Exhibit 10.23
RATIFICATION, CONFIRMATION AND AMENDMENT AGREEMENT
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This RATIFICATION, CONFIRMATION AND AMENDMENT AGREEMENT (this "Agreement"),
dated as of January 11, 2007, is by and among FIRST AVIATION SERVICES, INC., a
Delaware corporation ("First Aviation"), AEROSPACE PRODUCTS INTERNATIONAL, INC.,
a Delaware corporation ("Borrower"), and TD BANKNORTH, N.A., a national banking
association ("Lender"), as successor by merger to Xxxxxx United Bank.
PREAMBLE
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WHEREAS, Borrower and Lender are parties to that certain Amended and
Restated Commercial Revolving Loan and Security Agreement dated as of July 29,
2005 (such agreement, as supplemented, amended and modified from time to time,
the "Original LSA") pursuant to which Lender has extended to Borrower a
revolving loan facility in the principal amount of up to $25,000,000 (the
"Revolving Loan Facility") and a line of credit/term loan facility in the
principal amount of up to $3,000,000; and
WHEREAS, First Aviation has unconditionally guaranteed the payment and
performance of all indebtedness, obligations and liabilities of Borrower to
Lender pursuant to that certain Amended and Restated Guaranty dated as of July
29, 2005 from First Aviation in favor of Lender (the "Guaranty"); and
WHEREAS, First Aviation has also previously subordinated to the full and
final payment and performance of all indebtedness, obligations and liabilities
of Borrower to Lender (including, but not limited to, the indebtedness,
obligations and liabilities of Borrower to Lender arising under the Original
LSA) the payment and performance of all indebtedness, obligations and
liabilities of Borrower to First Aviation pursuant to the terms of that certain
Amended and Restated Subordination Agreement dated as of July 29, 2005 by and
among Borrower, Lender and First Aviation (the "Subordination Agreement"); and
WHEREAS, Borrower and its wholly-owned subsidiary, Aerospace Produits
International Ltee, a company constituted under Part 1A of the Companies Act
(Quebec) (the "Affiliate Guarantor"), have each requested Lender, and Lender has
agreed, to (a) extend the maturity date of the Revolving Loan Facility from
September 1, 2007 to September 1, 2008, (b) provide a $1,000,000 sublimit under
the Revolving Loan Facility for the issuance of letters of credit for the
account of Borrower, (c) extend to Borrower a revolving loan/term loan facility
for capital expenditures in the maximum principal amount of up to $3,000,000,
(d) permit Borrower to use the proceeds of Loans made hereunder to finance the
working capital and general corporate requirements of Affiliate Guarantor, and
(e) amend certain other terms and conditions of the Original LSA; and
WHEREAS, in order to memorialize their agreements set forth above,
Borrower, Affiliate Guarantor and Lender have entered into a certain Second
Amended and Restated Loan and Security Agreement dated as of the date hereof (as
amended and in effect from time to time, the "Replacement LSA") which
Replacement LSA, among other things, amends, restates and supersedes the
Original LSA in its entirety; and
WHEREAS, it is a condition precedent to Lender's entering into the
Replacement LSA and making any loans or otherwise extending credit to Borrower
thereunder that First Aviation, Borrower and Lender enter into this agreement.
NOW, THEREFORE, in order to induce Lender to enter into the Replacement
LSA, and for other good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. All capitalized terms used herein without definition but
which are defined in or by reference in the Replacement LSA shall have the same
meanings herein as therein.
2. Ratification of Agreements, Obligations and Liabilities. Except as
expressly set forth herein, the Guaranty and the Subordination Agreement shall
remain in full force and effect in accordance with their terms. First Aviation
(a) acknowledges receipt of a copy of the Replacement LSA and the other Loan
Documents, consents to the Borrower's and the Affiliate Guarantor's execution
and delivery thereof and consents to the amendments set forth in this Agreement,
(b) ratifies and confirms all of its respective payment and performance
obligations, contingent or otherwise, under the Guaranty and that such
obligations and liabilities extend to the Obligations, (c) acknowledges that any
and all of the Obligations constitute "Senior Obligations" (as such term is
defined under the Subordination Agreement), and (d) affirms that nothing
contained in the Replacement LSA shall limit in any respect whatsoever its
agreements, obligations and liabilities under the Guaranty and the Subordination
Agreement. In addition, each of First Aviation and Borrower hereby ratifies and
confirms all of its respective agreements, obligations and liabilities under the
Subordination Agreement. Although First Aviation has been informed of the
matters set forth herein and has acknowledged and agreed to same, First Aviation
understands that the Lender has no obligation to inform First Aviation of such
matters in the future or to seek First Aviation's acknowledgment or agreement to
future amendments, waivers or consents, and nothing herein shall create such a
duty.
3. Amendments to Guaranty.
a. Any and all references in the Guaranty to (i) the term "Loan
Agreement" shall mean the Replacement LSA, (ii) the term "Notes" shall mean the
Notes as such term is defined in the Replacement LSA, and (iii) the term
"Obligations" shall mean the Obligations as such term is defined in the
Replacement LSA.
b. The definitions of "Leverage Ratio", "Tangible Net Worth" and
"Total Liabilities" set forth on pages 2 and 3 of the Guaranty are hereby
deleted in their entirety.
c. Section 1 of the Guaranty is hereby amended and restated as
follows:
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1. Guaranty. The Guarantor hereby guarantees to the Lender the full and
punctual payment when due (whether at stated maturity, by required pre-payment,
by acceleration or otherwise), as well as the performance, of all of the
Obligations including all such which would become due but for the operation of
the automatic stay pursuant to ss.362(a) of the Federal Bankruptcy Code and the
operation of ss.ss.502(b) and 506(b) of the Federal Bankruptcy Code. This
Guaranty is an absolute, unconditional and continuing guaranty of the full and
punctual payment and performance of all of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Lender first attempt to collect any of the Obligations from the Borrower or any
other guarantor of the Obligations or resort to any collateral security or other
means of obtaining payment. Should the Borrower default in the payment or
performance of any of the Obligations, the obligations of the Guarantor
hereunder with respect to such Obligations in default shall, upon demand by the
Lender, become immediately due and payable to the Lender, without demand or
notice of any nature, all of which are expressly waived by the Guarantor.
Payments by the Guarantor hereunder may be required by the Lender on any number
of occasions. All payments by the Guarantor hereunder shall be made to the
Lender in the manner and at the place of payment specified therefor in the Loan
Agreement. The Guarantor further agrees, as the principal obligor and not as a
guarantor only, to pay to the Lender, on demand, all costs and expenses
(including court costs and legal expenses) incurred or expended by the Lender in
connection with this Guaranty and the enforcement thereof, together with
interest on amounts recoverable under this Section 1 from the time when such
amounts become due until payment, whether before or after judgment, at the rate
of interest for overdue principal set forth in the Loan Agreement, provided that
if such interest exceeds the maximum amount permitted to be paid under
applicable law, then such interest shall be reduced to such maximum permitted
amount.
d. Section 6.1 of the Guaranty is hereby amended by deleting said
section in its entirety and substituting the following in lieu thereof:
6.1 Leverage Ratio. Intentionally Deleted.
e. Notice is hereby given under Section 9 of the Guaranty changing
the address of First Aviation for notice purposes to First Aviation Services,
Inc., 00 Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxx X.
Xxxxxxxxx, Chairman and Chief Executive Officer.
f. Notice is hereby given under Section 9 of the Guaranty changing
the address of the Lender for notice purposes to TD Banknorth, N.A., 000 Xxxx
Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx,
Senior Vice President.
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4. Amendments to Subordination Agreement.
a. Any and all references in the Subordination Agreement to (i) the
term "Loan Agreement" shall mean the Replacement LSA, and (ii) the term "Notes"
shall mean the Notes as such term is defined in the Replacement LSA.
b. Section 2.b. of the Subordination Agreement is hereby amended and
restated as follows:
b. Without the Lender's written consent, unless and until all of the Senior
Obligations have been fully paid in cash, all financing arrangements between the
Lender and the Borrower have been terminated and all Bank Products extended to
the Borrower by the Lender (or any Affiliate thereof) have been terminated, the
Subordinated Creditor will not ask for, demand, xxx for, take or receive from
the Borrower or any successor or assign of the Borrower, including without
limitation, a receiver, trustee or debtor in possession, and the Borrower will
not make, give or permit, directly or directly, by set-off, redemption, purchase
or in any other manner, any payment on the whole or any part of the Junior Debt;
provided, however, that notwithstanding the foregoing, so long as (i) no default
or event of default under or within the meaning of the Loan Agreement shall have
occurred and be continuing at the time of such payment, whether or not the
Lender has provided the Subordinated Creditor with written notice thereof, and
(ii) no default or event of default under or within the meaning of the Loan
Agreement would occur as a result of, and after giving effect to, any such
payment, the Borrower may pay to the Subordinating Creditor, and the
Subordinating Creditor may accept and retain from the Borrower, monthly payments
of interest (but no principal) at the contract rate (but not the default rate)
on the interest payment dates set forth in the Junior Debt Instruments. The
Subordinated Creditor acknowledges and agrees that the terms and provisions of
this Agreement do not violate any term or provision of any of the Junior Debt
Instruments; and to the extent any of the terms and provisions of this Agreement
are inconsistent with any of the terms or provisions of the Junior Debt
Instruments, the terms and provisions of the Junior Debt Instruments shall be
deemed to have been superseded by this Agreement.
c. Section 2.c. of the Subordination Agreement is hereby deleted in
its entirety.
d. Section 16 of the Subordination Agreement is hereby amended and
restated as follows:
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Section 16. Continuing Agreement of Subordination; Modifications of
Senior Obligations.
a. This Agreement is a continuing agreement of subordination and the
Lender may continue, at any time and without notice to the
Subordinated Creditor, to extend credit or other financial
accommodations to or for the benefit of the Borrower in reliance
hereon. Without limiting the generality of the foregoing, in the
administration and servicing of the Senior Obligations, the
Subordinated Creditor acknowledges and agrees that the Lender may
at any time and from time to time, either before or after a
demand, default or event of default under or within the meaning
of the Loan Agreement and/or the Junior Debt Instruments, proceed
in its sole discretion, including without limitation, raising or
lowering loan advances, interest rates or fees, charging
additional fees, declining to make further advances, extending
additional loans or other financing accommodations to the
Borrower, increasing the dollar amounts of any of the Borrower's
credit limits, extending credit terms and maturities,
compromising claims, exchanging, releasing, selling, surrendering
or otherwise dealing with any or all of the collateral or other
obligors, and otherwise amending, modifying or otherwise altering
the terms of any of the Senior Obligations; all without notice
and with no duty to the Subordinated Creditor, and no such action
shall affect the subordination or other provisions herein in any
manner.
b. This Agreement shall remain in full force and effect and may not
be terminated or otherwise revoked by the Subordinated Creditor
until any and all of the Senior Obligations have been fully paid
and satisfied, all financing arrangements between the Borrower
and the Lender have been terminated and all Bank Products
extended to the Borrower by the Lender (or Affiliate thereof)
have been terminated. This Agreement shall be binding upon the
Subordinated Creditor, the Borrower and their respective
successors and assigns and inure to the benefit of, and be
enforceable by, the Bank and its respective successors,
transferees and assigns.
5. Representations and Warranties. First Aviation represents and warrants
to the Lender that all of the representations and warranties made by First
Aviation in the Guaranty and the Subordination Agreement are true and correct on
the date hereof as if made on and as of the date hereof, except to the extent
that any of such representations and warranties relate by their terms to a prior
date and as otherwise disclosed in writing to the Lender.
6. No Defenses. First Aviation hereby represents and warrants to, and
covenants with the Lender that, as of the date hereof, (a) it has no defense,
offset or counterclaim of any kind or nature whatsoever against the Lender with
respect to any of the Loans or any of the other Obligations, or any of the Loan
Documents to which it is a party, or any action previously taken or not taken by
the Lender with respect thereto, and (b) that the Lender has fully performed all
obligations to the Borrower which it may have had or has on and of the date
hereof.
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7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall be one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
FIRST AVIATION SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
AEROSPACE PRODUCTS INTERNATIONAL,
INC.
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
TD BANKNORTH, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
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