EXHIBIT 10.1
AMENDED AND RESTATED
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COMMERCIAL REVOLVING LOAN AND SECURITY AGREEMENT
BETWEEN
▇▇▇▇▇▇ UNITED BANK
AND
AEROSPACE PRODUCTS INTERNATIONAL, INC
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Dated as of July 29, 2005
Exhibits
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Exhibit "A" - $25,000,000 Commercial Revolving Promissory Note
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Exhibit "B" - Borrowing Base Certificate
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Exhibit "C" - Covenant Compliance Certificate
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Exhibit "D" - Schedule of Location of Inventory
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Exhibit "E" - Line of Credit Promissory Note of up to $3,000,000
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AGREEMENT dated as of July 29, 2005, between AEROSPACE PRODUCTS
INTERNATIONAL, INC., a Delaware corporation with an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ("Borrower") and ▇▇▇▇▇▇ UNITED BANK, a state
banking corporation with an office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank").
Recitals
A. The Borrower and Bank entered into a Commercial Revolving Loan And
Security Agreement executed as of March 30, 2000, as amended by that certain
First Amendment To Commercial Revolving Loan And Security Agreement dated as of
August 30, 2000, and as further amended by that certain Second Amendment To
Commercial Revolving Loan And Security Agreement dated as of April 27, 2001, and
as further amended by that certain Third Amendment To Commercial Revolving Loan
And Security Agreement dated as of June 28, 2001, and as further amended by that
certain Fourth Amendment To Commercial Revolving Loan And Security Agreement
dated as of July 31, 2002, and as further amended by that certain Fifth
Amendment To Commercial Revolving Loan And Security Agreement dated as of July
31, 2003, and as further amended by that certain Sixth Amendment To Commercial
Revolving Loan And Security Agreement dated as of July 31, 2004, (the "Loan
Agreement") which Loan Agreement provided, inter alia, for a commercial
revolving loan from the Bank to the Borrower in the original amount of up to
TWENTY MILLION DOLLARS ($20,000,000).
B. In connection with the Loan Agreement, the Borrower executed and
delivered to Bank that certain Commercial Revolving Promissory Note from
Borrower to Bank in the original amount of up to TWENTY MILLION DOLLARS
($20,000,000) executed March 30, 2000, as amended by the Second Amendment To
Commercial Revolving Loan And Security Agreement dated as of April 27, 2001, and
as further amended by that certain Third Amendment To Commercial Revolving Loan
And Security Agreement dated as of June 28, 2001, and as further amended by that
certain Fourth Amendment To Commercial Revolving Loan And Security Agreement
dated as of July 31, 2002, and as further amended by that certain Fifth
Amendment To Commercial Revolving Loan And Security Agreement dated as of July
31, 2003, and as further amended by that certain Sixth Amendment To Commercial
Revolving Loan And Security Agreement dated as of July 31, 2004, (the "Note").
C. The Lender has agreed to make available a Line of Credit of up to
$3,000,00.00 as evidenced by a Line of Credit Promissory Note dated of even date
herewith in the original amount of up to THREE MILLION DOLLARS ($3,000,000) upon
the terms and conditions as set forth herein;
D. The Borrower and Bank have agreed to amend and restate the Loan
Agreement in its entirety with this Agreement and to amend and restate the Note
in its entirety as provided herein and in that certain Amended And Restated
Commercial Revolving Promissory Note dated July 29, 2005, in the amount of
$25,000,000.
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Agreement
In consideration of the Background, which is incorporated by reference
and the mutual covenants contained in this Agreement, the Borrower and the Bank,
for good and valid consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be bound legally, agree as follows:
ARTICLE I.
Definitions
1.01 Definitions. As used herein, or in any certificate, document or
report delivered pursuant to this Agreement or any of the other Loan Documents,
capitalized terms shall have the meanings set forth on the attached Schedule
"1.01".
1.02 Accounting Terms.Except as otherwise specifically set forth in
this Agreement, each accounting term used in this Agreement shall have the
meaning given to it under GAAP. Any dispute or disagreement between the Borrower
and the Bank relating to the determination of GAAP shall, in the absence of
manifest error, be conclusively resolved for all purposes hereof by the written
opinion with respect thereto, delivered to the Bank, of independent accountants
selected by the Borrower and approved by the Bank for the purposes of auditing
the periodic financial statements of the Borrower.
ARTICLE II.
Loan Facilities
2.01 Facility I.
(a) Revolving Loans Subject to the terms and conditions, and
relying upon the representations and warranties set forth in this Agreement, the
Bank agrees to make revolving loans (each a "Revolving Loan" and, collectively,
the "Revolving Loans") to the Borrower at any time until the Commitment
Termination Date, in the principal amount which shall not exceed in the
aggregate at any one time the Borrowing Base (the "Revolving Loan Commitment").
In addition to this Agreement, the Revolving Loans shall be evidenced by the
Amended And Restated Commercial Revolving Promissory Note of this date, a copy
of which is attached hereto as Exhibit "A" (the "Note").
(b) Procedure For Revolving Loan Borrowing. Provided that the
Revolving Loan Commitment has not been terminated as provided in this Agreement
and Borrower is not in Default, the Borrower may borrow under the Revolving Loan
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Commitment by giving the Bank irrevocable notice of a request for a Revolving
Loan one (1) Business Day before a proposed borrowing, such irrevocable notice
setting forth (i) the amount of the Revolving Loan requested, which shall not be
less than $100,000, and (ii) the requested Revolving Loan Borrowing Date. Such
notice must be written (including, without limitation, via facsimile
transmission), accompanied by an executed Borrowing Base Certificate in the form
of Exhibit B attached hereto, and shall be sufficient if received by 2:00 p.m.
(Eastern Standard Time) on the date on which such notice is to be given. Unless
notification is otherwise furnished by the Borrower to the Bank in a manner
consistent with the requirements of this Section 2.01(b), Revolving Loans will
be made by credits to the Borrower's deposit account maintained with the Bank.
(c) Ability to Borrow and Reborrow. Within the limits of the
Borrowing Base, so long as the Borrower is in compliance with all the terms and
conditions of this Agreement and no Default or Event of Default exists, and so
long as the Bank has not demanded payment or accelerated payment of any of the
then outstanding Revolving Loans, the Borrower may borrow, repay and reborrow
Revolving Loan funds.
(d) Absence of Demand. Termination or Default. The Bank shall not,
and shall not be obligated to, make any Advances (i) if it has demanded payment
of, accelerated payment of, or terminated the Revolving Loans due to a Default,
or the occurrence of an Event of Default, or (ii) on or after the Commitment
Termination Date.
(e) Discretion of Bank. Notwithstanding any other terms of this
Agreement, Eligible Receivables, the Borrowing Base, Eligible Inventory, and
appropriate reserve levels from the availability under the Borrowing Base, shall
be determined by the Bank from time to time in its sole reasonable discretion.
(f) Inventory Limitations. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall the Bank be required to make
Revolving Loans which exceed (i) $13,000,000 in the event the Eligible
Acquisition has occurred (or $10,000,000.00 in the event the Eligible
Acquisition has not occurred) in the aggregate based on all Eligible Inventory
less the Facility II Advance Amount (defined below); or (ii) provided that no
Default exists and the Eligible Acquisition has occurred, $15,000,000 in the
aggregate based on all Eligible Inventory less the Facility II Advance Amount,
up to five times per year up to fifteen (15) days per time.
(g) Use of Proceeds. The Borrower represents that the proceeds of
the Loan will be used for general working capital purposes. The Borrower shall
not apply any funds advanced under the Loan to, or for the benefit of, any
Affiliate or Subsidiary.
(h) The Borrower shall not apply any funds advanced under the
Revolving Loans to, or for the benefit of, any Affiliate or Subsidiary.
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2.02 Facility II.
(a) On the date hereof, the Bank is making available to the
Borrower a commercial line of credit of up to THREE MILLION DOLLARS ($3,000,000)
(the "FACILITY II LOC") as evidenced by the Facility II Note, a copy of which is
attached hereto as Exhibit "E", upon the terms and conditions set forth in this
Section 2.02.
(b) Provided that no Default exists hereunder, and prior to the
Commitment Termination Date, the Bank will make one (1) advance under the Line
of Credit Note (the "FACILITY II ADVANCE") in an amount not to exceed the lesser
of (i) $3,000,000 or (ii) (y) in the event the Eligible Acquisition has
occurred, $25,000,000 or (z) in the event the Eligible Acquisition has not
occurred, $20,000,000, less the outstanding balance of all sums due and owing
under the Note (the "FACILITY II ADVANCE Amount") for the purpose of purchasing
equipment and making leasehold improvements to property the Borrower expects to
lease as its headquarters.
(c) Commencing one (1) month from the date of the Facility II
Advance, and continuing on the same day of each month thereafter, the Borrower
shall pay to the Bank principal and interest in sixty (60) consecutive equal
monthly installments in an amount sufficient to amortize the Facility II Advance
Amount over a five (5) year period at the interest rate mentioned in subsection
(d) below. Monthly payments shall be applied first to accrued interest and the
balance to principal.
(d) The interest rate under the Facility II Note shall be at a
fixed rate per annum at a rate equal at all times to two hundred fifty (250)
basis points above the rate for U.S. Treasury Securities adjusted to a constant
maturity of five (5) years as made available by the Federal Reserve Board in
effect as of the date of the Facility II Advance.
(e) At the time of the Facility II Advance, the Bank shall have a
first perfected security interest in the personal property of the Borrower (with
the exception of specific purchase money liens which have been approved in
advance by Bank in its sole discretion).
ARTICLE III.
Interest And Terms
3.01 Interest Rate.
(a) The Revolving Loan shall bear and the Borrower promises to pay
interest on the terms and conditions set forth in the Note.
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(b) Lawful Interest. It is the intent of the parties that the rate
of interest and all other charges to the Borrower be lawful. If for any reason
the payment of a portion of interest, fees or charges as required by this
Agreement would exceed the limit established by applicable law which a
commercial Bank such as the Bank may charge to a commercial borrower such as the
Borrower, then the obligation to pay interest or charges shall automatically be
reduced to such limit and, if any amounts in excess of such limits shall be
paid, then such amounts shall be applied to the unpaid principal amount of the
Obligations of the Borrower to Bank or refunded so that under no circumstances
shall the interest or charges required hereunder exceed the maximum rate allowed
by law.
3.02 Term and Termination. Unless sooner terminated as a result of the
occurrence of an Event of Default, the Revolving Loans shall be due and payable
in full on the Maturity Date. Upon termination of the Revolving Loan Commitment,
the Bank shall have no obligation to make any further advances under the
Revolving Loan Commitment. All of the rights, interest and remedies of the Bank
and Obligations of the Borrower under this Agreement and the other Loan
Documents shall survive termination of the Revolving Loan Commitment until all
of the Obligations of the Borrower are fully satisfied.
3.03 Repayments Any payments made by the Borrower to the Bank shall be
credited first to late charges, costs and expenses, then to accrued and unpaid
interest and then to the outstanding principal balance.
(a) Mandatory Prepayment. If on any date the sum of Revolving Loans
outstanding exceeds the Borrowing Base, the Borrower shall, no later than the
second Business Day following such date, make prepayment of the Revolving Loans
in such amount so that the sum of Revolving Loans does not exceed the Borrowing
Base.
(b) Payments. For purposes only of computing interest hereunder,
all payments shall be applied by the Bank on the Business Day on which payment
has been received by the Bank no later than 3:00 p.m.
3.04 Unused Facility Fee. The Borrower agrees that Bank may debit the
Revolving Loan Account for the Unused Facility Fee quarterly in arrears on the
last Business Day of each calendar quarter. The Unused Facility Fee shall be
computed on the basis of the actual number of days elapsed in a year of 360
days.
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ARTICLE IV.
Representations And Warranties
4.01 The Borrower represents and warrants to the Bank that:
(a) Organization and Qualification. The Borrower (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware, (ii) has all requisite power and authority to own and
operate its properties and to carry on its business as presently conducted and
as proposed to be conducted, (iii) is qualified to do business in the state of
Tennessee and in every jurisdiction where such qualification is required, and
(iv) has the power to execute, deliver and perform its obligations under each of
the Loan Documents and each other agreement or instrument contemplated thereby
to which it is or will be a party and to borrow hereunder.
(b) Corporate Authority. The Borrower has full corporate power and
authority to enter into and perform the obligations under this Agreement, to
make the borrowings contemplated herein, to execute and deliver the Note and the
other Loan Documents and to incur the obligations provided for herein and
therein. The execution, delivery and performance by the Borrower of each of the
Loan Documents and the borrowings hereunder have been duly authorized by all
necessary and proper corporate and, if required, stockholder action. No other
consent or approval or the taking of any other action in respect of shareholders
or of any public authority is required as a condition to the validity or
enforceability of this Agreement, the Note or any of the other Loan Documents.
The execution and delivery of this Agreement and the other Loan Documents is for
valid corporate purposes.
(c) Binding Agreements. This Agreement constitutes, and the Note
and the other Loan Documents delivered in connection herewith shall constitute,
legal, valid and legally binding obligations of the Borrower, enforceable in
accordance with their respective terms.
(d) Governmental Approvals. To the best of the Borrower's
knowledge, no action, consent or approval of, registration or filing with or any
other action by any Governmental Authority is or will be required in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, except such as have been made or obtained and are in full force and
effect.
(e) Litigation. Except as set forth in Schedule "4.01(e)", there
are no actions, suits, proceedings or investigations pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or the
Subsidiaries, or any business, property or rights of any such person, before any
court or administrative agency, which either in any case or in the aggregate, if
adversely determined, would either question the validity of this Agreement, the
Note, or any other Loan Documents, or any action to be taken in connection with
the transactions contemplated hereby or result in a Material Adverse Effect.
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(f) No Material Adverse Change. There has been no Material Adverse
Change sinceMay 31, 2005.
(g) No Conflicting Law or Agreements. To the best of the Borrower's
knowledge, the execution, delivery and performance by the Borrower of this
Agreement, the Note and the other Loan Documents (i) do not violate any
provision of the certificate of incorporation or bylaws of the Borrower, (ii) do
not violate any order, decree or judgment, or any provision of any statute, rule
or regulation, (iii) do not violate or conflict with, result in a breach of or
constitute (with notice or lapse of time, or both) a default under any
shareholder agreement, stock preference agreement, mortgage, indenture or
contract to which the Borrower is a party, or by which any of its properties are
bound, or (iv) do not result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any property or assets of the
Borrower except as contemplated herein.
(h) Taxes. Except as set forth on the attached Schedule "4.01(h)",
with respect to all taxable periods of the Borrower, the Borrower has properly
prepared, executed and filed all tax returns (or extensions for filing) required
to be filed by it and has paid all federal, state, municipal, franchise and
other taxes shown on such filed returns. The reserves and provisions for taxes
on the books of the Borrower and each Subsidiary are adequate for all open years
and for its current fiscal period.
(i) Existence of Assets and Title Thereto. The Borrower has good
and marketable title to, or valid leasehold interests in, all its properties and
assets, including the properties and assets reflected in the financial
statements referred to above. All such properties and assets are not subject to
any mortgage, pledge, lien, lease, encumbrance, restriction or charge except
those permitted under the terms of this Agreement or as set forth in Schedule
"4.01(i)", and none of the foregoing prohibit or interfere with ownership of the
Borrower's assets or the operation of its business presently conducted thereon.
(j) Regulations G, T, U and X. The proceeds of the borrowings
hereunder will not be used, directly or indirectly, for any consumer purpose or
purchases, or for the purposes of purchasing or carrying any margin stock in
contravention of Regulations G, T, U or X promulgated by the Board of Governors
of the Federal Reserve System.
(k) Investment Company Act/Public Utility Holding Company Act.
Neither the Borrower nor any Subsidiary is (i) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940,
or (ii) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
(l) Compliance. To the best of its knowledge, the Borrower is not
in default with respect to, or in violation of, any order, writ, injunction or
decree of any court or of any federal, state, municipal or other governmental
department, commission, board, bureau, agency, authority or official, or in
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violation of any law, statute, rule or regulation to which it or its properties
is or are subject, where such default or violation would materially and
adversely affect the financial condition of the Borrower. The Borrower
represents that it has not received notice of any such default from any party.
To the best of its knowledge, the Borrower is not in default in the payment or
performance of any of its obligations to any third parties or in the performance
of any mortgage, indenture, lease, contract or other agreement to which it is a
party or by which any of its assets or properties are bound.
(m) Leases. The Borrower enjoys quiet and undisturbed possession
under all leases under which it is operating, and all such leases are valid and
subsisting and the Borrower is not in default under any of its leases. The
leases to which the Borrower is currently a party are set forth on the attached
Schedule "4.01(m)".
(n) Employee Benefit Plans. The Borrower is in compliance in all
material respects with the applicable provisions of ERISA and the regulations
and published interpretations thereunder. No Reportable Event has occurred with
respect to any Plan as to which the Borrower was required to file a report with
the Pension Benefit Guaranty Corporation (hereinafter called the "PBGC"), and
the present value of all benefit liabilities under each Plan maintained by the
Borrower (based on those assumptions used to fund such plan) did not, as of the
last annual valuation date applicable thereto, exceed by a material amount the
value of the assets of such Plan. The Borrower has no unfunded liability with
respect to any Plan in contravention of ERISA.
(o) Solvency. (i) Immediately after the first Advance, the fair
salable value of the assets of the Borrower taken as a whole will exceed the
amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of the Borrower.
(ii) The Borrower does not intend to, and does not believe it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Borrower, and
of amounts to be payable on or in respect of debt of the Borrower). The Borrower
expects that the cash flow of the Borrower (including from asset dispositions),
after taking into account all anticipated uses of the cash of the Borrower, will
at all times be sufficient to pay all such amounts or in respect of debt of the
Borrower when such amounts are required to be paid.
(iii) The Borrower does not intend, and does not believe, that
final judgments against the Borrower in actions for money damages will be
rendered at a time when, or in an amount such that, the Borrower will be unable
to satisfy any such judgments promptly in accordance with their terms (taking
into account the maximum reasonable amount of such judgments in any such actions
and the earliest reasonable time at which such judgments might be rendered).
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(p) Office. The chief executive office and principal place of
business of the Borrower, and the office where its records concerning Collateral
are kept is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
(q) Places of Business. The Borrower has no other places of
business and locates no Collateral, specifically including books and records, at
any location other than those set forth on the attached Schedule "4.01(q)".
(r) Guaranty Obligations. Intentionally deleted.
(s) Contracts. Borrower is not in default of any material contract,
governmental or otherwise, to which the Borrower is a party, and the and there
are no contracts which the termination of which by the Borrower would require
the payment of any amount of money.
(t) Labor Matters. There are no strikes or other material labor
disputes against the Borrower pending or, to the Borrower's knowledge,
threatened such as would reasonably be expected to result in a Material Adverse
Effect. As of the Closing Date, the hours worked and payments made to employees
of the Borrower have not been in violation in any material respect of the Fair
Labor Standards Act or any other applicable law dealing with such matters. As of
the Closing Date, all payments due from the Borrower for which any claim has
been made against the Borrower on account of wages and employee health and
welfare insurance and other benefits have been paid or accrued as a liability on
the books of the Borrower. Upon request, the Company will furnish or make
available to the Banks copies of all collective bargaining agreements to which
the Borrower is a party. The consummation of the transactions contemplated by
this Agreement will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower is a party or by which the Borrower is bound.
(u) Stock Matters. There are no options or rights outstanding to
purchase any of the Borrower's capital stock except as set forth on the attached
Schedule "4.01(u)". The authorized capital stock of the Borrower consists of
300,000 shares of common stock, $.001 par value per share, 93,660 of which
shares are outstanding. There are no authorized shares of preferred stock except
as set forth on Schedule "4.01(u)". The record and beneficial ownership of such
capital stock of the Borrower is set forth in Schedule "4.01(u)". All of such
shares are fully paid and non-assessable, are not, and will not have been,
issued in violation of any preemptive rights.
(v) Licenses. The Borrower has all licenses, permits, approvals and
other authorization required by any government, agency or subdivision thereof,
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or from any licensing entity necessary for the conduct of its business, all of
which the Borrower represents to be current, valid and in full force and effect.
(w) Insurance. All policies of insurance in effect of any kind or
nature owned by or issued to the Borrower, including (as applicable), policies
of life, fire, theft, product liability, public liability, property damage,
other casualty, malpractice, business interruption, employee fidelity, workers'
compensation, property and liability insurance are in full force and effect, and
of a nature and provide such coverage as is customarily carried by companies
engaged in similar businesses and owning or operating similar properties in the
same general areas in which the Borrower operates. The Borrower does not provide
any of its insurance through self-insurance.
(x) Accounts. (i) Each Account is, or at the time it comes into
existence, will be, a true and correct statement of (A) the bona fide
indebtedness of each Account Debtor, and (B) the amount of the account for
merchandise sold and delivered to, or for services performed for and accepted
by, such Account Debtor, net of any charges, adjustments, discounts or other
reductions whatsoever; (ii) at the time of each borrowing hereunder, there are,
and to the best of the Borrower's knowledge after due investigation will be, no
defenses, counterclaims, discounts or setoffs that may be asserted against any
of the Eligible Receivables; and (iii) the Borrower shall be deemed to have
warranted as to each Eligible Receivable that (iv) each Account and all papers
relating thereto are genuine and in all respects are what they purport to be,
(v) each Account is valid and existing and arises out of a bona fide sale of
goods sold and delivered by the Borrower to, or in the process of being
delivered to, or out of and for actual services previously rendered by the
Borrower to the Account Debtor named in the Account, (vi) the amount of the
Account represented as owing is the correct amount actually and unconditionally
owing except for normal cash discounts and is not disputed, and except for such
normal cash discounts is not subject to any setoffs, credits, deductions or
counter changes, (vii) the Borrower is the owner of each Account free and clear
of all liens, encumbrances, right of setoff and security interests of any nature
whatsoever, and (viii) no surety bond was required or given in connection with
any account or the contract or purchase orders out of which the same arose.
(y) Financial Information. All financial information including, but
not limited to, information relating to the Accounts and Inventory submitted by
the Borrower to the Bank, whether previously or in the future, is and will be
true and correct in all material respects, and is and will be complete insofar
as may be necessary to give the Bank a true and accurate knowledge of the
subject matter.
(z) Environmental Matters. Except as disclosed in Schedule
"4.01(z)", the Borrower, and its plants and sites, have complied in all material
respects with all federal, state, local and regional statutes, ordinances,
orders, judgments, rulings and regulations relating to any matters of pollution
or of environmental regulation or control except where such failure to comply
would not result in a Material Adverse Effect. Except as disclosed in Schedule
"4.01(z)", the Borrower has not received notice of or has any knowledge of any
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actual or claimed or asserted failure so to comply which alone, or together with
any other such failure is material and would result in a Material Adverse
Effect. Except as disclosed in Schedule 4.01(z)", neither the Borrower, nor any
of its Subsidiaries or its plants, or other sites manage, generate or dispose of
or during its periods of use, occupancy or operation have managed, generated or
disposed of any hazardous wastes, hazardous substances, hazardous materials,
toxic substances or toxic pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, in material violation of or in a manner which
would result in liability under such statutes or any regulations promulgated
pursuant thereto or any other applicable law except where such noncompliance
would not result in a Material Adverse Effect.
(aa) Parent. Affiliate or Subsidiary Corporations. Except for the
Guarantor, the Borrower has no parent corporation and except as set forth on
Schedule "4.01(aa); and except for First Equity Group and its subsidiaries; the
Borrower has no Affiliate or Subsidiary.
(ab) Intellectual Property. The Borrower owns, or is licensed to
use, all trademarks, tradenames, copyrights, technology, know-how and processes
believed to be necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not reasonably be
expected to have a Material Adverse Effect. No claim has been asserted or is
pending by any Person challenging or questioning the use of any of the foregoing
or the validity or effectiveness of any of the foregoing, nor does the Borrower
know of any valid basis for any such claim. To the best of its knowledge, the
use of the foregoing by the Borrower does not infringe on the valid intellectual
property rights of any Person, except for such claims and infringements that, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(ac) Officers and Directors. The officers and directors of the
Borrower on the date of this Agreement are as set forth on the attached Schedule
"4.01(ac)".
(ad) No Material Misrepresentations and Omissions. No information,
report, financial statement, exhibit or schedule furnished by or on behalf of
the Borrower to the Bank in connection with the negotiation of any of the Loan
Documents or included therein or delivered pursuant thereto contained, contains
or will contain any material misstatement of fact or omitted, omits or will omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were, are or will be made, not misleading.
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ARTICLE V.
Conditions Of Lending
5.01 Initial Advance. The Borrower agrees that the Bank's obligation to
make the initial Advance under the Revolving Loan is subject to fulfillment by
the Borrower of the following conditions precedent, all in form, scope and
substance reasonably satisfactory to the Bank and its counsel:
(a) Representations and Warranties. All of the representations,
warranties and covenants contained in this Agreement shall continue to be true
and correct in all material respects.
(b) Non-Existence of Event of Default. The Borrower shall have
complied with each and every covenant, condition precedent or condition
subsequent required hereunder and no Event of Default shall have occurred and be
continuing, no condition exists (or would exist after giving effect to the
Advances requested to be made on such date) which would constitute a Default but
for the giving of notice or passage of time or both.
(c) Borrowing Base Certificate. The Bank shall have received a
fully completed and executed Borrowing Base Certificate.
(d) Certificate of Borrower. The Bank shall have received a fully
completed and executed Compliance Certificate of Borrower in the form of Exhibit
"C" attached hereto.
(e) Evidence of Corporate Action. The Bank shall have received
certified copies of all corporate actions taken by the Borrower to authorize the
execution, delivery and performance of this Agreement, the Note, the other Loan
Documents, and the borrowings to be made hereunder, together with copies of the
Borrower's certificate of incorporation and bylaws, all amendments thereto, and
such other papers as the Bank or its counsel may reasonably require.
(f) Note. The Bank shall have received the duly executed Note drawn
to its order.
(g) Guaranties. The Bank shall have received a duly executed
Amended And Restated Guaranty from the Guarantor of even date herewith.
(h) UCC-l Financing Statements. The Bank shall have received from
the Borrower (i) duly executed copies of the Financing Statements on the
applicable Form UCC-1, (ii) evidence of the Borrower's intended payment of the
state of Tennessee recordation tax , and (iii) such other documents as the Bank
deems reasonably necessary or proper to perfect its security interest in the
Collateral.
(i) Perfection Certificate. The Bank shall have received a fully
completed and executed Perfection Certificate from the Borrower.
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(j) Legal Matters. All legal matters incident to this Agreement and
the borrowing hereunder shall be reasonably satisfactory to the Bank and its
counsel, Quatrella & ▇▇▇▇▇, LLC.
(k) Insurance. The Bank shall have received evidence of insurance
in such amounts and with such companies reasonably satisfactory to the Bank, and
the Bank shall be named as a loss payee/mortgagee on all such insurance.
(l) Lessor's Agreement. The Bank shall have received a fully
executed Lessor's Agreement, dated within thirty (30) days of the date hereof,
with respect to the locations where the Borrower conducts business or locates
assets.
(m) Intentionally Deleted.
(n) Opinion of Counsel. The Bank shall have received a written
opinion of counsel to the Borrower and the Guarantor in form and substance, and
accompanied by such supporting documents, as the Bank or its counsel may
reasonably require.
(o) Subordination. The Bank shall have received a fully executed
Subordination Agreement from the Guarantor with respect to Indebtedness owed by
the Borrower, in form and substance as the Bank or its counsel may reasonably
require.
(p) Organizational Documents/Secretary's Certificate. The Bank
shall have received from the Borrower and the Guarantor (i) copies of its
organizational documents, (ii) a certificate of its Secretary or Assistant
Secretary dated the Closing Date and certifying (A) that attached thereto is a
true and complete copy of its bylaws as in effect on the Closing Date and at all
times since a date prior to the date of the resolutions described in clause (B)
below, and (B) that attached thereto is a true and complete copy of resolutions
duly adopted by its Board of Directors authorizing the execution, delivery and
performance of the Loan Documents and the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (iii) a certificate of another officer as to the incumbency and
specimen signature of the officer executing any Loan Documents or any other
document delivered in connection herewith on behalf of it, executing the
certificate pursuant to (ii) above, and (iv) such other documents as the Bank or
its counsel, may reasonably request.
(q) Litigation. The Bank shall have received evidence satisfactory
to it that on the as of the date hereof, no action, suit, litigation or similar
proceedings at law or in equity or by or before any court or governmental
instrumentality or agency shall exist (or, in the case of litigation or similar
proceedings by any government or governmental authority, be threatened) with
respect to the transactions contemplated by this Agreement which would in the
reasonable opinion of the Bank be likely to have a material adverse effect on
15
the ability of the Borrower to perform its obligations under any Loan Documents
to which it is a party, on the validity or enforceability of any of the Loan
Documents or on the rights, remedies or benefits available to the Bank
thereunder.
(r) Material Adverse Change. The Bank shall have received evidence
satisfactory to it that there has been no Material Adverse Change since May 31,
2005.
(s) Good Standing Certificates. The Bank shall have received copies
or certificates dated as of a recent date from the Secretary of State or other
appropriate authority of such jurisdiction, evidencing the good standing of the
Borrower and the Guarantor in its state of incorporation and in the state in
which its principal business operations are located..
(t) Additional Documents. The Bank shall have received each
additional document, instrument, legal opinion or item of information reasonably
requested by it, including, without limitation, a copy of any debt instrument,
security agreement or other material contract to which the Borrower may be a
party.
(u) No Change. There shall not have occurred any change, or
development or event involving a prospective change, which in any such case, in
the reasonable judgment of the Bank, has had or could be expected to have a
Material Adverse Effect.
(v) Additional Matters. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be reasonably satisfactory in form and substance to the Bank, and the Bank shall
have received such other documents and legal opinions in respect of any aspect
or consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
(w) Transaction Expenses. The Borrower shall have paid the all
costs and expenses in connection with the preparation, execution, delivery,
filing, recording, and administration of the Loan Documents, and the other
documents to be delivered under the Loan Documents, including, without
limitation, legal fees, the cost of any appraisals of the Collateral and all
costs and expenses, if any, in connection with the enforcement of the Loan
Documents and the other documents to be delivered under the Loan Documents.
Notwithstanding the foregoing, all such costs, expenses and fees shall be
reasonable.
(x) Intentionally Deleted.
(y) Financial Statements. The Bank shall have received the
financial statements for the Borrower and Guarantor for the fiscal year ended
January 31, 2005.
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(z) Subordination Statements. The Bank shall have received
Subordination Statements on Form UCC-3 for all filings, if any with respect to
the indebtedness of the Borrower to the Guarantor.
(aa) Other. The Bank shall have received such other documents as
the Bank deems necessary.
5.02 Subsequent Advances. (a) The Borrower agrees that the Bank's
obligation to make an Advance subsequent to the date of this Agreement shall be
subject to fulfillment by the Borrower of (i) the conditions precedent set forth
in Section 5.01(a), (b), (c), and (u), hereof, and (ii) the Bank's receipt of
(a) duly executed copies of the "as filed" Financing Statements on Form UCC-1,
and (b) searches evidencing the priority of the Bank's UCC filings, subject to
the liens shown on Schedule 4.01(i), all in form, scope and substance
satisfactory to the Bank and its counsel. The Borrower agrees that each request
for an Advance shall constitute a certification that no Default exists and a
reaffirmation that all representations and warranties continue to be true and
correct in all material respects on and as of the date of the Advance with the
same effect as though made as of such date, except to the extent such
representations and warranties expressly relate to an earlier date in which case
they shall be true and correct in all material respects as of such earlier date.
(b) The Borrower agrees that upon the occurrence of an Event of
Default, the making of all Advances by the Bank shall be discretionary and the
Bank shall not be required to declare a default and accelerate the Obligations.
ARTICLE VI.
Affirmative Covenants
The Borrower covenants and agrees with the Bank that so long as this
Agreement shall remain in effect and so long as the Note shall remain unpaid,
the Borrower will, unless the Bank shall otherwise consent in writing:
6.01. Compliance with Laws. Comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon the Borrower or upon its
property except to the extent contested in good faith.
6.02. Insurance. Maintain insurance by responsible and reputable
companies in such amounts and against such risks as are ordinarily carried by
similar businesses (including where applicable, fire, flood, liability and
extended all-risk coverage) and in amounts not less than the full replacement
value thereof (including business interruption insurance) and, in the case of
all policies insuring property in which the Bank shall have a security interest
17
of any kind, all such policies shall provide that the proceeds thereof shall be
payable to the Bank, as loss payee when applicable. All such policies or
certificates thereof, including all endorsements, shall be deposited with the
Bank; and such policies shall contain provisions that no such insurance may be
cancelled or decreased without thirty (30) days prior written notice to the Bank
(or such lesser period as the Bank may consent to). In the event of acquisition
of additional insurable Collateral, the Borrower shall cause such insurance
coverage to be increased or amended in such manner and to such extent, as
prudent business judgment would dictate. If the Borrower shall at any time or
times hereafter fail to obtain or maintain any of the policies of insurance
required herein, or fail to pay any premium in whole or in part relating to such
policies, the Bank may, after five (5) days written notice to the Borrower, but
shall not be obligated to, obtain or cause to be maintained insurance coverage
with respect to the Collateral, including, at the Bank's option, the coverage
provided by all or any of the policies of the Borrower and pay all or any part
of the premium therefor, without waiving any default by the Borrower, and any
sums so disbursed by the Bank shall be an additional Revolving Loan to the
Borrower by the Bank payable on demand. If the Borrower fails to do so, the Bank
shall have the right to settle and compromise claims under any of the policies
required to be maintained by the Borrower hereunder relating to the Collateral
and the Borrower shall appoint the Bank as its attorney-in-fact, with power to
demand, receive, and receipt for all monies payable with respect thereto, to
execute in the name of the Borrower or the Bank or both any proof of loss,
notice, draft or other instruments in connection with such policies or such loss
thereunder and generally to do and perform any and all acts as the Borrower, but
for this appointment, might or could perform.
6.03. Corporate Existence; Property. The Borrower will do or cause to
be done all things necessary to preserve and keep in full force and effect the
Borrower's corporate existence, privileges, rights and franchises; at all times
maintain, preserve and protect all material franchises and trade names and
preserve all of its property used or useful in the conduct of its business
(except (i) property removed from service or replaced or (ii) Inventory consumed
or sold, in the ordinary course of business) and keep the same in good repair,
working order and condition, ordinary wear and tear excepted, and from time to
time make, or cause to be made, all repairs, renewals, replacements, betterment
and improvements in the ordinary course of business consistent with past
practices so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
6.04. Collateral Monitoring; Access to Records and Premises. Keep
adequate records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied with prior years, reflecting all
financial transactions of the Borrower. At any reasonable time during normal
business hours and upon reasonable prior written notice, from time to time,
Borrower will permit the Bank or any agents or representatives thereof, for the
purpose of ascertaining whether or not each and every provision hereof and of
any related documents, instrument or document is being performed, make
reasonable examinations and reasonable number of copies of, and abstracts from,
the records and books of account of, and visit, examine and inspect the
properties of, the Borrower and audit the Collateral of the Borrower and to
discuss the affairs, finances and accounts of the Borrower with the President,
18
the Directors, the chief financial officer or the Borrower's management,
including, without limitation, permitting the Bank or its agents or
representatives to conduct one audit per year at the Borrower's reasonable
expense, provided, however, if Borrower is in Default, then Bank may conduct as
many audits as it deems reasonably necessary at Borrower's reasonable expense;
Without limiting the generality of the foregoing, the Bank shall be allowed to
verify the Accounts and Inventory of the Borrower. and to confirm with Account
Debtors the validity and amount of Accounts; conduct field examinations; perform
analyses of the Collateral; and, such other activities as the Bank deems
necessary The Bank agrees to exercise its rights under this Section 6.04 in a
manner which will not unreasonably interfere with the business of the Borrower.
6.05. Financial Statements; Reports. Furnish to the Bank:
(a) Within thirty (30) days after the close of each calendar month,
monthly financial statements prepared by the Chief Financial Officer of the
Borrower, which statements shall include, without limitation, the amount of all
Indebtedness (including principal and interest) of the Borrower to the Guarantor
which Indebtedness constitutes "Junior Debt" as defined in the Subordination
Agreement between Borrower, Guarantor and Bank dated as of March 30, 2000, as
may be amended from time to time;
(b) Annual budget of the Borrower to be submitted within ninety
(90) days following Borrower's fiscal year end;
(c) A Borrowing Base Certificate duly executed by the Chief
Financial Officer of the Borrower to be submitted (i) no later than fifteen (15)
Business Days after the end of each calendar month and (ii) at the time of each
request for an advance of a Revolving Loan;
(d) No later than fifteen (15) Business Days after the end of each
calendar month (i) Borrower's accounts receivable aging report and (ii) a report
with respect to the amount and value of the Borrower's Inventory and Eligible
Inventory, all in form and substance acceptable to Bank;
(e) A Covenant Compliance Certificate in the form of Exhibit "C",
duly executed by the Chief Financial Officer of the Borrower to be submitted
within forty-five (45) days following the end of each quarter and within ninety
(90) days following Borrower's fiscal year end;
(f) Within ten (10) days of issuance, proxy statements, management
letters, reports, press releases or such other information regarding the
operations, business affairs and financial condition of the Borrower, the
Guarantor or any Subsidiary of the Borrower, or compliance with the terms of any
Loan Documents, as the Bank may reasonably request;
(g) Within ninety (90) days after the close of each fiscal year,
audited financial statements of Guarantor and prepared in conformity with GAAP
consistently applied;
19
(h) Such other information, and on such forms, which Lender may
reasonably request.
6.06. Notice Requirements. Furnish to Bank:
(a) Within ten (10) days, notification of any proposed or pending
change in the senior executive management or corporate structure of the
Borrower;
(b) Within thirty (30) days after the commencement thereof, notice
of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, the subject matter of which may result in an adverse decision affecting
the Borrower which would have a Material Adverse Effect;
(c) Within ten (10) days, notification of any Material Adverse
Change in the financial condition of the Borrower; and
(d) Within ten (10) days, of becoming aware of any Event of
Default, or any occurrence but for the giving of notice on the passage of time
would constitute an Event of Default, notification thereof in writing.
6.07. Performance. Comply with all terms and conditions of this
Agreement, the Note and the other Loan Documents.
6.08. Primary Bank. Maintain a depository account with the Bank.
6.09. ERISA Reports. The Borrower will (a) comply in all material
respects with the provisions of ERISA applicable to any Plan maintained by the
Borrower and (b) furnish to the Bank (i) as soon as possible, and in any event
within ten (10) days after the Borrower knows or has reason to know that any
Reportable Event with respect to any Plan has occurred, a statement of the chief
financial officer of the Borrower setting forth details as to such Reportable
Event and the action which the Borrower proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event, if any, given to
the Pension Benefit Guaranty Corporation (hereinafter called the "PBGC"), and
(ii) promptly after receipt thereof, a copy of any notice the Borrower may
receive from the PBGC relating to the intention of the PBGC to terminate any
Plan or to appoint a trustee to administer the Plan.
6.10 Inventory. Allow the Bank to examine and inspect the Inventory at
reasonable times and intervals and with reasonable notice. The Borrower shall
immediately notify the Bank of any event causing material loss or depreciation
20
in value of Inventory and the amount of such loss or depreciation. All inventory
shall remain at the locations set forth on Exhibit "D".
ARTICLE VII.
Negative Covenants
The Borrower covenants and agrees with the Bank that so long as this
Agreement shall remain in effect and so long as the Note shall remain unpaid,
the Borrower will not, directly or indirectly, without the prior written consent
of the Bank:
7.01. Financial Covenants:
(a) Effective Tangible Net Worth.
(i) Permit the Borrower's Effective Tangible Net Worth for
Borrower as reflected on the monthly financial statements delivered pursuant to
Section 6.05(a) hereof to be less than $10,000,000.
(ii) intentionally deleted.
(b) Capital Expenditures . For the fiscal years ending January 31,
2005 and January 31, 2006 Borrower shall not make any capital expenditures or
fixed asset acquisitions in an aggregate amount exceeding $4,000,000 per fiscal
year.
(c) intentionally deleted.
(d) Debt Service Coverage Ratio. Permit the Debt Service Coverage
Ratio of the Borrower to be less than 1.50:1 for (i) the period ending the first
three months of the Borrower's 2006 fiscal year, (ii) the period ending the
first six months of the Borrower's 2006 fiscal year, (iii) the period ending the
first nine months of the Borrower's 2006 fiscal year, (iv) the period ending the
first twelve months of the Borrower's 2006 fiscal year and (v) the trailing
twelve-month period ending each quarter thereafter.
7.02. Use of Proceeds. Use the proceeds of the Loan for any other
purposes other than as set forth in the Recitals above.
7.03. Liens. Except for purchase money security interests in office
equipment, create, incur, assume or suffer to exist any lien, mortgage, pledge,
assignment, security interest or other charge or encumbrance, or any other type
21
of preferential arrangement, of any nature whatsoever (including conditional
sales or other title retention agreements) upon or with respect to any of the
Collateral, assets, properties or receivables, now owned or hereafter acquired,
of the Borrower, except: (a) liens existing on the date hereof as set forth on
the attached Schedule 4.01(i); (b) deposits under workmen's compensation,
unemployment insurance and social security laws, or to secure statutory
obligations or appeal bonds or discharge of ▇▇▇▇ ▇▇▇▇▇, in the ordinary course
of business; (c) liens for taxes not yet due and payable, or liens for taxes
contested as permitted by Section 4.01 above; and (d) any other liens granted to
the Bank.
7.04. Borrowing. Create, incur, assume or suffer to exist any liability
for Indebtedness, except (i) Indebtedness under the Note and Loan Documents, or
(ii) existing Indebtedness in favor of the Guarantor.
7.05. Merger and Acquisition or Sale of Property. Consolidate with, be
acquired by, or merge into or with any Person, or sell, lease or otherwise
dispose of all or substantially all of its properties or any of its capital
stock, or acquire all or substantially all of the stock or property of any
person, or permit any Subsidiary to do so.
7.06. Business Changes. Materially change the nature of its business as
conducted by the Borrower on the date hereof, or alter or modify its corporate
name, structure or status (including, without limitation, its tax status) or
alter its accounting principles, treatment or recording practices, except as
permitted or required by GAAP.
7.07. Contingent Liabilities. Assume, guaranty, endorse or otherwise
become liable for any Contingent Liability of any Person, except as required by
this Agreement and by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
7.8. Investment, Loan, Guaranties, Revolving Loan. Lend or advance
money, credit or property to any Person, or invest in (by capital contribution,
creation of subsidiaries or otherwise), or purchase or repurchase the stock or
indebtedness, or all or a substantial part of the assets of properties, of any
Person, or enter into any exchange of securities with any Person, or guaranty,
assume, endorse or otherwise become responsible for (directly or indirectly or
by any instrument having the effect of assuring any Person's payment or
performance or capability) the indebtedness, performance, obligations, stock or
dividends of any Person, or agree to do any of the foregoing, or permit or
suffer any Subsidiary to do so, except:
(i) endorsement of negotiable instruments for deposit or
collection in the ordinary course of business;
(ii) investments representing the indebtedness of any Person
owing as a result of the sale of goods by the Borrower or the
Borrower's Subsidiaries in the ordinary course of business;
22
(iii) the extension of credit to customers in the ordinary
course of business.
7.9 Change in Control. Permit a Change in Control of the Borrower which
the Bank reasonably determines would have a Material Adverse Effect on the
Borrower.
7.10 Intentionally Deleted.
7.11. Change Name or Location. Change the Borrower's names or conduct
the Borrower's businesses under any trade name or style other than as
hereinabove set forth or change its chief executive office, place of business or
the present locations of its business assets or records relating thereto from
the address set forth in the first paragraph of this Agreement.
7.12 Certificate of Incorporation and By-laws. Amend or otherwise
modify its certificate of incorporation or by-laws, in any way which would have
a Material Adverse Effect.
7.13. Mergers; Sales of Assets. Merge or consolidate with or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of their assets (whether now owned or
hereafter acquired) to, any Person or entity. The Borrower shall not sell,
assign, lease or otherwise dispose of any of their assets, except in the
ordinary course of business.
7.14. Acquisitions. Acquire the assets or stock of any other Person.
7.15. Change in Nature of Business. Make any material change in the
nature of the business of the Borrower.
7.16 Distributions. Intentionally Deleted.
7.17. Dividend. Other than with respect to the preferred shares
described on Schedule "4.01(u)" declare or pay any cash dividend on the
Borrower's capital stock or make any other distribution with respect to the
Borrower's capital stock or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for value or set apart any sum for the redemption,
retirement, purchase or other acquisition of, directly or indirectly, any share
of the Borrower's capital stock.
7.18. Sale/Leaseback. Enter into any sale/leaseback transactions.
23
ARTICLE VIII.
Grant Of Collateral
8.01 Grant of Collateral. To secure the prompt payment and performance
of the Obligations, the Borrower pledges, assigns, transfers and grants to the
Bank a continuing first priority security interest in the following property of
the Borrower (collectively, the "Collateral"):
(a) All accounts (the "Accounts"), as that term is defined in the
Uniform Commercial Code as in effect from time to time in the States of
Tennessee and Delaware (the "UCC"), including, without limitation, all accounts
receivable, book debts and other forms of obligations, other than forms of
obligations evidenced by Chattel Paper or Instruments, as those terms are
defined below, now owned or hereafter received or acquired by or belonging or
owing to the Borrower, including, without limitation, under any trade name,
style or division thereof, whether arising out of goods sold or services
rendered by the Borrower or from any other transaction, whether or not the same
involves the sale of goods or services by the Borrower, including, without
limitation, any such obligation which may be characterized as an account or
contract right under the UCC, and all of the Borrower's rights in, to and under
all purchase orders or receipts now owned or hereafter acquired by it for goods
or services, and all of the Borrower's rights to any goods represented by any of
the foregoing, including, without limitation, unpaid seller's rights of
rescission, replevin, reclamation or repossessed goods, and all monies due or to
become due to the Borrower under all purchase orders and contracts for the sale
of goods or the performance of services or both by the Borrower, whether or not
yet earned by performance on the part of the Borrower or in connection with any
other transaction, now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of such purchase orders and
contracts, and all collateral security and guaranties of any kind given by any
person with respect to any of the foregoing;
(b) All chattel paper (the "Chattel Paper"), as that term is
defined in the UCC, now owned or hereafter acquired by the Borrower;
(c) All contracts, undertakings, franchise agreements or other
agreements (collectively, the "Contracts"), other than rights evidenced by
Chattel Paper, Documents or Instruments, as those terms are defined below, in or
under which the Borrower may now or hereafter have any right, title or interest,
including, without limitation, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof;
(d) All documents (the "Documents"), as that term is defined in the
UCC, now owned or hereafter acquired by the Borrower;
(e) All equipment (the "Equipment"), as that term is defined in the
UCC, now or hereafter owned or acquired by the Borrower and, in any event, shall
include, without limitation, all machinery, tools, dyes, equipment, furnishings,
vehicles and computers and other electronic data processing and other office
equipment, any and all additions, substitutions and replacements of any of the
24
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto;
(f) All general intangibles (the "General Intangibles"), as that
term is defined in the UCC, now owned or hereafter acquired by the Borrower and,
in any event, shall include, without limitation, all right, title and interest
which the Borrower may now or hereafter have in or under any Contract, all
customer lists, trademarks, rights in intellectual property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions,
whether or not patented or patentable, technical information, procedures,
designs, knowledge, know-how, software, data bass, data, skill, expertise,
recipes, experience, processes, models, drawings, blueprints, catalogs,
materials and records, goodwill including, without limitation, the goodwill
associated with any trademark, trademark registration or trademark licensed
under any trademark license, claims in or under insurance policies, including
unearned premiums, uncertificated securities, deposit accounts, rights to
receive tax refunds and other payments and rights of indemnification;
(g) All instruments (the "Instruments"), as that term is defined in
the UCC, now owned or hereafter acquired by the Borrower, including, without
limitation, all Note and other evidences of indebtedness, other than instruments
that constitute, or are a part of a group or writings that constitute, Chattel
Paper;
(h) All inventory (the "Inventory"), as that term is defined in of
the UCC, wherever located, now or hereafter owned or acquired by the Borrower
and, in any event, shall include all inventory, merchandise, goods and other
personal property which are held by or on behalf of the Borrower for sale or
lease or are furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process or materials used or consumed or
to be used or consumed in the Borrower's business, or the processing, packaging,
promotion, delivery or shipping of the same, and all finished goods, whether or
not such inventory is listed on any schedules, assignments or reports furnished
to the Bank from time to time and whether or not the same is in transit or in
the constructive, actual or exclusive occupancy or possession of the Borrower or
is held by the Borrower or by others for the Borrower's account, including,
without limitation, all goods covered by purchase orders and contracts with
suppliers and all goods billed and held by suppliers and all inventory which may
be located on premises of the Borrower or of any carriers, forwarding agents,
truckers, warehousemen, vendors, selling agents or other persons; and
(i) All proceeds (the "Proceeds"), as that term is defined in the
UCC, and in any event including, without limitation, (i) any and all Accounts,
Chattel Paper, Instruments, cash and other proceeds payable to the Borrower from
time to time in respect of any of the foregoing collateral security, (ii) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Borrower from time to time with respect to any of the collateral security,
(iii) any and all payments (in any form whatsoever) made or due and payable to
the Borrower from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the collateral
25
security by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority) and (iv) any and all other amounts
from time to time paid or payable under or in connection with any of the
collateral security.
ARTICLE IX.
Events Of Default
9.01. Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" hereunder: With the exception of
subsections (i), (v) and (vi) below, the occurrence of which is a Default which
shall immediately constitute an Event of Default without notice or action by the
Bank, any of the following occurrences shall constitute a Default hereunder,
and, upon notice and declaration by the Bank to the Borrower of such Default,
shall be and constitute an Event of Default:
(i) failure, when and as the same shall become due and payable,
whether at the due date thereof or by acceleration thereof or otherwise, of the
Borrower to make any payment of interest arising under this Agreement or the
Note, which failure continues for five (5) days after written notice of such
breach or failure from the Bank or failure, when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise, of the Borrower to
make any payment of principal or any other principal Obligation arising under
this Agreement or the Note or the other Loan Documents or such failure by any
Guarantor or surety for any of the Obligations;
(ii) breach of, or failure timely to perform, any of the
Obligations by the Borrower or the Guarantor including, without limitation, any
promise, agreement, covenant, representation or warranty contained herein, or
the Borrower's failure to perform any act, duty or obligation as required by
this Agreement or any of the other Loan Documents, which failure continues for
fifteen (15) days after written notice of such breach or failure from the Bank;
(iii) any representation or warranty made, or deemed made, in or in
connection with any of the Loan Documents or the Advances, warranty, statement
or information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any of the Loan
Documents, shall prove to have been false or misleading when so made, deemed
made or furnished (including by omission of material information);
(iv) the failure of any condition precedent or condition subsequent
contained in this Agreement;
(v) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (a) relief
26
in respect of the Borrower or any Subsidiary under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (b) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Subsidiary, or (c) the winding-up or liquidation of the
Borrower or any Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days, or an order or decree approving or ordering any of the
foregoing shall be entered;
(vi) the Borrower or any Subsidiary shall (a) voluntarily commence
any proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal or
state bankruptcy, insolvency, receivership or similar law, (b) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in (v) above, (c) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of the property or assets of the Borrower or such Subsidiary,
(d) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (e) make a general assignment for the benefit
of creditors, (f) become unable, admit in writing its inability or fail
generally to pay its debts as they become due, or (g) take any action for the
purpose of effecting any of the foregoing;
(vii) one or more final , nonappealable judgments (including
judgments against unrelated parties for which judgments the Borrower is liable
under any agreements, including indemnification agreements) for the payment of
money in an aggregate amount in excess of $250,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of thirty (30) consecutive days, or any action shall
be legally taken by a judgment creditor to levy upon assets or properties of the
Borrower or any Subsidiary to enforce any such judgment;
(viii) a Reportable Event or Reportable Events, or a failure to
make a required payment (within the meaning of Section 412(n)(1) of the Code),
shall have occurred with respect to any Plan or Plans that reasonably could be
expected to result in liability of the Borrower to the PBGC or to a Plan in an
aggregate amount which would have a Material Adverse Effect and, within thirty
(30) days after the reporting of any such Reportable Event to the Bank, the Bank
shall have notified the Borrower in writing that (A) the Bank has made a
determination that, on the basis of such Reportable Event or Reportable Events
or the failure to make a required payment, there are reasonable grounds (I) for
the termination of such Plan or Plans by the PBGC, (II) for the appointment by
the appropriate United States District Court of a trustee to administer such
Plan or Plans, or (III) for the imposition of a lien in favor of a Plan, and (B)
as a result thereof an Event of Default exists hereunder; or a trustee shall be
appointed by a United States District Court to administer any Plan or Plans; or
the PBGC shall institute proceedings to terminate any Plan or Plans;
27
(ix) the Borrower or any of its plants or other sites have managed,
generated or disposed of any hazardous wastes, hazardous substances, hazardous
materials, toxic substances or toxic pollutants, as those terms are used in the
Resource Conservation and Recovery Act, the Comprehensive Environmental Resource
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act and the Clean Water Act, in
material violation of or in a manner which would result in liability under such
statutes or any regulations promulgated pursuant thereto or any other applicable
law except where such noncompliance would not result in a Material Adverse
Effect; or
(x) the Borrower shall fail to observe or perform any other
material term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness, if the effect of any
failure referred to in this clause shall have a Material Adverse Effect;
(xi) the loss, revocation or failure to renew any license or permit
now held or hereafter acquired by the Borrower which materially affects the
ability of the Borrower to continue its operations as presently conducted;
(xii) one or more of the Security Interests shall cease to exist at
any time after the Closing Date, or any Guaranty shall cease to be in full force
and effect or any Guarantor shall contest or repudiate his obligations under the
Guaranty to which he is a party;
(xiii) dissolution of the Borrower or any Guarantor;
(xiv) the occurrence of a Material Adverse Change in the condition
of the Borrower or any Guarantor, financial or otherwise, as determined by the
Bank in its sole and reasonable discretion;
(xv) the Borrower fails to pay, before the date same is delinquent,
any tax or assessment or any other loan or obligation of the Borrower on or
before the date the same is due or the Borrower is in default under any
instrument or document relating thereto and such failure shall continue for a
period of thirty (30) days, unless the Borrower is contesting any such payment
and provides the Bank with evidence that it has established appropriate reserves
for such payment;
(xvi) an event of default shall have occurred hereunder or any of
the Loan Documents;
(xvii) an event of default shall have occurred in connection with
any other indebtedness or obligation the Borrower may have now or in the future
to the Bank.
28
9.02. Remedies Upon Default. Upon the occurrence of an Event of
Default, the Bank may take either or any of the following actions, at the same
or different times:
(a) (i) terminate forthwith the Revolving Loan Commitment, and (ii)
declare the Revolving Loans then outstanding to be forthwith due and payable,
whereupon the principal of the Revolving Loans, together with accrued interest
thereon and all other Obligations, shall become forthwith due and payable,
without presentment, demand, protest, notice of protest or other notice of any
kind, all of which are waived by the Borrower, anything contained in this
Agreement or in the other Loan Documents to the contrary notwithstanding;
(b) exercise any or all of its rights or remedies permitted by
applicable law of a secured party under this Agreement or in other capacity
under the Loan Documents or applicable law;
(c) upon demand after the occurrence of an Event of Default, the
Bank shall have in any jurisdiction where enforcement hereof is sought, in
addition to all other rights and remedies which the Bank may have under law and
equity, the following rights and remedies, to the extent permitted by law, all
of which may be exercised with or without further notice to the Borrower and
without a prior judicial or administrative hearing or notice, which notice and
hearing are expressly waived by the Borrower: (i) to enforce or foreclose the
liens and security interests created under this Agreement and the Loan Documents
by any available judicial procedure or without judicial process, (ii) to enter
any premises where any Collateral may be located for the purpose of taking
possession or removing the same, (iii) to sell, assign, lease or otherwise
dispose of the Collateral or any part thereof, either at public or private sale,
in lots or in bulk, for cash, on credit or otherwise, with or without
representations or warranties, and upon such commercially reasonable terms as
shall be acceptable to the Bank, all at the Bank's sole option and as the Bank
in its sole discretion may deem advisable, (iv) to bid or become purchaser at
any such sale if public, free from any right of the Borrower of redemption after
sale, which is expressly waived by the Borrower to the extent permitted by law,
and (v) at the option of the Bank to apply or be credited with the amount of all
or any part of the outstanding amount of the Loan against the purchase price bid
by the Bank at any such sale;
(d) The Borrower will, at the Bank's request, assemble all
Collateral and make it available to the Bank at places which the Bank may
reasonably select and will make available to the Bank all premises and
facilities of the Borrower for the purpose of the Bank taking possession of the
Collateral or of removing or putting the Collateral in salable form. If any
Collateral shall require repairing, maintenance, preparation, or the like, or is
in process or other unfinished state, the Bank shall have the right, but shall
not be obligated, to do such repairing, maintenance, preparation, processing or
completion of manufacturing for the purpose of putting the same in such salable
form as the Bank shall deem appropriate, but the Bank shall have the right to
sell or dispose of such Collateral without such processing;
29
(e) The net cash proceeds resulting from the collection,
liquidation, sale, lease or other disposition of Collateral shall be applied
first to the expenses, including all reasonable attorneys' and professionals'
fees, of retaking, holding, storing, processing and preparing for sale, selling,
collecting, liquidating the Collateral and then to the satisfaction of all of
the Loan application as to particular Loan or against principal or interest to
be at the Bank's sole discretion and the balance of the proceeds, if any, shall
be paid to the Borrower. The Borrower shall be liable to the Bank and shall pay
to the Bank on demand any deficiency which may remain after such sale,
disposition, collection or liquidation of the Collateral;
(f) The Bank shall not have any liability for any error or omission
or delay of any kind occurring in the liquidation of any of the Collateral,
including the settlement, collection or payment of any of the Collateral or any
instrument received in payment thereof, or any damage resulting therefrom,
provided that the Bank acts in a commercially reasonable manner in its
liquidation of the Collateral. The Borrower agrees to indemnify and hold
harmless the Bank against any claim, loss or damage arising out of the
liquidation of any of the Collateral, including the settlement, collection of
payment of any of the Collateral or any instrument received in payment thereof,
provided that the Bank acted in a commercially reasonable manner in its
liquidation of any of the Collateral; and
(g) The enumeration of the Bank's rights and remedies set forth in
this Article is not intended to be exhaustive and the exercise by the Bank of
any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative and shall be in addition to any other
right or remedy given hereunder or under any other agreement between the parties
or which may now or hereafter exist in law or at equity or by suit or otherwise.
The Bank's delay or failure to take action in exercising any right, power or
privilege shall not operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude other or
further exercise thereof or the exercise of any other right, power or privilege
or shall be construed to be a waiver of any Event of Default. No course of
dealing between the Borrower and the Bank or their employees shall be effective
to change, modify or discharge any provision of this Agreement or to constitute
a waiver of any default.
(h) If requested by Lender, Borrower shall establish and maintain
at an office of Lender, or at such place as the Lender may determine, a lockbox
(the "Lockbox"), pursuant to Lender's form of Lockbox Service Agreement (the
"Lockbox Agreement"), for the collection of payments in respect of Accounts.
When such Lockbox is established:
(1) Borrower shall notify all of Borrowers' Debtors and Account
Debtors that any payment of an Indebtedness owing to Borrower shall only be made
directly to Lender at the address from time to time provided by Lender; and
(2) Borrower shall turn over to Lender, in kind, any and all
payments received by Borrower in connection with any of such Indebtedness or
Accounts; and
30
(3) Borrower shall ▇▇▇▇ or stamp all invoices with a legend
satisfactory to Lender so as to require that the same should be paid directly to
Lender; and
(4) Lender is hereby irrevocably appointed the Borrower's agent
and attorney-in-fact, irrevocable as coupled with an interest, with power to
endorse Borrower's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security; to sign the Borrower's name on any
invoice or ▇▇▇▇ of lading or other document of title relating to the Collateral,
on notices of assignment, financing statements and other public records, and
upon the occurrence and during the continuance of an Event of Default, to do any
act which Borrower is obligated to do under the terms and conditions of this
Agreement, to exercise such rights as Borrower might exercise and to do all
other things necessary to enforce and carry out Lender's rights and remedies
under this Agreement. Proceeds of the Lockbox shall be applied by Lender as set
forth in Article III hereof; and
(5) Borrower shall pay to Lender reasonable fees and charges
established by Lender where such Lockbox is maintained as they may vary from
time to time in connection with the establishment and maintenance of such
Lockbox.
ARTICLE X.
Miscellaneous
10.01. Modifications; Amendments. No modification, amendment or waiver
of any provision of this Agreement, the Note, or any other Loan Document, and no
consent to any departure by either party therefrom, shall in any event be
effective unless the same shall be in writing and signed by the parties hereto,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
10.02. Notices. All notices, requests, consents, demands and other
communications hereunder shall be in writing and shall be mailed by registered
or certified first class mail or delivered by an overnight courier or by
facsimile, to the respective parties to this Agreement as follows:
If to the Borrower:
AEROSPACE PRODUCTS INTERNATIONAL, INC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, President
31
With Copy to:
First Aviation Services, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, CFO
If to the Bank:
▇▇▇▇▇▇ UNITED BANK
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Attention: Corporate Affairs
With Copy to:
▇▇▇▇▇▇ UNITED BANK
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
All such notices and communications shall be deemed to have been delivered on
the date of delivery thereof, one day after receipt of facsimile or on the third
business day after the mailing thereof.
10.04. Cross-Default. The Revolving Loans shall be cross-defaulted with
current and future financing accommodations extended or to be extended by the
Bank to the Borrower, including, but not limited to, the Facility II LOC, so
that a default under any loan to the Borrower which would permit acceleration of
such other loan shall be an Event of Default hereunder and under all of the
other loans extended by the Bank.
10.05. Waiver; Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right under any Loan Document preclude any other or further exercise thereof or
the exercise of any other right. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.
The Borrower assents to any extension or postponement of the time of
payment or any other indulgence, to any (substitution, exchange or) release of
the Collateral, to the addition or release of any party primarily or secondarily
liable, to the acceptance of partial payments thereon and the settlement,
compromising or adjusting of any thereof, all in such manner and at such time or
32
times as the Bank may deem advisable. All rights and remedies of the Bank with
respect to the liabilities of the Borrower whether evidenced hereby or by any
other instrument or document, shall be cumulative and may be exercised
singularly or concurrently.
10.06. Costs, Expenses and Taxes. The Borrower agree to pay on demand
all costs and expenses in connection with the preparation, execution, delivery,
filing, recording, and administration of the Loan Documents, and the other
documents to be delivered under the Loan Documents, including, without
limitation, legal fees, the cost of any appraisals of the Collateral and all
costs and expenses, if any, in connection with the enforcement of the Loan
Documents and the other documents to be delivered under the Loan Documents.
Notwithstanding the foregoing, all such costs, expenses and fees shall be
reasonable. In addition, the Borrower shall pay any and all taxes (other than
income taxes) and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of the Loan Documents and the
other documents to be delivered under the Loan Documents, and the Borrower agree
to save the Bank harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes and fees.
In the event the Bank advances any sums under the Note, on behalf of the
Borrower pursuant to the terms hereof for expenses, fees or other sums which are
otherwise payable by the Borrower, the Borrower shall pay interest on such sums
which are not paid or reimbursed to the Bank when due at an annual rate equal to
two percent (2%) in excess of the then Note Rate under the Note.
10.07. Right of Set-Off. Upon the occurrence of any Event of Default
and the continuance thereof, the Bank is authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Bank to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement and the Note, irrespective of whether or not the Bank shall
have made any demand under this Agreement or the Note and although such
obligations may be unmatured. The Bank agrees promptly to notify the Borrower
after any such set-off and application made by the Bank, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Bank may have.
10.08. Binding Effect; Governing Law and Jurisdiction. This Agreement
shall become effective when it shall have been executed by the Borrower and the
Bank and shall be binding upon and inure to the benefit of the Borrower, the
Bank and their respective successors and assigns, except that the Borrower shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Bank. This Agreement is, and shall be deemed to
be, a contract entered into under and pursuant to the laws of the State of
Connecticut and shall be in all respects governed, construed, applied and
enforced in accordance with the laws of said State; and no defense given or
allowed by the laws of any other State or Country shall be interposed in any
33
action or proceeding hereon unless such defense is also given or allowed by the
laws of the State of Connecticut. The undersigned irrevocably appoints ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and each and every officer of the undersigned as its attorneys upon
whom may be served any notice, process or pleading in any action or proceeding
against it arising out of or in connection with this Agreement or any other Loan
Document. The undersigned hereby consents that any action or proceeding against
it may be commenced and maintained in any court within the State of Connecticut
or in the United States District Court for the District of Connecticut or, at
the option of Bank, any court in which Bank shall initiate legal or equitable
proceedings and which has subject matter jurisdiction over the matter in
controversy, and that such action or proceeding may be commenced by service of
process on any such officer. The undersigned agrees that the courts of the State
of Connecticut and the United States District Court for the District of
Connecticut shall have jurisdiction with respect to the subject matter hereof
and the person of the undersigned. The undersigned agrees not to assert any
defense to any proceeding initiated by Bank based upon improper venue or
inconvenient forum.
10.09. 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 shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
10.10. Compliance. The determination of the Borrower's compliance with
all financial covenants contained in this Agreement, the Note and all other Loan
Documents shall be based upon the consistent application of GAAP employed by the
Borrower as of the date of this Agreement unless otherwise subsequently and
specifically agreed to in writing by the Bank.
10.11. Survival of Representations. All representations, warranties,
covenants and agreements herein contained or made in writing in connection with
this Agreement shall survive the execution and delivery of the Note and shall
continue in full force and effect until all amounts payable on account of the
Note shall have been paid in full and this Agreement shall have terminated.
10.12. Severability. In case any one or more of the provisions
contained in this Agreement, the Note or in the other Loan Documents should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
10.13. Headings. Section headings used herein are for convenience of
reference only and are not to affect the construction of, or be taken into
consideration in, interpreting this Agreement.
10.14. Sale of Participation. The Bank reserves the right to sell
participation in the Loans without the consent of the Borrower.
34
10.15. Entire Agreement. This Agreement, the Note and the other Loan
Documents together with all exhibits and schedules attached hereto and thereto
embody the entire agreement and understanding between the Borrower and the Bank
and supersede all prior agreements and understandings relating to the subject
matter hereof unless otherwise specifically reaffirmed or restated herein.
10.16. THE BORROWER ACKNOWLEDGES THAT THE LOANS EVIDENCED HEREBY ARE A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE
OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE BANK MAY DESIRE
TO USE, AND FURTHER WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF
NONPAYMENT, PROTEST AND NOTICE OF ANY RENEWALS OR EXTENSIONS. THE BORROWER ALSO
ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, WILLINGLY AND VOLUNTARILY AND
WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF
THIS WAIVER WITH ITS ATTORNEYS.
10.17. THE BORROWER WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART OR THE
ENFORCEMENT OF ANY OF THE BANK'S RIGHTS. THE BORROWER ACKNOWLEDGES THAT IT MAKES
THIS WAIVER KNOWINGLY, WILLINGLY AND VOLUNTARILY AND WITHOUT DURESS, AND ONLY
AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS
ATTORNEYS.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
Witnesses: AEROSPACE PRODUCTS
INTERNATIONAL, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------ -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its Secretary
Duly Authorized
▇▇▇▇▇▇ UNITED BANK
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------ -------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Its Vice President
36
STATE OF CONNECTICUT )
) ss. Fairfield
COUNTY OF FAIRFIELD )
On this the 29th day of July, 2005, before me, the undersigned
officer, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, who acknowledged himself to be
the duly authorized Secretary of AEROSPACE PRODUCTS INTERNATIONAL, INC., a
corporation, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained and acknowledged the
same to be his free act and deed individually and as such officer, and the free
act and deed of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires:
STATE OF CONNECTICUT )
) ss.: Fairfield
COUNTY OF FAIRFIELD )
On this the 29th day of July, 2005, before me, the undersigned
officer, personally appeared ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, who acknowledged himself to be a
Vice President of ▇▇▇▇▇▇ UNITED BANK and that he, as such officer, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained and acknowledged the same to be his free act and deed individually and
as such officer, and the free act and deed of the bank.
IN WITNESS WHEREOF, I hereunto set my hand.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires:
37
SCHEDULE 1.01
DEFINITIONS
Schedule 1.01
DEFINITIONS.
------------
1.01 Defined Terms. As used herein the following terms shall have the
following meanings:
"Account" and "Accounts" shall mean the Accounts referred to in
Section 8.01 of this Agreement of the Borrower arising from the sale or lease of
goods or the rendering of services.
"Account Debtor" and "Account Debtors" shall mean the person or
entity or persons or entities obligated to the Borrower upon the Accounts.
"Advance" or "Advances" shall mean loans made by the Bank to the
Borrower as set forth in Section 2.01 and 2.02 in respect of a Revolving Loan or
the Revolving Loans.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly through one or more intermediaries controlling,
controlled by, or under common control with, that Person. For the purposes of
this definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of the Person, whether
through the ownership of voting securities or by contract or otherwise.
Notwithstanding the foregoing, the term Affiliate shall not include "First
Equity Group" and its subsidiaries.
"Agreement" shall mean this Amended And Restated Commercial Revolving
Loan And Security Agreement, as the same from time to time may be amended,
supplemented or modified.
"Borrowing Base" shall mean with respect to Revolving Loans made
pursuant to Section 2.01 hereof,
(i) in the event the Eligible Acquisition has occurred, an amount not
to exceed the lesser of:
(1) $25,000,000 or
(2) the sum of;
(a) Eighty Percent (80%) of Eligible Receivables less the
Dilution Reserve Percentage plus
(b) Fifty Percent (50%) of the fair market value of
Eligible Inventory (valued on a first in, first out
basis) not to exceed $13,000,000.00 less the Facility
II Advance Amount or, provided that no Default exists,
Sixty-Five Percent (65%) of the fair market value of
Eligible Inventory (valued on a first in, first out
basis) not to exceed $15,000,000.00 less the Facility
II Advance Amount up to five (5) times per year for a
period of up to fifteen (15) days per time; or
(ii) in the event the Eligible Acquisition has not occurred, an
amount not to exceed the lesser of:
(1) $20,000,000 or
(2) the sum of (a) Eighty Percent (80%) of Eligible Receivables
less the Dilution Reserve Percentage plus (b) Fifty Percent
(50%) of the fair market value of Eligible Inventory (valued
on a first in, first out basis) not to exceed $10,000,000.00
less the Facility II Advance Amount.
"Borrowing Base Certificate" means the Borrowing Base Certificate in
the form of the attached Exhibit C.
"Business Day" shall mean any day other than a day on which
commercial banks in Connecticut are required or permitted by law to close.
"Capital Stock" means any and all shares, interests, minority
interests participation or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to purchase any
of the foregoing.
"Change in Control" shall mean the stockholders of the Borrower shall
approve any plan or proposal for the acquisition of, merger, liquidation or
dissolution of the Borrower, or a sale of more than 30% of its assets in one or
a series of related transactions.
"Closing Date" means the date of the execution and delivery of the
Agreement.
"Code" means the Internal Revenue Code of 1986 as amended reformed or
otherwise modified from time-to-time.
"Collateral" shall mean the property of the Borrower described in
Section 8.1 of this Agreement.
"Commitment Termination Date" shall mean the earlier of the (i) the
Maturity Date, or (ii) the date on which the Bank's obligation to make, and the
Borrower's right to receive , Advances under this Agreement shall terminate
under Section 9 hereof.
"Contingent Liability" shall mean any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes, or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss), the debt,
obligation or other liability of any other Person (other than by endorsements of
negotiable instruments in the course of collection), or guarantees the payment
of dividends or other distributions upon the shares of any other Person. The
amount of the obligor's obligation under any Contingent Liability shall be
deemed to be the outstanding principal amount (or maximum permitted principal
amount, if larger) of the debt, obligation or other liability guaranteed thereby
(subject to any limitation set forth therein).
"Covenant Compliance Certificate" shall mean the Certificate in the
form of Exhibit B attached to the Agreement.
"Current Maturity of Long Term Debt (CMLTD)" shall mean the current
maturity of long term indebtedness paid during the applicable period, including,
but not limited to, amounts required to be paid during such period under capital
leases."
"Debt" shall mean all indebtedness, liabilities and obligations arising
under and in any way related to the financing accommodations set forth in the
Agreement, including, without limitation, the indebtedness of the Note.
"Debt Service Coverage Ratio" shall mean the ratio of EBITDA to
Interest Expense plus CMLTD (excluding borrowings under the Revolving Loans).
"Default" shall mean any of the events specified in Section 9.01
hereof, whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Dilution Reserve Percentage" shall mean a reserve percentage
determined by the Bank based on periodic field examinations and which is
consistent with the average actual levels noted over the prior six (6) months
based on a review of the Borrower's books and records. The Dilution Reserve
Percentage shall be applied against the advance rate with respect to Eligible
Receivables.
"Dollars" and "$" shall mean lawful currency of the United States of
America.
"EBITDA" means, for any fiscal period (i) the Net Income for such
period, (ii) plus depreciation and amortization, (iii) plus, (to the extent
deducted from earnings in determining Net Income) or minus (to the extent added
to earnings in determining Net Income) the sum, in each case for such period, of
income taxes and Net Interest Expense all as determined in accordance with GAAP.
"Effective Tangible Net Worth (ETNW)" shall mean, as at any date, the
sum of the capital stock and paid-in surplus, plus retained earnings (or minus
accumulated deficit) of the Borrower, plus Junior Debt, minus intangible assets
(including, without limitation, franchises, patents and patent applications,
trademarks and brand names, goodwill, research and development expenses,
unamortized debt discount and expense, and all write-ups in the book value of
any asset), minus any amount due from Affiliates or officers and shareholders of
the Borrower, minus Total Liabilities.
"Eligible Acquisition" shall mean, subject to the prior written
approval of the Bank in its sole and absolute discretion, the acquisition by the
Borrower of any or all of the assets or stock of a company unrelated to the
Borrower.
"Eligible Inventory" means Inventory of the Borrower which is (i) in
first class condition and salable through normal trade channels, (ii) owned by
the Borrower and subject to no lien, security interest, charge or other
encumbrances whatsoever, except those of the Bank, (iii) not sold, dated,
slow-moving or obsolete (the term "obsolete" shall refer to Inventory which is
older than one (1) year), (iv) not subject to consignment or in possession under
a similar arrangement, and (v) not of a class or condition which the Bank, in
its reasonable discretion, has deemed ineligible for advance and has notified
the Borrower of such ineligibility and (vi) not considered a "core"on the books
and records of the Borrower.
"Eligible Receivables" means an Account or Accounts due not more than
ninety (90) days from the date set forth on the original invoice evidencing such
Account, arising from the sale of goods or the performance of services by the
Borrower, in the ordinary course of its business, which Account is assignable
and conforms to the representations and warranties set forth in this Agreement
and which:
(i) reflects all credits for the particular Account Debtor as shown on the
schedule setting forth the aging submitted by the Borrower as required
in Section 6.05 hereof;
(ii) is an Account upon which the Borrower's right to receive payment is
absolute and not contingent upon the fulfillment of any condition
whosoever (e.g., delivery, acceptance, consignment, ▇▇▇▇ and hold, or
guaranteed sale);
(iii) is not a contra or offset Account;
(iv) is not an Account which is denominated and payable in a currency other
than Dollars;
(v) does not arise from a sale or sales to an affiliate, parent, or
subsidiary of the Borrower;
(vi) does not arise from the exchange or barter of any goods or services
and which is not subject to a deductible;
(vii) is not the obligation of a Account Debtor located in a foreign
country which is not otherwise supported by a Letter of Credit or
Credit Insurance;
(viii) is owned by the Borrower and is free and clear of any claim, setoff
or lien, other than the Security Interests;
(ix) does not arise from a contract containing a prohibition against
assigning or granting a security interest therein;
(x) is not an Account of the United States and/or any other foreign
government;
(xi) is not an Account arising from a sale to an Account Debtor which is an
inventory or trade supplier of the Borrower;
(xii) is not an Account of an Account Debtor which has suspended business,
made a general assignment for the benefit of creditors, committed any
act of insolvency, filed or have had filed against it any petition
under any bankruptcy law or any other laws for the relief of debtors;
(xiii) is not an Account to which an Account Debtor has objected to the
quality or quantity of goods or services of the Borrower sold, or
shall have rejected, returned, or refused to accept such goods or
services;
(xiv) is not an Account which is, in the Lender's reasonable judgment, an
Account of an Account Debtor which is an undue credit risk or
otherwise unacceptable to the Lender in its reasonable discretion;
(xv) is not an Account of an Account Debtor where fifty percent (50%) or
more of the total Accounts outstanding from the Account Debtor are
more than ninety (90) days past the original invoice date;
(xvi) is not that portion of an Account of an Account Debtor whose total
indebtedness to Borrower exceeds twenty percent (20%) as to that
Account Debtor; and
(xvii) is not an Account which contravenes, or arises from a sale which
contravenes, any applicable law, regulation or ordinance.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated pursuant thereto, as amended from
time to time.
"GAAP" shall mean generally accepted accounting principals applied in
a manner consistent with that employed in the preparation of the financial
statements described in Section 6.05 below.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled (through
stock or capital ownership or otherwise) by any of the foregoing.
"Guarantor" shall mean First Aviation Services, Inc., a Delaware
Corporation.
"Hazardous Materials" shall mean any material or substance that,
whether by its nature or use, is now or hereafter defined as hazardous waste,
hazardous substance, pollutant or contaminant under any Environmental Laws which
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and which is now or hereafter
regulated under any Environmental Laws, or which is or contains petroleum,
gasoline, diesel fuel or another petroleum hydrocarbon product.
"Indebtedness" means, of any Person at any date, (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices) or which
is evidenced by a note, bond (other than a performance bond issued in the
ordinary course of business), debenture or similar instrument, (ii) all
obligations of such Person under Financing Leases, (iii) all obligations of such
Person in respect of letters of credit and acceptances (other than letters of
credit and acceptances in respect of current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices)
issued or created for the account of such Person, and (iv) all liabilities
secured by any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof.
"Interest Expense" means, for any period, the amount which would, in
conformity with GAAP, be set forth opposite the caption "interest expense" or
any like caption (expressed as a positive number), on a income statement of the
Borrower less any intercompany interest expense accrued but unpaid on Junior
Debt (as defined in the Subordination Agreement of even date herewith).
"Junior Debt" shall have the meaning set forth in the Amended And
Restatted Subordination Agreement of even date herewith between Borrower,
Guarantor and Bank.
"Lien" shall mean any mortgage, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, or preference
recorded pursuant to 11 U.S.C. 547 , priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction).
"Loan Documents" shall mean this Agreement, the Note, the Line of
Credit Note and any other documents executed in connection herewith or
therewith.
"Long Term Indebtedness" shall mean all Indebtedness which is not a
current liability as of such date.
"Material Adverse Change" shall mean a material adverse change in (i)
the condition (financial or otherwise), operations, performance, business,
properties or prospects of the Borrower or of the Borrower and its Subsidiaries
taken as a whole or (ii) the aggregate rights and remedies of the Bank under the
Loan Documents or (iii) the ability of the Borrower to perform its obligations
under the Loan Documents, or (iv) the legality, validity or enforceability in
any material respect of any Loan Documents or (v) the Liens of the Bank pursuant
to this Security Agreement.
"Material Adverse Effect" means a material adverse effect on (i) the
business, operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower
to perform its obligations under this Agreement or any of the other Loan
Documents, or (iii) the validity of enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the Bank.
"Maturity Date(s)" shall mean September 1, 2007.
"Net Income" means, for any fiscal period, the consolidated net
income (or loss) of the Borrower for such period, determined on a first in,
first out inventory valuation basis in accordance with GAAP; provided that gains
determined by the Accountants to be extraordinary in accordance with GAAP shall
not be considered in determining Net Income.
"Note" shall mean the $25,000,000 Amended And Restated Commercial
Revolving Promissory Note of even date herewith.
"Obligations" shall mean and include all loans, advances, interest,
indebtedness, liabilities, obligations, covenants and duties at any time owing
by the Borrower to the Bank arising under this Agreement, the Note, the Line of
Credit Note and the other Loan Documents, and all reasonable costs, expenses,
fees, charges, expenses and attorneys', paralegals' and professionals' fees
incurred in connection with any of the foregoing, or in any way connected with,
involving or related to the preservation, enforcement, protection and defense of
this Agreement, the Note, the Line of Credit Note, the other Loan Documents, any
related agreement, document or instrument, any Lien, the Collateral and the
rights and remedies hereunder or thereunder.
"Partial Junior Debt" shall have the meaning set forth in the
Subordination Agreement of even date herewith between Borrower, Guarantor, Inc.,
and Bank.
"Person" shall mean any individual, corporation, partnership, joint
venture, trust, unincorporated organization or any other juridical entity, or a
government or state or any agency or political subdivision thereof.
"Plan" shall mean any plan of a type described in Section 4021(a) of
ERISA in respect of which the Borrower is an "employer" as defined in Section
3(5) of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Revolving Loan" and "Revolving Loans" shall have the definitions
assigned in Section 2.01 hereof.
"Security Interests" shall mean the valid and enforceable first
priority liens upon, pledges of, and security interests in, the Collateral.
"Subsidiary" and "Subsidiaries" shall mean, as to any Person a
corporation, partnership or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interest having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Total Assets" shall mean total assets determined in accordance with
GAAP.
"Total Liabilities" at any time of determination, amount equal to all
Indebtedness of the Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
"Unused Facility Fee" shall mean an amount, which will be billed
quarterly in arrears, equal to one-fourth of one percent (0.25%) of the average
daily amount for such period by which the sum of (i) in the event the Eligible
Acquisition has occurred, $25,000,000 (or $20,000,000 in the event the Borrower
provides the Bank with prior written notice of its decision not to borrow under
the Revolving Loans, at any one time, an amount in excess of $20,000,000) or
(ii) in the event the Eligible Acquisition has not occurred, $20,000,000,
exceeds the sum of the total outstanding principal amount of the Revolving
Loans.
SCHEDULE 4.01 (e)
LITIGATION
NONE
SCHEDULE 4.01 (h)
LIST OF TAX RETURNS
TO BE FILED
NONE
SCHEDULE 4.01 (i)
MORTGAGES, PLEDGES, LIENS AND OTHER ENCUMBRANCES
The following liens were filed subsequent to the Bank's lien filing:
1. General Electric Company, GE Lighting (Delaware): Filing No. 51334680
2. CCA Financial Services, LLC (Delaware): Filing No. 51351676
3. Citicorp Vendor Finance, Inc. (Delaware): Filing No. 51433011
SCHEDULE 4.01 (m)
LEASES
1. Amended and Restated Net Lease, with ▇▇▇▇▇▇▇▇▇▇ Industrial Properties, LLC,
dated as of January 23, 1995, as amended by First Amendment to Net Lease,
dated February 4, 1998, and by Second Amendment to Net Lease, dated
December 13, 1999 (3778 Distriplex Drive North, Memphis, Tennessee).
2. Net Lease with ▇▇▇▇▇▇▇▇▇▇ Industrial Properties II, LLC, dated as of August
27, 1997, as amended by First Amendment to Net Lease, dated February 4,
1998, and by Second Amendment to Net Lease, dated March 3, 2000 (4477
Getwell Drive, Memphis, Tennessee).
3. Net Lease with ▇▇▇▇▇▇▇▇▇▇ Industrial Properties Partnership, dated
September 12, 2001, as amended by Memorandum of Lease, dated as of
September 12, 2001 (3746 Distriplex Drive North, Memphis, Tennessee).
4. Net Lease with ▇▇▇▇▇▇▇▇▇▇ Farms One, dated as of June 1, 2003, as amended
by First Amendment to Net Lease, dated May 14, 2004 (5335 Mineral ▇▇▇▇▇
Road, Memphis, Tennessee).
SCHEDULE 4.01 (q)
PLACES OF BUSINESS
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
2. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
3. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
4. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
SCHEDULE 4.01 (u)
STOCK MATTERS
(Stock Options or Stock Rights)
NONE
SCHEDULE 4.01 (z)
ENVIRONMENTAL MATTERS
NONE
SCHEDULE 4.01 (aa)
AFFILIATE OR SUBSIDIARY CORPORATIONS
1. The Affiliates of the Borrower are: API Asia Pacific, Inc., Aircraft Parts
International, Ltd. and Aero V. Com, Inc.
2. The Borrower has no Subsidiaries.
SCHEDULE 4.01 (ac)
OFFICERS AND DIRECTORS
1. The Officers of the Borrower are as follows:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Chairman of the Board of Directors
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Secretary
2. The Directors of the Borrower are as follows:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBIT "A"
$25,000,000 AMENDED AND RESTATED
COMMERICAL REVOLVING PROMISSORY NOTE
AMENDED AND RESTATED
--------------------
COMMERCIAL REVOLVING PROMISSORY NOTE
------------------------------------
$25,000,000
Dated As Of July 29, 2005
Fairfield, Connecticut
1. For value received, the undersigned, AEROSPACE PRODUCTS
INTERNATIONAL, INC., a Delaware corporation, (the "Maker"), promises to pay to
▇▇▇▇▇▇ UNITED BANK, a state chartered bank (the "Bank"), or order, at its office
at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the
holder hereof (including the Bank, hereinafter referred to as the "Holder"), may
designate, the principal sum of TWENTY FIVE MILLION DOLLARS ($25,000,000), in
lawful money of the United States of America, or so much thereof as has been
advanced or is outstanding as per the Loan Agreement (as defined below) together
with interest on the unpaid balance of this Note, beginning on the date hereof,
before maturity, default or judgment, at a fluctuating rate per annum equal at
all times to one hundred fifty (150) basis points in excess of the LIBOR Rate
(as hereinafter defined) ( the " Note Rate").
THIS IS A VARIABLE RATE LOAN in which the interest rate will
fluctuate in accordance with monthly changes in the one (1) month "LIBOR Rate".
The initial Note Rate shall remain in effect until the first Business Day (as
defined below) of September, 2005. Thereafter, the Note Rate shall be adjusted
monthly on the first Business Day of every month to reflect the new one (1)
month LIBOR Rate as published on the second full LIBOR Business Day (as
hereinafter defined) preceding the first day of each such one (1) month period.
The "LIBOR Rate" shall mean a rate of interest per annum determined
by the Lender equal to the offered rate for deposits in United States Dollars
(rounded upward, if necessary, to the nearest 1/32 of one percent) for one-month
deposits of United States Dollars which appears on Telerate Page 3750 as of
11:00 a.m., London time, on the second full LIBOR Business Day (as hereinafter
defined) next preceding the first day of each monthly period referred to above
(unless such date is not a Business Day, in which event the next succeeding
Business Day will be used). A "LIBOR Business Day" shall mean a Business Day on
which banks in the city of London are generally open for interbank or foreign
exchange transactions. A "Business Day" shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or permitted to be
closed in the State of Connecticut and in reference to the LIBOR Rate shall mean
any such day that is also a LIBOR Business Day. In the event that the Board of
Governors of the Federal Reserve System shall impose a Reserve Percentage with
respect to LIBOR deposits of the Holder then for any period during which such
Reserve Percentage shall apply, the LIBOR Rate shall be equal to the amount
1
determined above divided by an amount equal to 1 minus the LIBOR Reserve
Percentage. The "LIBOR Reserve Percentage" shall mean for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the average maximum reserve requirement for member
banks of the Federal Reserve System in respect of "Eurocurrency liabilities" (or
in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Loans is determined or any
category of extensions of credit or other assets which includes LIBOR.
2. As used herein, the following terms shall mean:
(a) "Loan Agreement" shall mean the Amended And Restated
Commercial Revolving Loan And Security Agreement dated as of this date between
the Maker and the Bank.
(b) "Note" shall mean this Amended And Restated Commercial
Revolving Promissory Note from the Maker to the Bank.
(c) "Revolving Loan(s)" shall mean the revolving loans extended
by the Bank to the Maker pursuant to the Loan Agreement and as evidenced by this
Note.
Unless otherwise indicated, capitalized terms used herein shall have
the respective meanings ascribed to such terms in the Loan Agreement.
3. The principal amount of this Note shall be advanced upon the
request of the Maker, pursuant to the terms of the Loan Agreement. Only such
amounts as have been or shall be advanced to the Maker (less any repayments),
together with interest thereon, taxes, reasonable costs and expenses, reasonable
attorneys' fees, reasonable professionals' fees and disbursements in connection
therewith, and all other charges required to be paid pursuant to the Loan
Agreement shall be deemed due hereunder. Advances and payments on this Note may,
at Lender's option, be recorded on a schedule similar to the attached Schedule
"A".
4. Interest shall be computed on a daily basis and on the basis of a
360-day year and the actual days elapsed and shall be payable on the first day
of each month until the indebtedness of this Note and all sums due in connection
therewith are paid in full. Any unpaid interest may be added to principal and
additional interest may be charged thereon.
5. The Maker shall make monthly payments of interest only in arrears
commencing on September 1, 2005, and continuing on the first day of each
succeeding month until all outstanding principal has been repaid in full. The
Maker shall also pay to the Bank the Unused Facility Fee, commencing September
30, 2005, and on the last day of each December, March, June and September
thereafter. This Note may be prepaid, in whole or in part, at any time, without
penalty.
2
6. All outstanding principal hereunder, together with all accrued and
unpaid interest, late charges, cost and expenses shall be due and payable in
full on September 1, 2007 (the "Maturity Date").
7. The Maker agrees that if an Event of Default (as defined in the
Loan Agreement) shall have occurred, then, the entire indebtedness with accrued
interest thereon due under this Note shall, at the option of the Holder,
accelerate and become immediately due and payable without further notice.
8. The Maker agree that upon the occurrence of an Event of Default,
after judgment or on the Maturity Date, the indebtedness of this Note shall bear
interest at an annual rate of 3.0% above the then Note Rate.
9. The Holder may collect a late charge of 5.0% of any installment of
principal, interest or other amount due to the Holder which is not paid by the
Maker within 15 days after the due date thereof.
10. Notwithstanding any provision of this Note, it is the
understanding and agreement of the Maker and the Holder that the maximum rate of
interest to be paid by the Maker to the Holder shall not exceed the highest or
the maximum rate of interest permissible under the laws of the State of
Connecticut. Any amounts paid in excess of such rate shall be considered to have
been payments in reduction of principal.
11. The Maker gives the Holder a lien and right of setoff for all of
the Maker's Obligations upon and against all the deposits, credits, collateral
and property of the Maker now or hereafter in the possession or control of the
Holder or in transit to it. The Holder may, if an Event of Default occurs and is
continuing, apply or set off the same, or any part thereof, to any liability of
the Maker even though unmatured.
12. The failure by the Holder to insist upon the strict performance
by the Maker of any terms and provisions herein shall not be deemed to be a
waiver of any terms and provisions herein, and the Holder shall retain the right
thereafter to insist upon strict performance by the Maker of any and all terms
and provisions of this Note or any document securing the repayment of this Note.
13. This Note shall be governed by and construed in accordance with
the laws of the State of Connecticut. The undersigned irrevocably appoints
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and each and every officer of the undersigned as its attorneys
upon whom may be served any notice, process or pleading in any action or
proceeding against it arising out of or in connection with this Note or any
other Loan Document (as defined in the Loan Agreement). The undersigned hereby
3
consents that any action or proceeding against it may be commenced and
maintained in any court within the State of Connecticut or in the United States
District Court for the District of Connecticut or, at the option of Bank, any
court in which Bank shall initiate legal or equitable proceedings and which has
subject matter jurisdiction over the matter in controversy, and that such action
or proceeding may be commenced by service of process on any such officer. The
undersigned agrees that the courts of the State of Connecticut and the United
States District Court for the District of Connecticut shall have jurisdiction
with respect to the subject matter hereof and the person of the undersigned. The
undersigned agrees not to assert any defense to any proceeding initiated by Bank
based upon improper venue or inconvenient forum.
14. This Note is secured by the Loan Agreement.
15. THE MAKER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY OTHER
STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER MAY
DESIRE TO USE, AND FURTHER, WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT,
NOTICE OF NONPAYMENT, PROTEST AND NOTICE OF PROTEST, AND NOTICE OF ANY RENEWALS
OR EXTENSIONS OF THIS NOTE. THE MAKER ACKNOWLEDGES THAT IT MAKES THIS WAIVER
KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER EXTENSIVE CONSIDERATION OF
THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
16. THE MAKER WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION,
PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THIS NOTE OR THE FINANCING TRANSACTION OF WHICH THIS NOTE IS A PART OR THE
DEFENSE OR ENFORCEMENT OF ANY OF THE HOLDER'S RIGHTS AND REMEDIES IN CONNECTION
THEREWITH. THE MAKER ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY,
VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
4
17. This Note amends, restates and replaces the Commercial Revolving
Promissory Note dated March 30, 2000, as amended to the date hereof, in the
amount of up to $20,000,000.00 delivered by Maker to Lender.
AEROSPACE PRODUCTS INTERNATIONAL, INC.
By
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its Secretary
Duly Authorized
5
SCHEDULE "A"
------------
Amount of Amount of Principal Amount of Notation
Advance Made Principal Prepaid Balance Remaining Interest Paid Made By
This Date This Date Unpaid This Date
6
EXHIBIT "B"
COMPLIANCE CERTIFICATE
COVENANT COMPLIANCE CERTIFICATE
I, , do hereby certify that I am the _______________ of Aerospace Products
International, Inc., a Delaware corporation (the "Borrower") and that, as such,
I am duly authorized to execute and deliver this Certificate of Borrower's
behalf pursuant to Section 5.01 of the Amended and Restated Commercial Revolving
Loan and Security Agreement, dated July 29, 2005, by and between the Borrower
and ▇▇▇▇▇▇ United Bank (as the same may be amended or otherwise modified from
time to time, the "Loan Agreement"). Capitalized terms used herein that are
defined in the Agreement shall have the meanings therein defined.
I hereby certify that:
1. The Tangible Net Worth of the Borrower (determined as of the last day
of the immediately preceding month) is $ , computed as shown on
Schedule 1. Nothing has come to my attention to indicate that,
subsequent to the end of such month through the date hereof, the
Borrower is not in compliance with Section 7.01 of the Loan Agreement.
2. The Debt Service Coverage Ratio (determined as of the end of the
immediately preceding month) is : 1, computed as shown on Schedule 2.
Nothing has come to my attention to indicate that, subsequent to the
end of such month through the date hereof, the Borrower is not in
compliance with Section 7.05 of the Loan Agreement.
3. The Borrower has not made any capital expenditures or fixed asset
acquisitions in an aggregate amount exceeding $4,000,000. Nothing has
come to my attention to indicate that, subsequent to the end of such
month through the date hereof, the Borrower is not in compliance with
Section 7.02 of the Loan Agreement.
4. The Borrower is in compliance with all terms, covenants and conditions
of the Loan Documents, there exists no Default or Event of Default,
since the Closing Date, there has occurred no Material Adverse Change
since the Closing Date, and the representations and warranties
contained in each of the Loan Documents are true and correct.
IN WITNESS WHEREOF, I have executed this Certificate on this day of
-
, 20
--------------------------- -----
AEROSPACE PRODUCTS
INTERNATIONAL, INC.
` By:
-----------------------------
Name:
Its
EXHIBIT "C"
BORROWING BASE CERTIFICATE
BORROWING BASE CERTIFICATE
The undersigned, being the _______________________ of Aerospace Products
International, Inc. hereby certifies that the representations, warranties and
covenants set forth in the Amended And Restated Commercial Revolving Loan And
Security Agreement dated as of July 29, 2005, (the "Agreement") are true and
correct as of the date hereof, no Event of Default has occurred pursuant to the
Agreement as of the date hereof and since the date of the last financial
statement delivered to ▇▇▇▇▇▇ United Bank there has not been any Material
Adverse Change in the business, properties, financial position or results of
operations of the Borrower. Capitalized terms used herein that are defined in
the Agreement shall have the meanings therein defined.
The undersigned hereby further certifies to ▇▇▇▇▇▇ United Bank that the
following summary of Eligible Receivables and the attached accounts receivables
aging summary report and the summary of Eligible Inventory are each true and
accurate, not misleading, and have been compiled in accordance with GAAP as such
terms are defined in the Agreement.
ACCOUNTS
1. Gross Accounts as of $__________________
-------------------
(Date of attached A/R listing)
2. Less ineligible Accounts $__________________
3. Net Eligible Accounts Receivable
(Line 1 minus Line 2) $__________________
4. Advance rate of 80%, less Dilution
Reserve of 8% $__________________
INVENTORY
5. Total Eligible Inventory of Borrower $__________________
6. Advance Rate $__________________
In the event the Eligible Acquisition has occurred:
Fifty Percent (50%) of the fair market value
of Eligible Inventory (valued on a first in, first out basis)
not to exceed $13,000,000 less the Facility II Advance
Amount or, provided that no Default exists,
Sixty-Five Percent (65%) of the fair market
value of Eligible Inventory (valued on a first in, first out
basis) not to exceed $15,000,000 less the Facility II
Advance Amount up to five (5) times per
year for a period of up to fifteen (15) days per time
In the event the Eligible Acquisition has not occurred:
Fifty Percent (50%) of the fair market value of Eligible
Inventory (valued on a first in, first out basis) not to
exceed $10,000,000 less the Facility II Advance Amount.
7. Total Eligible Accounts
and Eligible Inventory $__________________
8. Amount Outstanding on the Loan $__________________
9. Amount of this Request $__________________
10. Outstanding Balance of Loan
after this Loan request $__________________
IN WITNESS WHEREOF, I have executed this Borrowing Base Certificate on this ____
day of _________, 20___.
AEROSPACE PRODUCTS INTERNATIONAL, INC.
BY: _________________________________
Its:
EXHIBIT "D"
SCHEDULE OF LOCATION OF INVENTORY
(Addresses)
See SCHEDULE 4.01 (q)
EXHIBIT "E"
LINE OF CREDIT PROMISSORY NOTE OF UP TO $3,000,000
LINE OF CREDIT PROMISSORY NOTE
------------------------------
(ONE-TIME ADVANCE)
U.S. $3,000,000 July 29, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
1. For value received, the undersigned, AEROSPACE PRODUCTS
INTERNATIONAL, INC., a Delaware corporation with an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Maker"), promises to pay to ▇▇▇▇▇▇
UNITED BANK, an institution authorized to do banking business under the banking
laws of Connecticut (the "Bank"), or order, at its office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the holder hereof
(including the Bank, hereinafter referred to as the "Holder"), may designate,
the principal sum of up to THREE MILLION DOLLARS ($3,000,000) (the "Loan"), in
lawful money of the United States of America in immediately available funds, or
so much thereof as has been advanced or is outstanding pursuant to Section 4
below together with interest on the unpaid balance of this Note, beginning on
the date hereof, before maturity, default or judgment, at the rate and in the
manner set forth in Sections 2 and 3 below, together with all taxes levied or
assessed against the Holder on this Note or the debt evidenced hereby (other
than income taxes or other similar taxes), and together with all costs,
expenses, reasonable attorneys' and professionals' fees incurred in any action
to collect the indebtedness (the "Indebtedness") of this Note, to foreclose any
mortgage or security agreement securing the Indebtedness of this Note, or in
protecting or sustaining the lien of any mortgage or any security agreement, or
in any litigation or controversy arising from or connected with this Note or any
mortgage, security agreement or other agreement securing the Indebtedness of
this Note.
2. Interest.
The Maker shall pay interest on the unpaid principal balance which
interest shall accrue from the date of the Advance (as defined below) (the
"Advance Date"), at a fixed rate per annum equal at all times (unless an Event
of Default has occurred) to two hundred fifty (250) basis points above the
weekly average yield on United States Treasury Securities adjusted to a constant
maturity of five (5) years as made available by the Federal Reserve Board (the
"Index") on the date of the Advance Date. Said interest rate shall be rounded to
the nearest one-eighth (1/8th) percent. If the Index is no longer available, the
Lender will choose a new Index, which is based upon comparable information.
Interest shall be computed on a daily basis based on 360 day year for the actual
number of days elapsed.
3. Payment. Commencing one (1) month from the Advance Date, and
continuing on the same day of each month thereafter, the Borrower shall pay to
the Bank principal and interest in sixty (60) consecutive equal monthly
installments in an amount sufficient to amortize the amount of the Advance over
a five (5) year period at the interest rate mentioned in Section 2 hereof.
Monthly payments shall be applied first to accrued interest and the balance to
principal. All outstanding principal hereunder, together with all accrued and
unpaid interests, late charges, cost and expenses shall be due and payable in
full on the fifth (5th) anniversary of the Advance Date (the "Maturity Date").
4. Advance.
(a) Provided that no Default nor Event of Default has occurred
and/or is continuing or would result from the Advance hereunder, or under that
Amended And Restated Commercial Revolving Loan And Security Agreement dated July
29, 2005, between the Bank and the Borrower (the "Loan Agreement"), the Bank
shall, prior to the Commitment Termination Date (as defined in the Loan
Agreement), make one (1) advance (the "Advance") on such terms and in such an
amount as provided in the Loan Agreement.
(b) On and after the Maturity Date, any obligation of Bank to
make further advances shall automatically terminate and the amount of the
Advances, together with accrued and unpaid interest thereon and expenses related
thereto, shall become immediately due and payable in full.
(c) The Maker may request the Advance by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, or
any of the other duly authorized officers of the Maker or any of their
respective designees, giving the Bank irrevocable notice of the request for the
Advance one (1) Business Day before the proposed borrowing, such irrevocable
notice setting forth (i) the amount of the Advance requested and (ii) the
requested borrowing date. Such notice must be written and shall be sufficient if
received by 2:00 p.m. (Eastern Standard Time) on the date on which such notice
is to be given. Unless notification is otherwise furnished by the Maker to the
Bank in a manner consistent with the requirements of this Section 4, the Advance
will be made by a credit to a designated deposit account in the name of Maker
maintained with the Bank.
5. Only such amount as have been or shall be advanced to the Maker
(less any repayments), together with interest thereon, taxes, costs, expenses,
attorneys' fees, professionals' fees and disbursements in connection therewith
and all other charges due in connection therewith pursuant to the Loan Agreement
shall be deemed due hereunder.
6. The Maker may prepay this Note without any penalty or premium at
any time. All partial and full prepayments of principal shall be accompanied by
and applied first to the payment of costs and expenses, then to unpaid late
charges, then to accrued but unpaid interest and the balance on account of the
unpaid principal in the inverse order of maturity. Such partial prepayments
shall not affect the Maker's obligations to make the regular installments
required hereunder.
7. The Maker agrees that if an Event of Default (as defined in the
Loan Agreement) shall have occurred, then the entire Indebtedness with accrued
interest thereon due under this Note shall, at the option of the Holder,
accelerate and become immediately due and payable without further notice.
8. The Maker agrees that upon the occurrence of an Event of Default
or on the Maturity Date, the Indebtedness of this Note shall bear interest at an
annual rate of 3.0% above the interest rate in effect at the time of the
Default.
9. The Holder may collect a late charge of 5.0% of any installment of
principal, interest or other amount due to the Holder which is not paid by the
Maker within 10 days after the due date thereof.
10. Notwithstanding any provision of this Note, it is the
understanding and agreement of the Maker and the Holder that the maximum rate of
interest to be paid by the Maker to the Holder shall not exceed the highest or
the maximum rate of interest permissible to be charged by a national banking
association under the laws of the State of Connecticut. Any amounts paid in
excess of such rate shall be considered to have been payments in reduction of
principal.
11. The Maker hereby grants to the Bank, a lien, security interest
and right of setoff as security for all liabilities and obligations to the Bank,
whether now or existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the, or in transit to any of them. At any time,
without demand or notice, provided there shall have occurred and be continuing
an Event of Default pursuant to the Loan Agreement, the Bank may setoff the same
or any part thereof and apply the same to any liability or obligation of the
Maker even though unmatured and regardless of the adequacy of any other
collateral securing the Loans. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF THE MAKER, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
12. The failure by the Holder to insist upon the strict performance
by the Maker of any terms and provisions herein shall not be deemed to be a
waiver of any terms and provisions herein, and the Holder shall retain the right
thereafter to insist upon strict performance by the Maker of any and all terms
and provisions of this Note or any document securing the repayment of this Note.
13. The Maker acknowledges receipt of a copy of this Note and attests
that the proceeds of this Note and the Indebtedness evidenced by this Note are
to be used for general commercial purposes and that no part of such proceeds
will be used, in whole or in part, for the purpose of purchasing or carrying any
"margin security" as such term is defined in Regulation U of the Board of
Governors of the Federal Reserve System.
14. This Note shall be governed by and construed in accordance with
the laws of the State of Connecticut. The Maker consents to the jurisdiction of
the appropriate court within the State of Connecticut with respect to any
disputes arising out of the enforcement of this Note or the other Loan
Documents.
15. THE MAKER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY OTHER
STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER MAY
DESIRE TO USE, AND FURTHER, WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT,
NOTICE OF NONPAYMENT, PROTEST AND NOTICE OF PROTEST, AND NOTICE OF ANY RENEWALS
OR EXTENSIONS OF THIS NOTE. THE MAKER ALSO WAIVES IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT BY THE HOLDER WITH REGARD TO THIS NOTE, ANY OFFSETS OR
COUNTERCLAIMS THEY MIGHT HAVE. THE MAKER ACKNOWLEDGES THAT IT MAKES THIS WAIVER
KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER EXTENSIVE CONSIDERATION OF
THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
16. THE MAKER AND THE HOLDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER WRITTEN OR VERBAL) OR ANY
ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
HOLDER TO ACCEPT THIS NOTE AND MAKE THE LOAN. THE MAKER ACKNOWLEDGES THAT IT
MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER
EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
Maker:
AEROSPACE PRODUCTS INTERNATIONAL, INC.
By
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its Secretary
Duly Authorized
