EX-10.2
LOAN AGREEMENT
This LOAN AGREEMENT ("Agreement"), is entered into as of October 2,
2006, by and among AVANTAIR, INC. ("Avantair"), a Nevada corporation, CNM, INC
("CNM"), a Nevada corporation and ARDENT ACQUISITION CORP, a Delaware
corporation, ("Ardent").
R E C I T A L S
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A. Avantair and CNM entered into that certain Secured Revolving Line of
Credit Note dated March 22, 2005 ("Original Note"), Revolving Credit
Agreement dated May 31, 2005 ("Revolving Credit Agreement"), General
Security Agreement dated July 30, 2003 and Amended and Restated Security
Agreement dated June 20, 2005 (collectively "Original Security
Agreement") whereby CNM agreed to loan and advance certain monies to
Avantair upon terms and conditions as set forth in the Revolving Credit
Agreement for a total amount of FORTY MILLION DOLLARS ($40,000,000.00).
B. Under the terms of the Revolving Credit Agreement, Avantair was
permitted to withdraw monies only upon certain conditions and
requirements and the consent of CNM as set forth in the Revolving Credit
Agreement.
C. Avantair is in need of funds in an amount equal to the balance of funds
under the Revolving Credit Agreement in the amount of SEVEN MILLION SIX
HUNDRED THOUSAND DOLLARS ($7,600,000.00), in order to acquire and pay
outstanding balances owed to Piaggio America with respect to its
purchase of two (2) Piaggio America aircraft in the amount of FOUR
MILLION EIGHT HUNDRED NINETY THOUSAND AND TWO HUNDRED THIRTY SEVEN
DOLLARS ($4,890,237.00) each, for a total of NINE MILLION SEVEN HUNDRED
EIGHTY THOUSAND FOUR HUNDRED SEVENTY FOUR DOLLARS ($9,780,474.00).
D. The remaining available credit under the Revolving Credit Agreement is
SEVEN MILLION SIX HUNDRED THOUSAND DOLLARS ($7,600,000.00), however, the
Note has matured and Avantair cannot meet certain conditions and
requirements of the Revolving Credit Agreement to draw down any
additional funds, but CNM is agreeable to providing a new secured loan
to Avantair on certain new terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein and for other good and valuable consideration, and
based upon the terms and conditions as set forth in this Agreement, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. LOAN AMOUNT. Avantair and CNM agree that, subject to the
remaining
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terms and conditions of this Agreement, that CNM shall loan to
Avantair the sum of SEVEN MILLION SIX HUNDRED THOUSAND DOLLARS ($7,600,000.00)
("Loan") on or before 11:59 p.m. Pacific Daylight Time, October 2, 2006,
payable as provided hereafter.
2. CONDITIONS. The parties hereto agree that the Loan shall be
permitted, funded and occur only upon the following conditions first being met
by Avantair and verified by CNM by the Closing Date as defined below:
a. Avantair and Ardent shall enter into and execute a
Definitive Stock Purchase Agreement ("Stock Purchase
Agreement") and provide proof of same to CNM and CNM
must approve the Stock Purchase Agreement in its sole
and absolute discretion, on or before 11:59 p.m.,
Pacific Daylight Time October 2, 2006 ("Closing
Date");
b. Avantair shall obtain, close and fund on its Equity
Financing with respect to the equity of Avantair in the
amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($7,500,000.00) ("Equity Amount") and provide proof of
same to CNM on or before the Closing Date;
c. Avantair shall first deliver and provide proof of same
to CNM on or before the Closing Date, to ▇▇▇▇▇ Fargo
Bank in Reno, Nevada, attention ▇▇▇▇▇ ▇▇▇▇▇, the Equity
Amount to be held in trust in a designated ▇▇▇▇▇ Fargo
Bank escrow account (`Escrow Account"). The Equity
Amount shall be administered and disbursed by ▇▇▇▇▇
▇▇▇▇▇▇ of ▇▇▇▇▇ Fargo Bank pursuant to specific wire
instructions of Avantair received and approved prior to
the Closing Date by CNM in writing. Pursuant to said
wire instructions The sum of TWO MILLION ONE HUNDRED
EIGHTY THOUSAND FOUR HUNDRED AND SEVENTY FOUR DOLLARS
($2,180,474.00) of the Equity Amount shall be wired, by
▇▇▇▇▇ ▇▇▇▇▇▇ from the Escrow Account directly to Piaggio
America to be applied to the outstanding balance of the
amounts due and owing for the purchase of two (2)
Piaggio America aircraft, with serial numbers 1109 and
1111 ("Aircraft"). In addition, from said Equity Amount
in the Escrow Account, Avantair shall authorize and
direct ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ Fargo Bank pursuant to the
approved wire instructions to wire to CNM's account at
▇▇▇▇▇ Fargo Bank Reno, Nevada such amounts as are
necessary to pay for all legal fees and costs of CNM
incurred in connection with the negotiation, preparation
of the documentation and execution of the Loan.
d. The Loan shall be secured by all of Avantair's assets,
including
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those identified in the Original Security Agreement to
the satisfaction of CNM ("Collateral"). Prior to the
Closing Date Avantair shall execute and deliver to CNM
any and all documents, including new Security Agreements
and UCC Financing Statements and filings, necessary to
perfect or secure CNM's Loan and the Collateral,
including that property as identified in the Original
Security Agreement ("Security Agreement") and Avantair
shall also have executed and delivered to CNM prior to
the Closing Date the original of a Secured Promissory
Note for the Loan ("Promissory Note").
e. Only upon satisfaction of the conditions in Sections
2(a)-(d) and receipt by CNM of proper title transfer
documentation and evidence of amounts owing Piaggio
America, will the Loan proceeds be disbursed and paid by
CNM directly to Piaggio America for the balance of the
purchase price of the Aircraft. If all conditions are
not met to the satisfaction of CNM, in its sole and
absolute discretion, then this Agreement shall terminate
and CNM shall have no further obligation or liability
with respect to this Agreement and the Loan.
3. APPLICATION AND PAYMENT OF LOAN AMOUNT. Should all conditions as
set forth in Paragraph 2 be satisfied, and proof of same provided to CNM and
confirmed by ▇▇▇▇▇ ▇▇▇▇▇▇ at ▇▇▇▇▇ Fargo Bank, then CNM shall direct ▇▇▇▇▇
▇▇▇▇▇▇ of ▇▇▇▇▇ Fargo Bank to wire the sum of SEVEN MILLION SIX HUNDRED THOUSAND
DOLLARS ($7,600,000.00) from CNM's ▇▇▇▇▇ Fargo Bank Account, Reno, Nevada
immediately to Piaggio America for the purchase and payment of the balance due
and owing on the Aircraft, pursuant to wire instructions prepared and submitted
by CNM to Avantair and ▇▇▇▇▇ Fargo Bank prior to the Closing Date.
4. REMAINDER OF EQUITY AMOUNT. Avantair, after first paying the
amounts as set forth above in Section 2 (c) for the purchase of the Aircraft,
shall be permitted to direct ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Fargo Bank to transfer the
balance of the Equity Amount to Avantair's Trade Account at ▇▇▇▇▇ Fargo Bank to
apply to and repay existing and outstanding corporate payables and debts of
Avantair to only those creditors and in those amounts as set forth in Schedule 1
attached hereto and incorporated herein.
5. AFFIRMATION OF REVOLVING CREDIT AGREEMENT. Avantair expressly
affirms the validity and enforceability of its debts and obligations under the
Revolving Credit Agreement, Original Note and Original Security Agreement.
6. LOAN TERMS. The Loan shall be evidenced by a Promissory Note,
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Security Agreement and UCC Financing Statement, executed by Avantair. The Loan
shall be secured by all assets of Avantair and shall give priority over all
other creditors to the fullest extent permitted by law. The Loan shall accrue
interest at the rate of Fifteen Percent (15%) per annum on the unpaid principal
amount until paid in full, with the entire principal balance amount and any
accrued interest thereon being due and payable in full on May 31, 2007 or seven
(7) days after the closing of Avantair's merger with Ardent, as defined under
the Stock Purchase Agreement, whichever is the earlier to occur.
7. REPAYMENT OBLIGATIONS. The parties agree that within Seven (7)
days following the closing of the transactions contemplated under the Stock
Purchase Agreement, Avantair, or its successor Ardent, shall pay to CNM an
amount sufficient to first pay the Loan in full and to then reduce the balance
due and owing under the Original Note and Revolving Credit Agreement and all
other debts and obligations of Avantair otherwise previously loaned and/or
guaranteed by CNM and/or its officers, directors, shareholders, affiliates and
subsidiaries, and specifically including all such obligations for letters of
credit, equipment and the Revolving Credit Agreement more particularly
identified in Schedule 2 attached hereto and incorporated herein to no more than
a combined total of TEN MILLION DOLLARS ($10,000,000.00), and in no event shall
the total payment amount be less than FIFTEEN MILLION DOLLARS ($15,000,000.00).
At that time, and so long as neither Avantair or Ardent is in default under this
Agreement the Revolving Credit Agreement shall be amended to convert into a
secured term loan to be repaid to CNM in twelve equal quarterly installments of
principal and interest, with the first payment due ninety (90) days after
completion of the transactions contemplated under the Stock Purchase Agreement
and all remaining terms and conditions of the Original Note, Revolving Credit
Agreement and Original Security Agreement shall otherwise remain. The principal
balance under the term loan shall accrue interest at the rate of Ten Percent
(10%) per annum.
8. USE OF AIRCRAFT. The parties hereto agree that as additional
consideration to CNM, CNM and its Officers, Directors and Shareholders shall be
entitled to the use without charge, upon their request, of a Piaggio Avanti
Aircraft for a total amount of 100 hours flight time over a three year period
commencing from the date hereof.
9. TRADING RESTRICTIONS. CNM and its Officers, Directors and
Shareholders agree not to trade in any of Ardent's common stock until the
earlier of (i) the announcement by Ardent of the execution of the Stock Purchase
Agreement and this Agreement or (ii) the termination of discussions between CNM,
Avantair and/or Ardent regarding the transactions contemplated by this Agreement
and/or the Stock Purchase Agreement and the failure of the parties to execute
said documents.
10. AVANTAIR REPRESENTATIONS AND WARRANTIES. Avantiar acknowledges
and agrees that the execution of this Agreement by CNM is made in
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material reliance by CNM on each and every one of the representations and
warranties made by Avantair in this Agreement, the Security Agreement and
Promissory Note. Avantair hereby further represents and warrants to CNM that:
a. GENERAL. Avantair acknowledges and agrees CNM has made
no representation or warranty to Avantair concerning the Loan, this Agreement,
the Promissory Note and Security Agreement, except as expressly stated in this
Agreement.
(b) ORGANIZATION. Avantair has been duly organized and is
validly existing as a Nevada corporation, in good standing and fully qualified
to do business in the State of Nevada.
(c) AUTHORITY. Avantair has the right, power and authority
to enter into this Agreement and to perform its obligations hereunder, and the
person(s) executing this Agreement on behalf of Avantiar have the right, power
and authority to do so. This Agreement constitutes the legal, valid and binding
obligation of Avantair enforceable against Avantair in accordance with its
terms, except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or limiting
the rights of contracting parties generally. This Agreement does not violate any
provision of any other agreement or document to which Avantair is a party or to
which Avantair is bound.
(d) NO ATTACHMENTS. There are no attachments, executions, or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy or under any other debtor-relief laws pending or, to
the best of Avantair's knowledge, threatened against Avantair.
(e) NO CONFLICT WITH, VIOLATION OF OR DEFAULT UNDER LAWS OR
OTHER Agreements. Neither the execution and delivery of this Agreement, the
Promissory Note, the Security Agreement or any other document, agreement,
certificate or instrument to which Avantair, as applicable, is a party or by
which it is bound in connection with the Loan, nor the consummation of the
transactions contemplated hereunder or thereunder, or the compliance with or
performance of the terms and conditions herein or therein, is prevented by,
limited by, conflicts in any material respect with, or will result in a material
breach or violation of, or a material default (with due notice or lapse of time
or both) under, or the creation or imposition of any lien, charge, or
encumbrance of any nature whatsoever upon any of their respective properties or
assets.
(f) INFORMATION AND FINANCIAL DATA ACCURATE; FINANCIAL
STATEMENTS; NO ADVERSE CHANGE. All information and financial and other data
including the Stock Purchase Agreement, previously furnished by Avantair to CNM
is true, correct and complete as of the date thereof, and there has been no
material adverse change with
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respect thereto to the date of this Agreement since the dates thereof. No
information has been omitted which would make the information previously
furnished in such statements and documents to CNM misleading or incorrect in any
material respect to the date of this Agreement.
(g) ARDENT DUE DILIGENCE. Ardent has not received nor relied
upon any representation or statement of CNM in connection with entering into the
Stock Purchase Agreement.
11. TOLLING OF LITIGATION. Upon all conditions being met under this
Agreement and so long as Avantair is not in default under this Agreement or the
Promissory Note and Security Agreement between Avantair and CNM, of even date
herewith, CNM shall agree to stay its pending litigation against Avantair with
respect to its default under the Revolving Credit Agreement pursuant to a
Tolling Agreement acceptable to CNM in its sole and absolute discretion, and
upon all payments being made as provided in Section 7 above and the Loan being
converted to a secured term loan as provided in Section 7, CNM shall agree to a
dismissal, without prejudice of such litigation.
12. NOTICES. Any notices permitted or required under this Agreement
shall be in writing and deemed given upon the date of personal delivery or 48
hours after deposit in the United States mail, postage fully prepaid, return
receipt requested, addressed to Debtor at:
Avantair, Inc.
Attn: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
addressed to the Secured Party at:
CNM, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
or at any other address as any party may, from time to time, designate by notice
given in compliance with this section.
13. GOVERNING LAW. This Agreement shall be governed and interpreted
pursuant to the laws of the State of Nevada. Jurisdiction and venue with respect
to any dispute or action to interpret or enforce this Agreement shall be brought
in the State or Federal Courts of Nevada located in Washoe County, Nevada.
14. ATTORNEYS FEES. In the event of any legal action to interpret or
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enforce provisions of this Agreement, the prevailing party in any such action
shall be awarded its reasonable attorneys fees and costs of court incurred in
connection therewith.
15. NO PARTNERSHIP. Neither the provisions of this Agreement nor the
relationship of the parties hereunder, shall be construed to create any
partnership, joint venture or other legal entity between the parties hereto and
the parties shall not have the right or authority to enter into any agreements
on behalf of the other party without the prior written consent of the party to
be charged.
16. ASSIGNMENT. CNM may assign its rights, title, interest and
obligations under this Agreement upon notice to all other parties. Avantair
shall not be permitted to assign their rights under this Agreement, without the
prior written consent of CNM.
17. SEVERABILITY. If any portion of this Agreement is found
unenforceable, invalid or illegal, the remaining portions of this Agreement
shall remain in full force and effect and shall not be a basis to void this
entire Agreement.
18. REASONABLE APPROVAL. If any approval is required under this
Agreement, any such approval or consent shall not be unreasonably withheld or
delayed.
19 TIME. Time is of the essence. Each party shall perform its
obligations hereunder in a prompt and timely manner.
20. ENTIRE AGREEMENT. This Agreement supercedes all other
agreements, whether oral or written, between the parties with respect to the
subject matter hereof. This Agreement shall not be modified by any party unless
such modification is in writing signed by all parties hereto.
21. WAIVER. No consent or waiver, expressed or implied, by any party
hereto, to or of any breach or default by any other party in the performance by
such other party of its obligations hereunder shall be deemed or construed to be
a consent or waiver to or of any other breach or default in the performance by
such other party of the same or any other obligations of such other party
hereunder. Failure on the part of a party to complain of any act or failure to
act with the other party or to declare the other party in default, irrespective
of how such failure continues, shall not constitute a waiver by said party of
its rights hereunder. The giving of consent by a party in any one instance shall
not limit or waive the necessity to obtain such consent in any future instance.
22. SUCCESSORS. Subject to the conditions set forth in this
Agreement, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and
assigns.
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23. COUNTERPARTS. This Agreement may be executed in counterparts
each of which shall be deemed an original but all of which shall together shall
constitute one and the same document.
The parties hereto have executed this Agreement in Washoe County,
Nevada, as of the day first above written.
AVANTAIR, INC. CNM, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------- -------------------------
Its: Chief Financial Officer ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: President
ACCEPTED AND AGREED SOLELY AS
TO SECTIONS 7* AND 10(G)
ARDENT ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: Chairman
*This is conditioned upon the consummation
of the transactions contemplated in the
Stock Purchase Agreement (as defined in
Section 2(a) herein).
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SCHEDULES
[Intentionally Omitted]
