EXHIBIT 10.4
----
AGREEMENT
This Agreement, dated as of August 14, 2001 ("Agreement"), is made and
entered to among Aviation Sales Company, a Delaware corporation ("AVS"), and
each of the subsidiaries of AVS listed on the signature pages hereof (the
"Guarantor Subsidiaries" and, together with AVS, the "AVS Group"), Xxxx Xxxxxx
("Xxxxxx"), on behalf of a group of Investors which will invest $20 million into
AVS to fund the Restructuring (as hereinafter defined) in accordance with the
Term Sheet (as hereinafter defined) and the definitive documents reflecting such
investment ("Investors"), each holder of AVS' common stock that is a signatory
party hereto (individually a "Consenting Stockholder" and, collectively the
"Consenting Stockholders"), and each other signatory party hereto who is a
holder of AVS Notes (as hereinafter defined) (individually, a "Consenting
Noteholder" and, collectively, the "Consenting Noteholders"). Each member of the
AVS Group, the Investor(s), the Consenting Stockholders, and each of the
Consenting Noteholders is sometimes referred to individually as a "Party" and
they are collectively referred to as the "Parties."
Whereas, AVS has issued and there remains outstanding $165 million in
principal amount of 8 1/8 % Senior Subordinated Notes due 2008 (the "AVS
Notes");
Whereas, each of the Guarantor Subsidiaries has guaranteed the payment of
the AVS Notes pursuant to guarantees included in the indenture governing the AVS
Notes;
Whereas, each of the Consenting Stockholders, including Xxxxxx, is the
beneficial owner (and/or agent, advisor, affiliate, manager or other authorized
representative of the beneficial owner(s)) of, and have voting and dispositive
power with respect to AVS' common stock, par value $.001 per share (the "AVS
Stock");
Whereas, each of the Consenting Noteholders, including Xxxxxx, is a
beneficial owner (and/or agent, advisor, affiliate, manager or other authorized
representative of the beneficial owner(s)) of AVS Notes (the claims evidenced by
the AVS Notes owned by the Consenting Noteholders on the date of this Agreement
and any AVS Notes acquired by any Consenting Noteholder after the date of this
Agreement are referred to herein as the "AVS Note Claims");
Whereas, the Consenting Noteholders have been represented by an unofficial
Ad Hoc Committee of Noteholders (the "Ad Hoc Committee");
Whereas, the AVS Group, the Consenting Stockholders, the Investors and the
Consenting Noteholders have engaged in negotiations towards a consensual
restructuring/reorganization of the AVS Group's financial affairs, including a
restructuring of the AVS Notes, the material terms of which are set forth in the
term sheet (the "Term Sheet") annexed hereto as Exhibit A (the "Restructuring");
Whereas, to implement the Restructuring, the AVS Group, and each of them,
intend to participate in a registered exchange offer (the "Exchange Offer"), a
registered rights offering (with a standby commitment from the Investors subject
to entering into definitive documentation with customary terms including, but
not limited to, the right to terminate if there is a material adverse change)
and a proxy solicitation;
Whereas, the Consenting Stockholders, including Xxxxxx, intend to support
and vote their respective AVS stock interest to accept the Restructuring and not
to oppose the Restructuring; and
Whereas, the Consenting Noteholders, including Xxxxxx, intend to support
and vote in favor of and tender their respective AVS Note Claims to accept the
Restructuring;
Now, therefore, in consideration of the foregoing, the Parties agree as
follows:
Section 1. Agreement.
AVS, the Investors, and each Consenting Noteholder and Consenting
Stockholder to the extent permitted by applicable law agree to the terms of
the Restructuring set forth in the Term Sheet and this Agreement.
Section 2. Voting in Favor of the Restructuring and Tendering of AVS Note
Claims.
(a) So long as this Agreement has not been terminated by its terms, each
Consenting Noteholder and each Consenting Stockholder agrees (i) with each of
the other Consenting Noteholders and Consenting Stockholders, and (ii) severally
(but not jointly or jointly and severally) with AVS and the other members of the
AVS Group, as follows:
(i) unless such Consenting Noteholder and Consenting Stockholder
shall have transferred its AVS Note Claims or AVS Stock in accordance with
Section 3 hereof, each Consenting Noteholder (and any permitted transferee
pursuant to this Agreement) and each Consenting Stockholder (and any
permitted transferee pursuant to this Agreement), subject to the conditions
that (i) any disclosure made in connection with the Restructuring is not
materially inconsistent with the information heretofore provided by AVS to
the Consenting Noteholders and (ii) the material terms of the Restructuring
are the terms set forth in the Term Sheet, shall vote its AVS Note Claims
and AVS Stock to accept the Restructuring and to effectuate its terms, and
shall tender its AVS Note Claims as part of the Restructuring, including
without limitation in any cases filed under Chapter 11, title 11 of the
United States Code to effectuate the Restructuring ("Chapter 11 Cases");
(ii) each Consenting Noteholder and Consenting Stockholder shall not
object to any disclosure in connection with the Restructuring to the effect
that such Restructuring was negotiated with the Consenting Stockholders and
an unofficial committee of Consenting Noteholders who intend to vote in
favor of such Restructuring;
(iii) each Consenting Noteholder and each Consenting Stockholder shall
not object to or otherwise commence any proceeding to oppose or object to
consummation of the Restructuring including, but not limited to, the filing
of involuntary Chapter 11 cases; and
(iv) each Consenting Noteholder and each Consenting Stockholder shall
not vote or tender its AVS Note Claims or vote its AVS Stock in favor of
any Alternative Plan (as hereinafter defined).
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(b) Notwithstanding the foregoing provisions, nothing in this Agreement
shall require the Consenting Stockholders or a Consenting Noteholder to take any
action prohibited by the United States Bankruptcy Code, the Securities Act of
1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any rules or regulations thereunder or by other
applicable law or regulation or by any order or direction of any court or any
federal or state governmental authority.
(c) It is expressly agreed by and among the AVS Group, the Consenting
Noteholders and the Consenting Stockholders that the right of any and all of
them to enforce the rights and obligations arising under this Agreement between
and among the AVS Group, the Consenting Noteholders and the Consenting
Stockholders shall not be in any way abridged, modified or in any manner
affected by the commencement of one or more Chapter 11 Cases by any of the AVS
Group.
Section 3. Transfer of AVS Notes, AVS Note Claims and AVS Stock; No
Solicitation.
(a) Neither the Consenting Stockholders nor any Consenting Noteholder
shall, directly or indirectly, sell, assign, hypothecate, grant an option on, or
otherwise dispose of (collectively, "Transfer") any of the AVS Notes, AVS Note
Claims or AVS Stock, or any interest therein, held by it to any other person or
entity (a "Transferee"); provided, however, that each of the Consenting
Stockholders and each Consenting Noteholder shall be permitted to Transfer any
or all of its AVS Notes, AVS Note Claims or AVS Stock (to the extent otherwise
transferable), if (i) with respect to a Transfer of AVS Stock or AVS Note
Claims, such Transferee is a "qualified institutional buyer" within the meaning
of Rule 144A promulgated under the Securities Act or is an institutional
accredited investor within the meaning of Rule 501 of the Securities Act or is
an entity or affiliate controlled by the Consenting Noteholder, and (ii) with
respect to any Transfer, (A) such Transferee agrees in writing to be bound by
the terms of this Agreement to the same extent as the Consenting Stockholders or
the Consenting Noteholder, as the case may be, and the transferring Party
notifies Investors and the AVS Group of the Transfer within three (3) business
days of the Transfer or as soon as practicable thereafter; or (B) such Transfer
occurs after the termination of this Agreement.
(b) Neither the AVS Group, the Consenting Stockholders nor any Consenting
Noteholder shall, nor shall the AVS Group or any Consenting Noteholder and
Consenting Stockholder permit any of its subsidiaries to, nor shall any
Consenting Noteholder or Consenting Stockholder authorize or permit any
affiliate, officer, director, employee, subsidiary, investment banker, attorney,
advisor, agent or representative (collectively, any "Affiliate") of the AVS
Group or such Consenting Noteholder or Consenting Stockholder to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Alternative
Plan, (ii) enter into any agreement with respect to any Alternative Plan, or
(iii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Alternative Plan. Notwithstanding
anything contained herein, AVS may discuss any bona fide unsolicited offers or
proposals from a third party as may be required under applicable law and may
further discuss such offers or proposals with the Ad Hoc Committee or, if the
AVS Group is operating its business under Chapter 11 of the United States
Bankruptcy Code, also with an official creditors' committee. Without limiting
the foregoing, it is understood
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that any violation of the restrictions set forth in the preceding sentence by
any Affiliate of the AVS Group, a Consenting Noteholder or Consenting
Stockholder, whether or not such Affiliate is purporting to act on behalf of the
AVS Group or such Consenting Noteholder, Consenting Stockholder or otherwise,
shall be deemed to be a material breach of this Agreement by the AVS Group or
such Consenting Noteholder or Consenting Stockholder. For purposes of this
Agreement, "Alternative Plan" means (i) any plan of reorganization or debt
restructuring other than the Restructuring, (ii) any proposal or offer other
than the Restructuring or a proposal or offer by Investors or any of its
affiliates, for a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving AVS or any of its subsidiaries or (iii) any proposal or
offer other than the Restructuring or a proposal or offer by Investors or any of
its affiliates, to acquire from the stockholders of AVS, by tender offer,
exchange offer or otherwise, more than 50% of any class of common stock of AVS
then outstanding.
In addition to the obligations of the AVS Group and each Consenting
Noteholder and Consenting Stockholder set forth in the foregoing paragraph, each
Consenting Noteholder and the Consenting Stockholder shall promptly advise the
Investors orally and in writing of any Alternative Plan or any inquiry with
respect to or which could lead to any Alternative Plan, the material terms and
conditions of such inquiry or Alternative Plan (including any proposed financing
for such Alternative Plan and a copy of such documents conveying such
Alternative Plan), and the identity of the person proposing such Alternative
Plan. The AVS Group and such Consenting Noteholder and Consenting Stockholder
will keep the Investors fully informed of the status and details of any such
proposed Alternative Plan.
Section 4. Termination of Obligations.
(a) The obligations of the Consenting Stockholders and each Consenting
Noteholder hereunder shall terminate and be of no further force and effect if
(each a "Termination Event"):
(i) any of the AVS Group shall not have consummated the
Restructuring on or before 5:00 p.m. New York time March 31, 2002 or such
later date as the AVS Group, the Consenting Noteholders, the Investors and
the Consenting Stockholders shall mutually agree;
(ii) a registration statement describing the Exchange Offer shall not
have been filed with the Securities and Exchange Commission (the "SEC") by
September 15, 2001;
(iii) in the event that (x) AVS shall have commenced a Chapter 11
Case, and the Chapter 11 Case shall have been dismissed or converted to a
case under Chapter 7 of the United States Bankruptcy Code or a trustee
shall have been appointed, (y) AVS shall have commenced a Chapter 11 Case
and shall not have filed a plan of reorganization incorporating the terms
of the Restructuring contemporaneously therewith, or (z) an involuntary
case has been commenced against AVS and such involuntary case has not been
dismissed or converted to a voluntary Chapter 11 Cases within 120 days;
(iv) AVS or any member of the AVS Group shall have withdrawn or
modified the Restructuring; provided, however, that modifications to the
Restructuring that do not
4
materially adversely affect the Consenting Noteholders shall not be deemed
to be a withdrawal. Any decrease in the amount or change in the form of the
distributions to be made to the class of holders of AVS Note Claims under
the Restructuring, and any increase in the amount or change in the form of
the distributions to be made to the class of holders of equity interests
under the Restructuring, shall be deemed a withdrawal of the Restructuring;
or
(v) AVS breaches any material provision of this Agreement, including,
but not limited to, ceasing to use its best efforts to obtain approval of
the Restructuring.
(b) If any Termination Event occurs (and has not been waived) at the time
when permission of a bankruptcy court shall be required for a Consenting
Noteholder to change or withdraw (or cause to be changed or withdrawn) its vote
to accept the Restructuring, AVS shall not oppose any attempt by such Consenting
Noteholder to change or withdraw (or cause to be changed or withdrawn) such vote
at such time.
(c) The AVS Group and each Consenting Noteholder and Consenting
Stockholder hereby further covenants and agrees to negotiate the definitive
documents relating to the Restructuring in good faith.
Section 5. Representations and Warranties.
(a) Each Consenting Stockholder and each Consenting Noteholder that
executes this Agreement represents and warrants that it is the beneficial owner
(and/or agent, advisor, affiliate, manager or other authorized representative of
the beneficial owner(s)) of the shares of common stock or principal amount of
the AVS Notes, as the case may be, listed adjacent to its signature to this
Agreement.
(b) Each Party that is not an individual represents and warrants that it
is duly organized, validly existing and in good standing under the laws of the
state of its organization, and has all requisite power and authority (corporate
or other) to execute this Agreement. Each Party represents and warrants that
this Agreement has been duly executed and delivered by such party .
(c) Each of the AVS Group and the Investors represents and warrants that
the execution and delivery of this Agreement does not conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of or a "put" right with respect to any obligation or to the loss
of a material benefit under, or result in the creation of any lien or
encumbrance upon any of its properties or assets under, any provision of (i) its
respective charter or bylaws, (ii) any loan or credit agreement, note, bond,
mortgage, indenture (other than, with respect to the AVS Group, the indenture
for the AVS Notes), lease, guaranty or other financial assurance agreement or
other agreement, instrument, permit, concession, franchise or license applicable
to it, and (iii) AVS's Stockholders' Rights Plan (as to which AVS's Board of
Directors shall take such action as is required to avoid a violation of the
Stockholder's Rights Plan).
(d) AVS represents and warrants that it has filed all reports and
documents required to be filed with the SEC since December 31, 1997. As of the
respective dates of their filing with
5
the SEC or, if any such SEC filings were amended, as of the date of the filing
of such amendment, the SEC filings of AVS complied, and as of the date of the
execution of this Agreement comply, in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder (other than the
failure by AVS to file its Form 10-K for 2000 by the applicable deadline or to
hold an annual meeting of stockholders during 2000), and did not and do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
(e) In addition, each Consenting Noteholder and Consenting Stockholder
hereby represents and warrants that it has made no prior assignment, sale,
participation, grant conveyance or other transfer of, and has not entered into
any other agreement to assign, sell, participate, grant or otherwise transfer,
in whole or in part, any portion of its right, title or interest in the AVS
Notes and AVS Stock, and it has good title thereto, free and clear or all liens,
security interests and other encumbrances of any kind.
Section 6. Amendments.
No modification or amendment of the terms of this Agreement shall be valid
unless such modification or amendment, in writing, has been signed by each of
the Parties.
Section 7. Governing Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to its conflict of laws
provisions, except Section 5-1401 of the New York General Obligations Law.
Section 8. Counterparts.
This Agreement may be executed by facsimile signature transmission in one
or more counterparts, any one of which need not contain the signature of more
than one party and all of which taken together shall constitute one and the same
agreement.
Section 9. Headings.
The Section headings of this Agreement are for convenience of reference
only and shall not, for any purpose, be deemed a part of this Agreement.
Section 10. Further Acquisition of Securities.
This Agreement shall in no way be construed to preclude the Consenting
Noteholders from owning, acquiring or obtaining a beneficial interest or
participation with the right to vote and have dispositive powers with respect to
AVS Stock, the Credit Facilities (as defined in the Term Sheet) or additional
AVS Notes or any portion thereof; provided, however, the terms and conditions of
this Agreement shall apply to any AVS Stock, Credit Facilities or additional AVS
Note interest so acquired.
6
Section 11. Successors and Assigns.
This Agreement is intended to bind and inure to the benefit of the parties
and their respective successors, assigns, heirs, executors, administrators and
representatives. The agreements, representations and obligations of the
Consenting Noteholders and Consenting Stockholders under this Agreement are
several and neither joint nor joint and several in all respects. Except as set
forth herein, no party may assign any of its rights or obligations hereunder
without the prior consent of all other parties.
Section 12. Prior Negotiations.
This Agreement supersedes all prior negotiations, understandings and
agreements with respect to the subject matter hereof.
Section 13. No Third-Party Beneficiaries.
Unless expressly stated herein, this Agreement shall be solely for the
benefit of the parties hereto and no other person or entity shall be a third-
party beneficiary hereof.
Section 14. Consideration.
It is hereby acknowledged by the parties that no consideration shall be due
or paid to the Consenting Noteholders or Consenting Stockholders for their
agreements hereunder, other than the AVS Group's agreement to work toward the
Restructuring.
Section 15. Notices.
All notices and communications in connection with this Agreement shall be
in writing and shall be delivered by hand, overnight courier, certified mail,
return receipt requested, or facsimile transmission as follows:
If to the Consenting Noteholders: Xxxxxxx X. Xxxxxxxxxx, Esq., Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx, 1285 Avenue of the Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, (Telephone (000) 000-0000, Fax (000) 000-0000).
If to AVS: Xxx X. Xxxxxx, Xx., Chairman of AVS, c/o Xxxxxx X. Xxxxxxxx,
Esq., Xxx X.X. Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxx, Xxxxxxx (Fax: (000) 000-0000)
and Xxxxx X. Xxxxxxx, Esq., Xxxxxxx & Xxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, (Telephone: (000) 000-0000, Fax: (000) 000-0000).
If to the Investors: Xxxx X. Xxxxxx, c/o J. Xxxxxxx Xxxxx, Esq., Xxxxx &
Xxxxxx, 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, (Telephone (713) 850-
7766, Fax (000) 000-0000).
Section 16. Specific Performance.
It is understood and agreed by each of the parties hereto that money
damages would not be a sufficient remedy for any breach of this Agreement by any
Party and each non-breaching
7
Party shall be entitled to specific performance and injunctive or other
equitable relief as a remedy of any such breach.
Section 17. Waiver of Defaults.
In the event that the failure to pay the interest installment on the AVS
Notes that is due on August 15, 2001 results in an occurrence of an Event of
Default (as defined in the Indenture governing the AVS Notes) and an
acceleration is effected in accordance with Section 6.02 of such Indenture, each
Consenting Noteholder agrees to vote pursuant to Section 6.04 of such Indenture
to rescind such acceleration and its consequences. Furthermore, each Consenting
Noteholder agrees to vote to rescind all subsequent accelerations under such
Section 6.02 arising from the occurrence of such Event of Default, and that all
such rescissions of acceleration shall include instructions to the Trustee under
such Indenture to such effect.
Section 18. Professional Fees.
The Restructuring shall include a provision for the payment by AVS of the
reasonable and customary fees and expenses of counsel for the Ad Hoc Committee.
Section 19. Severability.
The illegality, invalidity, or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its legality,
validity or enforceability under the law of any other jurisdiction nor the
legality, validity or enforceability of any other provision.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized representatives as of
the date first set forth above.
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AVIATION SALES COMPANY
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
----------------------------------
AVIATION SALES MAINTENANCE, REPAIR &
OVERHAUL COMPANY
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
----------------------------------
TRIAD INTERNATIONAL MAINTENANCE
CORPORATION
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
----------------------------------
TIMCO ENGINEERED SYSTEMS, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name:/s/ Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
----------------------------------
TIMCO ENGINE CENTER, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVS/CAI, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AIRCRAFT INTERIOR DESIGN, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
WHITEHALL CORPORATION
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
HYDROSCIENCE, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVIATION SALES PROPERTY MANAGEMENT CORP.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVSRE, L.P.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVIATION SALES DISTRIBUTION SERVICES
COMPANY
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVS/M-1, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVIATION SALES SPSI, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AERO HUSHKIT CORPORATION
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVIATION SALES LEASING COMPANY
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
AVIATION SALES FINANCE COMPANY
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
-----------------------------------
AVS/M-2, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
-----------------------------------
AEROCELL STRUCTURES, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
-----------------------------------
AVS/M-3, INC.
Address:_________________________________
Attention:_______________________________
Facsimile:_______________________________
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Vice President
-----------------------------------
XXXX XXXXXX
By: /s/ Xxxx Xxxxxx
----------------------------------------
Address:
-----------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
STOCKHOLDER
Name: LJH Corp.
--------------------------------------
Amount of Stock: 4,000,000 + options
---------------------------
Address:
-----------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Authorized
Officer/Principal: President
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: LJH Corp
-----------------------------------
Amount of 8-1/8% Notes: 11,750,000
-----------------------
Address:
--------------------------------------
Telephone:
------------------------------------
Facsimile:
------------------------------------
By: /s/ Xxxx X. Xxxxxx
-------------------------------------------
Authorized
Officer/Principal: President
----------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: TCS European Investment, Inc.
-----------------------------------
Amount of 8-1/8% Notes: 8,740,000
-----------------------
Address:
--------------------------------------
--------------------------------------
Telephone:
------------------------------------
Facsimile:
------------------------------------
By: /s/ Xxxx Xxxxxxx
-------------------------------------------
Authorized
Officer/Principal: Xxxx Xxxxxxx
----------------------------
Citibank International plc,
Special Situations Group, as
investment advisor to TCS
European Investments, Inc.
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Travelers European Investment LLC
-----------------------------------
Amount of 8-1/8% Notes: 8,740,000
-----------------------
Address:
--------------------------------------
--------------------------------------
Telephone:
------------------------------------
Facsimile:
------------------------------------
By: /s/ Xxxx Xxxxxxx
-------------------------------------------
Authorized
Officer/Principal: Xxxx Xxxxxxx, Citibank International
----------------------------
plc, Special Situations Group,
as investment advisor to Travelers
European Investments LLC
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Xxxx Xxxxxxxx
-----------------------------------
Amount of 8-1/8% Notes: 3,000,000
-----------------------
Address:
--------------------------------------
Copy to:
Telephone:
------------------------------------
Facsimile:
------------------------------------
By: /s/ Xxxx Xxxxxxxx
-------------------------------------------
Authorized
Officer/Principal: Xxxx Xxxxxxxx
----------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: The Easton Group
--------------------------------
Amount of 8-1/8% Notes: 290,000
--------------------
Address:
-----------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Authorized
Officer/Principal: Xxxxxx X. Xxxxxx
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Xxxxxx X. Xxxxxx
--------------------------------
Amount of 8-1/8% Notes: 6,182,000
--------------------
Address:
-----------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Authorized
Officer/Principal: Xxxxxx X. Xxxxxx
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Xxxxxx X. Xxxxxx, TTEE
--------------------------------
Amount of 8-1/8% Notes: 1,000,000
--------------------
Address:
-----------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Authorized
Officer/Principal: Xxxxxx X. Xxxxxx
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Xxxxxx Xxxxxx
--------------------------------
Amount of 8-1/8% Notes: 1,000,000
--------------------
Address:
-----------------------------------
Telephone:
---------------------------------
Facsimile:
---------------------------------
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Authorized
Officer/Principal: Xxxxxx X. Xxxxxx
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Xxxxxxx X.Xxxxxx
--------------------------------
Amount of 8-1/8% Notes: 500,000
--------------------
Address: __________________________________
Telephone:_________________________________
Facsimile:_________________________________
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Authorized
Officer/Principal: Xxxxxx X. Xxxxxx
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Xxxx Xxxxxx & Xxxxx Xxxxxx
--------------------------------
Amount of 8-1/8% Notes: 250,000
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Address:___________________________________
Telephone: ________________________________
Facsimile: ________________________________
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Authorized
Officer/Principal: Xxxxxx X. Xxxxxx
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Starwood Group L.P.
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Amount of 8-1/8% Notes: 11,000,000
--------------------
Address:
-----------------------------------
-----------------------------------
Telephone:
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Facsimile:
---------------------------------
By: /s/ Xxxxxx Xxxxx
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Authorized
Officer/Principal: General Partner
-------------------------
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Xxxxxx X. Xxxxx
--------------------------------
Amount of 8-1/8% Notes: 1,600,000
--------------------
Address:___________________________________
Telephone: ________________________________
Facsimile: ________________________________
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Authorized
Officer/Principal:_________________________
8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Cypress Management Partnership
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Amount of 8-1/8% Notes: 8,225,000
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Address:
-----------------------------------
-----------------------------------
Telephone:
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Facsimile:
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By: /s/ Xxxxxxxx X. Xxxxxx
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Authorized
Officer/Principal: Authorized Signatory
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8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Cincinnati Financial
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Corporation
--------------------------------
Amount of 8-1/8% Notes: 8,000,000
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Address:
-----------------------------------
-----------------------------------
Telephone:
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Facsimile:
---------------------------------
By: /s/ Xxxxxxx Xxxxxx
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Authorized
Officer/Principal: Vice President
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8-1/8% SENIOR SUBORDINATED NOTEHOLDER
Noteholder: Oaktree Capital Management
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LLC, as agent and on behalf of
--------------------------------
certain funds and accounts
--------------------------------
Amount of 8-1/8% Notes: 50,202,000
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Address:
-----------------------------------
-----------------------------------
Telephone:
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Facsimile:
---------------------------------
By: /s/ Xxxxxxx Xxxxx
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Authorized /s/ Xxxxxxx Xxxxxxx
---------------------------------
Officer/Principal: Xxxxxxx Xxxxx, Principal
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Xxxxxxx Xxxxxxx, Sr. VP.
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Exhibit A
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AVIATION SALES COMPANY
Proposed Restructuring Term Sheet
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The Restructuring Aviation Sales Company ("AVS" or "the Company")
intends to recapitalize the Company through an
exchange offer or a pre-negotiated Chapter 11
case and a concurrent investment in the Company
by certain existing AVS shareholders or a third
party on the terms set forth herein
(collectively, the "Restructuring").
TREATMENT OF CAPITAL CLAIMS UNDER THE RESTRUCTURING
The Restructuring will classify and provide treatment of claims against and
interest in the Company generally described below. Claims in each such class
will be discharged in full in exchange for delivery of the consideration
described below on the effective date of the Restructuring (the "Effective
Date").
Credit Facilities The Company's existing credit facilities (the
"Credit Facilities") will be unimpaired or
refinanced as part of the Restructuring.
Senior Subordinated Notes The outstanding principal amount of the 8 1/8%
Senior Subordinated Notes due 2008 ("Senior
Notes"), including all accrued and unpaid
interest thereon through and including the
consummation of the Restructuring and all other
claims held by holders of the Senior Notes
against the Company or its past and present
directors, officers, and employees arising out
of or related to the Senior Notes or the
purchase or sale of any other securities of the
Company shall be exchanged for (i) cash or (ii)
New Notes, New Common Stock and New Warrants as
described below.
Cash Option - $33.0 million of the principal
-----------
amount of Senior Notes will be exchanged for
$10.0 million in cash (i.e., $303 per $1,000
principal amount of Senior Notes); provided
that principal amount of Senior Notes eligible
for the Cash Option shall be reduced dollar for
dollar by the principal amount of Senior Notes
that do not tender into the Exchange Offer and
the amount of cash allocated to the Cash Option
shall be similarly reduced pro rata. For
example, if $11 million principal amount of
Senior Notes do not tender into the
1
Exchange Offer, only $22 million of principal
amount of Senior Notes will be eligible for the
Cash Option, each $1,000 of principal amount
shall continue to receive $303 and the
aggregate amount of cash distributed by the
Company shall be $6.666 million.
New Notes and New Common Stock Option - $132
-------------------------------------
million principal amount of the Senior Notes
will be exchanged for $100.0 million principal
amount of new redeemable, convertible
subordinated notes (the "New Notes") as
described below, 15% of the new common stock of
the Company after giving effect to the
Restructuring (the "New Common Stock") and
warrants to purchase additional New Common
Stock representing 10% of all outstanding New
Common Stock as of consummation of the
Restructuring to be struck at an implied equity
value of $155 million.
Each Senior Noteholder shall be entitled to
elect which option it prefers with respect to
all or any portion of its Senior Notes;
provided that if either option is over-
subscribed, Senior Noteholders that elect the
over-subscribed option will share pro rata and
receive the balance of their consideration from
the option that is not over-subscribed.
Features of the New Notes
Issuer: Aviation Sales Company
Principal Amount: $100,000,000
General Description: New Convertible Senior Subordinated Notes
Redemption Rights: Redeemable at the Company's option: (i) in
2002, at 70% of the sum of par plus interest
through the date of redemption (approximately
$75.7 million at the end of year one) plus 15%
of the New Common Stock; (ii) in 2003, at 72.5%
of the sum of par plus interest accrued through
the date of redemption (approximately $84.8
million at the end of year two) plus 15% of the
New Common Stock; (iii) 2004, at 73% of the sum
of par plus interest accrued through the date
of redemption (approximately $92.4 million at
the end of year three) plus 10% of the New
Common Stock; (iv) in 2005, at 75.625% of the
sum of par plus interest accrued through the
date of redemption (approximately $103.5
million at the end of year 4) plus 10% of the
New Common Stock; and (v) in 2006 to maturity,
at 77.5% of the sum of par plus interest
accrued
2
through the date of redemption (approximately
$114.7 million at the end of year 5) plus 10%
of the New Common Stock.
Conversion: If not previously redeemed, on December 31,
2006, the New Notes shall automatically convert
into shares of New Common Stock representing
90% of the New Common Stock outstanding as of
the consummation of the Restructuring
Change of Control: Mandatory repurchase at the then applicable
redemption rate upon a change of control
Maturity: December 31, 2006
Interest: 8% paid-in-kind accruing semi-annually.
Security: None
Ranking: Subordinated to senior debt, senior to
remaining Senior Notes.
Covenants: Substantially similar to existing Senior Notes,
but the New Notes shall be modified to permit
senior indebtedness equal to the greater of (i)
$95.0 million at any time outstanding and (ii)
an amount that satisfies a fixed charge
coverage ratio equal to 2.25/1 (same ratio as
in current indenture).
Guarantors: Unconditionally guaranteed, on a senior
subordinated basis, by substantially all of the
Company's existing and future subsidiaries.
Accounts Payable Accounts payable shall be left unimpaired.
New Investors The Investors, in consideration of their $20.0
million investment (the "Equity Infusion"),
shall receive 80% of New Common Stock of the
Reorganized Company as of consummation of the
Restructuring.
Existing Shareholders Shall continue to own 5% of New Common Stock of
the reorganized Company and shall be afforded
the opportunity to participate pro rata in the
Equity Infusion and shall receive warrants to
purchase additional New Common Stock
representing 10% of all outstanding New Common
Stock as of consummation of the Restructuring
to be struck at an implied equity value of $155
million
Management Up to a 8% phantom stock program that will
dilute all equityholders. The program will be
designed and implemented
3
by AVS' board of directors following the
Restructuring.
Means of Execution
Investment Subject to entering into definitive
documentation with customary terms, including,
but not limited to, the right to terminate if
there is a material adverse change, the
existing shareholders or third parties would
make a $20.0 million infusion of cash into the
Company as described herein, and would receive
80% of the common stock (the "New Common
Stock") of the reorganized Company.
Exchange Offer The Company shall seek to effectuate the
Restructuring by a registered exchange offer,
rights offering and proxy solicitation. Subject
to entering into definitive documentation with
customary terms, including, but not limited to,
the right to terminate if there is a material
adverse change, a group of investors led by
Xxxx Xxxxxx will commit to purchase the unsold
allotment of such rights offering.
Chapter 11 Plan Option At the Company's option, the exchange offer set
forth in this Term Sheet will be effectuated
through confirmation by AVS of a Chapter 11
plan ("Plan") that, among other things:
(a) will provide for the treatment of the
Senior Notes as described in this Term Sheet;
(b) leave any or all allowed claims other
than Note Claims and securities Litigation
Claims unimpaired; and
(c) shall provide for necessary amendments
to the Company's Certificate of Incorporation.
Conditions to Consummation of Consummation of the exchange offer described in
Exchange Offer this Term Sheet is subject to (1) effective
registration of the exchange offer, (2) receipt
by the Company of $20 million from existing
stockholders or third parties, (3) tender of no
less than $132 million principal amount of the
Senior Notes and the approval by the requisite
holders of the Company's common stock as
required under applicable state law or at the
Company's election confirmation of a plan of
reorganization, and entry of the Confirmation
Order which are, in each instance, wholly
consistent with this Term Sheet, and (4)
approval by the Company's senior lenders or new
lenders which replace the Company's existing
senior lenders in the future.
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Additional Terms . The Ad Hoc Committee of Senior Noteholders
will be entitled to nominate one member of
the Company's initial post-Restructuring
Board of Directors. The size of the Board
of Directors shall range from five to
seven members at the sole discretion of
the Company.
. The Consenting Noteholders, pursuant to
Section 9.02 of the 8-1/8% Senior
Subordinated Notes Indenture dated
February 17, 1998 (the "Indenture"), agree
to provide exit consents so that upon
consummation of the Restructuring the
Indenture shall be amended so as to delete
all covenants (to the extent permitted
under the Indenture) including, but not
limited to, Articles 3.09 and 4.07 through
4.18 and further agree as part of the
Restructuring to consent to and approve
any supplemental indenture which deletes
such Articles.
. The Investors shall have the right, but
not the obligation, to loan short-term
working capital to AVS prior to completion
of the Restructuring, and such short term
loans shall constitute Senior Debt and be
repaid from the proceeds of the
Restructuring.
. All equity and warrants issued in
connection with the Restructuring or
pursuant to the New Notes shall be subject
to dilution by future equity issuances,
but shall be protected by standard anti-
dilution rights with respect to below-
market equity issuances and provisions to
be agreed upon protecting against the sale
of equity to Company affiliates (even if
at market prices) during the first year
following consummation of the
Restructuring.
. Maximum holdouts shall not exceed $33
million par value of the existing Senior
Notes. Every dollar of Senior Note claims
that is not tendered shall reduce the face
value of Senior Notes eligible for the
cash option on a pro rata basis.
. By executing the prefixed Agreement dated
August 14, 2001 (the "Agreement") each
Consenting Noteholder agrees that the
terms of the Confidentiality Agreement
regarding 8-1/8 Senior Subordinated Notes
due 2008 of Aviation Sales Company shall
remain in full force and effect through
and including the Termination Event as
that term is defined in the Agreement.
. $10 million of the Equity Infusion shall
remain in the
5
Company to fund restructuring expenses and
working capital.
6
