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EXHIBIT 10.3
[EXECUTION COUNTERPART]
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BANNER AEROSPACE, INC.,
AS BORROWER
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SUBORDINATED LOAN AGREEMENT
Dated as of December 20, 1996
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RHI HOLDINGS, INC.,
AS LENDER
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
Page
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Section 1. Definitions and Accounting Matters...................................... 1
1.01 Certain Defined Terms............................................... 1
Section 2. The Commitment, Loans, Note and Prepayments............................. 5
2.01 Loans............................................................... 5
2.02 Borrowings.......................................................... 5
2.03 Changes of Commitment............................................... 6
2.04 Prepayments......................................................... 6
2.05 Note................................................................ 6
Section 3. Payments of Principal, Interest and Commitment
Fee............................................................. 7
3.01 Repayment of Principal Obligations.................................. 7
3.02 Interest............................................................ 7
3.03 Commitment Fee...................................................... 8
Section 4. Payments; Computations; Etc............................................. 8
4.01 Payments............................................................ 8
4.02 Computations........................................................ 9
4.03 Minimum Amounts..................................................... 9
4.04 Certain Notices..................................................... 9
Section 5. Conditions Precedent.................................................... 9
5.01 Initial Loan........................................................ 9
5.02 Initial and Subsequent Loans........................................ 10
Section 6. Representations and Warranties.......................................... 10
Section 7. Leverage Ratio.......................................................... 12
Section 8. Events of Default....................................................... 12
Section 9. Subordination........................................................... 14
Section 10. Miscellaneous.......................................................... 18
10.01 Waiver............................................................. 18
10.02 Notices............................................................ 18
10.03 Amendments, Etc.................................................... 18
10.04 Successors and Assigns............................................. 19
10.05 Assignments........................................................ 19
10.06 Captions........................................................... 19
10.07 Counterparts....................................................... 19
10.08 Governing Law...................................................... 19
10.09 Expenses........................................................... 20
EXHIBIT A - Form of Note
(i)
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SUBORDINATED LOAN AGREEMENT dated as of December 20, 1996,
between: BANNER AEROSPACE, INC., a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Company"); and RHI
HOLDINGS, INC., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "Lender"). The Company has requested that
the Lender make loans to it in an aggregate principal amount not exceeding
$30,000,000 and the Lender is prepared to make such loans upon the terms and
conditions hereof. Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used
herein, the following terms shall have the following meanings (all terms
defined in this Section 1.01 or in other provisions of this Agreement in the
singular to have the same meanings when used in the plural and vice versa):
"Affiliate" shall have the meaning assigned to such term in
the Senior Credit Agreement.
"Applicable Interest Rate" shall mean:
(a) during the period from and including the Initial
Borrowing Date to and including the Specified Date, 10.00% per annum;
and
(b) after the Specified Date, 11.20% per annum.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of
1978, as amended from time to time.
"Basic Documents" shall mean this Agreement and the Note.
"Business Day" shall mean any day on which commercial banks
are not authorized or required to close in New York City.
"Change of Control" shall have the meaning assigned to such
term in the Senior Credit Agreement.
"Commitment" shall mean the obligation of the Lender to make
Loans in an aggregate principal amount up to but not exceeding $30,000,000 (as
the same may be reduced at any time or from time to time pursuant to Section
2.03 hereof).
"Commitment Fee" shall mean the amount the Company agrees to
pay to the Lender for making Loans available hereunder.
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"Commitment Fee Rate" shall mean, for any month:
(a) if the last day of such month falls on or prior to the
Specified Date, 1/12 of 1.5%; and
(b) if the last day of such month falls after the Specified
Date, 1/12 of 3.0%.
"Commitment Termination Date" shall mean June 28, 1997 (or,
if such date is not a Business Day, the next preceding Business Day) or, if
earlier, the date of termination of the Commitment pursuant to Section 2.03 or
8 hereof.
"Contractual Obligation" shall have the meaning assigned to
such term in the Senior Credit Agreement.
"Deferral Dates" shall mean the first day of each January and
July, the first of which shall be the first such day after the date hereof;
provided that if any such day is not a Business Day, then such Deferral Date
shall be the next succeeding Business Day.
"Deferred Payments" shall mean accrued interest the payment
of which is deferred pursuant to Section 3.02 hereof and accrued Commitment
Fees the payment of which is deferred pursuant to Section 3.03 hereof.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"Events of Default" shall have the meaning assigned to such
term in Section 8 hereof.
"Fairchild" shall mean The ▇▇▇▇▇▇▇▇▇ Corporation.
"Governmental Authority" shall have the meaning assigned to
such term in the Senior Credit Agreement.
"Initial Borrowing Date" shall mean the date of the initial
Loan hereunder.
"Leverage Ratio" shall have the meaning assigned to such term
in the Senior Credit Agreement.
"Lien" shall have the meaning assigned to such term in the
Senior Credit Agreement.
"Loans" shall mean the loans provided for in Section 2.01
hereof.
"Margin Stock" shall have the meaning assigned to such term
in the Senior Credit Agreement.
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"Material Adverse Effect" shall mean a material adverse
effect upon (a) the financial condition, operations, assets or prospects of the
Company and its Subsidiaries, taken as a whole, (b) the ability of the Company
to perform its obligations under the Basic Documents or (c) the ability of the
Lender to enforce any of the Basic Documents.
"Maturity Date" shall mean November 15, 2003 (or, if such
date is not a Business Day, the next preceding Business Day).
"Note" shall mean the promissory note provided for by Section
2.05 hereof and all promissory notes delivered in substitution or exchange
therefor, in each case as the same shall be modified and supplemented and in
effect from time to time.
"Organizational Documents" shall have the meaning assigned to
such term in the Senior Credit Agreement.
"Permitted Assignee" shall mean (a) Fairchild or (b) a
Subsidiary of Fairchild or of the Lender that is organized under the laws of
the United States or any State thereof; provided that ▇▇▇▇▇▇▇▇▇ Holding Corp.,
each Person in which ▇▇▇▇▇▇▇▇▇ Holding Corp. has an equity interest and each
Person in which the Company has an equity interest shall be deemed not to be a
"Permitted Assignee".
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, limited liability company, joint venture,
trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Post-Default Rate" shall mean a rate per annum equal to 2%
plus the Applicable Interest Rate in effect from time to time.
"Potential Event of Default" shall mean an event that with
notice or lapse of time or both would become an Event of Default.
"Principal Obligations" shall mean, at any time, collectively:
(a) the principal amount of Loans outstanding at such time and (b) the Deferred
Payments outstanding at such time.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Qualified Equity" shall mean Preferred Stock (as defined in
the Senior Credit Agreement).
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"Qualified Equity Issuance" shall mean the issuance by the
Company of Qualified Equity upon the exercise of Qualified Equity Rights
pursuant to which the Company receives cash proceeds of not less than
$27,800,000.
"Qualified Equity Rights" shall mean rights to acquire
Qualified Equity, which rights are issued by the Company after the date hereof
to one or more shareholders of the Company.
"Requirements of Law" shall have the meaning assigned to such
term in the Senior Credit Agreement.
"Senior Administrative Agent" shall mean Citicorp USA, Inc.,
a Delaware corporation, as Administrative Agent under the Senior Credit
Agreement, together with its successors in such capacity.
"Senior Credit Agreement" shall mean that certain Second
Amended and Restated Credit Agreement dated as of December 12, 1996, by and
among the Company, the financial institutions from time to time party thereto
as "Lenders" and "Issuing Banks", and the Senior Administrative Agent.
"Senior Event of Default" shall mean an "Event of Default"
under and as defined in the Senior Credit Agreement.
"Senior Indebtedness" shall mean all principal of and
interest (including without limitation, all interest accruing after the filing
of any petition for the bankruptcy or insolvency of the Company, whether or not
allowed in any bankruptcy or insolvency proceeding) on the "Obligations" of the
Company presently existing or at any time hereafter arising under the Senior
Credit Agreement, and all extensions, substitutions, renewals, refinancings and
refundings thereof.
"Senior Potential Event of Default" shall mean an event that
with notice or lapse of time or both would become a Senior Event of Default.
"Specified Date" shall mean the date that is six months after
the Initial Borrowing Date.
"Subordinated Indebtedness" shall mean all outstanding
principal of and unpaid interest accrued on all Loans and Deferred Payments and
all other amounts from time to time owing hereunder and under the Note, and all
extensions and renewals thereof.
"Subsidiary" shall have the meaning assigned to such term in
the Senior Credit Agreement.
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Section 2. The Commitment, Loans, Note and Prepayments .
2.01 Loans.
(a) The Lender agrees, on the terms and conditions of this
Agreement, to make one or more term loans to the Company in Dollars on or
before the Commitment Termination Date in an aggregate principal amount up to
but not exceeding the amount of the Commitment. Once repaid or prepaid, a Loan
may not be reborrowed.
(b) The Company will use the proceeds of the Loans hereunder
solely to finance acquisitions and for working capital purposes of Persons so
acquired (all in compliance with all applicable legal and regulatory
requirements, including, without limitation, the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the regulations thereunder); provided that
the Lender shall not have any responsibility as to the use of any of such
proceeds.
2.02 Borrowings. The Company shall give the Lender
notice of each borrowing hereunder as provided in Section 4.04 hereof. On the
date specified for each borrowing hereunder, the Lender shall, subject to the
terms and conditions of this Agreement, make available the amount of such
borrowing to the Company by depositing the same, in immediately available
funds, in an account of the Company in the United States designated by the
Company in such notice.
2.03 Changes of Commitment.
(a) The Company shall have the right at any time or from time
to time to terminate or reduce the unused amount of the Commitment; provided
that (i) the Company shall give notice of each such termination or reduction as
provided in Section 4.04 hereof and (ii) each partial reduction shall be in an
amount at least equal to $1,000,000.
(b) The Commitment shall be automatically reduced to zero on
the earlier of (i) the Commitment Termination Date and (ii) the occurrence of a
Qualified Equity Issuance.
(c) The Commitment once terminated or reduced may not be
reinstated.
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2.04 Prepayments.
(a) Optional Prepayments. The Company shall have the right to
prepay Principal Obligations at any time or from time to time, provided that
the Company shall give the Lender notice of each such prepayment as provided in
Section 4.04 hereof.
(b) Mandatory Prepayment. Upon the occurrence of a Qualified
Equity Issuance, the Commitment shall be automatically terminated as provided
in Section 2.03(b) hereof and the Company shall prepay the Principal
Obligations then outstanding (together with all accrued and unpaid interest and
Commitment Fees owing hereunder) in full.
2.05 Note.
(a) The Principal Obligations shall be evidenced by a single
promissory note of the Company substantially in the form of Exhibit A hereto,
dated the date hereof and otherwise duly completed.
(b) The date and amount of each Loan made by the Lender to
the Company, each deferral of a Deferred Payment pursuant to Sections 3.02 and
3.03 hereof and each payment made on account of the Principal Obligations shall
be recorded by the Lender on its books and, prior to any transfer of the Note,
endorsed by the Lender on the schedule attached to the Note or any continuation
thereof; provided that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Company to make a
payment when due of any amount owing hereunder or under the Note.
(c) The Lender shall not be entitled to have the Note
substituted or exchanged for any reason, except in connection with a permitted
assignment of the Commitment, Principal Obligations and Note pursuant to
Section 10.05 hereof (and, if requested by the Lender, the Company agrees to so
exchange the Note).
Section 3. Payments of Principal, Interest and Commitment
Fee.
3.01 Repayment of Principal ObligationsRepayment of Principal
Obligations. The Company hereby promises to pay to the Lender in cash the
entire amount of the outstanding Principal Obligations, and each Loan and
Deferred Payment shall mature and be payable, on the Maturity Date.
3.02 Interest.
(a) The Company hereby promises to pay to the Lender
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interest on the outstanding Principal Obligations, for the period from and
including the date of the making of the relevant Loan or the effectiveness of
the deferral of the relevant Deferred Payment, as the case may be, to but
excluding the date such Principal Obligation shall be paid in full, at a rate
per annum equal to the Applicable Interest Rate as in effect from time to time.
On each Deferral Date prior to the Maturity Date, accrued interest on the
Principal Obligations shall become a "Deferred Payment" hereunder, the payment
of which shall be deferred until the Maturity Date, provided that accrued
interest shall be payable in cash (and shall not be deferred as provided
herein) upon the payment or prepayment of Principal Obligations (but only on
the principal amount so paid or prepaid).
(b) Notwithstanding the foregoing paragraph (a), the Company
hereby promises to pay to the Lender interest at the applicable Post-Default
Rate on any Principal Obligation and on any other amount payable by the Company
hereunder or under the Note that shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise), for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Interest payable at the Post-Default Rate shall be payable in cash (and,
accordingly, shall not be deferred) from time to time on demand.
3.03 Commitment Fee. On the last day of each
month (commencing on the first such date after the date hereof until the
Principal Obligations shall be paid in full and the Commitment shall have
expired or been terminated), Commitment Fee shall accrue in an amount equal to
(a) the Commitment Fee Rate as in effect at such time multiplied by (b) the
aggregate amount of Principal Obligations outstanding on such day. Commitment
Fees accrued pursuant to the preceding sentence shall, on each Deferral Date
prior to the Maturity Date, become a "Deferred Payment" hereunder, the payment
of which shall be deferred until the Maturity Date. Notwithstanding anything
herein to the contrary, no Commitment Fees shall be payable hereunder if the
Principal Obligations are repaid in full on or prior to June 30, 1997.
Section 4. Payments; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Company
under this Agreement and the Note, shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Lender at
the Lender's address specified on the signature pages hereof (or at such other
place as may, from time to time, be designated by the Lender), not
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later than 1:00 p.m. Eastern time on the date on which such payment shall
become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day).
(c) The Company shall, at the time of making each payment
under this Agreement or the Note, specify to the Lender the Loans or other
amounts payable by the Company hereunder to which such payment is to be applied
(and in the event that the Company fails to so specify, or if an Event of
Default has occurred and is continuing, the Lender may apply the amount of such
payment received by it in such manner as it may determine to be appropriate).
(d) If the due date of any payment under this Agreement or
the Note would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall be
payable for any principal so extended for the period of such extension.
4.02 Computations. Interest on Principal
Obligations and Commitment Fees shall be computed on the basis of a year of 365
or 366 days, as the case may be, and actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.
4.03 Minimum Amounts. Each borrowing and
partial prepayment of principal of Loans shall be in an amount at least equal
to $1,000,000.
4.04 Certain Notices. Notices by the Company to the Lender of
terminations or reductions of the Commitment, of borrowings of Loans and of
optional prepayments of Principal Obligations shall be irrevocable and shall be
effective only if received by the Lender not later than the tenth Business Day
prior to the date of the relevant termination, reduction, borrowing or
prepayment (or such other day as the Lender and the Company may otherwise
agree). Each such notice of termination or reduction shall specify the amount
of the Commitment to be terminated or reduced. Each such notice of borrowing
shall specify the Loans to be borrowed, the amount (subject to Section 4.03
hereof) thereof and the date of such borrowing (which shall be a Business Day).
Each such notice of optional prepayment shall specify the Principal Obligations
to be prepaid, the amount (subject to Section 4.03 hereof) thereof and the date
of such prepayment (which shall be a Business Day).
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Section 5. Conditions Precedent.
5.01 Initial Loan. The effectiveness of this
Agreement, and of the obligation of the Lender to make the initial Loan
hereunder, is subject to the satisfaction of the following conditions
precedent:
(a) Subordinated Loan Agreement. This Agreement shall have
been duly executed and delivered by the Company and the Lender.
(b) Note. The Lender shall have received the Note, duly
completed and executed by the Company.
(c) Senior Credit Agreement. The Senior Credit Agreement
shall have become effective in accordance with its terms.
(d) Qualified Equity Issuance Commitment. The Lender or
Fairchild shall have committed to exercise Qualified Equity Rights to
be issued to it in a manner satisfactory to the Company.
(e) Opinion of Counsel for the Company. The Lender shall have
received a favorable opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
special New York counsel to the Company.
5.02 Initial and Subsequent Loans. The obligation of the
Lender to make any Loan to the Company upon the occasion of each borrowing
hereunder (including the initial borrowing) is subject to the further
conditions precedent that, both immediately prior to the making of such Loan
and also after giving effect thereto and to the intended use thereof:
(a) no Potential Event of Default or Event of Default shall
have occurred and be continuing; and
(b) no Senior Potential Event of Default or Senior Event of
Default shall have occurred and be continuing.
Each notice of borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in the preceding sentence
(both as of the date of such notice and, unless the Company otherwise notifies
the Lender prior to the date of such borrowing, as of the date of such
borrowing).
Section 6. Representations and Warranties. The Company
represents and warrants to the Lender that:
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(a) Organization; Corporate Powers. The Company and each
Subsidiary of the Company (A) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization, (B) is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction in which failure to be so qualified and in good standing
will have or is reasonably likely to have a Material Adverse Effect,
and (C) has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business as
presently conducted and as proposed to be conducted in connection with
and following the consummation of the transactions contemplated by
this Agreement.
(b) Authority. The Company has the requisite corporate power
and authority to execute, deliver and perform the Basic Documents. The
execution, delivery and performance of the Basic Documents and the
consummation of the transactions contemplated thereby have been duly
approved by the board of directors of the Company and, if necessary,
the shareholders of the Company, and such approvals have not been
rescinded. No other corporate action or proceedings on the part of the
Company are necessary to consummate such transactions. Each of the
Basic Documents (A) has been duly executed and delivered by it, (B)
constitutes the Company's legal, valid and binding obligation,
enforceable against it in accordance with its terms, and (C) is in
full force and effect. The Company has performed and complied with all
the terms, provisions, agreements and conditions set forth herein and
in the Note, and no Potential Event of Default, Event of Default or
breach of any covenant by the Company exists thereunder.
(c) No Conflict. The execution, delivery and performance of
each of the Basic Documents do not and will not (i) conflict with the
Organizational Documents of the Company, (ii) constitute a tortious
interference with any Contractual Obligation of any Person or conflict
with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any Requirement of Law or
Contractual Obligation of the Company or any Subsidiary of the
Company, or require termination of any Contractual Obligation, the
consequences of which violation, breach, default, termination,
conflict or interference, singly or in the aggregate will, or is
reasonably likely to, result in a Material Adverse Effect or may
subject the Lender to any liability, (iii) result in or require the
creation or imposition of any Lien whatsoever upon any of the Property
or assets of the Company or any of its Subsidiaries, or (iv) require
any approval of shareholders of the Company which has not been
obtained.
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(d) Governmental Consents. The execution, delivery and
performance of each of the Basic Documents do not and will not require
any registration with, consent or approval of, or notice to, or other
action to, with or by any Governmental Authority, except filings,
consents or notices which have been made, obtained or given.
(e) Governmental Regulation. The Company is not subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, or the Investment
Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its
ability to consummate the transactions contemplated hereby or by the
Basic Documents.
(f) Disclosure. The representations and warranties of the
Company contained herein, and all certificates and other documents
delivered to the Lender pursuant to the terms hereof, do not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. The Company has not intentionally withheld any fact from
the Lender in regard to any matter which will, or in reasonably likely
to, result in a Material Adverse Effect.
(g) Requirements of Law. The Company and each Subsidiary of
the Company is in compliance with all Requirements of Law applicable
to it and its respective business, in each case where the failure to
so comply individually or in the aggregate will, or is reasonably
likely to, result in a Material Adverse Effect.
(h) Margin Stock. The Company is not engaged in the
business of extending credit for the purpose of purchasing or carrying
Margin Stock.
Section 7. Leverage Ratio. The Company covenants and agrees
with the Lender that, so long as the Commitment or any Principal Obligation is
outstanding and until payment in full of all amounts payable by the Company
hereunder, the Company shall maintain a Leverage Ratio (as determined as of the
last day of each fiscal quarter of the Company ending after the date hereof for
the four-fiscal-quarter period then ending) of not more than 6.00 to 1.00.
Section 8. Events of DefaultEvents of Default. If one or more
of the following events (herein called "Events of Default") shall occur
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and be continuing:
(a) The Company shall default in the payment of any principal
of any Loan or Deferred Payment when due (whether at stated maturity
or at mandatory prepayment) and such default continues for 90 days; or
(b) Any representation, warranty or certification made or
deemed made herein by the Company shall prove to have been false or
misleading as of the time made or furnished in any material respect;
or
(c) The Company shall default in the performance of any of
its obligations under Section 7 hereof; or
(d) A Change of Control shall occur; or
(e) Any Senior Event of Default shall occur and the
indebtedness of the Company thereunder shall be declared due and
payable as a result thereof; or
(f) The Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial
part of its Property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy
Code, (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment
of debts, (v) fail to controvert in a timely and appropriate manner,
or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of the Company, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a receiver,
custodian, trustee, examiner, liquidator or the like of the Company or
of all or any substantial part of its Property or (iii) similar relief
in respect of the Company under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or
an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a
period of 60 or more days; or an order for relief against the Company
shall be entered in an involuntary case under the Bankruptcy Code;
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THEREUPON: (1) in the case of an Event of Default (other than one referred to
in clause (f) or (g) of this Section 8), the Lender may, by notice to the
Company, terminate the Commitment and/or declare the entire Principal
Obligations (including, without limitation, the principal amount then
outstanding of, and the accrued interest on, the Loans and all other Deferred
Amounts) and all other amounts payable by the Company hereunder and under the
Note to be forthwith due and payable, whereupon such amounts shall be
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company; and (2) in the case of the occurrence of an Event of Default referred
to in clause (f) or (g) of this Section 8, the Commitment shall automatically
be terminated and the entire Principal Obligations (including, without
limitation, the principal amount then outstanding of, and the accrued interest
on, the Loans and all other Deferred Amounts) and all other amounts payable by
the Company hereunder and under the Note shall automatically become immediately
due and payable without presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Company.
Section 9. Subordination. The Lender hereby
covenants and agrees (for itself and its successors and assigns) that the
Subordinated Indebtedness is and shall be subordinated and subject and junior
in right of payment, to the extent and in the manner set forth in this Section
9, to the prior payment in full, in cash, of all Senior Indebtedness.
(a) Insolvency, Liquidation, Etc. In the event of any
insolvency, bankruptcy, receivership, liquidation, reorganization, reformation,
readjustment, composition or other similar proceeding for the liquidation,
dissolution or other winding up of the Company, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings, or any
assignment by the Company for the benefit of creditors, or any other
marshalling of the assets of the Company, then and in any such event:
(i) all Senior Indebtedness (including, without limitation,
interest accrued thereon after the commencement of any such
proceedings, whether or not allowed in such proceedings) shall first
be paid in full, in cash, before any payment or distribution of any
character, whether in cash, securities or other property, shall be
made on account of or applied to the Subordinated Indebtedness;
(ii) any payment or distribution of any character, whether
in cash, securities or other property, which would otherwise (but for
this Section 9(a)(ii)) be payable or
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deliverable in respect of the Subordinated Indebtedness shall be paid
or delivered directly to the Senior Administrative Agent on behalf of
the holders of Senior Indebtedness, until all Senior Indebtedness
shall have been paid in full, after giving effect to any concurrent
payment or distribution, or provision thereof, to the holders of
Senior Indebtedness; and
(iii) the Lender irrevocably authorizes and empowers the
Senior Administrative Agent, on behalf of each holder of Senior
Indebtedness (and each of their successors and assigns), to demand,
▇▇▇ for, collect and receive all such payments and distributions and
to receipt therefor, and to file and prove all such claims and take
all such other action in the name of all holders of the Subordinated
Indebtedness or otherwise, as the Senior Administrative Agent, on
behalf of the holders of Senior Indebtedness, may determine to be
necessary or appropriate, in each instance as more particularly set
forth in Section 9(d) hereof.
(b) No Payments and/or Enforcement in Certain Circumstances.
Prior to the occurrence of a Senior Potential Event of Default or Senior Event
of Default, the Lender shall only be entitled to receive (i) payments of
interest hereunder and Commitment Fees, in each case as and when due and
payable, and (ii) payment of the Principal Obligations pursuant to the first
sentence of Section 2.04 hereof. Following the occurrence and during the
continuance of a Senior Potential Event of Default or Senior Event of Default,
the Lender shall not ask, demand, ▇▇▇ for, take or receive, by setoff or in any
manner, all or any part of the Subordinated Indebtedness or any security
therefor, and shall have no right to enforce any claim with respect to the
Subordinated Indebtedness, or otherwise take any action against the Company or
its Property, in each case unless and until all Senior Indebtedness shall have
been fully paid and satisfied in cash and all financing arrangements between
the Company and the "Lenders" and "Issuing Banks" party to the Senior Credit
Agreement shall have been terminated, or such payment in full in cash shall
have been duly provided for in a manner satisfactory to the holders of the
Senior Indebtedness.
In the event of any direct or indirect payment or
distribution shall be received by the Lender in contravention of the aforesaid
subordination provisions hereof, then such payment or distribution shall be
held in trust for and shall be paid over or delivered to the Senior
Administrative Agent on behalf of the holders of Senior Indebtedness until all
Senior Indebtedness shall have been paid in full, in cash, after giving effect
to any concurrent payment or distribution to the holders of the Senior
Indebtedness. The Senior Indebtedness shall not be deemed to have been paid in
full, nor shall provision be deemed to have been made for such payment, unless
all holders of the Senior
Credit Agreement
17
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Indebtedness shall have received (after giving effect to all concurrent
payments or distributions to holders of Senior Indebtedness) cash equal to the
amount of all Senior Indebtedness at the time outstanding.
(c) Subrogation. Subject to the prior payment in full, in
cash, of all Senior Indebtedness, the holders of the Subordinated Indebtedness
shall be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Company made on the Senior
Indebtedness until the Subordinated Indebtedness shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to holders
of Senior Indebtedness of any cash, property or securities to which holders of
Subordinated Indebtedness would be entitled except for the provisions hereof
and no turnover of any payment pursuant to the provisions hereof to holders of
Senior Indebtedness by the holders of the Subordinated Indebtedness, shall, as
between the Company, its creditors (other than holders of Senior Indebtedness)
and the holders of Subordinated Indebtedness, be deemed to be a payment by the
Company to or on account of Senior Indebtedness, it being understood that the
provisions hereof are and are intended to be solely for the purpose of defining
the relative rights of the holders of the Senior Indebtedness, on the one hand,
and the holders of Subordinated Indebtedness on the other hand.
(d) Debtor Relief. Should any action be taken by or against
the Company for any relief or arrangement under any Federal or state bankruptcy
or insolvency law (including, without limitation, the appointment of a
receiver, the making of an assignment for the benefit of creditors, the holding
of a meeting of creditors for the purpose of working out the Company's debts or
the appointment of a creditor committee or receiver to supervise or administer
the business or assets of the Company), or should the Company become insolvent
or take steps to wind up or dissolve its business, the Lender irrevocably
authorizes and empowers the Senior Administrative Agent, on behalf of the
holders of the Senior Indebtedness, as the Lender's attorney-in-fact to enforce
or file any document or proof of claim for the Subordinated Indebtedness in the
name of the holders of the Senior Indebtedness or the Lender. In the event the
Senior Administrative Agent requires possession of the Note in order to seek
enforcement hereof as attorney-in-fact, the Lender shall deliver the Note to
the Senior Administrative Agent within three days after receipt by the Lender
of a written request to such effect from the Senior Administrative Agent. The
Lender agrees to provide the Senior Administrative Agent with all information
and documents necessary to present claims or seek enforcement as aforesaid. The
Lender further authorizes and empowers the Senior Administrative Agent, as
attorney-in-fact, to receive and give receipt for any payments or other
distributions on the Subordinated Indebtedness and to apply them to the Senior
Credit Agreement
18
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Indebtedness, to serve on any committee appointed to supervise or administer
the business or assets of the Company and to vote its claim with respect to any
proposed plan of reorganization, dissolution, or liquidation.
(e) Non-impairment of the Lender's Creditor Status. Nothing
otherwise contained herein is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
holders of the Subordinated Indebtedness, the obligations of the Company, which
obligations are (subject to the terms of the subordination provisions hereof)
absolute and unconditional, to pay the Subordinated Indebtedness as and when
the same shall become due and payable in accordance with its terms, or to
affect the relative rights of the Lender and creditors of the Company other
than the holders of the Senior Indebtedness, nor shall anything herein prevent
the Lender from exercising all rights permitted it hereunder upon the
acceleration of the Subordinated Indebtedness, subject to the rights hereunder
of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy and
subject to the limitations of the rights of the Lender set forth herein.
(f) Non-Waiver of Rights. No right of any present or future
holder of Senior Indebtedness to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act
on the part of the Company or by any act or failure to act, in good faith, by
any such holder, or by any non-compliance by the Company with the terms,
provisions and covenants hereof or of the Note, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
(g) Additional Agreements. The Lender hereby covenants and
agrees (for itself and its successors and assigns) that it will not, so long as
any Senior Indebtedness is outstanding:
(i) without the prior written consent of the holders of the
Senior Indebtedness, subordinate any of the Subordinated Indebtedness
to any other indebtedness of the Company;
(ii) take any collateral from the Company or any Affiliate
of the Company as security for the Subordinated Indebtedness; or
(iii) initiate or be a party to any proceeding or action
(other than a proceeding or action initiated by holders of Senior
Indebtedness) under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar
Credit Agreement
19
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law of any jurisdiction pursuant to which it is sought to adjudicate
the Company bankrupt or insolvent.
Section 10. Miscellaneous.
10.01 Waiver. No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or the Note shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement or the Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
10.02 Notices. All notices, requests and other communications
provided for herein (including, without limitation, any modifications of, or
waivers, requests or consents under, this Agreement) shall be given or made in
writing (including, without limitation, by telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof); or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have
been duly given when transmitted by telecopier or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
10.03 Amendments, Etc. No provision of this Agreement may
be modified or supplemented except by an instrument in writing signed by the
Company, the Lender and the Senior Administrative Agent.
10.04 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
10.05 Assignments.
(a) Except for the Company's pledge of its rights under this
Agreement to the Senior Administrative Agent as provided in the Senior Credit
Agreement and the other "Loan Documents" referred to therein, the Company may
not assign any of its rights or obligations hereunder or under the Note without
the prior consent of the Lender.
(b) The Lender may not assign the Principal Obligations or
the Commitment to any Person other than a Permitted Assignee. Upon any
assignment of the Principal Obligations and the Commitment to a Permitted
Assignee and:
Credit Agreement
20
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(i) the execution and delivery by the assignee to the
Company of an instrument in writing pursuant to which the assignee
agrees to become the "Lender" hereunder; and
(ii) the execution and delivery by the assignee to the
Senior Administrative Agent of a written acknowledgment of the terms
hereof and of the Note (including, without limitation, the terms of
Section 9 hereof),
the assignee shall have (unless provided in such assignment with the consent of
the Company) the obligations, rights and benefits of the Lender hereunder in
respect of the Commitment, Principal Obligations theretofore held by the
Lender, and the Lender shall be released from the Commitment.
10.06 Captions. The table of contents and captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
10.07 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
10.08 Governing Law. This Agreement and the Note
shall be governed by, and construed in accordance with, the law of the State of
New York.
10.09 Expenses. Each party hereto shall bear its own expenses
in connection with the execution, delivery and performance of this Agreement
and the Note.
Credit Agreement
21
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
BANNER AEROSPACE, INC.
By
----------------------------
Vice President - Finance and
Secretary
Address for Notices:
Washington Dulles International
Airport
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Credit Agreement
22
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RHI HOLDINGS, INC.
By
------------------------
Vice President
Address for Notices:
Washington Dulles International
Airport
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Credit Agreement
23
EXHIBIT A
[Form of Note]
PROMISSORY NOTE
December 20, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, BANNER AEROSPACE, INC., a Delaware
corporation (the "Company"), hereby promises to pay to RHI HOLDINGS, INC. (the
"Lender"), at its office at Washington Dulles International Airport, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, the principal sum
of THIRTY MILLION DOLLARS (or such greater or lesser amount as shall equal the
aggregate unpaid amount of the Principal Obligations owing to the Lender by the
Company under the Subordinated Loan Agreement referred to below), in lawful
money of the United States of America and in immediately available funds, on
the dates and in the amounts provided in the Subordinated Loan Agreement, and
to pay interest thereon, in like money and funds, for such periods, at the
rates per annum and on the dates provided in the Subordinated Loan Agreement.
The date and amount of each Loan made by the Lender to the
Company, each deferral of a Deferred Payment pursuant to Sections 3.02 and 3.03
of the Subordinated Loan Agreement and each payment made on account of the
Principal Obligations shall be recorded by the Lender on its books and, prior
to any transfer of this Note, endorsed by the Lender on the schedule attached
hereto or any continuation thereof, provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of
the Company to make a payment when due of any amount owing under the
Subordinated Loan Agreement or hereunder.
This Note is the Note referred to in the Subordinated Loan
Agreement dated as of December 20, 1996 (as modified and supplemented and in
effect from time to time, the "Subordinated Loan Agreement") between the
Company and RHI Holdings, Inc. and evidences Principal Obligations owing to the
Lender thereunder. Terms used but not defined in this Note have the respective
meanings assigned to them in the Subordinated Loan Agreement.
The Subordinated Loan Agreement provides for the acceleration
of the maturity of this Note upon the occurrence of certain events and for
prepayments of Principal Obligations upon the terms and conditions specified
therein.
Except as permitted by Section 10.05 of the Subordinated Loan
Agreement, this Note may not be assigned by the Lender to any other Person.
Note
24
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This Note (and the Principal Obligations and other amounts
evidenced hereby) are subordinated to the prior payment of the Senior
Indebtedness, all as provided in the Subordinated Loan Agreement.
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
BANNER AEROSPACE, INC.
By
------------------------
Vice President-Finance
and Secretary
Note
25
SCHEDULE
This Note evidences Loans made under the within-described
Subordinated Loan Agreement on the dates and in the principal amounts set forth
below, subject to the payments and prepayments thereof set forth below:
Date Amount
of of Unpaid
Loan/ Loan/ Amount Amount of
Deferred Deferred Paid or Principal Notation
Payment Payment Prepaid Obligations Made by
-------- -------- ------- ----------- --------
Note
