Exhibit 10.9(d)
ADVANCE FORMULA AGREEMENT
================================================================================
As of August 12, 1998, this Agreement is made between Jet Aviation Trading,
Inc., a Florida corporation ("Borrower") and COMERICA BANK ("Bank"). For and in
consideration of the loans and other credit which Borrower may now or hereafter
obtain or request from Bank which are secured pursuant to certain Security
Agreements dated August 12, 1998, ("Security Agreement"), and for other good and
valuable consideration, Borrower agrees as follows:
1. FORMULA LOANS. The credit which Bank may now or hereafter extend to
Borrower subject to the limitations of this Agreement and to the
conditions and limitations of any other agreement between Borrower and
Bank is identified as follows:
$3,500,000 secured, demand line of credit
and any extensions, renewals or substitutions, whether in a greater or
lesser amount, including any letters of credit issued thereunder
("Formula Loans").
2. ADVANCE FORMULA. Borrower warrants and agrees that Borrower's
indebtedness to Bank for the Formula Loans shall never exceed the sum
of:
2.1 Eighty Five percent (85%) of its Eligible Accounts, as defined
below; and
2.2 Thirty Five percent (35%) of its Eligible Inventory, as defined
below.
3. FORMULA COMPLIANCE. If the limitations in paragraph 2, above, are
exceeded at any time, Borrower shall immediately pay Bank sums
sufficient to reduce the Formula Loans by the amount of such excess.
4. ELIGIBLE ACCOUNT. "Eligible Account" shall mean an Account (as defined
in the Michigan Uniform Commercial Code, as amended "UCC"), but shall
not include interest and service charges) arising in the ordinary
course of Borrower's business which meets each of the following
requirements:
4.1 it is not owing more than ninety (90) days after the date of
the original invoice or other writing evidencing such Account;
1
4.2 it arises from the sale or lease of goods and such goods have
been shipped or delivered to the Account Debtor under such
Account; or it arises from services rendered and such services
have been performed;
4.3 it is evidenced by an invoice, dated not later than the date
of shipment or performance, rendered to such Account Debtor or
some other evidence of billing acceptable to Bank;
4.4 it is not evidenced by any note, trade acceptance, draft or
other negotiable instrument or by any chattel paper, unless
such note or other document or instrument previously has been
endorsed and delivered by Borrower to Bank;
4.5 it is a valid, legally enforceable obligation of the Account
Debtor thereunder, and is not subject to any offset,
counterclaim or other defense on the part of such Account
Debtor or to any claim on the part of such Account Debtor
denying liability thereunder in whole or in part;
4.6 it is not subject to any sale of accounts, any rights of
offset, assignment, lien or security interest whatsoever other
than to Bank;
4.7 it is not owing by a subsidiary or affiliate of Borrower, nor
by an Account Debtor which (i) does not maintain its chief
executive office in the United States of America, (ii) is not
organized under the laws of the United States of America, or
any state thereof, or (iii) is the government of any foreign
country or sovereign state, or of any state, province,
municipality or other instrumentality thereof (the Account
Debtors described in subclauses (i), (ii) and (iii) being
referred to as "Foreign Account Debtors"); provided, however,
an Account with respect to which the Account Debtor is a
Foreign Account Debtor shall be eligible if the Account is an
insured Account under a foreign credit insurance policy which
is acceptable to Bank in the exercise of its sole discretion;
4.8 it is not an account owing by the United States of America or
any state or political subdivision thereof, or by any
department, agency, public body corporate or other
instrumentality of any of the foregoing, unless all necessary
steps are taken to comply with the Federal Assignment of
Claims Act of 1940, as amended, or with any comparable state
law, if applicable, and all other necessary steps are taken to
perfect Bank's security interest in such account;
4.9 it is not owing by an Account Debtor for which Borrower has
received a notice of (i) the death of the Account Debtor or
any partner of the Account Debtor, (ii) the dissolution,
liquidation, termination of existence, insolvency or business
failure of the Account Debtor, (iii) the appointment of a
receiver for any part of the property of the Account Debtor,
or (iv) an assignment for the benefit of creditors, the filing
2
of a petition in bankruptcy, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or
against the Account Debtor;
4.10 it is not an account billed in advance, payable on delivery,
for consigned goods, for guaranteed sales, for unbilled sales,
for progress xxxxxxxx, payable at a future date in accordance
with its terms, subject to a retainage or holdback by the
Account Debtor or insured by a surety company; and
4.11 it is not owing by any Account Debtor whose obligations Bank,
acting in its sole discretion, shall have notified Borrower
are not deemed to constitute Eligible Accounts.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.
5. ELIGIBLE INVENTORY. "Eligible Inventory" shall be valued at the lesser
of cost or present market value in accordance with generally accepted
accounting principles, consistently applied, and shall mean all of
Borrower's Inventory (as defined in the UCC) which is in good and
merchantable condition, is not obsolete or discontinued, and which
consists of parts, engines and supplies, excluding (a) Borrower's
repairable parts which have not yet been repaired, salvage and scrap
inventory, consigned goods, inventory located outside the United States
of America, (b) inventory covered by or subject to a seller's right to
repurchase, or any consensual or nonconsensual lien or security
interest (including without limitation purchase money security
interests) other than in favor of Bank, whether senior or junior to
Bank's security interest, (c) inventory in which Bank does not have a
first priority perfected security interest, and (d) inventory that
Bank, acting in its sole discretion, after having notified Borrower,
excludes. Inventory which is at any time Eligible Inventory, but which
subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be Eligible Inventory.
6. CERTIFICATES, SCHEDULES AND REPORTS. Borrower will within fifteen (15)
days after and as of the end of each month (and at such other times as
Bank may request), deliver to Bank agings of the Accounts and a
schedule identifying each Eligible Account (not previously so
identified) and reports as to the amount of Eligible Inventory.
Borrower will from time to time deliver to Bank such additional
schedules, certificates and reports respecting all or any of the
Collateral (as defined in the Security Agreement), the items or amounts
received by Borrower in fall or partial payment of any of the
Collateral, and any goods (the sale or lease of which by Borrower shall
have given rise to any of the Collateral) possession of which has been
obtained by Borrower, all and as to such extent as Bank may request.
Any such schedule, certificate or report shall be executed by a duly
authorized officer of Borrower and shall be in such form and detail as
Bank may specify. Any such schedule identifying any Eligible Account
shall be accompanied (if Bank so requests) by a
3
true and correct copy of the invoice evidencing such Eligible Account
and by evidence of shipment or performance.
7. INSPECTIONS; COMPLIANCE. Borrower shall permit Bank and its designees
from time to time to make such inspections and audits, and to obtain
such confirmations or other information, with respect to any of the
Collateral or any Account Debtor as Bank is entitled to make or obtain
under the Security Agreement, and shall reimburse Bank on demand for
all costs and expenses incurred by Bank in connection with such
inspections and audits. Borrower shall further comply with all of the
other terms and conditions of the Security Agreement.
8. DEFAULT. Any failure by Borrower to comply with this Agreement shall
constitute a default under the Formula Loans and under the Security
Agreement and the Indebtedness, as defined therein.
9. AMENDMENTS; WAIVERS. This Agreement may be amended, modified or
terminated only in writing duly executed by Borrower and Bank. No delay
by Bank in requiring Borrower's compliance herewith shall constitute a
waiver of such right. The rights granted to Bank hereunder are
cumulative, and in addition to any other rights Bank may have by
agreement or under applicable law. This Agreement shall supersede and
replace in their entirety any prior advance formula agreements in
effect between Bank and Borrower. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
Michigan, without regard to conflict of laws principles.
10. DEMAND BASIS FORMULA LOANS. Notwithstanding anything to the contrary
set forth in this Agreement, in the event that the Formula Loans are at
any time on a demand basis, Borrower hereby acknowledges and agrees
that the formula set forth in paragraph 2 hereof is merely for advisory
and guidance purposes and Bank shall not be obligated to make any loans
or advances under the Formula Loans, and, notwithstanding the terms of
paragraph 3 above, Bank may at any time, at its option, demand payment
of any or all of the Formula Loans, whereupon the same shall become due
and payable-
11. JURY WAIVER. BORROWER AND BANK ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT
WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY
RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
4
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.
Borrower's Chief Executive Office Address: BORROWER:
JET AVIATION TRADING, INC.
00000 XX 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
By: /s/ Xxxxxx Xxxxxx
----------------------
Its: President
By: /s/ Xxxxxx Xxxxxx
----------------------
Its: Chief Financial Officer
Accepted and Approved:
COMERICA BANK
By: /s/ Xxxxxx Xxxxxxxx
-------------------
Its: Vice President
5
