laws of any country other than the
United States of America as aforesaid and it will cause the
Security Documents to be duly recorded and maintained of
record in the Aircraft Registry and any other appropriate
public offices as a first mortgage on, and as creating a
prior perfected security interest in, the Aircraft and each
portion thereof (including each portion which consists of an
aircraft engine of 750 or more rated takeoff horsepower, or
the equivalent of that horsepower, or a propeller capable of
absorbing 750 or more rated takeoff shaft horsepower); (ii)
maintain, service, repair, overhaul and test the Aircraft so
as to maintain the Aircraft in such condition as may be
necessary to enable the airworthiness certification of the
Aircraft to be maintained in good standing at all times
under the Federal Aviation Act, and, in any event, in good
repair, working order and operating condition, ordinary wear
and tear excepted, and in compliance with any applicable
requirements of law and of any governmental authority having
jurisdiction (regardless of upon which person such
requirements shall, by their terms, be nominally imposed),
and from time to time it will make or cause to be made all
necessary or appropriate repairs, restorations, replacements
and renewals thereof and additions or improvements thereto,
and in furtherance thereof (subject to Section 9.01 and the
provisions of this Agreement specifying the obligations of
the Company upon the occurrence of Events of Loss) will
promptly replace aircraft engines and all Parts of whatever
nature which, originally or from time to time, have been
incorporated in or installed as part of the Aircraft, or any
portion thereof, and which may from time to time become worn
out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any
reason whatsoever, and each replacement portion shall be
free and clear of all Liens (other than Permitted Liens) and
rights of others and shall be in as good operating condition
as, and shall have a value and utility at least equal to
that of, the replaced portion (assuming that such replaced
portion shall have been in the condition and state of repair
required to be maintained under the terms hereof); (iii)
maintain all records, logs and other materials required by
the Federal Aviation Administration, and any other
governmental authority having jurisdiction, to be maintained
in respect of the Aircraft, regardless of upon which person
any such requirements shall, by their terms, be nominally
imposed, and the Company will comply with all applicable
maintenance, service, repair and overhaul manuals and
service bulletins published by or on behalf of the
manufacturers of the Aircraft; (iv) at such times as any
Bank may reasonably request, through the Agent, furnish to
the Agent, with a copy to each Bank, statements regarding
the condition and state of repair of the Aircraft, in such
detail as such Bank, through the Agent, may reasonably
request; and (v) procure and pay for all permits,
franchises, inspections and licenses necessary or
appropriate in connection with the Aircraft or any repair,
restoration, replacement, renewal, addition or improvement
with respect to the Aircraft, the failure to procure which
might have an adverse effect on any Aviation Unit or Units
constituting a portion of the Aircraft, or any interest of
the Creditors therein or in respect thereof. The Company
further covenants that the Aircraft will not be (x)
maintained, used or operated in violation of any law or any
rule, regulation or order of any governmental authority
having jurisdiction, or in violation of any airworthiness
certification, license or registration relating to the
Aircraft issued by any such governmental authority or (y)
used or operated at any time that the full amount of
insurance required by Section 7.10 to be carried with
respect thereto shall not be in effect. The Company further
covenants (A) that no portion of the Aircraft, the Appraised
Value of which is used to determine the Borrowing Base will
be used, operated or situated at any time or for any period
outside the continental United States; provided that such
Aircraft may be taken from the continental United States to
Mexico or Canada for the purpose of transporting individuals
requiring medical care but only if the Security Interest
with respect to such Aircraft is not jeopardized thereby;
and (B)(1) the Company shall maintain with respect to the
Aircraft used, operated or situated outside the continental
United States hull war risk insurance (including insurance
against war, strikes, riots, civil commotion, acts of
persons for political or terrorist purposes, malicious acts,
acts of sabotage, hijacking, confiscation and
nationalization, except confiscation and nationalization by
the United States), extending throughout the world, which
insurance shall be made payable to the Agent, for the
benefit of the Creditors under a standard mortgagee loss
payable clause satisfactory to the Agent and each Creditor,
or (2) the Company shall have entered into such other
protective arrangements with respect to such Aircraft used,
operated or situated outside the continental United States
as shall be acceptable to the Agent and each Creditor.
(b) At all times affix to and maintain in each
portion of the Aircraft consisting of an Aviation Unit,
adjacent to the airworthiness certification therein, a metal
nameplate bearing the following inscription in plain,
distinct and conspicuous lettering:
"THIS EQUIPMENT IS OWNED BY AIR EVAC SERVICES, INC.
SUBJECT TO A MORTGAGE IN FAVOR OF NATIONSBANK OF TEXAS,
N.A., WHITNEY NATIONAL BANK AND FIRST NATIONAL BANK OF
COMMERCE (THE "BANKS"). ANY BUYER OR OTHER
ENCUMBRANCER OF THIS EQUIPMENT IS HEREBY PUT ON NOTICE
THAT THE SALE OR CREATION OF AN ENCUMBRANCE BY AIR EVAC
SERVICES, INC. TO OR IN FAVOR OF SUCH BUYER OR
ENCUMBRANCER IS IN VIOLATION OF THE AFORESAID MORTGAGE
UNLESS AND UNTIL SUCH BUYER OR ENCUMBRANCER SHALL HAVE
RECEIVED FROM SAID NATIONSBANK OF TEXAS, N.A., AS AGENT
FOR THE BANKS, A WRITTEN STATEMENT TO THE EFFECT THAT
SUCH EQUIPMENT HAS BEEN DULY RELEASED FROM THE SECURITY
INTEREST OF SAID MORTGAGE."
The Company will promptly replace any part of such nameplate
which may be removed, defaced or destroyed, and in the event
that any person shall, in accordance with the terms of this
Agreement, succeed to the position of the Company or the
Creditors named on any such nameplate, the Company will
promptly replace such nameplate with a nameplate inscribed
with the name of such successor. Except as above provided,
the Company will not permit or suffer the name of any person
other than the Company to be placed on any portion of the
Aircraft as a designation that might be interpreted as a
claim of ownership or a right to the possession or use
thereof.
(c) Hangar the Aircraft principally in Phoenix,
Arizona, and although any Aviation Unit may from time to
time, and for various periods of time, operate in the normal
course of business outside said city and state, it is
intended and agreed that such Aviation Unit shall remain
principally hangared, and in that sense located, in Phoenix,
Arizona.
7.10 Insurance with Respect to the Aircraft.
(a) Without limiting the generality of Section
7.03, at its own cost and expense, maintain, with insurers
of recognized national stature and responsibility
satisfactory to the Agent and the Creditors, insurance
policies insuring against loss or damage to the Aircraft
from such risks and in such amounts as a prudent person
would maintain on similar properties; provided, however,
that, without the prior written consent of the Agent and the
Creditors, the Company will not permit or suffer the
Aircraft to be insured on any basis or to any extent other
than that upon which the other Aviation Units in the
Company's fleet shall be insured, and, in any event, the
Company will not permit or suffer the amount of such
insurance for each occurrence, less the deductible, if any,
with respect thereto, at any time to be less than the
Appraised Value of the Aircraft. The policies required by
this Subsection 7.10(a) to be maintained shall name the
Agent as an additional insured with respect to the Aircraft
and any payment of claims thereunder shall be made payable
to the Agent (without the necessity for the Company's
joining in endorsing any check or otherwise accepting any
payment) under a standard mortgagee loss payable clause
satisfactory to the Agent and the Creditors; provided,
however, that such policies may provide that, with respect
to proceeds of any particular claim, such proceeds not in
excess of $500,000 may be paid by the insurers directly to
the Company rather than to the Agent unless an Event of
Default or Default shall have occurred and be continuing and
the Agent shall have notified the insurer thereof. To the
extent that such insurance coverage shall be available, such
policies shall further provide that (v) in respect of the
interest of the Agent and the Creditors in such policies,
the insurance shall not be invalidated by any action or
inaction of the Company or any other person, (w) the Agent's
and Creditors' interest shall be insured regardless of any
breach or violation by the Company of any warranties,
declarations or conditions contained in such policies, (x)
the insurers waive all rights of subrogation against the
Company, the Agent and each Creditor, (y) the insurers waive
any right to any set-off, counterclaim or deduction, whether
by attachment or otherwise, in respect of any liability of
the Company and (z) such insurance will not be invalidated
by any foreclosure or other remedial proceedings or notices
thereof relating to the Aircraft or any portion thereof or
interest therein, or by any change in the title to or
ownership of the Aircraft or any portion thereof or interest
therein, or by the use or operation of the Aircraft or any
portion thereof for purposes more hazardous, or in a manner
more hazardous, than shall have been permitted by such
policies. No such policy shall contain a provision reducing
or eliminating the liability of the insurer thereunder for
any loss by reason of the existence of other insurance
policies covering the Aircraft or any portion thereof
against the peril involved, whether collectible or not. As
between the Agent and the Creditors and the Company, all
insurance proceeds received as the result of the occurrence
of an Event of Loss shall be applied in accordance with
Subsection 9.02(a), and all insurance proceeds received as
the result of loss or damage not constituting an Event of
Loss shall be applied in accordance with Subsection 9.02(b).
(b) At its own cost and expense, maintain, with
insurers of recognized national stature and responsibility
satisfactory to the Agent and the Creditors, insurance
policies with respect to the Aircraft insuring against loss
or damage to the person and property of others from such
risks and in such amounts as a prudent person would maintain
in similar circumstances (including passenger legal
liability insurance); provided, however, that the Company
will maintain public liability (including passenger legal
liability) and property damage insurance applicable to the
Aircraft in an amount which shall not be less than
$20,000,000 per accident, subject to a deductible not in
excess of $50,000. The policies required by this Subsection
7.10(b) to be maintained shall name the Agent for the equal
and ratable benefit of the Creditors as an additional
insured with respect to the Aircraft, and, to the extent
available, shall insure the Agent's and Creditors' interest
regardless of any breach of or violation by the Company of
any warranties, declarations or conditions contained in such
policies and shall provide that the insurers waive all
rights of subrogation against the Company, the Agent and
each Creditor and that the insurers waive any right to any
set-off, counterclaim or deduction, whether by attachment or
otherwise, in respect of any liability of the Company. No
such policy shall contain a provision reducing or
eliminating the liability of the insurer thereunder for any
loss by reason of the existence of other insurance policies
covering the Aircraft or any portion thereof against the
peril involved, whether collectible or not.
Each insurance policy required by this subsection
(b) to be maintained by or on behalf of the Company shall
expressly provide that all the provisions thereof, except
the limits of liability (which shall be applicable to all
insureds as a group) and liability for premiums (which shall
be solely a liability of the Company), shall operate in the
same manner as if there were a separate policy covering each
insured.
(c) Upon request, furnish to the Agent, with a
copy to each Creditor, and in any event within 120 days
after the end of each fiscal year of the Company, a
certificate signed by the Company's independent insurance
broker or consultant summarizing the insurance then
maintained by or on behalf of the Company pursuant to this
Section 7.10 and stating that, in the opinion of said broker
or consultant, such insurance complies with the terms
hereof.
The Company will, and every insurance policy
required by this Section 7.10 to be maintained by or on
behalf of the Company shall provide that the insurer will,
(i) advise the Agent and each Creditor in writing promptly
of any default in the payment of any premiums or of any
other act or omission on the part of the Company or any
other person of which it shall have knowledge and which
might invalidate or render unenforceable, in whole or in
part, any such insurance and (ii) advise the Agent and each
Creditor in writing, at least thirty days prior thereto, of
the expiration or cancellation or any reduction or any
material change in the coverage of any such insurance (each
such policy to provide that no such cancellation, reduction
or change will be effective until thirty days after such
notice is given). The Company will advise the Agent and
each Creditor in writing promptly of any notice or other
communication received from any insurer by which such
insurer indicates that it may seek to suspend, terminate or
change any insurance required by this Section 7.10 to be
maintained by or on behalf of the Company.
7.11 Recording, Etc. Forthwith upon the execution and
delivery of this Agreement and thereafter from time to time,
cause the Security Documents and all other documents and
notices with respect thereto (including financing statements
and continuation statements, if any), to be promptly filed,
registered or recorded (and the Company will cause any such
filing, registration and recording to be continued in
effect) to such extent, in such manner and in such places
(including the Aircraft Registry) as may be necessary or
appropriate under any present or future law in order to
publish notice of and fully to preserve and protect the
validity and priority of the Security Interest, and the
interest of the Agent and the Creditors, in the property
comprising or intended to comprise the Collateral (including
any portion of the Aircraft or any Part which consists of an
aircraft engine of 750 or more rated takeoff horsepower, or
the equivalent of that horsepower, or a propeller capable of
absorbing 750 or more rated takeoff shaft horsepower), and
from time to time will perform or cause to be performed any
and all other actions, and will execute and deliver or cause
to be executed and delivered and filed, registered or
recorded any and all other documents, that may be required
by applicable law or requested by any Creditor for such
publication, preservation and protection. The Company will
pay or cause to be paid all filing, registration and
recording taxes and fees incident to such filing,
registration and recording, and all expenses incident to the
preparation, execution, delivery and acknowledgment of this
Agreement, the Security Documents, financing statements,
continuation statements, if any, and other such documents,
and all stamp taxes and other taxes, duties, imposts,
assessments and charges arising out of or in connection with
the execution and delivery of this Agreement, the Security
Documents, financing statements, continuation statements and
other such documents.
The Company will deliver to the Agent (a) promptly
after the execution and delivery of any Security Document
which subjects additional Collateral other than Aviation
Units to the Security Interest, an opinion of legal counsel
satisfactory to the Creditors stating either (i) that such
Security Document and all other documents have been properly
filed, registered and recorded to the extent required by
this Section 7.11, and reciting the details of such action
or referring to prior opinions of counsel in which such
details are given, or (ii) that no such action is necessary
to maintain the Security Interest, as so required, and
(b) within 45 days after a written request from the Agent or
any Creditor, but in no event more than once during each
calendar year, an opinion of legal counsel satisfactory to
the Creditors (i) stating that all action has been taken
with respect to the filing, registration, recording,
refiling, re-registration and re-recording of the Security
Documents and all other documents as is necessary to
maintain the Security Interest, as required under this
Agreement and the Security Documents (including the Security
Interest on any property acquired by the Company after the
date of execution and delivery of the Security Documents and
owned on the date of such request which is intended to be
subject to the Security Interest), and reciting the details
of such action or referring to prior opinions of counsel in
which such details are given, and (ii) describing what if
any action of the foregoing character may reasonably be
expected to become necessary in the future to maintain the
Security Interest, as so required, in the Collateral.
7.12 Material Adverse Change. Notify each Bank
promptly of the occurrence of any material adverse change
with respect to the business, prospects, earnings,
properties or condition, financial or otherwise, of the
Company or of the Company and the Subsidiaries taken as a
whole since the Effective Date (including, without
limitation, any downward valuation by the Company or any
Subsidiary of the Aviation Units or any determination by the
Company or any Subsidiary that a significant portion of its
Receivables is uncollectible). If at any time any Bank
notifies the Company through the Agent that it believes that
the value of the Aircraft to be less than the Appraised
Value of the Aircraft, the Company will, at its own cost and
expense, forthwith submit to the Agent, with a copy to each
Bank, such new written opinions of the Independent Appraiser
as the Agent, or such Bank through the Agent, shall
reasonably require.
7.13 Further Assurances. At any time and from time to
time, promptly, at its own cost and expense, the Company
will do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, any and all such
further acts, instruments, mortgages, security agreements,
lockbox or similar agreements, financing statements,
continuation statements and assurances as the Agent or any
Creditor through the Agent shall reasonably require to
obtain the full benefits of the estates, interests, rights,
powers, privileges, and immunities granted herein and in the
Security Documents and for the better mortgaging,
hypothecating, pledging, assuring and confirming to or with
the Creditors, or for the protection or continuance of
protection of the validity and priority of the Security
Interest in, all or any portion of the Collateral by the
Security Documents mortgaged, hypothecated or pledged, or
intended hereby or thereby to be mortgaged, hypothecated or
pledged, to or with the Creditors or which the Company may
be or may hereafter become bound to mortgage, hypothecate or
pledge to or with the Creditors.
7.14 Change of Control. Notify the Agent and each
Bank forthwith if at any time Carroll Wilson Suggs ("C.W.
Suggs") shall cease to own the Control Stock (hereinafter
defined), and at any time thereafter, upon the written
demand of the Agent given at the request of the Majority
Banks, pay to the Agent, for the ratable account of the
Banks, the entire unpaid principal amount of the Notes,
together with accrued interest thereon on the date specified
in such demand, which date shall not be less than 30 days
after the date of such demand; provided, however, if C.W.
Suggs shall cease to own the Control Stock solely because of
the death of C.W. Suggs, then, if and so long as the Control
Stock is owned by the estate of C.W. Suggs and the successor
trustees of trusts created under the will of Robert L. Suggs
(the "Successor Trustees") (collectively, the "Substitute
Control Group"), such demand by the Agent shall be given
only during the period from and including the date that is
273 days after the death of C.W. Suggs to and including the
date that is 365 days after her death; provided further that
if at any time after the death of C.W. Suggs the Control
Stock shall cease to be owned by the Substitute Control
Group, the terms of the preceding proviso shall thereupon
cease to apply and such demand for payment may thereupon and
at any time thereafter be given. As used in this Section
7.14, the term "Control Stock" shall mean that number of
shares of the capital stock of PHI which is sufficient to
give the holder or holders thereof the power to elect all of
the members of the board of directors of such corporation;
Control Stock shall be deemed "owned" only if owned both
legally and beneficially; provided that in the case of stock
owned by the estate of C.W. Suggs, the interest therein of
heirs and devisees shall be disregarded until any of such
stock is transferred from the estate to any such heir or
devisee; provided further that for purposes of this Section
7.14, including for purposes of the representation and the
warranty given in the next sentence, C.W. Suggs or the
Successor Trustees, as the case may be, shall be deemed to
own stock which is owned by Carroll W. Suggs, Robert L.
Suggs, and Frank A. Suggs or any trust created under the
will of Robert L. Suggs for so long as C.W. Suggs or the
Successor Trustees, as appropriate, has the right to vote
such stock. Subject to the last proviso of the immediately
preceding sentence, the Company represents and warrants that
according to the stock records of the Company, and to the
best of the Company's knowledge, C.W. Suggs owns the Control
Stock.
7.15 Location of Parts. Notify each Creditor and the
Agent promptly in the event that $50,000 of Parts (valued at
the lower of average cost or market) are located at any
location other than those enumerated in the Security
Agreement, and take such actions as the Creditors and the
Agent may reasonably request to subject such Parts to the
Security Interest.
8. NEGATIVE COVENANTS. So long as the principal amount of
any Borrowing or any amount of interest accrued under the
Notes or any commitment or Agent's fees, or any expense,
compensation, reimbursement or other amounts payable by the
Company shall remain unpaid or any Bank shall have any
Commitment hereunder, the Company will not, unless the
Majority Banks shall otherwise consent in writing:
8.1 Limitation on Amendments. Enter into any material
amendment, modification or waiver of any term or provision
of the Services Agreement without the prior written consent
of the Majority Banks.
8.2 Restricted Payments. Directly or indirectly,
through any Subsidiary or otherwise, declare or make or
incur any liability to make any Restricted Payment.
8.3 Capital Expenditures. Approve, incur or commit to
incur, or permit any Consolidated Subsidiary to approve,
incur or commit to incur, any capital expenditures if, after
giving effect thereto, the aggregate amount of all such
expenditures for the Company and the Consolidated
Subsidiaries in any fiscal year would exceed the sum of (a)
the cash proceeds, net of direct selling expenses, received
by the Company or any Consolidated Subsidiary from the sale
of any plant, property, equipment or other capital asset
during such fiscal year, plus (b) $2,000,000.
Notwithstanding any of the foregoing, the Company will not
approve, incur or commit to incur, or permit any
Consolidated Subsidiary to approve, incur or commit to
incur, any capital expenditures during the continuance of an
Event of Default.
8.4 Intentionally Deleted.
8.5 Liens, Etc. Create or permit to exist or permit
any Subsidiary to create or permit to exist any Liens
(including, with respect to the Collateral, any Lien
subordinate to the Security Interest) on any of its property
or assets, real or personal, except the following (the
following being sometimes in this Agreement collectively
referred to as the "Permitted Liens"):
(a) the Security Interest;
(b) liens for taxes either not yet delinquent or
being contested in accordance with the provisions of Section
7.06;
(c) materialmen's, mechanics', workmen's,
repairmen's, vendor's, employees' or other like liens
arising in the ordinary course of business for amounts the
payment of which shall not be delinquent, or which shall
have been bonded, or the enforcement of which shall have
been suspended (but then only for the duration of such
suspension);
(d) liens arising out of judgments or awards
against the Company or a Subsidiary (provided, however, that
any such lien is discharged within 60 days after entry, or
that the Company or such Subsidiary at the time shall in
good faith be prosecuting an appeal or proceedings for
review of such judgment or award and a stay of execution
shall have been granted pending such appeal or proceedings,
or that such lien shall have been bonded);
(e) leases of the Aircraft permitted by Section
8.15 and leases, other than Capital Leases, of any Aviation
Unit not constituting a portion of the Aircraft;
(f) liens created by statute or lease agreement
in favor of the landlord, as such, of any land upon which
any portion of the Collateral is or may be located, which
liens arise in the ordinary course of business and secure
amounts the payment of which shall not be delinquent;
provided, however, that any such lien shall be junior and
subordinate to the Security Interest; and
(g) liens described on Schedule II attached
hereto, provided that as long as this Agreement shall remain
in effect, (i) the Indebtedness secured by such liens shall
not increase in amount or in the actual or implicit interest
rate payable thereon and shall not have the maturity of any
principal payment due thereunder shortened and (ii) no such
lien shall extend to or cover any property other than the
property subject to such lien on the Effective Date; and
(h) to the extent that the same may be
characterized as constituting a Lien, any statutory or other
rights of offset or seizure in favor of the federal or any
state government in connection with Government Receivables.
The Company covenants that if it or any Subsidiary shall
create or assume any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind upon any of its
property or assets, whether now owned or hereafter acquired,
other than Permitted Liens, it will make or cause to be made
effective provisions whereby the Notes will be secured by
such mortgage, pledge, security interest, encumbrance, lien
or charge equally and ratably with any and all other
Indebtedness thereby secured as long as any such other
Indebtedness shall be so secured.
8.6 Limitations on Indebtedness for Money Borrowed.
Create, assume, incur, guarantee or in any manner become
liable, or permit any Subsidiary to create, assume, incur,
guarantee or in any manner become liable, contingently or
otherwise, in respect of any Indebtedness for Money
Borrowed, except for the Notes.
8.7 Investments. Make or acquire, or permit any
Subsidiary to make or acquire, any investment in shares of
the capital stock of any person which is neither a
Subsidiary nor a corporation "Controlled" by the Company
within the meaning of the second sentence of the definition
of "Affiliate" in Article 1, or any options, warrants or
other rights to purchase or acquire such shares, or any
securities convertible into or exchangeable for such shares
(whether or not with additional consideration).
8.8 Nature of Business. Engage, or permit any
Subsidiary to engage, in any line of business materially
different from any line of business carried on by the
Company or such Subsidiary on the Effective Date.
8.9 Stock of Subsidiaries, Merger, Sale of Assets,
Etc. Permit any Subsidiary to issue or dispose of its stock
(other than directors qualifying shares) except to the
Company or to another Subsidiary, and the Company will not,
and will not permit any Subsidiary to, sell or otherwise
dispose of any shares of stock of, or obligation (howsoever
evidenced) from, any Subsidiary, or merge or consolidate
with any other corporation or sell, lease or transfer or
otherwise dispose of all or a substantial part of its
assets, except that
(a) any corporation may merge or consolidate with
the Company or a Subsidiary provided that the Company or
such Subsidiary shall be the continuing or surviving
corporation and shall not be a subsidiary of another person,
and
(b) any Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to the Company or
another Subsidiary, or may merge or consolidate with the
Company or with another Subsidiary.
8.10 Change in Accounting Method. Make, or permit any
Subsidiary to make, any change in accounting principles or
methods or in the application thereof from those followed in
the financial statements referred to in Subsection 5.02(a)
of the PHI Loan Agreement if any such change would affect
any computation or calculation made pursuant to this
Agreement, except for changes in which the Company's
independent public accountants shall concur and with respect
to which the Banks shall have given their prior written
consent; provided, however, if no such consent is given by
the Banks, the Company may make such changes so long as it
shall maintain separate financial statements for purposes of
this Agreement that are consistent in accounting principle,
method and application with those followed in the
preparation of the financial statements referred to in
Subsection 5.02(a) of the PHI Loan Agreement.
8.11 Sale of Receivables and Parts. Sell, or permit
any Subsidiary to sell, any of its Receivables or notes
receivable or sell any of the Parts other than in the
ordinary course of business.
8.12 Tax Consolidation. File or permit or suffer to be
filed any consolidated income tax return with any person
other than PHI and a Subsidiary.
8.13 Chief Executive Office; Registered Office. Move
either its chief executive office or registered office from
the respective locations set forth in Section 5.14.
8.14 Transactions with Affiliates. Enter into or be a
party to, or permit any Subsidiary to enter into or be a
party to, any transaction (including the purchase, sale or
exchange of any property or the rendering of any services)
with any Affiliate except in the ordinary course of business
of the Company or such Subsidiary and except upon fair and
reasonable terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm's-length
transaction with a person not an Affiliate.
8.15 Leasing. Lease, or permit or suffer to be leased,
any portion of the Aircraft except pursuant to a written
lease which shall contain terms expressly subjecting and
subordinating the leasehold interest to the Security
Interest and to the rights of the Agent and the Banks
hereunder (a copy of which lease agreement shall have been
furnished to each Bank), and the Company will not assign or
otherwise transfer to any person any of its rights under any
such lease.
8.16 Limitation on Amount of Revolving Credit Loans.
Permit at any time the aggregate outstanding principal
amount of the Revolving Credit Loans to exceed the lesser of
(i) $5,000,000 and (ii) the Borrowing Base; provided,
however, that the Company may have Revolving Credit Loans in
an aggregate principal amount (the "Overadvance Amount")
which is in excess of the Borrowing Base (but not in excess
of the $5,000,000 representing the Banks' Commitments) and
which does not at any time exceed an additional 26% of the
Appraised Value of the Aircraft (for a total of 76% of such
Appraised Value), but only so long as the Overadvance Amount
does not exceed the Available PHI Borrowing Base.
8.17 Limitation on Prepayments on Funded Indebtedness.
Prepay, or permit any Consolidated Subsidiary to prepay, any
Funded Indebtedness prior to its due date (except the
Funded Indebtedness evidenced by the Notes).
8.18 Loans and Advances to Other Persons. Make or
permit to remain outstanding, or permit any Subsidiary to
make or permit to remain outstanding, any loan or advance to
any person, except for travel advances to employees in the
ordinary course of business and other loans and advances to
non-officers as is normal and customary; provided, however
the aggregate amount of all such travel advances and other
loans and advances permitted under this Subsection 8.18
shall not at any time exceed $100,000.
8.19 Hazardous Materials. Cause or permit, or allow
any of the Subsidiaries to cause or permit, any Hazardous
Materials to be placed, held, used, located or disposed of
on, under or at any of such person's property or any part
thereof by any person in a manner which could reasonably be
expected to have a material adverse effect upon the
financial condition, business, properties or operations of
the Company and the Subsidiaries taken as a whole or the
ability of the Company to perform its obligations under this
Agreement, the Notes or any of the Security Documents, or
cause or permit any part of any of such person's property to
be used as a manufacturing, storage or dump site for
Hazardous Materials, where such action could reasonably be
expected to have a material adverse effect upon the
financial condition, business, properties or operations of
the Company and the Subsidiaries taken as a whole or the
ability of the Company to perform its obligations under this
Agreement, the Notes or any of the Security Documents, or
cause or suffer any Lien to be recorded against any of such
person's property as a consequence of, or in any way related
to, the presence, remediation, or disposal of Hazardous
Materials in or about any of such person's property,
including any so-called state, federal or local "superfund"
Lien relating to such matters, which, together with all
other such Liens, secures obligations which in the aggregate
exceed $500,000.
9. POSSESSION, USE, VALUATION AND RELEASE OF COLLATERAL;
APPLICATION OF PROCEEDS THEREOF; ADDITIONS TO
COLLATERAL.
9.1 Possession and Use of Collateral. Unless and
until an Event of Default shall have occurred and be
continuing, the Company may remain in full possession,
enjoyment and control of the Collateral, may manage, operate
and use the same and each portion thereof and may take and
use the tolls, rents, issues, profits, receipts, products,
revenues and other income thereof, except as otherwise
expressly provided in this Agreement or any Security
Document; provided, however, that, as a condition to the
foregoing privilege of the Company, the possession,
enjoyment, control, management, operation and use of the
Collateral shall at all times be maintained and conducted in
accordance with the requirements of this Agreement and the
Security Documents.
Anything in this Agreement or the Security
Documents to the contrary notwithstanding, the Company may,
at its own cost and expense, remove from any Aviation Unit
constituting a portion of the Aircraft, in the ordinary
course of maintenance, service, repair, overhaul or testing,
any aircraft engine or any Parts, whether or not worn out,
destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use; provided, however, that
the Company shall have fully complied with the provisions of
Subsection 7.09(a) of this Agreement as if such removed
aircraft engine or Parts shall have been worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use. Any aircraft
engine and all Parts at any time removed from any Aviation
Unit constituting a portion of the Aircraft shall, no matter
where located, remain subject to the Security Interest until
the Company shall have fully complied with the provisions of
Section 7.11 with respect to each such aircraft engine and
such Part.
It is expressly agreed that, anything herein
contained to the contrary notwithstanding, the Company shall
remain liable under any and all purchase orders and
contracts relating to the construction or acquisition of the
Aircraft or any portion thereof to perform all its
obligations thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and neither the Agent
nor any Creditor shall have liability under any of the
foregoing by reason of or arising out of the action taken by
the Company in the granting of the Security Interest, nor
shall the Agent or any Creditor be required or obligated in
any manner to perform or fulfill any obligation of the
Company under or pursuant to any such purchase orders or
contracts.
Upon, but not before, (a) the occurrence of an
Event of Default and the automatic acceleration of the Notes
pursuant to clause (a) of Section 10.02 or the making of the
request or the granting of the consent required by clause
(b) of Section 10.02, the Agent may, with the consent of the
Majority Banks and shall upon the request of the Majority
Banks, notify any and all account debtors or obligors on the
Receivables of the Company, other than Government
Receivables, to make payment on all such Receivables to the
Agent for application as provided in Section 10.05, and take
such action as is permitted by law to have payment made to
the Agent on Government Receivables, and, subsequent to the
occurrence of an Event of Default, any proceeds of
Receivables received by the Company shall be held in trust
by the Company for the account of the Agent and the
Creditors, shall not be commingled with any other funds,
accounts, monies or property of the Company and, upon
receipt thereof by the Company shall be promptly accounted
for, paid over, transmitted and delivered to the Agent for
the benefit of the Creditors in the form received by the
Company. The Company agrees to assist the Agent in all such
collection efforts.
The Company hereby agrees that it will not, except
as expressly permitted by this Agreement, take, suffer or
omit to take any action the taking, suffering or omission of
which might result in an impairment of the Collateral or any
portion thereof, or the Security Interest therein. Without
limiting the generality of the foregoing, the Company agrees
that it will not sell, transfer or otherwise dispose of,
lease, or create or suffer to exist any Lien on, all or any
portion of the Collateral except as and to the extent
permitted by the express terms of this Agreement.
9.2 Loss, Restriction, Requisition, Etc.
(a) If an Event of Loss shall occur, the Company
shall forthwith (and, in any event, within 20 days after
such occurrence) give the Agent and each Bank notice of such
Event of Loss. Any amounts received by the Agent
representing payment of insurance proceeds or payment from
any governmental authority or other person with respect to
any condemnation, requisition, confiscation, theft or
seizure of, or requisition of title to or use of, or loss or
damage to, the Aircraft or any portion thereof resulting in
the occurrence of such Event of Loss, net of the direct
expenses of collecting such insurance proceeds or other
payments and net of the taxes payable upon or occasioned by
such Event of Loss, shall be paid, ratably, to the Banks for
application to the principal installments due under the Term
Loans in the inverse order of their respective due dates,
provided, however, if, at the time of such prepayment, there
is no aggregate principal amount outstanding under the Term
Loans, the Company may prepay the Revolving Credit Loans and
the respective Commitment of each Bank shall be permanently
and ratably reduced by the amount of such prepayment. If,
as a result of such Event of Loss, the Company shall not be
in compliance with Section 8.16, the Company also shall,
within 40 days after the occurrence of such Event of Loss,
(x) elect to take one or more of the following actions in
respect of such Event of Loss and (y) give the Agent and
each Bank notice of which action it has elected to take
(said written notice being hereinafter in this Subsection
9.02(a) called the "Notice of Election"):
(i) the Company may subject to the Security
Interest one or more Aviation Units (provided,
however, that any such other Aviation Units must
be acceptable to the Agent and each Creditor),
having an aggregate Appraised Value (in the case
of single-wing aircraft or other Aviation Units
more than one year old, as specified by the
Independent Appraiser in a written opinion
addressed and delivered to the Agent and each
Creditor) at least equal to the Appraised Value
(determined prior to such Event of Loss) of the
Aircraft affected by such Event of Loss and in
respect of which the Notes shall not have been
prepaid pursuant to clause (ii) below; and, in the
event of the Company's election to take such
action, the Company shall, within 45 days after
the delivery of the Notice of Election, take
Appropriate Actions; or
(ii) the Company may prepay principal on the
Term Loan Notes in an amount equal to the amount
necessary to cause the Company to be in compliance
with Subsection 8.16, provided, however, if, at
the time of such prepayment, there is no aggregate
principal amount outstanding under the Term Loans,
the Company may prepay the Revolving Credit Loans
and the respective Commitment of each Bank shall
be permanently and ratably reduced by the amount
of such prepayment; and in the event of the
Company's election to take such action, the
Company shall, in the Notice of Election, specify
the principal amount of the Loans to be repaid and
designate a date for prepayment which shall be no
later than 45 days after the date of the
occurrence of such Event of Loss, and on such date
such aggregate principal amount of the Loans,
together with interest thereon to the date of such
prepayment, shall become due and payable. All
such prepayments shall be applied as set forth in
Subsection 3.02(d) and shall be paid without any
premium or penalty except as provided in
Subsection 3.02(d).
Upon or concurrently with full compliance by the Company
with the foregoing provisions of this Subsection 9.02(a),
the Company may make written request of the Agent to release
from the Security Interest in accordance with Subsection
9.05(b) any Aircraft which is the subject of an Event of
Loss.
In the event that the Agent shall receive any
insurance proceeds or payments from any governmental
authority or other person in connection with the occurrence
of such Event of Loss, such amounts shall be held by
the Agent as a portion of the Collateral and may be invested
in accordance with the provisions of Subsection 9.02(c).
Such amounts shall be paid to the Company upon written
request by the Company, but only after the Company shall
have fully complied with the foregoing provisions of this
Subsection 9.02(a) and only if, at the time of such payment,
the Agent shall not have any actual knowledge that any
Default or Event of Default shall have occurred and then be
continuing, or will exist immediately after such payment.
(b) If any Aircraft or any portion thereof shall
be condemned, requisitioned, confiscated, stolen, seized,
lost or damaged or its title or use requisitioned, and such
action shall not result in an Event of Loss, the Company
will promptly take the action required by Section 7.09 with
respect to the repair and replacement thereof, and, in the
event of any such condemnation, requisition, confiscation,
requisition of title or use, the Company will forthwith
(and, in any event, upon the earlier of the Business Day
next preceding the date upon which a Borrowing Base
Certificate is to be delivered hereunder or 10 days after
such occurrence) notify the Banks in writing and, forthwith
upon receipt by the Company, will deposit with the Agent any
award or purchase price received by the Company in
connection therewith (the Company hereby assigning to the
Agent for the equal and ratable benefit of the Creditors all
its rights and interest in and to any and all such awards or
purchase price and hereby agreeing to execute and deliver,
upon the request of the Agent or any Creditor, any and all
assignments and other instruments deemed by the Agent or
such Creditor to be necessary or desirable for the purpose
of confirming or further evidencing the assignment by the
Company of the aforesaid awards or purchase price to the
Agent for the benefit of the Creditors free and clear of any
and all Liens of any kind or nature whatsoever created by
the Company). Any amounts received by the Agent
representing payment of insurance proceeds or payment from
any governmental authority or other person with respect to
any condemnation, requisition, confiscation, theft or
seizure of, or requisition of title to or use of, or loss or
damage to, the Aircraft or any portion thereof that shall
not result in an Event of Loss will be applied by the Agent
to reimburse the Company for (but only after its completion
of) the repair or replacement of the affected portion of the
Aircraft, but such reimbursement shall be made only (x) if,
at the time of such reimbursement, the Agent shall not have
any actual knowledge that any Default or Event of Default
shall have occurred and then be continuing, or will exist
immediately after such reimbursement, and (y) upon receipt
by each Bank, in form and substance satisfactory to such
Bank, of an Officers' Certificate requesting such
reimbursement, describing the costs incurred by the Company
for which it is requesting reimbursement and certifying that
(i) there is not any outstanding Indebtedness for the
purchase price or construction of said repairs or
replacements, or for labor, wages, materials or supplies in
connection with the making thereof, which, if unpaid, might
become the basis for a vendor's, mechanic's, laborer's,
materialman's, statutory or other similar lien upon said
repairs or replacements or any portion thereof, or which
might materially impair the security afforded by said
repairs or replacements; (ii) no Default or Event of Default
has occurred and is then continuing, or will exist
immediately after such reimbursement; (iii) no part of the
amount requested for reimbursement has been or is being made
the basis, in any previous or then pending application, for
the withdrawal of any other proceeds under this subsection
(b); and (iv) the affected portion of the Aircraft, as so
repaired or replaced, is of a value not less than the value
thereof immediately preceding such condemnation,
requisition, confiscation, theft, seizure, requisition of
title or use, loss or damage and, in any event, is in the
condition required by Section 7.09 to be maintained. If,
with respect to any particular loss, the Agent shall not
have notified the insurers that any Default or Event of
Default has occurred and is continuing, the proceeds
attributable to such loss not in excess of $500,000 may be
paid by the insurers directly to the Company, provided,
such proceeds shall be applied by the Company (and the
Company, by acceptance of such proceeds, covenants so to
apply such proceeds) to the cost of repairing, restoring or
replacing the property destroyed or damaged; and any portion
of such proceeds remaining after such application may be
retained by the Company. All proceeds attributable to such
loss in excess of $500,000 shall be directly paid by
the insurers, or, if the Company shall receive
such proceeds, the Company shall promptly surrender
such proceeds, to the Agent for the ratable benefit of
the Creditors. In all instances, other than those described
in the two immediately preceding sentences, such proceeds
shall be directly paid by the insurers, or, if the Company
shall receive such proceeds, the Company shall promptly
surrender such proceeds, to the Agent for the ratable
benefit of the Creditors.
(c) All insurance proceeds and payments from any
governmental authority or other person received by the Agent
in connection with any loss or taking of, or damage to, the
Collateral, shall be held by the Agent for the benefit of
the Creditors as a portion of the Collateral. Any such
proceeds and payments shall be invested and reinvested by
the Agent in Investment Securities in accordance with
written instructions received from the Company, and
Investment Securities purchased with such proceeds and
payments shall also be held by the Agent for the benefit of
the Creditors as Collateral.
Any Aircraft subject to an Event of Loss or
subject to the provisions of Subsection 9.02(b) shall not be
included in Aircraft for the purpose of determining the
Borrowing Base.
9.3 Valuation of Aircraft, Etc.
(a) The Company will deliver or cause to be
delivered to the Agent and each Bank on or before June 15 in
each calendar year, commencing June 15, 1998, (i) with
respect to any Aircraft that shall at the time be new or not
more than one year old, an Officers' Certificate certifying
the purchase price thereof, and having attached thereto a
schedule of all the Aircraft showing the Appraised Value of
each Aviation Unit constituting a portion thereof for that
year and the immediately prior year and (ii) with respect to
any Aircraft that shall at the time be more than one year
old, a written opinion of the Independent Appraiser, dated
as of a date after April 30 of that year and addressed to
the Agent and each Bank, specifying the "purchase price" (as
referred to in and determined in accordance with clause (ii)
of the definition of "Appraised Value" set forth herein) of
such Aircraft as of such date. The written opinion referred
to in clause (ii) of the preceding sentence shall (x) state
that the Independent Appraiser has, on or after April 30 of
that year, made such a physical inspection, if any, of each
single-wing aircraft or other Aviation Unit covered by said
written opinion as he deems necessary or appropriate for the
purposes of such opinion; (y) indicate, for each such single-
wing aircraft or other Aviation Unit, (aa) the make and
model, manufacturer's serial number and the United States
registration number thereof, (bb) the month and year of
purchase thereof by the Company, (cc) the original purchase
price thereof and (dd) the "purchase price" thereof referred
to in and determined in accordance with clause (ii) of the
definition of "Appraised Value" set forth herein; and (z)
otherwise be satisfactory in form and substance to the Agent
and each Bank. In the event that, after receiving any such
annual written opinion of the Independent Appraiser, any
Bank shall deliver to the Company and the Agent a written
request for a new written opinion and a written statement of
the reasons for its objection to the annual opinion, the
Company shall cause the Independent Appraiser to deliver to
the Agent, with a copy to each Bank, within 30 days after
the receipt by the Company of such written request, a new
written opinion, dated as of a date within such 30-day
period, with respect to the matters referred to in clause
(ii) of the first sentence of this Subsection 9.03(a);
provided, however, that, if the Company shall not, within 45
days after the delivery to the Agent and the Banks of any
annual written opinion, have received a written request for
a new written opinion pursuant to the preceding sentence,
the Agent and the Banks shall be deemed to have permitted
the Company to use such annual written opinion as the basis
for determining the "Appraised Value" of Aircraft for
purposes of this Agreement, including, without limitation,
as the basis for complying with its obligations under
Subsection 9.03(b). In the event any Bank shall request a
new written opinion pursuant to the preceding sentence, the
Agent and the Banks shall be deemed to have permitted the
Company to use the most recent annual written opinion
delivered by the Independent Appraiser as the basis for
determining the "Appraised Value" of Aircraft for purposes
of this Agreement until such new written opinion is
delivered.
(b) Subject to Section 8.16, the event that for
any reason, other than the occurrence of an Event of Loss,
the aggregate outstanding principal amounts of the Revolving
Credit Loans shall, at any time, exceed the lesser of
$5,000,000 and the Borrowing Base as shown on the most
recently delivered Borrowing Base Certificate, then, the
Company may, in lieu of the mandatory prepayment required
pursuant to Subsection 3.02(b), take all the actions
described in Subsection 9.02(a)(ii) for the purpose and with
the effect of subjecting to the Security Interest one or
more Aviation Units (provided, however, that any such
Aviation Units must be acceptable to the Agent and the
Creditors) having an aggregate Appraised Value in an amount
which, when added to the aggregate Appraised Value of the
Aircraft then subject to the Security Interest, 80% of the
amount of Eligible Receivables and 50% of the amount of
Eligible Parts (valued at the lower of average cost or
market), would cause the Company to be in compliance with
the provisions of Section 8.16; provided, however,
notwithstanding the time periods set forth in Subsection
9.02(a)(ii), any action taken by the Company pursuant to
this Subsection 9.03(b) must be taken within 3 Business Days
of the date upon which the Company or any Bank determines
that the Company is not in compliance with Section 8.16.
9.4 Protection of Purchasers. No purchaser of
property purporting to be released under this Agreement
shall be bound to ascertain the authority of the Agent and
the Creditors to execute any documents effecting such
release, or to inquire as to any facts required by the
provisions of this Agreement to exist as a condition to the
proper exercise of such authority.
9.5 Other Additions to Collateral; Releases of
Collateral
(a) Other Additions to Collateral. Within 30
days after purchasing any Aviation Unit that the Company
desires or is required by Subsection 2.03(b) to include in
the calculation of the Borrowing Base, the Company will
grant a first priority security interest in such
Aviation Unit to the Agent for the ratable benefit of the
Creditors to secure the Company's obligations hereunder and
under any other documents executed in connection herewith or
contemplated hereby, whereupon such Aviation Unit shall
constitute a portion of the Collateral subject to the
Security Interest. Without limitation on the foregoing,
within 30 days after the purchase of such Aviation Unit, the
Company shall take Appropriate Actions.
(b) Releases of Collateral. (i) If the Company
determines that it is in the best interest of the Company to
transfer ownership of one or more Aviation Units that
comprise a portion of the Aircraft or exchange one or more
Aviation Units that comprise a portion of the Aircraft for
one or more other Aviation Units, then upon the delivery of
an Officers' Certificate stating the United States
registration number of the Aviation Unit to be transferred
or exchanged and the date (which shall not be less than 14
nor more than 90 days from the date of such Officers'
Certificate) that the Company intends to consummate such
transaction, the Company may request that the Agent, on
behalf of the Creditors, release from the Security Interest
the Aircraft to be transferred or exchanged and the Agent,
on behalf of the Creditors, within a reasonable time after
such request and in any event on or before the date on which
the Company consummates such transaction, shall execute all
documents (including all appropriate termination statements
and releases) required to effect such release, provided that
(A) (I) the Company shall provide the Aviation Unit to be
received by it in any such exchange for inclusion in the
Security Interest pursuant to Subsection 9.05(b)(ii), and
the sum of the Appraised Value of said Aviation Unit, as
reflected on a certificate of an Independent Appraiser, in
form and substance acceptable to the Agent, plus the amount
of any cash to be received by the Company as additional
consideration for the Aviation Unit being transferred, shall
be greater than or equal to the Appraised Value, as
reflected on a certificate of an Independent Appraiser, in
form and substance acceptable to the Agent, of the Aviation
Unit to be released, and the Company shall pay to the Agent
for the ratable benefit of the Banks all proceeds, if any,
from such sale, net of direct expenses of, and taxes payable
upon or occasioned by, such sale, to be applied to the
principal installments due under the Loans according to the
terms and conditions of Subsection 3.02(c), or (II) in the
event the Company is selling one or more Aircraft, the
Company shall pay to the Agent for the ratable benefit of
the Banks the proceeds of such sale, net of direct expenses
of, and taxes payable upon or occasioned by, such sale to be
applied to the principal installments due under the Loans
according to the terms and conditions of Subsection 3.02(c),
and (B) no Default or Event of Default has occurred and is
continuing or would result from the release of the Aircraft
to be transferred or exchanged by the Company, and the
Company shall have delivered to the Agent an Officers'
Certificate to such effect in the form of Exhibit E to this
Agreement.
(ii) For each Aviation Unit that the Company
desires or is required to include in the Security
Interest as a substitute for an Aviation Unit to
be released pursuant to Subsection 9.05(b)(i), the
Company shall, upon its acquisition thereof, grant
a first priority security interest in such
Aviation Unit to the Agent for the ratable benefit
of the Creditors to secure the Company's
obligations hereunder and under any other
documents executed in connection herewith or
contemplated hereby, whereupon such Aviation Unit
shall constitute a portion of the Collateral
subject to the Security Interest. Without
limitation on the foregoing, within 30 days after
the earlier of the Company's acquiring the
Aviation Unit to be subjected to the Security
Interest or the Agent's release of the Aircraft
pursuant to Subsection 9.05(b)(i), the Company
shall take Appropriate Actions.
(iii) The Agent shall be absolutely
entitled to rely on the Officers' Certificates and
certificates of Independent Appraisers and
opinions of counsel referred to in the definition
of "Appropriate Actions" and (b) for the veracity
of each of the statements made therein absent
actual knowledge to the contrary on the part of
the officer of the Agent executing the documents
relating to such release or addition. The Agent
shall not be required to investigate or verify any
statement made in such Officers' Certificates and
certificates of Independent Appraisers and
opinions of counsel and any investigation that the
Agent shall elect to undertake shall not affect
its ability to rely on such Officers' Certificates
and Certificates of Independent Appraisers and
opinions of counsel.
(iv) As long as there is no Default or Event
of Default, each of the Creditors hereby
authorizes the Agent to execute and deliver (and,
where appropriate, as determined by the Agent in
its sole and independent discretion, to authorize
others to execute and deliver on its behalf) on
behalf of the Creditors, all documents required to
effect the release of the Aviation Unit and the
addition of one or more substitute Aviation Units
received by the Company, if any, under the
Security Interest.
(v) At no one time shall there be more than
one (1) Aircraft that is the subject of a release
from the Security Interest unless all requirements
set forth in this Subsection 9.05(b) with respect
thereto and with respect to the Aviation Units to
be subjected to the Security Interest in place
thereof have been satisfied.
10. EVENTS OF DEFAULT AND REMEDIES.
10.1 Events of Default. The following shall constitute
Events of Default hereunder:
(a) The Company shall fail to pay or prepay any
principal of or interest on any Note when due or any
commitment fee, additional fee, expense, compensation or
reimbursement or any other amount payable by the Company
hereunder, or under any Security Document when due
(including, without limitation, any payment required by
Subsection 3.02(b) or Section 7.14), and such failure in
either case, shall continue for three (3) days after the
date such payment or prepayment is due; or
(b) The Company or any Subsidiary shall fail to
pay any Indebtedness for Money Borrowed in excess of
$100,000 in principal amount (other than Indebtedness for
Money Borrowed evidenced by the Notes) owing by the Company
or such Subsidiary, as the case may be, or any interest or
premium thereon, when due (whether by scheduled maturity,
mandatory prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable
grace period, if any, specified in the agreement or
instrument relating to such Indebtedness for Money Borrowed
if the effect of such failure is to permit the holder of
such Indebtedness for Money Borrowed to declare
such Indebtedness for Money Borrowed due prior to its stated
maturity; or any other condition shall exist or event occur
permitting any Indebtedness for Money Borrowed (other than
Indebtedness for Money Borrowed evidenced by the Notes)
owing by the Company or any Subsidiary to become or be
declared due prior to its stated maturity; or
(c) Any material representation or warranty made
by the Company herein or in any Security Document or in any
writing furnished in connection with this Agreement or any
Security Document shall be false in any material respect
when made; or
(d) The Company violates any covenant, agreement
or condition contained in Section 7.03, 7.06, 7.07, 7.09,
7.10, 7.11 (first paragraph), 7.12 (first sentence),
Article 8 (except Section 8.16), Section 9.02 or Subsection
9.03(b); or
(e) [intentionally omitted]; or
(f) The Company violates any other covenant,
agreement or condition contained herein, or any covenant,
agreement or condition contained in any Security Document
and such violation shall not have been remedied within 30
days; or
(g) The Company or any Subsidiary makes an
assignment for the benefit of creditors; or
(h) The Company or any Subsidiary applies to any
tribunal for the appointment of a trustee or receiver or
custodian of any substantial part of the assets of the
Company or any Subsidiary, or commences any proceedings
relating to the Company or any Subsidiary under any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or other liquidation law
of any jurisdiction; or
(i) Any such application is filed, or any such
proceedings are commenced, against the Company or any
Subsidiary, and the Company or such Subsidiary indicates its
approval, consent or acquiescence, or an order is entered
appointing a trustee or receiver or custodian, or
adjudicating the Company or any Subsidiary bankrupt or
insolvent, or approving the petition in any such
proceedings, and such order remains in effect for 60 days;
or
(j) Any order is entered in any proceeding
against the Company or any Subsidiary decreeing the
dissolution or split-up of the Company or such Subsidiary,
and such order remains in effect for 60 days; or
(k) Final judgment for the payment of money in
excess of $100,000 shall be rendered against the Company or
any Subsidiary and the same shall remain undischarged for a
period of 30 days during which execution shall not be
effectively stayed by the posting of an appeal bond or
otherwise; or
(l) (i) the Company, any Subsidiary, or any
agents or representatives of either the Company or any
Subsidiary shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code)
which can be expected to result in a material liability to
the Company; (ii) any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, shall exist with
respect to any PBGC Plan or Multiple Employer Plan, if in
the reasonable judgment of the Majority Banks, such
accumulated funding deficiency would give rise to a material
liability of the Company; (iii) the Company, any Subsidiary
or any ERISA Affiliate shall apply for or be granted a
funding waiver under Section 302 of ERISA or Section 412 of
the Code, which waiver or request for waiver is for a
material amount; (iv) a Reportable Event (other than a
Reportable Event not subject to the provision for thirty-day
notice to the PBGC under applicable PBGC regulations) shall
occur with respect to any PBGC Plan or Multiple Employer
Plan, which Reportable Event is, in the reasonable opinion
of the Majority Banks, likely to result in the termination
of such PBGC Plan or Multiple Employer Plan for purposes of
Title IV of ERISA and to give rise to a material liability
of the Company or any Subsidiary; (v) proceedings shall
commence to have a trustee appointed or a trustee shall be
appointed to terminate or administer a PBGC Plan or a
Multiple Employer Plan which proceeding is, in the opinion
of the Majority Banks, likely to result in the termination
of such PBGC Plan or Multiple Employer Plan and to give rise
to a material liability of the Company or any Subsidiary
with respect to such termination; (vi) a notice of intent to
terminate a PBGC Plan or Multiple Employer Plan under
Section 4041(c) is filed with the PBGC if such termination
would give rise to a material liability of the Company, any
Subsidiary or any ERISA Affiliate; (vii) any Multiemployer
Plan is in reorganization or is insolvent and the
circumstances are such that, in the opinion of the Majority
Banks, there could be a material liability incurred by or
imposed upon the Company, any Subsidiary or any ERISA
Affiliate; (viii) there is a complete or partial withdrawal
from a Multiemployer Plan under circumstances which, in the
opinion of the Majority Banks, would likely subject the
Company, any Subsidiary or any ERISA Affiliate to material
liability; or (ix) any event or condition described in (i)
through (viii) above (determined without regard to whether
the event or condition taken alone would or could result in
a material liability) shall occur or exist with respect to a
PBGC Plan, a Multiple Employer Plan or a Multiemployer Plan
which individually or in combination with one or more of any
events described in clauses (i) through (viii) above
(determined without regard to whether the event or condition
taken alone would or could result in a material liability),
if any, in the opinion of the Majority Banks would likely,
subject the Company, any Subsidiary or any ERISA Affiliate
to any material tax, penalty or other liability; provided
that for the purposes of this Subsection 10.01(l), an
obligation or liability shall be considered material if it
equals or exceeds $500,000; or
(m) If at any time Samaritan shall fail to
continue all existing policies of insurance (or comparable
insurance) in full force and effect covering the Business
and naming the Company, the Banks and the Agent as
additional insureds thereunder and the Company fails to
obtain or is unable to obtain comparable insurance at
comparable cost; or
(n) If at any time a default or event of default
shall exist under the PHI Loan Agreement; or
(o) The Company at any time revokes or attempts
to revoke its appointment of Agent as its attorney-in-fact
under Section 9 of the Security Agreement.
10.2 Acceleration of Maturity. Upon (a) the occurrence
of any Event of Default described in Subsection 10.01(g),
10.01(h), 10.01(i) or 10.01(j) with respect to the Company,
the unpaid principal amount of and accrued interest on the
Notes and the Loans shall automatically become immediately
due and payable, together with all other amounts payable
under this Agreement or any Security Document, and the
obligation of each Bank to make Loans shall automatically
terminate, without presentment, demand, protest or further
notice (including, without limitation, notice of
acceleration and notice of intent to accelerate) of any
kind, all of which are hereby expressly waived by the
Company and (b) the occurrence of any other Event of
Default, the Agent shall at the request, and may with the
consent, of the Majority Banks, by notice to the Company,
(i) declare the obligation of each Bank to make Loans to be
terminated whereupon the same shall forthwith terminate, and
(ii) declare the unpaid principal amount of and accrued and
unpaid interest on the Notes and the Loans, together with
all other amounts payable under this Agreement or any
Security Document, to be forthwith due and payable,
whereupon the principal amount of and accrued and unpaid
interest on the Notes and the Loans, and all such other
amounts, shall become and be forthwith due and payable,
without presentment, demand, protest or further notice
(including, without limitation, notice of acceleration and
notice of intent to accelerate) of any kind, all of which
are hereby expressly waived by the Company. Upon the
occurrence of any such Event of Default and the acceleration
of the unpaid principal amount of and accrued and unpaid
interest on the Notes and the Loans and all other amounts
due hereunder and under the Security Documents, the Agent
shall at the request, and may with the consent, of the
Majority Banks, proceed to protect and enforce the rights of
the Creditors either by suit in equity or by action at law
or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in any
Security Document or in aid of the exercise of any power
granted in this Agreement or in any Security Document; or
may proceed to enforce the payment of the indebtedness
outstanding under the Notes, hereunder and under or secured
by the Security Documents and interest thereon in the manner
set forth therein; it being intended that no remedy
conferred herein or in any other Security Document shall be
exclusive but shall be in addition to every other remedy
given hereunder and under the Security Documents or now or
hereafter existing at law or in equity or by statute or
otherwise.
10.3 Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b)
either automatic acceleration of the Notes pursuant to
clause (a) of Section 10.02 or the making of the request or
the granting of the consent required by clause (b) of
Section 10.02 to declare the Notes due and payable pursuant
to the provisions of Section 10.02, each Bank is hereby
authorized, to the extent permitted by applicable law, at
any time and from time to time, without notice to the
Company (any such notice being expressly waived by the
Company), 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 (whether or not then due
and payable) at any time owing by such Bank to or for the
credit or the account of the Company, against any and all of
the obligations of the Company now or hereafter existing
under this Agreement, the Notes, or any of the Security
Documents, irrespective of whether or not such Bank shall
have made any demand for satisfaction of such obligations
and although such obligations may be unmatured or portions
thereof may be owing to Banks other than the Banks effecting
such set-off and application. Each Bank agrees to notify
the Company and the Agent promptly after any such set-off
and application made by such Bank, provided that the failure
to give such notice shall not affect the validity of such
set-off and application. The rights of each Bank under this
Section 10.03 are in addition to other rights and remedies
(including, without limitation, other rights of set-off)
which such Bank may have hereunder, under any of the other
Security Documents or under any applicable law.
10.4 Sharing of Payments, Etc. If at any time, whether
before or after the occurrence of an Event of Default, any
Bank shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off or
otherwise) of principal, interest or Commitment Fees on
account of the Notes held by it in excess of its Ratable
Share of such payments, such Bank shall purchase from the
other Banks such participations in the Notes held by them as
shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them, provided,
however, that if all or any portion of such excess payment
is thereafter recovered from such purchasing Bank, such
purchase from each Bank shall be rescinded and such Bank
shall repay to the purchasing Bank the purchase price to the
extent of such recovery together with an amount equal to
such Bank's ratable share (according to the proportion of
the amount of such Bank's required repayment to the total
amount so recovered from the purchasing Bank) of any
interest or Commitment Fee paid or payable by the purchasing
Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation
from another Bank pursuant to this Section 10.04 may
exercise all its rights of payment (including the right of
set-off) with respect to such participation, at any time, as
fully as if such Bank were the direct creditor of
the Company in the amount of such participation.
10.5 Application of Proceeds of Collateral. (a) All
moneys received by the Agent as a result of the enforcement
of the rights and remedies of the Agent or the Creditors
pursuant to the Security Documents and otherwise in respect
of the Collateral shall be distributed by the Agent on the
dates fixed by the Agent (individually a "Distribution Date"
and collectively, the "Distribution Dates") as follows:
FIRST: to the Agent in payment of the amount of any
and all unreimbursed expenses of the Agent,
including, without limitation, the fees and
disbursements of its counsel and of any
agents and experts employed by the Agent,
incurred by the Agent prior to the relevant
Distribution Date in connection with (w) the
administration of this Agreement and the
Security Documents, (x) the custody,
preservation, use or operation of, or the
sale of, collection from, or other
realization upon any assets of the Company
pursuant to the Security Documents (y) the
exercise or enforcement of any of the rights
of the Agent hereunder or under the Security
Documents or (z) the failure by the Company
to perform or observe any of the provisions
of this Agreement or any Security Document;
SECOND: to the Banks in an amount equal to the sum of
the unpaid principal of and interest on the
Notes and, in the event such moneys shall be
insufficient to pay in full such amounts,
then to the payment thereof ratably to each
Creditor in the same proportion which (x) the
sum of aggregate unpaid principal of and
interest on the Notes held by such Bank bears
to (y) the sum of the aggregate unpaid
principal of and interest on the Notes on the
relevant Distribution Date (all such
prepayments to be applied by each Creditor
first to the payment of accrued and unpaid
interest, if any, owing by the Company to
such Creditor, then to the payment of
principal on the Notes);
THIRD: to the Creditors in an amount equal to the
sum of unpaid commitment and agent's fees
payable under this Agreement (collectively
the "Fees"), whether matured or unmatured,
and, in the event such moneys shall be
insufficient to pay in full such amount, then
to the payment thereof ratably to each
Creditor in the same proportion which the
aggregate amount of Fees due to such Creditor
bears to the aggregate unpaid Fees due to all
the Creditors on the relevant Distribution
Date;
FOURTH: to the Banks in an amount equal to all other
amounts due under this Agreement and the
Security Documents (collectively the "Other
Amounts"), and in the event such moneys shall
be insufficient to pay in full such amount,
then to the payment thereof ratably to each
Creditor in the same proportion which the
aggregate amount of Other Amounts due such
Creditor to the aggregate unpaid Other
Amounts due to all the Creditors on the
relevant Distribution Date; and
FIFTH: any surplus then remaining shall be paid to
the Company, or to its successors and
assigns, or to whomsoever may be lawfully
entitled to receive the same, or as a court
of competent jurisdiction may direct.
(b) The term "unpaid" as used in this Section
10.05 shall mean all obligations outstanding as of a
Distribution Date as to which prior distributions have not
been made, after giving effect to any adjustments which are
made pursuant to Section 10.04 and of which the Agent shall
have been notified.
11. THE AGENT.
11.1 Appointment of Agent; Authority. Each of the
Creditors irrevocably appoints and authorizes the Agent to
act on its behalf under this Agreement and under the
Security Documents, and to exercise such powers hereunder
and thereunder as are specifically delegated to or required
of the Agent by the terms hereof and thereof, together with
such powers as may be reasonably incidental thereto. As to
(i) any action which is discretionary with the Agent under
the provisions hereof or of the Notes or the Security
Documents or (ii) any action not expressly required of
the Agent by this Agreement, the Notes and the Security
Documents (including, without limitation, enforcement or
collection of the Notes), 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 all of the Creditors, and such
instructions shall be binding upon all Creditors and all
holders of Notes; provided, however, that the Agent shall
not be required to take any action which, in the reasonable
opinion of the Agent, either exposes the Agent to personal
liability or is contrary to this Agreement, any Note, any
Security Document or applicable law.
11.2 INDEMNIFICATION OF AGENT. The Agent shall not be
required to take any action hereunder or to prosecute or
defend any suit in respect of this Agreement, the Notes or
the Security Documents, unless indemnified to its
satisfaction by the Creditors against loss, cost, liability
and expense. If any indemnity furnished to the Agent shall
become impaired, it may call for additional indemnity and
cease to do the acts indemnified against until such
additional indemnity is given. In addition EACH OF THE
CREDITORS AGREES TO INDEMNIFY the Agent, its officers,
directors, employees, attorneys and agents (each an
"Indemnified Party") (to the extent not reimbursed by the
Company), ratably according to such Creditor's pro rata
interest in the Secured Obligations (as defined in the
Security Agreement), from and against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against such Indemnified Party in
any way relating to or arising out of this Agreement, the
Security Documents, or the Notes, or any of them, or any
action taken or omitted by such Indemnified Party under this
Agreement, the Security Documents or the Notes, or any of
them, provided that no Creditor shall be liable for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Indemnified Party's gross
negligence or willful misconduct, provided further, that IT
IS THE INTENTION OF THE CREDITORS TO INDEMNIFY EACH
INDEMNIFIED PARTY FROM AND AGAINST THE CONSEQUENCES OF ITS
OWN NEGLIGENCE. Without limiting the generality of the
foregoing, each Creditor agrees to reimburse each
Indemnified Party promptly upon demand for its pro rata
percentage of any out-of-pocket expenses (including counsel
fees) incurred by such Indemnified Party in connection with
the preparation, execution, administration or enforcement
of, or the preservation of any rights hereunder or under
the Notes or the Security Documents to the extent such
Indemnified Party is not reimbursed by the Company.
The payment obligations and indemnities contained
in this Section 11.02 shall survive the payment or sale or
transfer of the Notes and the termination of this Agreement
(i) with respect to all events, facts, conditions or other
circumstances occurring or existing prior to such sale,
transfer or termination, and (ii) with respect to all
liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, charges, expenses and
disbursements, whenever the same shall be imposed, incurred
or asserted (whether before or after such sale, transfer,
resignation, removal or termination), arising out of the
events, facts, conditions or other circumstances referred to
in the first paragraph of this Section 11.02. The aforesaid
payment obligations and indemnities are made expressly for
the benefit of, and shall be enforceable by, any Indemnified
Party.
11.3 LIABILITY OF AGENT. NEITHER THE AGENT NOR ANY
OTHER INDEMNIFIED PARTY SHALL BE LIABLE FOR ANY ACTION TAKEN
OR OMITTED BY IT OR THEM HEREUNDER, OR IN CONNECTION
HEREWITH, (i) with the consent or at the request of the
Creditors, or (ii) in the absence of its or their own gross
negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent: (i) may treat the
payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the
Agent; (ii) may consult with legal counsel (including
counsel for the Company), independent public accountants and
other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any
Creditor and shall not be responsible to any Creditor for
any statements, warranties or representations made in or in
connection with this Agreement, any Security Document or any
Note; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance or any of the
terms, covenants or conditions of this Agreement, the
Security Documents or any Note, or to inspect the property
(including the books and records) of the Company or any
Subsidiary; (v) shall not be deemed to have notice of any
Default or Event of Default absent actual knowledge thereof
by a Responsible Officer of the Agent; (vi) shall not be
responsible to any Creditor for the due execution, legality,
validity, enforceability or genuineness of this Agreement,
any Security Document or any Note, or any other instrument
or document furnished pursuant thereto; and (vii) shall
incur no liability under or in respect of the Agreement, any
Security Document or any Note by acting upon any notice or
consent (whether oral or written and whether by telephone,
telegram, cable, telex or facsimile), certificate or other
instrument or writing (which may be by telegram, cable,
telex or facsimile) believed by it to be genuine and
communicated, signed or sent by the proper person or
persons.
11.4 Independent Credit Decision. Each Creditor agrees
that it has relied solely upon its independent review of the
financial statements of the Company and all other
representations and warranties made by the Company herein or
otherwise in making the credit decisions preliminary to
entering into this Agreement and agrees that it will
continue to rely solely upon its independent review of the
facts and circumstances of the Company in making future
decisions with respect to this Agreement and the Borrowings.
Each Bank agrees that it has not relied and will not rely
upon the Agent or any other Creditor respecting the ability
of the Company to perform its obligations pursuant to this
Agreement, the Notes or any Security Document.
11.5 Agent and Affiliates; Multiple Capacities. With
respect to its Commitment, the Loans made by it and the
Notes payable to it, NationsBank shall have the same rights
and powers under this Agreement, the Security Documents and
the Notes as any other Bank and may exercise the same
as though it were not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include
NationsBank in its individual capacity. NationsBank and its
affiliates may accept deposits from, lend money to, act as
trustee under indentures of and generally engage in any kind
of business with, the Company, any of the Subsidiaries and
any person or entity who may do business with or own
securities of any of them or of their subsidiaries, all as
if NationsBank were not the Agent and without any duty to
account therefor to the Creditors. No exercise or failure
to exercise by NationsBank of any of its discretionary
powers, rights or remedies in one capacity shall constitute,
or be deemed to constitute, a breach of any duty of loyalty,
fiduciary duty or other duty which NationsBank has, or may
have, in any other capacity. If at any time any other Bank
shall serve as Agent, the foregoing provisions of this
Section 11.05 shall apply to such Bank mutatis mutandis.
11.6 Successor Agent. The Agent or any successor or
successors hereunder may at any time, by giving 30 days'
prior written notice to the Company and the Creditors,
resign and be discharged of the responsibilities under this
Agreement, the Security Documents and the Notes,
such resignation to become effective upon the earlier of
(i) 30 days from the date of such notice or (ii) the
appointment of a successor agent, and the approval of such
successor agent by the Majority Banks and the Company (which
consent of the Company will not be unreasonably withheld).
The Agent may be removed at any time and a successor agent
appointed, with the consent of the Company (which consent
shall not be unreasonably withheld), by the affirmative vote
of all of the Banks (other than the Agent); provided that
the Agent so removed shall be entitled to its fees and
expenses to the date of removal. If no successor agent
shall be appointed and accepted within 30 days from the date
of the giving of the aforesaid notice of resignation or
within 30 days from the date of such removal, the Bank that
is an original party to this Agreement (excluding the Agent
that has resigned or been removed) having the largest
Ratable Share shall become the Agent. Any such successor
agent shall immediately and without further act be
superseded by any successor agent appointed by the Banks as
above provided. Upon the acceptance of any appointment
as Agent under this Agreement by a successor Agent, such
successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Agent. After any retiring Agent's resignation or
removal as Agent under this Agreement, the
Security Documents and the Notes, the provisions of this
Article 11 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under
this Agreement, the Security Documents and the Notes.
12. MISCELLANEOUS.
12.1 No Waiver; Remedies. No failure or delay on the
part of the Agent or any Creditor in exercising any power
or right hereunder or under the Notes or any Security
Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The
remedies herein are cumulative and not exclusive of any
remedies provided by law.
12.2 Amendments, Etc. Except for amendments to the
Security Documents to effect the addition or release of
certain Collateral pursuant to Sections 9.02, 9.03, or 9.05,
no modification or waiver of any provision of this
Agreement, any of the Security Documents or the Notes and no
consent to the departure by the Company therefrom shall in
any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or
consent shall be effective only in the specific instance and
for the purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Majority Banks,
affect the rights or duties of the Agent hereunder or under
any Security Document. No notice to or demand on the
Company in any case shall entitle the Company to any other
or further notice or demand in similar or other
circumstances.
12.3 Duty With Respect to Collateral. The duty of the
Agent and any Creditor with respect to the Collateral shall
be solely to use reasonable care in the custody and
preservation of Collateral in its possession, and neither
the Agent nor any Creditor shall be required to take any
steps to preserve rights against prior parties.
12.4 Performance of Company's Covenants. If the
Company shall fail to perform or cause to be performed any
of the covenants contained in Subsections 7.06(b)-(h), 7.09,
7.10 and 7.11, any Bank may, but shall be under no
obligation to, advance sums to perform the same on its
behalf; and sums so advanced by such Bank shall be repaid by
the Company on demand and shall bear interest at the rate of
the lesser of the Highest Lawful Rate or the Prime Rate plus
3% per annum until paid, and shall be secured hereby, having
the benefit of the Security Interest. No such advance shall
be deemed to relieve the Company from any default under this
Agreement.
12.5 INDEMNITIES. Any provision hereof to the contrary
notwithstanding, and whether or not the transactions
contemplated by this Agreement shall be consummated:
(a) The Company agrees to pay on demand (i) all
reasonable costs and expenses of the Agent and the Creditors
paid to third parties in connection with the preparation,
execution, delivery and administration of this Agreement,
the Notes and the Security Documents, and also in connection
with any future amendment or supplement to or waiver or
release with respect to (whether or not given) any of the
foregoing (including, without limitation, the reasonable
fees and out-of-pocket expenses of Baker & Botts, L.L.P.,
special counsel for the Agent and the Banks, and any local
counsel for the Agent and the Banks), and (ii) all
reasonable costs and expenses of the Agent and the Creditors
(including reasonable counsel fees and expenses), if any, in
connection with the enforcement of, and preservation of any
rights under this Agreement, the Notes and the Security
Documents.
(b) THE COMPANY HEREBY ASSUMES LIABILITY FOR, AND
AGREES TO INDEMNIFY, PROTECT, SAVE AND KEEP HARMLESS the
Agent and each Creditor and their respective successors and
assigns and any of their respective officers, directors,
employees, attorneys and agents, and any of them
(hereinafter for purposes hereof called an "Indemnified
Credit Party"), from and against, any and all liabilities,
obligations, losses, damages, penalties, claims, causes of
action, suits, demands, judgments, costs, charges, expenses
and disbursements (including legal fees and expenses), of
whatsoever kind and nature (hereinafter for the purposes
hereof collectively called "Expenses"), imposed on, asserted
against or incurred or suffered by any Indemnified Credit
Party and in any way relating to or arising out of this
Agreement, any of the Security Documents or the
construction, manufacture, installation, purchase,
acceptance, non-acceptance, rejection, ownership, delivery,
non-delivery, possession, use, occupancy, transportation,
operation, insurance, condition, safety, return, sale,
exchange or other disposition of or in respect of the
Collateral or any portion thereof or interest therein,
including latent and other defects, whether or not
discoverable by the Company or any Indemnified Credit Party,
any claim for patent, trademark or copyright infringement,
any claim arising under the strict liability doctrine in
tort or any claim arising from (a) injury to persons or
property growing out of or in connection with the ownership
or use of the Collateral, or any portion thereof or interest
therein, or resulting from the condition or safety thereof
or (b) violation or breach by the Company of any
representation, warranty, covenant, agreement or condition
contained in this Agreement or any of the Security Documents
or of conditions, agreements, laws, regulations,
requirements and rules affecting or relating to the
Collateral, or any portion thereof or interest therein;
provided, however, that the Company shall not be required to
indemnify any Indemnified Credit Party against Expenses
incurred by an Indemnified Credit Party attributable to its
gross negligence or willful misconduct; provided, further,
THAT IT IS THE INTENT OF THE PARTIES HERETO THAT THE COMPANY
INDEMNIFY EACH INDEMNIFIED CREDIT PARTY AGAINST EXPENSES
INCURRED BY AN INDEMNIFIED CREDIT PARTY ATTRIBUTABLE TO THE
CONSEQUENCES OF ITS OWN NEGLIGENCE, WHETHER SOLE,
CONCURRENT, CONTRIBUTORY OR OTHERWISE. If the Company shall
have knowledge of any Expense hereby indemnified against, it
will give prompt written notice thereof to every Indemnified
Credit Party concerned. All amounts payable by the Company
under this Subsection 12.05(b) shall be paid directly to the
Indemnified Credit Party or Parties entitled to
indemnification. The Company shall be obligated under this
Subsection 12.05(b) as primary obligor whether or not any
Indemnified Credit Party shall also be indemnified with
respect to the same matter under any other agreement by any
other person, and any Indemnified Credit Party seeking to
enforce the indemnification by the Company may proceed
directly against the Company under this Subsection 12.05(b)
without first resorting to any such other rights of
indemnification. If any action, suit or proceeding shall be
brought against any Indemnified Credit Party in connection
with any claim indemnified against under this
Subsection 12.05(b), the Company may (and, upon such
Indemnified Credit Party's request, will), at the Company's
own cost and expense, resist and defend such action, suit or
proceeding, or cause the same to be resisted and defended,
by counsel selected by the Company and approved by such
Indemnified Credit Party, and, in the event of any failure
by the Company to do so, the Company will pay all costs and
expenses (including legal fees and expenses) incurred by
such Indemnified Credit Party in connection with such
action, suit or proceeding. In the event that the Company
shall be required to make any payment under this
Subsection 12.05(b), the amount payable (and which the
Company hereby covenants to pay) shall be an amount which,
after deduction of all taxes required to be paid by the
particular Indemnified Credit Party in respect of the
receipt thereof under the laws of the United States of
America or of any political subdivision thereof (after
giving credit for any savings in respect of any such taxes
by reason of deductions, credits or allowances in respect of
the payment of the expense indemnified against, and of any
such taxes), shall be equal to the amount of such payment.
Upon the payment in full by the Company of any indemnities
under this Subsection 12.05(b), the Company shall be
subrogated to any right of such Indemnified Credit Party in
respect of the matter against which indemnity shall have
been given. Thereafter, and so long as no Default or Event
of Default has occurred and is continuing, any payment
received by any Indemnified Credit Party from any person
(except the Company) as a result of any matter with respect
to which such Indemnified Credit Party has been indemnified
by the Company under this Subsection 12.05(b) shall be paid
over to the Company to the extent necessary to reimburse the
Company for indemnification payments previously made.
Without limiting the generality of the foregoing,
THE COMPANY HEREBY ASSUMES LIABILITY FOR, AND AGREES TO
INDEMNIFY, PROTECT, SAVE AND KEEP HARMLESS each Indemnified
Credit Party from and against, any and all liabilities,
obligations, losses, damages, penalties, claims, causes of
action, suits, demands, judgments, costs, charges, expenses
and disbursements (including legal fees and expenses), which
any of the Indemnified Credit Parties may sustain or incur
by reason of or arising out of any and all claims or
proceedings (whether brought by a private party,
governmental authority, or otherwise) for bodily injury,
property damage, abatement, remediation, environmental
damage, or impairment or any other injury or damage
resulting from or relating to any Hazardous Materials
located upon, migrating into, from, or through or otherwise
relating to any property of the Company or any Subsidiary
(whether or not the release of such Hazardous Materials was
caused by the Company, any Subsidiary, a tenant, or
subtenant of the Company or any Subsidiary, a prior owner, a
tenant or subtenant of any prior owner or any other party
and whether or not the alleged liability is attributable to
the handling, storage, generation, transportation, or
disposal of any Hazardous Materials or the mere presence of
any Hazardous Materials on such property; provided that the
Company shall not be liable to the Indemnified Credit
Parties where the release of such Hazardous Materials occurs
at any time after which the Company or any Subsidiary has
ceased to own such property), which any Indemnified Credit
Party may incur due to the making of Loans or the
Commitments hereunder, the exercise of any of its rights
under this Agreement, the Notes, the Security Documents, or
otherwise, provided that no Indemnified Credit Party shall
be entitled to the benefits of this paragraph to the extent
its own gross negligence or willful misconduct contributed
to its loss, provided, further, THAT IT IS THE INTENT OF THE
PARTIES HERETO THAT THE COMPANY INDEMNIFY EACH INDEMNIFIED
CREDIT PARTY FROM AND AGAINST THE CONSEQUENCES OF SUCH
INDEMNIFIED CREDIT PARTY'S OWN NEGLIGENCE, WHETHER SOLE,
CONCURRENT, CONTRIBUTORY OR OTHERWISE. If any action, suit
or proceeding shall be brought against any Indemnified
Credit Party in connection with any claim indemnified
against under this paragraph of this Subsection 12.05(b),
the Company may (and, upon such Indemnified Credit Party's
request, will), at the Company's own cost and expense,
resist and defend such action, suit or proceeding, or cause
the same to be resisted and defended, by counsel selected by
the Company and approved by such Indemnified Credit Party,
and, in the event of any failure by the Company to do so,
the Company will pay all costs and expenses (including legal
fees and expenses) incurred by such Indemnified Credit Party
in connection with such action, suit or proceeding. Upon
the payment in full by the Company of any indemnities under
this Subsection 12.05(b), the Company shall be subrogated to
any right of such Indemnified Credit Party in respect of the
matter against which indemnity shall have been given.
Thereafter, and so long as no Default or Event of Default
has occurred and is continuing, any payment received by any
Indemnified Credit Party from any person (except the
Company) as a result of any matter with respect to which
such Indemnified Credit Party has been indemnified by the
Company under this Subsection 12.05(b) shall be paid over to
the Company to the extent necessary to reimburse the Company
for indemnification payments previously made.
(c) The payment obligations and indemnities
contained in this Section 12.05 shall survive the payment or
sale or transfer of the Notes and the termination of this
Agreement with respect to all events, facts, conditions or
other circumstances occurring or existing prior to such
sale, transfer or termination, and with respect to all
liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, charges, expenses and
disbursements, whenever the same shall be imposed, incurred
or asserted (whether before or after such sale, transfer,
resignation, removal or termination), arising out of the
events, facts, conditions or other circumstances referred to
in clause (i) of this Subsection 12.05(c). The aforesaid
payment obligations and indemnities are made expressly for
the benefit of, and shall be enforceable by, any Indemnified
Credit Party.
12.6 Notices. Notices and other communications
provided for herein shall be in writing (including
telegraphic, telex, cable or facsimile communication) and
shall be delivered, mailed, telegraphed, telexed or cabled
addressed as follows:
(a) If to the Company, to it at:
Mr. John H. Untereker
c/o Petroleum Helicopters, Inc.
113 Borman Drive
Municipal Airport
Lafayette, LA 70508
Telecopy: (504) 828-8333
(b) If to the Agent or NationsBank, to it at:
901 Main Street, Suite 6700
Dallas, Texas 75202
Attention: Mr. Thomas Blake
Telecopy No.: (214) 508-0980
(c) If to Whitney, to it at:
228 St. Charles
New Orleans, Louisiana 70130
Attention: Mr. Harry Stahel
Telecopy No.: (504) 599-3073
(d) If to FNBC, to it at:
201 St. Charles, 28th Floor
New Orleans, Louisiana 70170
Attention: Mr. J. Charles Freel, Jr.
Telecopy No.: 504-623-1316
All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement
shall be deemed to have been given (a) when deposited in the
United States mail, when sent by registered or certified
mail, return receipt requested, and with proper postage
prepaid; (b) when sent (after receipt of confirmation or
answer back), if sent by telecopy, telex or other similar
facsimile transmission; (c) when deposited with a reputable
overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger; and in each case
addressed to such party as provided in this Section 12.06 or
in accordance with the latest unrevoked direction from such
party, except for Notices of Borrowing, Notices of Election
and notices of prepayment of Loans hereunder, each of which
shall be deemed to have been given only when actually
received by the Agent.
12.7 Binding Effect. This Agreement shall become
effective when it shall have been executed by the Company,
the Agent and the Banks, and thereafter shall be binding
upon and inure to the benefit of the Company, the Agent and
each Creditor and their respective successors and assigns,
except that the Company shall not have the right to assign
its rights hereunder or any interest herein without the
prior written consent of the Creditors and that the
undertaking of the Banks to make the Loans to the Company
shall not inure to the benefit of any successor or assign of
the Company.
12.8 Interest. No provision of this Agreement or of
the Notes, any Security Document or any other instrument is
intended or shall be construed to require or permit the
payment or collection of interest at a rate that exceeds the
Highest Lawful Rate (and, to the extent that the Highest
Lawful Rate is at any time determined by Texas law, such
rate shall be the "weekly ceiling" described in Section
303.301 of the Texas Finance Code, as amended; provided,
however, to the extent permitted by such Article, the Banks
from time to time by notice through the Agent to the Company
may revise the aforesaid election of such interest rate
ceiling as such ceiling affects the then current or future
balances of the Borrowings outstanding under the Notes).
Accordingly, if the maturity of the Notes is accelerated for
any reason, or in the event of voluntary prepayment of all
or any portion of the Notes by the Company, or in any other
event, earned interest for any Bank on each Borrowing may
never exceed the Highest Lawful Rate, computed from the
Borrowing Date of each such Borrowing until payment, and any
unearned interest otherwise payable under any Note which is
in excess of the Highest Lawful Rate shall be canceled
automatically as of the date of such acceleration or
prepayment or other such event and (if theretofore paid)
shall, at the option of the holder of such Note, be either
refunded to the Company or credited on the principal of such
Note. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Highest
Lawful Rate, the Company and the Banks shall, to the maximum
extent permitted by applicable law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather
than as interest, and (b) amortize, prorate, allocate and
spread, in equal parts during the period of the full stated
term of the borrowing in question, all interest at any time
contracted for, charged, received or reserved in connection
with such Borrowing.
12.9 Survival of Representations and Warranties. All
representations, warranties and covenants contained herein
or made in writing by the Company in connection herewith
shall survive the execution and delivery of this Agreement
and of the Notes, and will bind and inure to the benefit of
the respective successors and assigns of the parties hereto,
whether so expressed or not.
12.10 Severability. Should any clause, sentence,
paragraph, subsection or section of this Agreement be
judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or
voiding the remainder of this Agreement, and the parties
hereto agree that the part or parts of this Agreement so
held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom and the remainder will have the
same force and effectiveness as if such part or parts had
never been included herein.
12.11 Descriptive Headings. The section headings
in this Agreement have been inserted for convenience only
and shall be given no substantive meaning or significance
whatever in construing the terms and provisions of this
Agreement.
12.12 Counterparts. This Agreement may be executed
in several counterparts, and by the parties hereto on
separate counterparts. When counterparts executed by all
the parties shall have been delivered to the Agent, this
Agreement shall become effective, and at such time the Agent
shall notify the Company and each Creditor. Each
counterpart, when so executed and delivered, shall
constitute an original instrument, and all such separate
counterparts shall constitute but one and the
same instrument.
12.13 GOVERNING LAW. THIS AGREEMENT AND THE NOTES
SHALL BE INTERPRETED AND GOVERNED BY, AND THE RIGHTS,
OBLIGATIONS AND LIABILITIES OF THE PARTIES HERETO AND
THERETO SHALL BE DETERMINED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW. Without
limitation of the foregoing, nothing in this Agreement or in
the Notes shall be deemed to constitute a waiver of any
rights which any Bank may have under applicable federal
legislation relating to the rate of interest which such Bank
may contract for, take, reserve, receive or charge in
respect of any borrowing. Chapter 346 of the Texas Finance
Code, as amended (relating to revolving loan and revolving
triparty accounts), shall not apply to this Agreement or the
Notes hereunder or the transactions contemplated hereby.
THIS WRITTEN "LOAN AGREEMENT" (AS DEFINED IN
SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS IN
EFFECT ON THE EFFECTIVE DATE AND AS THE SAME MAY THEREAFTER
BE AMENDED AT ANY TIME AND FROM TIME TO TIME), TOGETHER WITH
THE NOTES, THE LETTER AGREEMENT AND THE SECURITY DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE COMPANY, THE
BANKS AND THE AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
SAID PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN SAID PARTIES.
[Remainder of Page Intentionally Left Blank; Signature Page
Follows.]
IN WITNESS WHEREOF, the parties hereto, by their
officers thereunto duly authorized, have executed this
Agreement as of the day and year first above written.
AIR EVAC SERVICES, INC.
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
individually and as Agent
By:
Name:
Title:
WHITNEY NATIONAL BANK
By:
Name:
Title:
FIRST NATIONAL BANK OF COMMERCE
By:
Name:
Title:
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
BETWEEN
SAMARITAN HEALTH SYSTEM
AND
AIR EVAC SERVICES, INC.
Dated as of December 31, 1997
ASSET PURCHASE AGREEMENT
BETWEEN
SAMARITAN HEALTH SYSTEM
AND
AIR EVAC SERVICES, INC.
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS -1-
1.1 Purchase and Sale of Assets. -1-
1.2 Transfer and Conveyance -2-
1.3 Assumption of Certain Obligations -2-
ARTICLE II PURCHASE PRICE -3-
2.1 Purchase Price -3-
2.2 Allocation of Purchase Price -3-
ARTICLE III SAMARITAN'S GENERAL REPRESENTATIONS AND
WARRANTIES -3-
3.1 Due Organization and Qualification. -3-
3.2 Corporate Power and Authority -3-
3.3 Investment Representations -4-
3.4 True, Correct and Complete Information -4-
ARTICLE IV SAMARITAN'S REPRESENTATIONS AND WARRANTIES WITH
RESPECT TO THE BUSINESS AND ASSETS -5-
4.1 Availability of Documents -5-
4.2 Title; Use of Assets -5-
4.3 Inventory -5-
4.4 Physical Properties -5-
4.5 Trademarks, Etc. -6-
4.6 Permits -6-
4.7 Compliance with Laws -7-
4.8 Material Contracts -7-
4.9 Contract Defaults -8-
4.10 Litigation -8-
4.11 Financial Statements and Results of Operations -9-
4.12 Employee Benefits -9-
4.13 Employees; Employee Relations -10-
4.14 Consents -11-
4.15 Insurance -12-
4.16 Taxes -12-
4.17 Business Relations -12-
4.18 Environmental Laws and Regulations -12-
4.19 Absence of Certain Changes or Events -13-
4.20 Broker's and Finder's Fees -13-
4.21 Restrictive Documents or Laws -13-
4.22 EMTALA -13-
4.23 Medicare and Medicaid Programs; Licensure, etc -13-
4.24 Fraud and Abuse and Stark Law -14-
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY -14-
5.1 Organization and Authority -14-
5.2 Consents -15-
5.3 Broker's and Finder's Fees -15-
5.4 Litigation -15-
5.5 Employees -15-
5.6 Preferred Stock -15-
5.7 Capitalization -16-
ARTICLE VI COVENANTS OF SAMARITAN WITH RESPECT TO THE
BUSINESS -16-
6.1 Affirmative Covenants -16-
6.2 Negative Covenants -16-
6.3 Access to Properties and Records -17-
6.4 Employees of Samaritan -18-
6.5 Approvals of Third Parties -18-
6.6 Notices -18-
6.7 Access to Books and Records -18-
6.8 No Solicitation of Offers -18-
6.9 Release of Financing Statements -18-
6.10 Maintenance of Existence -18-
ARTICLE VII COVENANTS OF THE COMPANY -19-
7.1 Access to Properties and Records -19-
7.2 Approvals of Third Parties -19-
7.3 Removal of Samaritan Name -19-
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF THE COMPANY -20-
8.1 Representations and Warranties of Samaritan -20-
8.2 Covenants of Samaritan -20-
8.3 Samaritan's Certificate -20-
8.4 Noncompetition Agreements -20-
8.5 Certain Payments to Employees -20-
8.6 No Casualty Losses -21-
8.7 Certificates of Authorities -21-
8.8 Litigation -21-
8.9 Satisfactory to the Company's Counsel -21-
8.10 Opinion of Samaritan's Counsel -21-
8.11 No Material Adverse Effect -21-
8.12 Consents -22-
8.13 Financing -22-
8.14 Service Agreement -22-
8.15 Further Assurances -22-
ARTICLE IX CONDITIONS TO OBLIGATIONS OF SAMARITAN -22-
9.1 Representations and Warranties of the Company -22-
9.2 Covenants of the Company -22-
9.3 Certificate of the Company -22-
9.4 Certificates of Authorities -23-
9.5 Satisfactory to Samaritan's Counsel -23-
9.6 Opinion of the Company's Counsel -23-
9.7 Option Agreement -23-
9.8 Consents -23-
ARTICLE X CLOSING -23-
10.1 Date and Place of Closing -23-
10.2 Samaritan's Performance -23-
10.3 The Company's Performance -24-
10.4 Other Instruments -25-
ARTICLE XI INDEMNIFICATION AND POST-CLOSING MATTERS -25-
11.1 Indemnification by Samaritan -25-
11.2 Indemnification by the Company -26-
11.3 Notice of Loss -26-
11.4 Payment -26-
11.5 Right to Defend -27-
11.6 Cooperation -27-
11.7 Limitation on Indemnification -28-
11.8 Survival of Representations and Covenants -28-
11.9 Non-exclusivity of Indemnification Remedies -28-
11.10 Interest -28-
11.11 Right to Require Cure of Breach -28-
ARTICLE XII TERMINATION -29-
12.1 Termination -29-
12.2 No Further Force or Effect -29-
ARTICLE XIII MISCELLANEOUS -30-
13.1 Expenses -30-
13.2 Entire Agreement -30-
13.3 Publicity -30-
13.4 Successors and Assigns -30-
13.5 Counterparts -30-
13.6 Headings -30-
13.7 Use of Certain Terms -30-
13.8 Modification and Waiver -31-
13.9 Notices -31-
13.10 Governing Law -32-
13.11 Reformation and Severability -32-
13.12 Remedies Cumulative -32-
SCHEDULES:
Schedule 1.1A Assets and Assumed Contracts
Schedule 1.1B Excluded Assets
Schedule 4.2 Good Title to Assets; Encumbrances
Schedule 4.5 Trademarks, Etc.
Schedule 4.6 Permits
Schedule 4.8 Material Contracts
Schedule 4.10 Litigation
Schedule 4.11 Financial Statement and Results of Operations
Schedule 4.12 Employee Benefits
Schedule 4.13 Employees
Schedule 4.14 Consents
Schedule 4.17 Business Relations
Schedule 4.18 Environmental Matters
Schedule 4.19 Absence of Certain Changes or Events
Schedule 4.21 Restrictive Documents or Laws
Schedule 4.23 Medicare and Medicaid Programs
Schedule 5.2 Buyer's Consents
EXHIBITS:
Exhibit A Bill of Sale and Assignment
Exhibit B Assumption Agreement
Exhibit C Articles of Incorporation of the Company
Exhibit D Allocation of Purchase Price
Exhibit E Noncompetition Agreement
Exhibit F Matters Covered by Opinion of
Samaritan's Counsel - Lyle O. Reinsch
Exhibit G Service Agreement
Exhibit H Matters Covered by Opinion of
Company's Special Counsel - Locke Purnell
Rain Harrell (A Professional Corporation)
Exhibit I Option Agreement
ASSET PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into
as of the 31st day of December, 1997, by and between Samaritan
Health System, an Arizona non-profit corporation ("Samaritan"),
and Air Evac Services, Inc., a Louisiana corporation (the
"Company").
WHEREAS, Samaritan operates an air medical transport
business under the name "Samaritan AirEvac" (the "Business"); and
WHEREAS, Samaritan desires to sell to the Company, and the
Company desires to buy from Samaritan, certain specified assets
used in the Business, which are described below, on the terms and
conditions specified hereinbelow.
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties, covenants and agreements hereinafter
set forth and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, and
upon the terms and subject to the conditions hereinafter set
forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
I.1 Purchase and Sale of Assets. At the Closing (as that
term is defined in Section 10.1), Samaritan, will sell, convey,
transfer, assign and deliver to the Company, and the Company
shall purchase and accept from Samaritan, the following assets
and properties, free and clear of any and all options, pledges,
mortgages, security interests, liens, charges, adverse claims,
rights, restrictions, burdens and encumbrances whatsoever
("Encumbrances"):
(a) All of the personal property and other tangible
assets and properties of Samaritan used exclusively in the
operation of the Business, wherever located and whether or not
described or referred to herein, including, without limitation,
all aircraft, equipment, tools, vehicles, inventories (including
supplies in store, maintenance items and spare parts (which
hereinafter shall sometimes be collectively referred to as the
"Inventory")), prepaid accounts and prepaid expenses, furniture,
fixtures, fixed assets, books, reports and records listed on
Schedule 1.1A;
(b) The third party payor agreements, contracts,
leases, arrangements and commitments listed on Schedule 1.1A and
no others;
(c) All intangible properties and rights (other than
third party payor agreements, contracts, leases, arrangements and
commitments not listed on Schedule 1.1A and the names "Samaritan
AirEvac" and "Samaritan" which shall be Excluded Assets (as
defined below)), wherever located and whether or not described or
referred to herein, including, without limitation, all know-how,
trade secrets, technology, all trade names, trademark
registrations and applications, common law trademarks,
servicemarks, copyrights and copyright registrations and
applications, and the goodwill related to trade names, trademarks
and servicemarks;
(d) All licenses, permits, certificates and
authorizations relating to the Assets or Business; and
(e) Any other property or right, tangible or
intangible, of Samaritan used exclusively in the Business (other
than third party payor agreements, contracts, leases,
arrangements and commitments not listed on Schedule 1.1A) (the
items in (a) through (e) hereof hereinafter collectively referred
to as the "Assets");
provided, however, that Samaritan will not convey, transfer,
assign or deliver to the Company, and the Company will not
acquire from Samaritan, the items listed on Schedule 1.1B
(collectively, the "Excluded Assets").
I.2 Transfer and Conveyance. Samaritan shall execute and
deliver to the Company at or prior to the Closing a Bill of Sale
and Assignment in substantially the form attached hereto as
Exhibit A and all such other assignments, endorsements and
instruments of transfer as shall be necessary or appropriate to
carry out the intent of this Agreement and as shall be sufficient
to vest in the Company title to all of the Assets and all right,
title and interest of Samaritan thereto.
I.3 Assumption of Certain Obligations. Effective at the
Closing and subject to the terms set forth herein, at the Closing
the Company shall assume and be liable for Samaritan's
obligations to render performance arising after the Closing Date
under, or otherwise accruing after the Closing Date under, the
third party payor agreements, contracts, leases, arrangements and
commitments listed on Schedule 1.1A (but not any obligation for
performance or obligation or liability of Samaritan for default
or nonperformance under said third party payor agreements,
contracts, leases, arrangements and commitments arising prior to
the Closing)(collectively, the "Assumed Liabilities"). The
Company will not assume and will not be liable for any debts,
contracts, leases, liabilities, arrangements, commitments,
obligations, restrictions or duties of Samaritan, other than as
specified in the preceding sentence. The Company shall execute
and deliver to Samaritan at the Closing an Assumption Agreement
in substantially the form attached hereto as Exhibit B. From and
after the Closing, Samaritan shall remain responsible for, and
shall pay and discharge on a timely basis, all debts, contracts,
leases, liabilities, arrangements, commitments, obligations,
restrictions or duties of the Business not specifically assumed
by the Company under the Assumption Agreement (the "Excluded
Liabilities").
ARTICLE II
PURCHASE PRICE
II.1 Purchase Price. The purchase price for the Assets
(the "Purchase Price") shall be (i) $8,400,000 cash (the "Cash
Consideration") and (ii) 1,000 shares of Series A Cumulative
Accruing Pay-in-Kind Preferred Stock, par value $100.00 per
share, of the Company (the "Preferred Stock"). The rights,
preferences and limitations of the Preferred Stock are as
described in the Articles of Incorporation of the Company, a copy
of which is attached as Exhibit C to this Agreement.
II.2 Allocation of Purchase Price. Samaritan and the
Company agree to file all income tax returns and reports,
including without limitation, IRS Form 8954, to reflect the
allocation of the Purchase Price in a manner consistent with
Exhibit D attached hereto and not to take any position
inconsistent therewith before any governmental agency charged
with the collection of taxes or in any judicial proceeding
relating solely to tax reporting.
ARTICLE III
SAMARITAN'S GENERAL REPRESENTATIONS AND WARRANTIES
Samaritan represents and warrants to the Company as follows:
III.1 Due Organization and Qualification. Samaritan is a
non-profit corporation duly organized, validly existing and in
good standing under the laws of the State of Arizona, and has all
requisite corporate power and authority to own, lease or operate
its properties and to carry on its business as it is presently
being operated and in the place where such properties are owned,
leased or operated and such business is conducted. Samaritan is
duly qualified and licensed as a foreign non-profit corporation
and in good standing in each jurisdiction in which the character
or location of the property owned, leased or operated by it or
the nature of the business conducted by it makes such
qualification necessary unless the failure to be so qualified and
licensed would not have a material adverse effect on it.
III.2 Corporate Power and Authority. Samaritan has full
power, authority and legal right to enter into this Agreement,
and all other agreements by and among the parties, and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement by
Samaritan, and all other agreements by and among the parties, and
the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all requisite action and no
further action or approval is required in order to permit
Samaritan to consummate the transactions contemplated hereby and
thereby. This Agreement constitutes, and all other agreements by
and among the parties, when executed and delivered in accordance
with the terms thereof, will constitute the legal, valid and
binding obligations of Samaritan enforceable in accordance with
their terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and (ii) the remedy of
specific performance and injunctive relief are subject to certain
equitable defenses and to the discretion of the court before
which any proceedings may be brought (the "Equitable
Exceptions"). The making and performance of this Agreement, and
all other agreements by and among the parties, and the
consummation of the transactions contemplated hereby and thereby
in accordance with the terms hereof and thereof will not (a)
conflict with the Articles of Incorporation or the Bylaws of
Samaritan, (b) result in any breach or termination of, or
constitute a default under, or constitute an event that with
notice or lapse of time, or both, would become a default under,
or result in the creation of any Encumbrance upon any of the
Assets under, or create any rights of termination, cancellation
or acceleration in any person under, any Material Contract (as
defined below), or violate any order, writ, injunction or decree,
to which Samaritan is a party, by which any of the Assets or
business or operations of Samaritan may be bound or affected or
under which any of the Assets or business or operations of
Samaritan receive benefits, (c) result in the loss or adverse
modification of any license, certificate, franchise, permit or
other authorization granted to or otherwise held by Samaritan and
related to their business operations or (d) result in the
violation of any provisions of law applicable to Samaritan, the
violation of which could have an adverse effect upon the Assets
or business or operations of Samaritan.
III.3 Investment Representations.
(a) Samaritan is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
(b) Samaritan understands and agrees that the
issuance of shares of Preferred Stock to Samaritan upon
consummation of the transactions contemplated hereby will not be
registered under the Securities Act and applicable state
securities laws and that the issuance of shares of Preferred
Stock is intended to be exempt from the registration requirements
of the Securities Act and applicable state securities laws. The
certificates representing such shares will be imprinted with a
legend indicating that such shares have not been registered under
the Securities Act or any state securities laws and may not be
sold without registration as required by the Securities Act and
applicable state securities laws or exemptions therefrom, and in
the case of such an exemption, requiring delivery to the Company
of a legal opinion of counsel that such exemption is applicable
(such opinion and such counsel to be reasonably acceptable to the
Company).
(c) Samaritan is acquiring the shares of Preferred
Stock that it will be receiving at the Closing for Samaritan's
own account and not with a view to distribution thereof in
violation of the Securities Act. Samaritan has been afforded the
opportunity to ask questions of and receive answers from the
Company concerning the terms and conditions of the shares of
Preferred Stock, the business of the Company and has had all such
questions answered to its satisfaction and has been supplied all
additional information deemed necessary by it to verify the
accuracy of all information provided.
III.4 True, Correct and Complete Information. All written
agreements, lists, schedules, instruments, exhibits, documents,
certificates, reports, books, records, statements and other
writings furnished to the Company pursuant hereto or in
connection with this Agreement or the transactions contemplated
hereby are and will be complete and accurate in all material
respects and have been maintained in accordance with all
applicable laws and regulations. No representation or warranty
by Samaritan contained in this Agreement, in the schedules
attached hereto or in any certificate furnished or to be
furnished by Samaritan to the Company in connection herewith or
pursuant hereto contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact
necessary in order to make any statement contained herein or
therein not misleading. There is no fact known to Samaritan that
has specific application to Samaritan, the Business or the Assets
(other than general economic or industry conditions) and that
materially adversely affects or, as far as Samaritan can
reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of
Samaritan, the Business or the Assets that has not been set forth
in this Agreement or any schedule hereto.
ARTICLE IV
SAMARITAN'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
THE BUSINESS AND ASSETS
Samaritan represents and warrants to the Company with
respect to the Business and the Assets (but not the Excluded
Assets) as follows:
IV.1 Availability of Documents. Samaritan has made
available for inspection by the Company at the offices of
Samaritan true, correct and complete copies of its Articles of
Incorporation and By-Laws and all third party payor agreements,
contracts, books and records attributable to each aircraft
composing part of the Assets, leases, arrangements, commitments
and documents referred to herein or in any schedule referred to
herein, in each case together with all amendments and supplements
thereto.
IV.2 Title; Use of Assets. Samaritan has, and upon
conveyance of the Assets to the Company by Samaritan at the
Closing, the Company will acquire and hold, good, marketable and
valid title to all of the Assets, free and clear of any and all
Encumbrances except as set forth on Schedule 4.2. The Assets
constitute all of the property now used in and necessary for the
conduct of the Business as presently conducted.
IV.3 Inventory. The Inventory consists of current items of
a quality and quantity that are usable in the ordinary course of
the Business, are suitable for the purpose or purposes for which
they will be used, and are in good condition. Inventory not
usable in the Business has been written down in value in
accordance with the normal business practice of Samaritan to
estimated net realizable market values.
IV.4 Physical Properties. Set forth on Schedule 4.2 is a
description of (i) all aircraft owned or leased by Samaritan and
included among the Assets (showing aircraft type, aircraft
identification number and whether owned or leased), (ii) all
vehicles owned or leased by Samaritan and included among the
Assets (showing motor vehicle identification numbers and whether
owned or leased), and (iii) all physical properties (other than
the types of properties referred to in (i) and (ii) above), real,
personal or mixed, owned by or leased to Samaritan and included
among the Assets, having an original cost in excess of $5,000
(exclusive of Inventory). Except as set forth in Schedule 4.2,
all real property and structures and all aircraft, vehicles,
machinery, equipment and other tangible personal property
included among the Assets are suitable for the purpose or
purposes for which they are being used (including compliance in
all material respects with all laws and regulations relating to
such use) and are in good condition, normal wear and tear
excepted. Samaritan enjoys peaceable possession of all
properties owned or leased by it.
IV.5 Trademarks, Etc. Schedule 4.5 lists the domestic and
foreign trade names, trademarks, service marks, trademark
registrations and applications, service mark registrations and
applications, patents, patent applications, patent licenses,
software licenses and copyright registrations and applications
owned by Samaritan or used thereby in the operation of the
Business (collectively, the "Intellectual Property"), which
Schedule indicates (i) the term and exclusivity of its rights
with respect to the Intellectual Property and (ii) whether each
item of Intellectual Property is owned or licensed by Samaritan,
and if licensed, the licensor and the license fees therefor.
Unless otherwise indicated on Schedule 4.5, Samaritan has the
right to use and license the Intellectual Property and to
transfer and convey the Intellectual Property. Each item
constituting part of the Intellectual Property has been, to the
extent indicated on Schedule 4.5, registered with, filed in or
issued by, as the case may be, the United States Patent and
Trademark Office or such other government entity, domestic or
foreign, as is indicated on Schedule 4.5; all such registrations,
filings and issuances remain in full force and effect; and all
fees and other charges with respect thereto are current. Except
as stated on Schedule 4.5, there are no pending proceedings or
adverse claims made or, to the best knowledge of Samaritan,
threatened against Samaritan with respect to the Intellectual
Property; there has been no litigation commenced or threatened in
writing within the past five (5) years with respect to the
Intellectual Property or the rights of Samaritan therein; and
Samaritan has no knowledge that (i) the Intellectual Property or
the use thereof by Samaritan before the Closing or by the Company
after the Closing conflicts or will conflict with any trade
names, trademarks, service marks, trademark or service mark
registrations or applications, patents, patent applications,
patent licenses or copyright registrations or applications of
others ("Third Party Intellectual Property"), or (ii) such Third
Party Intellectual Property or its use by others or any other
conduct of a third party conflicts with or infringes upon the
Intellectual Property or its use by Samaritan before the Closing
or the Company after the Closing.
IV.6 Permits. Samaritan holds all licenses, certificates,
franchises, permits and other governmental authorizations,
including permits, titles (including, without limitation,
aircraft titles and motor vehicle titles and current certificates
of air worthiness and registrations), fuel permits, licenses,
franchises, certificates, trademarks, trade names, patents,
patent applications and copyrights owned or held by Samaritan,
the absence of any of which could reasonably be expected to have
a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise), results
of operations or prospects of Samaritan, the Assets or the
Business (the "Material Permits") and, since October 31, 1997,
there has been no event or condition of any character (whether
actual, or to the knowledge of Samaritan, threatened or
contemplated that has had or can be reasonably anticipated to
have a material adverse effect on the financial condition,
results of operations or prospects of the Business (collectively,
a "Material Adverse Effect"). An accurate list and summary
description is set forth on Schedule 4.6 hereto of all such
Material Permits. Except as set forth in Schedule 4.6, the
Material Permits are valid and in full force and effect and may
be transferred to the Company at the Closing. Samaritan has not
received any notice that any governmental authority intends to
cancel, terminate or not renew any such Material Permit, and
there is no existing breach of, and there is no existing grounds
for rescission or withdrawal of, any of the Material Permits.
Samaritan has conducted and is conducting its business in
compliance with the requirements, standards, criteria and
conditions set forth in each of the Material Permits and
applicable orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing except where such
noncompliance or violation would not have a Material Adverse
Effect. Except as specifically provided on Schedule 4.6, the
transactions contemplated by this Agreement will not result in a
default under or a breach or violation of, or adversely affect
the rights and benefits afforded to Samaritan before the Closing
or to the Company after the Closing by, any such Material
Permits. Each aircraft composing part of the Assets is duly
registered with the Federal Aviation Authority.
IV.7 Compliance with Laws. Samaritan (including, without
limitation, its medical director, nurses, licensed employees,
ambulance crew and others providing air ambulance and patient
care services) (i) has complied with all laws, regulations,
licensing requirements and orders applicable to its business or
personnel, the noncompliance with which could reasonably be
expected to have a Material Adverse Effect, and (ii) has filed
with the proper authorities all statements and reports required
by the laws, regulations, licensing requirements and orders to
which it or any of its employees (because of their activities on
behalf of their employer) is subject, the failure of which to
file could reasonably be expected to have a Material Adverse
Effect. All reports and returns required to be filed by
Samaritan with any governmental authority have been filed, and
were accurate and complete when filed. Without limiting the
generality of the foregoing: (i) the operation of Samaritan's
business as it is now or heretofore has been conducted does not,
nor does any condition exist as to, give rise to or constitute
the grounds for a meritorious suit, action, claim or demand by
any person or persons seeking compensation or damages or seeking
to restrain, enjoin or otherwise prohibit any aspect of the
conduct of such business or the manner in which it is now
conducted; and (ii) Samaritan has made all required payments with
the appropriate governmental departments of the state, local and
federal governments. Samaritan has not been investigated,
charged, fined, sanctioned, audited by any federal, state or
local regulatory authority for alleged violations of laws and
regulations.
IV.8 Material Contracts. Set forth on Schedule 4.8 is a
list of all contracts, agreements, arrangements or commitments
(the following, "Material Contracts") that relate to: (i) the
employment of any person other than personnel employed at the
pleasure of Samaritan in the ordinary course of its business at
rates of compensation and on terms consistent with good business
practice; (ii) collective bargaining with, or any representation
of any employees by, any labor union or association; (iii) the
acquisition or provision of services, spare parts, supplies,
equipment or other personal property involving more than $25,000
or that is not terminable by Samaritan upon not more than thirty
(30) days' notice without obligation on the part of Samaritan;
(iv) the purchase or sale of real property; (v) lease of real or
personal property as lessor or lessee or sublessor or sublessee;
(vi) lending or advancing of funds other than the extension of
credit to trade purchasers in the ordinary course of Samaritan's
business consistent with past business practice; (vii) borrowing
of funds or receipt of credit other than by Samaritan in the
ordinary course of business consistent with good business
practice and except for trade payables in amounts and on terms
consistent with past practice; (viii) incurring of any obligation
or liability except for transactions engaged in by Samaritan in
the ordinary course of business consistent with good business
practice; (xi) the sale of personal property (other than sales of
Inventory in the ordinary course of business consistent with good
business practice) or services under which payments due after the
date of this Agreement exceed $25,000; and (x) any matter or
transaction not in the ordinary course of the business of
Samaritan or that is inconsistent with the past business practice
of Samaritan.
IV.9 Contract Defaults. Samaritan is not in default in any
respect under any Material Contract, and such Material Contracts
are legal, valid and binding obligations of the respective
parties thereto in accordance with their terms and, except to the
extent reflected in Schedule 4.8, have not been amended; and no
defenses, offsets or counterclaims thereto have been asserted or
to the best knowledge of Samaritan, may be made, by any party
thereto other than Samaritan nor has Samaritan waived any
substantial rights thereunder. Except as set forth in Schedule
4.8, Samaritan has not received any notice from any third party
payor or supplier to the effect that such third party payor or
supplier will terminate its relationship with Samaritan as a
result of the transactions contemplated by this Agreement.
IV.10 Litigation. Set forth on Schedule 4.10 is a list of
all actions, suits, proceedings, investigations, arbitrations,
audits or grievances pending against Samaritan or, to the best
knowledge of Samaritan threatened against Samaritan, Samaritan's
business or any property or rights of Samaritan, at law or in
equity or before or by any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign ("Agencies"). None of
the actions, suits, proceedings, arbitrations, audits or
investigations listed on Schedule 4.10 either (i) has or would,
if adversely determined, have a Material Adverse Effect or (ii)
affects or would, if adversely determined, affect the right or
ability of Samaritan to carry on its business substantially as
now conducted. Samaritan is not subject to any continuing court
or Agency order, writ, injunction or decree applicable
specifically to the Assets, the business operations of Samaritan
or employees of Samaritan, or in default with respect to any
order, writ, injunction or decree of any court or Agency with
respect to the Assets, its business, operations or employees.
Neither Samaritan nor its officers or directors or employee
management knows or have grounds to know of any basis for any
proceedings, investigations or inquiries against Samaritan except
as disclosed on Schedule 4.10.
IV.11 Financial Statements and Results of Operations.
(a) Samaritan has previously furnished to the Company
true, correct and complete copies of the audited balance sheet of
Samaritan as of December 31, 1996, and the related statements of
income, shareholders' equity and cash flows for the three (3)
fiscal years then ended, as reviewed by Ernst & Young, LLP,
certified public accountants, together with Samaritan's unaudited
balance sheet, statements of income and shareholders' equity for
the 10-month period ended October 31, 1997 (collectively, the
"Financial Statements"). The Financial Statements (i) are
accurate and in accordance with the books and records and
accounting methods of Samaritan, (ii) constitute true, full and
complete disclosure of the financial position and results of
operations of Samaritan as of the dates and for the periods
indicated and (iii) except for the lack of footnotes in the
financial statements for the 10-month period ended October 31,
1997, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved. Except as may be set forth on the Financial Statements
or otherwise disclosed herein, there are no liabilities,
contingent or otherwise, by which Samaritan or any of the Assets
or the Business may be bound or affected other than those
incurred in the ordinary course of business consistent with good
business practice none of which could have a Material Adverse
Effect. Samaritan has previously permitted the Company full
access to papers pertaining to the Financial Statements,
including those work papers in the possession of or prepared by
Ernst & Young, LLP.
(b) Except to the extent (and not in excess of the
amounts) reflected in the October 31, 1997 balance sheet included
in the Financial Statements or as disclosed on Schedule 4.11,
Samaritan does not have any liabilities or obligations of any
nature related to the Business, whether absolute, accrued,
unmatured, contingent or otherwise that did not arise in the
ordinary course of business from and after October 31, 1997, or
any unsatisfied judgments.
IV.12 Employee Benefits. Samaritan maintains a defined
benefit pension plan (the "Pension Plan") and a 401(k) Savings
Plan (the "Savings Plan") and certain cafeteria, health and
medical, insurance and short and long term disability plans (the
"Welfare Benefit Plans") listed in Schedule 4.12. The Pension
Plan and Savings Plan are hereinafter collectively referred to as
the "Retirement Plans." The Welfare Benefit Plans and the
Retirement Plans are collectively referred to as the "Plans."
The Plans are in substantial compliance with applicable law and
have been administered and operated in all material respects
according to their terms. The Retirement Plans are qualified
within the meaning of Section 401(a) of the Code, and except for
the Savings Plan, have received a favorable determination from
the Internal Revenue Service ("IRS"), and no event has occurred
and no condition exists that would be expected to result in the
revocation of any such determination. A letter requesting a
favorable determination from the IRS that the Savings Plan is
qualified under Section 401(a) of the Code will be submitted by
Samaritan to the IRS within the remedial amendment period
specified in Section 401(b) of the Code. The Pension Plan is
frozen, as of December 1, 1993, and no further benefits are
accruing under the Pension Plan, except for certain transitional
benefits available to certain long service employees. The
Savings Plan is not subject to Title IV of ERISA, and neither
Samaritan nor any Group Member has made any contributions to or
participated in any multi-employer plans, as defined in Section
3(37) of ERISA. All contributions required to be made under the
Retirement Plans have been made (excluding any amounts not yet
due) and all amounts properly accrued to date as liabilities of
Samaritan that have not been paid have been properly recorded on
the Financial Statements. The Savings Plan is not subject to
Part 3 of Subtitle B of Title 1 of ERISA. No lien imposed under
Section 401(a)(29) or Section 412(n) of the Code, Section 302(f)
or Section 4068 of ERISA, or arising out of any action filed
under Section 4301(b) of ERISA, exists upon any of the Assets.
Neither Samaritan nor, to the best knowledge of Samaritan, any
other "disqualified person" or "party in interest" (within the
meaning of Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in
connection with any Plan that could be expected to result in the
imposition of a material penalty pursuant to Section 502(i) of
ERISA, damages pursuant to Section 409 of ERISA, or a tax
pursuant to Section 4975(a) of the Code which would adversely
affect the Company or the Assets. No material claim, action,
proceeding or litigation has been made, commenced or, to the best
knowledge of Samaritan, threatened with respect to any Plan
(other than for benefits payable in the ordinary course and PBGC
insurance premiums). No Plan or related trust owns any
securities in violation of Section 407 of ERISA. Neither
Samaritan nor any Group member has incurred any liability or
taken any action, that could cause it to incur, and has received
no notice of, any liability (i) under Section 412 of the Code or
Title IV of ERISA with respect to any "single employer plan"
(within the meaning of Section 4001(a)(15) of ERISA), (ii) on
account of a partial or complete withdrawal (within the meaning
of Section 4205 and 4203 of ERISA, respectively) with respect to
any "multi-employer plan" (within the meaning of Section 3(37) of
ERISA), (iii) on account of unpaid contributions to any such
multi-employer plan, or (iv) to provide health benefits or other
non-pension benefits to retired or former employees, except as
specifically required by Section 4980B(f) of the Code. For
purposes of this Agreement, "Group Member" shall mean any member
of any "affiliated service group," as defined in Section 414(m)
of the Code, that includes Samaritan, any member of any
"controlled group of corporations" as defined in Section 1563 of
the Code that includes Samaritan, or any member of any group of
"trades or businesses under common control" as defined by Section
414(c) of the Code that includes Samaritan.
IV.13 Employees; Employee Relations.
(a) Schedule 4.13 sets forth (i) the name and current
annual salary (or rate of pay) and other compensation (including,
without limitation, normal bonus, profit-sharing and other
compensation) now payable by Samaritan to each employee whose
current total annual compensation or estimated compensation is
$25,000 or more, (ii) any increase to become effective after the
date of this Agreement in the total compensation or rate of total
compensation payable by Samaritan to each such person, (iii) any
increase to become payable after the date of this Agreement by
Samaritan to employees other than those specified in clause (i)
of this Section 4.13(a), (iv) all presently outstanding loans and
advances (other than routine travel advances to be repaid or
formally accounted for within sixty (60) days) related to the
Business and made by Samaritan to, or made to Samaritan by, any
director, officer or employee, (v) all other transactions between
Samaritan and any director, officer or employee of Samaritan
since October 31, 1997, and (vi) an estimate of the amount of
"paid time off" that each employee of Samaritan who will be
employed by the Company effective on the Closing Date will not
have used as of December 31, 1997 and an estimate of the amount
of such paid time off that each employee will carry forward to
1998 (referred to herein for each such employee as "Carry Forward
Paid Time Off". For purposes of this Agreement, "paid time off"
shall mean the benefit plans maintained by Samaritan for its
employees with respect to vacation and sick leave.
(b) Except as disclosed on Schedule 4.13, Samaritan
is not a party to, nor bound by, the terms of any collective
bargaining agreement, and Samaritan has not experienced any
material labor difficulties during the last five (5) years.
Except as set forth on Schedule 4.13, there are no labor disputes
existing, or to the best knowledge of Samaritan, threatened
involving, by way of example, strikes, work stoppages, slowdowns,
picketing, or any other interference with work or production, or
any other concerted action by employees. No charges or
proceedings before the National Labor Relations Board, or similar
agency, exist, or to the best knowledge of Samaritan, are
threatened.
(c) Samaritan's relationship with its respective
employees is good. Except as disclosed on Schedule 4.13,
Samaritan is not a party to any employment contract with any
individual or employee, either express or implied. No legal
proceedings, charges, complaints or similar actions exist under
any federal, state or local laws affecting the employment
relationship including, but not limited to: (i) anti-
discrimination statutes such as Title VII of the Civil Rights Act
of 1964, as amended (or similar state or local laws prohibiting
discrimination because of race, sex, religion, national origin,
age and the like); (ii) the Fair Labor Standards Act or other
federal, state or local laws regulating hours of work, wages,
overtime and other working conditions; (iii) requirements imposed
by federal, state or local governmental contracts such as those
imposed by Executive Order 11246; (iv) state laws with respect to
tortious employment conduct, such as slander, harassment,
invasion of privacy, negligent hiring or retention, intentional
infliction of emotional distress, assault and battery, or loss of
consortium; or (v) the Occupational Safety and Health Act, as
amended, as well as any similar state laws, or other regulations
respecting safety in the workplace; and to the best knowledge of
Samaritan, no proceedings, charges, or complaints are threatened
under any such laws or regulations and no facts or circumstances
exist that would give rise to any such proceedings, charges,
complaints, or claims, whether valid or not. Samaritan is in
full compliance with the provisions of the Americans with
Disabilities Act (the "ADA"). Samaritan is not subject to any
settlement or consent decree with any present or former employee,
employee representative or any government or Agency relating to
claims of discrimination or other claims in respect to employment
practices and policies; and no government or Agency has issued a
judgment, order, decree or finding with respect to the labor and
employment practices (including practices relating to
discrimination) of Samaritan.
(d) Samaritan has not incurred any liability or
obligation under the Worker Adjustment and Retraining
Notification Act or similar state laws. Samaritan has not laid
off more than ten percent (10%) of its employees at any single
site of employment in any ninety (90) day period during the
twelve (12) month period ending October 31, 1997.
IV.14 Consents. Except as disclosed in Schedule 4.14, no
consent, approval, authorization or order of any court, Agency or
any other person or under any Material Contract is required in
order to permit Samaritan to execute and deliver this Agreement
and to consummate the transactions contemplated by this
Agreement.
IV.15 Insurance. Samaritan has been and is insured with
responsible insurers in respect of its properties against
business risks normally insured against by companies in similar
lines of business. Samaritan has not, during the past three
fiscal years, been denied or had revoked any policy of insurance,
and no insurance carrier has reduced any insurance coverage or
has given notice or other indication of its intention to reduce
coverage or revoked any such policy, or to increase premiums
based on claims history or for any reason related to Samaritan's
business.
IV.16 Taxes. Samaritan has duly filed all federal, state,
county, local and other excise, franchise, property, payroll,
income, capital stock, sales and use and other tax returns that
are required to be filed by it and such returns are true, correct
and complete in all respects. Samaritan has paid all taxes which
have become due or have been assessed against it or the Assets
and all taxes, penalties and interest which any taxing authority
has proposed or asserted to be owing. All tax liabilities to
which the properties of Samaritan may have been subjected have
been discharged, except for taxes assessed but not yet payable
but for which Samaritan shall remain responsible and shall pay on
a timely basis. There are no tax claims presently being asserted
against Samaritan or the Assets and Samaritan knows of no basis
for any such claim. Samaritan has not granted any extension to
any taxing authority of the limitation period during which any
tax liability may be asserted thereby.
IV.17 Business Relations. Schedule 4.17 contains an
accurate list of all significant customers of the Business (i.e.,
those customers representing 2% or more of Samaritan's revenues
for the twelve (12) months ended October 31, 1997). Except as
set forth in Schedule 4.17, Samaritan has not experienced any
difficulties in obtaining any inventory items, spare parts or
equipment necessary to the operation of its business, and, to the
best knowledge of Samaritan, no such shortage of supply of
inventory, spare parts or equipment items is threatened or
pending. Samaritan is not required to provide any bonding or
other financial security arrangements in any material amount in
connection with any transactions with any of its customers or
suppliers.
IV.18 Environmental Laws and Regulations. Except as set
forth in Schedule 4.18, Samaritan is in compliance in all
material respects with all applicable Environmental Requirements.
Samaritan has not received any notice or other communication (in
writing or otherwise) that alleges that Samaritan is not in
compliance with any Environmental Requirements, and, to the best
knowledge of Samaritan, there are no circumstances that may
prevent or interfere with Samaritan or the Company's compliance
with any Environmental Requirements in the future.
"Environmental Requirements" shall mean all laws, statutes,
rules, regulations, ordinances, guidance documents, judgments,
decrees, orders, agreements and other restrictions and
requirements (whether now or hereafter in effect) of any
governmental authority, including, without limitation, federal,
state and local authorities, relating to the regulation or
protection of human health and safety, natural resources,
conservation, the environment, or the storage, treatment,
disposal, transportation, handling or other management of
industrial or solid waste, hazardous waste, hazardous or toxic
substances or chemicals, or pollutants.
IV.19 Absence of Certain Changes or Events. Since
December 31, 1996, Samaritan has not (i) suffered any
extraordinary losses or waived any rights of substantial value;
(ii) amended its Articles of Incorporation or Bylaws; (iii) made
any change in its mode of management or any change in its method
of operation or method of accounting; (iv) made or become
obligated to make any capital expenditures other than such
expenditures or commitments exceeding $50,000 individually, which
expenditures are listed on Schedule 4.19; (v) suffered any event
or circumstance that could have a Material Adverse Effect; (vi)
entered into any transaction, except in the ordinary course of
its business consistent with good business practice; (vii)
received any notice of any claim asserted against it by any
Agency that could have a Material Adverse Effect; or (viii)
incurred or agreed to incur any material obligation outside the
ordinary course of business that has not heretofore been
disclosed in writing to the Company.
IV.20 Broker's and Finder's Fees. Samaritan has not made
any agreement with any person, or taken any action which would
cause any person, to become entitled to an agent's, broker's or
finder's fee or commission in connection with the transactions
contemplated by this Agreement.
IV.21 Restrictive Documents or Laws. With the exception of
the matters listed in Schedule 4.21, Samaritan is not a party to
or bound by any mortgage, lien, lease, agreement, contract,
instrument, law, order, judgment or decree, or any similar
restriction not of general application which has a Material
Adverse Effect, or reasonably could be expected to so affect, (a)
the continued operation or use by the Company of the Assets after
the Closing on substantially the same basis as the Assets are
currently operated or (b) the consummation of the transactions
contemplated by this Agreement.
IV.22 EMTALA. Samaritan has complied with all Emergency
Medical Treatment and Labor Act ("EMTALA") requirements.
Samaritan has not been the subject of an investigation or
administrative termination proceeding by the Health Care
Financing Administration for an EMTALA violation.
IV.23 Medicare and Medicaid Programs; Licensure, etc. Each
of Samaritan, and Samaritan's medical director, nurses, licensed
employees and other individuals providing air ambulance and
patient care services on behalf of Samaritan is qualified,
credentialed and licensed for participation in the Medicare and
Medicaid programs and as otherwise required under applicable
state law, and each has been required to be so qualified,
credentialed and licensed prior to providing air ambulance and
patient care services on behalf of Samaritan. Samaritan is a
party to supplier agreements under the Medicare and Medicaid
programs which are in full force and effect with no defaults
having occurred thereunder. Samaritan has timely filed all
claims or other reports required to be filed with respect to the
services provided to Medicare, Medicaid and third party payors,
and all such claims or reports are complete and accurate, and
Samaritan has no liability to any payor with respect thereto.
Except as set forth in Schedule 4.23, there are no pending
appeals, overpayment determinations, adjustments, challenges,
audit litigation or notices of intent to open Medicare or
Medicaid, or third party claim determinations or other reports
required to be filed by Samaritan.
Neither Samaritan, nor any medical director, nurses,
licensed employees or other individuals providing patient care
services on behalf of Samaritan has been convicted of, or pled
guilty or nolo contendere to, patient abuse or negligence, or any
other Medicare or Medicaid program related offense and none has
committed any offense which may serve as the basis for suspension
or exclusion from the Medicare and Medicaid programs.
IV.24 Fraud and Abuse and Stark Law. Samaritan, its
officers, directors, employees and agents have not engaged in any
activities which are prohibited under 1320a-7b or 139nn of
Title 42 of the United States Code or the regulations promulgated
thereunder, or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct including,
but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation
of a material fact in any application for any benefit or payment,
(b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in
determining rights to any benefit or payment, (c) any failure by
a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or
payment on its own behalf or on behalf of another, with the
intent to fraudulently secure such benefit or payment, and
(d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly
or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) in return for
referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid,
or (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering
any good, facility, service or item for which payment may be made
in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated
health services to a patient upon referral from an entity or
person with which the physician or an immediate family member has
a financial relationship, and to which no exception under
1395nn of Title 42 of the United States Code applies.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Samaritan as follows:
V.1 Organization and Authority.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Louisiana, and has all requisite corporate power and authority
to own or lease its respective properties and to carry on its
business as it is presently being operated and in the place where
such properties are owned or leased and such business is
conducted. The Company has full power, authority and legal right
to enter into this Agreement and all other agreements by and
among the parties and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of
this Agreement by the Company, and all other agreements by and
among the parties, and the consummation by it of the transactions
contemplated hereby and thereby, have been or will be duly
authorized by all requisite corporate action. This Agreement
constitutes, and all other agreements by and among the parties,
when executed and delivered in accordance with the terms thereof,
will constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to
the Equitable Exceptions. The making and performance of this
Agreement, and all other agreements by and among the parties, and
the consummation of the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof will not
(i) conflict with the Certificate of Incorporation or Bylaws of
the Company, (ii) result in any breach or termination of, or
constitute a default under, or constitute an event which with
notice or lapse of time, or both, would become a default under,
or result in the creation of any Encumbrance upon any asset of
the Company under, or create any rights of termination,
cancellation or acceleration in any person under, any contract,
lease, arrangement or commitment, or violate any order, writ,
injunction or decree, to which the Company is a party or by which
the Company or its assets, business or operations may be bound or
affected or under which the Company or its respective assets,
business or operations receive benefits, (iii) result in the loss
or adverse modification of any material license, franchise,
permit or other authorization granted to or otherwise held by the
Company that is material to the business or financial condition
of the Company or (iv) result in the violation of any provisions
of law applicable to the Company, the violation of which could
have a material adverse effect upon the business, operations or
assets of the Company, taken as a whole.
V.2 Consents. Except as set forth on Schedule 5.2, no
consent, approval, authorization or order of any court, Agency or
any other person is required in order to permit the Company to
consummate the transactions contemplated by this Agreement.
V.3 Broker's and Finder's Fees. The Company has not made
any agreement with any person, or taken any action which would
cause any person, to become entitled to an agent's, broker's or
finder's fee or commission in connection with the transactions
contemplated by this Agreement.
V.4 Litigation. There is no pending or, to the knowledge
of the Company, threatened litigation in any court or any
proceeding before any Agency in which it is sought to restrain,
prohibit, invalidate or obtain damages in respect of the
consummation of the purchase and sale of the Assets or the other
transactions contemplated hereby.
V.5 Employees. The Company represents that it presently
intends to offer employment to all of the employees of Samaritan
associated with the Business; provided, however, that the Company
shall have no such obligation to offer such employment to
Samaritan's employees.
V.6 Preferred Stock. The shares of Preferred Stock to be
delivered to Samaritan at the Closing shall when issued
constitute valid and legally issued shares of the Company, fully
paid and non-assessable, and, except as set forth in this
Agreement, will be owned free and clear of all Encumbrances.
V.7 Capitalization. The authorized capital stock of the
Company consists of (i) 7,000 shares of common stock, no par
value, of which on the date hereof 1,000 shares are issued and
outstanding and (ii) 3,000 shares of Preferred Stock, of which no
shares are issued and outstanding immediately prior to the date
hereof. All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid
and non-assessable.
ARTICLE VI
COVENANTS OF SAMARITAN WITH RESPECT TO THE BUSINESS
Samaritan covenants and agrees with the Company with respect
to the Business as follows:
VI.1 Affirmative Covenants. Prior to the Closing Date,
Samaritan will operate the Business only in the usual, regular
and ordinary course of business consistent with good business
practices, and will use its best efforts to: (i) preserve intact
its business organization and the Assets; (ii) maintain its level
of Inventory at levels consistent with good business practices
and maintain its properties, machinery and equipment in good
operating condition and repair; (iii) continue all existing
policies of insurance (or comparable insurance) in full force and
effect up to and including the Closing Date (and will not cancel
any such insurance or take (or fail to take) any action that
would enable the insurers under such policies to avoid liability
for claims arising out of any occurrence prior to the Closing
Date without the prior written consent of the Company); (iv) keep
available the services of its employees and agents; (v) preserve
its present relationships with suppliers, third party payors and
customers; and (vi) maintain its books, accounts and records in
the usual, regular and ordinary manner on a basis consistently
applied. Samaritan will notify the Company in writing within
five (5) business days of learning of any facts, event or
circumstance that is reasonably likely to have a Material Adverse
Effect.
VI.2 Negative Covenants. Prior to the Closing Date,
Samaritan will not, without the prior written consent of the
Company: (i) with regard to employees utilized in the Business,
make any increase in the compensation payable or to become
payable by it to any employee, establish any severance plan, or
contribute or make any commitment to or representation that it
will contribute any amounts to any bonus or other employee
benefit plan for employees of Samaritan, except as required by
law or by the terms of any such plan in the ordinary course of
business consistent with good business practices; (ii) make any
amendment to its Certificate of Incorporation, Bylaws or other
organizational documents; (iii) make any material change in the
character of the Business; (iv) incur any obligation or liability
(fixed or contingent) with regard to the Business except in the
ordinary course of business consistent with good business
practices; (v) discharge or satisfy any Encumbrance or pay any
obligation or liability (fixed or contingent) with regard to the
Business other than in the ordinary course of business consistent
with good business practices; (vi) mortgage, pledge, transfer or
otherwise dispose of or subject to any Encumbrance any of the
Assets; (vii) acquire any assets or properties with regard to the
Business, except in the ordinary course of business consistent
with good business practices; (viii) cancel or compromise any
material debt or claim with regard to the Business; (ix) waive or
release any rights of material value with regard to the Business;
(x) transfer, grant or terminate contract, lease, arrangement or
commitment rights under any concessions, leases, licenses,
agreements, patents, patent licenses, inventions, trademarks,
trade names, service marks, or copyrights or registrations or
licenses thereof or applications therefor or with respect to any
know-how or other proprietary or trade rights with regard to the
Business; (xi) modify or change in any material respect or
terminate any third party payor agreement, existing contract,
lease, arrangement or commitment required to be listed on
Schedule 1.1A; (xii) undertake any material borrowing of any
nature whatsoever with regard to the Business; (xiii) make any
loans or extensions of credit with regard to the Business; or
(xiv) make or become obligated to make any capital expenditures
or enter into commitments therefor with regard to the Business
exceeding $50,000 in the aggregate.
VI.3 Access to Properties and Records. Samaritan will keep
the Company advised of all material developments relevant to the
consummation of the transactions contemplated hereby and will
cooperate fully in permitting the Company to make a full
investigation of the business, properties and financial condition
of Samaritan during regular business hours and upon reasonable
notice and in bringing about the consummation of the transactions
contemplated hereby. Samaritan will, during regular business
hours and upon reasonable notice, afford to the Company and its
representatives full access to the offices, buildings, real
properties, machinery and equipment, inventory and supplies,
spare parts, records, files, books of account, tax returns,
agreements and commitments, corporate record books and personnel
of Samaritan and will permit the Company and its representatives
to contact and interview Samaritan's personnel, certified public
accountants, attorneys, suppliers, third party payors, vendors,
referral sources and any other persons that the Company shall
reasonably determine to be necessary for it to make a full
investigation of the Business, provided that all confidential
information disclosed to the Company shall be maintained by the
Company in accordance with the provisions of the Confidentiality
Agreement dated November 1, 1996 between Samaritan and Petroleum
Helicopters, Inc. Samaritan will furnish to the Company all such
further information concerning the business and affairs of
Samaritan as the Company may reasonably request. Samaritan will
update by amendment or supplement each of the Schedules referred
to herein and any other disclosure in writing from Samaritan
required by this Agreement to be disclosed in writing by
Samaritan to the Company promptly upon any change in the
information set forth in such Schedules or other disclosures, and
Samaritan hereby represents and warrants that such Schedules and
such written disclosures, as so amended or supplemented, shall be
true, correct and complete as of the date or dates thereof;
provided, however, that the inclusion of any information in any
such amendment or supplement, not included in the original
Schedule or other disclosure at or prior to the date of this
Agreement, shall not limit or impair any right which the Company
might otherwise have to terminate this Agreement pursuant to
Section 12.1(b) due to the failure to satisfy the condition in
Section 8.1. No investigation pursuant to this Section 6.3 shall
affect any representations or warranties or the conditions to the
obligations of the Company to consummate the transactions
contemplated hereby. In the event of the termination of this
Agreement, the Company will deliver to Samaritan all documents,
work papers and other material (including copies thereof)
obtained by the Company or on its behalf from Samaritan as a
result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof and, if the
transactions contemplated hereby are not consummated, the Company
will hold such information in confidence until such time as such
information is otherwise publicly available.
VI.4 Employees of Samaritan. Samaritan shall pay all
salaries and wages to all employees of Samaritan associated with
the Business due on or before the Closing Date, and effective on
the Closing Date shall terminate all such employees. Samaritan
shall maintain through the Closing Date all currently-existing
medical, dental, 401(k), life insurance, and any other welfare or
benefit plans for its employees. Samaritan shall make all
workers' compensation payments due on or before the Closing Date.
VI.5 Approvals of Third Parties. As soon as practicable
after the date hereof, Samaritan will use its best efforts to
secure all necessary consents, approvals and clearances of third
parties and Agencies that shall be required for Samaritan to
consummate the transactions contemplated hereby and will
otherwise use its best efforts to cause the consummation of such
transactions in accordance with the terms and conditions of this
Agreement.
VI.6 Notices. Samaritan will timely give all notices
required to be given relating to the transactions contemplated
hereby, including without limitation, (i) notices to employees
and (ii) any notices required or requested to be given to all
creditors and claimants against Samaritan.
VI.7 Access to Books and Records. Samaritan agrees to
provide the Company, its accountants, counsel and other
representatives, during normal business hours and upon reasonable
notice, for a period of four (4) years after the Closing Date,
access to the books, records, income tax returns, contracts and
other underlying data and documentation of Samaritan relating to
the period prior to the Closing Date and to make available to the
Company personnel of Samaritan in the Company's review thereof
for the purpose of enabling them to determine and calculate any
tax liabilities in connection with the Assets. Samaritan agrees
that, for such four-year period, it will preserve and keep intact
all such books and records.
VI.8 No Solicitation of Offers. Samaritan covenants and
agrees that it will not solicit, entertain, encourage or assist
any acquisition proposal with respect to the purchase or exchange
of the Assets or any portion thereof, or with respect to any
proposed merger, consolidation, sale of securities or other
acquisition involving Samaritan, by or with any person other than
the Company until January 31, 1998.
VI.9 Release of Financing Statements. Samaritan shall
obtain and file in the appropriate jurisdictions Termination
Statements properly executed by any parties holding a security
interest or other Encumbrance with respect to the Assets as
identified by lien searches conducted with respect to Samaritan
and the Assets.
VI.10 Maintenance of Existence. Samaritan shall maintain
its existence as an Arizona non-profit corporation until its
obligations under this Agreement are satisfied.
ARTICLE VII
COVENANTS OF THE COMPANY
The Company covenants and agrees with Samaritan as follows:
VII.1 Access to Properties and Records. The Company will
keep Samaritan advised of all material developments relevant to
the consummation of the transactions contemplated hereby and will
cooperate fully in permitting Samaritan to make a full
investigation of the business, properties and financial condition
of the Company during regular business hours and upon reasonable
notice and in bringing about the consummation of the transactions
contemplated hereby. The Company will, during regular business
hours and upon reasonable notice, afford to Samaritan full access
to its offices, buildings, records, files, books of account,
corporate record books and personnel of the Company, and will
permit Samaritan and its representatives to contact and interview
the Company's personnel, attorneys and any other persons that
Samaritan shall reasonably determine to be necessary for it to
make a full investigation of the Company, provided that all
confidential information disclosed to Samaritan shall be
maintained by Samaritan in accordance with the provisions of the
Confidentiality Agreement dated November 1, 1996 between
Samaritan and Petroleum Helicopters, Inc. The Company will
update by amendment or supplement each of the Schedules referred
to herein and any other disclosure in writing from the Company
required by this Agreement to be disclosed in writing by the
Company to Samaritan promptly upon any change in the information
set forth in such Schedules or other disclosures, and the Company
hereby represents and warrants that such Schedules and such
written disclosures, as so amended or supplemented, shall be
true, correct and complete as of the date or dates thereof;
provided, however, that the inclusion of any information in any
such amendment or supplement, not included in the original
Schedule or other disclosure at or prior to the date of this
Agreement, shall not limit or impair any right which Samaritan
might otherwise have to terminate this Agreement pursuant to
Section 12.1(c) due to the failure to satisfy the condition in
Section 9.1. No investigation pursuant to this Section 7.1 shall
affect any representations or warranties or the conditions to the
obligations of Samaritan to consummate the transactions
contemplated hereby. In the event of the termination of this
Agreement, Samaritan will deliver to the Company all documents,
work papers and other material (including copies thereof)
obtained by Samaritan or on its behalf from the Company as a
result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof and, if the
transactions contemplated hereby are not consummated, Samaritan
will hold such information in confidence until such time as such
information is otherwise publicly available.
VII.2 Approvals of Third Parties. As soon as practicable
after the date hereof, the Company will use its best efforts to
secure all necessary consents, approvals and clearances of third
parties and Agencies that shall be required for the Company to
consummate the transactions contemplated hereby and will
otherwise use its best efforts to cause the consummation of such
transactions in accordance with the terms and conditions of this
Agreement.
VII.3 Removal of Samaritan Name. The Company shall use
commercially reasonable efforts to remove by December 31, 1998
the Samaritan name and logo on the aircraft and inventory
comprising a part of the Assets, the uniforms of the employees of
the Company and signage associated with the Business and until
such process is complete shall take commercially reasonable steps
to assure that the public is not confused or misled as to
Samaritan's association with the Company.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to purchase the Assets and to
consummate the other transactions contemplated hereby at Closing
shall be subject to the satisfaction on or prior to the Closing
Date of all of the following conditions, except such conditions
as the Company may waive in writing:
VIII.1 Representations and Warranties of Samaritan. All
of the representations and warranties of Samaritan contained in
this Agreement and in any Schedule or other disclosure in writing
from Samaritan shall have been true and correct in all material
respects when made, and shall be true and correct in all material
respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been
made on and as of the Closing Date.
VIII.2 Covenants of Samaritan. All of the covenants and
agreements herein on the part of Samaritan to be complied with or
performed on or before the Closing Date shall have been fully
complied with and performed.
VIII.3 Samaritan's Certificate. There shall be
delivered to the Company a certificate dated as of the Closing
Date and signed by the President of Samaritan to the effect set
forth in Sections 8.1 and 8.2, which certificate shall have the
effect of a representation and warranty made by Samaritan on and
as of the Closing Date.
VIII.4 Noncompetition Agreements. Samaritan shall have
executed and delivered to the Company a Noncompetition Agreement
in substantially the form attached hereto as Exhibit E (the
"Noncompetition Agreement").
VIII.5 Certain Payments to Employees. Samaritan on the
Closing Date will deliver to the Company an update to Schedule
4.13 to reflect the paid time off that each employee of Samaritan
who will be employed by the Company effective on the Closing will
not have used as of December 31, 1997 and the Carry Forward Paid
Time Off for each such employee as of December 31, 1997.
Samaritan on or prior to the Closing Date will pay to each
employee of Samaritan who will be employed by the Company
effective on the Closing a cash payment in an amount equal to the
cash value of the Carry Forward Paid Time Off of such employee.
On or prior to the Closing Date, Samaritan shall deliver to the
Company an agreement satisfactory to the Company and its counsel
(i) with respect to certain matters covering paid time off from
and after the Closing and (ii) providing for the payment to the
Company of $47,406.50 on the last day of each month during the
period commencing January 1, 1998 and ending June 30, 1998 which
shall represent a payment by Samaritan to the Company for the
cash equivalent of the number of days of vacation which each
employee of Samaritan who will be employed by the Company
effective on the Closing Date will be entitled to in 1999 under
the Company's then existing vacation policy. In calculating an
employee's seniority to determine the number of days of vacation
to which such employee is entitled in 1998, an employee's years
of service as an employee of Samaritan shall be treated as years
of service with the Company.
VIII.6 No Casualty Losses. The Assets shall not have
suffered any destruction or damage by fire, explosion, crash or
other casualty which has materially impaired the operation of the
Assets or otherwise had a Material Adverse Effect.
VIII.7 Certificates of Authorities. Samaritan shall
have furnished to the Company (i) certificates of the Secretary
of State of Arizona, dated as of a date not more than five (5)
days prior to the Closing Date, attesting to the organization,
existence and good standing of Samaritan, (ii) a copy, certified
by the Secretary of State of Arizona as of a date not more than
twenty (20) days prior to the Closing Date, of Samaritan's
Certificate of Incorporation and all amendments thereto, (iii) a
copy, certified by the Secretary of Samaritan, of the Bylaws of
Samaritan, as amended and in effect at the Closing Date, and (iv)
a copy, certified by an authorized officer of Samaritan, of
resolutions duly adopted by the Board of Directors of Samaritan
duly authorizing the transactions contemplated in this Agreement.
VIII.8 Litigation. At the Closing Date, there shall not
be pending or threatened any litigation in any court or any
proceeding before any Agency, (i) in which it is sought to
restrain, invalidate, set aside or obtain damages in respect of
the consummation of the purchase and sale of the Assets or the
other transactions contemplated hereby, (ii) that could, if
adversely determined, result in any Material Adverse Effect, or
(iii) as a result of which, in the reasonable judgment of the
Company, the Company would be deprived of the material benefits
of its ownership of the Assets.
VIII.9 Satisfactory to the Company's Counsel. All
actions, proceedings, instruments and documents required to carry
out this Agreement or incidental thereto and all other related
matters shall have been satisfactory to Locke Purnell Rain
Harrell (A Professional Corporation), New Orleans, Louisiana,
special counsel for the Company.
VIII.10 Opinion of Samaritan's Counsel. The Company
shall have received the opinion of Lyle O. Reinsch, counsel for
Samaritan, dated the Closing Date, in form and substance
satisfactory to the Company, with respect to the matters set
forth on Exhibit F.
VIII.11 No Material Adverse Effect. There shall not have
occurred any Material Adverse Effect. The Company shall receive
a certificate from Samaritan, dated as of the Closing Date and in
form and substance satisfactory to the Company, as to the
fulfillment of the conditions set forth in this Section 8.11
VIII.12 Consents. Samaritan shall have obtained all
necessary orders, approvals, estoppel certificates or consents of
third parties and Agencies, including, without limitation, any
orders, approvals, certificates or consents deemed necessary by
counsel to the Company that shall be required for Samaritan to
consummate the transactions contemplated hereby, including,
without limitation, consents to the assignment of the Assumed
Liabilities listed on Schedule 1.1A.
VIII.13 Financing. The Company shall have obtained
funds, in an amount and on terms satisfactory to the Company,
necessary to pay the Cash Consideration to Samaritan.
VIII.14 Service Agreement. Samaritan shall have executed
and delivered to the Company a Service Agreement in substantially
the form attached hereto as Exhibit G (the "Service Agreement").
VIII.15 Further Assurances. Samaritan shall take all
such further action as may be reasonably requested by the Company
in order to effectuate the consummation of the transactions
contemplated by this Agreement. If the Company shall reasonably
determine that any further conveyance, assignment or other
document or any further action is necessary to vest in it full
title to the Assets, Samaritan shall cause the appropriate
officers to execute and deliver all such instruments and take all
such action as the Company may reasonably determine to be
necessary.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SAMARITAN
The obligations of Samaritan to sell the Assets and to
consummate the other transactions contemplated hereby at Closing
shall be subject to the satisfaction on or prior to the Closing
Date of all of the following conditions, except such conditions
as Samaritan may waive in writing:
IX.1 Representations and Warranties of the Company. All of
the representations and warranties of the Company contained in
this Agreement and in any Schedule or other disclosure in writing
from the Company shall have been true and correct in all material
respects when made, and shall be true and correct in all material
respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been
made on and as of the Closing Date.
IX.2 Covenants of the Company. All of the covenants and
agreements herein on the part of the Company to be complied with
or performed on or before the Closing Date shall have been fully
complied with and performed.
IX.3 Certificate of the Company. There shall be delivered
to Samaritan a certificate dated as of the Closing Date and
signed by the President of the Company to the effect set forth in
Sections 9.1 and 9.2, which certificate shall have the effect of
a representation and warranty made by the Company on and as of
the Closing Date.
IX.4 Certificates of Authorities. The Company shall have
furnished to Samaritan (i) certificates of the Secretary of State
of Louisiana, dated as of a date not more than five (5) days
prior to the Closing Date, attesting to the organization,
existence and good standing of the Company, (ii) copies,
certified by the Secretary of State of Louisiana, as of a date
not more than twenty (20) days prior the Closing Date, of the
Company's Certificate of Incorporation and all amendments
thereto, (iii) a copy, certified by the Secretary of the Company,
of the Bylaws of the Company, as amended and in effect at the
Closing Date, and (iv) copies, certified by authorized officers
of the Company, of resolutions duly adopted by the Board of
Directors of the Company duly authorizing the transactions
contemplated in this Agreement.
IX.5 Satisfactory to Samaritan's Counsel. All actions,
proceedings, instruments and documents required to carry out this
Agreement or incidental thereto and all other related legal
matters shall have been satisfactory to Lyle O. Reinsch, counsel
for Samaritan.
IX.6 Opinion of the Company's Counsel. Samaritan shall
have received an opinion of Locke Purnell Rain Harrell (A
Professional Corporation), special counsel for the Company, dated
the Closing Date, in form and substance satisfactory to
Samaritan, with respect to the matters set forth on Exhibit H.
IX.7 Option Agreement. The Company shall have executed and
delivered to Samaritan an Option Agreement in substantially the
form attached hereto as Exhibit I (the "Option Agreement").
IX.8 Consents. The Company shall have obtained all
necessary orders, approvals, estoppel certificates or consents of
third parties and Agencies, including, without limitation, any
orders, approvals, certificates or consents deemed necessary by
counsel to Samaritan that shall be required for the Company to
consummate the transactions contemplated hereby.
ARTICLE X
CLOSING
X.1 Date and Place of Closing. Subject to satisfaction or
waiver of the conditions to the obligations of the parties, the
purchase and sale of the Assets pursuant to this Agreement shall
be consummated at a closing (the "Closing") to be held in the
offices of Locke Purnell Rain Harrell (A Professional
Corporation), in New Orleans, Louisiana, or such other place as
mutually agreed to by the parties, at 10:00 a.m., New Orleans,
Louisiana time, but shall be effective as of 11:59 P.M., New
Orleans, Louisiana time, on December 31, 1997, or such other date
as agreed to by the Company and Samaritan (the "Closing Date").
X.2 Samaritan's Performance. At the Closing, concurrently
with performance by the Company of its obligations to be
performed at the Closing:
(a) Conveyances. Samaritan shall execute and deliver
to the Company, in form and substance acceptable to the Company,
(i) a Bill of Sale and Assignment in substantially the form
attached hereto as Exhibit A conveying to the Company all items
of personalty included among the Assets, (ii) assignments of each
of the third party payor agreements, contracts, leases,
arrangements and commitments listed on Schedule 1.1A and (iii)
all other assignments, endorsements and instruments of transfer
as shall be necessary or appropriate to carry out the intent of
this Agreement and as shall be sufficient to vest in the Company
title to all of the Assets and all right, title and interest of
Samaritan thereto. If requested by the Company, such documents
shall be in a form suitable for recording.
(b) Records. Samaritan shall deliver to the Company
all documents, agreements, reports, books, records and accounts
pertaining specifically to the Assets and the Business that are
in Samaritan's possession.
(c) Certificates. Samaritan shall execute and
deliver to the Company the certificates referred to in
Sections 8.3 and 8.11.
(d) Noncompetition Agreement. Samaritan shall
execute and deliver to the Company the Noncompetition Agreement.
(e) Certain Payments and Agreements. Samaritan shall
have made the payments and delivered the agreement specified in
Section 8.5 above.
(f) Certificates of Authorities. Samaritan shall
deliver to the Company the certificates of authorities referred
to in Section 8.7.
(g) Opinion of Samaritan's Counsel. Samaritan shall
deliver to the Company the opinions of its counsel, dated the
Closing Date, as specified in Section 8.10.
(h) Consents. Samaritan shall deliver to the Company
the consents and approvals required by Section 8.12.
(i) Service Agreement. Samaritan shall deliver to
the Company the Service Agreement.
(j) Allocation of Purchase Price. Samaritan shall
deliver to the Company the Allocation of Purchase Price in the
form of Exhibit D annexed hereto.
(k) Other Actions. Samaritan shall take all such
other steps as may be necessary or appropriate to put the Company
in actual and complete ownership and possession of the Assets.
X.3 The Company's Performance. At the Closing,
concurrently with the performance by Samaritan of its obligations
to be performed at the Closing:
(a) Purchase Price. The Company shall deliver to
Samaritan the Cash Consideration and a certificate representing
1,000 shares of Preferred Stock.
(b) Assumption Agreement. The Company shall execute
and deliver to Samaritan the Assumption Agreement in
substantially the form attached hereto as Exhibit B.
(c) Certificate. The Company shall execute and
deliver the certificate referred to in Section 9.3.
(d) Certificates of Authorities. The Company shall
deliver to Samaritan the certificates of authorities referred to
in Section 9.4.
(e) Opinion of the Company's Counsel. The Company
shall deliver to Samaritan the opinion of its special counsel,
dated the Closing Date, as specified in Section 9.6.
(f) Option Agreement. The Company shall deliver to
Samaritan the Option Agreement.
(g) Covenants. The Company shall deliver to
Samaritan the consents and approvals required by Section 9.8.
X.4 Other Instruments. In addition to the foregoing, the
Company and Samaritan agree as follows:
(a) Further Action by Samaritan. At any time and
from time to time, at or after the Closing, upon request of the
Company, Samaritan shall do, execute, acknowledge and deliver or
shall cause to be done, executed, acknowledged and delivered all
such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may reasonably be required
in order to evidence, vest in and confirm to the Company full and
complete title to, possession of, and the right to use and enjoy,
the Assets.
(b) Further Action by the Company. At any time and
from time to time, at or after the Closing, upon request of
Samaritan, the Company shall do, execute, acknowledge and deliver
all such further acts and assurances as may reasonably be
required in order to better assure and confirm to Samaritan the
assumption by the Company of the obligations to render
performance that are to be assumed by the Company pursuant to
this Agreement.
ARTICLE XI
INDEMNIFICATION AND POST-CLOSING MATTERS
XI.1 Indemnification by Samaritan. Samaritan agrees to
indemnify and hold harmless the Company, the Company's affiliates
and the shareholders, directors, officers, employees,
representatives, agents and attorneys of the Company and its
affiliates from, against, for and in respect of any and all
damages (including, without limitation, amounts paid in
settlement with Samaritan's consent, which may not be
unreasonably withheld), penalties, fines, interest and monetary
sanctions, losses, obligations, debts, liabilities, claims,
deficiencies, costs and expenses, including, without limitation,
reasonable attorneys' fees and other costs and expenses incident
to any suit, action, investigation, claim or proceeding suffered,
sustained, incurred or required to be paid by any of them
(hereinafter referred to collectively as "Company Losses") by
reason of (i) any representation or warranty made by Samaritan in
or pursuant to this Agreement (as amended or supplemented
pursuant to Section 6.3) being untrue or incorrect in any
respect; (ii) any liability arising from or with respect to the
Assets or the employees of Samaritan employed in connection with
the Business as of or prior to the Closing Date; (iii) any
failure by Samaritan to observe or perform its covenants and
agreements set forth in this Agreement; (iv) any failure by
Samaritan to satisfy and discharge the Excluded Liabilities; or
(v) the items described in Schedule 4.10.
XI.2 Indemnification by the Company. The Company agrees to
indemnify and hold harmless Samaritan, its directors, officers,
employees, representatives, agents and attorneys from, against,
for and in respect of any and all damages (including, without
limitation, amounts paid in settlement with the Company's
consent, which may not be unreasonably withheld), penalties,
fines, interest and monetary sanctions, losses, obligations,
debts, liabilities, claims, deficiencies, costs and expenses,
including, without limitation, reasonable attorneys' fees and
other costs and expenses incident to any suit, action,
investigation, claim or proceeding (hereinafter referred to
collectively as "Samaritan's Losses") suffered, sustained,
incurred or required to be paid by Samaritan by reason of (i) any
representation or warranty made by the Company in or pursuant to
this Agreement (as amended or supplemented pursuant to Section
6.1) being untrue or incorrect in any respect, (ii) any liability
arising from or with respect to the Assets after the Closing Date
or (iii) any failure by the Company to satisfy and discharge any
liability or obligation expressly assumed by the Company pursuant
to this Agreement.
XI.3 Notice of Loss. Except to the extent set forth in the
next sentence, a party to this Agreement shall not have any
liability under the indemnity provisions of this Agreement with
respect to a particular matter unless a notice setting forth in
reasonable detail the breach which is asserted has been given to
the Indemnifying Party (as hereafter defined) and, in addition,
if such matter arises out of a suit, action, investigation or
proceeding, such notice is given promptly, but in any event
within thirty (30) days after the Indemnified Party (as hereafter
defined) is given notice of the commencement of the suit, action,
investigation or proceeding. Notwithstanding the preceding
sentence, failure of the Indemnified Party to give notice
hereunder shall not release the Indemnifying Party from its
obligations under this Article XI, except to the extent the
Indemnifying Party is actually prejudiced by such failure to give
notice. For purposes of this Agreement, the party required to
indemnify another party pursuant to this Article XI is referred
to herein as the "Indemnifying Party", and the party entitled to
indemnification pursuant to this Article XI is referred to herein
as the "Indemnified Party."
XI.4 Payment. Claims for indemnification involving the
payment of money by an Indemnifying Party to an Indemnified Party
shall be paid by the Indemnifying Party within 10 days of
notification thereof; claims for indemnification involving
amounts due to third parties shall be promptly paid by the
Indemnifying Party, subject to the Indemnifying Party's right to
defend such third party claim as provided in Section 11.5 below.
XI.5 Right to Defend. Upon receipt of notice of any suit,
action, investigation, claim or proceeding for which
indemnification might be claimed by an Indemnified Party, the
Indemnifying Party shall be entitled to defend, contest or
otherwise protect against such suit, action, investigation, claim
or proceeding at its own cost and expense, and the Indemnified
Party must cooperate in any such defense or other action. The
Indemnified Party shall have the right, but not the obligation,
to participate at its own expense in a defense thereof by counsel
of its own choosing, but the Indemnifying Party shall be entitled
to control the defense unless the Indemnified Party has relieved
the Indemnifying Party from liability with respect to the
particular matter or the Indemnifying Party fails to assume
defense of the matter or the Indemnifying Party has undertaken
such defense but thereafter fails to continue to do so diligently
and in good faith. In the event the Indemnifying Party shall
fail to defend, contest or otherwise protect in a timely manner
against any such suit, action, investigation, claim or proceeding
or the Indemnifying Party has undertaken such defense but
thereafter fails to continue to do so diligently and in good
faith, the Indemnified Party shall have the right, but not the
obligation, to defend, contest or otherwise protect against the
same and make any compromise or settlement thereof and recover
the entire cost thereof from the Indemnifying Party including
reasonable attorneys' fees, disbursements and all amounts paid as
a result of such suit, action, investigation, claim or proceeding
or the compromise or settlement thereof; provided, however, that
the Indemnified Party must send a written notice to the
Indemnifying Party of any such proposed settlement or compromise,
which settlement or compromise the Indemnifying Party may reject,
in its reasonable judgment, within thirty (30) days of receipt of
such notice. Failure to reject such notice within such thirty
(30) day period shall be deemed an acceptance of such settlement
or compromise. The Indemnified Party shall have the right to
effect a settlement or compromise over the objection of the
Indemnifying Party; provided, that if (i) the Indemnifying Party
is contesting such claim in good faith or (ii) the Indemnifying
Party has assumed the defense from the Indemnified Party, the
Indemnified Party waives any right to indemnity therefor. If the
Indemnifying Party undertakes the defense of such matters, the
Indemnified Party shall not, so long as the Indemnifying Party
does not abandon the defense thereof, be entitled to recover from
the Indemnifying Party any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense
thereof other than the reasonable costs of investigation
undertaken by the Indemnified Party with the prior written
consent of the Indemnifying Party.
XI.6 Cooperation. Each of the parties to this Agreement
and each of their affiliates, successors and assigns shall
cooperate with each other in the defense of any suit, action,
investigation, proceeding or claim by a third party and, during
normal business hours, shall afford each other access to their
books and records and employees relating to such suit, action,
investigation, proceeding or claim and shall furnish each other
all such further information that they have the right and power
to furnish as may reasonably be necessary to defend such suit,
action, investigation, proceeding or claim.
XI.7 Limitation on Indemnification. Subject to the last
sentence of this Section 11.7, the liability of Samaritan under
this Agreement shall be limited such that Samaritan shall have no
liability or obligation to the Company under Section 11.1 unless
and until the amount of the Company's Losses incurred by the
Company in the aggregate exceed the sum of $50,000 and then
Samaritan shall be responsible for the entirety of the Company's
Losses (and not merely the portion of the Company's Losses
exceeding $50,000). The liability of the Company under this
Agreement shall be limited such that the Company shall have no
liability or obligation to Samaritan under Section 11.2 unless
and until the amount of Samaritan's Losses incurred by Samaritan
in the aggregate exceed the sum of $50,000 and then the Company
shall be responsible for the entirety of Samaritan's Losses (and
not merely the portion of Samaritan's Losses exceeding $50,000).
The limitation on the indemnification obligations set forth in
this Section 11.7 shall not apply to any inaccuracy in or breach
of the Specified Representations or any covenant or obligation to
be performed after the Closing.
XI.8 Survival of Representations and Covenants. The
representations, warranties, covenants and obligations of each
party shall survive the Closing to the extent provided in this
Section 11.8. The Specified Representations (as defined below)
and any covenants or obligations to be performed after the
Closing shall survive and continue indefinitely. All other
representations and warranties (as well as covenants and
obligations to be performed prior to the Closing Date) of the
parties shall terminate on the later to occur of (i) the fourth
anniversary of the date of the Closing or (ii) the expiration of
the applicable statute of limitation period or periods applicable
to the warranties, representations, covenants or agreements. For
purposes of this Agreement, "Specified Representations" shall
mean the representations and warranties set forth in Sections
3.2, 4.2, 4.7, 4.10 and 4.18.
XI.9 Non-exclusivity of Indemnification Remedies. The
indemnification remedies and other remedies provided in this
Article XI shall not be deemed to be exclusive. Accordingly, the
exercise by any person or entity of any of its rights under this
Article XI shall not be deemed to be an election of remedies and
shall not be deemed to prejudice, or to constitute or operate as
a waiver of, any other right or remedy that such person or entity
may be entitled to exercise (whether under this Agreement, under
any other agreement, under any statute, rule or other legal
requirement, at common law, in equity or otherwise).
XI.10 Interest. Any party that is required to indemnify any
other party pursuant to this Article XI with respect to any
matter set forth in Article XI shall also be required to pay such
other person or entity interest on the amount of the indemnity
award at a floating rate equal to the rate of interest publicly
announced by Hibernia National Bank, New Orleans, Louisiana, from
time-to-time as its prime base or reference rate plus 3%, except
to the extent interest may have been included in the amount of
the indemnity awarded.
XI.11 Right to Require Cure of Breach. Without limiting the
generality of anything contained in Section 11.1, if there is any
inaccuracy in, breach of or failure to comply with any
representation, warranty, covenant or agreement made by
Samaritan, then Samaritan shall be obligated, in addition to its
other obligations under this Article XI, to take such other
actions as the Company in good faith may request for purposes of
causing such inaccuracy, breach or failure to be corrected, cured
and eliminated.
ARTICLE XII
TERMINATION
XII.1 Termination. This Agreement may be terminated and
abandoned at any time on or prior to the Closing Date:
(a) By the consent in writing of the Company and
Samaritan;
(b) By the Company, if any of the material conditions
to the obligations of the Company contained herein shall not have
been satisfied or, if unsatisfied, waived by the Company as of
the Closing Date;
(c) By Samaritan, if any of the material conditions
to the obligations of Samaritan contained herein shall not have
been satisfied or, if unsatisfied, waived by Samaritan as of the
Closing Date;
(d) By the Company or Samaritan, if the Closing shall
not have occurred by January 31, 1998;
(e) By a party hereto, in the event of a breach by
the other party (a) of any covenant or agreement contained herein
if such breach results in a material increase in the cost of the
non-breaching party's performance of this Agreement or (b) of any
representation or warranty herein if the facts constituting such
breach reflect a material and adverse change in the financial
condition, results of operations, business, or prospects taken as
a whole, of the breaching party, which in either case cannot be
or is not cured within sixty (60) days after written notice of
such breach is given to the party committing such breach;
(f) By the Company, upon the occurrence of any
Material Adverse Effect;
(g) By the Company, within thirty (30) days after the
date hereof, if its due diligence review of the Business or
Assets results and/or discloses material liabilities, obstacles
to the Company's continuation of the Business or other
circumstances that are disclosed in this Agreement or the
Schedules hereto and that, in the good faith judgment of the
Company, materially alter the economic basis for, or feasibility
of, the transactions contemplated by this Agreement.
XII.2 No Further Force or Effect. In the event of
termination and abandonment of this Agreement pursuant to the
provisions of Section 12.1, this Agreement shall be of no further
force or effect, except for Sections 6.3, 7.1 and 13.1, which
shall not be affected by termination of this Agreement.
ARTICLE XIII
MISCELLANEOUS
XIII.1 Expenses. Each party hereto shall bear all
expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, including the fees,
disbursements and expenses of its legal counsel and auditors.
XIII.2 Entire Agreement. This Agreement (including the
exhibits and schedules hereto) constitutes the entire agreement
and supersedes all prior agreements and understandings, both
written and oral, between the parties hereto with respect to the
subject matter hereof, and no party shall be liable or bound to
the other in any manner by any representations or warranties not
set forth herein.
XIII.3 Publicity. No party hereto shall issue any
press release or make any public statement, in either case
relating to or in connection with or arising out of this
Agreement or the matters contained herein, without obtaining the
prior written approval of the other parties hereto to the content
and manner of presentation and publication thereof, which consent
shall not be unreasonably withheld or delayed; provided, however,
that the parties shall be entitled, following reasonable prior
written notice to the other party, to issue such press releases
and make such public statements as are, in the opinion of its
legal counsel, required by applicable law.
XIII.4 Successors and Assigns. This Agreement and the
rights of the parties hereunder may not be assigned by either
party hereto without the prior written consent of the other party
hereto, which shall be given or withheld in such party's sole
discretion, and the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any
party, other than the parties and their respective affiliates and
the successors and assigns of the parties and their respective
affiliates, any rights, remedies, obligations or liabilities
under or by reason of such agreements.
XIII.5 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be
deemed to be an original and all of which shall constitute the
same instrument.
XIII.6 Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience of
reference only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
XIII.7 Use of Certain Terms. As used in this Agreement,
the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular paragraph, subparagraph or other subdivision.
XIII.8 Modification and Waiver. Any of the terms or
conditions of this Agreement may be waived in writing at any time
by the party which is entitled to the benefits thereof, and this
Agreement may be modified or amended by a written instrument
executed by the parties hereto. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by all of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
XIII.9 Notices. All notices of communication required
or permitted hereunder shall be in writing and may be given by
(a) depositing the same in United States mail, addressed to the
party to be notified, postage prepaid and registered or certified
with return receipt requested, (b) delivering the same in person
to an officer or agent of such party, or (c) telecopying the same
with electronic confirmation of receipt.
(i) If to Samaritan: George A. Zara
Senior Vice President, System Services
Samaritan Health Systems
1441 North 12th Street
Third Floor
Phoenix, Arizona 85006
Telecopy No.: (602) 495-4559
with copies to: Lyle O. Reinsch, Esq.
Samaritan Health System
1441 North 12th Street
Third Floor
Phoenix, Arizona 85006
Telecopy No.:(602) 495-4571
(ii) If to the Company: Air Evac Services, Inc.
Suite 400
2121 Airline Highway
Metairie, Louisiana 70004-0578
Attention: Carroll W. Suggs
Telecopy No.: (504) 828-8333
with copies to: John H. Untereker
Petroleum Helicopters, Inc.
113 Borman Drive
Lafayette, Louisiana 70509
Telecopy No.: (318) 235-1357
with copies to: Anthony J. Correro, III, Esq.
Correro, Fishman, Haygood, Phelps,
Weiss, Walmsley & Casteix, L.P.
47th Floor
201 St. Charles Avenue
New Orleans, Louisiana 70170
Telecopy No.: (504) 586-5250
or at such other address or counsel as any party hereto shall
specify pursuant to this Section 12.9 from time to time.
XIII.10 Governing Law. This agreement shall be construed
in accordance with the laws of the State of Louisiana (without
giving effect to its choice of laws provisions).
XIII.11 Reformation and Severability. In case any
provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in
such manner as to be valid, legal and enforceable but so as to
most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed
from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement
shall not in any way be affected or impaired thereby.
XIII.12 Remedies Cumulative. No right, remedy or
election given by any term of this Agreement shall be deemed
exclusive but each shall be cumulative with all other rights,
remedies and elections available at law or in equity.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be signed in counterparts all as of the date
first above written.
SAMARITAN HEALTH SYSTEM
By:
Printed Name:
Title:
AIR EVAC SERVICES, INC.
By:
Carroll W. Suggs
Chairman of the Board and President
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This schedule contains summary financial information from condensed financial
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