EXHIBIT 10.1
LOAN AGREEMENT
AMONG
BLX COMMERCIAL CAPITAL, LLC
AS LENDER
▇▇▇▇▇▇ AIRPLANE COMPANY, INC.
AS BORROWER
AND
▇▇▇▇▇▇ AEROSPACE GROUP, LTD.
AND ▇. ▇▇▇▇▇▇ HAPPY
AS GUARANTOR
October 31, 2003
LOAN AGREEMENT PAGE 1
LOAN AGREEMENT
This Loan Agreement is made and entered this 31st day of October, 2003,
by and among BLX Commercial Capital, LLC ("LENDER"), ▇▇▇▇▇▇ Airplane Company,
Inc., a Delaware corporation ("BORROWER"), and ▇▇▇▇▇▇ Aerospace Group, Ltd., a
Delaware corporation, and ▇. ▇▇▇▇▇▇ Happy ("GUARANTOR", whether one or more). In
the event the terms and provisions of this Loan Agreement conflict with or are
inconsistent with the provisions of the Loan Documents, as herein defined, the
terms and provisions of this Loan Agreement will control.
ARTICLE 1 DEFINITIONS.
1.1 CERTAIN DEFINED TERMS.
Unless a particular term, word or phrase is otherwise defined or the
context otherwise requires, capitalized terms, words and phrases used herein or
in the Loan Documents (as hereinafter defined) have the following meanings (all
definitions that are defined in this Agreement in the singular to have the same
meanings when used in the plural and VICE VERSA):
EQUIPMENT and FIXTURES shall have the respective meanings assigned to
them in the UCC in force on the Closing Date.
AFFILIATE shall mean any Person controlling, controlled by or under
common control with any other Person. For purposes of this definition, "CONTROL"
(including "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
AGREEMENT shall mean this Loan Agreement, as it may from time to time
be amended, modified, restated or supplemented.
ANNUAL REVIEWED FINANCIAL STATEMENTS shall mean the annual financial
statements of a Person, including all notes thereto, for a fiscal year of such
Person, which statements shall include a balance sheet as of the end of such
fiscal year, an income statement, a statement of cash flows, a profit and loss
statement showing the result of operations for such fiscal year, and a
reconciliation of surplus, each for such fiscal year, all setting forth in
comparative form the corresponding figures from the previous fiscal year, all
prepared in conformity with GAAP, accompanied by the reviewers notes and
reviewed with no qualifications and reported upon by a firm of independent
certified public accountants acceptable to Lender which shall state that such
financial statements, in the opinion of such accountants present fairly the
financial position of such Person as of the date thereof and the results of its
operations for the period covered thereby in conformity with GAAP. Such
statements shall be accompanied by a certificate of such accountants that in
making the appropriate audit and/or investigation in connection with such report
and opinion, such accountants did not become aware of any Default relating to
the financial tests set forth in SECTION 4.2 hereof or, if in the opinion of
such accountant any such Default exists, a description of the nature and status
thereof.
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BANKRUPTCY CODE shall mean the United States Bankruptcy Code, as
amended, and any successor statute.
BUSINESS DAY shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to close in
New York, New York.
CEILING RATE shall mean, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or state laws
permits the higher interest rate, stated as a rate per annum. On each day, if
any, that the state law establishes the Ceiling Rate, the Ceiling Rate shall be
the "weekly ceiling rate" for that day. Lender may from time to time, as to
current and future balances, implement any other ceiling under applicable
federal or state laws by notice to Borrower, if and to the extent permitted by
applicable laws and regulations. Without notice to Borrower or any other person
or entity, the Ceiling Rate shall automatically fluctuate upward and downward as
and in the amount by which such maximum nonusurious rate of interest permitted
by applicable law fluctuates.
CLOSING DATE shall mean October 31, 2003.
CODE shall mean the Internal Revenue Code of 1986, as amended, as now
or hereafter in effect, together with all regulations, rulings and
interpretations thereof or thereunder by the Internal Revenue Service.
COLLATERAL means all Property, tangible or intangible, real, personal
or mixed, now or hereafter subject to the Security Documents, as more
particularly described in Exhibit "A" attached hereto.
COMMERCIAL LAND shall mean that certain real property located at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Field, Kerrville, ▇▇▇▇ County, Texas, as more particularly described
on EXHIBIT A attached hereto and made a part hereof.
CONDITIONAL COMMITMENT shall mean United States Department of
Agriculture Form 4279-3, Conditional Commitment (Business and Industry) issued
by RBS in connection with the Loan.
CORPORATION shall mean corporations, limited liability companies,
partnerships, joint ventures, joint stock associations, business trusts and
other business entities, whether organized under the laws of the United States
of America or of a foreign jurisdiction.
CURRENT ASSETS shall mean all assets which in accordance with GAAP
would be included in "current assets."
CURRENT LIABILITIES shall mean all Indebtedness which in accordance
with GAAP would be included as "current liabilities."
CURRENT RATIO shall mean the ratio of Current Assets to Current
Liabilities.
DEBT shall mean the sum of (i) all borrowings under the Note, (ii) any
obligation for borrowed money which under GAAP is shown on the balance sheet as
a liability (including the
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principal component of capitalized lease obligations, but excluding reserves for
deferred income taxes, deferred pension liability and other deferred expenses
and reserves), (iii) Indebtedness for borrowed money secured by any Lien
existing on Property owned subject to such Lien, whether or not the Indebtedness
secured thereby shall have been assumed, (iv) guarantees of borrowed money
Indebtedness and endorsements (other than endorsements of negotiable instruments
for collection in the ordinary course of business), (v) letters of credit and
(vi) the redemption amount with respect to any equity interest required to be
redeemed.
DEBT COVERAGE RATIO shall mean for any period the ratio of (a) the Net
Operating Income of Borrower to (b) all required principal and interest payments
due and owing on Borrower's Debt during such period, as determined in accordance
with GAAP.
DEBT TO WORTH RATIO shall mean for any period the ratio of Total
Liabilities of the Borrower divided by the Tangible Net Worth of the Borrower.
DEED OF TRUST/MORTGAGE shall mean that certain Deed of Trust (With
Security Agreement and Assignment of Rents) dated as of the Closing Date, in
Proper Form, executed by Borrower for the benefit of Lender covering and
affecting Borrower's interest in the Commercial Land and securing payment and
performance of the Obligations, as same may be amended, modified, restated or
supplemented from time to time.
DEFAULT shall mean an event which with notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
DEFAULT RATE shall mean, on any day, a rate per annum equal to the
Default Rate, as defined in the Note.
DISBURSEMENT ACCOUNT shall mean a non-interest bearing account in
Lender's or its designee's name in a financial institution selected by Lender.
ENVIRONMENTAL CLAIM means any third party (including Governmental
Authorities and employees) action, lawsuit, claim or proceeding (including
claims or proceedings at common law or under the Occupational Safety and Health
Act or similar laws relating to safety of employees) which seeks to impose
liability for (i) noise; (ii) pollution or contamination of the air, surface
water, ground water or land or the cleanup of such pollution or contamination;
(iii) solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation; (iv) exposure to Hazardous Substances; (v) the
safety or health of employees; or (vi) the manufacture, processing, distribution
in commerce or use of Hazardous Substances. An "ENVIRONMENTAL CLAIM" includes,
but is not limited to, a common law action, as well as a proceeding to issue,
modify or terminate an Environmental Permit, or to adopt or amend a regulation
to the extent that such a proceeding attempts to redress violations of an
applicable permit, license, or regulation as alleged by any Governmental
Authority.
ENVIRONMENTAL LIABILITIES includes all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including but not limited to:
remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage
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to property or injuries to persons, and any other related costs, expenses,
losses, damages, penalties, fines, liabilities and obligations, and all costs
and expenses necessary to cause the issuance, reissuance or renewal of any
Environmental Permit including attorneys' fees and court costs.
ENVIRONMENTAL PERMIT means any permit, license, approval or other
authorization under any applicable Legal Requirement relating to pollution or
protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants or hazardous substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or Hazardous Substances.
EVENT OF DEFAULT shall have the meaning assigned to it in Section 7.1
hereof.
FINANCING STATEMENTS means all such Uniform Commercial Code financing
statements as Lender shall require, in Proper Form, duly executed by Borrower or
others (if required by Lender) to give notice of and to perfect or continue
perfection of Lender's Liens in all Collateral.
GAAP shall mean, as to a particular Person, such accounting practice
as, in the opinion of independent certified public accountants of recognized
national standing, conforms at the time to generally accepted accounting
principles, consistently applied. In addition, GAAP means those principles and
practices (a) which are recognized as such by the Financial Accounting Standards
Board; and (b) which are consistently applied for all periods after the Closing
Date so as to reflect properly the financial condition, and results of
operations and changes in financial position, of such Person. If any change in
any accounting principle or practice is required by the Financial Accounting
Standards Board in order for such principle or practice to continue as GAAP, all
reports and financial statements required hereunder may be prepared in
accordance with such change. Notwithstanding the foregoing, as to individuals
only, GAAP means such accounting principles and practices as, in the opinion of
such accountants, conform at the time to such individual's federal income tax
basis of accounting, consistently applied.
GOVERNMENTAL AUTHORITY shall mean any foreign governmental authority,
the United States of America, any State of the United States and any political
subdivision of any of the foregoing, and any central bank, agency, department,
commission, board, bureau, court or other tribunal having jurisdiction over
Lender, Borrower, Guarantor, any Party or their respective Property.
GUARANTY shall mean collectively all guaranties dated as of the Closing
Date in Proper Form executed by the Guarantor in favor of Lender, as any of the
same may from time to time be amended, modified, restated, supplemented or
substituted.
GUARANTOR shall mean ▇▇▇▇▇▇ Aerospace Group, Ltd., a Delaware
corporation.
HAZARDOUS SUBSTANCE shall mean petroleum products, and any hazardous or
toxic waste or substance defined or regulated as such from time to time by any
law, rule, regulation or order described in the definition of "Requirements of
Environmental Law".
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IMPROVEMENTS shall mean all buildings and other improvements now or
hereafter placed on the Commercial Land, as well as all appurtenances,
betterments and additions thereto; all and singular the rights, privileges,
hereditaments, and appurtenances in any wise incident or appertaining to said
Land and improvements, including, without limitation, any and all rights to the
present or future use of waste water, waste water capacity, drainage, water or
other utility facilities to the extent same pertain to or benefit said Land or
the improvements located thereon, including, without limitation, all
reservations of or commitments or letters covering any such use in the future
whether now owned or hereafter acquired.
INDEBTEDNESS shall mean and include, without duplication, (a) all items
which in accordance with GAAP would be included on the liability side of a
balance sheet on the date as of which Indebtedness is to be determined
(excluding capital stock, surplus, surplus reserves and deferred credits); (b)
all guaranties, letter of credit contingent reimbursement obligations and other
contingent obligations in respect of, or any obligations to purchase or
otherwise acquire, Indebtedness of others, and (c) all Indebtedness secured by
any Lien existing on any interest of the Person with respect to which
Indebtedness is being determined in Property owned subject to such Lien whether
or not the Indebtedness secured thereby shall have been assumed; PROVIDED, that
the term "Indebtedness" shall not mean or include any Indebtedness in respect of
which monies sufficient to pay and discharge the same in full (either on the
expressed date of maturity thereof or on such earlier date as such Indebtedness
may be duly called for redemption and payment) shall be deposited with a
depository, agency or trustee acceptable to Lender in trust for the payment
thereof.
KEY AGREEMENTS means all contracts, permits, licenses and other rights
acquired by a Person or to which such Person is a party or by which such Person
is bound and from time to time material to the ownership of assets or the
operations of such Person.
LEGAL REQUIREMENT shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, or regulation (or interpretation of any of
the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, whether presently existing or arising in the future,
including, without limitation, any Requirements of Environmental Law.
LENDER means the Lender named in the first paragraph of this Agreement
and its successors and assigns, in whole or in part.
LIEN shall mean any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment or other lien whether based on common law,
constitutional provision, statute or contract.
LIMITED GUARANTOR shall mean ▇. ▇▇▇▇▇▇ Happy, and any future president
or chief executive officer of the Borrower.
LOAN shall mean the loan provided for in SECTION 2.1 hereof.
LOAN DOCUMENTS shall mean, collectively, the Note, the Guaranty, this
Agreement, the Deed of Trust, the Security Documents, the Authorization
Agreement for automatic drafts, the Disclaimer of Oral Agreements, and all other
documents prepared and/or executed in connection
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with the Loan, each dated as of the Closing Date, and all instruments,
certificates and agreements now or hereafter executed or delivered to Lender
pursuant to any of the foregoing or in connection with the Obligations or any
commitment regarding the Obligations, and all amendments, modifications,
renewals, extensions, increases and rearrangements of, and substitutions for,
any of the foregoing.
MATERIAL ADVERSE EFFECT means a material adverse effect upon (a) the
financial condition, business, operations, assets or prospects of the Borrower
or Guarantor, (b) the ability of Borrower, Guarantor, or any other Party to
perform its respective obligations under any of the Loan Documents or (c) the
ability of Lender to enforce any of the Loan Documents against Borrower,
Guarantor, or any other Party.
MONTHLY FINANCIAL STATEMENTS shall mean the monthly financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such calendar month and an income
statement and a statement of cash flow for such calendar month and for the
fiscal year to date, all setting forth in comparative form the corresponding
figures for the corresponding calendar month of the preceding year, prepared in
accordance with GAAP (with the exclusion of notes and an auditor's opinion) and
certified as fairly reflecting the financial condition of such Person as of the
date thereof and for the period covered thereby, subject to normal yearend
adjustments, by the Chief Financial Officer or President of such Person.
MORTGAGEE'S POLICY OF TITLE INSURANCE shall mean a mortgagee's policy
or policies of title insurance issued in favor of Lender by an underwriter
satisfactory to Lender insuring the Lien of the Deed of Trust/Mortgage as a
first and prior lien in an amount equal to Five Million and 00/100 Dollars
($5,000,000.00), subject only to such encumbrances as are acceptable to Lender.
NET OPERATING INCOME shall mean the gross income received by Borrower
for the period in question, less the expenses incurred by Borrower that are
allocable to such period computed without regard to taxes, depreciation,
amortization, or interest on the Note but otherwise in accordance with GAAP.
NET WORTH shall mean Total Assets minus Total Liabilities.
NOTE shall mean that certain adjustable rate promissory note dated as
of the Closing Date, the form of which is attached hereto and incorporated by
reference herein as Exhibit "B", made and executed by Borrower payable to the
order of Lender in the aggregate original principal amount of Five Million and
00/100 Dollars ($5,000,000.00), and all modifications, renewals, extensions,
increases and rearrangements of, and substitutions for such promissory notes.
OBLIGATIONS shall mean, as at any date of determination thereof, the
sum of the following: (i) any and all sums, including principal, interest,
expenses, Prepayment Consideration (as defined in the Note), court costs and
attorneys' fees called for in the Note, PLUS (ii) all other agreements,
covenants, conditions, warranties, representations, liabilities, obligations and
indebtedness of any Party now or hereafter created or incurred, in whole or in
part, under this Agreement or any other Loan Document, PLUS (iii) all other
debts of any kind and character now or hereafter owing by Borrower to the Lender
whether such debts be evidenced by written instrument or not and whether they be
direct obligations arising out of a guaranty, endorsement, suretyship or
otherwise, or
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whether they be joint, several or indirect, and whether they were heretofore or
are hereafter purchased or acquired and any and all amendments, modifications,
renewals, extensions, increases, or rearrangements in whole or in part of any of
the above. Obligations herein shall not include those owed by any Guarantor
herein outside those created by the Loan Documents.
ORGANIZATIONAL DOCUMENTS shall mean, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a limited liability company, the articles of
organization, the limited liability company operating agreement and the
regulations of such limited liability company; with respect to a partnership,
the partnership agreement establishing such partnership and the certificate of
limited partnership as to any limited partnership; with respect to a joint
venture, the joint venture agreement establishing such joint venture; and, with
respect to a trust, the instrument establishing such trust; in each case
including any and all modifications thereof as of the date of the Loan Document
referring to such Organizational Document and any and all future modifications
thereof.
PARTIES shall mean Borrower, Guarantor, and any other party (other than
Lender) executing any Loan Document.
PERSON shall mean any individual, corporation, limited liability
company, partnership, joint venture, joint stock association, business trust,
other business entity, trust, unincorporated organization, Governmental
Authority or any other form of entity.
PROPER FORM shall mean in form and substance satisfactory to Lender.
PROPERTY shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
QUARTERLY FINANCIAL STATEMENTS shall mean the quarterly financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such calendar quarter and an income
statement and a statement of cash flow for such calendar quarter and for the
fiscal year to date, all setting forth in comparative form the corresponding
figures for the corresponding calendar quarter of the preceding year, prepared
in accordance with GAAP (with the exclusion of notes and an auditor's opinion)
and certified as fairly reflecting the financial condition of such Person as of
the date thereof and for the period covered thereby, subject to normal year end
adjustments, by the Chief Financial Officer or President of such Person.
REMEDIAL ACTION shall mean any action necessary to ensure compliance
with the Requirements of Environmental Law including (i) the removal and
disposal or containment (if containment is practical under the circumstances and
is permissible within Requirements of Environmental Law) or monitoring of any
and all Hazardous Substances at the Property; (ii) the taking of necessary
precautions to protect against the release or threatened release of Hazardous
Substances at, on, in, about, under, within or near the air, soil, surface
water, groundwater or soil vapor at the Property or any public domain affected
by the Property or any surrounding areas thereof; (iii) any action necessary to
mitigate the usurpation of wetlands, pinelands or other protected land or
reclaim the same or to protect and preserve wildlife species; (iv) any action
necessary to meet the requirements of an environmental permit or (v) any other
action required to
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satisfy Requirements of Environmental Law imposed upon Borrower, the Property
and/or any operation thereon by the Texas Commission on Environmental Quality.
REQUIREMENTS OF ENVIRONMENTAL LAW means all requirements imposed by any
law (including for example and without limitation The Resource Conservation and
Recovery Act and The Comprehensive Environmental Response, Compensation, and
Liability Act), rule, regulation, or order of any Governmental Authority in
effect at the applicable time which relate to (i) noise; (ii) pollution,
protection or cleanup of the air, surface water, ground water or land; (iii)
solid, gaseous or liquid waste generation, treatment, storage, disposal or
transportation; (iv) exposure to Hazardous Substances; (v) the safety or health
of employees or (vi) regulation of the manufacture, processing, distribution in
commerce, use, discharge or storage of Hazardous Substances.
RURAL AREA shall mean all territory of a State that is not within the
outer boundary of any city having a population of fifty thousand or more and its
immediately adjacent urbanized and urbanizing area with a population density of
more than one hundred persons per square mile, as determined by the Secretary of
Agriculture according to the latest decennial census of the United States.
RBS shall mean The United States of America acting by and through its
agency, the Rural Business Cooperative Service, United States Department of
Agriculture, or its successor agency.
RBS DOCUMENTS shall mean all of the following duly executed by or on
behalf of the parties thereto and in Proper Form:
Loan Note Guarantee (Form 4279-5)
Certificate of Incumbency (Form 4279-7)
Lender's Agreement (Form 4279-4)
and all amendments, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing.
RBS GUARANTEE shall mean that certain guaranty of the United States of
America acting through RBS in the amount of eighty percent (80%) of the amount
of the Note, being Five Million and No/100 Dollars ($5,000,000.00).
RBS GUARANTEE FEE shall mean that certain fee imposed by RBS in the
amount of two percent (2%) of the amount of the RBS Guarantee in connection with
this Loan, being Eighty Thousand and 00/100 Dollars ($80,000.00).
RELATED PERSON shall mean any individual, corporation, organization or
other entity that is an officer, director, stockholder, partner or employee of
Borrower.
SECRETARY'S/MEMBER'S CERTIFICATE shall mean a certificate, in Proper
Form, of the Secretary or an Assistant Secretary or a Member of a Person as to
(a) the resolutions of the Board of Directors or other governing body of such
Person authorizing the execution, delivery and performance of the documents to
be executed by such Person; (b) the incumbency and signature
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of the officer of such Person executing such documents on behalf of such Person,
and (c) the Organizational Documents of such Person.
SECURITY AGREEMENTS shall mean (i) those certain Security Agreements
dated as of the Closing Date executed by Borrower in favor of Lender covering,
among other Property, the Equipment, Fixtures (save and except those claimed by
the lessor to Borrower as disclosed to Lender), Proprietary Tooling, FAA
Certificates, Records, and Trademarks (as such terms are defined in Exhibit "A"
hereto) of Borrower and (ii) that certain Assignment of Life Insurance as
Collateral Security dated as of the Closing Date executed by ▇. ▇▇▇▇▇▇ Happy in
favor of Lender covering, among other Property, a $2,000,000.00 life insurance
policy on the life of ▇. ▇▇▇▇▇▇ Happy, together with any and all security
agreements hereafter executed in favor of Lender in connection with, or as
security for, the Obligations, as any of them may be amended, modified, restated
or supplemented from time to time.
SECURITY DOCUMENTS shall mean this Agreement, the Security Agreements,
the Deed of Trust/Mortgage, the Guaranty, the Financing Statements and any and
all other agreements, deeds of trust, mortgages, chattel mortgages, security
agreements, pledges, guaranties, undertakings, subordination agreements and
other instruments and financing statements now or hereafter executed and
delivered by any Person (other than solely by Lender), as the same may be
amended, modified, restated or supplemented from time to time, in connection
with, or as security for the payment of the Obligations.
STATED RATE shall mean the "Stated Rate" as defined in the Note as
subsequently adjusted.
TANGIBLE NET WORTH shall mean as to Borrower total assets (valued at
cost less normal depreciation), LESS (1) all intangibles and (2) all
liabilities, all determined in accordance with GAAP. The term "intangibles"
shall include (i) deferred charges, (ii) the amount of any write-up in the book
value of any assets contained in any balance sheet resulting from revaluation
thereof or any write-up in excess of the cost of such assets acquired (excluding
marketable securities) and (iii) the aggregate of all amounts appearing on the
assets side of any such balance sheet for franchises, licenses, permits,
patents, patent applications, copyrights, trademarks, trade names, goodwill,
experimental or organizational expenses and other like intangibles.
TENANT ESTOPPEL LETTERS shall mean those certain letters in Proper Form
in favor of Lender executed by tenants of the Commercial Land, if any.
TOTAL ASSETS shall mean all assets of Borrower which in accordance with
GAAP would be included in "assets."
TOTAL LIABILITIES shall mean the sum of all short-term note
obligations, current maturities of long-term obligations due within the next
fiscal year, open accounts due to trade, income taxes including current portion
of deferred taxes, bank overdrafts, accrued expenses, long-term note
obligations, bonds, debentures, mortgages, deferred portions of long-term debt,
capital leases, subordinated debt, liability reserves and any other obligations
of the Borrower.
UCC shall mean the Uniform Commercial Code of the State of New York, or
if the creation, perfection, and enforcement of any security interest granted in
the Security Documents
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is governed by the laws of a state other than the State of New York, then, as to
the matter in question, the Uniform Commercial Code in effect in that state.
1.2 MISCELLANEOUS. The words "HEREOF," "HEREIN" and "HEREUNDER" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE 2 THE LOAN
2.1 THE LOAN. Subject to the terms and conditions of this Agreement,
Lender agrees to make a loan to Borrower in an amount not to exceed Five Million
and No/100 Dollars ($5,000,000.00) (the "LOAN").
2.2 USE OF PROCEEDS. The proceeds of the Loan shall be used by Borrower
as follows:
(a) approximately Three Million Eight Hundred Seventy
Thousand and 00/100 Dollars ($3,870,000.00) for the
refinance of existing debt;
(b) approximately Nine Hundred Thirty Thousand and 00/100
Dollars ($930,000.00) for working capital;
(c) approximately Two Hundred Thousand and 00/100 Dollars
($200,000.00) for closing costs.
2.3 NOTE. The Loan made by Lender to Borrower shall be evidenced by the
Note to be executed and delivered by Borrower to Lender on the Closing Date. The
Loan shall bear interest from time to time at the rate and be due and payable on
the terms and conditions set forth in the Note and in this Agreement.
2.4 SECURITY. The Obligations will be secured by the Security Documents
which cover, without limitation, the following Collateral: (a) a first lien on
Borrower's interest in the Commercial Land and Improvements; (b) a first lien on
all Equipment, Fixtures, Proprietary Tooling, FAA Certificates, Records, and
Trademarks (as such terms are defined in Exhibit "A" hereto), whether now owned
or hereafter acquired, as more fully set forth in the Security Agreements; and
(c) an assignment of a $2,000,000.00 life insurance policy on the life of ▇.
▇▇▇▇▇▇ Happy.
ARTICLE 3 CONDITIONS FOR MAKING THE LOAN
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of Lender
to make the initial advance under the Loan is conditioned upon and subject to
all legal matters incident to the transactions hereby contemplated being
satisfactory to Lender and Lender's legal counsel, and is further conditioned
upon Lender's receipt of the following in Proper Form or the following
conditions precedent having been otherwise fulfilled or waived:
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(a) the Loan Documents and all other agreements,
documents and instruments required by Lender to be
executed and/or delivered at or prior to Closing,
each duly executed where appropriate, and in Proper
Form.
(b) a duly executed Secretary's/Member's Certificate with
respect to Borrower and any Party which is not a
natural person.
(c) an opinion of counsel to Borrower and Guarantor in
Proper Form.
(d) a list and summary of all pending or threatened
litigation against Borrower and Guarantor with an
amount in controversy in excess of $100,000.00,
certified to by Guarantor and Borrower.
(e) evidence satisfactory to Lender that there has been
no material deterioration in the Borrower's financial
condition since the issuance of the Conditional
Commitment.
(f) evidence satisfactory to Lender that Borrower has
Tangible Net Worth of at least twenty percent (20.0%)
of Total Assets. At a minimum, such evidence will
consist of a certification by an independent
Certified Public Accountant acceptable to Lender that
Borrower has a tangible balance sheet equity position
of a minimum 20%, which certification will include a
balance sheet of the Borrower as of the date required
by Lender.
(g) Borrower shall have paid the RBS Guarantee Fee.
(h) complete professionally prepared appraisal(s)
acceptable to Lender in its sole discretion. Such
appraisal(s) shall cover the machinery and equipment
owned by the Borrower, reflecting an aggregate
minimum value of $5,000,000.00, the FAA Type
Certificate 2A3, reflecting an aggregate minimum
value of $11,000,000.00, and the leasehold and
improvements, reflecting an aggregate minimum value
of $6,500,000.00.
(i) the RBS Documents.
(j) insurance policies reflecting the insurance required
by the Loan Documents.
(k) at Lender's request, invoices and/or statements of
bills owed or incurred or other evidence that
advances are for purposes authorized under this
Agreement.
(l) current financial statements of Borrower and
Guarantor dated no earlier than thirty (30) days
prior to the Closing Date.
(m) an environmental assessment satisfactory to Lender
and RBS.
LOAN AGREEMENT PAGE 12
(n) a current certificate from the appropriate official
of the state of organization of Borrower as to the
existence and good standing of Borrower.
(o) a current certificate from the appropriate public
official of each jurisdiction other than Borrower's
state of organization as to the due qualification to
do business and good standing of Borrower where such
qualification is necessary to conduct Borrower's
business in such jurisdiction.
(p) a landlord's subordination agreement in Proper Form
executed by any landlord of Borrower subordinating
their Lien(s) in the Collateral, if any, to Lender.
(q) receipt of a $50,000.00 origination fee.
(r) the Mortgagee's Policy of Title Insurance.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of Lender to
make any advance hereunder shall be subject to the further conditions precedent
that on the date of each advance (a) the following statements shall be true (and
each of the giving of the applicable "Request for Advance" and the acceptance by
Borrower of the proceeds of such advance shall constitute a representation and
warranty by Borrower that on the date of such advance such statements are true):
(i) The representations and warranties contained in
ARTICLE 6 of this Agreement are correct in all
material respects on and as of the date of such
advance, before and after giving effect to such
advance, and to the application of the proceeds
therefrom, as though made on and as of such date;
(ii) No event has occurred and is continuing, or would
result from such advance or the application of the
proceeds therefrom, which constitutes a Default or an
Event of Default;
(iii) No law, regulation, order, judgment or decree of any
Governmental Authority shall enjoin, prohibit or
restrain, or impose or result in the imposition of
any material adverse condition upon Lender's making
the requested advance; and
(iv) evidence satisfactory to Lender that Borrower has
Tangible Net Worth of at least twenty percent (20.0%)
of Total Assets. At a minimum, such evidence will
consist of a certification by an independent
Certified Public Accountant acceptable to Lender that
Borrower has a tangible balance sheet equity position
of a minimum 20%, which certification will include a
balance sheet of the Borrower as of the date required
by Lender.
(b) Lender shall have received such other approvals, opinions or
documents as Lender may request.
LOAN AGREEMENT PAGE 13
3.3 BORROWING PROCEDURES. Within two (2) Business Days after
satisfaction of all of the conditions set forth in SECTION 3.1 above, Lender
shall advance the proceeds of the Loan for the purposes set forth in SECTION
2.2, with any funds used for any purpose not supported by evidence of payment at
the Closing Date deposited into the Disbursement Account to be further disbursed
by Lender for the purposes set forth in SECTION 2.2 hereof. Interest shall begin
to accrue on the Loan from the date advanced, whether that advance is to
Borrower, an escrow agent, a third party or to the Disbursement Account.
Borrower hereby grants to Lender a security interest in the Loan proceeds in the
Disbursement Account. While a Default or Event of Default exists, Lender shall
not be obligated to advance any funds from the Disbursement Account and Lender
shall be entitled without notice to Borrower or any other Person to apply the
Loan proceeds in the Disbursement Account to the Obligations. From time to time,
Borrower may request advances under the Loan by submitting to Lender a "Request
for Advance" no later than two (2) Business Days preceding the date of the
requested advance. Subject to the terms of this Agreement, Lender shall advance
to Borrower or, at Lender's option, by joint payee checks or directly to the
applicable third party, the amount requested; provided in no event, will the
aggregate amount advanced under the Loan exceed the original principal amount of
the Note.
ARTICLE 4 AFFIRMATIVE COVENANTS
Until payment in full of and satisfaction of all Obligations (unless
full compliance with any of the following provisions has been waived in writing,
signed by both Lender and Borrower or Guarantor, as the case may be), Borrower
and Guarantor will do and, if necessary, cause to be done, each and all of the
following:
4.1 FINANCIAL STATEMENTS AND INFORMATION. Without request by Lender
(unless otherwise indicated), furnish Lender with true, correct and complete
copies of the following documents, instruments, and information:
(a) Within forty-five (45) days of the end of each
calendar quarter, quarterly year-to-date financial
statements signed by a representative of Borrower and
prepared in accordance with GAAP, including the
business balance sheet, income statement, and any
supporting statements for the period covered.
(b) Within sixty (60) days after the end of each fiscal
year of Borrower, Borrower's Annual Reviewed
Financial Statements with supporting schedules in a
form acceptable to Lender.
(c) Within ninety (90) days after the end of each
calendar year, annual financial statements of
Guarantor and Limited Guarantor as of December 31st
of each year, which financial statements need to be
reviewed and shall be certified and signed by
Guarantor and Limited Guarantor, respectively, as
being true, correct and complete.
(d) Within ten (10) days after the filing of same, a
true, correct and complete copy of the signed and
dated U.S. federal income tax return, state income
tax return, and extension requests of Borrower,
Guarantor, and Limited
LOAN AGREEMENT PAGE 14
Guarantor, state franchise tax return of Borrower and
quarterly, state and federal payroll returns for the
immediately preceding fiscal year then ended.
(e) Such other financial and other information concerning
Borrower and Guarantor requested by RBS or as Lender
may request from time to time, including without
limitation, updated appraisals on real estate,
equipment or chattel property within sixty (60) days
from the date Lender or RBS requests such information
or appraisals.
(f) Upon request of Lender, evidence of payment and
discharge of all taxes, assessments and governmental
charges or levies imposed on Borrower, Guarantor,
their income or profits or any of their Property
prior to the date on which penalties or liens attach
thereto, provided, however, neither Borrower nor
Guarantor shall be required to pay any such tax,
assessment, charge, levy or claim the payment of
which is being contested in good faith and by proper
proceedings and against which adequate reserves have
been set up in accordance with GAAP.
(g) Prompt written notice of all claims, actions or
litigation, including, without limitation, all
proceedings before any Governmental Authority
affecting Borrower, Guarantor or the Property of
either of them, except litigation or proceedings not
materially affecting the financial condition of
Borrower or Guarantor.
(h) Prompt written notice of the occurrence of any
Default hereunder or any other event or occurrence
which has had or can be expected to have a Material
Adverse Effect.
(i) A master list of all lessees currently leasing any
item of Collateral. This list will contain the name,
address, and phone number of each current
customer/lessee. The information contained on this
list must enable the Lender to match the lessee shown
on the list, to the specific job described on the
equipment report that will be provided to the Lender
each month. The master list of lessees will be
updated and immediately forwarded to Lender each time
a new customer/lessee is added or information
changes.
4.2 FINANCIAL TESTS. Borrower shall have and maintain at all times:
(a) a Debt to Worth Ratio not exceeding 7 to 1.
(b) a Current Ratio of not less than 1.25 to 1.
LOAN AGREEMENT PAGE 15
4.3 TAXES, EXISTENCE, PROPERTY, ETC. At all times (a) pay when due all
taxes and governmental charges of every kind upon Borrower or Guarantor or
against its income, profits or Property, unless and only to the extent that the
same shall be contested diligently in good faith and by proper proceedings and
against which Borrower, or Guarantor, as the case may be has set up adequate
reserves in accordance with GAAP and have in operation a depository plan for
payment of future withholding taxes when required; (b) do all things necessary
to preserve its existence, qualifications, rights and franchises in all
jurisdictions where its Property or the nature of its business makes such
licensing or qualification necessary; and (c) cause the Collateral and its
Property necessary or appropriate to the conduct of its business to be
protected, maintained and kept in good repair, ordinary wear and tear excepted,
and make all replacements and additions to its Property as may be necessary to
conduct its business properly and efficiently.
4.4. LEGAL REQUIREMENTS. Comply with, and provide Lender (if requested)
with evidence of compliance with, all applicable legal requirements in respect
of the conduct of its business and the ownership of its Property, including,
without limitation, the following:
(a) Requirements of Environmental Law.
(b) all equal opportunity and nondiscrimination
requirements as more fully set out in RBS Instruction
4279A, 4279B and 4287B.
(c) all requirements under Clean Air Act and Water
Pollution Control Act as more fully set out in RBS
Instruction 4279A, 4279B and 4287B.
(d) all federal, state and/or local laws and regulations,
as well as any and all requirements contained in RBS
Instruction 4279A, 4279B and 4287B.
(e) The Americans with Disabilities Act.
4.5 INSPECTION. Permit Lender or RBS, as well as any accompanying
personnel, at any time to inspect its Property, to examine its files, books and
records except privileged communication with legal counsel and classified
governmental material, and make and take away copies thereof, and to discuss its
affairs with its officers and accountants, all during normal business hours and
at such intervals and to such extent as Lender or RBS may desire. RBS personnel
and any person(s) accompanying RBS personnel shall be authorized to enter upon
the premises and into any building thereon, whether permanent or temporary,
jointly or separately, with personnel of the Lender to carry out the functions
involving their interests. It is anticipated that scheduled and unscheduled
inspections shall be conducted during normal business hours by these personnel
as well as final acceptance inspections.
4.6 FURTHER ASSURANCES. Promptly execute and deliver, at Borrower's
expense, any and all other and further instruments which may be requested by
Lender to cure any defect in the execution and delivery of any Loan Document in
order to effectuate the transactions contemplated by the Loan Documents, and in
order to grant, preserve protect and perfect the validity and priority of the
Liens created by the Security Documents.
LOAN AGREEMENT PAGE 16
4.7 BOOKS AND RECORDS. Maintain books of record and account in such
detail, form and scope as Lender or RBS shall require and in accordance with
GAAP.
4.8 INSURANCE. Borrower will maintain at Borrower's sole expense
insurance with such insurers, on such of its Property, with responsible
companies in such amounts, with such deductibles and against such risks as may
be required by Lender and furnish Lender satisfactory evidence thereof promptly
upon request.
4.9 CULTURAL MATERIALS. If cultural materials are encountered during
any construction, work must cease in the immediate area. Work can continue in
the project area where no cultural materials are present. The Secretary of
Interior, must be contacted in accordance with 36 CFR 8007. Also, the State
Historic Preservation Officer must be notified.
4.10 PROTECTION OF COLLATERAL. Lender may at any time after notice to
Borrower take such steps as Lender deems necessary to protect Lender's interest
in and to preserve the Collateral. Borrower agrees to cooperate fully with all
of Lender's efforts to preserve the Collateral and will take such actions to
preserve the Collateral as Lender may direct. All of Lender's expenses of
preserving the Collateral shall be charged to Borrower's account and added to
the Note. Upon the occurrence and continuation of an Event of Default, Lender
may use any of Borrower's owned or leased lifts, hoists, trucks or other
facilities or equipment for handling or removing the Collateral and Lender shall
have, and is hereby granted, a right of ingress or egress to and through any of
Borrower's owned or leased Property.
4.11 RURAL AREAS. Borrower will utilize all Loan proceeds in improving,
developing or financing business, industry and employment and improving the
economic or environmental climate in a Rural Area.
4.12 RURAL DEVELOPMENT INSTRUCTIONS. Borrower and Guarantor certify and
represent that they understand, accept, and will comply with all of the
conditions of the Conditional Commitment.
4.13 ESCROW FUND At the option of Lender, Lender may require Borrower
to establish an Escrow Fund (defined below) sufficient to discharge its
obligations for the payment of taxes, insurance premiums, and maintenance as
required by the Mortgage/Deed of Trust in an amount equal to one hundred five
percent (105%) of the total of these payments. The initial deposits together
with the amounts set forth in this subsection shall be called the "Escrow Fund".
Initial deposits for taxes, premiums, and maintenance shall be made by Borrower
to Lender in amounts determined by Lender in its sole and exclusive discretion
on the date hereof to be held in Lender's Escrow Fund. Additionally, Borrower
shall pay to Lender or its designee on the first day of each calendar month: (a)
one twelfth of an amount which would be sufficient to pay the taxes payable, or
estimated by Lender to be payable, upon the due dates established by the
appropriate taxing authority during the ensuing twelve (12) months; (b)
one-twelfth of an amount which would be sufficient to pay the insurance premiums
due for the renewal of the coverage afforded by the policies upon the expiration
thereof; and (c) one-twelfth of an amount which would be sufficient to pay all
costs associated with maintenance and upkeep of building, grounds, equipment,
and all other property which needs to be maintained in the ordinary course of
business ("CAM"). Borrower shall notify Lender immediately of any changes to the
amounts, schedules and instructions for payment of taxes, insurance premiums,
and CAM of which it has obtained
LOAN AGREEMENT PAGE 17
knowledge and expressly authorizes Lender or its designee to obtain the bills
for taxes and other charges directly from the appropriate authority. The Escrow
Fund and the payments of interest or principal, or both, payable pursuant to the
Note, shall be added together and shall be paid as the aggregate sum by Borrower
to Lender. Provided there are sufficient amounts in the Escrow Fund and no
Default or an Event of Default exists, Lender shall be obligated to pay on
behalf of Borrower the taxes, insurance premiums and CAM as they become due on
their respective due dates by applying the Escrow Fund to the payment of such
taxes, insurance premiums,and CAM required to be made by Borrower hereunder. If
the amount of the Escrow Fund shall not be sufficient to pay the amounts due for
taxes, insurance premiums, and CAM herein, Borrower shall promptly pay top
Lender, upon demand, an amount which Lender shall estimate to make up the
deficiency. The Escrow Fund shall constitute a separate fund and shall not be
commingled with other monies held by Lender. No interest or earnings shall be
payable to Borrower on the Escrow Fund.
4.14 COPIES OF LEASES. Borrower and Guarantor shall provide Lender with
true, correct, and complete copies of any and all leases relating to the
Collateral. Borrower shall also provide Lender with such other and further
information regarding such leases as Lender may request.
4.15 EXERCISE OF RIGHT(S) OF FIRST REFUSAL. Immediately upon
notification to Borrower from the City of Kerrville, and/or the County of ▇▇▇▇
(hereinafter jointly referred to as the "Lessor") that Lessor intends to lease
to a third party any part of the acreage located at the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Field,
Kerrville, ▇▇▇▇ County, Texas, subject to the right of first refusal in favor of
Borrower, Borrower agrees to provide a copy of such notification to the Lender.
Borrower will proceed to exercise its right of first refusal unless it obtains
the prior written consent of Lender to release Borrower's interest in which it
holds a right of first refusal.
ARTICLE 5 NEGATIVE COVENANTS
Until payment in full of and satisfaction of all Obligations, Borrower
shall not, without prior express written consent of Lender and RBS (if deemed
necessary by Lender):
5.1 INDEBTEDNESS. Create, incur or assume, directly or indirectly, or
become or remain liable with respect to any Debt whether direct, indirect,
contingent or otherwise, other than the Loan and Current Liabilities arising out
of transactions in the ordinary course of Borrower's business. Notwithstanding
anything contained herein to the contrary, Borrower's total annual debt payments
(including capital lease payments, payments on the Loan, and other payments, but
excluding payments made on a working capital line of credit or other similar
type of working capital facility) shall not exceed $1,000,000.00, save and
except those arising from Current Liabilities. Unless specifically approved in
writing by Lender, no payments shall be made to ▇▇▇▇▇▇ Aerospace Group, Ltd.,
the parent company of Borrower, during the term of the Loan.
5.2 CONTINGENT LIABILITIES. Directly or indirectly assume, guarantee,
endorse or otherwise become liable upon, or agree to purchase or otherwise
furnish funds for the payment of, the liability or obligation, including
contingent liabilities or obligations, of any Person other than Borrower except
for transactions in the ordinary course of Borrower's business.
LOAN AGREEMENT PAGE 18
5.3 LIENS. Create, incur, assume or suffer to exist any Lien upon any
of its Property now owned or hereafter acquired, except (i) Liens securing
payment of the Note under this Agreement;(ii) purchase money security interests
in equipment, provided the debt associated with same does not cause the Debt
Coverage Ratio of Borrower to fall below 1.25x, (iii) mechanics', carriers',
workmen's, repairmen's or other like Liens incurred in the ordinary course of
business in respect of obligations which are not overdue or are being contested
in good faith by appropriate proceedings, if adequate reserves with respect
thereto are maintained in accordance with GAAP; and (iv) those arising from
current subordinate liabilities or liabilities hereafter acquired under
$1,000,000.00.
5.4 NATURE OF BUSINESS. Engage in any business other than Borrower's
principal business activity or a business activity which is directly related
thereto, or change the nature or method of operation or its manner of conducting
business in any material respect.
5.5 LOANS TO AFFILIATES. Make any loans or advances to any officer,
director or shareholder of Borrower or to Guarantor.
5.6 MERGERS, CONSOLIDATIONS, DISPOSITIONS, ACQUISITIONS, INVESTMENTS.
Liquidate or dissolve; form any new subsidiary or merge or consolidate with any
corporation or other entity, or sell, lease, assign, transfer or otherwise
dispose of (whether in one transaction or a series of transactions) all or
substantially all of its assets, whether now owned or hereafter acquired; or
acquire by purchase in any acquisitive corporate transaction or otherwise, all
or substantially all of the assets of any corporation or other entity or make
any investment in the assets of any corporation or other entity or business
venture; or allow any changes, by sale of stock or otherwise, in the current
equity ownership of Borrower, excluding those transactions arising from the
Current Liabilities of Borrower or Guarantor and provided that the consolidated
financial condition of the Borrower is not thereafter in violation of the
financial covenants of this Loan Agreement.
5.7 CHANGE OF PRESIDENT OR CHIEF EXECUTIVE OFFICER. Make any change or
substitution of the president or other chief executive officer of the Borrower
without prior written notification to Lender and the execution by such new
president or chief executive officer of a personal guaranty in form and
substance satisfactory to Lender limited to the lesser of $1,000,000.00 or the
outstanding balance owed by Borrower on the Loan (the "Limited Presidential
Guaranty"). The requirement for the Limited Presidential Guaranty may be
released upon written request to the Lender and full compliance with the
following conditions: (a) there must not have been a default under the terms of
this Loan Agreement for the three consecutive years preceding the date of such
request, and (b) for the entire twelve month period immediately preceding such
request, Borrower must have maintained a Debt Coverage Ratio of at least 1.25:1,
as determined solely by Lender.
5.8 DISPOSITION OF ASSETS. During any fiscal year, sell, lease or
dispose of (whether in one or more transactions) in any manner any real
property, machinery, equipment, furniture or fixtures, other than Collateral,
having an aggregate value of $100,000.00 or more, and shall not sell or dispose
of any Collateral except in accordance with SECTION 5.13 hereof. Notwithstanding
the above, the Borrower may sell or dispose of any asset(s), other than
Collateral, so long as the asset(s) being sold or disposed of are immediately
replaced by Borrower with a similar asset of equal or greater value and utility.
LOAN AGREEMENT PAGE 19
5.9 REDEMPTIONS, DIVIDENDS, DISTRIBUTIONS. Redeem, retire or otherwise
acquire, directly or indirectly, any shares of Borrower's capital stock or other
equity interest, declare or pay any dividend on or in respect any shares of
Borrower's capital stock or bonuses to officers or shareholders unless (1)
after-tax profit was made in the preceding fiscal year, (2) the Borrower is and
will remain in compliance with covenants of this Agreement and Conditional
Commitment, (3) all of the Borrower's debts are paid to a current status and (4)
prior written concurrence of the Lender and U.S.D.A., or make any other
distribution of any Property or cash to owners of an equity interest in Borrower
(in their capacity as such) except as provided above.
5.10 THIS SECTION HAS BEEN INTENTIONALLY DELETED.
5.11 CHANGE OF NAME OR LOCATION. Change its name or the location of its
chief executive office or principal place of business or the place where it
keeps its books and records without the consent of Lender which shall not be
unreasonably withheld.
5.12 ORGANIZATIONAL DOCUMENTS. Amend, modify, restate or supplement any
of its Organizational Documents if such action could be expected to materially
and adversely affect the Loan or any Obligation or the abilities of any of the
Parties to perform their respective Obligations under any Loan Document.
5.13 COLLATERAL. Dispose of any of the Collateral, except for
replacement of Collateral acquired in the normal course of business, or use the
Collateral, permit the same to be used, for any unlawful purpose or in any
manner inconsistent with the provisions or requirements of any insurance policy
required in the Loan Documents, or allow any tangible Collateral to be moved
from its current location, except in connection with the leasing of any said
Collateral or operations of Borrower, provided Borrower advised Lender in
writing and lists all Collateral to be moved prior to relocation of same.
Borrower further agrees that all payments of any kind from any sale, including
but not limited to public or private, of any of the Collateral, will be made
jointly payable to the Lender and the Borrower and shall be kept separate and
distinct from other Property of the Borrower. These payments include but are not
limited to the sale of any equipment, accounts receivable, real estate, rolling
stock, bonds or stocks. All proceeds must be applied to the Obligations upon
receipt of such proceeds. If the Collateral is evidenced by promissory notes or
other instruments for the payment of money, Borrower, will, at the request of
Lender, immediately deliver them to Lender, appropriately endorsed to Lender's
order and regardless of the form of endorsement, Borrower waives presentment,
demand, notice of dishonor, protest and notice of protest. Notwithstanding
anything to the contrary herein, Collateral shall not mean or include inventory,
work in process, or finished planes.
5.14 THIS SECTION HAS BEEN INTENTIONALLY DELETED
5.15 KEY AGREEMENTS. Amend, modify or grant a waiver of any provision
of any of the Key Agreements if such amendment, modification or waiver could
have a Material Adverse Effect.
5.16 ADDITIONAL LIFE INSURANCE. Without the prior written consent of
Lender and RBS, purchase additional life insurance from Borrower's business
assets or income.
LOAN AGREEMENT PAGE 20
5.17 RELATED PARTIES. Engage in any transactions with any Related
Person except upon terms equally available in like transactions with other
parties.
5.18 GAMBLING ACTIVITY. Borrower shall not derive more than ten percent
(10%) of its annual gross revenue from gambling activity.
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
To induce Lender to extend the credit and financial accommodations
evidenced by the Loan Documents, Borrower and Guarantor each represents and
warrants to Lender that:
6.1 ORGANIZATION. Borrower is a corporation, validly existing and in
good standing under the laws of the jurisdiction of its organization and has all
requisite power and authority necessary in order for it to conduct its business
and own its Properties. Borrower is in good standing under the laws of all other
jurisdictions in which qualification is necessary in order for it to conduct its
business and own its Property as conducted and owned in such jurisdictions.
▇▇▇▇▇▇ Aerospace Group, Ltd. is a Delaware corporation, validly existing and in
good standing under the laws of the jurisdiction of its organization and has all
requisite power and authority necessary in order for it to conduct its business
and own its Properties. ▇▇▇▇▇▇ Aerospace Group, Ltd. is in good standing under
the laws of all other jurisdictions in which qualification is necessary in order
for it to conduct its business and own its Property as conducted and owned in
such jurisdictions.
6.2 FINANCIAL STATEMENTS. The financial statements of Borrower and
Guarantor delivered to Lender fairly present the financial condition of the
Borrower and Guarantor as of the date(s) of such financial statements for the
period ended on such date all in accordance with GAAP, and since the date of
such financial statements, no event has occurred which has had or is likely to
have a Material Adverse Effect.
6.3 ENFORCEABLE OBLIGATIONS; AUTHORIZATION. The execution, delivery and
performance of the Loan Documents to which Borrower is a party are within its
corporate powers and have been duly authorized by all necessary corporate action
of Borrower. Neither execution or delivery of any Loan Documents nor the
fulfillment of or compliance with its terms will contravene or violate (i)
Borrower's Organizational Documents, (ii) any Legal Requirement binding on or
affecting Borrower or Guarantor or (iii) any mortgage, indenture, contract,
agreement or other instrument, or any judgment, order or decree binding upon
Borrower or Guarantor. No authorization or approval or other action by, and no
notice to or filing with, any franchisor, licensor, distributor, Governmental
Authority, regulatory body, or other Person is required for the due execution,
delivery and performance by Borrower or Guarantor of the Loan Documents to which
each is a party. The Loan Documents to which each is a party have been duly
executed and delivered and are legal, valid and binding obligations of Borrower
and Guarantor, enforceable against each in accordance with their respective
terms. The Improvements and the use of the Commercial Land and Improvements
complies in all respects with applicable Legal Requirements.
LOAN AGREEMENT PAGE 21
6.4 CONTRACTUAL OBLIGATIONS. Neither Borrower nor Guarantor has
received notice nor has any actual knowledge that (i) it is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any contractual obligation, including, without
limitation, franchise and distribution contracts, applicable to it, or (ii) any
condition exists which, with the giving of notice or the lapse of time or both,
would constitute such a default under such contractual obligations, in each
case, except where such default or defaults, if any, will not have or is not
likely to have a Material Adverse Effect, except as described on Exhibit "C"
attached hereto and made a part hereof.
6.5 LITIGATION. There is no pending or, to the knowledge of Borrower or
Guarantor, threatened action or proceeding affecting Borrower or Guarantor
before any court, governmental agency or arbitrator, which has had or is likely
to have an adverse effect on the financial position of Borrower or Guarantor or
the results of operations of Borrower or any of their businesses or the ability
of Borrower or Guarantor to perform its obligations under the Loan Documents, or
would subject Borrower or Guarantor to any liability not fully covered by
insurance, or would be required to be disclosed in the notes to any financial
statements of Borrower or Guarantor prepared in accordance with GAAP, except for
amounts in controversy not exceeding $100,000.00 and except as described on
Exhibit "D" attached hereto and made a part hereof.
6.6 TITLE; PERMITS. Borrower has, and will maintain, adequate assets,
licenses, permits, patents, patent applications, copyrights, trademarks,
trademark applications, trade names, technology, processes, and franchise and
distribution rights to continue to conduct its business as heretofore conducted
by it. Borrower will maintain evidence of such adequate assets, licenses,
permits, patents, patent applications, copyrights, trademarks, trademark
applications, trade names, technology, processes, and franchise and distribution
rights and provide such evidence to Lender upon request. Borrower has and will
continue to have good and indefeasible title to its Property free and clear of
all Liens other than as permitted by SECTION 5.3. No Liens exist as of the
Closing Date upon or with respect to any Property of Borrower other than Liens
permitted under SECTION 5.3
6.7 INDEBTEDNESS. Except for trade payables arising and endorsements of
negotiable instruments for collection, in each case, in the ordinary course of
its business, and except as permitted under SECTION 5.1 of this Agreement,
Borrower will not have, as of the Closing Date, (i) any obligation or liability
(including, without limitation, contingent liabilities) which would have a
Material Adverse Effect, (ii) any Indebtedness for borrowed money other than the
Obligations or (iii) any obligation to guarantee the obligations of any other
Person.
6.8 REGULATIONS G, U AND X. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, U or X issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Loan will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or for any purpose which would be
inconsistent with the provisions of Regulations G, U or X.
6.9 COMPANY STRUCTURE. At least fifty-one percent (51%) of the
outstanding interests in Borrower are owned by corporate entities of the United
States, citizens of the United States, or individuals who reside in the United
States after being legally admitted for permanent residence.
LOAN AGREEMENT PAGE 22
6.10 NO UNTRUE OR MISLEADING STATEMENTS. The representations and
warranties of Borrower, Guarantor and of each other Party to a Loan Document
contained in the Loan Documents, and all certificates and other documents
delivered pursuant to the terms thereof do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. Neither Borrower nor Guarantor has
intentionally withheld any material fact from Lender in regard to any matter
which will have or is likely to have a Material Adverse Effect.
6.11 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT, ETC.
Borrower is not subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, or any other Legal Requirements which limit the ability of
Borrower to incur indebtedness or its ability to consummate the transactions
contemplated hereby or by the other Loan Documents.
6.12 SOLVENCY. After giving effect to the consummation of the
transactions evidenced by the Loan Documents, Borrower has capital sufficient to
carry on its respective business and transactions and all businesses and
transactions in which it is about to engage and is solvent and able to pay its
respective debts as they mature; and Borrower owns Property having a value, both
at fair valuation and at present fair salable value, greater than the amount
required to pay its respective debts.
6.13 LEGAL REQUIREMENTS. Borrower and Guarantor are in compliance with
all Legal Requirements applicable to them or their respective business, the
violation of which would have a Material Adverse Effect.
6.14 ENVIRONMENTAL MATTERS. The operations of Borrower and Guarantor
are in compliance with all applicable Requirements of Environmental Law, (i)
none of the Properties of Borrower or Guarantor require any Remedial Action;
(ii) to the knowledge of Borrower and Guarantor, there is not now on or in the
Properties of Borrower or Guarantor: (A) any asbestos containing materials; (B)
any underground or aboveground storage tanks (except as previously disclosed to
Lender); or (C) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment (except as previously disclosed to
Lender); (iii) neither Borrower nor Guarantor has received or is otherwise aware
of any notice or claim to the effect that Borrower or Guarantor is or may be
liable in any respect to any Person as a result of the release or threatened
release of Hazardous Substances into the environment, and (iv) neither Borrower
nor Guarantor, nor any of their past or present Properties or operations, are
subject to any investigation, judicial or administrative proceeding, order,
judgment, decree, settlement or other agreement respecting (x) any Requirements
of Environmental Law, (y) any Remedial Action or (z) any Environmental Claim or
Environmental Liabilities arising from the release or threatened release of
Hazardous Substances into the environment except those disclosed to Lender.
6.15 TAXES. Each of Borrower and Guarantor has filed (or has obtained a
currently effective extension of time for the filing of) all federal and all
state, local and other tax returns and other reports which each is required by
any Legal Requirement to file, and all taxes, assessments, fees and other
governmental charges thereupon and upon their respective Property, assets,
income and franchises which are shown in such returns or reports to be due and
payable have been paid
LOAN AGREEMENT PAGE 23
other than those taxes, fees, assessments and charges which are being contested
pursuant to SECTION 4.3 hereof and such returns properly reflect the United
States income, foreign taxes and/or state taxes of Borrower and Guarantor for
the periods covered thereby. Borrower does not have any knowledge of any
proposed tax assessment against Borrower that will have or is likely to have a
Material Adverse Effect except those outstanding as disclosed to Lender.
6.16 USE OF PROCEEDS. Borrower's uses of the proceeds of the Loan are
and will continue to be, legal and proper corporate uses (duly authorized by
Borrower's Board of Directors, partners or members or managers, as applicable)
in connection with Borrower's business and are consistent with this Agreement
and all applicable Legal Requirements in effect from time to time. None of the
proceeds of the Loan will be disbursed to the owner(s), partners, stockholders
or beneficiaries of Borrower or any members of their families.
6.17 SECURITY INTERESTS. The Liens of Lender attaching to the
Collateral will at all times constitute valid and enforceable first priority
Liens in favor of Lender, subject to no prior Lien except as approved by Lender.
Before any funding under the Note, Borrower and Guarantor will have taken or
will have participated with Lender in taking, all necessary action and make all
necessary filings to provide Lender with perfected, first priority Liens in the
Collateral under the laws of all applicable jurisdictions. The Collateral is
free from damage caused by fire or other casualty. Borrower and/or Guarantor, as
applicable, has good and marketable title to and enjoy peaceful and undisturbed
possession of all of the Collateral.
6.18 BUSINESS LOAN. All loans evidenced by the Note are and shall be
for business, commercial, investment or other similar purposes and not primarily
for personal, family, household or agricultural use, as such terms are used in
the commercial law provision of the New York Code.
6.19 PRINCIPAL PLACE OF BUSINESS & COLLATERAL. Borrower's principal
place of business and chief executive office is ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Field,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, all Collateral is, and will be, located at such address.
6.20 CERTIFICATE OF TITLE. No part of the Collateral, other than the
FAA Type certificate described in Exhibit "A" hereto, is covered by a
certificate of title or subject to any certificate of title law.
6.21 LAND. The Commercial Land described on EXHIBIT A is all the real
estate owned or leased by Borrower and Guarantor.
6.22 ADA COMPLIANCE. Borrower's office facilities and all places
accessible to the public are accessible to physically handicapped persons who
may be employed or come to visit. The office layout is in compliance with the
Uniform Federal Accessibility Standards (UFAS) or the Americans With
Disabilities Act (ADA) which became effective January 26, 1992, as appropriate.
ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES
7.1 EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur, then the Lender may do any or all of the following
without any notice to the Borrower (except as
LOAN AGREEMENT PAGE 24
hereinafter expressly provided): (i) declare the Note to be, and thereupon such
Note shall forthwith become, immediately due and payable, together with all
accrued interest thereon and all fees and other amounts payable hereunder and
under the other Loan Documents, without notice of any kind, notice of
acceleration or of intention to accelerate, presentment and demand or protest,
all of which are hereby expressly waived; (ii) exercise its rights of offset
against each account and all other Property of the Borrower in the possession of
the Lender, which right is hereby granted by Borrower to Lender; (iii) terminate
Lender's obligation to make any further advances under the Loan and (iv)
exercise any and all other rights available to Lender under the Loan Documents,
at law or in equity:
(a) Borrower fails to make any payment of principal of or
interest on the Note or in respect of any other
Obligations under any Loan Document as and when due;
however, it is provided that, notwithstanding
anything contained herein to the contrary, Lender
shall give Borrower ten (10) days written notice of
any Default under this Section 7.1(a), and Borrower
shall have an opportunity to cure such Default within
the notice period. The notice and cure period
specified herein shall begin to run on the date said
notice is (1) mailed or (2) delivered, whichever is
earlier; or
(b) Any representation or warranty made by the Borrower
or Guarantor herein or by Borrower, Guarantor or any
other Party in any other Loan Document or in any
certificate, financial statement or other written
statement furnished to Lender proves to have been
incorrect, false or misleading in any material
respect when made; or
(c) Borrower, Guarantor or any other Party violates any
covenant, agreement or condition or otherwise fails
to perform any obligation (other than the obligation
to pay principal of, or interest on, the Note)
contained in this Agreement or any of the other Loan
Documents or in connection with any other
Indebtedness owed by Borrower, Guarantor or any other
Party to Lender; however, it is provided that,
notwithstanding anything contained herein to the
contrary, Lender shall give Borrower thirty (30) days
written notice of a Default under this Section
7.1(d), and Borrower shall have an opportunity to
cure such Default within the notice period. The
notice and cure period specified herein shall begin
to run on the date said notice is (1) mailed or (2)
delivered, whichever is earlier; or
(d) Final judgment for the payment of money is rendered
against the Borrower in excess of $100,000.00, and
the same is not immediately paid or sufficiently
bonded or escrowed; or
(e) Borrower claims, or any court finds or rules, that
the Lender does not have a valid Lien under any
Security Document; or
(f) Borrower or any other Party sells, encumbers, or
abandons (except as otherwise expressly permitted by
the Loan Documents) any of the Property now or
hereafter subject to any of the Security Documents;
or any levy, seizure or attachment is made on any
material portion thereof or thereon and
LOAN AGREEMENT PAGE 25
same is not dismissed within 30 days; or any material
portion of such Property is lost, stolen,
substantially damaged or destroyed unless such loss,
damage or destruction is in Lender's judgment
adequately covered by insurance; or
(g) Borrower or any other Party (other than guarantors)
makes a general assignment for the benefit of
creditors or becomes insolvent or fails generally to
pay its debts as they become due, or petitions or
applies to any tribunal for the appointment of a
trustee, custodian, receiver, (or other similar
official) of the Borrower or any other Party of all
or any substantial part of the assets of the Borrower
or any other Party or commences a voluntary case or
any other proceeding relating to the Borrower or any
other Party under any bankruptcy, reorganization,
compromise arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law
(herein called the "bankruptcy law") of any
jurisdiction; or
(h) Any such petition or application is filed, or any
such proceeding is commenced, against the Borrower or
any other Party and the Borrower or such other Party
by any act or omission indicates its approval,
consent, or acquiescence thereto, or an order for
relief is entered in an involuntary case under the
federal bankruptcy laws as now or hereafter
constituted, or an order, judgment or decree is
entered appointing any such trustee, custodian,
receiver, liquidator, or similar official or
adjudicating the Borrower or such other Party
bankrupt or insolvent, or approving the petition in
any such proceedings, and such order, judgment, or
decree remains in effect for 30 days; or
(i) Borrower or any other Party conceals, removes, or
permits to be concealed or removed, any part of its
Property, with intent to hinder, delay or defraud its
creditors or any of them, or makes or suffers a
transfer of any of its Property which may be
fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or shall have made any
transfer of its Property to or for the benefit of a
creditor at a time when other creditors similarly
situated have not been paid; or
(j) Any event shall occur or condition exist which
results in a Material Adverse Effect; or
(k) Any litigation commences which hinders or delays the
collection of any part of the Obligations or the
exercise of any right or option of Lender; or
(l) Dissolution, business failure, merger, or similar
event, adversely affects the Borrower, Guarantor or
any other Party; or
(m) Borrower uses the Loan proceeds or Collateral in any
manner different from the manner contemplated in the
Loan Documents; or
LOAN AGREEMENT PAGE 26
(n) Failure of Borrower to comply with the terms of the
Conditional Commitment.
(o) Any event occurs which, with or without the passage
of time or the giving of notice, would permit the
holder of any lien on any of the Collateral to
accelerate the secured debt.
It is understood and agreed that the notices and opportunities to cure Defaults
described in Section 7.1(a) and 7.1(d) herein shall be limited to three (3) such
notices in any one twelve (12) month period.
7.2 OTHER REMEDIES. In addition to and cumulative of any rights or
remedies provided for in SECTION 7.1 hereof, if any one or more Events of
Default shall have occurred, the Lender may proceed to protect and enforce its
rights hereunder, by any appropriate proceedings, and the Liens evidenced by the
Security Documents shall be subject to foreclosure in any manner provided for
therein or provided for by law as the Lender may elect. The Lender may also
proceed either by the specific performance of any covenant or agreement
contained in this Agreement or the other Loan Documents or to enforce the
payment of the Note or to enforce any other legal or equitable right provided
under this Agreement or the other Loan Documents, or otherwise existing under
any law in favor of the holders of Indebtedness of the Borrower.
ARTICLE 8 MISCELLANEOUS
8.1 NOT AN AGENT. Nothing contained herein shall be construed to
constitute Borrower or Guarantor as Lender's agent for any purpose whatsoever
and Lender shall not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever same may be
located and regardless of the cause thereof. Lender does not, by anything herein
or in any assignment or otherwise, assume any of Borrower's or Guarantor's
obligations under any contract or agreement assigned to Lender and Lender shall
not be responsible in any way for the performance by Borrower or Guarantor of
any of the terms and conditions hereof.
8.2 NOTICES. Any notice or other document required or permitted to be
delivered to any party hereto shall be in writing and shall be given or
delivered by hand delivery, by depositing it with an overnight delivery service,
by registered or certified mail, return receipt requested, or sent by telecopy
(provided an identical notice is also sent simultaneously by mail, overnight
delivery, or personal delivery as otherwise provided in this SECTION 8.2 to the
party entitled to receive such notice or other document at the address specified
adjacent to their signature on the signature pages of this Agreement or any such
other address as such party shall request in a written notice made in compliance
herewith. Any such notice or document will be deemed given or delivered on the
earliest of the date actually received if sent by hand delivery, on the first
Business Day after deposit with an overnight delivery service, on the date
deposited in the mail, if mailed, or on the date the telecopy is transmitted to
the party's telecopy number and confirmation of complete receipt is received by
the transmitting party during normal business hours or the next Business Day if
not confirmed during normal business hours. Actual notice, however and from
whoever given or received, shall always be effective when received.
8.3 WAIVER; REMEDIES CUMULATIVE. No failure to exercise and no delay in
exercising on the part of Lender of any right, power or privilege under any Loan
Document shall operate as
LOAN AGREEMENT PAGE 27
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under any Loan Document preclude any other right, power or
privilege. The rights and remedies provided in the Loan Documents are cumulative
of, and not exclusive of, any rights or remedies provided by law, in equity, or
in any other agreement or Loan Document, all of which Lender may pursue at any
time and from time to time.
8.4 ASSIGNMENT. This Agreement shall be binding upon Borrower and
Lender and their respective successors and permitted assigns; provided, however,
Borrower may not assign or transfer any of its rights or obligations hereunder
without the prior written consent of Lender, and any such assignment or transfer
without such consent shall be null and void. Borrower acknowledges and agrees
that Lender may sell one or more participations or assign its interest in all or
any part of the Loan to others. Lender shall exercise its best efforts to give
notice of such assignment to Borrower within thirty (30) days of same. Any such
assignment shall not increase any obligation of Borrower.
8.5 SEVERABILITY. If a court of competent jurisdiction finds any
provision of this Loan Agreement, the Note, or any other Loan Document to be
invalid or unenforceable as to any Person or circumstance, such finding shall
not render that provision invalid or unenforceable as to any other Person or
circumstance. If feasible, any such unenforceable or invalid provision shall be
deemed to be modified to be within the limits of enforceability or validity;
however, if such provision cannot be so modified, it shall be stricken and all
of the remaining provisions of the Loan Documents in all other respects shall
remain valid and enforceable and in no way affected thereby.
8.6 EXPENSES, ETC. Borrower shall pay or reimburse Lender on demand:
(a) the reasonable fees and expenses of legal counsel to Lender, in connection
with the preparation, negotiation, execution and delivery of this Agreement
(including the EXHIBITS and schedules hereto), and the other Loan Documents and
the making of the Loan, and any modification, supplement or waiver of any of the
terms of this Agreement, or any other Loan Document; (b) out-of-pocket expenses
incurred by Lender in connection with the preparation, documentation and
administration of the Loan or any of the Loan Documents; and (c) all amounts
expended, advanced or incurred by Lender to satisfy any obligation of Borrower,
Guarantor or any Party under this Agreement or any other Loan Document to
collect the Obligations or to enforce, protect, preserve or defend the rights of
Lender under this Agreement or any other Loan Document, including, without
limitation, fees and expenses incurred in connection with Lender's participation
as a member of a creditor's committee in a case commenced under the Bankruptcy
Code or other similar law, fees and expenses incurred in connection with lifting
the automatic stay prescribed in Section 362 of the Bankruptcy Code, fees and
expenses incurred in connection with any action pursuant to Section 1129 of the
Bankruptcy Code and all other customary out-of-pocket expenses incurred by
Lender in connection with such matters, together with interest thereon at the
Past Due Rate on each such amount until the date of reimbursement to Lender.
8.7 INDEMNIFICATION. Borrower shall indemnify the Lender and its
directors, officers, employees and agents from, and hold each of them harmless
against, any and all losses (except loss of profits), liabilities, claims or
damages to which any of them may become subject, REGARDLESS OF WHETHER CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE OF ANY INDEMNIFIED PARTIES, except for gross
negligence of the
LOAN AGREEMENT PAGE 28
lender, insofar as such losses (except loss of profits), liabilities, claims or
damages arise out of or result from any (i) actual or proposed use by Borrower
of the proceeds of any extension of credit by Lender hereunder; (ii) breach by
Borrower of this Agreement or any other Loan Document or the breach by any Party
of any Loan Document; (iii) violation by Borrower or any other Party of any
Legal Requirement; (iv) investigation, litigation or other proceeding relating
to any of the foregoing, and Borrower shall reimburse Lender and its directors,
officers, employees and agents, upon demand for any expenses (including legal
fees) incurred in connection with any such investigation or proceeding; or (v)
taxes (excluding income taxes and franchise taxes) payable or ruled payable by
any Governmental Authority in respect of the Obligations or any Loan Document,
together with interest and penalties, if any.
8.8 AMENDMENTS, ETC. No amendment or modification of this Agreement,
the Note or any other Loan Document shall in any event be effective against
Borrower unless the same shall be agreed or consented to in writing by Borrower.
No amendment, modification or waiver of any provision of this Agreement, the
Note or any other Loan Document, nor any consent to any departure by Borrower
therefrom, shall in any event be effective against the Lender unless the same
shall be agreed or consented to in writing by Lender, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
8.9 LIMITATION OF INTEREST. Borrower, Guarantor and Lender intend to
strictly comply with all applicable federal and New York laws, including
applicable usury laws (or the usury laws of any jurisdiction whose usury laws
are deemed to apply to the Note or any other Loan Document despite the intention
and desire of the parties to apply the usury laws of the State of New York). As
used in this Section, the term "interest" includes the aggregate of all charges,
fees, benefits or other compensation which constitute interest under applicable
law, PROVIDED that, to the maximum extent permitted by applicable law, (a) any
non-principal payment shall be characterized as an expense or as compensation
for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or
received shall be amortized, prorated, allocated and spread, in equal parts
during the full term of the Obligations. In no event shall Borrower or any other
Person be obligated to pay, or Lender have any right or privilege to reserve,
receive or retain, (a) any interest in excess of the maximum amount of
nonusurious interest permitted under the laws of the State of New York or the
applicable laws (if any) of the United States or of any other state, or (b)
total interest in excess of the amount which Lender could lawfully have
contracted for, reserved, received, retained or charged had the interest been
calculated for the full term of the Obligations. On each day, if any, that the
Stated Rate called for under this Agreement or any other Loan Document exceeds
the Ceiling Rate, the rate at which interest shall accrue shall automatically be
fixed by operation of this sentence at the Ceiling Rate for that day.
Thereafter, interest shall accrue at the Stated Rate unless and until the Stated
Rate again exceeds the Ceiling Rate, in which case, the provisions of the
immediately preceding sentence shall again automatically operate to limit the
interest accrual rate to the Ceiling Rate. The daily interest rates to be used
in calculating interest at the Ceiling Rate shall be determined by dividing the
applicable Ceiling Rate by the number of days in the calendar year for which
such calculation is being made. None of the terms and provisions contained in
this Agreement or in any other Loan Document which directly or indirectly relate
to interest shall ever be construed without reference to this SECTION 8.9, or be
construed to create a contract to pay for the use, forbearance or detention of
money at an interest rate in excess of the Ceiling Rate. If the
LOAN AGREEMENT PAGE 29
term of any Obligation is shortened by reason of acceleration of maturity as a
result of any Default or by any other cause, or by reason of any required or
permitted prepayment, and if for that (or any other) reason Lender at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Ceiling Rate,
then and in any such event all of any such excess interest shall be canceled
automatically as of the date of such acceleration, prepayment or other event
which produces the excess, and, if such excess interest has been paid to Lender,
it shall be credited PRO TANTO against the then outstanding principal balance of
Borrower's obligations to Lender, effective as of the date or dates when the
event occurs which causes it to be excess interest, until such excess is
exhausted or all of such principal has been fully paid and satisfied, whichever
occurs first, and any remaining balance of such excess shall be promptly
refunded to its payor.
8.10 SURVIVAL. The obligations of Borrower and Guarantor under each
Loan Document to which each is a Party shall survive the repayment of the Loan.
8.11 CAPTIONS. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
8.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.13 GOVERNING LAW. LENDER SHALL HAVE THE OPTION BY WHICH STATE LAWS
THIS LOAN AGREEMENT SHALL BE GOVERNED AND CONSTRUED: (A) THE LAWS OF THE STATE
OF NEW YORK; OR (B) IF COLLATERAL HAS BEEN PLEDGED TO SECURE THE DEBT EVIDENCED
BY THIS LOAN AGREEMENT, THEN BY THE LAWS OF THE STATE OR STATES WHERE THE
COLLATERAL IS LOCATED, AT LENDER'S OPTION. THIS CHOICE OF STATE LAWS IS
EXCLUSIVE TO THE LENDER. BORROWER SHALL NOT HAVE ANY OPTION TO CHOOSE THE LAWS
BY WHICH THIS AGREEMENT SHALL BE GOVERNED. BORROWER AND GUARANTORS HEREBY
CONSENT TO THE EXERCISE OF JURISDICTION OVER IT BY ANY FEDERAL COURT SITTING IN
NEW YORK OR ANY NEW YORK COURT SELECTED BY HOLDER, FOR THE PURPOSES OF ANY AND
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTE, THIS LOAN
AGREEMENT AND ALL OTHER LOAN DOCUMENTS. BORROWER AND GUARANTORS IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH
COURT, ANY CLAIM BASED ON THE CONSOLIDATION OF PROCEEDINGS IN SUCH COURTS IN
WHICH PROPER VENUE MAY LIE IN DIVERGENT JURISDICTIONS, AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. BORROWER AND GUARANTORS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO
LOAN AGREEMENT PAGE 30
THIS LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
8.14 VENUE. Borrower hereby irrevocably (a) agrees that any legal
proceeding against Lender arising out of or in connection with the Loan
Documents shall be brought in the district courts of New York County, New York,
or in the United States District Court for the Southern District of New York, or
elsewhere (collectively, the "COURTS"); (b) submits to the nonexclusive
jurisdiction of the Courts; (c) agrees and consents that service of process may
be made upon it in any proceeding arising out of the Loan Documents or any
transaction contemplated thereby by service of process as provided by New York
law; (d) WAIVES, to the fullest extent permitted by law, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of any Loan Document or the transactions contemplated
thereby in the Courts; and (e) WAIVES any claim that any such suit, action or
proceeding in any Court has been brought in an inconvenient forum. Nothing
herein shall affect the right of Lender to commence legal proceedings or
otherwise proceed against Borrower in any jurisdiction or to serve process in
any manner permitted by applicable law. Borrower agrees that a final and
nonappealable judgment in any such action or proceeding may be enforced in other
jurisdictions in any manner provided by law.
8.15 CONFLICTS BETWEEN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. In
the event of any conflict between the terms of this Agreement and the terms of
any of the other Loan Documents, the terms of this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
LENDER:
BLX Commercial Capital, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Executive Vice President
ADDRESS FOR NOTICE:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
LOAN AGREEMENT PAGE 31
BORROWER:
▇▇▇▇▇▇ Airplane Company, Inc.,
a Delaware corporation
By: /s/ ▇. ▇▇▇▇▇▇ Happy
-------------------------------------
▇. ▇▇▇▇▇▇ Happy, President
ADDRESS FOR NOTICE:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Field
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
GUARANTOR:
▇▇▇▇▇▇ Aerospace Group, Ltd., a Delaware
corporation
By: /s/ ▇. ▇▇▇▇▇▇ Happy
-------------------------------------
▇. ▇▇▇▇▇▇ Happy, President
ADDRESS FOR NOTICE:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Field
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇. ▇▇▇▇▇▇ Happy
----------------------------------------
▇. ▇▇▇▇▇▇ Happy
ADDRESS FOR NOTICE:
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LOAN AGREEMENT PAGE 32
EXHIBIT A
The following personal property of Borrower, wherever located, and now
owned, or hereafter acquired or arising, including Proceeds and Supporting
Obligations (Any capitalized term relating to a Collateral definition and not
otherwise defined in this Exhibit, shall have the meaning accorded thereto in
the Uniform Commercial Code, as now enacted and hereinafter amended in the State
of Texas):
1. all FAA Certificates;
2. all present and future documents, agreements, Instruments, contracts
and General Intangibles in any way related to the FAA Certificates,
including, but not limited to, the underlying specifications, other
data and other tangible and intangible property and property rights
related thereto;
3. all Equipment (including all Proprietary Tooling), Fixtures, and
Accessions;
4. all Records;
5. all Trademarks; and
6. The following policy of life insurance:
Policy Owner: ▇. ▇▇▇▇▇▇ Happy
Name of Insured: ▇. ▇▇▇▇▇▇ Happy
Policy Number: XP-5403223
Amount: $2,000,000.00
Issued by: Jefferson-Pilot Life Insurance Company
Borrower's leasehold interest in the following Commercial Land:
See Exhibit "A-2" attached hereto and made part hereof for all
purposes. .
"Aircraft" shall mean all now owned or hereafter acquired aircraft of
Debtor manufactured, owned or operated pursuant to the FAA Certificates and
shall include, without limitation, all existing and future airframes, engines,
propellers, parts and other goods attached to, incorporated in, affixed to or
used in connection with such aircraft.
"Airworthiness Certificate" shall mean, as to any Aircraft, an
Airworthiness Certificate with respect to such Aircraft issued by the FAA
pursuant to the Federal Aviation Act Laws.
LOAN AGREEMENT PAGE 33
"Dealer's Aircraft Registration Certificate" shall mean the Dealer's
Aircraft Registration Certificate issued by the FAA to Debtor pursuant to the
Federal Aviation Act Laws, as the same now exists or may hereafter be amended,
supplemented, renewed, extended, reissued or replaced.
"FAA" shall mean the Federal Aviation Administration of the United
States Department of Transportation, and any successor or replacement
administration, governmental agency or other entity having the same or similar
authority and responsibilities.
"FAA Certificates" shall mean, collectively, all certificates required
by the FAA and the Federal Aviation Act Laws for the manufacture, design,
production, maintenance and/or use of Aircraft by Debtor, including, without
limitation, each FAA Type Certificate, Production Certificate, Airworthiness
Certificate and Dealer's Aircraft Registration Certificate, as the same now
exist or may hereafter be amended, supplemented, renewed, extended, reissued or
replaced.
"FAA Type Certificate" shall mean, individually and collectively, Type
Certificate Number 2A3 issued by the FAA to Debtor and each other Type
Certificate or supplement thereto issued by the FAA to Debtor pursuant to the
Federal Aviation Act Laws certifying that the type design of certain aircraft
models which are the subject of such Type Certificate comply with the
requirements of the Federal Aviation Act Laws, as the same now exists or may
hereafter be amended, modified, supplemented, renewed, reissued or replaced.
"Federal Aviation Act Laws" shall mean Title 49 of the United States
Code, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
"Production Certificate" shall mean a Production Certificate issued by
the FAA to Debtor pursuant to the Federal Aviation Act Laws certifying that the
manufacturing and production capabilities of Debtor to manufacture, produce and
deliver airworthy aircraft and comply with the requirements of the FAA Aviation
Act Laws, as the same now exists or may hereafter be amended, modified,
supplemented, renewed, reissued or replaced.
"Proprietary Tooling"shall mean all of Debtor's now owned and hereafter
acquired tools, molds, jigs and dies which are used solely for the manufacture
of aircraft, and/or any portion thereof, of the models and pursuant to the type
design therefor which are the subject of a FAA Type Certificate.
"Records" shall mean all of Debtor's present and future books of
account of every kind of nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including, without limitation, any rights with respect to
the foregoing maintained with or by any other person)
"Trademarks" shall mean (a) all of Debtor's now existing or hereafter
acquired right, title, and interest in and to: (i) all of Debtor's trademarks,
tradenames, trade styles, and service marks
LOAN AGREEMENT PAGE 34
and all applications, registrations, and recordings relating to the foregoing as
may at any time be filed in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof, any
political subdivision thereof, or in any other country, together with all rights
and privileges arising under applicable law with respect to Debtor's use of any
trademarks, tradenames, trade styles, and service marks, and all reissues,
extensions, continuation and renewals thereof; (ii) all prints and labels on
which such trademarks, tradenames, trade styles, and service marks appear, have
appeared or will appear, and all designs and general intangibles of a like
nature; (iii) the goodwill of the business symbolized by each of such
trademarks, including, without limitation, all customer lists and other records
relating to the distribution of products or services bearing any such
trademarks; (iv) all income, fees, royalties, and other payments at any time due
or payable with respect thereto, including, without limitation, payments under
all licenses at any time entered into in connection therewith; (v) the right to
▇▇▇ for past, present, and future infringements thereof; (vi) all rights
corresponding thereto throughout the world; and (vii) any and all other proceeds
of any of the foregoing, including, without limitation, damages and payments or
claims by Debtor against third parties for past or future infringement of any
such trademarks.
Notwithstanding anything to the contrary contained herein, Collateral
does not include inventory, work in progress, complete planes or the stock of
Borrower.
LOAN AGREEMENT PAGE 35
