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Exhibit 10.33
SECOND AMENDMENT
THIS SECOND AMENDMENT (this "AMENDMENT") dated as of December 31, 1999,
to the Credit Agreement referenced below, is by and among AVTEAM, INC., a
Florida corporation, the Subsidiaries of the Borrower identified as Guarantors
on the signature pages hereto, the lenders identified herein, and Bank of
America, N.A., a national banking association formerly known as NationsBank,
N.A., as Administrative Agent. Terms used herein but not otherwise defined
herein shall have the meanings provided to such terms in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $70 million credit facility has been extended to the
Borrower pursuant to the terms of that Credit Agreement dated as of April 30,
1998 (as amended and modified, the "CREDIT AGREEMENT") among the Borrower, the
Subsidiaries of the Borrower identified as Guarantors therein, the Lenders
identified therein, and NationsBank, N.A.
(now known as Bank of America, N.A.), as Administrative Agent;
WHEREAS, the Borrower has requested certain modifications to the Credit
Agreement;
WHEREAS, the requested modifications require the consent of the
Required Lenders;
WHEREAS, the Required Lenders have agreed to the requested
modifications on the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Credit Agreement is amended in the following respects:
1.1 Effective June 7, 2000 with respect to each Extension of Credit
made after such date and each Extension of Credit outstanding on such
date, the pricing grid in the definition of "Applicable Percentage" in
Section 1.1 of the Credit Agreement is hereby amended to read as
follows:
Eurodollar
Margin
Consolidated and
Pricing Senior Leverage Base Rate Letter of Commitment
Level Ratio Margin Credit Fee Fee
------- ---------------- --------- ----------- -----------
I more than 3.5 2.00% 3.50% 0.500%
II more than 3.0 but less than or equal to 3.5 1.25% 2.75% 0.500%
III more than 2.5 but less than or equal to 3.0 1.00% 2.50% 0.500%
IV more than 2.0 but less than or equal to 2.5 0.75% 2.25% 0.375%
V more than 1.5 but less than or equal to 2.0 0.50% 2.00% 0.375%
VI more than 1.0 but less than or equal to 1.5 0.25% 1.75% 0.300%
VII less than or equal 1.0 0.00% 1.50% 0.250%
1.2 The definition of "Consolidated EBITDA" in Section 1.1 of the
Credit Agreement is amended to read as follows:
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"CONSOLIDATED EBITDA" means for any period for the
Consolidated Group, the sum of Consolidated Net Income plus,
to the extent deducted in determining net income, (a)
Consolidated Interest Expense, (b) all provisions for any
federal, state or other domestic and foreign income taxes, and
(c) depreciation and amortization (including the amortization
of bank fees paid in connection with this Agreement), in each
case on a consolidated basis determined in accordance with
GAAP applied on a consistent basis. Notwithstanding any
provision to the contrary contained herein, (i) for purposes
of calculating the Consolidated Senior Leverage Ratio (A) for
the fiscal quarter ending September 30, 2000, Consolidated
EBITDA shall be the result obtained by multiplying the actual
Consolidated EBITDA for such fiscal quarter by four (4); (B)
for the fiscal quarter ending December 31, 2000, Consolidated
EBITDA shall be the result obtained by multiplying the actual
Consolidated EBITDA for the period of two fiscal quarters
ending December 31, 2000 by two (2); (C) for the fiscal
quarter ending March 31, 2001, Consolidated EBITDA shall be
the result obtained by multiplying the actual Consolidated
EBITDA for the period of three fiscal quarters ending March
31, 2001 by one and one-third (1>); and (D) for the
fiscal quarter ending June 30, 2001 and each fiscal quarter
ending thereafter, Consolidated EBITDA shall be the actual
Consolidated EBITDA for the period of four consecutive fiscal
quarters ending as of the date of determination, and (ii) for
purposes of calculating Consolidated EBITDA under Section
7.9(f) and the Consolidated Fixed Charge Coverage Ratio (A)
for the fiscal quarter ending September 30, 2000, Consolidated
EBITDA shall be the actual Consolidated EBITDA for such fiscal
quarter; (B) for the fiscal quarter ending December 31, 2000,
Consolidated EBITDA shall be the actual Consolidated EBITDA
for the period of two fiscal quarters ending December 31,
2000; (C) for the fiscal quarter ending March 31, 2001,
Consolidated EBITDA shall be the actual Consolidated EBITDA
for the period of three fiscal quarters ending March 31, 2001;
and (D) for the fiscal quarter ending June 30, 2001,
Consolidated EBITDA shall be the actual Consolidated EBITDA
for the period of four fiscal quarters ending June 30, 2001.
1.3 The last sentence of the definition of "Consolidated Fixed Charges"
in Section 1.1 of the Credit Agreement is amended to read as follows:
Notwithstanding any provision to the contrary contained
herein, for purposes of calculating the Consolidated Fixed
Charge Coverage Ratio (A) for the fiscal quarter ending
September 30, 2000, Consolidated Fixed Charges shall be the
actual Consolidated Fixed Charges for such fiscal quarter; (B)
for the fiscal quarter ending December 31, 2000, Consolidated
Fixed Charges shall be the actual Consolidated Fixed Charges
for the period of two fiscal quarters ending December 31,
2000; (C) for the fiscal quarter ending March 31, 2001,
Consolidated Fixed Charges shall be the actual Consolidated
Fixed Charges for the period of three fiscal quarters ending
March 31, 2001; and (D) for the fiscal quarter ending June 30,
2001, Consolidated Fixed Charges shall be the actual
Consolidated Fixed Charges for the period of four fiscal
quarters ending June 30, 2001.
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1.4 In the definition of "Eligible Inventory" in Section 1.1 of the
Credit Agreement, the phrase immediately preceding clause (i) thereof
is amended to read as follows:
means, as of any date of determination and without
duplication, the lower of the aggregate book value or fair
market value of all raw materials, revenue producing equipment
and finished goods inventory held for sale or lease owned by
the Borrower less appropriate reserves determined, as to any
inventory held for sale only, in accordance with GAAP and less
appropriate reserves determined by the Administrative Agent in
its sole reasonable discretion, but excluding in any event
1.5 In the definition of "Eligible Receivables" in Section 1.1 of the
Credit Agreement, the phrase immediately preceding clause (i) thereof
is amended to read as follows:
means, as of any date of determination and without
duplication, the aggregate book value of all accounts
receivable, receivables, and obligations for payment created
or arising from the sale of inventory or the rendering of
services in the ordinary course of business (collectively, the
"RECEIVABLES"), owned by or owing to the Borrower, net of
allowances and reserves for doubtful or uncollectible accounts
and sales adjustments consistent with such Person's internal
policies and in any event in accordance with GAAP and net of
reserves determined by the Administrative Agent in its sole
reasonable discretion, but excluding in any event
1.6 In the definition of "Eligible Inventory" in Section 1.1 of the
Credit Agreement, the "and" at the end of clause (iv) thereof is
deleted and replaced with ",", the "." at the end of clause (v) thereof
is deleted and replaced with "and", and a new clause (vi) is added
thereto to read as follows:
(vi) inventory which fails to meet such other specifications
and requirements as may from time to time be established by
the Administrative Agent in its sole reasonable discretion.
1.7 In the definition of "Eligible Receivables" in Section 1.1 of the
Credit Agreement, the "and" at the end of clause (v) thereof is deleted
and replaced with ",", the "." at the end of clause (vi) thereof is
deleted and replaced with "and", and a new clause (vii) is added
thereto to read as follows:
(vii) Receivables which fail to meet such other specifications
and requirements as may from time to time be established by
the Administrative Agent in its sole reasonable discretion.
1.8 Subclause (ii) of clause (c) of Section 2.1 of the Credit Agreement
is amended to read as follows:
(ii) MINIMUM AMOUNTS. Each Eurodollar Loan shall be in a
minimum aggregate principal amount of $5,000,000 and in integral
multiples of $1,000,000 in excess thereof.
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1.9 In Section 6.2 of the Credit Agreement, the phrase "Since the date
of the audited financial statements referenced in Section 6.1(i)," is
replaced with the phrase "Since December 31, 1999,".
1.10 In clause (b) of Section 6.17 of the Credit Agreement, the word
"Except" is deleted and replaced with the phrase "Except as disclosed
in public filings with the Securities and Exchange Commission and
except".
1.11 A new Section 6.20 is added to the Credit Agreement to read as
follows:
6.20 ACCOUNTING METHOD. No member of the Consolidated Group
has changed the accounting method for determining inventory
values utilized by the Borrower in the preparation of the
audited financial statements for the Borrower and its
subsidiaries for the fiscal year ended December 31, 1999
without the prior written consent of the Administrative Agent.
1.12 A new subclause (iii) is added to clause (b) of Section 7.1 of the
Credit Agreement to read as follows:
(iii) within thirty (30) days after the end of each calendar
month, a company-prepared consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of the immediately
preceding calendar month and related company-prepared
consolidated statements of income, retained earnings,
shareholders' equity and cash flows for such monthly period
and for the fiscal year to date, in form and substance
satisfactory to the Administrative Agent and the Required
Lenders;
1.13 Clause (c) of Section 7.1 of the Credit Agreement is amended to
read as follows:
(c) Within thirty (30) days after the 15th day of each
calendar month and the last day of each calendar month, a
statement of the Borrowing Base and its components (the
"BORROWING BASE CERTIFICATE") as of the 15th day of the
immediately preceding calendar month or the last day of the
immediately preceding calendar month, as applicable
(including, among other things, accounts receivable aging and
listing, inventory listing (by location) and accounts payable
aging and listing), certified by the chief financial officer
of the Borrower to be true and correct as of the date thereof
and in form reasonably satisfactory to the Administrative
Agent. A form of Borrowing Base Certificate is attached as
SCHEDULE 7.1(C);
1.14 Clause (d) of Section 7.1 of the Credit Agreement is renumbered as
clause (e) thereof, and a new clause (d) is added thereto to read as
follows:
(d) On the 15th day of each calendar month and the last day of
each calendar month, company-prepared cash flow projections
for the Borrower and each of its Subsidiaries (prepared on a
consolidated and consolidating basis) for the thirteen (13)
week period from the date thereof. Such cash flow projections
shall be in form and content reasonably satisfactory to the
Administrative Agent. Such cash flow projections shall be
accompanied by a report, prepared by the Borrower,
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demonstrating in detail reasonably satisfactory to the
Administrative Agent, the actual cash expenditures by the
Borrower and its Subsidiaries during the immediately preceding
thirteen (13) week period.
1.15 Clause (a) of Section 7.9 of the Credit Agreement is deleted in
its entirety and replaced with:
(a) [Reserved]
1.16 Clause (b) of Section 7.9 of the Credit Agreement is amended to
read as follows:
(b) CONSOLIDATED SENIOR LEVERAGE RATIO. As of the end of each
fiscal quarter set forth below, the Consolidated Senior
Leverage Ratio shall be not greater than the ratio set forth
opposite such fiscal quarter:
Quarter Ratio
------- -----
December 31, 1999 no covenant
March 31, 2000 no covenant
June 30, 2000 no covenant
September 30, 2000 7.12:1.0
December 31, 2000 5.6:1.0
March 31, 2001 5.0:1.0
Each fiscal quarter ending thereafter 4.5:1.0
1.17 Clause (c) of Section 7.9 of the Credit Agreement is amended to
read as follows:
(c) CONSOLIDATED NET WORTH. As of the end of each fiscal
quarter beginning with the fiscal quarter ending June 30,
2000, the Consolidated Net Worth shall not be less than the
sum of one hundred percent (100%) of the actual Consolidated
Net Worth as of June 30, 2000 PLUS on the last day of each
fiscal quarter beginning with the fiscal quarter ending
September 30, 2000, eighty-five percent (85%) of the
Consolidated Net Income for the fiscal quarter then ended (but
not less than zero), such increases to be cumulative, PLUS one
hundred percent (100%) of the Net Proceeds from Equity
Transactions occurring thereafter.
1.18 Clause (d) of Section 7.9 of the Credit Agreement is amended to
read as follows:
(d) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. As of the end of
each fiscal quarter set forth below, the Consolidated Fixed
Charge Coverage Ratio shall be not less than the ratio set
forth opposite such fiscal quarter:
Quarter Ratio
------ -----
December 31, 1999 no covenant
March 31, 2000 no covenant
June 30, 2000 no covenant
September 30, 2000 0.72:1.0
December 31, 2000 0.86:1.0
March 31, 2001 0.98:1.0
Each fiscal quarter ending thereafter 1.09:1.0
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1.19 Clause (e) of Section 7.9 of the Credit Agreement is amended to
read as follows:
(e) CAPITAL EXPENDITURES. Capital Expenditures for the
Consolidated Group shall not exceed $2,000,000 in the
aggregate in any fiscal year.
1.20 A new clause (f) is added to Section 7.9 of the Credit Agreement
to read as follows:
(f) MINIMUM CONSOLIDATED EBITDA. As of the end of each fiscal
quarter set forth below, Consolidated EBITDA shall not be less
than the amount set forth opposite such fiscal quarter:
Quarter Amount
------- ------
December 31, 1999 no covenant
March 31, 2000 no covenant
June 30, 2000 no covenant
September 30, 2000 $2,383,000
December 31, 2000 $5,682,000
March 31, 2001 $9,506,000
June 30, 2001 $13,718,000
1.21 Clause (c) of Section 8.4 of the Credit Agreement is amended to
read as follows:
(c) Acquire all or any portion of the capital stock or other
ownership interest in any Person which is not a Subsidiary or
all or any substantial portion of the assets, property and/or
operations of a Person which is not a Subsidiary, UNLESS such
acquisition will not cause a violation of Section 8.5.
1.22 Section 8.10 of the Credit Agreement is amended to read as
follows:
8.10 RESTRICTED PAYMENTS.
Make or permit any Restricted Payments.
2. Effective June 7, 2000, the Swingline Commitment is terminated.
3. The Administrative Agent (or its agents) has commenced a field exam
of the inventory and the accounts receivables systems, processes and controls of
the Credit Parties (the "FIELD EXAM"). The Credit Parties agree to cooperate
fully with the Administrative Agent (and its agents) in the conduct of the Field
Exam, providing reasonable access to all personnel, books and records, and
facilities of the Credit Parties necessary for the conduct of the Field Exam.
The Credit Parties shall promptly pay upon demand all reasonable costs,
expenses, and fees incurred by the Administrative Agent and any of its agents
and designees related thereto.
4. The Administrative Agent, on behalf of the Lenders, has engaged an
appraiser to make an appraisal of the inventory of the Credit Parties (current
fair market value and one-year orderly liquidation value) (the "Appraisal"). The
Credit Parties agree to cooperate fully with the Administrative Agent and the
appraiser in the conduct of the Appraisal, providing reasonable access to all
personnel, books and records, and facilities of the Credit Parties necessary for
the conduct of the Appraisal. The Credit Parties shall promptly pay upon demand
all reasonable costs, expenses, and fees incurred by the Administrative
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Agent and any of its agents and designees related thereto; PROVIDED, HOWEVER,
that the aggregate fees relating thereto (exclusive of costs and expenses) shall
not exceed $50,000.
5. The Administrative Agent has engaged PricewaterhouseCoopers, LLC
(the "CONSULTANT") to serve as a consultant and financial advisor with regard to
analyzing and examining various aspects of the Borrower's business. The Borrower
shall provide the Consultant reasonable access to all business records,
facilities and appropriate personnel and professionals of the Credit Parties,
including without limitation the Borrower's accountants and auditors, to
facilitate the Consultant's review and analysis. The Credit Parties shall
promptly pay upon demand all reasonable costs, expenses and fees of the
Consultant as and when incurred by the Administrative Agent.
6. The Required Lenders hereby waive any Default or Event of Default
which exists or existed on or prior to June 7, 2000 solely as a result of: (a)
the Borrower's failure to timely deliver annual financial statements for fiscal
year 1999 in violation of Section 7.1(a) of the Credit Agreement; (b) the
Borrower's failure to timely deliver quarterly financial statements for the
fiscal quarter ended March 31, 2000 in violation of Section 7.1(b) of the Credit
Agreement; and (c) the Borrower's failure to timely deliver the January 31,
2000, February 29, 2000, March 31, 2000 and April 30, 2000 Borrowing Base
Certificates required pursuant to Section 7.1(c) of the Credit Agreement.
7. The Borrower hereby covenants and agrees that it will:
(a) on or before June 7, 2000, file its 10K for its fiscal
year ending December 31, 1999 with the Securities and Exchange
Commission;
(b) on or before June 7, 2000, deliver to the Administrative
Agent the audited financial statements of the Borrower and its
subsidiaries for the fiscal year ended December 31, 1999 that satisfy
the requirements of Section 7.1(a) of the Credit Agreement (other than
the date by which delivery is required as set forth therein);
(c) on or before June 12, 2000, deliver to the Administrative
Agent the accountant's certificate referenced in Section 7.2(a) of the
Credit Agreement for the fiscal year ended December 31, 1999;
(d) on or before June 15, 2000, deliver to the Administrative
Agent the final Borrowing Base Certificate as of January 31, 2000 and
February 29, 2000;
(e) on or before June 22, 2000, file its 10Q for its fiscal
quarter ending March 31, 2000 with the Securities and Exchange
Commission;
(f) on or before June 22, 2000, deliver to the Administrative
Agent the company-prepared unaudited financial statements of the
Borrower and its subsidiaries for the fiscal quarter ended March 31,
2000 that satisfy the requirements of Section 7.1(b) of the Credit
Agreement (other than the date by which delivery is required as set
forth therein); and
(g) on or before June 22, 2000, deliver to the Administrative
Agent the final Borrowing Base Certificate as of March 31, 2000, April
30, 2000 and May 31, 2000;
The failure by the Borrower to comply with any of the
covenants set forth in this Section 7 shall constitute an Event of
Default.
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8. The Credit Parties and the Required Lenders hereby agree that the
occurrence of either of the following events shall constitute an Event of
Default: (a) the annual audited financial statements of the Borrower and its
subsidiaries for the fiscal year ended December 31, 1999 are materially
different, as determined by the Required Lenders in their reasonable discretion,
from the projected financial statements (including projected financial covenant
calculations) delivered to the Administrative Agent and the Lenders in
connection with this Amendment or (b) one-time charges taken by the Borrower and
its subsidiaries in the fiscal quarter ended December 31, 1999 in connection
with the write-down of excess inventory and other charges exceed $6,900,000.
9. This Amendment shall be effective as of the date hereof upon
satisfaction of the following conditions:
(a) receipt by the Administrative Agent of the Lockbox
Agreement, in substantially the form attached hereto as EXHIBIT A,
executed by the Credit Parties and the Administrative Agent;
(b) receipt by the Administrative Agent, for the ratable
benefit of the Lenders that approve this Amendment, of an amendment fee
equal to 45.0 basis points (0.45%) on the aggregate amount of
Commitments;
(c) receipt by the Administrative Agent of evidence of payment
of all other fees payable in connection with this Amendment; and
(d) receipt by the Administrative Agent of all information,
such counterpart originals or such certified or other copies of such
originals as it may reasonably request, and all legal and financial
matters incident to the transactions contemplated by this Amendment
shall be satisfactory to the Administrative Agent.
10. Except as modified hereby, all of the terms and provisions of the
Credit Agreement and the other Credit Documents (including schedules and
exhibits thereto) shall remain in full force and effect.
11. Each Credit Party hereby represents and warrants that (a) after
giving effect to this Amendment, each of the representations and warranties
contained in the Credit Agreement and the other Credit Documents are true and
correct as of the date hereof (except those which expressly relate to an earlier
period), (b) no Credit Party is in default under or with respect to any
Contractual Obligation (including, without limitation, any Operating Lease or
any Capital Lease), and (c) no Credit Party has any claims, counterclaims,
offsets, or defenses to the Credit Documents and the performance of its
obligations thereunder, including but not limited to the repayment of the
Obligations.
12. Each of the Guarantors (i) acknowledges and consents to all of the
terms and conditions of this Amendment, (ii) affirms all of its obligations
under the Credit Documents and (iii) agrees that this Amendment and all
documents executed in connection herewith do not operate to reduce or discharge
the Guarantors' obligations under the Credit Agreement or the other Credit
Documents.
13. In consideration of the Lenders' willingness to enter into this
Amendment, each of the Credit Parties hereby releases the Administrative Agent,
the Lenders, and the Administrative Agent's and the Lenders' respective
officers, employees, representatives, agents, counsel, trustees and directors
from any and all actions, causes of action, claims, demands, damages and
liabilities of whatever kind or nature, in law or in equity, now known or
unknown, suspected or unsuspected to the extent that any of the foregoing arises
from any action or failure to act on or prior to June 7, 2000.
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14. The Borrower agrees to pay upon demand all reasonable costs and
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Amendment, including without limitation the
reasonable fees and expenses of Xxxxx & Xxx Xxxxx, PLLC.
15. The Administrative Agent hereby notifies the Credit Parties and the
Lenders that its address for notices and all other communications set forth in
Section 11.1 of the Credit Agreement is as follows:
Bank of America, N.A.
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
16. This Amendment 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 Amendment to produce or account for
more than one such counterpart.
17. This Amendment shall be deemed to be a contract made under, and for
all purposes shall be construed in accordance with, the laws of the State of
Florida.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Second Amendment to be duly executed and delivered as of the date first
above written.
BORROWER: AVTEAM, INC.,
a Florida corporation
By:
---------------------------------------
Name:
Title:
GUARANTORS: AVTEAM AVIATION FIELD SERVICES, INC.
a Florida corporation
By:
---------------------------------------
Name:
Title:
AVTEAM ENGINE REPAIR CORP.,
a Florida corporation
By:
---------------------------------------
Name:
Title:
[Signature Pages Continue]
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LENDERS: BANK OF AMERICA, N.A., a national banking
association formerly known as NationsBank, N.A.,
individually in its capacity as a Lender
and in its capacity as Administrative Agent
By:
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Name: Xxxxx X. Xxxxx, Xx.
Title: Vice President
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By:
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Name:
Title:
NATIONAL CITY BANK OF KENTUCKY
By:
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Name:
Title:
NATIONAL BANK OF CANADA
By:
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Name:
Title:
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
By:
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Name:
Title:
CITIZENS BANK OF MASSACHUSETTS,
as successor to USTRUST
By:
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Name:
Title:
BANK LEUMI LE-ISRAEL B.M., MIAMI AGENCY
By:
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Name:
Title:
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