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EXHIBIT 10.2
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NATIONAL AIRMOTIVE CORPORATION
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LOAN AND SECURITY AGREEMENT
Dated: June 13, 1996
$40,000,000
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FLEET CAPITAL CORPORATION
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TABLE OF CONTENTS
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SECTION 1. CREDIT FACILITY .................................................. 2
1.1 Revolving Credit Loans.................................... 2
1.2 Term Loans................................................ 3
1.3 Letters of Credit; LC Guaranties.......................... 3
SECTION 2. INTEREST, FEES AND CHARGES........................................ 3
2.1 Interest.................................................. 3
2.2 Computation of Interest and Fees.......................... 4
2.3 Conditional Interest Rate Reduction at 1997 FYE........... 4
2.4 Closing Fee............................................... 5
2.5 Letter of Credit and LC Guaranty Fees..................... 5
2.6 Unused Line Fee........................................... 5
2.7 Collection Charges........................................ 5
2.8 Audit and Appraisal Fees.................................. 5
2.9 Reimbursement of Expenses................................. 5
2.10 Bank Charges.............................................. 6
SECTION 3. LOAN ADMINISTRATION............................................... 6
3.1 Manner of Borrowing Revolving Credit Loans................ 6
3.2 Payments.................................................. 7
3.3 Prepayments............................................... 8
3.4 Application of Payments and Collections................... 8
3.5 All Loans to Constitute One Obligation.................... 9
3.6 Loan Account.............................................. 9
3.7 Statements of Account..................................... 9
SECTION 4. TERM AND TERMINATION.............................................. 9
4.1 Term of Agreement......................................... 9
4.2 Termination............................................... 9
SECTION 5. SECURITY INTERESTS................................................ 10
5.1 Security Interest in Collateral........................... 10
5.2 Lien Perfection; Further Assurances....................... 11
5.3 .......................................................... 11
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SECTION 6. COLLATERAL ADMINISTRATION....................................... 11
6.1 General................................................. 11
6.2 Administration of Accounts.............................. 12
6.3 Administration of Inventory............................. 14
6.4 Administration of Equipment............................. 14
6.5 Payment of Charges...................................... 15
SECTION 7. REPRESENTATIONS AND WARRANTIES.................................. 15
7.1 General Representations and Warranties.................. 15
7.2 Continuous Nature of Representations and Warranties..... 21
7.3 Survival of Representations and Warranties.............. 21
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS............................. 21
8.1 Affirmative Covenants................................... 22
8.2 Negative Covenants...................................... 23
8.3 Specific Financial Covenants............................ 28
9.1 Documentation........................................... 29
9.2 Intentionally Omitted................................... 29
9.3 Other Loan Documents.................................... 29
9.4 Availability............................................ 30
9.5 Fiscal Year End Financial Statements.................... 30
9.6 Certified Documents of Borrower......................... 30
9.7 [Intentionally omitted]................................. 30
9.8 Confirmation Searches................................... 30
9.9 Opinion of Counsel...................................... 30
9.10 Evidence of Insurance of Collateral..................... 31
9.11 Use of Financing........................................ 31
9.12 Pay-Off Letter and UCC Termination Statements, etc. .... 31
9.13 Disbursement Instruction Letter......................... 31
9.14 Offshore Receivable Financing........................... 31
9.15 Past Due ▇▇▇▇▇▇▇ Payable................................ 31
9.16 Dominion Account Agreement.............................. 31
9.17 Inventory Analysis...................................... 31
9.18 Tax Sharing Agreement................................... 31
9.19 Shareholders Agreement.................................. 31
9.20 Canpartners Sub Debt Documents.......................... 31
9A.1 No Default.............................................. 32
9A.2 Representations and Warranties.......................... 32
9A.3 No Litigation........................................... 32
SECTION 9B. CONDITION SUBSEQUENT............................................ 32
9B.1 ........................................................ 32
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SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT................... 33
10.1 Events of Default........................................... 33
10.2 Acceleration of the Obligations............................. 35
10.3 Other Remedies.............................................. 35
10.4 Remedies Cumulative; No Waiver.............................. 37
SECTION 11. MISCELLANEOUS....................................................... 37
11.1 Power of Attorney........................................... 37
11.2 Indemnity................................................... 38
11.3 Modification of Agreement; Sale of Interest................. 38
11.4 Severability................................................ 39
11.5 Successors and Assigns...................................... 39
11.6 Cumulative Effect; Conflict of Terms........................ 39
11.7 Execution in Counterparts................................... 40
11.8 Notice...................................................... 40
11.9 Lender's Consent............................................ 41
11.10 Credit Inquiries............................................ 41
11.11 Time of Essence............................................. 41
11.12 Entire Agreement............................................ 41
11.13 Interpretation.............................................. 41
11.14 GOVERNING LAW: CONSENT TO FORUM............................. 41
11.15 WAIVERS BY BORROWER......................................... 42
11.16 Confidentiality............................................. 43
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 13th day of June, 1996, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ and NATIONAL AIRMOTIVE CORPORATION ("Borrower"), a California corporation
with its chief executive office and principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇. Capitalized terms used in this
Agreement have the meanings assigned to them in Appendix A, General
Definitions. Accounting terms not otherwise specifically defined herein shall
be construed in accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $40,000,000
available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long as no Default
or Event of Default exists and subject to the satisfaction of the applicable
conditions precedent set forth in Sections 9 and 9A, to make Revolving Credit
Loans to Borrower from time to time, as requested by Borrower in the manner set
forth in subsection 3.1.1 hereof, up to a maximum principal amount at any time
outstanding equal to the lesser of (a) the Maximum Amount minus the LC Amount,
or (b) the Borrowing Base at such time minus the LC Amount, and reserves, if
any. Lender shall have the right to establish reserves in such amounts, and
with respect to such matters, as Lender shall in good ▇▇▇▇▇ ▇▇▇▇ necessary or
appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under this subsection 1.1.1, including, without limitation,
with respect to (i) price adjustments, damages, unearned discounts, returned
products or other matters for which credit memoranda are issued in the ordinary
course of Borrower's business; (ii) shrinkage, spoilage and obsolescence of
Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against
Borrower's Loan Account as Revolving Credit Loans under any section of this
Agreement; (v) amounts owing by Borrower to any Person to the extent secured by
a Lien on, or trust over, any Property of Borrower; and (vi) such other matters,
events, conditions or contingencies as to which Lender, in its sole credit
judgment, determines reserves should be established from time to time hereunder.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used
solely for (a) the satisfaction of existing Indebtedness of Borrower to Existing
Lender, (b) the satisfaction of a portion of the Canpartners Subordinated Debt,
and (c) Borrower's general operating capital needs in a manner consistent with
the provisions of this Agreement and all applicable laws.
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1.2 Term Loans.
1.2.1 Term Loan #1. So long as no Default or Event of Default
exists and subject to the satisfaction of the conditions precedent set forth in
Sections 9 and 9A, Lender agrees to make a term loan to Borrower on the Closing
Date in the principal amount of $2,000,000 which shall be repayable in
accordance with the terms of Term Note #1 and shall be secured by all of the
Collateral. The proceeds of Term Loan #1 shall be used solely for purposes for
which the proceeds of the Revolving Credit Loans are authorized to be used.
1.2.2 Term Loan #2. So long as no Default or Event of Default
exists and subject to the satisfaction of the conditions precedent set forth in
Sections 9 and 9A, Lender agrees to make a term loan to Borrower on the Closing
Date in the principal amount of $1,000,000 which shall be repayable in
accordance with the terms of Term Note #2 and shall be secured by all of the
Collateral. The proceeds of Term Loan #2 shall be used solely for purposes for
which the proceeds of the Revolving Credit Loans are authorized to be used.
1.3 Letters of Credit; LC Guaranties. So long as no Default or
Event of Default exists and subject to the satisfaction of the applicable
conditions precedent set forth in Sections 9 and 9A, Lender agrees, if requested
by Borrower, to (i) issue its, or cause to be issued its Affiliate's, Letters of
Credit for the account of Borrower or (ii) execute LC Guaranties by which Lender
or its Affiliate shall guaranty the payment or performance by Borrower of its
reimbursement obligations with respect to Letters of Credit, provided that the
LC Amount at any time shall not exceed the lesser of (a) $1,500,000, and (b) the
lesser of (i) the Maximum Amount minus the then aggregate outstanding principal
amount of Revolving Credit Loans or (ii) the Borrowing Base at such time minus
the aggregate outstanding principal amount of the Revolving Credit Loans. No
Letter of Credit or LC Guaranty may have an expiration date that is after the
last day of the Original Term or the then applicable Renewal Term. Any amounts
paid by Lender under any LC Guaranty or in connection with any Letter of Credit
shall be treated as Revolving Credit Loans, shall be secured by all of the
Collateral and shall bear interest and be payable at the same rate and in the
same manner as Revolving Credit Loans.
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SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest.
(i) Term Loans. Interest shall accrue on the Term Loan #1
in accordance with the terms of Term Note #1. Interest shall accrue
on the Term Loan #2 in accordance with the terms of Term Note #2.
(ii) Revolving Loans. Interest shall accrue on the principal
amount of each Revolving Credit Loan outstanding at the end of each
day at a fluctuating rate per annum equal to 3.00% plus the LIBOR
Rate. The rate of interest on Revolving Credit Loans shall increase
or decrease by an amount equal to any increase or decrease in the
LIBOR Rate, effective as of the opening of business on the day that
any such change in the LIBOR Rate occurs.
2.1.2 Default Rate of Interest. Upon and after the occurrence and
during the continuation of an Event of Default, the principal amount of all
Loans shall bear interest at a rate per annum equal to 2.00% plus the interest
rate otherwise applicable thereto (the "Default Rate").
2.1.3 Maximum Interest. In no event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under the Term Notes and charged or
collected pursuant to the terms of this Agreement or pursuant to the Term Notes
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If any
provisions of this Agreement or the Term Notes are in contravention of any such
law, such provisions shall be deemed amended to conform thereto.
2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees, unused line fees, and collection charges hereunder and under the
Term Notes shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days. For the purpose of computing interest
hereunder, all items of payment received by Lender shall be deemed applied by
Lender on account of the Obligations (subject to final payment of such items)
on the second Business Day after receipt by Lender of such items in Lender's
account located at ▇▇▇▇▇▇ Bank in Chicago, Illinois or such other account as
Lender may designate by written notice to Borrower.
2.3 Conditional Interest Rate Reduction at 1997 FYE. If and only if
Borrower achieves EBITDA for Borrower's 1997 fiscal year of not less than
$9,000,000, then, from and after Lender's receipt of the financial statements
and accompanying compliance certificate required to be delivered under Section
8.1.3(i) hereof and Lender's confirmation from such financial statements that
such EBITDA has been achieved, the respective rates of interest per annum
otherwise applicable to Term Loan #1, Term Loan #2, and the Revolving Credit
Loans thereafter shall be reduced by 25 basis points. The conditional interest
rate reduction described in the foregoing sentence is limited to solely the
circumstances expressly described in the foregoing sentence.
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2.4 Closing Fee. Borrower shall pay to Lender a closing fee of $200,000
which shall be fully earned and nonrefundable on the Closing Date and shall be
paid concurrently with the initial Loan hereunder. The amount of any
unexpended portion of the good faith deposit and commitment fee previously paid
to Lender, after deduction therefrom for the payment of Lender's costs, fees,
and expenses, shall be credited toward the Closing Fee.
2.5 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Lender,
for standby Letters of Credit and LC Guaranties of standby Letters of Credit,
2.00% per annum of the aggregate face amount of such Letters of Credit and LC
Guaranties outstanding from time to time during the term of this Agreement,
plus all normal and customary charges associated with the issuance,
negotiation, and administration thereof, which fees and charges shall be deemed
fully earned upon issuance of each such Letter of Credit or LC Guaranty, shall
be due and payable on the first Business Day of each month and shall not be
subject to rebate or proration upon the termination of this Agreement for any
reason.
2.6 Unused Line Fee. Commencing on the first day of the second month
following the Closing Date, Borrower shall pay to Lender a fee equal to 0.375%
per annum of the amount by which $40,000,000 exceeds the sum of (a) the average
outstanding principal balance of the Loans, and (b) the average LC Amount, in
each case, during the preceding month. The unused line fee shall be payable
monthly in arrears on the first day of each calendar month thereafter.
2.7 Collection Charges. If items of payment are received by Lender at a
time when there are no Revolving Credit Loans outstanding, such items of
payment shall be subject to a collection charge equal to two Business Days
interest on the amount thereof at the rate then applicable to Revolving Credit
Loans, which collection charges shall be payable on the first Business Day of
each month.
2.8 Audit and Appraisal Fees. Borrower shall pay to Lender all
reasonable out-of-pocket expenses incurred by Lender in connection with audits
and appraisals of Borrower's books and records, and the collateral. Audit fees
shall be payable on the first day of the month following the date of issuance
by Lender of a request for payment thereof to Borrower.
2.9 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs costs or
out-of-pocket expenses (including reasonable attorneys fees) in connection with
(i) the negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or
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modification of this Agreement or any of the other Loan Documents; (ii) the
administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Lender, Borrower or
any other Person) in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or Borrower's affairs; (iv) any attempt to enforce
any rights of Lender against Borrower or any other Person which may be
obligated to Lender by virtue of this Agreement or any of the other Loan
Documents, including, without limitation, the Account Debtors; or (v) any
attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then all such
costs and out-of-pocket expenses of Lender shall be charged to Borrower. All
amounts chargeable to Borrower under this Section 2.9 shall be Obligations
secured by all of the Collateral, shall be payable on demand to Lender and
shall bear interest from the date such demand is made until paid in full at the
rate applicable to Revolving Credit Loans from time to time. Borrower shall
also reimburse Lender for expenses incurred by Lender in its administration of
the Collateral to the extent and in the manner provided in Section 6 hereof.
2.10 Bank Charges. Borrower shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to Borrower
or any other Person on behalf of Borrower, by Lender, of proceeds of Loans made
by Lender to Borrower pursuant to this Agreement, and (ii) the depositing for
collection, by Lender of any check or item of payment received or delivered to
Lender on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 1.1 hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) Borrower may
give Lender notice of its intention to borrow, in which notice Borrower shall
specify the amount of the proposed borrowing and the proposed borrowing date, no
later than 11:00 a.m. Los Angeles time, on the proposed borrowing date,
provided, however, that no such request may be made at a time when there exists
a Default or an Event of Default and (ii) the becoming due of any amount
required to be paid under this Agreement or the Term Notes, whether as interest
or for any other Obligation, irrevocably shall be deemed to be a request for a
Revolving Credit Loan on the due date in the amount required to pay such
interest or other Obligation. As an accommodation to Borrower, Lender may
permit telephonic requests for Loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower. Unless Borrower
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Lender's
honoring of any requests, execution of any instructions, authorizations or
agreements, or reliance on any reports communicated to it telephonically or
electronically and believed in good faith by Lender to have been sent to Lender
by Borrower and Lender shall have no duty to verify the origin of any such
communication or the authority of the person sending it.
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3.1.2 Disbursement. Borrower hereby irrevocably authorizes Lender
to disburse the proceeds of each Revolving Credit Loan requested, or deemed to
be requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1 (ii) shall be disbursed by Lender
by way of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes Lender,
in Lender's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrower to Lender
hereunder.
3.2 Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this Section 3.2 (in which event the conflicting
provisions of said notes or other instruments shall govern and control), the
Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of the Collateral
other than Equipment or real Property, to the extent of said proceeds; (ii) the
occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Obligations in accordance with the
terms hereof, or (iii) termination of this Agreement pursuant to Section 4
hereof; provided, however, that if an Uncommitted Advance shall exist at any
time, Borrower shall, on demand, repay the Uncommitted Advance.
3.2.2 Interest. Interest accrued on the Revolving Credit Loans
shall be due on the earliest of (1) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, (2) the acceleration of the maturity and payment of the
Obligations in accordance with the provisions hereof, upon the occurrence of an
Event of Default and Lender's election to accelerate, or (3) termination of this
Agreement pursuant to Section 4 hereof.
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3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is earlier.
3.3 Prepayments.
3.3.1 Proceeds of Sale Loss Destruction or Condemnation of
Collateral. Except as provided in subsection 6.4.2 hereof, if Borrower sells any
of the Equipment or real Property, or if any of the Collateral is lost or
destroyed or taken by condemnation, Borrower shall pay to Lender, unless
otherwise agreed by Lender, as and when received by Borrower and as a mandatory
prepayment of the Term Loans (to be applied in such order and, as between the
Term Loans, in such proportion as determined by Lender) a sum equal to the
proceeds (including insurance payments) received by Borrower from such sale,
loss, destruction or condemnation. Any such prepayment of the Term Loans shall
be without premium or penalty.
3.3.2 Optional Prepayment in Full of Term Loans. Anything to the
contrary notwithstanding, Borrower shall have the right, upon not less than
thirty (30) days prior written notice to Lender, to prepay, in whole but not in
part and without premium or penalty, the Term Loans (but not just one of the
Term Loans, unless Term Loan #2 shall have been paid in full in cash at the time
of such proposed prepayment) in cash and from any source other than proceeds of
any Revolving Credit Loan made hereunder or any other source supported by any
Letter of Credit or LC Guaranty caused to be issued hereunder. With such
prepayment, Borrower also shall pay interest accrued and unpaid on the Term
Loans to the date of such prepayment.
3.4 Application of Payments and Collections. For purposes of calculating
Availability, all items of payment received by Lender by 12:00 noon, Los
Angeles time, on any Business Day shall be deemed received on that Business
Day. All items of payment received after 12:00 noon, Los Angeles time, on any
Business Day shall be deemed received on the following Business Day. Borrower
irrevocably waives the right to direct the application of any and all payments
and collections at any time or times hereafter received by Lender from or on
behalf of Borrower, and Borrower does hereby irrevocably agree that, subject to
subsection 3.2.1(i), Lender shall have the continuing exclusive right to apply
and reapply any and all such payments and collections received at any time or
times hereafter by Lender or its agent against the Obligations, in such manner
as Lender may deem advisable, notwithstanding any entry by Lender upon any of
its books and records. If, as the result of collections of Accounts as
authorized by subsection 6.2.6 hereof, a credit balance exists in the Loan
Account, such credit balance shall not accrue
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interest in favor of Borrower, but shall be available to Borrower at any time
or times for so long as no Default or Event of Default exists. Such credit
balance shall not be applied or be deemed to have been applied as a prepayment
of the Term Loans except that Lender may, at its option, offset such credit
balance against any of the Obligations upon and after the occurrence of an
Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans shall constitute
one general Obligation of Borrower, and shall be secured by Lender's Lien upon
all of the Collateral.
3.6 Loan Account. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practices, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower.
3.7 Statements of Account. Lender will account to Borrower monthly with
a statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrower unless Lender is notified by Borrower in writing to the contrary
within 30 days of the date each accounting is mailed to Borrower. Such notice
shall only be deemed an objection to those items specifically objected to
therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making Loans
to Borrower upon or after the occurrence of any Default or Event of Default,
this Agreement shall be in effect for a period of 2 years and eleven months from
the date hereof, through and including May 15, 1999 (the "Original Term"), and
this Agreement shall automatically renew itself for one-year periods thereafter
(the "Renewal Terms"), in each case, unless terminated as provided in Section
4.2 hereof.
4.2 Termination.
4.2.1 Termination by Lender. Upon at least 90 days prior written
notice to Borrower, Lender may terminate this Agreement as of the last day of
the Original Term or the then current Renewal Term and Lender may terminate this
Agreement without notice upon or after the occurrence of an Event of Default.
4.2.2 Termination by Borrower. Upon at least 90 days prior written
notice to Lender, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds, and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Lender's satisfaction. Any notice of
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termination given by Borrower shall be irrevocable unless Lender otherwise
agrees in writing, and Lender shall have no obligation to make any Loans or
issue or procure any Letters of Credit or LC Guaranties on or after the
termination date stated in such notice. Borrower may elect to terminate this
Agreement in its entirety only. No section of this Agreement or type of Loan
available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of termination of
this Agreement for any reason, Borrower shall pay to Lender (in addition to the
then outstanding principal, accrued interest and other charges owing under the
terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an amount ("Early
Termination Charge") equal to (a) 2.00% of the Total Credit Facility if
termination occurs during the first twelve-month period of the Original Term
(June 13, 1996 through and including June 15, 1997); and (b) 1.00% of the Total
Credit Facility if termination occurs thereafter, prior to the last day of the
Original Term. If termination occurs on the last day of the Original Term or
the last day of any Renewal Term, no termination charge shall be payable.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds, together with the applicable termination charge, if
any. Notwithstanding the payment in full of the Obligations, Lender shall not
be required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Lender may incur as a result of dishonored checks
or other items of payment received by Lender from Borrower or any Account Debtor
and applied to the Obligations (except to the extent such loss is the proximate
result of Lender's gross negligence or willful misconduct), Lender shall, at its
option, (i) have received a written agreement, executed by Borrower and by any
Person whose loans or other advances to Borrower are used in whole or in part to
satisfy the Obligations, indemnifying Lender from any such loss or damage; or
(ii) have retained such monetary reserves and Liens on the Collateral for such
period of time as Lender, in its reasonable discretion, may deem necessary to
protect Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing Lien upon all of Borrower's assets, including all of the following
Property and interests in Property of Borrower, whether now owned or existing
or hereafter created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
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(iii) Equipment;
(iv) General Intangibles;
(v) All monies and other Property of any kind now or at any time
or times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(vi) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (v) above,
including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral; and
(vii) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (vi)
above.
5.2 Lien Perfection; Further Assurances. Borrower, at Lender's request,
shall execute such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary to perfect
Lender's Lien upon any of the Collateral and shall take such other action as
may be required to perfect or to continue the perfection of Lender's Lien upon
the Collateral. Unless prohibited by applicable law, Borrower hereby
authorizes Lender to execute and file any such financing statement on
Borrower's behalf. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof. At Lender's request,
Borrower also shall promptly execute or cause to be executed and shall deliver
to Lender any and all documents, instruments and agreements deemed necessary by
Lender to give effect to or carry out the terms or intent of the Loan
Documents.
5.3 Intentionally omitted.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All Collateral, other than Inventory
in transit, motor vehicles and equipment that may be carried off-site in
connection with service calls, will at all times be kept by Borrower at one or
more of the business locations set forth in Exhibit 6.1.1 hereto and shall not,
without the prior written approval of Lender, be moved therefrom except, prior
to an Event of Default and Lender's acceleration of the maturity of the
Obligations in consequence thereof for (i) sales of Inventory in the ordinary
course of business; and (ii) removals in connection with dispositions of
Equipment that are authorized by subsection 6.4.2 hereof.
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6.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrower shall deliver the originals of such policies to Lender with
438-BFU (NS) lender's loss payable endorsements or other satisfactory lender's
loss payable endorsements, naming Lender as loss payee and additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Lender in the event of cancellation of the policy for any reason whatsoever and
a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy. If Borrower fails to provide and pay for such insurance, Lender
may, at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be at
Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
may reasonably request a sales and collections report for the preceding period,
in form satisfactory to Lender. On or before the fifteenth day of each month
from and after the date hereof, Borrower shall deliver to Lender, in form
acceptable to Lender, a detailed aged trial balance of all Accounts existing as
of the last day of the preceding month, specifying the names, addresses, face
value, dates of invoices and due dates for each Account Debtor
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obligated on an Account so listed ("Schedule of Accounts"), and, upon
Lender's request therefor, copies of proof of delivery and the original copy of
all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Lender shall
reasonably request. In addition, in the event that, during the period between
the submission of Schedules of Accounts, Eligible Accounts in an aggregate face
amount in excess of $100,000 become ineligible because they fall within one of
the specified categories of ineligibility set forth in the definition of
Eligible Accounts or otherwise established by Lender, Borrower shall notify
Lender of such occurrence on the first Business Day following such occurrence,
and the Borrowing Base thereupon shall be adjusted to reflect such occurrence.
If requested by Lender, Borrower shall execute and deliver to Lender formal
written assignments of all of its Accounts weekly or daily, which shall include
all Accounts that have been created since the date of the last assignment,
together with copies of invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $100,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an
Event of Default, Lender shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Lender may deem advisable, and to charge the deficiencies, costs and expenses
thereof, including attorney's fees, to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, Lender is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefor; provided, however that Lender shall
not be liable for any taxes to any governmental taxing authority that may be due
by Borrower.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or otherwise. Borrower
shall cooperate fully with Lender in an effort to facilitate and promptly
conclude any such verification process.
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6.2.5 Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such bank as may be selected by Borrower and be acceptable to Lender. Borrower
shall issue to such bank an irrevocable letter of instruction directing such
bank to deposit all payments or other remittances received in the lockbox
maintained by such bank to the Dominion Account for application on account of
the Obligations. All funds deposited in the Dominion Account immediately shall
become the property of Lender and Borrower shall obtain the agreement by such
bank in favor of Lender to waive any offset rights against the funds so
deposited. Lender assumes no responsibility for such lockbox arrangement,
including, without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Lender. All remittances received by Borrower on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lender's
benefit and Borrower shall immediately deposit same in kind in the Dominion
Account. Lender retains the right at all times after the occurrence of a
Default or an Event of Default to notify Account Debtors that Accounts have been
assigned to Lender and to collect Accounts directly in its own name and to
charge the collection costs and expenses, including reasonable attorneys' fees
to Borrower.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrower shall keep
accurate and complete records of its Inventory. Borrower shall furnish to
Lender Inventory reports in form and detail satisfactory to Lender, at such
times as Lender may request, but at least once each month, not later than the
twentieth day of such month. Borrower shall conduct a physical inventory no
less frequently than annually and shall provide to Lender a report based on each
such physical inventory promptly thereafter, together with such supporting
information as Lender shall request.
6.3.2 Returns of Inventory. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which generated
an Account on which such Account Debtor is obligated in excess of $100,000,
Borrower immediately shall notify Lender of the same, specifying the reason for
such return and the location, condition and intended disposition of the returned
Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with subsection
6.4.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Immediately on request therefor by Lender, Borrower shall deliver to
Lender any and all evidence of ownership, if any, of any of the Equipment.
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6.4.2 Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $50,000 or less, provided that all proceeds thereof are
remitted to Lender for application to the Loans, or (ii) dispositions of
Equipment that is substantially worn, damaged or obsolete, provided that
replacement Equipment shall be acquired in connection with any disposition of
such Equipment, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens, and Borrower shall have
given Lender at least 5 days prior written notice of such disposition.
6.5 Payment of Charges. All amounts chargeable to Borrower under Section
6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to Revolving Credit Loans from time
to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to enter
into this Agreement and to make Loans or issue Letters of Credit and LC
Guaranties hereunder, Borrower warrants and represents to Lender that:
7.1.1 Organization and Qualification. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is duly qualified and is authorized
to do business and is in good standing as a foreign corporation in each state or
jurisdiction listed in Exhibit 7.1.1 and in all other states and jurisdictions
where the character of its Properties or the nature of its activities make such
qualification necessary or in which the failure of Borrower to be so qualified
would have a material adverse effect on the financial condition, business or
Properties of Borrower.
7.1.2 Corporate Power and Authority. Borrower is duly authorized
and empowered to enter into, execute, deliver and perform this Agreement and
each of the other Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other Loan Documents
have been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of the shareholders of Borrower; (ii)
contravene Borrower's charter, articles or certificate of incorporation or
by-laws; (iii) violate, or cause Borrower to be in default under, any provision
of any law, rule, regulation order, writ, judgment, injunction, decree,
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determination or award in effect having applicability to Borrower; (iv) result
in a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which Borrower is a
party or by which it or its Properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than Permitted
Liens) upon or with respect to any of the Properties now owned or hereafter
acquired by Borrower.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of Borrower enforceable against it in accordance
with its respective terms.
7.1.4 Capital Structure. Exhibit 7.1.4 hereto states (i) the correct
name of each of the Subsidiaries of Borrower, its jurisdiction of incorporation
and the percentage of its Voting Stock owned by Borrower, (ii) the name of each
of Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower and each Subsidiary of Borrower, and (iv) the number of authorized,
issued and treasury shares of Borrower and each Subsidiary of Borrower. Borrower
has good title to all of the shares it purports to own of the stock of each of
its Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. There are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its Subsidiaries
not listed in Exhibit 7.1.4. There are no outstanding agreements or instruments
binding upon any of Borrower's shareholders relating to the ownership of shares
of Borrower's capital stock not listed in Exhibit 7.1.4.
7.1.5 Corporate Names. Borrower has not during the last 5 years been
known as or used any corporate, fictitious or trade names except those listed on
Exhibit 7.1.5 hereto. Except as set forth on Exhibit 7.1.5, Borrower has not
during the last 5 years been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Borrower's chief
executive office and other places of business are as listed on Exhibit 6.1.1
hereto. During the preceding one-year period, Borrower has not had an office,
place of business or agent for service of process other than as listed on
Exhibit 6.1.1. Except as shown on Exhibit 6.1.1 no inventory is stored with a
bailee, warehouseman or similar party, nor is any Inventory consigned to any
Person.
7.1.7 Title to Properties; Priority of Liens. Borrower has good,
indefeasible and marketable title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its real Property, and good title to
all of the Collateral and all
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of its other Property, in each case, free and clear of all Liens except
Permitted Liens. Borrower has paid or discharged all lawful claims which, if
unpaid, might become a Lien against any of Borrower's Properties that is not a
Permitted Lien. The Liens granted to Lender under Section 5 hereof are first
priority Liens, subject only to Permitted Liens.
7.1.8 Accounts. All Accounts that are included as Eligible Accounts
in a certificate signed by Borrower and submitted to Lender qualify as Eligible
Accounts under the terms of this Agreement. Lender may rely, in determining
which Accounts are Eligible Accounts, on all statements and representations made
by Borrower with respect to any Account or Accounts. Unless otherwise indicated
in writing to Lender, with respect to each Account:
(i) It is genuine and in all respects what it purports to
be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by Borrower in the
ordinary course of its business and in accordance with the terms and
conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between Borrower
and the Account Debtor;
(iii) Billing has, with the exception of an Eligible Unbilled
Account, been made on the Account;
(iv) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy
of which has been furnished or is available to Lender;
(v) Such Account, and Lender's security interest therein, is
not, and will not (by voluntary act or omission of Borrower) be in
the future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for disputes
resulting in returned goods where the amount in controversy is deemed
by Lender to be immaterial, and each such Account is absolutely owing
to Borrower and is not contingent in any respect or for any reason;
(vi) Borrower has made no agreement with any Account Debtor
thereunder for any extension, compromise, settlement, or modification
of any such Account or any deduction therefrom, except discounts or
allowances which are granted by Borrower in the ordinary course of
its business for prompt payment and which are reflected in the
calculation of the net amount of each respective invoice related
thereto and are reflected in the Schedule of Accounts submitted to
Lender pursuant to subsection 6.2.1 hereof;
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(vii) There are no facts, events or occurrences which in any
way impair the validity or enforceability of any Accounts or tend to
reduce the amount payable thereunder from the face amount of the
invoice and statements delivered to Lender with respect thereto;
(viii) To the best of Borrower's knowledge, the Account
Debtor thereunder (a) had the capacity to contract at the time any
contract or other document giving rise to the Account was executed
and (b) such Account Debtor is Solvent; and
(ix) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any
Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9 Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted. Borrower will not permit any of
the Equipment to become affixed to any real Property leased to Borrower so that
an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a Collateral
Access Agreement in favor of and in form acceptable to Lender, and Borrower will
not permit any of the Equipment to become an accession to any personal Property
other than Equipment that is subject to first priority (except for Permitted
Liens) Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year. The Consolidated balance
sheets of Borrower and such other Persons described therein (including the
accounts of all Subsidiaries of Borrower for the respective periods during which
a Subsidiary relationship existed) as of February 3, 1996, and the related
statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such date, have been prepared in accordance
with GAAP, and present fairly the financial positions of Borrower and such
Persons at such date and the results of Borrower's operations for such periods.
Since February 3, 1996, there has been no material change in the condition,
financial or otherwise, of Borrower and such other Persons as shown on the
Consolidated balance sheet as of such date and no change in the aggregate value
of Equipment and Real Property owned by Borrower or such other Persons, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. The fiscal year of Borrower and each of
its Subsidiaries ends on (or about) January 31 of each year.
7.1.11 Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact
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necessary to make the statements contained therein or herein not misleading.
There is no fact (other than facts of a general economic nature) which Borrower
has failed to disclose to Lender in writing which materially affects adversely
or, so far as Borrower can now foresee, will materially affect adversely the
Properties, business, profits or condition (financial or otherwise) of Borrower
or the ability of Borrower to perform this Agreement or the other Loan
Documents. The projections and pro forma financial information contained in
the materials referenced above are based upon good faith estimates and
assumptions believed by such Persons to be reasonable at the time made, it
being recognized by the Banks that such projections as to future events are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results.
7.1.12 Solvent Financial Condition. Borrower is now and, after
giving effect to the Loans to be made and the Letters of Credit and LC
Guaranties to be issued hereunder, at all times will be, Solvent.
7.1.13 Surety Obligations. Borrower is not obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.
7.1.14 Taxes. Borrower's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. Borrower has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid, or made provision for
the payment of, all taxes, assessments, fees, levies and other governmental
charges upon it, its income and Properties as and when such taxes, assessments,
fees, levies and charges that are due and payable, unless and to the extent any
thereof are being actively contested in good faith and by appropriate
proceedings and Borrower maintains reasonable reserves on its books therefor.
The provision for taxes on the books of Borrower are adequate for all years not
closed by applicable statutes, and for its current fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Borrower owns
or possesses all the patents, trademarks, service marks, trade names, copyrights
and licenses necessary for the present and future conduct of its business
without any known conflict with the rights of others. All such patents,
trademarks, service marks, tradenames, copyrights, licenses and other similar
rights are listed on Exhibit 7.1.16 hereto.
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7.1.17 Governmental Consents. Borrower has, and is in good standing
with respect to, all governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises necessary to continue to
conduct its business as currently or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it.
7.1.18 Compliance with Laws. Borrower has duly complied with, and
its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all federal, state and local laws,
rules and regulations applicable to Borrower, its Properties or the conduct of
its business and there have been no citations, notices or orders of
noncompliance issued to Borrower under any such law, rule or regulation.
Borrower has established and maintains an adequate monitoring system to insure
that it remains in compliance with all federal, state and local laws rules and
regulations applicable to it. No Inventory has been produced in violation of
the Fair Labor Standards Act (29 U.S.C. Section 201 et seq.), as amended.
7.1.19 Restrictions. Borrower is not a party or subject to any
contract, agreement, or charter or other corporate restriction, which materially
and adversely affects its business or the use or ownership of any of its
Properties. Borrower is not a party or subject to any contract or agreement
which restricts its right or ability to incur Indebtedness, other than as set
forth on Exhibit 7.1.19 hereto, none of which prohibit the execution of or
compliance with this Agreement or the other Loan Documents by Borrower.
7.1.20 Litigation. Except as set forth on Exhibit 7.1.20 hereto,
there are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower, which could,
if adversely determined, be reasonably expected to have a material adverse
effect on the business, operations, Properties, profits or condition of
Borrower. Borrower is not in default with respect to any order, writ,
injunction, judgment, decree or ruling of any court, governmental authority or
arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Borrower is not in default, and no event has occurred and no condition exists
which constitutes, or which with the passage of time or the giving of notice or
both would constitute, a default in the payment of any Indebtedness to any
Person for Money Borrowed.
7.1.22 Leases. Exhibit 7.1.22(A) hereto is a complete listing of
all capitalized leases of Borrower and Exhibit 7.1.22(B) hereto is a complete
listing of all operating leases of Borrower. Borrower is in full compliance
with all of the terms of each of its capitalized and operating leases.
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7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23
hereto, Borrower does not maintain any Plan. Borrower is in full compliance
with the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that could result in a material
adverse change in the financial condition of Borrower exists in connection with
any Plan. Borrower does not have any withdrawal liability in connection with a
Multiemployer Plan.
7.1.24 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially affect
adversely Borrower or prevent Borrower from conducting such business after the
consummation of the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Except as described on Exhibit 7.1.25
hereto, Borrower is not a party to any collective bargaining agreement. There
are no material grievances, disputes or controversies with any union or any
other organization of Borrower's employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization.
7.1.26 Eligible Inventory. All Inventory that is included as
Eligible Inventory in a certificate signed by Borrower and submitted to Lender
qualify as Eligible Inventory under the terms of this Agreement.
7.1.27 No Restricted Inventory. No Inventory consists of any
Restricted Inventory.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's business or operations that would render the
information in any exhibit attached hereto either inaccurate, incomplete or
misleading, so long as Lender has consented to such changes or such changes are
not expressly prohibited by this Agreement.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
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SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, but only during
normal business hours, to visit and inspect the Properties of Borrower, inspect,
audit and make extracts from its books and records, and discuss with its
officers, its employees and its independent accountants, Borrower's business,
assets, liabilities, financial condition, business prospects and results of
operations.
8.1.2 Notices. Promptly notify Lender in writing of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.
8.1.3 Financial Statements. Keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all its financial transactions; and cause to
be prepared and furnished to Lender the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrower's certified
public accountants concur in any change therein and such change is disclosed to
Lender and is consistent with GAAP):
(i) not later than 90 days after the close of each fiscal
year of Borrower, unqualified audited financial statements of
Borrower as of the end of such year, certified by a firm of
independent certified public accountants of recognized standing
selected by Borrower but acceptable to Lender (except for a
qualification for a change in accounting principles with which the
accountant concurs);
(ii) not later than 20 days after the end of each month
hereafter, including the last month of Borrower's fiscal year,
unaudited interim financial statements of Borrower as of the end of
such month and of the portion of Borrower's financial year then
elapsed, certified by the principal financial officer of Borrower as
being prepared in accordance with GAAP and fairly presenting the
financial position and results of operations of Borrower for such
month and period subject only to changes from audit and year-end
adjustments and except that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or
reports which Borrower has made available to its shareholders and
copies of any regular,
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periodic and special reports or registration statements which
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any
national securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report required by ERISA to be filed in connection with each Plan;
and
(v) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or Borrower's financial condition or
results of operations.
Concurrently with the delivery of the financial statements described in
clause (i) of this subsection 8.1.3, Borrower shall forward to Lender a copy of
the accountants' letter to Borrower's management that is prepared in connection
with such financial statements and also shall cause to be prepared and shall
furnish to Lender a certificate of the aforesaid certified public accountants
certifying to Lender that, based upon their examination of the financial
statements of Borrower performed in connection with their examination of said
financial statements, they are not aware of any Default or Event of Default, or,
if they are aware of such Default or Event of Default, specifying the nature
thereof. Concurrently with the delivery of the financial statements described
in clauses (i) and (ii) of this subsection 8.1.3, or more frequently if
requested by Lender, Borrower shall cause to be prepared and furnished to Lender
a Compliance Certificate in the form of Exhibit 8.1.3 hereto executed by the
Chief Financial Officer of Borrower.
8.1.4 Landlord and Storage Agreements. Provide Lender with copies
of all written agreements between Borrower and any landlord or warehouseman
which owns any premises at which any Inventory may, from time to time, be kept.
8.1.5 Intentionally Omitted.
8.1.6 Projections. Not later than 30 days prior to the end of each
fiscal year of Borrower, deliver to Lender Projections of Borrower for the
forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by
month.
8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that,
unless Lender has first consented thereto in writing, it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate,
or permit any of its Subsidiaries to merge or consolidate, with any Person; nor
acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Properties of any Person.
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8.2.2 Loans. Make, or permit any Subsidiary of Borrower to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit any Subsidiary of Borrower to create, incur or suffer to exist,
any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt existing on the date of this
Agreement;
(iii) Unsecured (except as may be cash-collateralized below)
letters of credit and letter of credit guaranties issued by the
Existing Lender set forth on Exhibit 8.2.3, to the extent the same
are cash-collateralized with the proceeds of Loans made hereunder or
are supported by LC Guaranties or Letters of Credit caused to be
issued hereunder; provided, however, that such Letters of Credit and
Letter of Credit Guaranties issued by the Existing Lender shall not
be renewed and shall be terminated or permitted to expire as soon as
practicable;
(iv) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not aged
more than 120 days from billing date or more than 90 days from the
due date, in each case incurred in the ordinary course of business
and paid within such time period, unless the same are being actively
contested in good faith and by appropriate and lawful proceedings;
and Borrower or such Subsidiary shall have set aside such reserves,
if any, with respect thereto as are required by GAAP and deemed
adequate by Borrower or such Subsidiary and its independent
accountants;
(v) Obligations to pay Rentals permitted by subsection
8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in
the ordinary course of business; and
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(viii) Indebtedness not included in paragraphs (i) through
(vii) above which does not exceed at any time, in the aggregate, the
sum of $100,000.
8.2.4 Affiliate Transactions. Enter into, or be a party to, or
permit any Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower, except (a) in the ordinary course of
and pursuant to the reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms which are fully disclosed to Lender
and are no less favorable to Borrower than would obtain in a comparable arm's
length transaction with a Person not an Affiliate or stockholder of Borrower or
such Subsidiary, and (b) subject to this Agreement and the Intercreditor
Agreement, the performance by Borrower of its obligations under the Tax Sharing
Agreement and the Shareholders Agreement.
8.2.5 Limitation on Liens. Create or suffer to exist, any Lien upon
any of its Property, income or profits, whether now owned or hereafter acquired,
except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in
the manner described in subsection 7.1.14 hereto, but only if in
Lender's judgment such Lien does not adversely affect Lender's rights
or the priority of Lender's Lien in the Collateral;
(iii) Liens arising by operation of law in favor of
warehouseman, landlords, carriers, mechanics, materialmen, laborers
or suppliers, incurred in the ordinary course of business of Borrower
and not in connection with the borrowing of money, for sums not yet
delinquent or which are being contested in good faith and by proper
proceedings diligently pursued, provided that a reserve or other
appropriate provision, if any, required by GAAP shall have been made
therefor on the applicable financial statements of Borrower, and at
Lender's option, Lender shall be entitled to create a reserve against
the Borrowing Base in an amount sufficient to discharge such Lien and
any and all penalties or interest payable in connection therewith;
(iv) Deposits made in connection with worker's compensation
or other unemployment insurance incurred in the ordinary course of
Borrower's business;
(v) Deposits to secure performance of bids, tenders, or
leases (to the extent permitted under this Agreement), incurred in
the ordinary course of business of Borrower and not in connection
with the borrowing of money;
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(vi) Liens arising by reason of security for surety or
appeal bonds in the ordinary course of business of Borrower;
(vii) Liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which has not yet
expired, or in respect of which Borrower is in good faith prosecuting
an appeal or proceeding for a review, and in respect of which a stay
of execution pending such appeal or proceeding for review has been
secured; provided, however, that any such Lien does not give rise to
any Event of Default;
(viii) With respect to any real property: easements, rights
of way, zoning and similar covenants and restrictions and similar
encumbrances which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which in any
event do not materially interfere with or impair the use or operation
of the Collateral by Borrower or the value of Lender's Lien thereon
and security interest therein, or materially interfere with the
ordinary conduct of the business of Borrower;
(ix) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(x) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(xi) such other Liens as appear on Exhibit 8.2.5 hereto;
(xii) such other Liens as Lender may hereafter approve in
writing; and
(xiii) Deposits as cash collateral for the Letters of
Credit and Letter of Credit Guaranties described in, and to the
extent permitted by, item (iii) of Section 8.2.3 hereof.
8.2.6 Subordinated Debt. Make, or permit any Subsidiary of Borrower
to make, any payment of any part or all of any Subordinated Debt, except, if the
Junior Payments Fixed Charge Coverage Condition is satisfied therefor, payments
with respect to the Canpartners Subordinated Debt to the extent (and in the
manner) expressly permitted under Section 4(b) of the Intercreditor Agreement.
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8.2.7 Distributions. Declare or make any Distributions other than
Permitted Distributions. Without limiting the generality of the foregoing,
until the payment in full in cash of all Obligations and the termination of
Lender's commitments to make Loans and issue Letters of Credit and LC
Guaranties, Borrower shall not exercise the Management Call or the Canpartners
Call and shall not make any Distribution in respect of the Canpartners Put.
8.2.8 Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate,
exceed $2,500,000 during any fiscal year of Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of
any of, or permit any Subsidiary of Borrower to sell, lease or otherwise
dispose of any of, its Properties, including any disposition of Property as
part of a sale and leaseback transaction, to or in favor of any Person, except
(i) sales of Inventory in the ordinary course of business for so long as no
Event of Default exists hereunder, or (ii) dispositions expressly authorized by
Section 6.4.2 of this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to
issue any additional shares of its capital stock except director's qualifying
shares.
8.2.11 ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any customer on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, any Restricted
Investment.
8.2.13 Leases. Become a lessee under any operating lease (other
than a lease under which Borrower is lessor) of Property if the aggregate net
Rentals payable during any current or future period of 12 consecutive months
under the lease in question and all other leases under which Borrower or any of
its Subsidiaries is then lessee would exceed $1,500,000. The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any lease.
8.2.14 Tax Consolidation. Except under the Tax Sharing Agreement,
file or consent to the filing of any consolidated income tax return with any
Person other than a Subsidiary of Borrower.
8.2.15 Management Fees. Pay any management fees or fees for
financial and advisory services to or for the benefit of Investor (or any
Affiliate thereof) or Canpartners, whether under Section 2.3 of the Shareholders
Agreement or otherwise, unless (a) no Event of Default has occurred and is
continuing or would result therefrom, (b) if the Management Payments Fixed
Charge Coverage Condition is satisfied therefor, and (c) Borrower is in
compliance with subsections 8.3.1 through 8.3.5; provided, however, that all
such fees, in the aggregate, shall not exceed $400,000 per annum. The
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foregoing to the contrary notwithstanding, Borrower may (a) pay reasonable
compensation to a partner of Investor who serves as the chief executive officer
(or other officer position) of Borrower, and (b) pay the non-employee
directors' fees under Section 2.4 of the Shareholders Agreement;
8.2.16 Amendments or Waivers of Certain Documents. Enter into any
amendment, supplement, or modification of: (a) any Canpartners Sub Debt
Document; (b) the Tax Sharing Agreement; or (c) the Shareholders Agreement; in
each case, in any manner that reasonably could be expected to be adverse to the
interests of Lender or materially adverse to the interests of Borrower.
8.2.17 Restricted Inventory. Acquire any Restricted Inventory or
use or intend to use any existing Inventory as Restricted Inventory, unless
Borrower provides to Lender, not less than 45 days prior to any such
acquisition, use, or intention to use, written notification thereof and such
Security Documents and filings (each in form and substance satisfactory to
Lender) as are necessary or reasonably desirable by Lender to perfect with the
Federal Aviation Administration its Liens on such Restricted Inventory under the
provisions of the Federal Aviation Act.
8.3 Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.3.1 Minimum Net Worth. Maintain at all times Net Worth of not
less than the amount shown below for the period corresponding thereto:
Period Amount
------ ----------
May 1, 1996 through July 31, 1996 $3,700,000
August 1, 1996 through October 31, 1996 $4,200,000
November 1, 1996 through January 31, 1997 $4,700,000
February 1, 1997 through April 30, 1997 $5,000,000
In each subsequent fiscal quarter thereafter $5,000,000
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8.3.2 Minimum Average Availability. Maintain Average Availability,
as of the end of each month, of not less than $1,000,000, and maintain
Availability, on the last day of each month, of not less than $1,000,000.
8.3.3 [Intentionally omitted].
8.3.4 Fixed Charge Coverage Ratio. Achieve a Fixed Charge Coverage
Ratio for each fiscal quarter of not less than the ratio shown below for the
period corresponding thereto:
May 1, 1996 through July 31, 1996 1.05 to 1.00
August 1, 1996 through October 31, 1996 1.05 to 1.00
November 1, 1996 through January 31, 1997 1.10 to 1.00
In each subsequent fiscal quarter thereafter 1.10 to 1.00
8.3.5 Minimum Backlog. Maintain, at the end of each fiscal quarter,
a Backlog of not less than $24,000,000.
SECTION 9. CONDITIONS PRECEDENT TO INITIAL CREDITS
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make or
issue the initial Loans, Letters of Credit, or LC Guaranties under this
Agreement unless and until each of the following conditions has been and
continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel.
9.2 Intentionally Omitted.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
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9.4 Availability. Lender shall have determined that immediately after
Lender has made the initial Loans and issued the initial Letters of Credit and
LC Guaranties contemplated hereby, and paid all closing costs incurred in
connection with the transactions contemplated hereby, Availability shall not be
less than $2,000,000.
9.5 Fiscal Year End Financial Statements. Lender shall have received,
and shall have approved in its sole discretion, copies of Borrower's audited
1996 fiscal year end financial statements, dated as of February 3, 1996,
prepared in accordance with the requirements of subsection 8.1.3(i), which
financial statements shall not reflect any material adverse change or changes
from Borrower's draft 1996 fiscal year end financial statements previously
submitted to Lender.
9.6 Certified Documents of Borrower. On or before the Closing Date,
Borrower shall have delivered to Lender copies of the following documents, duly
certified, or the following certificates, as applicable:
(i) Resolutions of the board of directors of Borrower authorizing
(a) the execution, delivery and performance of the Loan Documents to which
Borrower is a party, (b) the consummation of the transactions contemplated by
the Loan Documents to which Borrower is a party, and (c) all other actions to be
taken by Borrower in connection with the Loan Documents to which it is a party;
(ii) A certificate, signed by the secretary or an assistant
secretary of Borrower, dated as of the Closing Date, as to (a) the incumbency,
and containing the specimen signature or signatures, of the Person or Persons
authorized to execute the Loan Documents to which Borrower is a party on behalf
of Borrower, together with evidence of the incumbency of such secretary or
assistant secretary, and (b) the authenticity and completeness of the articles
of incorporation and bylaws of Borrower (with complete and accurate copies of
same to be attached to the certificate); and
(iii) Certificates of status or good standing of Borrower, from the
Secretary of State of California and Texas, and in each other jurisdiction in
which Borrower is required to be qualified to do business, dated within 15 days
of the Closing Date.
9.7 [Intentionally omitted].
9.8 Confirmation Searches. Lender shall have received searches
reflecting the filing of its financing statements and/or fixture filings with
respect to Borrower.
9.9 Opinion of Counsel. Lender shall have received from counsel for
Borrower a legal opinion in form and substance reasonably satisfactory to Lender
and its counsel.
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9.10 Evidence of Insurance of Collateral. Lender shall have
received certificates of insurance in respect of the Collateral, together with
the endorsements thereto, as are required by subsection 6.1.2 hereof.
9.11 Use of Financing. Lender shall have received a certificate
from Borrower satisfactory to it that the Loans to be made hereunder are being
used in accordance with subsection 1.1.2 hereof.
9.12 Pay-Off Letter and UCC Termination Statements, etc.. Existing
Lender shall have executed and delivered the Pay-Off Letter, which shall be in
full force and effect, together with UCC termination statements and other
documentation evidencing the termination of its Liens on the Property of
Borrower.
9.13 Disbursement Instruction Letter. Borrower shall have executed
and delivered to Lender the Disbursement Instruction Letter.
9.14 Offshore Receivable Financing. Lender shall have received
evidence satisfactory to it that Borrower has received the proceeds of the
Garuda Indonesia receivable financed by the Export Import Bank.
9.15 Past Due ▇▇▇▇▇▇▇ Payable. Lender shall have received evidence
satisfactory to it that Borrower is in good standing with regard to any and all
past due amounts owing to ▇▇▇▇▇▇▇ Engine Company.
9.16 Dominion Account Agreement. Lender shall have received an
executed and delivered original counterpart of the Dominion Account Agreement
entered into by the bank at which the Dominion Account is maintained, which
shall be acceptable in form and content to Lender.
9.17 Inventory Analysis. Lender shall have conducted and approved
of the results of a "Pre-Funding Audit" during which audit Lender shall have
compared the inventory costing of repairable and serviceable parts to the list
price for new parts.
9.18 Tax Sharing Agreement. Lender shall have received a copy of
the Tax Sharing Agreement, together with a certificate of the Secretary of
Borrower certifying the same to be a true, correct, and complete copy thereof.
9.19 Shareholders Agreement. Lender shall have received a copy of
the Shareholders Agreement, together with a certificate of the Secretary of
Borrower certifying the same to be a true, correct, and complete copy thereof.
9.20 Canpartners Sub Debt Documents. Lender shall have received a
copy of the Canpartners Sub Debt Documents, together with a certificate of the
Secretary of Borrower certifying the same to be a true, correct, and complete
copy thereof.
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SECTION 9A. CONDITIONS PRECEDENT TO ALL CREDITS
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make or
issue any Loans, Letters of Credit or LC Guaranties under this Agreement unless
each of the following conditions is satisfied:
9A.1 No Default. No Default or Event of Default shall exist.
9A.2 Representations and Warranties. The representations and warranties
contained in this Agreement and the other Loan Documents shall be true and
correct in all material respects on and as of date of such Loan (except to the
extent that such representations and warranties relate solely to an earlier
date).
9A.3 No Litigation. No action, proceeding, investigation, regulation, or
legislation shall have been instituted, threatened, or proposed before any
court, governmental agency, or legislative body to enjoin, restrain, or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Agreement or the consummation of the transactions contemplated
hereby.
9A.4 Adverse Change. No material adverse change shall have occurred in
the financial condition or business operations of Borrower.
SECTION 9B. CONDITION SUBSEQUENT
As a condition subsequent to the making or issuing of the Loans, Letters of
Credit, or LC Guaranties under this Agreement on the Closing Date, Borrower
shall perform or cause to be performed the following (the failure by Borrower to
so perform or cause to be performed constituting an Event of Default hereunder):
9B.1 Retention of Chief Financial Officer. Within 120 days of the Closing
Date, Borrower shall have hired a chief financial officer, which individual
shall be satisfactory to Lender, such approval not to be unreasonably withheld
or delayed.
9B.2 Collateral Access Agreements. (a) Within 60 days of the Closing
Date, Lender shall have received the Oakland Collateral Access Agreements, each
of which shall have been duly executed and delivered and shall be in full force
and effect.
(b) Within 45 days of the Closing Date, Lender shall have received
Collateral Access Agreements (other than the Oakland Collateral Access
Agreements) in respect of any location of Borrower at which Inventory or
Equipment is located and that either (i) is not owned in fee by Borrower, or
(ii) is subject to a mortgage in favor of a mortgagee other than Lender, each of
which shall have been duly executed and delivered and shall be in full force and
effect.
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SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Notes. Borrower shall fail to pay any
installment of principal, interest, or premium, if any, owing on either of the
Term Notes on the due date of such installment.
10.1.2 Payment of Other Obligations. Borrower shall fail to pay
any of the Obligations that are not evidenced by the Term Notes on the due date
thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower in this
Agreement, any of the other Loan Documents or any instrument, certificate or
financial statement furnished in compliance with or in reference thereto proves
to have been false or misleading in any material respect when made or furnished
or when reaffirmed pursuant to Section 7.2 hereof.
10.1.4 Breach of Specific Covenants. (a) Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 5.2,
6.1.1, 8.1.1, 8.2, or 8.3 hereof on the date that Borrower is required to
perform, keep or observe such covenant; or (b) in the case of Sections 6.2 or
8.1.3, Borrower has not performed, kept or observed such covenant within 15 days
of the date that Borrower is required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or neglect
to perform, keep or observe any covenant contained in this Agreement (other than
a covenant which is dealt with specifically elsewhere in Section 10.1 hereof)
and the breach of such other covenant is not cured to Lender's satisfaction
within 15 days after the sooner to occur of Borrower's receipt of notice of such
breach from Lender or the date on which such failure or neglect first becomes
known to any officer of Borrower.
10.1.6 Default Under Security Documents/Other Agreements. Any event
of default shall occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
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10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) if the
payment or maturity of such Indebtedness is accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made.
10.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.9 Adverse Changes. There shall occur any material adverse
change in the financial condition or business prospects of Borrower.
10.1.10 Insolvency and Related Proceedings. Borrower shall cease to
be Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (and if against Borrower, the continuation of such
proceeding for more than 45 days; provided, however, that during the pendency of
such proceeding, Lender shall be relieved of its obligation to make additional
Revolving Credit Loans hereunder or cause to be issued additional Letters of
Credit or LC Guaranties hereunder), or Borrower shall make any offer of
settlement, extension or composition to its unsecured creditors generally.
10.1.11 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower for a period which
significantly affects Borrower's capacity to continue its business, on a
profitable basis; or Borrower shall suffer the loss or revocation of any license
or permit now held or hereafter acquired by Borrower which is necessary to the
continued or lawful operation of its business; or Borrower shall be enjoined,
restrained, or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower leases, uses or occupies
any Property shall be canceled or terminated prior to the expiration of its
stated term and such cancellation or termination of such lease or agreement,
either individually or together with the cancellation or termination of all
other such leases and agreements, could reasonably be expected to result in a
material adverse change in the financial condition or business of Borrower; or
any part of the Collateral shall be taken through condemnation or the value of
such Property shall be impaired through condemnation.
10.1.12 Change of Ownership. First Aviation shall cease to own and
control, beneficially and of record, 51% of the issued and outstanding capital
stock of Borrower.
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10.1.13 ERISA. A Reportable Event shall occur which Lender in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower is in "default" (as defined in Section 4219(c)(5)
of ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's complete or partial withdrawal from such Plan.
10.1.14 Challenge to Agreement. Borrower or any Affiliate of
Borrower shall challenge or contest in any action, suit or proceeding the
validity or enforceability of this Agreement, or any of the other Loan
Documents, the legality or enforceability of any of the Obligations, or the
perfection or priority of any Lien granted to Lender.
10.1.15 Intentionally Omitted.
10.1.16 Criminal Forfeiture. Borrower or any Subsidiary of Borrower
shall be criminally indicted or convicted under any law that could lead to a
forfeiture of any Property of Borrower or any Subsidiary of Borrower having a
fair market value exceeding $100,000.
10.1.17 Judgments. Any money judgment, writ of attachment or
similar process is filed against Borrower or any of its Property in the amount
of $100,000 in the aggregate and the same is not discharged or bonded within 30
days of such filing.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand protest or further
notice by Lender, become at once due and payable and Borrower shall forthwith
pay to Lender, the full amount of such Obligations, provided that upon the
occurrence of an Event of Default specified in subsection 10.1.10 hereof, all of
the Obligations shall become automatically due and payable without declaration,
notice or demand by Lender.
10.3 Other Remedies. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
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10.3.2 The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Lender at a place designated by Lender which is
reasonably convenient to both parties, and (ii) enter any premises where any of
the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that 10 days written
notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after allowing
2 Business Days for collection, first to the costs, expenses and attorneys' fees
incurred by Lender in collecting the Obligations, in enforcing the rights of
Lender under the Loan Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
Collateral, second to the interest due upon any of the Obligations; and third,
to the principal of the Obligations. If any deficiency shall arise, Borrower
shall remain liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements, to the extent permitted under the terms of such
licenses, shall inure to Lender's benefit.
10.3.5 Lender may, at its option, require Borrower to deposit with
Lender funds equal to the LC Amount and, if Borrower fails to promptly make such
deposit, Lender may advance such amount as a Revolving Credit Loan (whether or
not an Uncommitted Advance is created thereby). Any such deposit or advance
shall be held by Lender as a reserve to fund future payments on such LC
Guaranties and future drawings against such Letters of Credit. At such time as
all LC Guaranties have been paid or terminated and all Letters of Credit have
been drawn upon or expired, any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.
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10.3.6 Lender, at its option, may retain an independent consultant
to perform a valuation of Borrower's Inventory. Borrower shall provide such
independent consultant with full access to Borrower's business and records to
the same extent granted to Lender in subsection 8.1.1 hereof.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lender or contained in any other agreement between
Lender and Borrower, heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrower herein contained. The
failure or delay of Lender to require strict performance by Borrower of any
provision of this Agreement or to exercise or enforce any rights, Liens, powers,
or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from Borrower
to Lender shall have been fully satisfied. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained in this
Agreement or any of the other Loan Documents and no Event of Default by Borrower
under this Agreement or any other Loan Documents shall be deemed to have been
suspended or waived by Lender, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
11.1.1 At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent, in its sole discretion, may determine,
endorse Borrower's name on any checks, notes, acceptances, drafts, money orders
or any other evidence of payment or proceeds of the Collateral which come into
the possession of Lender or under Lender's control.
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11.1.2 At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent, in its sole discretion, may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral: (v) prepare file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrower's obligations under this Agreement.
11.2 Indemnity. Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's failure to observe, perform
or discharge Borrower's duties hereunder. In addition, Borrower shall defend
Lender against and save it harmless from all claims of any Person with respect
to the Collateral. Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Lender by any Person
under any Environmental Laws or similar laws by reason of Borrower's or any
other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances. The foregoing to the contrary
notwithstanding, the obligation of Borrower under this Section 11.2 shall
survive the payment in full of the Obligations and the termination of this
Agreement.
11.3 Modification of Agreement; Sale of Interest. This Agreement may not
be modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties
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hereunder or thereunder. Lender may, with the written consent of Borrower
(which shall not be unreasonably withheld, conditioned, or delayed),
participate, sell, assign, transfer, or otherwise dispose of, at any time or
times hereafter, this Agreement and any of the other Loan Documents, or of any
portion hereof or thereof, including, without limitation, Lender's rights,
title, interests, remedies, powers, and duties hereunder or thereunder;
provided, however, that no such consent of Borrower shall be required if: (a)
any such assignment or sale is in connection with the merger, sale,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of Lender; or (b) any such
participation, sale, assignment, transferee, or other disposition is to an
Eligible Transferee. In the event Lender elects to make an assignment of a
portion of its interests in respect of this Agreement and the other Loan
Documents, Lender agrees to use reasonable best efforts to make any such
assignment in the minimum amount of $10,000,000 (with unfunded commitments and
outstanding Loans being aggregated for such purpose) or such lesser amount as
then is held by Lender. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignments. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower and its Subsidiaries to any
potential participant or assignee provided such participant or assignee shall
be bound by the provisions of Section 11.16.
11.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
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11.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
11.8 Notice. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
If to Lender: FLEET CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇, PHLEGER & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esquire
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: NATIONAL AIRMOTIVE CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: O'MELVENY & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2
hereof shall not be effective until received by Lender.
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11.9 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
11.10 Credit Inquiries. Borrower hereby authorizes and permits Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrower.
11.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
11.14 GOVERNING LAW: CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
LOS ANGELES, CALIFORNIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN
CALIFORNIA, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
WITH THE LAWS OF CALIFORNIA. AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE
SUPERIOR COURT OF LOS ANGELES COUNTY, CALIFORNIA, OR, AT LENDER'S OPTION, THE
UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, CENTRAL
DIVISION, SHALL HAVE
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EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY
JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL: (II) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (III) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (IV) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (V) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT
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AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS
WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
11.16 Confidentiality. Lender agrees that material, non-public
information regarding Borrower, its operations, assets, and existing and
contemplated business plans shall be treated by Lender in a confidential manner,
and shall not be disclosed by it to Persons who are not parties to this
Agreement, except: (a) to counsel for and other advisors, accountants, and
auditors to Lender, (b) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (c) as may be agreed to in advance by
Borrower, (d) as to any such information that is or becomes generally available
to the public, and (e) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participation,
or pledge or prospective pledge of Lender's interests under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective pledgee
shall take its interest hereunder subject to the terms hereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning of this Agreement.
ATTEST: NATIONAL AIRMOTIVE CORPORATION,
a California corporation
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- --------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary Title: Chief Executive Officer
ACCEPTED IN LOS ANGELES, CALIFORNIA:
FLEET CAPITAL CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of June 13, 1996 by
and between Fleet Capital Corporation and National Airmotive Corporation, the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or
on account of an Account.
Accounts - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by
Borrower or in which Borrower now has or hereafter acquires any interest.
Affiliate - a Person: (i) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common
control with, a Person; (ii) which beneficially owns or holds 5% or more of
any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or
more of the equity interest) of which is beneficially owned or held by a
Person or a Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix ▇.
▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇ Engine Company, Inc.
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when (a) the sum of the principal amount of Revolving
Credit Loans then outstanding (including any amounts which Lender may have
paid for the account of Borrower pursuant to any of the Loan Documents and
which have not been reimbursed by Borrower), plus the LC Amount, is
subtracted from (b) the Borrowing Base. If the amount outstanding is equal
to or greater than the Borrowing Base, Availability is 0.
Average Availability - with respect to any month, the sum of
Availability on each Business Day during such month divided by the number
of Business Days in such month.
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Backlog- as of the last day of any fiscal quarter commencing with
July 31, 1996, the dollar amount of the scheduled shipments reasonably
projected to be made by Borrower during the next 90 day period.
Borrowing Base - as at any date of determination thereof, an amount
equal to:
(a) 85% of the net amount of Eligible Accounts; PLUS
(b) an amount equal to the lesser of: (i) $2,000,000 and
(ii) 70% of the net amount of Eligible Unbilled Accounts; PLUS
(c) an amount equal to the lesser of: (i) $19,500,000 and
(ii) the sum of (w) 60% of the value of Eligible Inventory; provided,
however, that, during the 10 consecutive quarters following the
Closing Date, such percentage shall be permanently reduced by 1% in
each quarter during which Borrower is not in compliance with
subsection 8.3.2, 8.3.4 and 8.3.5hereof; PLUS
(d) the lesser of (1) $6,000,000 and (2) 60% of the value
of Eligible WIP Inventory; provided, however, that, during the 10
consecutive quarters following the Closing Date, such percentage
shall be permanently reduced by 1% in each quarter during which
Borrower is not in compliance with subsection 8.3.2, 8.3.4 and 8.3.5
hereof;PLUS
(e) the lesser of (1) $2,000,000 and (2) 50% of the value
of Eligible Slow and Rental Inventory; MINUS
(d) the aggregate amount of the Environmental Reserve.
For purposes hereof, the net amount of Eligible Accounts at any time shall
be the face amount of such Eligible Accounts less any and all returns, rebates,
discounts (which may, at Lender's option, be calculated on shortest terms),
credits, allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time.
Business Day - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of California or is a day on
which banking institutions located such state are closed.
Canpartners - Canpartners Investments IV, LLC, a California limited
liability company, as assignee of Canpartners Investments III, L.P., a
California limited partnership.
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Canpartners Call - the right of Borrower to exercise the "CPI Call
Option" (as defined in the Shareholders Agreement) in respect of Securities
of Borrower owned by Canpartners in accordance with Article VI of the
Shareholders Agreement.
Canpartners Put - the right of Canpartners to exercise the "Put
Option" in respect of the Securities of Borrower owned by Canpartners in
accordance with Article VI of the Shareholders Agreement.
Canpartners Sub Debt Documents - all material agreements,
instruments, and documents in respect of the Canpartners Subordinated Debt,
including, without limitation, that certain Loan and Security Agreement,
dated as of June 1, 1995, as amended by that certain First Amendment to
Loan and Security Agreement of National Airmotive Corporation, dated of
even date herewith, between Canpartners and Borrower, and that certain
Warrant Agreement of National Airmotive Corporation, dated as of June 1,
1995, as amended by that certain First Amendment to Warrant Agreement of
National Airmotive Corporation, dated of even date herewith, between
Canpartners and Borrower.
Canpartners Subordinated Debt - Subordinated Debt of Borrower owing
to Canpartners in the principal amount of $2,000,000 as of the Closing
Date.
Capital Expenditures - cash expenditures made or liabilities incurred
under this Agreement for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto which are
capital assets as defined in accordance with GAAP.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions precedent in
Sections 9 and 9A of the Agreement are satisfied and the initial Loan is
made or the initial Letter of Credit or LC Guaranty is issued under the
Agreement.
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Code - the Uniform Commercial Code as adopted and in force in the
State of California as from time to time in effect, except that in those
circumstance where the California Commercial Code requires the application
of the Uniform Commercial Code of another jurisdiction, the term Code shall
refer to the Uniform Commercial Code as enacted in such jurisdiction.
Collateral - all of the Property and interests in Property described
in Section 5 of the Agreement, and all other Property and interests in
Property that now or hereafter secure the payment and performance of any of
the Obligations.
Collateral Access Agreement - a landlord waiver, mortgagee waiver,
bailee letter, or similar acknowledgement agreement of any warehouseman or
processor of Inventory or Equipment, in each case in form and substance
satisfactory to Lender.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Cumulative Fixed Charge Coverage Ratio - For the cumulative period
beginning on the date of this Agreement and ending on the date of
calculation of this ratio, the ratio of cumulative EBITDA minus cumulative
Capital Expenditures divided by the sum of cumulative Interest Expense plus
cumulative Scheduled Principal Amortization plus cumulative unscheduled
principal amortization payments plus cumulative actual cash income taxes
(other than cash payments of income taxes accrued through April 30, 1996
for the period from June 1, 1995 through April 30, 1996) for such fiscal
periods of Borrower plus cumulative Distributions in respect of the
"Preferred Stock" (as defined in the Intercreditor Agreement), as
determined in accordance with GAAP and as reflected on the financial
statement of Borrower supplied to Lender pursuant to subsection 8.1.3 of
the Agreement plus the cumulative cash equivalent value of any
distributions of stock in respect of the "Preferred Stock" not otherwise
included in cumulative Distributions.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets
shown on a balance sheet at such date in accordance with GAAP.
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
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Disbursement Instruction Letter - a signed letter of instruction, in
form and content satisfactory to Lender, instructing Lender as to the
disbursements of Loans to be made on the Closing Date.
Distribution - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net
proceeds of the sale of Securities.
Dominion Account - a special account of Lender established by
Borrower pursuant to the Agreement at a bank selected by Borrower, but
acceptable to Lender in its reasonable discretion, and over which Lender
shall have sole and exclusive access and control for withdrawal purposes.
Dominion Account Agreement - any and all agreements with respect to
the Dominion Account in form and substance satisfactory to Lender.
Early Termination Charge - as defined in subsection 4.2.3 of the
Agreement.
EBITDA - with respect to any fiscal period, means the net earnings
(or loss) before interest expense, provision for income taxes,
depreciation, and amortization expense for such fiscal period of Borrower,
as determined in accordance with GAAP and as reflected on the financial
statement of Borrower supplied to Lender pursuant to subsection 8.1.3 of
the Agreement, but excluding non- recurring transaction costs incurred in
connection with the negotiation, execution, and delivery of this Agreement
and the concurrent amendments to the Canpartners Sub Debt Documents.
Eligible Account - an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services which
Lender, in its sole credit judgment, deems to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if:
(i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled by
an Affiliate of Borrower; or
(ii) (A) with respect to Accounts other than Supported
Foreign Accounts, it is unpaid for more than 60 days after the
original due date shown on the invoice; or (B) with respect to
Supported Foreign Accounts, its is unpaid for more than 150 days
after the original due date shown on the invoice; or
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(iii) it is due or unpaid more than 120 days after the
original invoice date; provided that, in the case of either (A)
Accounts for which the Account Debtor is the United States of
America, or (B) Supported Foreign Accounts, such time period may be
up to 150 days; or
(iv) 50% or more of the Accounts from the Account Debtor
are not deemed Eligible Accounts hereunder; or
(v) the total unpaid Accounts of the Account Debtor
(excluding Federal Accounts and LC Supported Foreign Accounts) exceed
20% of the net amount of all Eligible Accounts, to the extent of such
excess; provided however, that in the case of Insurance Supported
Foreign Accounts, the forgoing percentage shall be 30% before the
excess would be deemed ineligible; or
(vi) any covenant, representation or warranty contained in
the Agreement with respect to such Account has been breached; or
(vii) the Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed liability with respect
to such Account, or the Account Debtor has made any claim with
respect to any other Account due from such Account Debtor to
Borrower, or the Account otherwise is or may become subject to any
right of setoff by the Account Debtor; or
(viii) the Account Debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed
for it or for all or a significant portion of its assets or affairs;
or
(ix) it arises from a sale to an Account Debtor outside the
United States, unless it is a Supported Foreign Account; or
(x) it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
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(xi) [Intentionally omitted].
(xii) the Account is subject to a Lien other than a
Permitted Lien; or
(xiii) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by Borrower and
accepted by the Account Debtor or the Account otherwise does not
represent a final sale; or
(xiv) the Account is evidenced by chattel paper or an
instrument of any kind that has not been delivered into the
possession of Lender, or has been reduced to judgment; or
(xv) Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for
prompt payment and which discounts or allowances are reflected in the
calculation of the face value of each invoice related to such
Account; or
(xvi) Borrower has made an agreement with the Account Debtor
to extend the time of payment thereof.
The foregoing as to the general eligibility of Accounts owed by an Account
Debtor that is the United States of America or any department, agency or
instrumentality thereof ("Federal Accounts") notwithstanding, Borrower shall, at
Lender's request, promptly assign to Lender Borrower's rights to payment of: (y)
prior to the occurrence and during the continuance of a Default or Event of
Default, Federal Accounts in excess of a $250,000 invoice amount; and (z) upon
the occurrence and during the continuance of a Default or Event of Default, all
Federal Accounts; in each case, in a manner satisfactory to Lender, so as to
comply with the Assignment of Claims Act of 1940 (31 U.S.C. Section 203 et seq.,
as amended) (it being understood that the foregoing shall not limit Lender's
right not to make any Revolving Credit Loan or to cause to be issued any Letter
of Credit or LC Guaranty if and for so long as a Default or Event of Default
shall exist).
Eligible Transferee - any of: (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total
assets in excess of $100,000,000; (b) a commercial bank organized under the
laws of any other country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such country, and
having total assets in excess of $100,000,000; provided, however, such bank
is acting through a branch or agency located in the United States; (c) a
finance company, insurance or other financial
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institution or fund that is engaged in making, purchasing, or
otherwise investing in commercial loans in the ordinary course of
business and having total assets in excess of $100,000,000; (d) any
Affiliate (other than individuals) of Lender; (e) any other Person
approved by Lender and Borrower; or (f) Investor or any Affiliate
thereof or Canpartners or any Affiliate thereof.
Eligible Inventory - such Inventory of Borrower (other than packaging
materials and supplies) which Lender, in its sole credit judgment, deems to
be Eligible Inventory. Without limiting the generality of the foregoing,
no Inventory shall be Eligible Inventory if:
(i) it is not new, serviceable, or repairable ▇▇▇▇▇▇▇
parts (constituting type A, B, or C Inventory as determined by
Lender), finished goods, or new, serviceable, or repairable parts
furnished by vendors other than ▇▇▇▇▇▇▇; or
(ii) it is not (y) in good and saleable condition, and (z)
new, serviceable , or repairable; or
(iii) it is slow moving (i.e., it has not moved within 24
months from the date of purchase or, in the case of serviceable
parts, from the date of production,) obsolete or unmerchantable; or
(iv) it does not meet all applicable standards imposed by
any governmental agency or authority; or
(v) it does not conform in all respects to the warranties
and representations set forth in the Agreement; or
(vi) it is not at all times subject to Lender's duly
perfected, first priority security interest and no other Lien except
a Permitted Lien; or
(vii) it is not situated at a location in compliance with
the Agreement or is in transit.
Eligible Slow and Rental Inventory - such Inventory of Borrower that
would constitute Eligible Inventory except for the fact that it consists of
slow moving Inventory (net of reserves) and rental engines.
Eligible Unbilled Accounts - such Accounts of Borrower that would
constitute Eligible Accounts except for the fact that they have been earned
by performance but not yet billed.
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Eligible WIP Inventory - such Inventory of Borrower that would
constitute Eligible Inventory except for the fact that it consists of
work-in-process.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
Environmental Reserve - $50,000 in respect of Borrower's potential
liability for additional remediation costs for its Oakland, California
facility, such reserve to remain in place until Borrower's two year
obligation to monitor the facility has been satisfied.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or
owned by Borrower or in which Borrower has an interest, whether now owned
or hereafter acquired by Borrower and wherever located, and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Existing Lender - Congress Financial Corporation (Western), a
California corporation.
Federal Accounts - has the meaning ascribed thereto in the definition
of Eligible Accounts.
First Aviation - First Aviation Services, Inc., a Delaware
corporation.
Fixed Charge Coverage Ratio - The ratio of EBITDA minus Capital
Expenditures divided by the sum of Interest Expense plus Scheduled
Principal Amortization plus actual cash income taxes (other than cash
payments of income taxes accrued through April 30, 1996 for the period from
June 1, 1995 through April 30, 1996) for such fiscal period of Borrower
plus Distributions in respect of the "Preferred Stock" (as defined in the
Intercreditor Agreement), as determined in accordance with GAAP and as
reflected on the financial statement of Borrower supplied to Lender
pursuant to subsection 8.1.3 of the Agreement.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ - all personal property of Borrower (including
things in action) other than goods, Accounts, chattel paper, documents,
instruments and money, whether now owned or hereafter created or acquired
by Borrower.
Indebtedness - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation,
Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the
account of such Person, and
(iv) in the case of Borrower (without duplication), the
Obligations.
Insurance Supported Foreign Accounts - Accounts which qualify as a
Supported Foreign Account under item (b) or (c) of the definition of
Supported Foreign Account.
Intercreditor Agreement - the Intercreditor and Subordination
Agreement to be dated on or about the closing date among Borrower, Lender,
First Aviation and Canpartners.
Interest Expense - with respect to any fiscal period, the interest
expense incurred for such period as determined in accordance with GAAP plus
the Letter of Credit and LC Guaranty fees owing for such period.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired including, but not limited to, all goods intended for
sale or lease by Borrower, or for display or demonstration; all work in
process; all raw materials and other materials and supplies of every nature
and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's
business; and all documents evidencing and General Intangibles relating to
any of the foregoing, whether now owned or hereafter acquired by Borrower.
Investor - First Equity Development, Inc., a Delaware corporation.
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Junior Payments Fixed Charge Coverage Condition - Borrower shall have
achieved, for the relevant period, a Fixed Charge Coverage Ratio that
exceeds the minimum Fixed Charge Coverage Ratio set forth in Section 8.3.4
for such period by at least five points (0.05). By way of illustration
only, the Junior Fixed Charge Coverage Condition is satisfied if Borrower
achieves a Fixed Charge Coverage Ratio of 1.10:1.00 for the fiscal quarter
ending July 31, 1996 and is not satisfied if Borrower achieves a Fixed
Charge Coverage Ratio of 1.09:1.00 for the fiscal quarter ending July 31,
1996.
Junior Payments Heightened Fixed Charge Coverage Condition - Borrower
shall have achieved, for the relevant period, a Fixed Charge Coverage Ratio
that exceeds the minimum Fixed Charge Coverage Ratio set forth in Section
8.3.4 for such period by at least ten points (0.10). By way of
illustration only, the Junior Heightened Fixed Charge Coverage Condition is
satisfied if Borrower achieves a Fixed Charge Coverage Ratio of 1.15:1.00
for the fiscal quarter ending July 31, 1996 and is not satisfied if
Borrower achieves a Fixed Charge Coverage Ratio of 1.14:1.00 for the fiscal
quarter ending July 31, 1996.
LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Lender or any Affiliate
of Lender shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any standby letter of credit.
LC Supported Foreign Accounts - Accounts which qualify as a Supported
Foreign Account under item (a) of the definition of Supported Foreign
Account.
Letter of Credit - any letter of credit issued by Lender or any of
Lender's Affiliates for the account of Borrower.
LIBOR Rate - the rate of interest displayed on the Reuters LIBOR Page
from time to time as the then prevailing one month LIBOR Rate; and, if such
rate quotation service is discontinued or substantially modified for any
reason, a comparable rate quotation designated by Lender as a substitute
therefor. Each determination by Lender of the LIBOR Rate shall be
conclusive.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of the
Agreement, Borrower shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement 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 Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loans - all loans and advances of any kind made by Lender pursuant to
the Agreement.
Management Call - the right of Borrower to exercise the "Management
Call Option" (as defined in the Shareholders Agreement) in respect of
Securities of Borrower owned by "Management Holders" (as defined in the
Shareholders Agreement) in accordance with Article VI of the Shareholders
Agreement.
Management Payments Fixed Charge Coverage Condition - Borrower shall
have achieved, for the relevant period, a Fixed Charge Coverage Ratio that
exceeds the minimum Fixed Charge Coverage Ratio set forth in Section 8.3.4
for such period by at least ten points (0.10). By way of illustration
only, the Management Payments Fixed Charge Coverage Condition is satisfied
if Borrower achieves a Fixed Charge Coverage Ratio of 1.15:1.00 for the
fiscal quarter ending July 31, 1996 and is not satisfied if Borrower
achieves a Fixed Charge Coverage Ratio of 1.14:1.00 for the fiscal quarter
ending July 31, 1996.
Maximum Amount - as of any date of determination, $40,000,000 minus
the unpaid principal balance of the Term Loans at such date.
Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to Borrower, (A)
which is represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced by bonds,
debentures, notes or similar instruments, or (C) upon which interest
charges are customarily paid (excluding accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of Borrower under any guaranty of
obligations that would constitute Indebtedness for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by Borrower.
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Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
of ERISA.
Net Worth - with respect to any fiscal period, means Borrower's Net
Worth as determined in accordance with GAAP and as reflected in the
financial statement of Borrower supplied to Lender pursuant to subsection
8.1.3 of the Agreement.
Oakland Collateral Access Agreements - Collateral Access Agreements
in respect of each of the Oakland Leases.
Oakland Leases - collectively, (i) that certain License and
Concession Agreement, between the City of Oakland, a municipal corporation
acting by and through its Board of Port Commissioners, and Borrower, dated
November 22, 1990, respecting certain property described therein located at
the Metropolitan Oakland International Airport consisting of approximately
28,455 square feet of land near Building L-815 and more commonly known as
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and (ii) that certain Lease, between the City of
Oakland, a municipal corporation acting by and through its Board of Port
Commissioners, and Borrower, dated January 31, 1991, respecting certain
property described therein located at the Metropolitan Oakland
International Airport consisting of approximately 95,256 square feet of
land.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon (including without limitation, Early Termination
Changes), owing, arising, due or payable from Borrower to Lender of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement or any of
the other Loan Documents or otherwise whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and
however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - the Dominion Account Agreements, the Pay-Off
Letter, the Disbursement Instruction Letter, the Intercreditor Agreement
and any and all agreements, instruments and documents (other than the
Agreement and the Security Documents), heretofore, now or hereafter
executed by Borrower, any Subsidiary of Borrower or any other third party
and delivered to Lender in respect of the transactions contemplated by the
Agreement.
Pay-Off Letter - the letter, in form and substance reasonably
satisfactory to Lender, from Existing Lender, respecting the amount
necessary to repay in full all of the obligations of Borrower owing to
Existing Lender and obtain a termination or release of all of the security
interests or liens existing in favor of Existing Lender in and to the
Property of Borrower.
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Permitted Distributions - (a) solely to the extent (and in the
manner) expressly permitted under Section 4(c) of the Intercreditor
Agreement and if the Junior Payments Heightened Fixed Charge Coverage
Condition is satisfied therefor, payments of dividends on and redemptions
of the "Preferred Stock" (as defined in the Intercreditor Agreement),
provided, however, that upon repayment in full in cash of the Term Loans,
Borrower may make payments of cash dividends so long as Borrower's
Cumulative Fixed Charge Coverage Ratio is equal to or greater than 1.20;
(b) so long as no Event of Default has occurred and is continuing or would
result therefrom, repurchases or redemptions by Borrower of Securities
issued by Borrower to "Management Holders" (as defined in the Shareholders
Agreement) pursuant to Article V of the Shareholders Agreement; provided,
however, that the aggregate amount of all such redemptions shall not exceed
$250,000; and (c) Distributions that are made by Borrower through First
Aviation to Investor in the amount of income tax payments then due and
owing by Borrower under the Tax Sharing Agreement (and provided such
Distributions are not made earlier than 10 days prior to the date such
payments are due and owing by Borrower) and are paid promptly by Investor
on behalf of Borrower in connection with consolidated income tax returns
filed by Investor under the Tax Sharing Agreement (and each of Investor and
First Aviation, by the execution and delivery by First Aviation of the
Intercreditor Agreement, shall be deemed to have agreed promptly to use the
proceeds of such Distributions solely for such purpose).
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of
the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness
of Borrower incurred after the date hereof which is secured by a Purchase
Money Lien and which, when aggregated with the principal amount of all
other such Indebtedness of Borrower at the time outstanding, does not
exceed $100,000. For the purposes of this definition, the principal amount
of any Purchase Money Indebtedness consisting of capitalized leases shall
be computed instead as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
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Projections - Borrower's forecasted (a) balance sheets, (b) profit
and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within 10 days prior to or after
the acquisition of any fixed assets for the purpose of financing all or any
part of the purchase price thereof, and (iii) any renewals, extensions or
refinancings thereof, but not any increases in the principal amounts
thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined
solely to the fixed assets the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
Rentals - as defined in subsection 8.2.13 of the Agreement.
Renewal Terms - as defined in Section 4.1 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Restricted Inventory - Inventory consisting of any:
a. aircraft engine which is rated 750 or more takeoff
horsepower or the equivalent of such horsepower;
b. aircraft propeller which is rated as being capable of
absorbing 750 or more rated takeoff shaft horsepower; or
c. aircraft engines, propellers, spare parts, or
appliances, including any instrument, equipment, apparatus, parts,
appurtenances or accessories of whatever description, which are used
or capable of being or intended to be used, in the navigation,
operation or control of aircraft in flight (including parachutes,
communication equipment and any other mechanism or mechanisms
installed or attached to aircraft during flight) which are not parts
of aircraft, aircraft engines or propellers, that are maintained on
behalf of an air carrier certified by the Civil Aeronautics Board.
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Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or
other obligation or Security, or by loan, advance or capital contribution,
or otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of Borrower to
the extent existing on the Closing Date;
(ii) Property used or to be used in the ordinary course of
business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries;
(iv) investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature
within one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within
one year from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or any state
thereof having capital surplus and undivided profits aggregating at
least $100,000,000; and
(vi) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more than
270 days from the date of creation thereof.
(vii) loans or other advances of money for salary, travel
advances, advances against commissions and other similar advances in
the ordinary course of business; provided, however, that no such loan
or other advance of money shall be evidenced by a note or other
instrument.
Revolving Credit Loan - a Loan made by Lender as provided in Section
1.1 of the Agreement.
Schedule of Accounts - as defined in subsection 6.4.1 of the
Agreement.
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64
Scheduled Principal Amortization - scheduled repayment of unpaid
principal for the relevant period as required under the Term Notes and,
irrespective of whether permitted under the Intercreditor Agreement to be
paid, the Canpartners Subordinated Debt.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - All instruments and agreements now or at any
time hereafter securing the whole or any part of the Obligations.
Shareholders Agreement - that certain Shareholders Agreement, dated
as of June 1, 1995, as amended by that certain Amendment to Shareholders
Agreement, dated as of even date herewith, among Borrower and the "Holders"
identified therein, as such agreement is in existence on the Closing Date.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay all
of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
Stockholder's Equity - at any date, the sum of Borrower's stated
capital, paid-in surplus and retained earnings, less treasury stock, all as
determined in accordance with GAAP, and specifically not including any
reevaluation surplus.
Subordinated Debt - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to the Lender.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.
Supported Foreign Account - An Account owed by an Account Debtor
located outside the United States that is: (a) supported by an irrevocable
letter of credit satisfactory to Lender (as to form, substance, and issuer,
including an acceptable domestic confirming bank), a copy of which is in
the possession of Lender or its agent so long as no Default or Event of
Default has occurred and is continuing, and the original of which is in the
possession of Lender or its agent from and after the occurrence and during
the continuance of a Default or Event of Default (it being understood that
the foregoing shall not limit Lender's right not to make any Revolving
Credit Loan or to cause to be issued any Letter of Credit or LC Guaranty if
and for so long as a Default or Event of Default shall exist); or (b)
covered under foreign credit insurance satisfactory to Lender (as to form,
substance, and issuer) evidence of which is in possession of Lender or its
agent; or (c) covered by credit insurance issued by the Export Import Bank
in form and amount satisfactory to Lender.
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Tax Sharing Agreement - that certain Tax Sharing Agreement, dated as
of June 1, 1995, among Investor and those of its Affiliates signatory
thereto, as such agreement is in existence on the Closing Date.
Term Loans - Term Loan #1 and Term Loan #2.
Term Loan #1 - the Loan described in subsection 1.2.1 of the
Agreement.
Term Loan #2 - the Loan described in subsection 1.2.2 of the
Agreement.
Term Notes - Term Note #1 and Term Note #2.
Term Note #1 - the Secured Promissory Note to be executed by Borrower
on or about the Closing Date in favor of Lender to evidence Term Loan #1
which shall be in the form of Exhibit T-1 to the Agreement.
Term Note #2 - the Secured Promissory Note to be executed by Borrower
on or about the Closing Date in favor of Lender to evidence Term Loan #2
which shall be in the form of Exhibit T-2 to the Agreement.
Total Credit Facility - $40,000,000.
Voting Stock - Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a
whole and not to any particular section, paragraph or subdivision. Any
pronoun used shall be deemed to cover all genders. The section titles,
table of contents and list of exhibits appear as a matter of convenience
only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments
of same and any successor statutes and regulations. All references to any
of the Loan Documents shall include any and all modifications thereto and
any and all extensions or renewals thereof.
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LIST OF EXHIBITS
Exhibit T-1 Term Note #1 (LIBOR Option)
Exhibit T-2 Term Note #2 (LIBOR Option)
Exhibit 6.1.1 Borrower's and each Subsidiary's Business Locations
Exhibit 7.1.1 Jurisdictions in which Borrower and each Subsidiary is
Authorized to do Business
Exhibit 7.1.4 Capital Structure of Borrower
Exhibit 7.1.5 Corporate Names
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Borrower's Right to Incur Debts
Exhibit 7.1.20 Litigation
Exhibit 7.1.22(A) Capitalized Leases
Exhibit 7.1.22(B) Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.25 Labor Contracts
Exhibit 8.1.3 Compliance Certificate
Exhibit 8.2.3 Letters of Credit and Letter of Credit Guaranties
issued by Existing Lender
Exhibit 8.2.5 Permitted Liens
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EXHIBIT T-1
SECURED PROMISSORY NOTE
$2,000,000 June 13, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, INC., a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of Two Million Dollars
($2,000,000), together with interest from and after the date hereof on the
unpaid principal balance outstanding at a variable rate per annum equal to 3.50%
plus the LIBOR Rate.
This Secured Promissory Note (the "Note") is the Term Note #1 referred to
in, and is issued pursuant to, that certain Loan and Security Agreement between
Borrower and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants, and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
At all times, the rate of interest shall increase or decrease by an amount
equal to any increase or decrease in the LIBOR Rate, effective as of the opening
of business on the day that any such change in the LIBOR Rate occurs. All
interest shall be computed in the manner provided in subsection 2.1.3 and
Section 2.2 of the Loan Agreement.
For so long as no Event of Default shall have occurred, the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
(a) Interest shall be due and payable monthly, in arrears, on
the first day of each month, commencing on July 1, 1996, and continuing
until such time as the full principal balance, together with all other
amounts owing hereunder, shall have been paid in full;
(b) Principal shall be due and payable monthly commencing on
July 1, 1996, and continuing on the first day of each month thereafter
until paid in full, in installments of Twenty Three Thousand and 00/100
Dollars ($23,000.00) each;
A-20
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(c) Paragraph (b) above notwithstanding, the entire remaining
principal amount then outstanding, together with any and all other amounts
due hereunder, shall be due and payable on May 15, 1999.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrower also may terminate
the Loan Agreement and, in connection with such termination, prepay this Note in
the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Lender of any right or
remedy preclude any other right or remedy. Lender, at its option, may enforce
its rights against any collateral securing this Note without enforcing its
rights against Borrower, any guarantor of the indebtedness evidenced hereby or
any other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release, surrender, substitute or exchange any collateral
securing this Note and may at any time release any party primarily or
secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of California.
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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and
delivered in Los Angeles, California, on the date first above written.
ATTEST: NATIONAL AIRMOTIVE CORPORATION,
a California corporation
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- ----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary Title: Chief Executive Officer
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70
EXHIBIT T-2
SECURED PROMISSORY NOTE
$1,000,000 June 13, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, INC., a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of One Million Dollars
($1,000,000), together with interest from and after the date hereof on the
unpaid principal balance outstanding at a variable rate per annum equal to 4.50%
plus the LIBOR Rate.
This Secured Promissory Note (the "Note") is the Term Note #2 referred to
in, and is issued pursuant to, that certain Loan and Security Agreement between
Borrower and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants, and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
At all times, the rate of interest shall increase or decrease by an amount
equal to any increase or decrease in the LIBOR Rate, effective as of the opening
of business on the day that any such change in the LIBOR Rate occurs. All
interest shall be computed in the manner provided in subsection 2.1.3 and
Section 2.2 of the Loan Agreement.
For so long as no Event of Default shall have occurred, the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
(a) Interest shall be due and payable monthly, in arrears, on
the first day of each month, commencing on July 1, 1996, and continuing
until such time as the full principal balance, together with all other
amounts owing hereunder, shall have been paid in full;
(b) Principal shall be due and payable monthly commencing on
July 1, 1996, and continuing on the first day of each month thereafter
until paid in full, in installments of Twenty Seven Thousand and 00/100
Dollars ($27,000.00) each;
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(c) Paragraph (b) above notwithstanding, the entire remaining
principal amount then outstanding, together with any and all other amounts
due hereunder, shall be due and payable on May 15, 1999.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to prepayment in accordance with the provisions
of Section 3.3 of the Loan Agreement. Borrower also may terminate the Loan
Agreement and, in connection with such termination, prepay this Note in the
manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Lender of any right or
remedy preclude any other right or remedy. Lender, at its option, may enforce
its rights against any collateral securing this Note without enforcing its
rights against Borrower, any guarantor of the indebtedness evidenced hereby or
any other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release, surrender, substitute or exchange any collateral
securing this Note and may at any time release any party primarily or
secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of California.
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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
and delivered in Los Angeles, California, on the date first above written.
ATTEST: NATIONAL AIRMOTIVE CORPORATION,
a California corporation
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary Title: Chief Executive Officer
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EXHIBIT 6.1.1
BUSINESS LOCATIONS
1. Borrower currently has the following business locations, and no
others:
Chief Executive Office:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Other Locations:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
-----------------------
Houston, Texas
2. Borrower maintains its books and records relating to Accounts and
General Intangibles at:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
3. Borrower has had no office, place of business or agent for process
located in any county other than as set forth above, except:
4. Each Subsidiary currently has the following business locations, and no
others:
Chief Executive Office:
Other Locations:
5. Each Subsidiary maintains its books and records relating to Accounts
and General Intangibles at:
▇-▇▇
▇▇
▇. Each Subsidiary has had no office, place of business or agent for
process located in any county other than as set forth above, except:
7. The following bailees, warehouseman, similar parties and consignees
hold inventory of Borrower or one of its Subsidiaries:
-------------------------------------------------------------------------------
Name and Address Nature of Amount of
of Party Relationship Inventory Owner of Inventory
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
▇-▇▇
▇▇
▇▇▇▇▇▇▇ 7.1.1
JURISDICTIONS IN WHICH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
Name of Entity Jurisdictions
-------------- -------------
National Airmotive Corporation California
Texas
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EXHIBIT 7.1.4
CAPITAL STRUCTURE
1. The classes and number of authorized shares of Borrower and each
Subsidiary and the record owner of such share are as follows:
Borrower:
--------------------------------------------------------------------------------
Number of Shares
Issued and Number of Shares
Class of stock Outstanding Record Owners Authorized but Unissued
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Subsidiaries:
--------------------------------------------------------------------------------
Number of Shares
Issued and Number of Shares
Class of stock Outstanding Record Owners Authorized but Unissued
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The number, nature and holder of all other outstanding Securities of
Borrower and each Subsidiary are as follows:
▇-▇▇
▇▇
▇. The correct name and jurisdiction of incorporation of each Subsidiary
of Borrower and the percentage of its issued and outstanding shares
owned by Borrower are as follows:
--------------------------------------------------------------------------------
Percentage of Shares
Name Jurisdiction of Incorporation Owned by Borrower
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. The name of each of Borrower's corporate or joint venture Affiliates
and the nature of the affiliation are as follows:
▇-▇▇
▇▇
▇▇▇▇▇▇▇ 7.1.5
CORPORATE NAMES
1. Borrower's correct corporate name, as registered with the Secretary of
State of the State of California, is National Airmotive Corporation.
2. In the conduct of its business, Borrower has used the following names:
3. Each Subsidiaries' correct corporate name, as registered with the
Secretary of State of the State of its incorporation, is:
4. In the conduct of its business, each Subsidiary has used the following
names:
▇-▇▇
▇▇
▇▇▇▇▇▇▇ 7.1.14
TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES
Subsidiary Number
---------- ------
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EXHIBIT 7.1.16
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
1. Borrower's and its Subsidiaries' patents:
--------------------------------------------------------------------------------
Status in Federal Registration Registration
Patent Owner Parent Office Number Date
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. Borrower's and its Subsidiaries' trademarks:
--------------------------------------------------------------------------------
Status
Trademark Federal Registration Registration
Trademark Owner Office Number Date
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
▇-▇▇
▇▇
▇. Borrower's and its Subsidiaries' copyrights:
--------------------------------------------------------------------------------
Status
Copyright Federal Registration Registration
Copyrights Owner Office Number Date
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. Borrower's and its Subsidiaries' licenses (other than routine business
licenses, authorizing them to transact business in local
jurisdictions):
--------------------------------------------------------------------------------
Name of License Nature of License Licensor Term of License
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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EXHIBIT 7.1.19
CONTRACTS RESTRUCTURING BORROWER'S RIGHT TO INCUR DEBTS
Contract that restrict the right of Borrower to incur Indebtedness:
--------------------------------------------------------------------------------
Identity of Nature of
Title of Contract Parties Restriction Term of Contract
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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EXHIBIT 7.1.20
LITIGATION
1. Actions, suits, proceedings and investigations pending against
Borrower or any Subsidiary:
--------------------------------------------------------------------------------
Jurisdiction
Title of Action Nature of Action Complaining Parties or Tribunal
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The only threatened actions, suits, proceedings or investigations of
which Borrower or any Subsidiary is aware are as follows:
▇-▇▇
▇▇
▇▇▇▇▇▇▇ 7.1.22(A)
CAPITALIZED LEASES
Borrower and its Subsidiaries have the following capitalized leases:
--------------------------------------------------------------------------------
Lessee Lessor Term of Lease Property Covered
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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EXHIBIT 7.1.22(B)
OPERATING LEASES
Borrower and its Subsidiaries have the following operating leases:
--------------------------------------------------------------------------------
Lessee Lessor Term of Lease Property Covered
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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EXHIBIT 7.1.23
PENSION PLANS
Borrower and its Subsidiaries have the following Plans:
--------------------------------------------------------------------------------
Party Type of Plan
--------------------------------------------------------------------------------
Borrower
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[Subsidiaries]
--------------------------------------------------------------------------------
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EXHIBIT 7.1.25
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Borrower and its Subsidiaries are parties to the following collective
bargaining agreements:
--------------------------------------------------------------------------------
Type of Agreement Parties Term of Agreement
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. Material grievances, disputes of controversies with employees are as
follows:
--------------------------------------------------------------------------------
Parties Involved Nature of Grievance, Dispute or Controversy
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining are as follows:
--------------------------------------------------------------------------------
Parties Involved Nature of Matter
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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EXHIBIT 8.1.3
COMPLIANCE CERTIFICATE
[Letterhead of Borrower]
19
-------------------, --
National Airmotive Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
The undersigned, the chief financial officer of National Airmotive
Corporation, a California corporation ("Borrower"), gives this certificate to
Fleet Capital Corporation ("Lender") in accordance with the requirements of
subsection 8.1.2 of that certain Loan and Security Agreement dated June 13,
1996, between Borrower and Lender ("Loan Agreement"). Capitalized terms used in
this Certificate, unless otherwise defined herein, shall have the meanings
ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets and statements of income of
Borrower for the [fiscal year] [fiscal quarterly period] [monthly period]
ending ______________, 19__, copies of which are attached hereto, I hereby
certify that:
(a) Consolidated Adjusted Net Worth is $___________;
(b) Average Availability was $______________; and
(c) [Intentionally omitted].
(d) The Fixed Charge Coverage Ratio is ________: 1.00;
(e) The Backlog is $___________; and
(f) Capital Expenditures during the period and for the fiscal year to
date total $____________ and $____________, respectively.
2. No default exists on the date hereof, other than: _____________________
[if none, so state]; and
3. No Event of Default exists on the date hereof, other than _____________
[if none, so state].
Very truly yours,
/s/ [SIGNATURE]
-----------------------------
Chief Financial Officer
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EXHIBIT 8.2.5
PERMITTED LIENS
--------------------------------------------------------------------------------
Secured Party Nature of Lien
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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