SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): SEPTEMBER 26, 1997
PAN AM CORPORATION
(Exact name of Registrant as specified in its charter)
9300 N.W. 36TH STREET, MIAMI, FLORIDA 33178
(address of principal offices)
305-873-3000
(Registrant's telephone number)
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<S> <C> <C>
Incorporation under the laws of the Commission File Number I.R.S. Employer Identification Number
STATE OF FLORIDA 0-23444 65-0450311
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 26, 1997, Pan Am Corporation, a Florida corporation (the
"Registrant"), completed the acquisition of Carnival Air Lines, Inc. pursuant to
an Acquisition Agreement, dated March 20, 1997, as amended (the "Agreement"),
among the Registrant, CAL Acquisition Corporation, a wholly-owned subsidiary of
the Registrant ("Acquisition"), Air Holding Company and Carnival Air Lines, Inc.
("Carnival"). Pursuant to the Agreement, (i) Acquisition was merged (the
"Merger") with and into Carnival, (ii) Carnival became a wholly-owned subsidiary
of the Registrant, (iii) all of the outstanding shares of the Common Stock, par
value $0.0002105 per share, of Carnival were converted into an aggregate of
9,523,810 shares (the "Exchange Shares") of the Common Stock, par value $0.0001
per share, of the Registrant (the "Common Stock"), (iv) Carnival changed its
name to "Pan American Airways Corp." and (v) Mr. Howard Frank, a representative
of Carnival, was appointed to the Board of Directors of the Registrant. The
Merger was accounted for by the Registrant under the "purchase" method of
accounting in accordance with generally accepted accounting principles. The
Registrant's shareholders approved the issuance of the Exchange Shares at the
Registrant's Annual Meeting of Shareholders held on September 26, 1997.
The Exchange Shares constituted approximately 46% of the
then-outstanding shares of Common Stock, without giving effect to the issuance
of (i) 4,748,000 shares of Common Stock issuable upon the exercise of
outstanding warrants and options to purchase Common Stock and (ii) the shares of
Common Stock issuable upon the conversion of the Registrant's Series A
Convertible Preferred Stock, par value $0.0001 per share, and Series B Junior
Convertible Preferred Stock, par value $0.0001 per share. Of the 9,523,810
Exchange Shares, 8,928,571 (or approximately 93.7% of the Exchange Shares) were
issued to The Micky Arison 1995 Air Holding Trust, the principal shareholder of
Carnival (the "Trust"), 357,143 shares were issued to Mr. Reuven Wertheim
("Wertheim") and 238,096 shares were issued to Mr. A. Daniel Ratti ("Ratti"). In
connection with the acquisition, Registrant entered into a Registration Rights
Agreement with the Trust, Wertheim and Ratti (the "Registration Rights
Agreement") and a Standstill Agreement, with Mr. Micky Arison and JMD Delaware,
Inc. ("JMD"), as Trustee for the Trust (the "Standstill Agreement"). Pursuant to
the terms of the Standstill Agreement, Mr Arison and the Trust are, as a group,
generally prohibited from directly or indirectly acquiring voting securities of
the Registrant in excess of 45% of the voting rights of all outstanding voting
securities of the Registrant (on a fully diluted basis) and from directly or
indirectly offering or seeking to control, in any manner, the management, Board
of Directors or policies of the Registrant, other than through the director
position contemplated by the Agreement. Mr. Arison and JMD are also generally
restricted in the amount and manner by which they may transfer any Common Stock
owned by them.
The foregoing description of the Agreement, the Registration Rights
Agreement and the Standstill Agreement is qualified in its entirety by the full
text of the Agreement, the Registration Rights Agreement and the Standstill
Agreement which are included as Exhibits 2.1, 10.1 and 10.2 to this Current
Report on Form 8-K and incorporated herein by reference. Additional information
with respect to the Merger is set forth in the Registrant's Definitive Proxy
Statement, dated September 8, 1997, which has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The Registrant's
Common Stock is traded on the American Stock Exchange under the symbol "PAA."
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
1. Report of Independent Certified Public Accountants
(incorporated by reference to the Registrant's
Definitive Proxy Statement, filed with the Securities
and Exchange Commission on September 8, 1997).
2. Audited Balance Sheet of Carnival Air Lines, Inc. at
June 30, 1997 and 1996 (incorporated by reference to
the Registrant's Definitive Proxy Statement, filed
with the Securities and Exchange Commission on
September 8, 1997).
3. Audited Statement of Operations of Carnival Air
Lines, Inc. for the years ended June 30, 1997, 1996
and 1995 (incorporated by reference to the
Registrant's Definitive Proxy Statement, filed with
the Securities and Exchange Commission on September
8, 1997).
4. Audited Statement of Cash Flows of Carnival Air
Lines, Inc. for the years ended June 30, 1997, 1996
and 1995 (incorporated by reference to the
Registrant's Definitive Proxy Statement, filed with
the Securities and Exchange Commission on September
8, 1997).
5. Notes to Financial Statements (incorporated by
reference to the Registrant's Definitive Proxy
Statement, filed with the Securities and Exchange
Commission on September 8, 1997).
(b) Pro Forma Financial Information
1. Introduction to Unaudited Pro Forma Combined
Condensed Financial Information (incorporated by
reference to the Registrant's Definitive Proxy
Statement, filed with the Securities and Exchange
Commission on September 8, 1997).
2. Unaudited Pro Forma Combined Condensed Balance Sheet
as of June 30, 1997 (incorporated by reference to the
Registrant's Definitive Proxy Statement, filed with
the Securities and Exchange Commission on September
8, 1997).
3. Unaudited Pro Forma Combined Condensed Income
Statement for the year ended December 31, 1996
(incorporated by reference to the Registrant's
Definitive Proxy Statement, filed with the Securities
and Exchange Commission on September 8, 1997).
4. Unaudited Pro Forma Combined Condensed Income
Statement for the six months ended June 30, 1997
(incorporated by reference to the Registrant's
Definitive Proxy Statement, filed with the Securities
and Exchange Commission on September 8, 1997).
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5. Notes to Unaudited Pro Forma Combined Condensed
Financial Information (incorporated by reference to
the Registrant's Definitive Proxy Statement, filed
with the Securities and Exchange Commission on
September 8, 1997).
(c) Exhibits
2.1 Acquisition Agreement, dated as of March 20, 1997,
among Pan Am Corporation, CAL Acquisition
Corporation, Air Holding Company and Carnival Air
Lines, Inc., as amended on July 8, 1997, July 9, 1997
and August 26, 1997 (incorporated by reference to the
Registrant's Definitive Proxy Statement, filed with
the Securities and Exchange Commission on September
8, 1997).
10.1 Registration Rights Agreement, dated as of March 20,
1997, among Pan Am Corporation, The Micky Arison 1995
Air Holding Trust, Reuven Wertheim and A. Daniel
Ratti.
10.2 Standstill Agreement, dated as of March 20, 1997,
among Pan Am Corporation, Micky Arison and The
Micky Arison 1995 Air Holding Trust.
10.3 Credit Agreement, dated August 1, 1997, among Pan
Am Corporation, Carnival Air Lines, Inc. and
NationsBank National Association.
20 Definitive Proxy Statement of Pan Am Corporation,
dated September 5, 1997 (incorporated by reference
to the Registrant's Definitive Proxy Statement filed
with the Securities and Exchange Commission on
September 8, 1997).
23.1 Consent of Price Waterhouse LLP.
99.1 Press Release of Pan Am Corporation relating to the
Acquisition of Carnival Air Lines, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PAN AM CORPORATION
By: /s/ John J. Ogilby, Jr.
-----------------------
John J. Ogilby, Jr.
Chief Financial Officer and
General Counsel
Dated: October 6, 1997
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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10.1 Registration Rights Agreement, dated as of March 20, 1997, among the
Registrant, the Trust, Wertheim and Ratti.
10.2 Standstill Agreement, dated as of March 20, 1997, among the Registrant,
Micky Arison and the Trust.
10.3 Credit Agreement, dated August 1, 1997, among the Registrant, Carnival
Air Lines, Inc. and NationsBank National Association.
23.1 Consent of Price Waterhouse LLP.
99.1 Press Release of Pan Am Corporation relating to the Acquisition of
Carnival Air Lines, Inc.
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered
into as of the 20th day of March, 1997, by and among Pan Am Corporation, a
Florida corporation (the "Company"), and JMD Delaware, Inc., as trustee for the
Micky Arison 1995 Air Holding Trust (the "Trust"), Micky Arison ("Arison"),
Reuven Wertheim and A. Daniel Ratti (each a "Holder" and collectively, the
"Holders").
RECITALS
A. The Company and the Holders are contemporaneously entering into that
certain Acquisition Agreement, dated as of March 20, 1997 (the "Acquisition
Agreement"), among the Company, CAL Acquisition Corporation, a Florida
corporation, Carnival Air Lines, Inc., a Florida corporation, Air Holding
Company, a Florida corporation, and the Holders pursuant to which the Company
will issue and deliver to the Holders an aggregate of 9,523,810 shares (the
"Shares") of the Company's Common Stock, par value $.0001 per share (the "Common
Stock").
B. As contemplated by the Acquisition Agreement, the Company has agreed
herein to provide to the Holders certain registration rights with respect to the
Shares.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good, valuable and
sufficient consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
AGREEMENT
1. SHELF REGISTRATION.
(a) Subject to the limitations set forth in this Agreement and
Section 5.10 of the Acquisition Agreement, the Company will promptly file a
registration statement (the "Initial Shelf Registration Statement") registering
each Holder's resale of up to 2,380,953 Shares owned by such Holder and shall
thereafter use its best efforts to cause the Shelf Registration Statement to be
declared effective on or as soon as legally possible after the "Closing Date"
under the Acquisition Agreement and maintain such effectiveness until the
effectiveness of the "Second Shelf Registration Statement" (as hereinafter
defined); in addition, not later than 10 months after the Closing Date, the
Company will file an additional registration statement (the "Second Shelf
Registration Statement" and, together with the Initial Shelf Registration
Statement, the "Shelf Registration Statements") registering each Holder's resale
of up to 4,761,906 Shares owned by such Holder (which amount shall be reduced by
the number of Shares sold by the Holder prior to the effectiveness of the Second
Shelf Registration Statement) and shall thereafter use its best efforts to cause
such Second Shelf Registration Statement to be declared effective by the first
anniversary of the Closing Date and to maintain such effectiveness until the
third anniversary of the Closing Date, PROVIDED, HOWEVER, that the Company shall
have the right to prohibit the sale of Common Stock pursuant to each Shelf
Registration Statement, upon notice to the Holders (A) if the Company reasonably
believes that such sale might reasonably be expected to have an adverse effect
on any significant proposal or plan of the Company to engage in an acquisition
of assets or any merger, consolidation, tender offer, financing, corporate
reorganization or similar transaction; (B) during the period specified in
Section 7(a) hereof; or (C) upon the happening of any event, as a result of
which the prospectus under the Shelf Registration Statement (the "Prospectus")
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing (in the opinion of
counsel for the Company), it being agreed that in the case of the resale
prohibitions contemplated by clauses (A) and (C), the Company shall use its best
efforts to minimize the period of time in which it shall so prohibit the sale of
any shares of Common Stock and in no event shall any period of time during which
sales are prohibited exceed 20 consecutive days or an aggregate of 45 days in
any six-month period. Each Shelf Registration Statement will provide that the
Holders may sell their Shares in one or more transactions (which may include
"block" transactions) on any securities exchange on which the Common Stock is
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traded, in the over-the-counter market, in negotiated transactions or in a
combination of such methods, at fixed prices which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to maintain the effectiveness of a
Shelf Registration Statement pursuant to this Section 1(a) or to deliver any
prospectus under a Shelf Registration Statement after the Holders have sold at
least 75% of the Shares of Common Stock issued pursuant to the Acquisition
Agreement.
2. UNDERWRITTEN OFFERING.
(a) The Company will use its best efforts, prior to the first
anniversary of the Closing Date, to consummate an underwritten offering relating
to 25% of the Shares (which amount shall be reduced by the number of shares
theretofore sold pursuant to the Initial Shelf Registration Statement), pursuant
to which the Company shall file a registration statement with the Securities and
Exchange Commission ("Commission") and shall use its best efforts to cause such
registration statement promptly become effective under the Securities Act.
(b) The Company shall be entitled to include in the registration
contemplated by this Section 2 shares of Common Stock to be sold by the Company
for its own account and for the account of other significant shareholders of the
Company. In the event that the underwriters advise the Company that in their
opinion the number of securities to be included in such registration exceeds the
number of securities which can be sold in the offering without adversely
affecting the offering price or the marketing of the Company's securities, the
Holders and the other shareholders of the Company entitled to participate in the
offering shall accept a pro rata reduction in the number of securities to be
included in such registration (such that their participation is in proportion to
their relative holdings of Common Stock); provided however that each of the
Holders shall have the absolute priority to participate (and thereby reduce or
eliminate any pro rata participation of other shareholders) to the extent
necessary so that each such Holder shall in all events be entitled to include an
aggregate of 2,000,000 Shares (which amount shall be reduced by the number of
Shares theretofore sold pursuant to the Shelf Registration Statement) in such
underwritten offering.
(c) The Company shall select a nationally recognized underwriter
or underwriters to manage and administer such offering, such underwriter or
underwriters, as the case may be, to be subject to the approval of Micky Arison,
which approval shall not be unreasonably withheld.
(d) The Company will use its best efforts to complete the
underwritten offering of the Shares in accordance with customary practice.
Without limiting the generality of the foregoing, the Company will cause its
principal officers to actively prepare for and participate in good faith in any
road shows reasonably requested by the underwriters to market the Shares.
3. PIGGYBACK RIGHTS. If the Company shall at any time during the
three-year period (five years in the case of underwritten public offerings of
common equity) commencing on the Closing Date propose to file a registration
statement under the Securities Act for any sales of shares of any of the
Company's equity securities (or any warrants, units, convertibles, rights or
other securities related or linked to any shares of the Company's equity
securities), whether for a secondary offering or for a primary offering of
securities by the Company, the Company shall give written notice of such
registration to each of the Holders no later than thirty (30) days before its
filing with the Commission; provided, that registrations in connection with
acquisitions, conversions of any of the Company's securities or any employee
stock option or employee stock purchase or savings plan shall not be deemed to
be a sale for purposes of this Section 3. If any Holder or Holders so request
within thirty (30) days, the Company shall include in any registration the
Shares held by such Holder or Holders and requested to be included in such
registration, but the Company shall not be obligated to so include such Shares
to the extent the underwriter or underwriters, if any, of such securities being
otherwise registered by the Company shall determine in good faith that the
inclusion of such Shares would jeopardize the successful sale at the desired
price of such other securities proposed to be sold by such underwriter or
underwriters, in which case the Holder or Holders requesting to participate in
such registration shall be entitled to participate in any such reduced number of
Shares (if any) which may be included in such registration along with the
Company and any other Holders exercising piggyback rights with respect to such
registration hereunder on a pro rata basis in proportion to their relative
holdings of shares of Common Stock, in the aggregate,
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to the complete exclusion, if necessary, of any other holders of Common
securities having similar registration rights and proposing to include their
shares in such registration. The obligations and rights of the Company and each
of the Holders under this Section 3 shall not affect in any way the obligations
and rights of the Company and the Holders under Section 1 or 2.
4. EXPENSES. Subject to the limitations contained in this Section 4
and except as otherwise specifically provided in this Agreement, the entire
costs and expenses of the registrations and qualifications pursuant to Sections
1, 2 and 3 as hereof shall be borne by the Company. Such costs and expenses
shall include, without limitation, the fees and expenses of counsel for the
Company and of its accountants, all other costs, fees and expenses of the
Company incident to the preparation, printing and filing under the Securities
Act of each registration statement and all amendments and supplements thereto,
the reasonable fees and expenses of a special counsel to the Holders relating to
such registration and qualification (provided that the aggregate fees for all
such registrations, together with the aggregate fees of Holders' counsel in
connection with the Acquisition Agreement, shall in no event exceed $150,000),
the cost of furnishing copies of each preliminary prospectus, each final
prospectus and each amendment or supplement thereto to underwriters, dealers and
other purchasers of the Shares and the costs and expenses (including fees and
disbursements of counsel) incurred in connection with the qualification of the
Shares under the blue sky laws of various jurisdictions. The Company shall not,
however, pay underwriting discounts or commissions to the extent related to the
sale of Shares sold in any registration and qualification.
5. PROCEDURES.
(a) In the case of each registration or qualification pursuant
to Sections 1, 2 or 3, the Company will use its best efforts to register or
qualify the offering under the blue sky laws of such states as may be reasonably
requested by Holders from time to time (provided, however, the Company shall not
be obligated to qualify as a foreign corporation to do business under the laws
of any jurisdiction in which it is not then qualified or to file any general
consent to service of process). The Company will also keep each Holder advised
in writing as to the initiation of proceedings for such state and Federal
registration and qualification and as to the completion thereof, and will advise
any such Holder, upon request, of the progress of such proceedings.
(b) Except as otherwise specifically provided in Section 1 of
this Agreement, at the Company's expense, the Company will keep each
registration and qualification under this Agreement effective (and in compliance
with the Securities Act) by such action as may be necessary or appropriate for a
period of 120 days after the effective date of such registration statement,
including, without limitation, the filing of post-effective amendments and
supplements to any registration statement or prospectus necessary to keep the
registration statement current and the further qualification under any
applicable blue sky or other state securities laws to permit such sale or
distribution, all as requested by the Holder or Holders whose Shares are so
registered, and shall perform such other reasonable acts and things as may be
required of it to enable such Holder to consummate the disposition in the
jurisdiction of the securities covered by such registration statement. The
Company will immediately notify each Holder on whose behalf Shares have been
registered pursuant to this Agreement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing (in which case, the Company shall promptly provide such Holder with
revised or supplemental prospectuses and, if so requested by the Company in
writing, such Holder shall promptly take action to cease making any offers of
the Common Stock until receipt and distribution of such revised or supplemental
prospectuses, subject in all respects to the 20 and 45 day time limits
contemplated by Section 1 hereof with respect to prohibitions on sale pursuant
to clauses (A) and (B) thereof).
(c) The Company will use its best efforts to furnish to each
Holder on whose behalf Shares have been registered pursuant to this Agreement a
signed counterpart, addressed to the such Holder, of (i) an opinion of counsel
for the Company, dated the effective date of such registration statement, and
(ii) a so-called "cold comfort" letter signed by the independent public
accountants who have certified the Company's financial statements included in
such registration statement, and such opinion of counsel and accountants' letter
shall cover substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter,
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with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in connection with underwritten public
offerings of securities.
(d) Without limiting any other provision hereof, in connection
with any registration of Shares under this Agreement, the Company will use its
best efforts to comply with the Securities Act, the Securities Exchange Act of
1934, as amended (the "Securities Exchange Act"), and all applicable rules and
regulations of the Commission, and will make generally available to its
securities holders, as soon as reasonably practicable, an earnings statement
covering a period of at least twelve months, beginning with the first month of
the first fiscal quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act.
(e) In connection with any registration of Shares under this
Agreement, the Company will provide, if appropriate, a transfer agent and
registrar for the Shares not later than the effective date of such registration
statement.
(f) No Holder may participate in any underwritten registration
hereunder unless such Holder (i) agrees to sell his or its Shares on the basis
provided in any reasonable underwriting arrangements required in connection
therewith, and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, and other documents reasonably
required under the terms of such underwriting arrangements. The Company also
agrees to enter into such underwriting agreement with the underwriters for such
offering, such agreement to contain such representations and warranties by the
Company and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, provisions relating to indemnification and contribution. The
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of the underwriters shall also be made to and for
the benefit of the Holders.
(g) In connection with the preparation and filing of each
registration statement registering Shares under this Agreement, the Company will
give each Holder or Holders on whose behalf Shares are to be so registered and
their counsel and accountants (as well as all underwriters, if any) the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers, its counsel and the independent public accountants
who have certified its financial statements, as shall be necessary, in the
opinion of such Holders or such underwriters or their respective counsel, in
order to conduct a reasonable and diligent investigation within the meaning of
the Securities Act. Without limiting the foregoing, each registration statement,
prospectus, amendment, supplement or any other document filed with respect to a
registration under this Agreement shall be subject to review and reasonable
approval by the Holder or Holders registering Shares in such registration and by
their counsel.
(h) The Company will use reasonable efforts to list, on or prior
to the effective date of each registration statement registering Shares under
this Agreement, all shares covered by such registration statement on any
securities exchange on which any of the Common Stock is then listed, if any.
(i) The Company will cooperate with the Holder or Holders and
each underwriter or agent participating in the disposition of securities subject
to any registration hereunder and their respective counsel in connection with
any filings required to be made with the National Association of Securities
Dealers.
(j) The Company will use reasonable efforts to prevent the
issuance by the SEC or any other governmental agency or court of a stop order,
injunction or other order suspending the effectiveness of each registration
statement registering Shares under this Agreement and, if such an order is
issued, use reasonable efforts to cause such order to be listed as promptly as
practicable.
(k) The Company and the Holders will enter into other customary
agreements, if any, and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Shares as contemplated
hereby.
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(l) The Company will, at the expense of the Company, furnish to
each Holder on whose behalf the registration of Shares has been effected such
number of registration statements, prospectuses, offering circulars and other
documents incident to any registration or qualification referred to in Sections
1, 2 or 3 as such Holder from time to time may reasonably request.
6. INDEMNIFICATION. The Company will indemnify and hold harmless
each Holder and any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls the Holder or underwriter within
the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, and expenses (including reasonable attorneys'
fees and expenses and reasonable costs of investigation) to which the Holder or
underwriter or such controlling person may be subject, under the Securities Act
or otherwise, insofar as any thereof arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in (A)
any registration statement under which such Holder's Shares were registered
under the Securities Act pursuant to Sections 1, 2 or 3 hereof, any prospectus
or preliminary prospectus contained therein, or any amendment or supplement
thereto or (B) any other document incident to the registration of the Shares
under the Securities Act or the qualification of the Shares under any state
securities laws applicable to the Company, (ii) the omission or alleged omission
to state in any item referred to in the preceding clause (i) a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Securities Exchange Act or any other federal or state
securities law, rule or regulation applicable to the Company and relating to
action or inaction by the Company in connection with any such registration or
qualification, except the Company will not indemnify any Holder insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or alleged untrue statement or omission or alleged omission
based upon information furnished to the Company in writing by the Holder or by
any affiliate of a Holder pursuant to the Acquisition Agreement or otherwise
expressly for use therein and provided further that with respect to any untrue
statement or omission or alleged untrue statement made in any prospectus
delivered in connection with non-underwritten offerings pursuant to Section 1 or
3 hereof shall not inure to the benefit of the Holders (or the benefit of any
person controlling the Holders) if the person asserting any such loss, claim,
liability, expense or damage purchased the Shares that is the subject thereof,
and the Holder or any person controlling the Holder (i) failed to comply with
the prospectus delivery requirements of Section 5(b)(2) of the Securities Act in
connection with the sale of the Shares to such person, or (ii) utilized a
prospectus after the Holder was notified, in accordance with the terms hereof,
to cease making any offers or sales of Shares pursuant to the terms thereof.
Each of the Holders severally agrees to identify and hold harmless (in the same
manner and to the same extent set forth in this Section 6 for the
indemnification of such Holder), the Company and each person who controls the
Company within the meaning of the Securities Act with respect to any untrue
statement or alleged untrue statement or omission or alleged omission with
respect to such Holder and/or his or its distribution of Shares made in reliance
upon and conformity with information furnished to the Company by such Holder for
use therein. Any underwriting agreement with the underwriter or underwriters for
any offering registered under the Securities Act pursuant to Section 2 or 3
hereof shall contain customary provisions with respect to indemnification and
contribution which shall, at a minimum, provide the indemnification set forth
above.
7. HOLDBACK.
(a) Except for transfers made in transactions exempt from the
registration requirements under the Securities Act pursuant to Section 4(1)
thereof, the Holders agree not to offer, sell, contract to sell or otherwise
dispose of any of their Shares within the five (5) business day period before or
the ninety (90) day period after the date of any final prospectus relating to
any underwritten public offering of any of the Company's Common Stock, in each
case except pursuant to such prospectus or with the written consent of the
underwriter or underwriters for such offering and provided that the Holders are
entitled to sell not less than an aggregate of 1,000,000 Shares in any such
underwritten offering.
(b) In consideration of the Company's covenants herein and in
the Acquisition Agreement, the Holders have agreed by separate instruments that
they will not sell, transfer or otherwise reduce their interest in any of the
shares of the Company's Common Stock issued pursuant to the Acquisition
Agreement until such time as the Company has published financial results
covering at least thirty (30) days of combined operations of the Company and
Carnival Air Lines, Inc. after the Closing Date. In consideration of such
covenants and the premises and covenants set forth in the
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Acquisition Agreement, the Company hereby agrees to publish such financial
results as soon as practicable and in any event no later than (x) if the Closing
Date is on or before August 31, 1997, October 30, 1997, or (y) if the Closing
Date is subsequent to August 31, 1997, 20 days after the end of the first full
month after the Closing Date.
8. NOTICES. All notices required or permitted to be given pursuant
to this Agreement shall be given in writing, shall be transmitted by personal
delivery, by registered or certified mail, return receipt requested, postage
prepaid, or by telecopier or other electronic means (with a confirming copy by
registered or certified mail, postage prepaid) and shall be addressed as
follows:
When the Holders are the intended recipients:
Micky Arison
3655 N.W. 87th Avenue
Miami, Florida 33178
Telecopy: (305) 471-4758
WITH A COPY TO:
Arnaldo Perez, Esq.
3655 N.W. 87th Avenue
Miami, Florida 33178
Telecopy: (305) 471-4758
Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Bruce E. Macdonough, Esq.
Telecopy: (305) 579-0717
When the Company is the intended recipient:
Pan Am Corporation
9300 N.W. 36th Street
Miami, Florida 33178
Attention: John J. Ogilby, Esq.
Telecopy: (305) 873-2800
WITH A COPY TO:
Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
150 West Flagler Street
Suite 2200
Miami, Florida 33130
Attention: Teddy Klinghoffer, Esq.
Telecopy: (305) 789-3395
Any party to this Agreement (each a "Party") may designate a new address to
which notices required or permitted to be given pursuant to this Agreement shall
thereafter be transmitted by giving written notice to that effect to the other
Parties. Each notice transmitted in the manner described in this Section 9 shall
be deemed to have been given, received and become effective for all purposes at
the time it shall have been (i) delivered to the addressee as indicated by the
return receipt (if transmitted by mail), the affidavit of the messenger (if
transmitted by personal delivery) or the answer back or call back (if
transmitted by telecopier or other electronic means, but only if a confirmation
copy of such telecopied or electronically delivered notice is also delivered by
registered or certified mail, postage prepaid) or (ii) presented for delivery to
the addressee as so indicated during normal business hours, if such delivery
shall have been refused for any reason.
6
<PAGE>
9. GOVERNING LAW; FORUM.
(a) The validity, interpretation, performance and enforcement of
this Agreement shall be governed by the laws the State of Florida (without
giving effect to the laws, rules or principles of the State of Florida regarding
conflicts of laws).
(b) Each Party agrees that any proceeding arising out of or
relating to this Agreement or the breach or threatened breach of this Agreement
shall be commenced and prosecuted in a court in Miami, Florida. Each party
consents and submits to the non-exclusive personal jurisdiction of any court in
Miami, Florida in respect of any such proceeding. Each Party consents to service
of process upon it with respect to any such proceeding by registered mail,
return receipt requested, and by any other means permitted by applicable laws
and rules. Each Party waives any objection that it may now or hereafter have to
the laying of venue of any such proceeding in any court in Miami, Florida and
any claim that it may now or hereafter have that any such proceeding in any
court in Miami, Florida has been brought in an inconvenient forum.
(c) Final judgment against any Party hereto in any suit or
proceeding shall be conclusive, and may be enforced in any other jurisdiction
(i) by suit, action or proceeding on the judgment, a certified or true copy of
which shall be conclusive evidence of the fact and the amount of indebtedness or
liability of the Party hereto, or (ii) in any other manner provided by or
pursuant to the laws of such other jurisdiction.
(d) Nothing herein shall in any way be deemed to limit the
ability or right of any Party to serve any legal process, summons, notices or
other documents in any other manner permitted by applicable law, or to obtain
jurisdiction over any other Party, or to bring actions, suits or proceedings
against any other Party in such other jurisdictions, and in such manner, as may
be otherwise permitted by applicable law.
10. BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES. This
Agreement shall be binding upon the Parties and their respective successors and
assigns and shall inure to the benefit of the Parties and their respective
successors and permitted assigns. No Party shall assign any of its rights or
delegate any of its duties under this Agreement (by operation of law or
otherwise) without the prior written consent of the other Parties. Any
assignment of rights or delegation of duties under this Agreement by a Party
without the prior written consent of the other Parties, if such consent is
required hereby, shall be void. No person (including, without limitation, any
employee of a Party) shall be, or be deemed to be, a third party beneficiary of
this Agreement.
11. ENTIRE AGREEMENT; EFFECTIVE DATE OF AGREEMENT. This Agreement
constitutes the entire contract among the Parties with respect to the subject
matter hereof and cancels and supersedes all of the previous contracts,
commitments, representations, warranties and understandings (whether oral or
written) by, between or among the Parties with respect to the subject matter
hereof.
12. AMENDMENTS. No addition to, and no cancellation, renewal,
extension, modification or amendment of, this Agreement shall be binding upon a
Party unless such addition, cancellation, renewal, extension, modification or
amendment is set forth in a written instrument which states that it adds to,
amends, cancels, renews, extends or modifies this Agreement and has been
approved by all of the Parties.
13. WAIVERS. No waiver of any provision of this Agreement shall be
binding upon a Party unless such waiver is expressly set forth in a written
instrument which is executed and delivered by such Party or on behalf of such
Party by an officer of, or attorney-in-fact for, such Party. Such waiver shall
be effective only to the extent specifically set forth in such written
instrument. Neither the exercise (from time to time and at any time) by a Party
of, nor the delay or failure (at any time or for any period of time) to
exercise, any right, power or remedy shall constitute a waiver of the right to
exercise, or impair, limit or restrict the exercise of, such right, power or
remedy or any other right, power or remedy at any time and from time to time
thereafter. No waiver of any right, power or remedy of a Party shall be deemed
to be a waiver of any other right, power or remedy of such Party or shall,
except to the extent so waived, impair, limit or restrict the exercise of such
right, power or remedy.
7
<PAGE>
14. REMEDIES.
(a) The rights, powers and remedies of the Parties set forth
herein for a breach of or default under this Agreement are cumulative and in
addition to, and not in lieu of, any rights or remedies that any Party may
otherwise have under this Agreement, at law or in equity.
(b) The Parties acknowledge that the Shares are unique, and that
any violation of this Agreement cannot be compensated for by damages alone.
Accordingly, in addition to all of the other remedies which may be available
hereunder or under applicable law, any Party shall have the right to any
equitable relief which may be appropriate to remedy a breach or threatened
breach by any other Party hereunder, including, without limitation, the right to
enforce specifically the terms of this Agreement by obtaining injunctive relief
in respect of any violation or non-performance hereof, and any Party shall have
the right to seek recovery of and be awarded attorneys' fees and expenses in any
proceeding with respect to this Agreement as reasonably determined by the court
in which such proceeding is brought.
15. HEADINGS; COUNTERPARTS. The headings set forth in this Agreement
have been inserted for convenience of reference only, shall not be considered a
part of this Agreement and shall not limit, modify or affect in any way the
meaning or interpretation of this Agreement. This Agreement may be signed in any
number of counterparts, each of which (when executed and delivered) shall
constitute an original instrument, but all of which together shall constitute
one and the same instrument. It shall not be necessary when making proof of this
Agreement to account for any counterparts other than a sufficient number of
counterparts which, when taken together, contain signatures of all of the
Parties.
16. SEVERABILITY. If any provision of this Agreement shall hereafter
be held to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason, (i) such provision shall be
reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and legal while preserving the intent of the Parties as expressed
in, and the benefits to the Parties provided by, this Agreement or (ii) if such
provision cannot be so reformed, such provision shall be severed from this
Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision of this Agreement.
8
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Agreement as of the date first above written.
PAN AM CORPORATION
By:__________________________________
John J. Ogilby
JMD DELAWARE, INC., as trustee for the
Micky Arison 1995 Air Holding Trust
By:___________________________________
______________________________________
MICKY ARISON
______________________________________
REUVEN WERTHEIM
______________________________________
A. DANIEL RATTI
9
EXHIBIT 10.2
THIS STANDSTILL AGREEMENT (this "Agreement") is made and
entered into as of March 20, 1997 by and among PAN AM CORPORATION, a Florida
corporation ("Pan Am") MICKY ARISON ("Arison") and JDM DELAWARE, INC., as
trustee for the Micky Arison 1995 Air Holding Trust (the "Trust") (Arison and
the Trust are sometimes referred to herein collectively as the "Shareholders").
Capitalized terms used herein without definition shall have the meanings
ascribed to them in that certain Acquisition Agreement (the "Acquisition
Agreement"), dated as of the date hereof, among Pan Am, CAL Acquisition
Corporation, a Florida corporation ("Acquisition"), Airline Holding Company,
Inc., a Florida corporation ("AHC") and Carnival Air Lines, Inc., a Florida
corporation ("Carnival").
W I T N E S S E T H:
WHEREAS, Pan Am, Acquisition, AHC and Carnival have entered
into the Acquisition Agreement which contemplates the merger of Acquisition with
and into Carnival; and
WHEREAS, the Trust owns all of the issued and outstanding
shares of AHC Common Stock (the "AHC Shares") and, immediately prior to the
Effective Time, will own over 90% of the issued and outstanding shares of the
Carnival Common Stock (the "Carnival Shares" and, together with the AHC Shares,
the "Shares");
WHEREAS, upon the consummation of the transactions
contemplated by the Acquisition Agreement, each of the Carnival Shares will be
converted into approximately 1.8796991 shares of Common Stock (the "Exchange
Shares"); and
WHEREAS, as a condition to the willingness of each of Pan Am
and Acquisition to enter into the Acquisition Agreement, Pan Am and Acquisition
have each requested that the Shareholders agree, and, in order to induce Pan Am
and Acquisition to enter into the Acquisition Agreement, the Shareholders have
agreed to certain limitations on their ownership of the Voting Securities (as
herein defined) of Pan Am and to certain other undertakings;
NOW, THEREFORE, in consideration of the mutual agreements and
covenants set forth herein, Pan Am and the Shareholder, intending to be legally
bound, hereby agree as follows:
1. LIMITATION ON OWNERSHIP OF VOTING SECURITIES; CERTAIN
UNDERTAKINGS. The Shareholders covenant and agree that, from and after the
Effective Date, they will not, and will cause each of their respective
Affiliates not to, singly or as part of a "partnership, limited partnership,
syndicate or other group" (as those terms are used within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, through one or more intermediaries or otherwise:
a. without the consent of the Board of
Directors of Pan Am, voluntarily acquire or offer, seek, propose or agree to
acquire, beneficial ownership (as such term is defined in regulations
promulgated under the Exchange Act) of the Voting Power (as hereinafter defined)
an aggregate of more than 45% of all Outstanding Voting Securities (as
hereinafter defined);
b. (i) solicit proxies within the meaning of
Regulation 14A promulgated under the Exchange Act with respect to the Common
Stock or any other securities of Pan Am,
<PAGE>
(ii) become a participant in a solicitation of proxies with respect to the
Common Stock or other securities of Pan Am, (iii) form, join or in any way
participate in a Group (as such term is used within the meaning of Section
13(d)(3) of the Exchange Act, which meaning shall apply for all purposes of this
Agreement) which is soliciting or intends to solicit proxies with respect to the
Common Stock or other securities of Pan Am, or (iv) seek to advise, encourage or
influence any person or entity with respect to the voting of any Outstanding
Voting Securities;
c. form, join or in any way participate in a
Group which has acquired or plans to acquire shares of Common Stock or other
securities of Pan Am, other than as a Group composed of the Shareholders and
their respective Affiliates;
d. deposit any Common Stock or other
Outstanding Voting Securities in any voting trust or subject any Common Stock or
other Outstanding Voting Securities to a voting agreement or other arrangement
with similar effect that could reasonably be expected to result in any of the
foregoing;
e. otherwise act, alone or in concert with
others (including by providing financing for another party), to seek or offer to
control, in any manner, the management, Board of Directors or policies of Pan Am
other than through the director positions contemplated by the Acquisition
Agreement;
f. unless and until the Shareholders have
received the prior written invitation or approval of a majority of the
disinterested Board of Directors of Pan Am, the Shareholders will not, and will
cause each of their respective Affiliates not to, directly or indirectly,
solicit, seek or offer to effect, negotiate with or provide any information to
any party, or make any statement or proposal to any person with a view to
forming a Group or make any public announcement or proposal or offer whatsoever,
with respect to (i) any form of business combination or similar transaction
involving Pan Am or any Subsidiary thereof, including, without limitation, a
merger, tender or exchange offer or liquidation of assets or (ii) any form of
restructuring, recapitalization or similar transaction with respect to Pan Am or
any Subsidiary thereof; or
g. instigate, encourage or assist any third
party to do any of the foregoing, provided, however that, subject to the
restrictions contained in Section 4 hereof, nothing in this Agreement shall
prohibit the Shareholders from selling or otherwise disposing of all or a
portion of the Exchange Shares to unaffiliated person(s) or entity(ies) on the
market or in negotiated transactions.
As used in this Agreement, (i) the term "Voting
Securities" shall mean the Common Stock and all other securities of Pan Am of
any kind or class having power to vote for the election of directors, (ii) the
term "Outstanding Voting Securities" shall at any time mean the then issued and
outstanding Voting Securities, other securities of Pan Am convertible or
exchangeable into Voting Securities (which shall be counted at the highest
conversion or exchange rate at which they can be converted or exchanged), and
options or rights (whether or not presently exercisable) to purchase Voting
Securities or securities convertible or exchangeable, and (iii) the term "Voting
Power" shall mean, with respect to Outstanding Voting Securities, the highest
number of votes that the holders of all such Outstanding Voting Securities would
be entitled to cast for the election of directors or on any other matter
assuming, for purposes of this computation, the conversion or exchange into
Voting Securities of securities convertible into or exchangeable
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<PAGE>
therefore, and the exercise of options and rights (whether or not presently
exercisable) to purchase Voting Securities.
2. REPRESENTATIONS AND WARRANTIES OF PAN AM. Pan Am hereby
represents and warrants to the Shareholders as follows:
a. Each of Pan Am and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its state or country of incorporation. Each of Pan Am and its Subsidiaries is
duly qualified to transact business as a foreign corporation in all
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification except where the failure to be so
qualified would not have a material adverse effect on the financial condition,
results of operations, assets, liabilities, prospects or business of Pan Am and
its Subsidiaries on a consolidated basis. Each of Pan Am and its Subsidiaries
has the corporate authority to (i) own or lease and operate its properties and
(ii) conduct its business as presently conducted.
b. Pan Am has the corporate authority to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Pan Am and the consummation by Pan Am of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Pan Am. This Agreement has been duly executed
and delivered by Pan Am and constitutes the legal, valid and binding obligation
of Pan Am, enforceable against it in accordance with its terms, except to the
extent that such enforcement is limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights generally or by general principles of equity.
c. The execution, delivery and performance by
Pan Am of this Agreement and the consummation by Pan Am of the transactions
contemplated hereby; (i) do not and will not violate or conflict with any
provision of law or regulation, or any writ, order, judgment or decree of any
court or governmental or regulatory authority specifically naming Pan Am, or any
provision of Pan Am's Articles of Incorporation or Bylaws; and (ii) do not and
will not, with or without the passage of time or the giving of notice, result in
the breach of, or constitute a default, cause the acceleration of performance,
permit the unilateral modification or termination of, or require any consent
under, or result in the creation of any lien, charge or encumbrance upon any
property or assets of Pan Am pursuant to, any material instrument or agreement
to which Pan Am is a party or by which Pan Am may be bound or affected.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The
Shareholders each hereby represent and warrant to Pan Am as follows:
a. Each Shareholder is authorized to execute
and deliver this Agreement. This Agreement has been duly executed and delivered
by the Shareholders and constitutes the legal, valid and binding obligation of
each Shareholder, enforceable against such Shareholder in accordance with its
terms, except to the extent that such enforcement is limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally or by general principles of equity.
b. The execution, delivery and performance by
the Shareholders, of this Agreement, and the consummation by Shareholders of the
transactions contemplated hereby and thereby: (i) do not and will not violate or
conflict with any provision of law or regulation, or any writ, order, judgment
or decree of any court or governmental or regulatory authority specifically
-3-
<PAGE>
naming any Shareholder; and (ii) do not and will not, with or without the
passage of time or the giving of notice, result in the breach of, or constitute
a default, cause the acceleration of performance, permit the unilateral
modification or termination of, or require any consent under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of any
Shareholder or of AHC or Carnival pursuant to, any material instrument or
agreement to which any Shareholder or AHC or Carnival is a party or by which the
Shareholder or AHC or Carnival or any of their respective properties may be
bound or affected.
c. The Shareholders are acquiring the Exchange
Shares for investment and not with a view to the sale or distribution thereof,
are acquiring the Exchange Shares for their own account and not on behalf of
others and have not granted any other person any right or option or any
participation or beneficial interest in any of the Exchange Shares. Each
Shareholder acknowledges his respective understanding that none of the Exchange
Shares may be sold except (i) pursuant to paragraph (d) of Rule 145 under the
Securities Act, (ii) pursuant to an effective registration statement under the
Securities Act or (iii) in a transaction exempt from registration under the Act,
and acknowledges that he understands the meaning and effect of such
restrictions.
d. The AHC Shares are, and the Carnival Shares
will be, owned by the Shareholders, free and clear of any liens, encumbrances,
security interests, options or claims whatsoever, including, without limitation,
claims or rights under "buy-sell" or other shareholder or voting agreements.
4. TRANSFER OF STOCK. No Shareholder may transfer, assign,
sell or otherwise dispose of (a "Transfer") any Common Stock owned by it to any
Person which is an Affiliate of the Shareholder. If any Shareholder shall
propose to Transfer, in any transaction or series of related transactions (which
shall include a series of transactions to the same Person or its Affiliates),
any Common Stock that represents greater than 15% of the Outstanding Voting
Securities, then the Shareholder shall provide Pan Am with prior written notice
of the proposed transfer (the "Transfer Notice"). The Transfer Notice shall set
forth all of the material terms of the proposed Transfer. Pan Am shall have the
right, exercisable by written notice within 30 days of its receipt of the
Transfer Notice (the "Exercise Notice"), to purchase all of the Common Stock
which is the subject of the proposed Transfer upon the terms set forth in the
Transfer Notice (it being agreed that Pan Am may, at its option, substitute cash
in an amount equal to the fair market value of any non-cash assets reflected in
the Transfer Notice). Upon delivery of the Exercise Notice, Pan Am shall be
obligated to consummate the purchase contemplated thereby, which purchase shall
be consummated not less than 10 business days following the Shareholders receipt
of the Exercise Notice. If Pan Am defaults in its obligation to purchase all of
the Common Stock it is obligated to purchase pursuant to an Exercise Notice,
then this Agreement shall automatically terminate and shall cease to have any
force or effect. If Pan Am shall not timely deliver an Exercise Notice, then the
Shareholder may thereafter Transfer the Common Stock owned by it upon terms no
less favorable than those set forth in the Transfer Notice; PROVIDED, HOWEVER,
that if the Transfer shall not be consummated within 45 business days following
Pan Am's failure timely to deliver the Exercise Notice, then Pan Am shall have
the right of first offer set forth above with respect to any subsequent Transfer
by the Shareholder of any Common Stock that represents greater than 15% of the
Outstanding Voting Securities.
5. TERMINATION. This Agreement shall, unless otherwise agreed
to by the Shareholder and Pan Am, terminate on the earliest of the following
dates or events, whereupon the foregoing provisions of this Agreement shall
cease to have any force or effect:
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<PAGE>
a. June 30, 1997, if the Closing shall not
have occurred by such date, PROVIDED, HOWEVER, that if the basis for any such
termination is the failure of the Merger to be consummated by June 30, 1997 (the
"Termination Date"), and the parties to the Acquisition Agreement agree to
extend the Termination Date to any subsequent date on one or more occasions,
then no party shall be permitted to terminate this Agreement until such
subsequent date;
b. The Closing Date, if the acquisition of
Carnival by Pan Am shall qualify for treatment as a "pooling of interests" for
accounting purposes; or
c. The date which is three years from the
Closing Date.
6. NOTICES. Any notice or other communication under this
Agreement shall be in writing and shall be delivered personally or sent by
registered mail, return receipt requested, postage prepaid, by prepaid overnight
courier or by telecopier, facsimile or other electronic means (with a confirming
copy by registered or certified mail, postage prepaid) to the parties at the
addresses set forth below their names on the signature pages of this Agreement
(or at such other addresses as shall be specified by the parties by like
notice). Such notices, demands, claims and other communications shall be deemed
given when actually received or (i) in the case of delivery by overnight service
with guaranteed next day delivery, the next day or the day designated for
delivery or (ii) in the case of registered U.S. mail, five days after deposit in
the U.S. mail. A copy of any notices delivered to the Shareholder shall also be
sent to Arnaldo Perez, Esq., 3655 N.W. 36th Street, Miami, Florida 33178 and to
Bruce Macdonough, Esq., Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A.,
1221 Brickell Avenue, Suite 2100, Miami, Florida 33131. A copy of any notices
delivered to Pan Am shall also be sent to John J. Ogilby, Jr., Esq., 9300 N.W.
36th Street, Miami, Florida, 33178 and to Teddy D. Klinghoffer, Esq., Stearns
Weaver Miller Weissler Alhadeff & Sitterson, P.A., Suite 2200, 150 West Flagler
Street, Miami, Florida, 33130.
7. MISCELLANEOUS.
a. ENTIRE AGREEMENT. This Agreement contains
every obligation and understanding between the parties relating to the subject
matter hereof and merge all prior discussions, negotiations and agreements, if
any, between them, and none of the parties shall be bound by any
representations, warranties, covenants, or other understandings, other than as
expressly provided or referred to herein.
b. ASSIGNMENT. This Agreement may not be
assigned by any party without the written consent of the other party. Subject to
the preceding sentence, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs, personal
representatives, legal representatives, and permitted assigns.
c. WAIVER AND AMENDMENT. Any representation,
warranty, covenant, term or condition of this Agreement which may legally be
waived, may be waived, or the time of performance thereof extended, at any time
by the party hereto entitled to the benefit thereof, and any term, condition or
covenant hereof may be amended by the parties hereto at any time. Any such
waiver, extension or amendment shall be evidenced by an instrument in writing
executed on behalf of the appropriate party and, in the case of Pan Am, by a
person who has been authorized by Pan Am's Board of Directors to execute
waivers, extensions or amendments on its behalf. No waiver by any party hereto,
whether express or implied, of its rights under any provision of this Agreement
shall constitute a waiver of such party's rights under such provisions at any
other time
-5-
<PAGE>
or a waiver of such party's rights under any other provision of this Agreement.
No failure by any party hereto to take any action against any breach of this
Agreement or default by another party shall constitute a waiver of the former
party's right to enforce any provision of this Agreement or to take action
against such breach or default or any subsequent breach or default by such other
party.
d. NO THIRD PARTY BENEFICIARY. Nothing
expressed or implied in this Agreement is intended, or shall be construed, to
confer upon or give any Person other than the parties hereto and their
respective successors and permitted assigns, any rights or remedies under or by
reason of this Agreement.
e. SEVERABILITY. In the event that any one or
more of the provisions contained in this Agreement shall be declared invalid,
void or unenforceable, the remainder of the provisions of this Agreement shall
remain in full force and effect, and such invalid, void or unenforceable
provision shall be interpreted as closely as possible to the manner in which it
was written.
f. HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of any provisions of this Agreement.
g. COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Any telecopied version of any manually executed signature page shall be deemed a
manually executed original.
h. LITIGATION; PREVAILING PARTY. In the event
of any litigation with regard to this Agreement, the prevailing party shall be
entitled to receive from the non-prevailing party and the non-prevailing party
shall pay upon demand all reasonable fees and expenses of counsel for the
prevailing party.
i. INJUNCTIVE RELIEF. It is possible that
remedies at law may be inadequate and, therefore, the parties hereto shall be
entitled to equitable relief including, without limitation, injunctive relief,
specific performance or other equitable remedies in addition to all other
remedies provided hereunder or available to the parties hereto at law or in
equity.
j. REMEDIES CUMULATIVE. No remedy made
available by any of the provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or hereafter existing
at law or in equity.
k. PARTICIPATION OF PARTIES; CONSTRUCTION.
The parties hereto acknowledge that this Agreement and all matters contemplated
herein, have been negotiated among all parties hereto and their respective legal
counsel and that all such parties have participated in the drafting and
preparation of this Agreement from the commencement of negotiations at all times
through the execution hereof. This Agreement shall be construed and interpreted
without regard to presumption or other rule or interpretation against the party
who may have had primary responsibility for drafting this Agreement.
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<PAGE>
l. GOVERNING LAW. This Agreement has been
entered into and shall be construed and enforced in accordance with the laws of
the State of Florida without reference to the choice of law principles thereof.
m. JURISDICTION AND VENUE. This Agreement
shall be subject to the exclusive jurisdiction of the courts of Dade County,
Florida, which shall be the exclusive jurisdiction and venue for disputes,
actions or lawsuits arising out of or relating to this Agreement or the
transactions contemplated hereby. The parties to this Agreement agree that any
breach of any term or condition of this Agreement shall be deemed to be a breach
occurring in the State of Florida by virtue of a failure to perform an act
required to be performed in the State of Florida and irrevocably and expressly
agree to submit to the jurisdiction of the courts of the State of Florida for
the purpose of resolving any disputes among the parties relating to this
Agreement or the transactions contemplated hereby. The parties irrevocably
waive, to the fullest extent permitted by law, any objection which they may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any
court in respect hereof brought in the State of Florida, and further irrevocably
waive any claim that any suit, action or proceeding brought in the State of
Florida has been brought in an inconvenient forum.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
PAN AM CORPORATION
By:________________________________
SHAREHOLDERS:
___________________________________
MICKY ARISON
THE MICKY ARISON 1995
AIR HOLDING TRUST
By: JMD Delaware, Inc., as trustee
By:________________________________
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EXHIBIT 10.3
===============================================================================
CREDIT AGREEMENT
by and among
CARNIVAL AIR LINES, INC.
as Borrower,
PAN AM CORPORATION
as Guarantor,
and
NATIONSBANK, NATIONAL ASSOCIATION ,
as Lender
August 1, 1997
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TABLE OF CONTENTS
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ARTICLE I
Definitions and Terms
1.1. Definitions..........................................................................................2
1.2. Rules of Interpretation.............................................................................18
ARTICLE II
The Revolving Credit Facilities
2.1. Loans...............................................................................................20
2.2. Payment of Interest.................................................................................20
2.3. Payment of Principal................................................................................21
2.4. Non-Conforming Payments.............................................................................21
2.5. Notes...............................................................................................21
2.6. Reductions..........................................................................................21
2.7. Increase and Decrease in Amounts....................................................................22
2.8. Fees................................................................................................22
2.9. Use of Proceeds.....................................................................................23
ARTICLE III
Letters of Credit
3.1. Letters of Credit...................................................................................24
3.2. Reimbursement.......................................................................................24
3.3. Letter of Credit Facility Fees......................................................................26
3.4. Administrative Fees.................................................................................26
ARTICLE IV
Facility Guaranty
4.1. Facility Guaranty...................................................................................27
4.2. Guaranty Absolute...................................................................................28
4.3. Reinstatement, etc..................................................................................29
4.4. Waiver..............................................................................................29
4.5. Waiver of Subrogation Rights........................................................................29
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ARTICLE V
Security
5.1. Security............................................................................................31
5.2. Stock Pledge........................................................................................31
5.3. Real Property, Mortgage and Lease Assignments.......................................................31
5.4. Airframe Lease Assignments..........................................................................31
5.5. Further Assurances..................................................................................32
5.6. Information Regarding Collateral....................................................................32
ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
6.1. Conditions of Initial Advance.......................................................................33
6.2. Conditions of Loans and Letter of Credit............................................................35
ARTICLE VII
Representations and Warranties
7.1. Organization and Authority..........................................................................37
7.2. Loan Documents......................................................................................37
7.3. Solvency............................................................................................38
7.4. Subsidiaries and Stockholders.......................................................................38
7.5. Ownership Interests.................................................................................38
7.6. Financial Condition.................................................................................38
7.7. Title to Properties.................................................................................39
7.8. Taxes...............................................................................................39
7.9. Other Agreements....................................................................................40
7.10. Litigation..........................................................................................40
7.11. Margin Stock........................................................................................40
7.12. Investment Company..................................................................................40
7.13. Patents, Etc........................................................................................40
7.14. No Untrue Statement.................................................................................41
7.15. No Consents, Etc....................................................................................41
7.16. Employee Benefit Plans..............................................................................41
7.17. No Default..........................................................................................42
7.18. Hazardous Materials.................................................................................42
7.19. Employment Matters..................................................................................42
7.20. RICO................................................................................................43
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ARTICLE VIII
Affirmative Covenants
8.1. Financial Reports, Etc..............................................................................44
8.2. Maintain Properties.................................................................................45
8.3. Existence, Qualification, Etc.......................................................................45
8.4. Regulations and Taxes...............................................................................45
8.5. Insurance...........................................................................................46
8.6. True Books..........................................................................................46
8.7. Right of Inspection.................................................................................46
8.8. Observe all Laws....................................................................................46
8.9. Governmental Licenses...............................................................................46
8.10. Covenants Extending to Other Persons................................................................46
8.11. Authorized Representative's Knowledge of Default....................................................46
8.12. Suits or Other Proceedings..........................................................................47
8.13. Notice of Discharge of Hazardous Material or Environmental Complaint................................47
8.14. Environmental Compliance............................................................................47
8.15. Indemnification.....................................................................................47
8.16. Further Assurances..................................................................................48
8.17. Employee Benefit Plans..............................................................................48
8.18. Continued Operations................................................................................49
8.19. New Subsidiaries....................................................................................49
ARTICLE IX
Negative Covenants
9.1. Financial Covenants.................................................................................51
9.2. Capital Expenditures................................................................................51
9.3. Liens...............................................................................................51
9.4. Indebtedness........................................................................................52
9.5. Transfer of Assets..................................................................................53
9.6. Investments.........................................................................................53
9.7. Merger or Consolidation.............................................................................54
9.8. Restricted Payments.................................................................................54
9.9. Transactions with Affiliates........................................................................54
9.10. Compliance with ERISA...............................................................................54
9.11. Fiscal Year.........................................................................................55
9.12. Dissolution, etc....................................................................................55
9.13. Limitations on Sales and Leasebacks.................................................................55
9.14. Change in Control...................................................................................56
9.15. Negative Pledge Clauses.............................................................................56
9.16. Partnerships........................................................................................56
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ARTICLE X
Events of Default and Acceleration
10.1. Events of Default...................................................................................57
10.2. Lender to Act.......................................................................................59
10.3. Cumulative Rights...................................................................................60
10.4. No Waiver...........................................................................................60
10.5. Allocation of Proceeds..............................................................................60
ARTICLE XI
Miscellaneous
11.1. Participations......................................................................................62
11.2. Notices.............................................................................................62
11.3. Right of Set-off; Adjustments.......................................................................64
11.4. Survival............................................................................................64
11.5. Expenses............................................................................................64
11.6. Amendments and Waivers..............................................................................65
11.7. Counterparts........................................................................................65
11.8. Termination.........................................................................................65
11.9. Indemnification; Limitation of Liability............................................................65
11.10. Severability........................................................................................66
11.11. Entire Agreement....................................................................................66
11.12. Agreement Controls..................................................................................66
11.13. Usury Savings Clause................................................................................66
11.14. Governing Law; Waiver of Jury Trial.................................................................67
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of July 28, 1997 (the "Agreement"), is
made by and among CARNIVAL AIR LINES, INC., a Florida corporation, having its
principal place of business in Dania, Florida (the "Borrower"), PAN AM
CORPORATION, a Florida corporation, having its principal place of business in
Miami, Florida, ("Pan Am", and collectively with the Borrower, the "Obligors"),
and NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized
and existing under the laws of the United States, in its capacity as the Lender
(the "Lender");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender make available to
the Borrower revolving credit facilities in a maximum aggregate principal amount
at any time outstanding of $25,000,000, the proceeds of which are to be used to
pay up to $5,000,000 of existing indebtedness and for general corporate purposes
and which shall include two revolving credit facilities of up to $12,500,000
each and a letter of credit subfacility of up to $5,000,000 for the issuance of
standby letters of credit; and
WHEREAS, Pan Am has agreed to guaranty the obligations arising
hereunder in the manner described herein and to secure its Facility Guaranty by
substantially all of the assets of Pan Am and the assets and capital stock of
the subsidiaries of Pan Am; and
WHEREAS, the Lender is willing to make such revolving credit and letter
of credit facilities available to the Borrower upon the terms and conditions set
forth herein;
NOW, THEREFORE, the Borrower, Pan Am and the Lender hereby agree as
follows:
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ARTICLE I
DEFINITIONS AND TERMS
1.1. DEFINITIONS. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Advance" means a borrowing under the Revolving Credit
Facility.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower or Pan Am; or (ii) which
beneficially owns or holds 10% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation,
10% or more of the equity interest) of the Borrower or Pan Am; or 10%
or more of any class of the outstanding voting stock (or in the case of
a Person which is not a corporation, 10% or more of the equity
interest) of which is beneficially owned or held by the Borrower or Pan
Am; PROVIDED, HOWEVER, at the time the Borrower registers any security
issued by it pursuant to the Securities Act of 1933, as amended, the
figure "10%" used in this definition shall automatically change to "5%"
without further action. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through ownership
of voting stock, by contract or otherwise.
"Airframe Lease Assignment" means, collectively, each
Collateral Assignment of Airframe Lease assigning to the Lender each
airframe lease of the Borrower or Pan Am or any Guarantor listed on
SCHEDULE 5.4 hereto or arising after the Closing Date and delivered by
the Borrower or such Guarantor, as applicable, pursuant to ARTICLE V or
SECTION 5.4 hereof to collaterally secure the Borrower's Obligations
and such Guarantor's obligations under its Facility Guaranty,
substantially in the form of EXHIBIT L hereto and incorporated herein
by reference.
"Applicable Commitment Fee" means 0.50% for Facility A and
0.25% for Facility B.
"Applicable Law" means and includes statutes and rules and
regulations thereunder and interpretations thereof by any Governmental
Authority charged with the administration or the interpretation
thereof, common law and orders, requests, directives, instructions and
notices of any Governmental Authority.
"Applicable Margin" means for the periods from the Closing
Date that percent per annum set forth below opposite such period:
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APPLICABLE MARGIN
-----------------
FACILITY A FACILITY B
---------- ----------
(a) MONTHS 1 THROUGH 6: 3.00% 0.00%
(b) MONTHS 7 THROUGH 9: 4.50% 0.00%
(c) MONTHS 10 THROUGH 12: 6.00% 0.00%
"Applicable Unused Fee" means one-half of one percent (1/2%)
per annum in the case of Facility A and one-quarter of one percent
(1/4%) per annum in the case of Facility B.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Authorized Representative" means any of the President or the
chief financial officer of the Borrower or, with respect to financial
matters, the chief financial officer of the Borrower, or any other
Person expressly designated by the Board of Directors of the Borrower
(or the appropriate committee thereof) as an Authorized Representative
of the Borrower, as set forth from time to time in a certificate in the
form of EXHIBIT A.
"Bankruptcy or Insolvency Proceeding" means, with respect to
any Person, (a) any insolvency or bankruptcy proceeding, or any
receivership, liquidation, reorganization or other similar proceeding
in connection therewith, relative to such Person or its creditors, as
such, or to its property, (b) any proceeding for voluntary liquidation,
dissolution, or other winding up of such Person, whether or not
involving insolvency or bankruptcy and (c) any assignment for the
benefit of creditors of such Person;
"Barnett Agreement" means the Amended and Restated Revolving
Line of Credit Agreement dated October 2, 1996 by and between Barnett
Bank of South Florida, N.A. and the Borrower, as amended on June 16,
1997.
"Base Rate" means, for any day, the rate per annum equal to
the sum of (x) the higher of (a) the Federal Funds Rate for such day
plus one-half of one percent (0.5%) and (b) the Prime Rate for such day
plus (y) the Applicable Margin. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or Federal Funds
Rate.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan made to
satisfy Reimbursement Obligations arising from a drawing under a Letter
of Credit.
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"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account number
3750855133 or any successor account with the Lender, which may be
maintained at one or more offices of the Lender or an agent of the
Lender.
"Borrowing Base" means an amount equal to the sum of (a) 80%
of the appraised value of all airframes and engines, (b) 75% of the
appraised value of the real property described in the Mortgage, (c) 25%
of the book value of expendable inventory and 40% of the book value of
rotable inventory, (d) 50% of Eligible Accounts minus any credit card
holdbacks, and (e) 100% of Eligible Securities held by the Lender, all
of the foregoing of which are owned by the Borrower or a Guarantor and
in which the Lender has a duly perfected first priority security
interest.
"Borrowing Base Certificate" means a certificate in the form
of Exhibit N signed by an Authorized Representative which shall be
delivered by the Borrower to the Lender with each Borrowing Notice
relating to Revolving Credit Facility A.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under either Revolving
Credit Facility A or Revolving Credit Facility B, in the form of
EXHIBIT B.
"Business Day" means, with respect to any Base Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the
States of New York and North Carolina are authorized or obligated by
law, executive order or governmental decree to be closed.
"Capital Expenditures" means, with respect to the Obligors and
their Subsidiaries, for any period the SUM of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Obligors or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Obligors and their Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance and any trade-in allowance
as evidenced in writing and submitted to the Lender together with any
compliance certificate delivered pursuant to SECTION 8.1(A) or (B), and
(ii) with respect to any Capital Lease entered into by the Obligors or
their Subsidiaries during such period, the present value of the
principal portion of lease payments due under such Capital Lease over
the term of such Capital Lease applying a discount rate equal to the
interest rate provided in such lease (or in the absence of a stated
interest rate, that rate used in the preparation of the financial
statements described in SECTION 8.1(A)), all the foregoing in
accordance with GAAP applied on a Consistent Basis; provided, however,
that notwithstanding anything to the contrary set forth in any Loan
Document, airframe and engine overhaul costs and expenditures shall not
be deemed Capital Expenditures to the extent reimbursable by lessor of
such airframe or engine.
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"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) either (A) becomes
the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act ), directly or indirectly, of Voting Stock of the
Borrower or Pan Am (or securities convertible into or
exchangeable for such Voting Stock) representing 25% or more
of the combined voting power of all Voting Stock of the
Borrower or Pan Am (on a fully diluted basis) or (B) otherwise
has the ability, directly or indirectly, to elect a majority
of the board of directors of the Borrower or Pan Am; except
that the foregoing shall not apply in the case of conversions
of securities as a result of any financing described in
SECTION 2.6(C) hereof or as a result of the Merger;
(ii) during any period of up to 24 consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such 24-month period were directors of the
Borrower or Pan Am shall cease for any reason (other than the
death, disability or retirement of an officer of the Borrower
or Pan Am that is serving as a director at such time so long
as another officer of the Borrower or Pan Am replaces such
Person as a director) to constitute a majority of the board of
directors of the Borrower or Pan Am; PROVIDED, HOWEVER, that
any member of the board of directors nominated or elected or
appointed by a majority of the directors on the Closing Date
shall be deemed to have been a director as of the Closing
Date; and, PROVIDED, FURTHER, that any director becoming a
director in connection with the Merger or the financing
described in SECTION 2.6(C) hereof shall be deemed to have
been a director as of the Closing Date; or
(iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition
of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of the
Borrower or Pan Am; PROVIDED, HOWEVER, that the foregoing
shall be inapplicable with respect to Persons acquiring
securities in the Merger or in the financing described in
SECTION 2.6(C) hereof.
"Closing Date" means the date as of which this Agreement is
executed by the Obligors and the Lender and on which the conditions set
forth in SECTION 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
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"Collateral" means, collectively, all property of the
Obligors, any Subsidiary or any other Person in which the Lender is
granted a Lien as security for all or any portion of the obligations
under this Agreement or any Security Instrument.
"Company" means, prior to the consummation of the merger, the
Borrower, and after the consummation of the Merger, collectively, the
Borrower and Pan Am.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Borrower and Pan Am referred
to in SECTION 7.6.
"Consolidated EBITDA" means, with respect to the Company and
its Subsidiaries for any period ending as at the date of computation
thereof, the SUM of, without duplication, (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) taxes on income, (iv)
amortization, and (v) depreciation, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Fixed Charge Ratio" means, with respect to the
Company and its Subsidiaries, without duplication, for any period
ending as at the date of computation thereof, the ratio of (i)
Consolidated EBITDA plus contributions to capital (excluding in all
events Indebtedness other than Indebtedness permitted under SECTION
9.4(G)) to (ii) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to the
Company and its Subsidiaries for any period ending on the date of
computation thereof the sum of, without duplication, (i) Consolidated
Interest Expense, (ii) current maturities of Consolidated Indebtedness,
excluding, however, the Revolving Credit Facility and payments required
to be made thereunder and Indebtedness arising under the Barnett
Agreement, (iii) income taxes accrued during such period and (iv)
Capital Expenditures (excluding Capital Expenditures relating to
transition costs of up to $5,000,000), all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Indebtedness" means, without duplication, all
Indebtedness for Money Borrowed of the Company and its Subsidiaries,
all determined on a consolidated basis.
"Consolidated Interest Expense" means, without duplication,
with respect to any period of computation thereof, the gross interest
expense of the Company and its Subsidiaries, including without
limitation (i) the current amortized portion of debt discounts to the
extent included in gross interest expense, (ii) the current amortized
portion of all fees payable in connection with the incurrence of
Indebtedness to the extent included in gross interest expense and (iii)
the portion of any payments made in connection with Capital Leases
allocable to interest expense, all determined on a consolidated basis
in accordance with GAAP applied on a Consistent Basis.
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"Consolidated Lease Payments" means, without duplication, the
gross amount of all lease or rental payments, whether or not
characterized as rent, of the Company and its Subsidiaries, excluding
payments in respect of Capital Leases constituting Indebtedness, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Company and its
Subsidiaries (including payments received by the Company and its
Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by
Persons in which investment is permitted pursuant to this Agreement and
not related to an extraordinary event), less all operating and
non-operating expenses of the Company and its Subsidiaries including
taxes on income, all determined on a consolidated basis in accordance
with GAAP applied on a Consistent Basis, without duplication; but
excluding (for all purposes other than (x) compliance with SECTION
9.1(A) hereof) as income, without duplication of deduction: (i) net
gains on the sale, conversion or other disposition of capital assets,
(ii) net gains on the acquisition, retirement, sale or other
disposition of capital stock and other securities of the Company or its
Subsidiaries, (iii) net gains on the collection of proceeds of life
insurance policies, (iv) any write-up of any asset, and (v) any other
net gain or credit of an extraordinary nature as determined in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Shareholders' Equity" means, as of any date on
which the amount thereof is to be determined, the sum of the following
in respect of the Company and its Subsidiaries (determined on a
consolidated basis and excluding any upward adjustment after the
Closing Date due to revaluation of assets, after giving effect to the
Merger): (i) the amount of issued and outstanding share capital, plus
(ii) the amount of additional paid-in capital and retained earnings
(or, in the case of a deficit, minus the amount of such deficit), plus
(iii) the amount of any foreign currency translation adjustment (if
positive, or, if negative, minus the amount of such translation
adjustment), minus (iv) the amount of any treasury stock, all as
determined in accordance with GAAP applied on a Consistent Basis.
"Consolidated Total Assets" means, as of any date on which the
amount thereof is to be determined, the net book value of all assets of
the Company and its Subsidiaries as determined on a consolidated basis
in accordance with GAAP applied on a Consistent Basis.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the financial statements
(including footnotes) of such Person in accordance with GAAP applied on
a Consistent Basis, including Statement No. 5 of the Financial
Accounting Standards Board, all Rate Hedging Obligations and any
obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including obligations of such Person however incurred:
(1) to purchase such Indebtedness or other
obligation or any property or assets constituting security
therefor;
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(2) to advance or supply funds in any manner (i) for
the purchase or payment of such Indebtedness or other
obligation, or (ii) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets
of such Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or
other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the Indebtedness
or such obligation of the primary obligor against loss in
respect thereof.
"Credit Party" means, collectively, the Borrower, each
Guarantor and each other Person providing Collateral pursuant to any
Security Instrument.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
"Default Rate" means with respect to Base Rate Loans, at a
rate of interest per annum which shall be two percent (2%) above the
Base Rate or the maximum rate permitted by applicable law, if lower.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Eligible Accounts" means, to the extent not duplicative,
those accounts of the Borrower and Guarantors which have been
outstanding for a period of not greater than 45 days.
"Eligible Inventory" means the inventory of the Borrower and
Guarantors which constitute airframe or engine spare parts which are
useable on airframes or engines owned or operated by the Borrower or
Guarantors.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Lender:
(a) Government Securities;
(b) obligations of any corporation organized
under the laws of any state of the United States of America
or under the laws of any other nation, payable in the
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United States of America, expressed to mature not later than
92 days following the date of issuance thereof and rated in an
investment grade rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued
by any Lender or certificates of deposit maturing within one
year from the date of issuance thereof and issued by a bank or
trust company organized under the laws of the United States or
of any state thereof having capital surplus and undivided
profits aggregating at least $400,000,000 and being rated
"A-3" or better by S&P or "A" or better by Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in
obligations described in paragraphs (a) through (f) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P;
(h) tax-exempt or taxable adjustable rate preferred
stock issued by a Person having a rating of its long term
unsecured debt of "A" or better by S&P or "A-3" or better by
Moody's; and
(i) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P-1" by Moody's.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of the Borrower, Pan Am or any of its or their ERISA
Affiliates or is assumed by the Borrower, Pam Am or any of its or their
ERISA Affiliates in connection with any acquisition or (ii) has at any
time been maintained for the employees of the Borrower, Pan Am or any
current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning, any environmental matters or conditions,
environmental protection or conservation, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended; the Superfund Amendments and Reauthorization
Act of 1986, as amended; the Resource Conservation and Recovery Act, as
amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all
regulations promulgated thereunder, and any other "Superfund" or
"Superlien" law.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower and Pan Am,
means any Person or trade or business which is a member of a group
which is under common control with the Borrower or Pan Am, who together
with the Borrower or Pan Am, is treated as a single employer within the
meaning of Section 414(b) and (c) of the Code.
"Event of Default" means any of the occurrences set forth as
such in SECTION 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Fee" means an amount equal to one percent (1%).
"Facility Guaranty" means each Guaranty and Suretyship
Agreement between one or more Guarantors and the Lender, delivered as
of the Closing Date and otherwise pursuant to SECTION 8.19, as the same
may be amended, modified or supplemented.
"Facility Termination Date" means the date on which the
Revolving Credit Termination Date shall have occurred, no Letters of
Credit shall remain outstanding or are otherwise collateralized with
cash or cash equivalents in a manner acceptable to the Lender and the
Borrower shall have fully, finally and irrevocably paid and satisfied
all Obligations.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; PROVIDED
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Lender (in its individual capacity) on such day on such
transactions as determined by the Lender.
"Fiscal Year" means, prior to the Merger, the twelve month
fiscal period of the Borrower and its Subsidiaries commencing on July 1
of each calendar year and ending on June 30 of the following calendar
year, and after the Merger, the twelve month fiscal period of the
Company and its Subsidiaries commencing on January 1 of each calendar
year and ending on December 31 of such calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate
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or other political subdivision thereof regulating, relating to, or
imposing liability or standards of conduct concerning, any Employee
Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Company and its Subsidiaries, taken together as
one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants
or which have other substantial authoritative support and are
applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guarantors" means, at any date, any Subsidiary of Borrower
now existing or hereafter created or acquired; Pan Am, and any
Subsidiary of Pan Am now existing or hereafter created or acquired; the
Individual Guarantor and any other Person who is required to be a party
to a Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials and lead), the generation, handling,
storage, transportation, disposal, treatment, release, discharge or
emission of which is subject to any Environmental Law.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate
Hedging Obligations, all indebtedness secured by any Lien on the
property of such Person whether or not such indebtedness is assumed,
all liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business), all
Contingent Obligations, that portion of obligations with respect to
Capital Leases and other items which in accordance with GAAP is
required to be classified as a liability on a balance sheet; but
excluding all accounts and trade payables and other operating expenses
(so long as not Indebtedness for Money Borrowed) in the ordinary course
of business so long as payment therefor is due within one year;
provided that in no event shall the term Indebtedness include surplus
and retained earnings, lease obligations (other than
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pursuant to Capital Leases), reserves for deferred income taxes and
investment credits, other deferred credits or reserves, or deferred
compensation obligations.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including conditional sales or similar title
retention agreements), other than accounts and trade payables incurred
in the ordinary course of business.
"Individual Guarantor" means Micky Arison, a resident of
Florida.
"Issuing Bank" means NationsBank as issuer of Letters of
Credit under ARTICLE III.
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof between the Borrower and the Lender, as amended,
modified or supplemented from time to time.
"Lease Assignments" means, collectively, the Airframe Lease
Assignment and the Real Property Lease Assignment."
"Letter of Credit" means a standby letter of credit issued by
the Issuing Bank for the account of the Borrower in favor of a Person
advancing credit or securing an obligation on behalf of the Borrower.
"Letter of Credit Facility" means the sub-facility of
Revolving Credit Facility A described in ARTICLE III hereof providing
for the issuance by the Issuing Bank for the account of the Borrower of
Letters of Credit in an aggregate stated amount at any time outstanding
not exceeding the Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters
of Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Obligors and their
Subsidiaries shall be deemed to be the owner of any property which they
have acquired or hold subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for
security purposes.
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"Loan" or "Loans" means any borrowing pursuant to an Advance
under the Revolving Credit Facilities.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, and all other
instruments and documents heretofore or hereafter executed or delivered
to or in favor of the Lender in connection with the Loans made and
transactions contemplated under this Agreement, as the same may be
amended, supplemented or replaced from the time to time.
"Loan Parties" means the Borrower, Pan Am, and the Lender.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations or condition, financial or
otherwise, of the Credit Parties and their Subsidiaries, taken as a
whole, assuming that the condition of the Borrower, Pan Am and their
Subsidiaries as of any date is similar to that described in the
Projections as at such date, (ii) the ability of the Credit Parties,
taken as a whole, to pay or perform their respective obligations,
liabilities and indebtedness under the Loan Documents as such payment
or performance becomes due in accordance with the terms thereof, or
(iii) the rights, powers and remedies of the Lender under any Loan
Document or the validity, legality or enforceability thereof (including
for purposes of clauses (ii) and (iii) the imposition of burdensome
conditions thereon).
"Merger" means the merger between Carnival Air Lines, Inc. and
CAL Acquisition Corporation, pursuant to that certain Acquisition
Agreement by and among Pan Am, CAL Acquisition Corporation, a Florida
corporation, Air Holding Company, a Florida corporation, and the
Borrower, dated as of March 20, 1997, as amended on July 8, 1997 and
July 9, 1997.
"Mortgage" means, collectively, all Mortgages, Deeds of Trust
and Deeds to Secure Debt granting a Lien to the Lender (or a trustee
for the benefit of the Lender) in Collateral constituting real
property, as such documents may be amended, modified or supplemented
from time to time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or Pan Am or any
ERISA Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under the laws of any such state which are rated in the
highest investment rating category by both S&P and Moody's.
"NationsBank" means NationsBank, National Association.
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"Net Proceeds" from the issuance of equity or Indebtedness
means cash payments received therefrom as and when received, net of all
legal, accounting, banking, underwriting, title and recording fees and
expenses, commissions, discounts and other issuance expenses incurred
in connection therewith and all taxes required to be paid or accrued as
a consequence of such transaction.
"Notes" means, collectively, the promissory notes of the
Borrower evidencing Revolving Loans executed and delivered to the
Lenders substantially in the form of EXHIBIT C.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the Reimbursement
Obligations and otherwise in respect of the Letters of Credit, and
(iii) the payment and performance of all other obligations, liabilities
and Indebtedness of the Borrower to the Lender hereunder, under any one
or more of the other Loan Documents or with respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings and Revolving Credit Outstandings on such date.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or Pan Am or any of its ERISA Affiliates or is assumed by the Borrower
or Pan Am or any of its ERISA Affiliates in connection with any
acquisition or (ii) has at any time been maintained for the employees
of the Borrower or Pan Am or any current or former ERISA Affiliate.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) those certain Stock Pledge Agreements dated
as of the date hereof between Air Holding Company, which owns 90% of
the outstanding capital stock of the Borrower and the Lender, and (ii)
any additional Stock Pledge Agreement delivered to the Lender pursuant
to SECTION 8.19, substantially in the form of Exhibit I, as hereafter
amended, supplemented or replaced from time to time.
"Pledged Stock" has the meaning given to such term in the
respective Pledge Agreement.
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"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of any such state which
are rated, based on the escrow, in the highest investment rating
category by both S&P and Moody's and which have been irrevocably called
for redemption and advance refunded through the deposit in escrow of
Government Securities or other debt securities which are (i) not
callable at the option of the issuer thereof prior to maturity, (ii)
irrevocably pledged solely to the payment of all principal and interest
on such obligations as the same becomes due and (iii) in a principal
amount and bear such rate or rates of interest as shall be sufficient
to pay in full all principal of, interest, and premium, if any, on such
obligations as the same becomes due as verified by a nationally
recognized firm of certified public accountants.
"Prime Rate" means the per annum rate of interest established
from time to time by NationsBank as its prime rate, which rate may not
be the lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such
other office and address as the Lender may from time to time designate.
"Projections" means those projections set forth in the
Forecast of Combined Pan Am/Carnival Operations prepared by Simat,
Hellissen & Eichner, Inc. dated as of July 27, 1997.
"Rate Hedging Obligations" means any and all obligations of
the Borrower, Pan Am or any Subsidiary, whether absolute or contingent
and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or assignments
of any of the foregoing.
"Real Property Lease Assignment" means, collectively, each
Collateral Assignment of Real Property Lease assigning to the Lender
each facility lease of the Borrower and any Guarantor listed on
SCHEDULE 5.3 hereto or arising after the Closing Date and delivered by
the Borrower and the Guarantors, as applicable, pursuant to ARTICLE V
hereof to collaterally secure the Borrower's Obligations and
obligations of Guarantors under their respective Facility Guaranty,
substantially in the form of EXHIBIT F hereto and incorporated herein
by reference.
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"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank for amounts theretofore paid by the Issuing
Bank pursuant to a drawing under such Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of the Obligors or any of their Subsidiaries (other than those
payable or distributable solely to the Obligors) now or hereafter
outstanding, except a dividend payable solely in shares of a class of
stock to the holders of that class; (b) any redemption, conversion,
exchange, retirement or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of stock of
either of the Obligors or any of its Subsidiaries (other than those
payable or distributable solely to the Obligors) now or hereafter
outstanding; (c) any payment made to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire shares
of any class of stock of either of the Obligors or any of its
Subsidiaries now or hereafter outstanding; and (d) any issuance and
sale of capital stock of any Subsidiary of either of the Obligors (or
any option, warrant or right to acquire such stock) other than to the
Obligors.
"Revolving Credit Commitment" means the obligation of the
Lender to make Loans to the Borrower up to an aggregate principal
amount at any one time outstanding equal to the Total Revolving Credit
Commitment.
"Revolving Credit Facilities" means collectively Revolving
Credit Facility A and Revolving Credit Facility B described in Article
II hereof providing for Loans to the Borrower by the Lender in the
aggregate principal amount of the Total Revolving Credit Commitment.
"Revolving Credit Facility A" means the facility described in
Article II hereof providing for Loans to the Borrower by the Lender in
the aggregate principal amount of $12,500,000, as reduced in accordance
with SECTION 2.6 and SECTION 2.7.
"Revolving Credit Facility B" means the facility described in
Article II hereof providing for Loans to the Borrower by the Lender in
the aggregate principal amount of $12,500,000, as reduced in accordance
with SECTION 2.6 and SECTION 2.7.
"Revolving Credit Outstandings" means the sum of the principal
amount of all outstanding Loans.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lender's
obligations pursuant to SECTION 10.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving
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Credit Outstandings and Letter of Credit Outstandings and cancellation
or cash or other satisfactory collateralization of all Letters of
Credit.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill.
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Security Agreement dated as of the
date hereof by the Borrower and its Subsidiaries to the Lender, (ii)
the Security Agreement dated as of the date hereof by the Pan Am
Corporation and its Subsidiaries to the Lender, and (iii) any
additional Security Agreement delivered to the Lender pursuant to
SECTION 8.19, as hereafter modified, amended or supplemented from time
to time.
"Security Instruments" means, collectively, the Pledge
Agreement, the Security Agreement, the Mortgage, the Lease Assignments
and all other agreements, instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Obligors or any
Subsidiary shall grant or convey to the Lender a Lien in property as
security for all or any portion of the obligations, as any of them may
be amended, modified or supplemented from time to time.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Company or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations but excluding unearned ticket
revenues and, prior to the Merger, assuming that no
Indebtedness is outstanding under the Barnett Agreement due to
the Micky Arison guaranty; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Stated Termination Date" means August 1, 1998.
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by the Borrower or Pan
Am and/or by one or more of the Subsidiaries of the Borrower or Pan Am.
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"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Company or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4068(f) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer,
any Pension Plan; or (vi) the partial or complete withdrawal of the
Company or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302
of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section 4241
or Section 4245 of ERISA, respectively; or (ix) any event or condition
which results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to
exceed $5,000,000.
"Total Revolving Credit Commitment" means a principal amount
equal to the sum of Revolving Credit Facility A and Revolving Credit
Facility B, as reduced from time to time in accordance with SECTION 2.6
and SECTION 2.7.
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
1.2. RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code
of another jurisdiction is controlling, in which case such terms shall
have the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
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(d) Except as otherwise expressly provided, references herein
to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules in or
to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the
context may require.
(f) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to
refer to each other officer of such Person, however titled, exercising
the same or substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted
therein and in the Loan Documents.
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ARTICLE II
THE REVOLVING CREDIT FACILITIES
2.1. LOANS. (a) COMMITMENT. Subject to the terms and conditions of this
Agreement, the Lender agrees to make Advances to the Borrower under the
Revolving Credit Facilities from time to time from the Closing Date until the
Revolving Credit Termination Date not to exceed the Revolving Credit Commitment
of the Lender, PROVIDED, however, that the Lender will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Lender has accelerated
the maturity of any of the Notes as a result of an Event of Default; PROVIDED
further, however, (x) that immediately after giving effect to each such Advance
of Revolving Credit Facility A, the principal amount of Loans outstanding under
Revolving Credit Facility A plus Letter of Credit Outstandings shall not exceed
the lesser of Revolving Credit Facility A or the Borrowing Base and (y) that
immediately after giving effect to each Advance of Revolving Credit Facility B
the principal amount of Loans outstanding under Revolving Credit Facility B
shall not exceed the Revolving Credit Facility B. Within such limits, the
Borrower may borrow, repay and reborrow under the Revolving Credit Facilities on
a Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Revolving Credit Termination Date. The Borrower
shall not be entitled to borrower under Revolving Credit Facility B if Borrower
is entitled to receive Advances under Revolving Credit Facility A.
(b) AMOUNTS. Except as otherwise permitted by the Lender from
time to time, the aggregate unpaid principal amount of the outstanding Loans
plus Letter of Credit Outstandings shall not exceed at any time the Total
Revolving Credit Commitment, and, in the event there shall be outstanding any
such excess, the Borrower shall immediately make such payments and prepayments
as shall be necessary to comply with this restriction. In addition, at no time
shall the amount of outstanding Loans under Revolving Credit Facility A plus
Letter of Credit Outstandings exceed the lesser of Revolving Credit Facility A
or the Borrowing Base and the Borrower shall immediately make such payments and
prepayments as shall be necessary to comply with this restriction. Each Loan
hereunder, other than Base Rate Refunding Loans, shall be in an amount of at
least $100,000, and, if greater than $100,000, an integral multiple of $10,000.
(c) ADVANCES. An Authorized Representative of the Borrower
shall give the Lender irrevocable written notice by telefacsimile transmission
of a Borrowing Notice (as applicable) with appropriate insertions, effective
upon receipt, of each Loan (other than Base Rate Refunding Loans to the extent
the same are effected without notice) prior to 10:30 A.M. on the day of such
proposed Loan. Each such notice shall specify the amount of the borrowing and
the date of borrowing and in the case of an Advance under Revolving Credit
Facility A shall be accompanied by a Borrowing Base Certificate.
2.2. PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Lender for the account of the Lender on the outstanding and unpaid principal
amount of each Loan made by the Lender for the period commencing on the date of
such Loan until such Loan shall be due at the then applicable Base Rate;
PROVIDED, however, that if any amount shall not be paid when due (at maturity,
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by acceleration or otherwise), all amounts outstanding hereunder shall bear
interest thereafter at the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a
year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Loan shall be paid (i) quarterly in arrears on the
last Business Day of each September, December, March and June, commencing
September 30, 1997 for each Loan and upon payment in full of the principal
amount of such Loan.
2.3. PAYMENT OF PRINCIPAL. The principal amount of each Loan shall be
due and payable to the Lender in full on the Revolving Credit Termination Date,
or earlier as specifically provided herein. The principal amount of any Loan may
be prepaid in whole or in part at any time. All prepayments of Loans made by the
Borrower shall be in the amount of $100,000 or such greater amount which is an
integral multiple of $10,000, or the amount equal to all outstanding Loans.
Except as provided in SECTION 2.6 and SECTION 10.5 principal payments shall
first be applied to the payment of Revolving Credit Facility B.
2.4. NON-CONFORMING PAYMENTS. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount required
to be paid to Lender with respect to the Loans, shall be made to the Lender at
the Principal Office, in Dollars and in immediately available funds before 12:30
P.M. on the date such payment is due. The Lender may, but shall not be obligated
to, debit the amount of any such payment which is not made by such time to any
ordinary deposit account, if any, of the Borrower with the Lender.
(b) The Lender shall deem any payment made by or on behalf of
the Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment. Any such
payment shall not be deemed to be received by the Lender until the later of (i)
the time such funds become available funds and (ii) the next Business Day. Any
non-conforming payment may at the option of the Lender constitute or become a
Default or Event of Default. Interest shall continue to accrue on any principal
as to which a non-conforming payment is made until the later of (x) the date
such funds become available funds or (y) the next Business Day at the Default
Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Notes
becomes due and payable on a day other than a Business Day, then such due date
shall be extended to the next succeeding Business Day; PROVIDED that interest
shall continue to accrue during the period of any such extension and PROVIDED
further, that in no event shall any such due date be extended beyond the
Revolving Credit Termination Date.
2.5. NOTES. Loans made by the Lender shall be evidenced by the Notes
payable to the order of the Lender, in their respective amounts, in the amount
of the Revolving Credit Facility A and the Revolving Credit Facility B, which
Notes shall be dated the Closing Date.
2.6. REDUCTIONS. (a) The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not
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less than three (3) Business Days' written notice to the Lender, effective upon
receipt, to reduce the Total Revolving Credit Commitment. Each such reduction
shall be in the aggregate amount of $100,000 or such greater amount which is in
an integral multiple of $10,000, or the entire remaining Total Revolving Credit
Commitment, and shall permanently reduce first the Revolving Credit Facility B
and thereafter Revolving Credit Facility A. Each reduction of the Total
Revolving Credit Commitment shall be accompanied by payment of the Loans to the
extent that the principal amount of outstanding Loans plus Letter of Credit
Outstandings exceeds the Total Revolving Credit Commitment after giving effect
to such reduction, together with accrued and unpaid interest on the amounts
prepaid.
(b) Simultaneously with the effectiveness of the Merger the
Borrower shall permanently reduce the amount of Revolving Credit Facility A by
the amount of $5,000,000. To the extent the principal amount of outstanding
Loans under Revolving Credit Facility A plus Letter of Credit Outstandings
exceeds Revolving Credit Facility A after giving effect to such reduction, the
Borrower shall pay outstanding Loans in the amount of such excess.
(c) Simultaneously with the receipt by the Borrower or Pan Am
of the net proceeds from the sale of any security of the Borrower or Pan Am
pursuant to an underwritten offering, the Borrower shall cause the amount of
Revolving Credit Facility B to be permanently reduced by an amount equal to the
sum of (x) the lesser of (i) $7,500,000 and (ii) the net proceeds received by
the Borrower or Pan Am from the sale of such security excluding proceeds from
the exercise of warrants or conversions of preferred stock and (y) the then
unused portion of Revolving Credit Facility B.
2.7. INCREASE AND DECREASE IN AMOUNTS. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower as Advances
shall be reduced by the aggregate amount of Letters of Credit Outstanding.
2.8. FEES.
(a) UNUSED FEE. For the period beginning on August 1, 1997 and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay to
the Lender an unused fee equal to the Applicable Unused Fee multiplied by the
average daily amount by which the Total Revolving Credit Commitment exceeds the
sum of (i) outstanding Loans plus (ii) Letter of Credit Outstandings. Such fees
shall be due in arrears on the last Business Day of each September, December,
March and June commencing September 30, 1997 to and on the Revolving Credit
Termination Date. Such fee shall be calculated on the basis of a year of 360
days for the actual number of days elapsed.
(b) FACILITY FEE. So l ong as the Revolving Credit Termination
Date has not occurred, on the six and nine month anniversaries of the Closing
Date, the Borrower agrees to pay to the Lender an amount equal to the product of
Facility Fee times the Total Revolving Credit Commitment as at such date. Such
fee shall be calculated on the basis of a year of 360 days for the actual number
of days elapsed.
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(c) UNDERWRITING FEE. The Borrower shall pay the Lender not
later than the Closing Date an underwriting fee of 3.00% of the Revolving Credit
Facility A and 1.50% of Revolving Credit Facility B (the "Underwriting Fees").
Upon acceptance of the commitment of the Lender to make Advances under the
Revolving Credit Facilities, the Borrower was required to pay $280,000 of the
Underwriting Fees, which amount has been paid, and issue to the Lender warrants
to purchase 550,000 shares of common stock of Pan Am, which warrants shall be
subject to vesting as described therein. The balance of the Underwriting Fee
will be due on the Closing Date. Of these Underwriting Fees, $100,000 and
100,000 warrants will be deemed earned by the Lender when the commitment to lend
is accepted regardless of whether the Closing Date occurs, if such failure of
the Closing Date to occur is caused by any action of the Borrower or Pan Am.
2.9. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for general
working capital needs and other corporate purposes, including repayment of up to
$5,000,000 of indebtedness outstanding under the Barnett Agreement, PROVIDED,
HOWEVER that the amount available to Borrower under the Barnett Facility shall
not be reduced below $30,000,000.
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ARTICLE III
LETTERS OF CREDIT
3.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower Letters of Credit upon delivery to
the Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; PROVIDED, that (i)
the Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment and (ii) no Letter of Credit shall be issued if, after giving effect
thereto, Letter of Credit Outstandings plus Loans outstanding under Revolving
Credit Facility A shall exceed Revolving Credit Facility A. No Letter of Credit
shall have an expiry date (including all rights of the Borrower or any
beneficiary named in such Letter of Credit to require renewal) or payment date
occurring later than the fifth Business Day prior to the Stated Termination Date
unless the Issuing Bank shall hold cash or cash equivalents as security for the
undrawn amount of Letters of Credit pursuant to the LC Account Agreement.
3.2. REIMBURSEMENT. (a) The Borrower hereby unconditionally agrees to
pay to the Issuing Bank immediately on demand at the Principal Office all
amounts required to pay all drafts drawn or purporting to be drawn under the
Letters of Credit and all reasonable expenses incurred by the Issuing Bank in
connection with the Letters of Credit, and in any event and without demand to
place in possession of the Issuing Bank (which shall include Advances under the
Revolving Credit Facility A permitted by SECTION 2.1) sufficient funds to pay
all debts and liabilities arising under any such Letter of Credit. The Issuing
Bank agrees to give the Borrower prompt notice of any request for a draw under a
Letter of Credit. The Issuing Bank may charge any account the Borrower may have
with it for any and all amounts the Issuing Bank pays under a Letter of Credit,
plus charges and reasonable expenses as from time to time agreed to by the
Issuing Bank and the Borrower; provided that to the extent permitted by SECTION
2.1(A), amounts shall be paid pursuant to Advances under the Revolving Credit
Facility A. The Borrower agrees to pay the Issuing Bank interest on any
Reimbursement Obligations not paid when due hereunder at the Base Rate plus two
percent (2.0%), or the maximum rate permitted by applicable law, if lower, such
rate to be calculated on the basis of a year of 360 days for actual days
elapsed.
(b) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in ARTICLE VI, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank consistent
with the then current practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such practices and
procedures and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
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(c) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(d) Without limiting the generality of the provisions of
SECTION 11.9, the Borrower hereby agrees to indemnify and hold harmless the
Issuing Bank from and against any and all claims and damages, losses,
liabilities, reasonable costs and expenses which the Issuing Bank may incur (or
which may be claimed against the Issuing Bank) by any Person by reason of or in
connection with the issuance or transfer of or payment or failure to pay under
any Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, (i) caused by the willful
misconduct or gross negligence of the party to be indemnified or (ii) caused by
the failure of the Issuing Bank to pay under any Letter of Credit after the
presentation to it of a request for payment strictly complying with the terms
and conditions of such Letter of Credit, unless such payment is prohibited by
any law, regulation, court order or decree.
(e) The obligation of the Borrower to immediately reimburse
the Issuing Bank for drawings made under Letters of Credit and the Issuing
Bank's right to receive such payment shall be absolute, unconditional and
irrevocable, and that such obligations of the Borrower shall be performed
strictly in accordance with the terms of this Agreement and such Letters of
Credit and the related Applications and Agreement for any Letter of Credit,
under all circumstances whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the obligation supported by the Letter of
Credit or any other agreement or instrument relating thereto
(collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any consent
to or departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the
terms of this Agreement) or other rights which the Borrower
may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting) or any
other Person, whether in connection with the Loan Documents,
the Related LC Documents or any unrelated transaction;
(iv) any breach of contract or other dispute between
the Borrower and any beneficiary or any transferee of a Letter
of Credit (or any persons or entities for whom such
beneficiary or any such transferee may be acting) or any other
Person;
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(v) any draft, statement or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by the Lender, with or without notice to or approval
by the Borrower in respect of any of Borrower's Obligations
under this Agreement; or
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
3.3. LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to the
Lender a fee on the aggregate amount available to be drawn on each outstanding
Letter of Credit at a rate equal to the Applicable Margin for Revolving Credit
Facility A. Notwithstanding the foregoing, the Borrower may secure Letters of
Credit issued hereunder with cash on a dollar for dollar basis and in such event
the fee payable to Lender under this Section shall be one-half of one percent
(1/2%) plus an issuance fee of one-eighth of one percent (1/8%). Such fees shall
be due with respect to each Letter of Credit quarterly in arrears on the last
day of each September, December, March and June, the first such payment to be
made on the first such date occurring after the date of issuance of a Letter of
Credit. The fees described in this SECTION 3.3 shall be calculated on the basis
of a year of 360 days for the actual number of days elapsed.
3.4. ADMINISTRATIVE FEES. The Borrower shall pay to the Issuing Bank
such administrative fee and other fees, if any, in connection with the Letters
of Credit in such amounts and at such times as the Issuing Bank and the Borrower
shall agree from time to time.
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ARTICLE IV
FACILITY GUARANTY
4.1. FACILITY GUARANTY.
(a) GUARANTY OF REVOLVING CREDIT FACILITY A.
(i) Prior to the Merger Pan Am guaranties to the
Lender the collection of Obligations of the Borrower with
respect to Revolving Credit Facility A after the Lender has
exercised any rights to seek payment from the Borrower,
whether such Obligations arise at stated maturity, by
scheduled repayment, required prepayment, declaration,
acceleration, demand or otherwise (including all amounts which
would have become due but for the operation of the automatic
stay under Section 362(a) of the Federal Bankruptcy Code, 11
U.S.C. 362(a)) of all such Obligations in accordance with
their respective terms, whether such Obligations are
outstanding on the date of this Agreement, or arise or are
incurred at any time or times thereafter. The Facility
Guaranty hereby made with respect to Revolving Credit Facility
A prior to the Merger constitutes a guaranty of collection
only and not of payment and performance in full when due, and
the Lender hereby agrees that notwithstanding anything to the
contrary set forth in any Loan Documents Lender shall not be
entitled to demand performance by Pan Am under this CLAUSE (I)
until it has liquidated its security for Revolving Credit
Facility A, demanded payment of the Borrower and its
Subsidiaries and the Individual Guarantor and obtained a final
judgment against and exhausted all remedies against the
Borrower and its Subsidiaries and the Individual Guarantor,
and, accordingly, neither Pan Am nor any of its Subsidiaries
shall be in default under or have any liability under any Loan
Document until Lender has complied with each condition
precedent to Pan Am's obligations under this Section
4.1(a)(i). Notwithstanding anything to the contrary set forth
in any Loan Document, the parties acknowledge that prior to
the Merger Pan Am and its Subsidiaries are parties to this
Agreement and the other Loan Documents solely as a Guarantor,
and shall have no obligations hereunder or thereunder other
than in their capacity as Guarantor.
(ii) After the Merger, with respect to Revolving
Credit Facility A, Pan Am absolutely, unconditionally and
irrevocably guaranties to the Lender the full and punctual
payment and performance when due, whether at stated maturity,
by scheduled repayment, required prepayment, declaration,
acceleration, demand or otherwise (including all amounts which
would have become due but for the operation of the automatic
stay under Section 362(a) of the Federal Bankruptcy Code, 11
U.S.C. 362(a)) of all the Obligations in accordance with their
respective terms, whether such Obligations are outstanding on
the date of this Agreement, or arise or are incurred at any
time or times thereafter. After the Merger the Facility
Guaranty hereby made by Pan Am constitutes a guaranty of
payment and performance in full when due and not of collection
only, and Pan Am individually agrees that it shall not be
necessary or required that the Lender exercise any rights,
assert any claim or
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demand or enforce any remedy whatsoever before or as a
condition to the obligation of Pan Am hereunder. After the
Merger the liability of Pan Am to the Lender under the
Facility Guaranty made hereunder with respect to the Revolving
Credit Facility A Obligations after the Merger shall be
unlimited.
(b) GUARANTY OF REVOLVING CREDIT FACILITY B. After
consummation of the Merger, with respect to Revolving Credit Facility B, Pan Am
absolutely, unconditionally and irrevocably guaranties to the Lender the full
and punctual payment and performance when due, whether at stated maturity, by
scheduled repayment, required prepayment, declaration, acceleration, demand or
otherwise (including all amounts which would have become due but for the
operation of the automatic stay under Section 362(a) of the Federal Bankruptcy
Code, 11 U.S.C. 362(a)) of all the Obligations in accordance with their
respective terms, whether such Obligations are outstanding on the date of this
Agreement, or arise or are incurred at any time or times thereafter. The
Facility Guaranty hereby made by Pan Am with respect to Revolving Credit
Facility B after the consummation of the Merger constitutes a guaranty of
payment and performance in full when due and not of collection only, and Pan Am
individually agrees that it shall not be necessary or required that the Lender
exercise any rights, assert any claim or demand or enforce any remedy whatsoever
before or as a condition to the obligation of Pan Am hereunder. After the Merger
the liability of Pan Am to the Lender under the Facility Guaranty made hereunder
shall be unlimited.
4.2. GUARANTY ABSOLUTE. The obligations of Pan Am under SECTIONS
4.1(A)(II) AND 4.1(B) are and shall be construed as a continuing, absolute and
unconditional guaranty of payment and performance in full, and shall remain in
full force and effect until all Obligations have been paid in full and the
Revolving Credit Commitment terminated. Pan Am guaranties with respect to the
Obligations in SECTIONS 4.1(A)(II) AND 4.1(B) that the Obligations will be paid
and performed strictly in accordance with the terms of this Agreement and the
other Loan Documents, regardless of any applicable law now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Lender with respect thereto. The liability of Pan Am under SECTIONS 4.1(A)(II)
AND 4.1(B) hereby made shall be absolute, unconditional and irrevocable
irrespective of:
(a) any lack of validity or enforceability of this
Agreement or any other Loan Document or any other instrument relating
to any thereof or to any of the Obligations;
(b) any change in the existence, partnership structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or
any property of the Borrower or any resulting release or discharge of
any Obligation contained in this Agreement or any other Loan Document;
(c) the failure of the Lender
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, Pan Am, or any other
Person under the provisions of this Agreement or any other
Loan Document or any other instrument relating to any thereof
or under any Applicable Law; or
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(ii) to exercise any right or remedy against any
Collateral;
(d) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the Obligations,
or any other compromise, renewal, extension, acceleration or release
with respect thereto, or any other amendment to, rescission, waiver or
other modification of or any consent to departure from any of the terms
of this Agreement or any other Loan Document or any other instrument
relating to any thereof;
(e) any increase, reduction, limitation, impairment or
termination of the Obligations for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity,
compromise, or unenforceability of, or any other event or occurrence
affecting, any of the Obligations (and Pan Am hereby waives any right
to or claim of any such defense or set-off, counterclaim, recoupment or
termination);
(f) any exchange, release or non-perfection of any Collateral,
or any amendment to or waiver or release of, or consent to departure
from any other guaranty held by the Lender securing all or any of the
Obligations;
(g) any defense, set-off or counterclaim which may at any time
be available to or be asserted by the Borrower against the Lender; or
(h) any other circumstance which might otherwise constitute a
suretyship or other defense available to, or legal or equitable
discharge of, the Borrower, Pan Am or any other Credit Party.
4.3. REINSTATEMENT, ETC. Pan Am hereby agrees that the guaranties made
under SECTION 4.2(A)(II) hereof shall continue to be effective or be reinstated,
as the case may be, if at any time any payment (in whole or in part) of any of
the Obligations is rescinded or must otherwise be restored by the Lender in
connection with any Bankruptcy or Insolvency Proceeding relating to the Borrower
or otherwise, all as though such payment had not been made.
4.4. WAIVER. With respect to guaranties made under SECTION 4.2(A)(II)
hereof, to the maximum extent permitted by Applicable Law, Pan Am hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations or its guaranty, other than as provided in this
Agreement, and any requirement that the Lender protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take any
action against the Borrower, Pan Am or any other Person or entity or any
Collateral.
4.5. WAIVER OF SUBROGATION RIGHTS. The rights (including any right of
subrogation, reimbursement or contribution) which Pan Am shall acquire against
the Borrower as a consequence of making any payment under its Facility Guaranty
are, in this SECTION 4.5, collectively the "Subrogation Rights". All Subrogation
Rights of Pan Am shall in all respects be subordinate and junior in right of
payment to the prior payment in full of all the Obligations, and, if any payment
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shall be made to Pan Am on account of such Subrogation Rights prior to the
payment in full of all the Obligations, such payment shall forthwith be paid to
the Lender to be credited and applied against the Obligations to the extent
necessary to cause the payment in full of all the Obligations. Upon payment by
Pan Am of any sum to the Lender hereunder, subject to the payment in full of all
the Obligations, Pan Am shall be subrogated to the rights of such Lender to
receive payments of such Obligations; PROVIDED, HOWEVER, that to the extent any
Subrogation Rights which Pan Am otherwise would have pursuant to this Agreement,
under Applicable Law or otherwise would result in Pan Am being a "creditor" of
the Borrower within the meaning of Section 547 of Title 11 of the United States
Code as now in effect or hereafter amended, or any comparable provision of any
successor statute, Pan Am hereby irrevocably waives all such Subrogation Rights
until the Obligations have been paid in full.
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ARTICLE V
SECURITY
5.1. SECURITY. As security for the full and timely payment and
performance of the respective Obligations of the Borrower and the respective
obligations of the Guarantors and their Subsidiaries under their respective
Facility Guaranty, respective obligations of the Credit Parties shall, and shall
cause each Subsidiary to, on or before the Closing Date deliver to the Lender,
in form and substance reasonably acceptable to the Lender, the Security
Agreement, the Airframe Security Agreements, the Airframe Lease Assignments, the
Real Property Lease Assignments, Landlord Consent to Assignment in form and
content acceptable to the Lender, and such duly executed and filed Uniform
Commercial Code financing statements sufficient to grant to the Lender a valid,
duly perfected first priority security interest in the Collateral described
therein, subject to no prior Liens other than those permitted by SECTION 9.3,
and do all things necessary in the opinion of the Lender and its counsel to
grant and continue to the Lender a first priority security interest, duly
perfected with respect to the Collateral governed by the UCC, in all Collateral
subject to no prior Lien or other encumbrance or restriction on transfer (other
than restrictions on transfer imposed by applicable securities laws) or as
permitted under SECTION 9.3.
5.2. STOCK PLEDGE. As security for the full and timely payment and
performance of (i) the respective Obligations of the Borrower and the respective
obligations of the Guarantors and their Subsidiaries now existing or hereafter
arising, and (ii) certain Guarantors' obligations under their respective
Facility Guaranty, Air Holding Company, the Borrower, Pan Am and each Subsidiary
owning any Pledged Stock shall on or before the Closing Date deliver to the
Lender, in form and substance reasonably acceptable to the Lender, the Pledge
Agreement together with certificates representing such Pledged Stock and such
stock powers duly executed in blank as may be required by the Lender in
accordance with the terms hereof and thereof. In addition to any Pledge
Agreement required to be delivered pursuant hereto, the Borrower, Pan Am and
each Subsidiary hereby agrees to pledge and cause to be pledged to the Lender
100% of the capital stock and related interests and rights of any Subsidiary
hereafter acquired or created and, to deliver to the Lender a Pledge Agreement
substantially in the form of EXHIBIT I hereto within thirty (30) days of the
acquisition or creation of such Subsidiary.
5.3. REAL PROPERTY, MORTGAGE AND LEASE ASSIGNMENTS. As security for the
full and timely payment and performance of (a) the respective Obligations of the
Borrower now existing or hereafter arising, and (b) the Guarantors' obligations
under their respective Facility Guaranty, the Borrower and each Subsidiary shall
deliver to the Lender and the Borrower shall cause the Guarantors to deliver to
the Lender, in form and substance reasonably acceptable to the Lender, the
Mortgage and Real Property Lease Assignments. The Mortgage and Real Property
Lease Assignments shall be delivered on or before September 30, 1997, in form
and substance reasonably acceptable to the Lender.
5.4. AIRFRAME LEASE ASSIGNMENTS. As security for the full and timely
payment and performance of (a) the respective Obligations of the Borrower now
existing or hereafter arising, and (b) the Guarantors' obligations under their
respective Facility Guaranties, the Borrower, the
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Guarantors and each Subsidiary shall deliver to the Lender, in form and
substance reasonably acceptable to the Lender, the Airframe Lease Assignments.
The Airframe Lease Assignments shall be delivered on or before the Closing Date,
in form and substance reasonably acceptable to the Lender.
5.5. FURTHER ASSURANCES. At the request of the Lender, the Borrower
will or will cause its Subsidiaries and the Guarantors, as the case may be to
execute, by its duly authorized officers, alone or with the Lender, any
certificate, instrument, statement or document, or to procure any such
certificate, instrument, statement or document, or to take such other action
(and pay all connected costs) which the Lender reasonably deems necessary from
time to time to create, continue or preserve the liens and security interests in
Collateral (and the perfection and priority thereof) of the Lender contemplated
hereby and by the other Loan Documents.
5.6. INFORMATION REGARDING COLLATERAL. The Borrower and Pan Am each
represents, warrants and covenants that (i) the chief executive office of the
Borrower and each other Person providing Collateral pursuant to a Security
Instrument (each, a "Grantor") at the Closing Date is located at the address or
addresses specified on SCHEDULE 5.6, and (ii) SCHEDULE 5.6 contains a true and
complete list of (a) the name and address of each Grantor and of each other
Person that has effected any merger or consolidation with a Grantor at any time
since January 1, 1992 (excluding Persons making sales in the ordinary course of
their businesses to a Grantor of property constituting inventory in the hands of
such seller), (b) each location of the chief executive office of each Grantor at
any time since January 1, 1992, (c) each location in which goods constituting
Collateral while owned by Grantor are or have been located since January 1,
1992, and (d) each trade style used by any Grantor since January 1, 1992 and the
purposes for which it was used. Borrower and Pan Am shall not, except with
respect to the Merger, change, and shall not permit any other Grantor to change,
the location of its chief executive office or any location specified in clause
(c) of the immediately preceding sentence, or use or permit any other Grantor to
use, any additional trade style, except upon giving not less than thirty (30)
days' prior written notice to the Lender and taking or causing to be taken all
such action at Borrower's or such other Grantor's expense as may be reasonably
requested by the Lender to perfect or maintain the perfection of the Lien of the
Lender in Collateral.
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ARTICLE VI
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
6.1. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lender to
make the initial Advance under the Revolving Credit Facility, and of the Issuing
Bank to issue any Letter of Credit, is subject to the conditions precedent that:
(a) the Lender shall have received on the Closing Date,
in form and substance satisfactory to the Lender, the following:
(i) executed originals of each of this Agreement,
the Notes, the initial Facility Guaranties, the Security
Instruments, the LC Account Agreement and the other Loan
Documents, together with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to (x) the Loan Documents and the transactions
contemplated thereby of counsel to the Credit Parties (other
K&W Group, Ltd.) dated the Closing Date, (y) the filing of
documents with the Federal Aviation Authority and the
existence of Liens with the Federal Aviation Authority, in
each case addressed to the Lender and satisfactory to Smith
Helms Mulliss & Moore, L.L.P., special counsel to the Lender,
substantially in the form of EXHIBITS D-1 and D-2;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Credit Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(iv) specimen signatures of officers of each of the
Loan Parties executing the Loan Documents on behalf of such
Credit Party, certified by the secretary or assistant
secretary of such Credit Party;
(v) the charter documents of each of the Loan
Parties certified as of a recent date by the Secretary of
State of its state of organization;
(vi) the bylaws of each of the Loan Parties certified
as of the Closing Date as true and correct by its secretary
or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of
formation of each of the Loan Parties as to the due existence
and good standing of such Person;
(viii) appropriate certificates of qualification to
do business, good standing and, where appropriate, authority
to conduct business under assumed name, issued
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in respect of each of the Loan Parties as of a recent date by
the Secretary of State or comparable official of each
jurisdiction in which the failure to be qualified to do
business or authorized so to conduct business could have a
Material Adverse Effect;
(ix) notice of appointment of the initial
Authorized Representative(s);
(x) Omitted intentionally.
(xi) evidence of all insurance required by the
Loan Documents;
(xii) an initial Borrowing Notice, if any.
(xiii) evidence of the filing of Uniform Commercial
Code financing statements reflecting the filing in all places
required by applicable law to perfect the Liens of the Lender
under the Security Instruments as a first priority Lien as to
items of Collateral in which a security interest may be
perfected by the filing of financing statements, and such
other documents and/or evidence of other actions as may be
necessary under applicable law to perfect the Liens of the
Lender under the Security Instruments as a first priority Lien
in and to such other Collateral as the Lender may require,
including without limitation:
(i) the delivery by each Credit Party, to
the extent applicable, of all stock certificates
evidencing Pledged Stock and certificates, if any,
evidencing ownership of Partnership Interests,
accompanied in each case by duly executed stock
powers (or other appropriate transfer documents) in
blank affixed thereto; and
(ii) the delivery by the Borrower and Pan Am
of evidence that all material filings have been made
with the Federal Aviation Administration and the
Department of Transportation.
(xiv) with respect to the property described in
the Mortgage appraisal, phase I environmental assessment,
boundary/as-built survey;
(xv) evidence that all fees payable by the
Borrower on the Closing Date to the Lender have been paid in
full;
(xvi) Uniform Commercial Code search results
showing only those Liens as are acceptable to the Lender;
(xvii) the Merger Agreement;
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(xviii) the Subscription Agreements by and among
Pan Am and certain investors;
(xix) a Borrowing Base Certificate;
(xx) receipt and approval of a letter from Price
Waterhouse LLP stating the Individual Guarantor's net worth;
(xxi) such other documents, instruments, certificates
and opinions as the Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby; and
(b) In the good faith judgment of the Lender:
(i) there shall not have occurred or become known to
the Lender any event, condition, situation or status since the
date of the information contained in the financial and
business projections, budgets, pro forma data and forecasts
concerning the Credit Parties delivered to the Lender prior to
the Closing Date that has had or could reasonably be expected
to result in a Material Adverse Effect;
(ii) except as set forth on SCHEDULE 7.10, no
litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or
threatened which could reasonably be likely to result in a
Material Adverse Effect;
(iii) the Loan Parties shall have received all
approvals, consents and waivers, and shall have made or given
all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the
occurrence of any default under, conflict with or violation of
(A) any applicable law, rule, regulation, order or decree of
any Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Loan
Parties is a party or by which any of them or their properties
is bound, except for such approvals, consents, waivers,
filings and notices the receipt, making or giving of which
will not have a Material Adverse Effect; and.
(iv) all due diligence with respect to the Borrower
and each Guarantor has been completed in scope and
determination satisfactory to the Lender.
6.2. CONDITIONS OF LOANS AND LETTER OF CREDIT. The obligations of the
Lender to make any Loans, and the Issuing Bank to issue Letters of Credit,
hereunder on or subsequent to the Closing Date are subject to the satisfaction
of the following conditions:
(a) the Lender shall have received a Borrowing Notice
if required by ARTICLE II;
(b) the representations and warranties of the Loan
Parties set forth in ARTICLE VII and in each of the other Loan
Documents shall be true and correct in all material respects on
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and as of the date of such, with the same effect as though such
representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties expressly
relate to an earlier date and except that the financial statements
referred to in SECTION 7.6(A) shall be deemed to be those financial
statements most recently delivered to the Lender pursuant to SECTION
8.1 from the date financial statements are delivered to the Lender in
accordance with such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each Advance
or the issuance of a Letter of Credit, no Default or Event of Default
specified in ARTICLE X shall have occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Loan, (x) the aggregate principal
balance of all outstanding Loans shall not exceed the
Total Revolving Credit Commitment; (y) if a Loan of
Revolving Credit Facility A all outstanding Loans
under such facility after giving effect to such Loan
shall not exceed the lesser of the Borrowing Base and
the Revolving Credit Facility A and (z) if a Loan of
Revolving Credit Facility B all outstanding Loans
under such facility after giving effect to such Loan
shall not exceed Revolving Credit Facility B;
(ii) a Letter of Credit or renewal thereof,
the aggregate principal balance of all outstanding
Letters of Credit and Reimbursement Obligations for
the Lender shall not exceed the Total Letter of
Credit Commitment;
(iii) a Loan or a Letter of Credit or
renewal thereof, the sum of Letter of Credit
Outstandings plus outstanding Loans shall not exceed
the Total Revolving Credit Commitment.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Each of the Obligors represents and warrants with respect to itself and
to its Subsidiaries (which representations and warranties shall survive the
delivery of the documents mentioned herein and the making of Loans), that:
7.1. ORGANIZATION AND AUTHORITY.
(a) It and each of its Subsidiaries are a corporation
duly organized and validly existing under the laws of the jurisdiction
of its formation;
(b) It and each of its Subsidiaries (x) has the requisite
power and authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in the Loan
Documents, and (y) is qualified to do business in every jurisdiction in
which failure so to qualify would have a Material Adverse Effect;
(c) It has the power and authority to execute, deliver and
perform this Agreement and the Notes in the case of the Borrower, and
to borrow hereunder in the case of the Borrower, and to execute,
deliver and perform each of the other Loan Documents to which it is a
party;
(d) It and each of its Subsidiaries has the power and
authority to execute, deliver and perform the Facility Guaranty and
each of the other Loan Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which it or its Subsidiaries is a party will be the legal, valid and
binding obligation or agreement, as the case may be, of such Credit
Party, enforceable against such Credit Party in accordance with its
terms, subject to the effect of any applicable bankruptcy, fraudulent
conveyance, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered in a
proceeding at law or in equity);
7.2. LOAN DOCUMENTS. The execution, delivery and performance by each
Credit Party of each of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite corporate
action (including any required shareholder approval) of such Credit
Party required for the lawful execution, delivery and performance
thereof;
(b) do not violate any provisions of (i) applicable law, rule
or regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority
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or arbitral authority binding on such Credit Party or its properties,
or (iii) the charter documents or bylaws of such Credit Party;
(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which such Credit Party is a party, or by which the
properties or assets of such Credit Party are bound; and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of such Credit Party
or any Subsidiary except any Liens in favor of the Lender created by
the Security Instruments;
7.3. SOLVENCY. Each Credit Party is Solvent after giving effect to the
transactions contemplated by the Loan Documents;
7.4. SUBSIDIARIES AND STOCKHOLDERS. The Borrower and Pan Am have no
Subsidiaries other than those Persons listed as Subsidiaries in SCHEDULE 7.4 and
additional Subsidiaries created or acquired after the Closing Date in compliance
with SECTION 8.19; SCHEDULE 7.4 states as of the date hereof the organizational
form of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower, Pan Am
or by any such Subsidiary; the outstanding shares or other equity interests of
each such Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable; and Borrower, Pan Am and each such Subsidiary owns
beneficially and of record all the shares and other interests it is listed as
owning in SCHEDULE 7.4, free and clear of any Lien;
7.5. OWNERSHIP INTERESTS. It owns no interest in any Person other than
the Persons listed in SCHEDULE 7.4, except equity investments in Persons not
constituting Subsidiaries permitted under SECTION 9.6 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 8.19;
7.6. FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to the Lender an
audited consolidated balance sheet of the Borrower and its Subsidiaries
as at June 30, 1996 and the notes thereto and the related consolidated
statements of income, stockholders' equity and cash flows for the
Fiscal Year then ended as examined and certified by Price Waterhouse
LLP, and unaudited consolidated interim financial statements of the
Borrower and its Subsidiaries consisting of a consolidated balance
sheets and related consolidated statements of income, stockholders'
equity and cash flows, in each case without notes, for and as of the
end of the nine (9) month period ending March 31, 1997. Except as set
forth therein, such financial statements (including the notes thereto)
present fairly the financial condition of the Borrower
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and its Subsidiaries as of the end of such Fiscal Year and nine (9)
month period and results of their operations and the changes in its
stockholders' equity for the Fiscal Year and interim period then ended,
all in conformity with GAAP applied on a Consistent Basis, subject
however, in the case of unaudited interim statements to year end audit
adjustments and the absence of notes thereto;
(b) Pan Am has heretofore furnished to the Lender an audited
consolidated balance sheet of Pan Am and its Subsidiaries as at
December 31, 1996 and the notes thereto and the related consolidated
statements of income, stockholders' equity and cash flows for the
Fiscal Year then ended as examined and certified by Deloitte & Touche,
and unaudited consolidated interim financial statements of Pan Am and
its Subsidiaries consisting of a consolidated balance sheet and related
consolidated statements of income, stockholders' equity and cash flows,
in each case without notes, for and as of the end of the three (3)
month period ending March 31, 1997. Except as set forth therein, such
financial statements (in cluding the notes thereto) present fairly the
financial condition of Pan Am and its Subsidiaries as of the end of
such Fiscal Year and three (3) month period and results of their
operations and the changes in its stockholders' equity for the Fiscal
Year and interim period then ended, all in conformity with GAAP applied
on a Consistent Basis, subject however, in the case of unaudited
interim statements to year end audit adjustments and the absence of
notes thereto;
(c) since March 31, 1997, other than as described in the
Projections, there has been no change in the condition, financial or
otherwise, of the Borrower, Pan Am and their Subsidiaries, taken as a
whole, which would have a Material Adverse Effect, or in the
businesses, properties, performance, or operations of the Borrower, Pan
Am or their Subsidiaries, taken as a whole, which would have a Material
Adverse Effect, nor have such businesses or properties been materially
adversely affected as a result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo or
act of God, which would have a Material Adverse Effect; and
(d) except as set forth in the financial statements referred
to in SECTION 7.6(A) OR (B) or in SCHEDULE 7.6 or permitted by SECTION
9.4, neither Borrower, Pan Am nor any Subsidiary has incurred, other
than in the ordinary course of business, any material Indebtedness,
Contingent Obligation or other commitment or liability which remains
outstanding or unsatisfied;
7.7. TITLE TO PROPERTIES. The Borrower, Pan Am and each of their
Subsidiaries and each other Credit Party has good and marketable title to all
its real and personal properties, other than certain intellectual properties as
relates to foreign title thereto, subject to no transfer restrictions or Liens
of any kind, except for the transfer restrictions and Liens described in
SCHEDULE 7.7 and Liens permitted by SECTION 9.4;
7.8. TAXES. Except as set forth in SCHEDULE 7.8, the Borrower, Pan Am
and each of its Subsidiaries has filed or caused to be filed all federal, state
and local tax returns which are required to be filed by it and, except for taxes
and assessments being contested in good faith by appropriate
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proceedings diligently conducted and against which reserves reflected in the
financial statements described in SECTION 7.6(A) and satisfactory to the
Borrower's and Pan Am's independent certified public accountants have been
established, have paid or caused to be paid all taxes as shown on said returns
or on any assessment received by it, to the extent that such taxes have become
due;
7.9. OTHER AGREEMENTS. Except as set forth on SCHEDULE 7.9, no Credit
Party nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
agreement or instrument to which such Credit Party or any Subsidiary is
a party, which default has, or if not remedied within any applicable
grace period could reasonably be likely to have, a Material Adverse
Effect;
7.10. LITIGATION. Except as set forth in SCHEDULE 7.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower or Pan Am, threatened by or against the Borrower or
Pan Am or any Subsidiary or other Credit Party or affecting the Borrower or Pan
Am or any Subsidiary or other Credit Party or any properties or rights of the
Borrower or Pan Am or any Subsidiary or other Credit Party, which could
reasonably be likely to have a Material Adverse Effect;
7.11. MARGIN STOCK. The proceeds of the borrowings made hereunder will
be used by the Borrower only for the purposes expressly authorized herein. None
of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof;
7.12. INVESTMENT COMPANY. No Credit Party is an "investment company,"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. ss. 80a-1, et seq.). The application of the proceeds
of the Loans and repayment thereof by the Borrower and the performance by the
Borrower and the other Loan Parties of the transactions contemplated by the Loan
Documents will not violate any provision of said Act, or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder, in each case
as in effect on the date hereof;
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7.13. PATENTS, ETC. The Obligors and each other Credit Party owns or
has the right to use, under valid license agreements or otherwise, all material
domestic patents, licenses, franchises, trademarks, trademark rights, trade
names, trade name rights, trade secrets and copyrights necessary to or used in
the conduct of its businesses in the United States or a territory thereof as now
conducted and as contemplated by the Loan Documents, without known conflict with
any patent, license, franchise, trademark, trade secret, trade name, copyright,
other proprietary right of any other Person located within the United States or
a territory thereof;
7.14. NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of the Obligors or any other Credit Party in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Lender in connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement contained
therein not misleading;
7.15. NO CONSENTS, ETC. The execution, delivery and performance of the
Loan Documents and the transactions contemplated thereby do not require a
consent, approval or authorization of, or filing, registration or qualification
with, any Governmental Authority or any other Person on the part of any Credit
Party as a condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by the Loan Documents, which, if
not obtained or effected, would be reasonably likely to have a Material Adverse
Effect, or if so, such consent, approval, authorization, filing, registration or
qualification has been duly obtained or effected, as the case may be;
7.16. EMPLOYEE BENEFIT PLANS.
(a) The Borrower and Pan Am and each ERISA Affiliate is in
material compliance with all applicable provisions of ERISA and the
regulations and published interpretations thereunder and in compliance
with all Foreign Benefit Laws with respect to all Employee Benefit
Plans except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code has not yet
expired. Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and each trust related to such plan
has been determined to be exempt under Section 501(a) of the Code. No
material liability has been incurred by the Borrower and Pan Am or any
ERISA Affiliate which remains unsatisfied for any taxes or penalties
with respect to any Employee Benefit Plan or any Multiemployer Plan;
(b) Neither the Borrower, Pan Am nor any ERISA Affiliate has
(i) engaged in a nonexempt prohibited transaction described in Section
4975 of the Code or Section 406 of ERISA affecting any of the Employee
Benefit Plans or the trusts created thereunder which could subject any
such Employee Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any accumulated funding deficiency with
respect to any Employee Benefit Plan,
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whether or not waived, or any other liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid, (iii) failed to make a required
contribution or payment to a Multiemployer Plan, or (iv) failed to make
a required installment or other required payment under Section 412 of
the Code, Section 302 of ERISA or the terms of such Employee Benefit
Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither the Borrower, Pan Am nor any ERISA Affiliate has
incurred any unpaid withdrawal liability with respect to any
Multiemployer Plan;
(d) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, did
not, as of the most recent valuation date for each such plan, exceed
the then current value of the assets of such Employee Benefit Plan
allocable to such benefits;
(e) To the best of its knowledge, each Employee Benefit Plan
subject to Title IV of ERISA, maintained by the Borrower, Pan Am or any
ERISA Affiliate, has been adminis tered in accordance with its terms in
all material respects and is in compliance in all material respects
with all applicable requirements of ERISA and other applicable laws,
regulations and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower or Pan
Am after due inquiry, is threatened concerning or involving any
Employee Benefit Plan;
7.17. NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder;
7.18. HAZARDOUS MATERIALS. The Borrower, Pan Am and each of their
respective Subsidiaries is in compliance with all applicable Environmental Laws
in all material respects. Neither the Borrower, Pan Am nor any Subsidiary has
been notified of any action, suit, proceeding or investigation which, and
neither the Borrower, Pan Am nor any Subsidiary is aware of any facts which, (i)
calls into question, or could reasonably be expected to call into question,
compliance by the Borrower, Pan Am or any Subsidiary with any Environmental
Laws, (ii) which seeks, or could reasonably be expected to form the basis of a
meritorious proceeding, to suspend, revoke or terminate any license, permit or
approval necessary for the generation, handling, storage, treatment or disposal
of any Hazardous Material, or (iii) which could reasonably be expected to form
the basis of a meritorious proceeding to cause any property of the Borrower, Pan
Am or any Subsidiary or other Credit Party to be subject to any restrictions on
ownership, use, occupancy or transferability under any Environmental Law, any of
the foregoing of which could have Material Adverse Effect;
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7.19. EMPLOYMENT MATTERS. (a) Except as set forth in SCHEDULE 7.19,
none of the employees of the Borrower or Pan Am or any Subsidiary is subject to
any collective bargaining agreement and there are no strikes, work stoppages,
election or decertification petitions or proceedings, unfair labor charges,
equal opportunity proceedings, or other material labor/employee related
controversies or proceedings pending or, to the best knowledge of the Borrower
or Pan Am, threatened against the Borrower or Pan Am or any Subsidiary or
between the Borrower or Pan Am or any Subsidiary and any of its employees, other
than employee grievances arising in the ordinary course of business which could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not
have a Material Adverse Effect, the Borrower, Pan Am and each Subsidiary is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation those
pertaining to wages, hours, occupational safety and taxation and there is
neither pending or threatened any litigation, administrative proceeding nor, to
the knowledge of the Borrower, Pan Am, any investigation, in respect of such
matters which, if decided adversely, could reasonably be likely, individually or
in the aggregate, to have a Material Adverse Effect; and
7.20. RICO. Neither the Borrower, Pan Am nor any Subsidiary is engaged
in or has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Lender shall otherwise
consent in writing, the Borrower and Pan Am will, and where applicable will
cause each of its Subsidiaries to:
8.1. FINANCIAL REPORTS, ETC. (a) As soon as practical and in any event
within 105 days after the end of each Fiscal Year of the Borrower and Pan Am,
deliver or cause to be delivered to the Lender (i) consolidated balance sheet of
each of the Borrower and Pan Am and their respective Subsidiaries as at the end
of such Fiscal Year, and the notes thereto, and the related consolidated
statements of income, stockholders' equity and cash flows, and the respective
notes thereto, for such Fiscal Year, setting forth (other than for consolidating
statements) comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP applied on a Consistent Basis and containing,
with respect to the consolidated financial statements, opinions of independent
certified public accountants selected by the Borrower and Pan Am and approved by
the Lender, which are unqualified as to the scope of the audit performed and
without any exception, other than a "going concern" qualification for the
Borrower as at June 30, 1997, not acceptable to the Lender, and (ii) a
certificate of an Authorized Representative demonstrating compliance with
SECTIONS 9.1(A) and 9.1(B) , which certificate shall be in the form of EXHIBIT
E;
(b) as soon as practical and in any event within 50 days after the end
of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Lender (i) consolidated balance sheet of each of Borrower and Pan
Am and their respective Subsidiaries as at the end of such fiscal quarter, and
the related consolidated statements of income, stockholders' equity and cash
flows for such fiscal quarter and for the period from the beginning of the then
current Fiscal Year through the end of such reporting period, and accompanied by
a certificate of an Authorized Representative of the Borrower and Pan Am to the
effect that such financial statements present fairly the financial position of
the Borrower and Pan Am and its respective Subsidiaries as of the end of such
fiscal period and the results of their operations and the changes in their
financial position for such fiscal period, in conformity with the standards set
forth in SECTION 7.6(A) with respect to interim financial statements, and (ii) a
certificate of an Authorized Representative containing computations for such
quarter comparable to that required pursuant to SECTION 8.1(A)(II);
(c) as soon as practical and in any event within 31 days after the end
of each calendar month deliver to the Lender a consolidated balance sheet of
each of the Borrower and Pan Am and their respective Subsidiaries as at the end
of such month, and the related consolidated statement of income and cash flow
for such month;
(d) after the Merger, on or prior to March 1, 1998, deliver to the
Lender a capital and operating expense budget and consolidated financial
projections for the Company and its Subsidiaries for the Fiscal Year ending
December 31, 1998;
(e) together with each delivery of the financial statements required by
SECTION 8.1(A)(I), deliver to the Lender a letter from the Company's accountants
specified in SECTION 8.1(A)(I) stating
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that in performing the audit necessary to render an opinion on the financial
statements delivered under SECTION 8.1(A)(I), they obtained no knowledge of any
Default or Event of Default by the Company in the fulfillment of the terms and
provisions of this Agreement insofar as they relate to financial matters (which
at the date of such statement remains uncured); or if the accountants have
obtained knowledge of such Default or Event of Default, a statement specifying
the nature and period of existence thereof;
(f) promptly upon their becoming available to the Borrower or Pan Am,
the Borrower or Pan Am, as the case may be, shall deliver to the Lender a copy
of (i) all regular or special reports or effective registration statements which
Borrower or Pan Am or any Subsidiary shall file with the Securities and Exchange
Commission (or any successor thereto) or any securities exchange, (ii) any proxy
statement distributed by the Borrower or Pan Am or any Subsidiary to its
shareholders, bondholders or the financial community in general, and (iii) any
management letter or other report submitted to the Borrower or Pan Am or any
Subsidiary by independent accountants in connection with any annual, interim or
special audit of the Borrower or Pan Am or any Subsidiary; and
(g) promptly, from time to time, deliver or cause to be delivered to
the Lender such other information regarding Borrower's or Pan Am's and any
Subsidiary's operations, business affairs and financial condition as the Lender
may reasonably request;
The Lender is hereby authorized to deliver a copy of any such financial
or other information delivered hereunder to any Governmental Authority,
including, but not limited to, the Federal Aviation Agency and Federal
Department of Transportation, having jurisdiction over the Lender pursuant to
any written request therefor or in the ordinary course of examination of loan
files, or to any other Person who shall acquire any participation interest in,
any Obligation permitted by this Agreement;
8.2. MAINTAIN PROPERTIES. Maintain all properties, taken as a whole,
necessary to its operations in good working order and condition, make all needed
repairs, replacements and renewals to such properties, and maintain free from
Liens all domestic trademarks, trade names, patents, copyrights, trade secrets,
know-how, and other intellectual property (or adequate licenses thereto), in
each case as are reasonably necessary to conduct its business as currently
conducted or as contemplated hereby, all in accordance with customary and
prudent business practices;
8.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary except where the failure to so qualify would not have
a Material Adverse Effect;
8.4. REGULATIONS AND TAXES. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
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proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable against its creditors;
8.5. INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated
and otherwise as required by the Security Instruments, (b) maintain general
public liability insurance at all times with responsible insurance carriers
against liability on account of damage to persons and property and (c) maintain
insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) and against loss by reason by business interruption such
policies of insurance to have such limits, deductibles, exclusions, co-insurance
and other provisions providing no less coverages than that specified in SCHEDULE
8.5, such insurance policies to be in form reasonably satisfactory to the
Lender. Each of the policies of insurance described in this SECTION 8.5 shall
provide that the insurer shall give the Lender not less than thirty (30) days'
prior written notice before any such policy shall be terminated, lapse or be
altered in any manner;
8.6. TRUE BOOKS. Keep true books of record and account in which in all
material respects full, true and correct entries will be made of all of its
dealings and transactions, and set up on its books such reserves as may be
required by GAAP with respect to doubtful accounts and all taxes, assessments,
charges, levies and claims and with respect to its business in general, and
include such reserves in interim as well as year-end financial statements;
8.7. RIGHT OF INSPECTION. Permit any Person designated by the Lender to
visit and inspect any of the properties, corporate books and financial reports
of the Borrower and Pan Am or any of their Subsidiaries and to discuss their
affairs, finances and accounts with its principal officers and independent
certified public accountants, all at reasonable times during business hours and
when a representative of the Borrower is reasonably available, at reasonable
intervals and with reasonable prior notice;
8.8. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business;
8.9. GOVERNMENTAL LICENSES. Obtain and maintain all material licenses,
permits, certifications and approvals of all applicable Governmental Authorities
as are required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents;
8.10. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower and Pan Am in SECTIONS 8.2 through 8.9, and
8.18 inclusive;
8.11. AUTHORIZED REPRESENTATIVE'S KNOWLEDGE OF DEFAULT. Upon any
Authorized Representative of the Borrower or Pan Am obtaining knowledge of any
Default or Event of Default
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hereunder or under any other obligation of the Borrower or Pan Am or any
Subsidiary or other Credit Party to the Lender, or any event, development or
occurrence which could reasonably be expected to have a Material Adverse Effect,
cause such Authorized Representative to promptly notify the Lender of the nature
thereof, the period of existence thereof, and what action the Borrower or Pan Am
or such Subsidiary or other Credit Party proposes to take with respect thereto;
8.12. SUITS OR OTHER PROCEEDINGS. Upon any Authorized Representative of
the Borrower or Pan Am obtaining knowledge of any litigation or other
proceedings being instituted against the Borrower or Pan Am or any Subsidiary or
other Credit Party, or any attachment, levy, execution or other process being
instituted against any assets of the Borrower or Pan Am or any Subsidiary or
other Credit Party, making a claim or claims in an aggregate amount greater than
$100,000 not otherwise covered by insurance which litigation or other proceeding
could have a Material Adverse Effect, promptly deliver to the Lender written
notice thereof stating the nature and status of such litigation, dispute,
proceeding, levy, execution or other process;
8.13. NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL
COMPLAINT. Promptly provide to the Lender true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or Pan Am or any Subsidiary relating to any (a)
violation or alleged violation by the Borrower or Pan Am or any Subsidiary of
any applicable Environmental Law; (b) release or threatened release by the
Borrower or Pan Am or any Subsidiary, or at any facility or property owned or
leased or operated by the Borrower or Pan Am or any Subsidiary, of any Hazardous
Material, except where occurring legally; or (c) liability or alleged liability
of the Borrower or Pan Am or any Subsidiary for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials;
8.14. ENVIRONMENTAL COMPLIANCE. If the Borrower and Pan Am or any
Subsidiary shall receive any letter, notice, complaint, order, directive, claim
or citation alleging that the Borrower or Pan Am or any Subsidiary has violated
any Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower or
Pan Am shall, within the time period permitted by the applicable Environmental
Law or the Governmental Authority responsible for enforcing such Environmental
Law, remove or remedy, or cause the applicable Subsidiary to remove or remedy,
such violation or release or satisfy such liability unless and only during the
period that the applicability of the Environmental Law, the fact of such
violation or liability or what is required to remove or remedy such violation is
being contested by the Borrower or Pan Am or the applicable Subsidiary by
appropriate proceedings diligently conducted and all reserves with respect
thereto as may be required under Generally Accepted Accounting Principles, if
any, have been made, and no Lien in connection therewith shall have attached to
any property of the Borrower or Pan Am or the applicable Subsidiary which shall
have become enforceable against creditors of such Person;
8.15. INDEMNIFICATION. Without limiting the generality of SECTION 11.9,
but subject to the limitations of obligation contained in ARTICLE IV, the
Borrower and Pan Am hereby agree (severally prior to the Merger and jointly
thereafter) to indemnify and hold the Lender, and their respective officers,
directors, employees and agents, harmless from and against any and all claims,
losses, penalties, liabilities, damages and expenses (including assessment and
cleanup costs and reasonable
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attorneys' fees and disbursements) arising directly or indirectly from, out of
or by reason of (a) the violation of any Environmental Law by the Borrower or
Pan Am or any Subsidiary or with respect to any property owned, operated or
leased by the Borrower or Pan Am or any Subsidiary or (b) the handling, storage,
treatment, emission or disposal of any Hazardous Materials by or on behalf of
the Borrower or Pan Am or any Subsidiary or on or with respect to property owned
or leased or operated by the Borrower or Pan Am or any Subsidiary. The
provisions of this SECTION 8.15 shall survive the Facility Termination Date and
expiration or termination of this Agreement;
8.16. FURTHER ASSURANCES. At the Borrower's cost and expense, upon
request of the Lender, duly execute and deliver or cause to be duly executed and
delivered, to the Lender such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Lender to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents;
8.17. EMPLOYEE BENEFIT PLANS.
(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Lender of (a) the establishment
of any new Pension Plan (which notice shall include a copy of such
plan), (b) the commencement of contributions to any Employee Benefit
Plan to which the Borrower or Pan Am or any of its ERISA Affiliates was
not previously contributing, (c) any material increase in the benefits
of any existing Employee Benefit Plan, (d) each funding waiver request
filed with respect to any Employee Benefit Plan and all communications
received or sent by the Borrower or Pan Am or any ERISA Affiliate with
respect to such request and (e) the failure of the Borrower or Pan Am
or any ERISA Affiliate to make a required installment or payment under
Section 302 of ERISA or Section 412 of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Pension Plan or any trust created thereunder,
deliver to the Lender a notice specifying the nature thereof, what
action the Borrower or Pan Am or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (a), (b) and (c), deliver to the
Lender copies of (a) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code, (b) all notices received
by the Borrower or Pan Am or any ERISA Affiliate of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (c) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by the
Borrower or Pan Am or any ERISA Affiliate with the Internal Revenue
Service with respect to each Pension
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Plan and (d) all notices received by the Borrower or Pan Am or any
ERISA Affiliate from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to Section 4202
of ERISA. The Borrower or Pan Am will notify the Lender in writing
within five (5) Business Days of the Borrower or Pan Am or any ERISA
Affiliate obtaining knowledge or reason to know that the Borrower or
Pan Am or any ERISA Affiliate has filed or intends to file a notice of
intent to terminate any Pension Plan under a distress termination
within the meaning of Section 4041(c) of ERISA;
8.18. CONTINUED OPERATIONS. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted;
8.19. NEW SUBSIDIARIES. Simultaneously with the acquisition or creation
of any Subsidiary by the Borrower or Pan Am cause to be delivered to the Lender
each of the following:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of EXHIBIT F;
(b) a Security Agreement of such Subsidiary substantially in
the form of EXHIBIT H, together with such Uniform Commercial Code
financing statements on Form UCC-1 or otherwise duly executed by such
Subsidiary as "Debtor" and naming the Lender as "Secured Party", in
form, substance and number sufficient in the reasonable opinion of the
Lender and its special counsel to be filed in all Uniform Commercial
Code filing offices in all jurisdictions in which filing is necessary
or advisable to perfect in favor of the Lender the Lien on Collateral
conferred under such Security Instrument to the extent such Lien may be
perfected by Uniform Commercial Code filing;
(c) if such Subsidiary is a corporation or is a partnership
that has issued certificates evidencing ownership of partnership
interests, (A) the Pledged Stock or, if applicable, certificates of
ownership of such partnership interests, together with duly executed
stock powers or powers of assignment in blank affixed thereto, and (B)
if such Collateral shall be owned by a Subsidiary who has not then
executed and delivered to the Lender a Security Instrument from the
owner of such Collateral granting a Lien to the Lender in such
Collateral, a Security Agreement or a Pledge Agreement (as appropriate)
substantially similar in form and content to that executed and
delivered by the Borrower as of the Closing Date, with appropriate
revisions as to the identity of the pledgor and securing the
obligations of such pledgor under its Facility Guaranty;
(d) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized
Representative (provided that the failure to deliver such supplement
shall not impair the rights conferred under the Security Instruments in
after acquired Collateral);
(e) an opinion of counsel to the Subsidiary dated as of the
date of delivery of the Facility Guaranty and other Loan Documents
provided for in this SECTION 8.19 and addressed to the Lender, in form
and substance reasonably acceptable to the Lender (which opinion may
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include assumptions and qualifications of similar effect to those
contained in the opinions of counsel delivered pursuant to SECTION
6.1(A)), to the effect that:
(A) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted and proposed to be conducted, and is duly qualified
to transact business and is in good standing as a foreign
corporation or partnership in each other jurisdiction in which
the character of the properties owned or leased, or the
business carried on by it, requires such qualification and the
failure to be so qualified would reasonably be likely to
result in a Material Adverse Effect;
(B) the execution, delivery and performance of the
Facility Guaranty and other Loan Documents described in this
SECTION 8.19 to which such Subsidiary is a signatory have been
duly authorized by all requisite corporate or partnership
action (including any required shareholder or partner
approval), each of such agreements has been duly executed and
delivered and constitutes the valid and binding agreement of
such Subsidiary, enforceable against such Subsidiary in
accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general
principles of equity (whether considered in a proceeding at
law or in equity); and
(C) the Uniform Commercial Code financing statements
on Form UCC-1 delivered to the Lender by the Subsidiary in
connection with the delivery of the Security Instruments of
such Subsidiary have been duly executed by the Subsidiary and
are in form, substance and number sufficient for filing in all
Uniform Commercial Code filing offices in all jurisdictions in
which filing is necessary to perfect in favor of the Lender
the Lien on Collateral conferred under such Security
Instruments to the extent such Lien may be perfected by
Uniform Commercial Code filing;
(f) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if
applicable, and bylaws of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if
required by such charter documents, bylaws or by applicable law, of the
shareholders) of such Subsidiary authorizing the actions and the
execution and delivery of documents described in this SECTION 8.19.
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ARTICLE IX
NEGATIVE COVENANTS
Until the Obligations have been paid and satisfied in full, no Letters
of Credit remain outstanding (or they have been collateralized in a manner
acceptable to the Lender) and this Agreement has been terminated in accordance
with the terms hereof, unless the Lender shall otherwise consent in writing, the
Borrower and Pan Am will not, nor will it permit any Subsidiary to:
9.1. FINANCIAL COVENANTS.
(a) NET WORTH. Permit Consolidated Shareholders' Equity (Deficit) as at
the end of each Fiscal Quarter to be less than (i) ($15,500,000) at September
30, 1997, (ii) ($25,500,000) at December 31, 1997, (iii) ($23,500,000) at March
31, 1998 and (iv) ($17,500,000) at June 30, 1998, plus (B) 75% of the net
proceeds for such fiscal quarter of any sale of an equity interest in the
Company or any Subsidiaries (excluding amounts received in excess of $13,500,000
from the sale of Pan Am's Series B Convertible Preferred Stock) plus (C) 75% of
the exercise price of warrants issued in consideration for the real property
described in the Mortgage at the time of the exercise of such warrants.
(b) FIXED CHARGE RATIO. Permit Consolidated Fixed Charge Ratio to be
greater than 1.10 to 1.00 for (i) the one quarter period ending September 30,
1997, (ii) the six month period beginning July 1, 1997 and ending December 31,
1997, (iii) the nine month period beginning July 1, 1997 and ending March 31,
1998 and (iv) the Four Quarter period ending June 30, 1998.
9.2. CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures, which exceed in the aggregate in any fiscal quarter of the Company
described below (on a cumulative basis, with the effect that amounts not
expended in any fiscal quarter may be carried forward to a subsequent period),
the amount set forth opposite each such period:
CAPITAL EXPENDITURES
FISCAL QUARTER ENDING: NOT TO EXCEED:
---------------------- --------------
September 30, 1997 $ 9,800,000
December 31, 1997 $10,800,000
March 31, 1998 $10,000,000
June 30, 1998 $10,500,000
9.3. LIENS. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Borrower, Pan Am or any Subsidiary, other
than
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(a) Liens created under the Security Instruments in favor of
the Lender, and otherwise existing as of the date hereof and as set
forth in SCHEDULE 7.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted, which, except as expressly so specified on SCHEDULE 7.7, are
inferior in respect of the Collateral to the Liens conferred under the
Security Instruments, and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable against other creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted, which, except as expressly so specified on
SCHEDULE 7.7, are inferior in respect of the Collateral to the Liens
conferred under the Security Instruments, and with respect to which
adequate reserves or other appropriate provisions are being maintained
in accordance with GAAP and which Liens are not yet enforceable against
other creditors;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds)
in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower,
Pan Am or any Subsidiary and which do not materially detract from the
value of the property to which they attach or materially impair the use
thereof to the Borrower, Pan Am or any Subsidiary;
(f) rights of set off of financial institutions holding
deposits of Credit Parties; and
(g) purchase money Liens to secure Indebtedness permitted
under SECTION 9.4(F) and incurred to purchase fixed assets, provided
such Indebtedness represents not less than 75% of the purchase price of
such assets as of the date of purchase thereof and no property other
than the assets so purchased secures such Indebtedness.
9.4. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except:
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(a) Indebtedness existing as of the Closing Date as set forth
in SCHEDULE 7.6; PROVIDED, none of the instruments and agreements
evidencing or governing such Indebtedness shall, in any material way
which has an adverse effect on the Lender, be amended, modified or
supplemented after the Closing Date to change any terms of
subordination, repayment or rights of conversion, put, exchange or
other rights from such terms and rights as in effect on the Closing
Date; PROVIDED, further, that from and after the Merger all
Indebtedness arising under the Barnett Agreement shall be paid in full
and the Barnett Agreement terminated.
(b) Indebtedness owing to the Lender in connection with this
Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) Indebtedness owed by Borrower, Pan Am or any Subsidiary to
one another so long as such Indebtedness is subordinated in right of
payment to the Obligations;
(e) Unpaid taxes to the extent not due or if due are being
contested in accordance with SECTION 8.4;
(f) purchase money Indebtedness described in SECTION 9.3(G)
not to exceed an aggregate outstanding amount at any time of
$1,500,000; and
(g) Indebtedness issued in an underwritten offering which is
unsecured, subordinated on terms acceptable to the Lender, provides for
no principal payment prior to payment of the Obligations, contains not
less than a 270 day standstill, the proceeds of which are used as
provided in SECTION 2.6(C) and after giving effect to the incurrence
thereof no Default or Event of Default exist hereunder.
9.5. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose of
any assets other than (a) dispositions of inventory in the ordinary course of
business, (b) dispositions of property that is substantially worn, damaged,
obsolete or, in the judgment of the Borrower, Pan Am, as the case may be, no
longer best used or useful in its business or that of any Subsidiary, (c)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by SECTION 9.7, and (d) the disposition of Eligible
Securities in the ordinary course of management of the investment portfolio of
the Borrower, Pan Am and their Subsidiaries;
9.6. INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that the Borrower and Pan Am maintain
investments or invest in:
(a) Eligible Securities;
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(b) investments existing as of the date hereof and as set
forth in SCHEDULE 7.4;
(c) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss; and
(d) investments in Subsidiaries which are Guarantors and a 30%
ownership interest in Chalks Air Bridge, Inc.;
(e) other loans, advances and investments in an aggregate
principal amount at any time outstanding not to exceed $100,000;
9.7. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person (except that the Merger may occur without affecting this
Agreement), or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales permitted under SECTION 9.5;
PROVIDED, HOWEVER, (i) any Subsidiary of the Borrower or Pan Am may merge or
transfer all or substantially all of its assets into or consolidate with the
Borrower or Pan Am, respectively, or any wholly-owned Subsidiary of the Borrower
or Pan Am, and (ii) any other Person may merge into or consolidate with the
Borrower or Pan Am or any wholly-owned Subsidiary, PROVIDED FURTHER, that any
resulting or surviving entity shall execute and deliver such agreements and
other documents, including a Facility Guaranty, and take such other action as
the Lender may require to evidence or confirm its express assumption of the
obligations and liabilities of its predecessor entities under the Loan
Documents;
9.8. RESTRICTED PAYMENTS. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing;
9.9. TRANSACTIONS WITH AFFILIATES. Other than transactions permitted
under SECTIONS 9.5 and 9.7 and as described in SCHEDULE 9.9, enter into any
transaction after the Closing Date, including, without limitation, the purchase,
sale, lease or exchange of property, real or personal, or the rendering of any
service, with any Affiliate of the Borrower or Pan Am, except (a) that such
Persons may render services to the Borrower or Pan Am or its Subsidiaries for
compensation at the same rates generally paid by Persons engaged in the same or
similar businesses for the same or similar services, (b) that the Borrower or
Pan Am or any Subsidiary may render services to such Persons for compensation at
the same rates generally charged by the Borrower or Pan Am or such Subsidiary
and (c) transactions in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or Pan Am's (or any Subsidiary's)
business consistent with past practice of the Borrower or Pan Am and its
Subsidiaries and upon fair and reasonable terms no less favorable to the
Borrower or Pan Am's (or any Subsidiary) than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate;
9.10. COMPLIANCE WITH ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
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(a) permit the occurrence of any Termination Event which would
result in a liability on the part of the Borrower, Pan Am or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or Pan Am or any ERISA Affiliate
may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or Pan Am or any ERISA Affiliate or increase
the obligation of the Borrower, Pan Am or any ERISA Affiliate to a
Multiemployer Plan; or
(g) fail, or permit the Borrower, Pan Am or any ERISA
Affiliate to fail, to establish, maintain and operate each Employee
Benefit Plan in compliance in all material respects with the provisions
of ERISA, the Code, all applicable Foreign Benefit Laws and all other
applicable laws and the regulations and interpretations thereof;
9.11. FISCAL YEAR. Change its Fiscal Year;
9.12. DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to SECTION 9.7.
9.13. LIMITATIONS ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower, Pan Am or any
Subsidiary of real or personal property, whether now owned or hereafter acquired
in a related transaction or series of related transactions, which has been or is
to be sold or transferred by the Borrower, Pan Am or any Subsidiary to such
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the
Borrower, Pan Am or any Subsidiary;
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9.14. CHANGE IN CONTROL. Cause, suffer or permit to exist or occur any
Change of Control;
9.15. NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Lender pursuant to this
Agreement or any other Loan Documents which prohibits or limits the ability of
any of the Borrower, Pan Am or any Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, PROVIDED that the Borrower, Pan Am and any
Subsidiary may enter into such an agreement in connection with property acquired
with the proceeds of purchase money Indebtedness permitted hereunder subject to
any Lien permitted by this Agreement and not released after the date hereof,
when such prohibition or limitation is by its terms effective only against the
assets subject to such Lien;
9.16. PARTNERSHIPS. Become a general partner in any general or limited
partnership.
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ARTICLE X
EVENTS OF DEFAULT AND ACCELERATION
10.1. EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of ARTICLE II or ARTICLE III, at maturity, by
acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or
other Obligation or of any fees or other amounts payable to the Lender
on the date on which the same shall be due and payable; or
(c) if default shall be made in the performance or observance
of any covenant set forth in SECTION 8.7, 8.11, 8.12, 8.19 or ARTICLE
IX;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for 30 or more days after the earlier of receipt of notice of
such default by the Authorized Representative from the Lender or an
Authorized Representative becomes aware of such default, or if a
default shall be made in the performance or observance of, or shall
occur under, any covenant, agreement or provision contained in any of
the other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or
creating any obligation, guaranty, or Lien in favor of the Lender or
delivered to the Lender in connection with or pursuant to this
Agreement or any of the Obligations, or if any Loan Document ceases to
be in full force and effect (other than by reason of any action by the
Lender), or if without the written consent of the Lender, this
Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void or
unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or by reason of any action by the
Lender); or
(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other than the Loans and other
Obligations) of the Borrower, Pan Am or any Subsidiary in an amount not
less than $250,000 in the aggregate outstanding, or (ii) a default,
which is not waived, in the performance, observance or fulfillment of
any term or covenant contained in any agreement or instrument under or
pursuant to which any such Indebtedness may have been issued,
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created, assumed, guaranteed or secured by the Borrower or Pan Am or
any Subsidiary, or (iii) any other event of default as specified in any
agreement or instrument under or pursuant to which any such
Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower, Pan Am or any Subsidiary, and such default or
event of default shall continue for more than the period of grace, if
any, therein specified, or such default or event of default shall
permit the holder of any such Indebtedness (or any agent or trustee
acting on behalf of one or more holders) to accelerate the maturity
thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Lender by or on behalf of the
Borrower, Pan Am or any other Credit Party pursuant to or in connection
with any Loan Document, or otherwise, shall be false or misleading in
any material respect when given; or
(g) if either Credit Party shall file a petition to take
advantage of any insolvency statute; make an assignment for the benefit
of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole
or any substantial part of its property; file a petition or answer
seeking liquidation, reorganization or arrangement or similar relief
under the federal bankruptcy laws or any other applicable law or
statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower, Pan Am or any Subsidiary or
other Credit Party or of the whole or any substantial part of its
properties and such order, judgment or decree continues unstayed and in
effect for a period of ninety (90) days, or approve a petition filed
against the Borrower, Pan Am or any Subsidiary seeking liquidation,
reorganization or arrangement or similar relief under the federal bank
ruptcy laws or any other applicable law or statute of the United States
of America or any state, which petition is not dismissed within ninety
(90) days; or if, under the provisions of any other law for the relief
or aid of debtors, a court of competent jurisdiction shall assume
custody or control of the Borrower, Pan Am or any Subsidiary or other
Credit Party or of the whole or any substantial part of its properties,
which control is not relinquished within ninety (90) days; or if there
is commenced against the Borrower, Pan Am or any Subsidiary or other
Credit Party any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of
ninety (90); or if the Borrower, Pan Am or any Subsidiary or other
Credit Party takes any action to indicate its consent to or approval of
any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount
not covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $25,000 is rendered against the Borrower,
Pan Am or any Subsidiary, or (ii) there is any attachment, injunction
or execution against any of the Borrower's, Pan Am's or Subsidiaries'
properties for any amount in excess of $25,000 in the aggregate; and in
either event such judgment,
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attachment, injunction or execution remains unpaid, unstayed,
undischarged, unbonded or undismissed for a period of thirty (30) days;
or
(j) if the Borrower, Pan Am or any Subsidiary shall, other
than in the ordinary course of business (as determined by past
practices), suspend all or any part of its operations material to the
conduct of the business of the Borrower, Pan Am or such Subsidiary for
a period of more than 60 days; provided, however, that nothing in this
clause shall limit the right to suspend unprofitable routes; or
(k) if there shall occur and not be waived an Event of Default
as defined in any of the other Loan Documents; then, and in any such
event and at any time thereafter, if such Event of Default or any other
Event of Default shall have not been waived, or
(l) if the Merger shall not have occurred by September 30,
1997 or if Borrower shall not have caused the Mortgage and related
title insurance to be delivered to the Lender by September 30, 1997,
(A) either or both of the following actions may be
taken: (i) the Lender may declare any obligation of the Lender
and the Issuing Bank to make further Loans or to issue
additional Letters of Credit terminated, whereupon the
obligation of the Lender to make further Loans and of the
Issuing Bank to issue additional Letters of Credit, hereunder
shall terminate immediately, and (ii) the Lender at its
option, declare by notice to the Borrower any or all of the
Obligations to be immediately due and payable, and the same,
including all interest accrued thereon and all other
obligations of the Borrower to the Lender, shall forthwith
become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all of
which are hereby expressly waived, anything contained herein
or in any instrument evidencing the Obligations to the
contrary notwithstanding; PROVIDED, however, that
notwithstanding the above, if there shall occur an Event of
Default under clause (g) or (h) above, then the obligation of
the Lender to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall automatically terminate and
any and all of the Obligations shall be immediately due and
payable without the necessity of any action by the Lender or
notice to the Lender;
(B) The Borrower shall, upon demand of the Lender,
deposit cash or cash equivalents with the Lender in an amount
equal to the amount of any Letter of Credit Outstandings, as
collateral security for the repayment of any future drawings
or payments under such Letters of Credit, and such amounts
shall be held by the Lender pursuant to the terms of the LC
Account Agreement; and
(C) the Lender shall have all of the rights and
remedies available under the Loan Documents or under any
applicable law.
10.2. LENDER TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Lender may, proceed to protect and enforce
its rights or remedies either by suit in
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equity or by action at law, or both, whether for the specific performance of any
covenant, agreement or other provision contained herein or in any other Loan
Document, or to enforce the payment of the Obligations or any other legal or
equitable right or remedy.
10.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lender is intended to be exclusive of any other rights or remedies contained
herein or in any other Loan Document, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
10.4. NO WAIVER. No course of dealing between the Borrower and the
Lender or any failure or delay on the part of the Lender in exercising any
rights or remedies under any Loan Document or otherwise available to it shall
operate as a waiver of any rights or remedies and no single or partial exercise
of any rights or remedies shall operate as a waiver or preclude the exercise of
any other rights or remedies hereunder or of the same right or remedy on a
future occasion.
10.5. ALLOCATION OF PROCEEDS. (a) If an Event of Default has occurred
and not been waived, and the maturity of the Notes has been accelerated pursuant
to ARTICLE X hereof, all payments received by the Lender hereunder, in respect
of any principal of or interest on the Obligations or any other amounts payable
by the Borrower hereunder, shall be applied by the Lender in the following
order:
(i) amounts due to the Lender pursuant to SECTIONS
2.8, 3.3, 3.4 AND 11.5;
(ii) payments of interest on Loans and Reimbursement
Obligations;
(iii) payments of principal of Loans and
Reimbursement Obligations;
(iv) payments of cash or cash equivalent amounts to
the Lender in respect of outstanding Letters of Credit
pursuant to SECTION 10.1(K)(B);
(v) amounts due to the Lender pursuant to SECTIONS
8.15 and 11.9;
(vi) payments of all other amounts due under any of
the Loan Documents, if any; and
(vii) payments of any remaining amounts to the
Company.
(b) The parties hereto agree that only the first $6,000,000 of Loans
made pursuant to Revolving Credit Facility A are secured by the real property
and improvements described in the Mortgage and that no other Obligations are
secured by the real property described in the Mortgage. Any principal payments
of Revolving Credit Facility A made either pursuant to SECTION 2.3 shall be
applied first to reduce that portion of Revolving Credit Facility A not secured
by the real property described in the Mortgage.
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(c) In the event of the occurrence of an Event of Default and the sale
of the Collateral prior to the effective date of the Merger, the proceeds of the
sale of Collateral owned by the Borrower and its Subsidiaries shall be applied
first to repay Revolving Credit Facility A. The parties hereto agree that in the
event the Merger shall not have occurred and the Borrower shall have made any
principal payment of Revolving Credit Facility B from application of any
Collateral of Borrower and its Subsidiaries during a period of ninety days
preceding the occurrence of an Event of Default, then in that event such payment
shall be deemed to have been a payment of Revolving Credit Facility A rather
than Revolving Credit Facility B.
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ARTICLE XI
MISCELLANEOUS
11.1. PARTICIPATIONS.
(a) The Lender may sell participations to one or more Persons
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Revolving Credit Commitment and its Loans);
PROVIDED, HOWEVER, that (i) the Lender's obligations under this Agreement shall
remain unchanged, (ii) the Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the right of set-off contained in SECTION
11.3, and (iv) the Borrower shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under this
Agreement, and the Lender shall retain the sole right to enforce the obligations
of the Borrower relating to its Loans and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other than
amendments, modifications, or waivers decreasing the amount of principal of or
the rate at which interest is payable on such Loans or Note, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Loans or Note, or extending its Revolving Credit Commitment).
(b) Notwithstanding any other provision set forth in this
Agreement, the Lender may at any time assign and pledge all or any portion of
its Loans and its Note to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
(c) The Lender may furnish any information concerning the
Borrower, Pan Am or any of its or their Subsidiaries in the possession of the
Lender from time to time to assignees and participants (including prospective
participants).
11.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
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(a) IF TO THE BORROWER:
Carnival Air Lines, Inc.
1815 Griffin Road, Suite 205
Dania, Florida 33178
Attn: Lew Graham
Telephone: (954)923-8672 ext. 2280
Telefacsimile: (954) 927-0839
WITH COPY TO:
Carnival Corporation
3655 N.W. 87th Avenue
5th Floor
Miami, Florida 33178
Attn: Arnaldo Perez, Esq.
Telephone: (305) 599-2600 ext. 5323
Telefacsimile: (305) 471-4758
(b) IF TO PAN AM:
Pan Am Corporation
9300 N.W. 36th Street
Miami, Florida 33178
Attn: Jack Ogilby, Esq.
Telephone: (305) 873-3877
Telefacsimile: (305) 873-2800
WITH COPY TO:
Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.C.
150 W. Flagler, Suite 2400
Miami, Florida 33130
Attn: Carl Roston
Telephone: (305) 789-3532
Telefacsimile: (305) 789-3395
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(b) if to the Lender:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-1112
Telefacsimile: (704) 386-8694
(c) if to any other Credit Party, at the address set
forth on the signature page of the Facility Guaranty
or Security Instrument executed by such Credit Party,
as the case may be.
11.3. RIGHT OF SET-OFF; ADJUSTMENTS. (a) Upon the occurrence and during
the continuance of any Event of Default, the Lender (and each of its affiliates)
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Lender (or any of its affiliates) to or for the credit or
the account of the Borrower or Pan Am against any and all of the obligations of
the Borrower or Pan Am now or hereafter existing under this Agreement and the
Note held by the Lender, irrespective of whether the Lender shall have made any
demand under this Agreement or such Note and although such obligations may be
unmatured. The Lender agrees promptly to notify the Borrower or Pan Am, as the
case may be, after any such set-off and application made by the Lender;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
SECTION 11.3 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that the Lender may have.
11.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lender of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lender of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or the Borrower has
continuing obligations hereunder unless otherwise provided herein. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of the Borrower and Pan Am
which are contained in the Loan Documents shall inure to the benefit of the
successors and permitted assigns of the Lender or any of them.
11.5. EXPENSES. The Borrower agrees to pay on demand all costs and
expenses of the Lender in connection with the preparation, execution, delivery,
administration, modification, and amendment of this Agreement, the other Loan
Documents, and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of counsel for the Lender
(including the cost of internal counsel) with respect thereto and with respect
to advising the Lender as to its rights and responsibilities under the Loan
Documents. The Borrower further agrees to pay on demand all costs and expenses
of the Lender, if any (including, without limitation, reasonable
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attorneys' fees and expenses and the cost of internal counsel), in connection
with the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Loan Documents and the other documents to be delivered
hereunder.
11.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower, Pan Am and the Lender; no
notice to or demand on the Borrower in any case shall entitle the Borrower other
or further notice or demand in similar or other circumstances, except as
otherwise expressly provided herein. No delay or omission on the Lender's part
in exercising any right, remedy or option shall operate as a waiver of such or
any other right, remedy or option or of any Default or Event of Default. The
Lender agrees that it shall not release any Collateral so long as no Event of
Default exists without the prior written consent of PanAm and the Individual
Guarantor.
11.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
11.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower, Pan Am or the Lender or any obligation of the
Borrower or the Lender, arising prior to the effective date of such termination,
and the provisions hereof shall continue to be fully operative until all
transactions entered into or rights created or obligations incurred prior to
such termination have been fully disposed of, concluded or liquidated and the
Obligations arising prior to or after such termination have been irrevocably
paid in full. The rights granted to the Lender under the Loan Documents shall
continue in full force and effect, notwithstanding the termination of this
Agreement, until all of the Obligations have been paid in full after the
termination hereof (other than Obligations in the nature of continuing
indemnities or expense reimbursement obligations not yet due and payable, which
shall continue) or the Borrower has furnished the Lender with an indemnification
satisfactory to the Lender with respect thereto. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until payment in full of the Obligations unless otherwise
provided herein. Notwithstanding the foregoing, if after receipt of any payment
of all or any part of the Obligations, the Lender is for any reason compelled to
surrender such payment to any Person because such payment is determined to be
void or voidable as a preference, impermissible setoff, a diversion of trust
funds or for any other reason, this Agreement shall continue in full force and
the Borrower shall be liable to, and shall indemnify and hold the Lender
harmless for, the amount of such payment surrendered until the Lender shall have
been finally and irrevocably paid in full. The provisions of the foregoing
sentence shall be and remain effective notwithstanding any contrary action which
may have been taken by the Lender in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to the Lender's rights under
this Agreement and shall be deemed to have been conditioned upon such payment
having become final and irrevocable.
11.9. INDEMNIFICATION; LIMITATION OF LIABILITY. (a) The Borrower agrees
to indemnify and hold harmless the Lender and each of its affiliates and their
respective officers,
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directors, employees, agents, and advisors (each, an "Indemnified Party") from
and against any and all third party claims, damages, losses, liabilities, costs,
and expenses (including, without limitation, reasonable attorneys' fees) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or proceeding or
preparation of defense in connection therewith) the Loan Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans, except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this SECTION 11.9 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by the Borrower, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated. The Borrower agrees not to assert any claim against the Lender, any
of its affiliates, or any of their respective directors, officers, employees,
attorneys, agents, and advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to the Loan Documents, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Loans.
(b) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 11.9 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
11.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
11.11. ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations and other communications between or among the parties, both oral
and written, with respect thereto.
11.12. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
11.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
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hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Lender an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lender and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if the Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at the Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
11.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(B) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF DADE,
STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY EXPRESSLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE
EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN
ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH PARTY, HEREBY IRREVOCABLY
SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(C) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE
MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
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PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE
ADDRESS OF THE BORROWER, PAN AM AND LENDER PROVIDED IN SECTION 11.2, OR
BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS
IN EFFECT IN THE STATE OF FLORIDA.
(D) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL
PRECLUDE THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE THE BORROWER, PAN AM OR ANY OF THE BORROWER'S OR PAN
AM'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT
PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER
AND PAN AM EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY
BE AVAILABLE UNDER APPLICABLE LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER AND PAN
AM AND THE LENDER HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY
JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
68
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
CARNIVAL AIR LINES, INC.
as the Borrower
WITNESS:
/S/ JOHN J. OGILBY, JR. By: /S/ ARNALDO PEREZ
Name: Arnaldo Perez
/S/ DOREEN FURNARI Title: Vice President & Secretary
PAN AM CORPORATION,
as the Guarantor
WITNESS:
/S/ ARNALDO PEREZ By:/S/ JOHN J. OGILBY, JR.
Name: John J. Ogilby, Jr.
/S/ DOREEN FURNARI Title: Chief Financial Officer & General Counsel
NATIONSBANK, NATIONAL ASSOCIATION,
as the Lender
By:/S/ RICHARD M. STARKE
Name: Richard M. Starke
Title: Vice President
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION
By:/S/ RICHARD M. STARKE
Name: Richard M. Starke
Title: Vice President
Lending Office for Base Rate Loans:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Barbara Pollock
Telephone: (704) 388-1112
Telefacsimile: (704) 386-8694
Wire Transfer Instructions:
NationsBank, National Association
ABA# 063100277
Account No.: 3750855133
Reference: Carnival Air Lines, Inc.
Attention: Barbara Pollock
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-29659) of
Pan Am Corporation of our report dated August 15, 1997 relating to the financial
statements of Carnival Air Lines, Inc., which are incorporated by reference in
the Current Report on Form 8-K of Pan Am Corporation dated October 6, 1997.
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
September 26, 1997
EXHIBIT 99.1
[LOGO] PAN AM NEWS RELEASE
- -------------------------------------------------------------------------------
For Immediate Release Contact:
Jeff Kriendler, Pan Am
305-873-6509
Pan Am Corporation Shareholders Approve Acquisition of Carnival Air Lines
MIAMI, September 26 - Shareholders of Pan Am Corporation (ASE: PAA)
approved the issuance of 9,523,810 shares of the Corporation's common stock in
connection with the acquisition of Carnival Air Lines. The announcement was
made at Pan Am's annual meeting of shareholders held here this morning on the
first anniversary of Pan Am's inaugural flight on September 26, 1996.
The vote was 6,966,793 in favor of the proposal and 18,538 opposed, with
18,495 abstaining. A total of 11,412,610 shares of Pan Am's common stock were
outstanding and entitled to vote on September 2, the date of record, of which
9,845,469 were present or represented by proxy.
Four other proposals which had been unanimously endorsed by the
Corporation's Board of Directors and submitted for shareholder consideration
today also received the requisite majority approval, including the election of
six directors, an amendment to increase the 1996 Stock Option Plan, the issuance
of Common Stock in connection with the conversion of the Company's outstanding
Preferred Stock, and the purchase by Pan Am of the Doral Technology Center in
Miami from Eastern Air Lines, Inc.
Hailing the affirmative shareholder vote to approve the merger, Martin R.
Shugrue, Jr., Pan Am's President and Chief Executive Officer said, "Today
represents the beginning of a new era for the combined company."
In speaking to the shareholders, Shugrue noted that the combined carrier
will be concentrating its resources in northeast U.S. to Florida markets as
well as routes from the northeast to Puerto Rico, the Bahamas and the Dominican
Republic. In order to capitalize on anticipated strong demand from New England
to warm weather destinations, Shugrue also announced that Pan Am is planning
to inaugurate service this December from Boston to New York and beyond with
direct and connecting service to Florida and the Caribbean in time for the peak
winter season.
-more-
<PAGE>
"To optimize our cost structure, we will be eliminating the one daily
transcontinental flight between Los Angeles and New York, as well as make other
route system adjustments that are designed to attempt to improve our financial
performance," Shugrue said.
Certain matters discussed in this press release may constitute forward-
looking statements within the meaning of the federal securities laws. Actual
results and the timing of certain events could differ materially from those
projected in or contemplated by the forward-looking statements.
###
