LOAN AGREEMENT
BY THIS AGREEMENT made and entered into as of the 5th day of May, 2005,
GLOBAL AIRCRAFT SOLUTIONS, INC., FKA RENEGADE VENTURE CORPORATION, a Nevada
corporation, whose address is X.X. Xxx 00000, Xxxxxx, Xxxxxxx 00000-0000, WORLD
JET CORPORATION, a Nevada corporation, whose address is X.X. Xxx 00000, Xxxxxx,
Xxxxxxx 00000-0000, and XXXXXXXX AEROSPACE TECHNOLOGIES, INC., a Delaware
corporation, whose address is X.X. Xxx 00000, Xxxxxx, Xxxxxxx 00000-0000
(collectively, "Borrower"), and **************************BANK, a banking
corporation organized and existing under the laws of the State of Wisconsin
("Lender"), whose address is x/x Xxxxxxxxxx Xxxx Xxxxxxxxxx, , Xxxxxxx, Xxxxxxx
00000, for and in consideration of the recitals and mutual promises contained
herein, confirm and agree as follows:
SECTION 1. RECITALS
1.1 Borrower has applied to Lender for a line of credit in the amount of
TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00).
1.2 Lender is willing to provide the loan upon the terms, conditions and
provisions set forth herein.
SECTION 2. DEFINITIONS
As used herein, the following capitalized terms shall have the meanings
specified below, unless the context otherwise requires.
2.1 Accounts: All trade accounts, accounts receivable, or other rights to
payment for goods sold or services rendered owing to Borrower, including any
rights to payment under any rental or lease agreements for the rental or lease
of equipment entered into in the ordinary course of Borrower's business.
"Accounts" shall not include depository accounts of Borrower.
2.2 Account Debtor: Any person or entity obligated on any of the Accounts.
2.3 Advance: An individual disbursement under a Loan; disbursements are
collectively called "Advances".
2.4 Affiliate: Any person or entity (i) that directly or indirectly
controls, or is controlled by, or is under common control with, Borrower; (ii)
that directly or indirectly beneficially owns or holds five percent (5%) or more
of any class of voting stock of Borrower; (iii) five percent (5%) or more of the
voting stock of which entity is directly or indirectly beneficially owned or
held by Borrower or by a shareholder or member of Borrower; (iv) that is an
officer, director or partner of Borrower; (v) of which another Affiliate is an
officer, director or partner; or (vi) who is related by blood, adoption, or
marriage to another Affiliate. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of an entity, whether through the ownership of voting securities,
by contract, or otherwise.
2.5 Borrower: Global Aircraft Solutions, Inc., fka Renegade Venture
Corporation, a Nevada corporation, World Jet Corporation, a Nevada corporation,
and Xxxxxxxx Aerospace Technologies, Inc., a Delaware corporation.
2.6 Borrowing Base: As defined in Section 3.4 hereof.
2.7 Business Day: Any day other than a Saturday, Sunday or public holiday.
In addition to the foregoing, any other day when commercial banks in Arizona are
authorized or required to close shall not constitute a Business Day.
2.8 Closing: The satisfaction of all of the conditions precedent set forth
in Section 6 hereof and the consummation of all of the loan transactions
contemplated by this Loan Agreement.
2.9 Closing Date: The date, on or before May 15, 2005, on which the Closing
occurs, or such later date as is approved by Lender in its sole discretion.
2.10 Collateral: All property encumbered by the Security Documents as
security for the Indebtedness and Obligations.
2.11 Consolidated Group: Borrower and Xxxxxxxxx Softmachine Corporation.
2.12 Intentionally Omitted.
2.13 Debt Subordination Agreements: As defined in Section 5.4 hereof.
2.14 Eligible Accounts: As defined in Section 3.4 hereof.
2.15 Eligible Inventory: As defined in Section 3.4 hereof.
2.16 Environmental Law: Any federal, state or local statute, ordinance, or
regulation pertaining to the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"); the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq. ("RCRA");
the Arizona Environmental Quality Act, Title 49, Arizona Revised Statutes; any
statute, ordinance or regulation pertaining to such matters in any other state
or jurisdiction in which Borrower has any interest in real property or transacts
any business; and all rules adopted and guidelines promulgated pursuant to all
of the foregoing.
2.17 ERISA: The Employee Retirement Income Security Act of 1974, as amended
and as in effect from time to time.
2.18 Event of Default: As defined in Section12.1 hereof.
2.19 Facility: Any real property and improvements (i) owned or occupied by
Borrower in the conduct of its business, or (ii) upon which any Collateral is
located.
2.20 Intentionally Omitted.
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2.21 GAAP. Those generally accepted accounting principles and practices
that are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the date
thereof so as to properly reflect the financial condition, and the results of
operations and changes in the financial position, of Borrower.
2.22 Guarantor: Intentionally omitted.
2.23 Hazardous Substance: Includes:
(a) those substances included within the definitions of "hazardous
substances," "hazardous materials," "toxic substances," or "solid waste" in
CERCLA, RCRA, and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., and in the regulations promulgated pursuant thereto;
(b) those substances defined as "hazardous substances" in A.R.S.
Section 49-201 and in rules adopted or guidelines promulgated pursuant
thereto;
(c) those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency as hazardous substances (40 CFR Part 302
and amendments thereto); and
(d) all other substances, materials and wastes that are, or that
become, regulated under, or that are classified as hazardous or toxic
under, any Environmental Law.
2.24 Indebtedness: The total outstanding indebtedness owed Lender by
Borrower from time to time, including without limitation the indebtedness owing
under or in connection with any Loan, including principal and interest accrued
but not previously paid.
2.25 Landlord Consent: An agreement in form acceptable to Lender, signed by
the landlord of a Facility, subordinating all lien rights and other rights in
the Collateral, to Lender, giving Lender notice of a default under the lease for
the Facility, and giving Lender the right to enter the Facility and remove the
Collateral.
2.26 Lender: ************** Bank, a banking corporation organized and
existing under the laws of the State of Wisconsin.
2.27 Intentionally Omitted.
2.28 Line of Credit: As defined in Section 3.1 hereof.
2.29 Line of Credit Note: As defined in Section 3.2 hereof.
2.30 Loan Documents. This Agreement, the Note, the Security Documents, and
all other documents now or hereafter executed or delivered in connection with or
in any way related to the Indebtedness, the Obligations, or any Loan.
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2.31 Loan(s): The Line of Credit and any other loan now or hereafter
extended to Borrower by Lender, severally and collectively.
2.32 Intentionally Omitted.
2.33 Material Adverse Effect: Any event or condition that either (i) would
have a material adverse effect upon the validity, performance or enforceability
of this Agreement, or any of the other Loan Documents, (ii) is material and
adverse to a material portion of the Collateral, any Facility, the financial
condition, credit or business operations or prospects of Borrower or Guarantor,
(iii) would materially impair the ability of Borrower or Guarantor to fulfill
its obligations under this Agreement, or any of the other Loan Documents, or
(iv) causes an Event of Default or an event or condition that with notice or
lapse of time or both, would become an Event of Default.
2.34 Note(s): The Line of Credit Note and any notes executed in furtherance
of any other Loan, severally and collectively.
2.35 Obligations: Any and all of the representations, warranties, covenants
and other obligations made or undertaken by Borrower in this Agreement, any Note
or in any of the other Loan Documents.
2.36 PBGC: The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
2.37 Plan: Each pension, profit sharing, stock bonus, thrift, savings, and
employee stock ownership plan established or maintained, or to which
contributions have been made, by Borrower or any trade or business which
together with the Borrower would be treated as a single employer under ERISA.
2.38 Intentionally Omitted.
2.39 Principal Indebtedness: The principal portion of the Indebtedness.
2.40 Prohibited Liens/Approved Liens: "Prohibited Liens" are any liens,
security interests or encumbrances against the Collateral except: (i) liens and
security interests granted to Lender; (ii) other liens, security interests and
encumbrances approved in writing by Lender, or those described in Schedule 2.40,
attached, if any; and (iii) the lien of taxes and assessments not past due or
delinquent. "Approved Liens" are those liens listed in items (i) through (iii)
in the preceding sentence.
2.41 Readvance: An individual disbursement under the Line of Credit that is
made from available funds that were previously advanced and repaid by Borrower;
such disbursements are collectively called "Readvances."
2.42 Release: Any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping.
2.43 Security Documents: The documents required by Section 6 of this Loan
Agreement and any and all other documents or instruments now or hereafter
executed by Borrower or any other party to secure the payment of the
Indebtedness or the performance of the Obligations, or any portion thereof.
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SECTION 3. LINE OF CREDIT
3.1 Line of Credit. Subject to the conditions herein set forth, Lender
agrees to loan to or for the benefit of Borrower, and Borrower agrees to draw
upon and borrow, in the manner and upon the terms and conditions herein
expressed, amounts that shall not exceed at any time the lesser of (i) the
"Borrowing Base" or (ii) TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($2,500,000.00) (the "Line of Credit").
3.2 Line of Credit Note. The Line of Credit shall be evidenced by a
Promissory Note (the "Line of Credit Note") of Borrower, executed and delivered
simultaneously with the execution of this Agreement, in the amount of TWO
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00), payable to
Lender upon the terms and conditions contained therein and herein. Borrower
acknowledges and agrees that the interest rate contracted for in the Line of
Credit Note includes the interest rate set forth therein and any other charges,
fees, costs and expenses incident to the Line of Credit paid by Borrower to the
extent that the same are deemed interest under applicable law.
3.3 Readvances. On the Line of Credit, Advances may be made to Borrower,
repaid by Borrower (subject to the limitations contained herein), and Readvances
made to Borrower upon the same terms and conditions as are required for Advances
hereunder, provided that Lender shall have no obligation to make any Advance or
Readvance that would cause the outstanding principal balance of the Line of
Credit to exceed the limitations of Section 3.1 hereof.
3.4 Borrowing Base. The "Borrowing Base" shall mean an amount equal to the
sum of (i) eighty percent (80%) of the outstanding amount of all Eligible
Accounts, less all returns, discounts, credits, and offsets, and (ii) fifty
percent (50%) of the net book value of all Eligible Inventory, provided,
however, the total amount of Eligible Inventory which can serve in the Borrowing
Base cannot exceed $1,000,000.00 at any one time, and no Eligible Inventory may
be used in the Borrowing Base if it is or will be held in a Facility which is
leased by Borrower if Lender does not have all Landlord Consents for such
Facility which it requires. "Eligible Inventory" means the inventory owned by
Borrower which is new and in good working condition, complete and ready for sale
in the ordinary course of business, and which is not and may not be subject to
any security interest, claim, lien or encumbrance which is or may become prior
to the security interest of Lender. "Eligible Account" is an Account owing to
Borrower that contains commercially reasonable selling terms or rental
conditions and which is not otherwise excluded pursuant to subparagraphs 3.4(a)
through (m) below. Unless otherwise agreed by Lender in writing, Eligible
Accounts do not include the following:
(a) Accounts on which the Account Debtor is an Affiliate.
(b) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.
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(c) Accounts on which the Account Debtor is not a resident of, or an
entity domiciled in, the United States.
(d) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(e) Accounts that are subject to a claim which has been asserted or is
reasonably likely to be asserted for returns, discounts, credits, disputes,
counterclaims or offsets.
(f) Accounts with respect to which the goods have neither been shipped
nor delivered, or the services have not been rendered, to the Account
Debtor.
(g) Accounts with respect to which Lender, in its reasonable
discretion, deems the creditworthiness or financial condition of the
Account Debtor to be such that the Account Debtor is unlikely to pay the
Account.
(h) Accounts of any Account Debtor who has filed, or has filed against
it, a petition in bankruptcy or an application for relief under any
provision of any state or federal bankruptcy, insolvency or
debtor-in-relief acts; or who has had appointed a trustee, custodian or
receiver for its assets; or who has made an assignment for the benefit of
creditors; or who has become insolvent or who has failed generally to pay
its debts (including its payrolls) as such debts become due.
(i) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States.
(j) Accounts that have not been paid in full within ninety (90) days
from the invoice date.
(k) Accounts with respect to which the Account Debtor is a school
district organized under the laws of the United States government or of any
state, county or municipality.
(l) Accounts where the performance of Borrower or the Account Debtor
or the supply of materials from or being used by Borrower or the Account
Debtor is bonded by Borrower in any manner.
(m) That portion of any Account which is subject to retainages held
pending performance, payment or correction of a defect.
3.5 Advances. Lender shall make Advances of the Line of Credit to Borrower
upon satisfaction of the conditions precedent set forth in Sections 6 and 7
hereof.
3.6 Repayment. Borrower, from time to time, may repay the Line of Credit in
whole or in part at any time, without penalty. Borrower shall repay to Lender,
from time to time, within ten days after receipt of notice from Lender, an
amount equal to any amount by which the outstanding principal balance of the
Line of Credit, from time to time, exceeds the limits set forth in Section 3.1
above.
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3.7 Termination. Unless renewed or extended by written notice from Lender
to Borrower, Borrower's right to Advances of the Line of Credit shall terminate
on April 30, 2006, and the entire outstanding principal balance, all accrued and
unpaid interest, and all other sums payable in connection with the Line of
Credit shall be due and payable on that date. The termination of the Line of
Credit shall not impair Lender's liens and security interests in the Collateral,
and those liens and security interests shall continue subject only to Approved
Liens.
3.8 Permitted Uses. The proceeds from the Line of Credit shall be used and
shall only be used for the following purposes: (i) payment at the Closing Date
in full of Lender's loan no. 10000 to Xxxxxxxx Aerospace Technologies, Inc., a
Delaware corporation (and the parties agree Lender shall have no further
obligations to advance funds under such Loan), (ii) payment at the Closing Date
in full of all obligations of World Jet Corporation to Universal Lease & Finance
Corporation which loan(s) Borrower represents and warrants to be the sole
obligations of Borrower to such entity, and does/do not exceed $625,000.00,
(iii) training and retooling necessary to enable Xxxxxxxx Aerospace
Technologies, Inc., a Delaware corporation to work on Boeing 757 jets, which
amount Borrower represents and warrants does not need to exceed $400,000.00 to
accomplish its purpose and will not exceed such amount, and (iv) working capital
for Borrower.
SECTION 4. GENERAL LOAN MATTERS
4.1 Advances by Lender. Subject to the following sentence, Lender may make
Advances in payment of insurance premiums, taxes, assessments, liens or
encumbrances existing against property encumbered by the Security Documents,
interest accrued and payable upon any Loan, and any charges and expenses that
are the obligation of Borrower under this Agreement or any of the other Loan
Documents to the extent necessary to preserve the Collateral or to cure any
Event of Default. Lender shall have the right to act in accordance with the
preceding sentence (i) at any time after an Event of Default; (ii) at any time
before an Event of Default if Borrower has failed to make any necessary payment
in a timely manner; and (iii) at any time if Lender reasonably believes that
prompt action on Lender's part is necessary or appropriate to ensure payment of
the amount in question, protection of the Collateral or protection of any right
of Lender under the Loan Documents.
4.2 Prior Performance. Although Lender shall have no obligation to make any
Advance unless and until all of the requirements and conditions precedent set
forth herein have been satisfied, Lender, at its sole discretion, may make
Advances prior to that time without waiving or releasing any of the requirements
or conditions precedent of this Agreement; Borrower shall continue to be
strictly obligated to perform, and shall be subject to, all such requirements
and conditions notwithstanding any such Advance, and Lender, at its sole
discretion, may discontinue any further Advances, at any time until all of the
requirements and conditions precedent have been strictly performed and
satisfied.
4.3 Right to Advances. Borrower shall have no right to any Advance other
than to have the same disbursed by Lender in accordance with the disbursement
provisions contained in this Agreement. Any assignment or transfer, voluntary or
involuntary, of this Agreement or any right hereunder shall not be binding upon
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or in any way affect Lender without its written consent; Lender may make
Advances under the provisions hereof, notwithstanding any such assignment or
transfer.
4.4 Loan Account. Lender may maintain on its books a record of account in
which Lender may make entries for each Advance and such other debits and credits
as shall be appropriate in connection with each Loan. Lender may provide
Borrower with periodic statements of Borrower's account, which statements shall
be considered to be correct and conclusively binding on Borrower unless Borrower
notifies Lender to the contrary within thirty (30) days after Borrower's receipt
of any such statement which Borrower deems to be incorrect.
SECTION 5. SECURITY; GUARANTEES, SUBORDINATIONS
5.1 Collateral. Borrower shall cause the Indebtedness and Obligations to be
secured by a valid and effectual Security Agreement granting Lender a first and
prior security interest in all personal property in, to, or under which Borrower
now has or hereafter acquires any right, title or interest, whether present,
future, or contingent, subject only to the Approved Liens. Borrower shall cause
any UCC financing statements to be filed and/or recorded and any other actions
to be taken as required by Lender to fully perfect the liens and security
interests of Lender. Borrower acknowledges and agrees that the Security
Agreement executed by Xxxxxxxx Aerospace Technologies, Inc. in favor of Lender,
and dated as of the 16th day of December, 2004, by its terms does, and shall be
deemed to secure all Indebtedness and Obligations.
5.2 Guarantees. Intentionally Omitted.
5.3 Landlord Consents. Borrower shall obtain and provide Lender with a
Landlord Consent in form and content satisfactory to Lender in its sole
discretion from the owner of each Facility that is not owned by Borrower.
5.4 Debt Subordination Agreements. Borrower shall obtain and provide Lender
from time to time upon request with Debt Subordination Agreements ("Debt
Subordination Agreements") in form and content acceptable to Lender in its sole
discretion from Guarantor and, if requested by Lender, from each Affiliate,
member or shareholder of Borrower, or other Borrower, that is or becomes a
creditor of Borrower. The Debt Subordination Agreements shall (i) subordinate
all debt to the Indebtedness and the Obligations, (ii) restrict payment of the
subordinated debt in a manner satisfactory to Lender in its sole discretion, and
(iii) upon the occurrence of an Event of Default, require the junior creditor to
standstill and accept no payments until all Indebtedness and Obligations are
paid and satisfied in full.
SECTION 6. CONDITIONS PRECEDENT FOR CLOSING AND ADVANCES
The obligation of Lender to make the Loans, and each and every Advance, is
subject to the following express conditions precedent, all of which shall have
been satisfied prior to or at the Closing.
6.1 Documents Required. Borrower shall have executed (or obtained the
execution or issuing of) and delivered to Lender the following documents, all in
form reasonably satisfactory to Lender:
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(a) This Agreement;
(b) The Line of Credit Note;
(c) The Security Documents;
(d) Such Landlord Consents as Lender shall require;
(e) The Debt Subordination Agreements; and
(f) All other Loan Documents required by Lender.
6.2 Items Required. Borrower, at its expense, shall have obtained and
delivered to Lender the following items, or Lender shall otherwise have acquired
the same, all of which shall be in form and content satisfactory to Lender and
shall be subject to approval in writing by Lender:
(a) Evidence in the form of updated financial statements that there
has been no material adverse change in the financial condition of Borrower
or Guarantor since the information provided to Lender upon which Lender's
approval of the Loans was based.
(b) Copies of all lease agreements for each place of business of
Borrower or any other place where any of the Collateral is located for
which Borrower has a written or an oral lease.
(c) Policies of insurance providing comprehensive general liability
insurance with personal liability and property damage liability coverages
in amounts acceptable to Lender that shall be in effect with respect to
Borrower and shall name Lender as an additional insured and loss payee.
(d) Copies of all policies providing "all risks" property insurance
against loss or damage to the Collateral issued by insurance companies
approved by Lender in an amount not less than the full insurable value on a
replacement-cost basis with standard, without contribution, mortgagee's
loss payable endorsements in favor of Lender.
(e) Evidence of worker's compensation insurance coverage reasonably
satisfactory to Lender.
(f) A copy of the organizational documents of Borrower and Guarantor
and all amendments thereto, together with evidence of good standing in the
state of incorporation and evidence of qualification to do business and
good standing in the State of Arizona (if Arizona is not the state of
incorporation), together with proper corporate resolutions and certificates
and such other documents as Lender may reasonably require relating to the
existence and good standing of each such entity and the authority of any
person executing documents on behalf of such entity.
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(g) Evidence that all taxes and assessments levied against or
affecting any Facility have been paid current.
(h) A Certification and Reconciliation of Borrowing Base in the form
attached as Schedule 6.2(h) dated and current as of the Closing Date, or,
if none is attached, in form acceptable to Lender in its sole discretion.
6.3 UCC Searches. Lender shall have obtained UCC and other searches under
the name of Borrower in such offices as Lender shall consider necessary, and the
results of those searches shall be satisfactory to Lender.
6.4 First Lien. Lender shall have obtained a valid and continuing first
lien and security interest in all of the Collateral, free and clear of all
Prohibited Liens, subject only to Approved Liens.
6.5 Payment of Loan Fee. Lender shall have obtained payment of the loan fee
referenced in Section 15 hereof.
6.6 Representations and Warranties True. All representations and warranties
by Borrower shall remain true and correct and all agreements that Borrower is to
have performed or complied with by the date hereof shall have been performed or
complied with.
6.7 No Default. No Event of Default exists, and no event has occurred and
no condition exists that, after notice or lapse of time, or both, would
constitute an Event of Default.
6.8 Appraisal. Lender shall have completed at the Closing such appraisals
of the Collateral as Lender shall require and the results of the appraisal(s)
shall be satisfactory to Lender.
6.9 Examination. An examination of such of the Collateral as Lender may
require shall have been performed by Lender, at Borrower's expense, prior to the
Closing Date and the results of that examination shall be acceptable to Lender.
6.10 Opinions of Counsel. Borrower, at its expense, shall have provided
Lender with written opinions of counsel acceptable to Lender with respect to
such matters as Lender may require.
SECTION 7. ADDITIONAL CONDITIONS PRECEDENT FOR FUTURE ADVANCES
The obligation of Lender to make any additional Advances on the Line of
Credit shall be subject to the following additional conditions precedent, all of
which shall have been satisfied and remain satisfied at the time of each such
Advance:
7.1 Prior Conditions. All of the conditions precedent provided in Section 6
hereof shall have been and shall continue to be satisfied.
7.2 Items Required. Borrower, at its expense, shall have obtained and
delivered to Lender, in form and content reasonably satisfactory to Lender and
subject to approval in writing by Lender, evidence that there has been no
Material Adverse Effect in the financial condition of the Borrower since the
information provided to Lender upon which Lender's approval of the Loans was
based.
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7.3 Request for Advance. Lender shall have received a request for the
Advance from Borrower specifying the date and amount of the requested Advance.
Each Advance shall be conclusively deemed to be made at the request of and for
the benefit of Borrower (i) when credited to any deposit account of Borrower
maintained with Lender, or (ii) when advanced or made in accordance with the
instructions of Borrower. Lender, at its option, may set a cut off time, after
which all requests for Advances will be treated as having been requested on the
next succeeding Business Day.
7.4 Representations and Warranties True. All representations and warranties
by Borrower shall remain true and correct and all agreements that Borrower is to
have performed or complied with by the date of the requested Advance shall have
been performed or complied with.
7.5 No Default. No Event of Default exists, and no event has occurred and
no condition exists that, after notice or lapse of time, or both, would
constitute an Event of Default.
7.6 Examination Satisfactory. The results of the most recent examination of
Borrower's accounts receivable and other Collateral performed by Lender shall
have been satisfactory to Lender in Lender's reasonable discretion.
7.7 Required Documents: Borrower shall have provided to Lender within
fifteen days after the first day of each calendar month after the Closing Date,
or more frequently if required by Lender, a Certification and Reconciliation of
Borrowing Base in the form attached as Schedule 6.2(h) dated and current as of
the first day of each such month, or more frequently if required by Lender.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
8.1 Recitals True. The recitals and statements of intent appearing in this
Agreement are true and correct.
8.2 Duly Organized. Borrower is duly organized, validly existing and in
good standing under the laws of the State of its formation, and is qualified to
do business and is in good standing in the State of Arizona and in every other
state in which it is doing business.
8.3 Power and Authority. Borrower has full power and authority to own its
properties and assets and to carry on its business as now being conducted.
8.4 Fully Authorized. Borrower is fully authorized and permitted to enter
into this Agreement and the other Loan Documents, to execute any and all
documentation required herein, to borrow the amounts contemplated herein upon
the terms set forth herein and to perform the terms of this Agreement and the
other Loan Documents. This Agreement, the Notes and each of the other Loan
Documents are valid and binding legal obligations of Borrower and each is
enforceable in accordance with its terms.
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8.5 Valid Liens. The liens, security interests, pledges and assignments
created by the Security Documents will, when granted, be valid, effective,
properly perfected (assuming the UCC-1 forms have been properly filed by
Lender), and enforceable liens, security interests, pledges and assignments.
8.6 No Breach or Default. The execution, delivery and performance by
Borrower of this Agreement, the Notes, and the other Loan Documents will not
conflict with or result in a default under: (i) any provision of the
organizational documents of Borrower, (ii) any law or regulation applicable to
Borrower, or (iii) the terms, conditions or provisions of any agreement or
instrument under which Borrower is a party or is obligated. Borrower is not in
default in the performance or observance of any covenants, conditions or
provisions of any such agreement or instrument.
8.7 No Adverse Proceeding. To the best of Borrower's knowledge, no actions,
suits or proceedings are pending or threatened against Borrower or Guarantor
that could result in a Material Adverse Effect. To the best of Borrower's
knowledge, neither Borrower nor Guarantor is in default with respect to any
order, writ, injunction or decree, of any court, governmental department,
commission, board, agency or official, which default could result in a Material
Adverse Effect. To the best of Borrower's knowledge, there is no litigation
pending or threatened against Borrower or Guarantor other than as described in
Schedule 8.7 attached.
8.8 No Violation of Environmental Laws. To the best of Borrower's
knowledge, (i) neither Borrower nor any Facility are in violation of any
Environmental Law, and (ii) neither Borrower nor any Facility are subject to any
existing, pending or threatened investigation by any federal, state or local
governmental authority under or in connection with any Environmental Law.
Borrower has not obtained as the result of the requirements of any Environmental
Law, and to the best of Borrower's knowledge is not required by any
Environmental Law to obtain, any permit or license to construct or use any
improvements, fixtures or equipment that are a part of, or are located on, any
Facility or to operate any business that is being conducted or intended to be
conducted on any Facility. Borrower has not caused or permitted the Release of,
and has no knowledge of the Release or presence of, any Hazardous Substance on
any Facility, except in accordance with all Environmental Laws, or the migration
of any Hazardous Substance, except in accordance with all Environmental Laws,
from or to any other property adjacent to, or in the vicinity of, any Facility.
Borrower's prior and present use of each Facility has not resulted in, and its
future use of each Facility will not result in, the Release of any Hazardous
Substance on the Facility, except in accordance with all Environmental Laws.
8.9 Financial Statements Correct. All financial statements, profit and loss
statements, statements as to ownership and other statements or reports
previously or hereafter given to Lender by or on behalf of Borrower are and
shall be true, complete and correct as of the date thereof. There has been no
change since the latest financial statements of Borrower given to Lender that
could have a Material Adverse Effect.
8.10 Tax Returns Filed. Borrower has properly prepared, executed and filed
(unless an extension of time has been granted by the proper authorities) all
federal, state and local tax returns required by law and has paid all of its
current obligations before delinquent, including all federal, state and local
taxes and all other payments required under federal, state or local law.
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8.11 No Margin Security. Borrower does not own any "margin security" as
that term is defined in Regulation U of the Board of Governors of the Federal
Reserve System except amounts thereof that do not and will not in the aggregate
constitute a substantial part of Borrower's assets.
8.12 ERISA Compliance. Borrower is in compliance in all material respects
with all applicable provision of ERISA. Neither a "reportable event" as defined
in ERISA nor a "prohibited transaction" as set forth in ERISA or in the Internal
Revenue Code has occurred and is continuing with respect to any Plan. No notice
of intent to terminate a Plan has been filed nor has any Plan been terminated;
no circumstances exist that constitute grounds under ERISA entitling PBGC to
institute proceedings to terminate, or appoint a trustee to administer, a Plan,
nor has the PBGC instituted any such proceedings. Borrower is not a party to,
and has no employees who are covered by, a multi-employer pension or benefit
plan. Borrower has met its minimum funding requirements under ERISA with respect
to each Plan and the present value of all vested benefits under each Plan did
not exceed the fair market value of all Plan assets allocable to such benefits,
as determined on the most recent valuation date of ERISA for calculating the
potential liability of Borrower to the PBGC or the Plan under ERISA. Borrower
has not incurred any liability to the PBGC under ERISA.
8.13 Affirmation. Each request by Borrower for an Advance shall constitute
an affirmation on the part of Borrower that the representations and warranties
contained herein are true and correct as of the time of such request and that
the conditions precedent for the same have been satisfied. All representations
and warranties made herein shall survive the execution of this Agreement, all
Advances and the execution and delivery of all other Loan Documents, so long as
Lender has any commitment to lend to Borrower hereunder and until the
Indebtedness has been fully paid and all of the Obligations have been fully
performed.
8.14 Guarantees Binding. Each guarantee referred to in Paragraph 5.2 hereof
constitutes a legal, valid and binding obligation of Guarantor according to the
terms thereof.
SECTION 9. AFFIRMATIVE COVENANTS
So long as Lender has any commitment to lend to Borrower hereunder and
until the Indebtedness as been fully paid and all of the Obligations have been
fully performed:
9.1 No Changes in Documents. Borrower shall maintain its existence with no
material amendments or changes in its organizational documents which would
adversely affect the Collateral, Lender's rights under the Loan Documents or
security interest in Collateral or the ability of Borrower to perform its
obligations under the Loan Documents without the prior written approval of the
Lender, not to be unreasonably held or delayed. Borrower may change its name
with prior written notice delivered to Lender at least five (5) business days
prior to the change.
9.2 Maintain Business. Borrower shall maintain in full force and effect all
agreements, rights and licenses necessary to carry out its business, and shall
keep all of its properties in good condition and repair and shall make all
needed and proper repairs and improvements to its properties in order to
properly conduct its business.
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9.3 Comply With Laws. Borrower will comply in all material respects with
all applicable laws, including without limitation, all applicable Environmental
Laws. Borrower will not, and will not permit any third party to, use, generate,
manufacture, produce, store, or Release on, under or about any Facility, or
transfer to or from any Facility, any Hazardous Substance except in compliance
with all applicable Environmental Laws.
9.4 Maintain Insurance. Borrower shall maintain in full force and effect at
all times all insurance coverages required as a condition of the Loans or
required under the terms of the Loan Documents.
9.5 Loan Payments. Borrower shall make all payments of interest and
principal on the Loans and shall keep and comply with all terms, conditions and
provisions of the Loan Documents.
9.6 Statements and Reports. Borrower shall maintain a standard, modern
system of accounting that reflects the application of generally accepted
accounting principles, consistently applied, and Borrower shall furnish to
Lender the following:
(a) Within one hundred twenty (120) days after the end of each fiscal
year of Borrower, the 10-KSB statement for the Consolidated Group for that
fiscal year, prepared in accordance with GAAP, reviewed by an independent
certified public accountant selected by Borrower who is acceptable to
Lender in its reasonable judgment.
(b) Within forty-five (45) days after the end of each fiscal month of
Borrower, the financial statement for the Consolidated Group, prepared in
accordance with GAAP and on a basis consistent with the year-end financial
statements for the Consolidated Group, certified as true and correct by the
principal financial officer(s) of Borrower.
(c) With each statement submitted under subparagraphs (a) and (b)
above, a certificate signed by Borrower and by the principal financial
officer(s) of Borrower stating, to the best of their knowledge, that no
Event of Default exists, and no event has occurred and no condition exists
that, after notice or lapse of time, or both, would constitute an Event of
Default.
(d) On the fifteenth day of each calendar month, or more frequently if
required by Lender, a Certification and Reconciliation of Borrowing Base in
the form attached as Schedule 6.2(h), or, if none is attached, in form
acceptable to Lender in its sole discretion.
(e) Within fifteen (15) days after the end of each calendar month, (i)
a current aged listing of Borrower's accounts receivable, (ii) a then
current schedule of all equipment, including all equipment held for rental
to customers in the ordinary course of business, (iii) every six (6)
months, a depreciation schedule, and (iv) a current aged listing of
Borrower's accounts payable.
(f) A statement of litigation matters involving Borrower that could
cause a Material Adverse Effect, such statement to be furnished within
fifteen (15) days after date of service of such litigation or the
occurrence of any such change.
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(g) Annually, as filed, a complete copy, including all schedules, of
the federal income tax returns for Borrower.
(h) Annually, as filed, a complete copy, including all schedules, of
the federal income tax returns of Guarantor.
(i) Within ninety (90) days after the end of each fiscal year of
Borrower, or more often at Lender's request, financial statements, prepared
on forms provided by or acceptable to Lender, for Guarantor.
(j) Promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of Borrower and
Guarantor as Lender may reasonably request.
9.7 Records. Borrower shall maintain, in a safe place, proper and accurate
books, ledgers, correspondence and other records relating to its operations and
business affairs. Lender, during normal business hours after reasonable prior
telephonic notice, shall have the right from time to time to examine and audit
and to make abstracts from and photocopies of Borrower's books, ledgers,
correspondence and other records.
9.8 Accounts Receivable and Collateral Examination. Lender shall have the
right to perform an examination of Borrower's accounts receivable and of any
other Collateral at any reasonable time during normal business hours and upon
reasonable prior notice to Borrower.
9.9 Maintain Insurance. Borrower shall at all times maintain public
liability, property damage and worker's compensation insurance in amounts and
with coverages satisfactory to Lender, with loss payable endorsements or
additional insured endorsements in favor of Lender as appropriate. Any proceeds
from such insurance policies shall be applied in the manner set forth in the
Security Documents and the other Loan Documents.
9.10 No Margin Security. Borrower shall not use any proceeds of the Loans,
or any proceeds of any other or future loan from Lender to Borrower, directly or
indirectly, to purchase or carry any "margin security" as that term is defined
in Regulation U of the Board of Governors of the Federal Reserve System or to
reduce or retire any indebtedness undertaken for such purposes within the
meaning of said Regulation U, and will not use such proceeds in a manner that
would cause Borrower to be in violation of Regulation G, T, or X of such Board,
nor use such proceeds for any purpose not permitted by Section 7 of the
Securities Exchange Act of 1934, as amended, or any of the rules or regulations
respecting the extensions of credit promulgated thereunder.
9.11 Pay Obligations. Borrower shall pay all of its current obligations
before they become delinquent, including all federal, state and local taxes,
assessments, levies and governmental charges and all other payments required
under any federal, state or local law; provided, however, that Borrower may
contest any such taxes, assessments, levies, charges or payments if such contest
is pursuant to established procedures, the tax is paid prior to contest if
required by law, Borrower provides such bonds or other security as may be
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reasonably required by Lender, and upon a final adverse determination Borrower
pays such taxes, assessments, levies, charges or payments, along with any
penalties, as are required in a prompt manner.
9.12 Checking Account Analysis. Upon the analysis each quarter by Lender of
Borrower's checking account with Lender, if any, Borrower shall promptly pay all
charges for services utilized by Borrower that are not offset by credits given
by Lender for balances maintained in that account.
9.13 Further Assurance. Borrower shall execute and deliver such additional
documents and do such other acts as Lender may reasonably require in connection
with the Loans.
SECTION 10. NEGATIVE COVENANTS
Borrower covenants and agrees that so long as Lender has any commitment to
lend to Borrower hereunder and until the Indebtedness as been fully paid and all
of the Obligations have been fully performed, Borrower shall not, without
receiving the prior written consent of Lender:
10.1 Incur Debt. Become or remain obligated either directly or as a
guarantor or surety for any indebtedness for borrowed money or for any
indebtedness incurred in connection with the acquisition of any property, real
or personal, tangible or intangible, except:
(a) Indebtedness to Lender; and
(b) Unsecured trade, utility or non-extraordinary accounts payable
arising in the ordinary course of its business.
10.2 Transfer Collateral; Incur Liens. Assign, transfer or convey any of
its right, title and interest in any Collateral, other than in the ordinary
course of business and for fair consideration; create or suffer to be created
any mortgage, pledge, security interest, encumbrance or other lien on any
Collateral (except for Permitted Liens); or create or suffer to be created any
mortgage, pledge, security interest, encumbrance or other lien on any other
property or assets which it now owns or hereafter acquires.
10.3 Loans, Investments, etc. Make any loan, advance, extension of credit,
or gift to, or, without the prior written consent of Lender, which consent may
not be unreasonably withheld or delayed, any investment in or any acquisition of
any person or entity, except for (i) the purchase of United States government
bonds and obligations, (ii) extensions of credit to customers in the ordinary
course of business, (iii) the purchase of bank certificates of deposits and
prime rated commercial paper having a maturity not exceeding one year, (iv)
deposits in demand and savings accounts at banks, and (v) loans and advances to
employees and agents in the ordinary course of business for travel and
entertainment expenses and similar items.
10.4 Dissolution; Management Change. Dissolve or liquidate, or merge or
consolidate with or into any other entity; turn over the management or operation
of its property, assets or business to any other person, firm or corporation.
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10.5 Fiscal Year. Change the times of commencement or termination of its
fiscal year or other accounting periods; or change its methods of accounting
other than to conform to GAAP.
10.6 Tangible Net Worth Covenant. For the Consolidated Group permit
tangible net worth to be less than $5,000,000.00 at any time. The foregoing
covenant shall be measured quarterly, as of the end of each calendar quarter.
All computations made to determine compliance with the requirements contained in
this paragraph shall be made in accordance with GAAP and shall be certified as
true and correct by Borrower.
10.7 Intentionally Omitted
10.8 Dividends. Purchase, redeem, retire or otherwise acquire for value any
shares of its capital stock or member interests or declare or pay any dividend
on, or make any other distribution with respect to, whether by reduction of
capital or otherwise, any shares of its capital stock or member interests,
except, if Borrower is a Chapter S corporation or a limited liability company,
Borrower, as applicable, may pay dividends or make distributions that do not
exceed the amount necessary to enable each shareholder or member to pay his or
her pro rata share of taxes created as a result of that company's profits.
All financial terms used in this Paragraph shall have the meanings accorded
them under generally accepted accounting principles, unless otherwise defined
herein. All computations made to determine compliance with the requirements
contained in this Section shall be made in accordance with generally accepted
accounting principles, applied on a consistent basis, and shall be certified as
true and correct by Borrower.
SECTION 11. WAIVER
11.1 Notice Waivers. Borrower waives presentment, demand, protest and
notices of protest, nonpayment, partial payment and all other notices and
formalities except as expressly called for in this Agreement. Borrower consents
to and waives notice of: (i) the granting of indulgences or extensions of time
of payment, (ii) the taking or releasing of security, and (iii) the addition or
release of persons who may be or become primarily or secondarily liable on or
with respect to the Indebtedness or any part thereof, and all in such manner and
at such time as Lender may deem advisable.
11.2 Waiver of Defenses. Each entity comprising Borrower waives and agrees
not to assert: (a) any right to require Lender to proceed against any other
entity comprising Borrower or Guarantor, to proceed against or exhaust any
security for the Indebtedness, to pursue any other remedy available to Lender,
or to pursue any remedy in any particular order or manner; (b) the benefit of
any statute of limitations affecting such entity's liability hereunder or under
any other Loan Document or the enforcement hereof or thereof; (c) demand,
diligence, presentment for payment, protest and demand, and notice of extension,
dishonor, protest, demand, and nonpayment, except as provided herein and in the
Notes; (d) notice of the existence, creation or incurring of new or additional
indebtedness of Borrower to Lender; (e) the benefits of any statutory provision
limiting the liability of a surety, including without limitation the provisions
of A.R.S. Sections 12-1641, et seq.; and (f) any defense arising by reason of
any disability or other defense of any other entity comprising Borrower or by
reason of the cessation from any cause whatsoever (other than payment in full)
of the liability of Borrower for the Indebtedness. Each entity comprising
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Borrower hereby expressly consents to any impairment of Collateral, including,
but not limited to, failure to perfect a security interest and release
Collateral and any such impairment or release shall not affect such entity's
obligations hereunder.
11.3 No Waivers By Lender. No delay or omission by Lender in exercising any
right, power or remedy hereunder, and no indulgence given to Borrower, with
respect to any term, condition or provision set forth herein, shall impair any
right, power or remedy of Lender under this Agreement or any other Loan
Document, or be construed as a waiver by Lender of, or acquiescence in, any
Event of Default. Likewise, no such delay, omission or indulgence by Lender
shall be construed as a variation or waiver of any of the terms, conditions or
provisions of this Agreement or any other Loan Document. Any actual waiver by
Lender of any Event of Default shall not be a waiver of any other prior or
subsequent Event of Default or of the same Event of Default after notice to
Borrower demanding strict performance.
SECTION 12. DEFAULT
12.1 Events of Default. The occurrence of any of the following events or
conditions shall constitute an "Event of Default" under this Agreement:
(a) Any failure to pay any interest or principal or any other part of
the Indebtedness within five (5) days after the same becomes due and
payable subject to any applicable cure periods.
(b) Any warranty, representation or statement contained in this
Agreement, in any of the Notes, in any other Loan Document, or made or
furnished to Lender by or on behalf of Borrower or Guarantor that shall be
or shall prove to have been materially false or misleading as of the time
made or furnished.
(c) The filing by Borrower or Guarantor of any proceeding under the
federal bankruptcy laws now or hereafter existing or any other similar
statute now or hereafter in effect; or the entry of an order for relief
under such laws with respect to Borrower or Guarantor.
(d) The commencement of any proceeding described in Subparagraph (c)
above against Borrower or Guarantor unless dismissal of such proceeding is
promptly sought and diligently prosecuted and such proceeding is in fact
dismissed within forty-five (45) days from the date of such commencement;
the acquiescence by Borrower or Guarantor to such proceedings; or the
appointment of a receiver, trustee, custodian or conservator for all or any
part of the assets of Borrower or Guarantor.
(e) The insolvency of Borrower or Guarantor; the execution by Borrower
or Guarantor of an assignment of a material portion of its assets for the
benefit of creditors; or the convening by Borrower or Guarantor of a
meeting of its creditors, or any class thereof, for purposes of affecting a
moratorium upon or extension or composition of its debts; or the failure of
Borrower or Guarantor to pay any of its material debts as they mature; or
if Borrower or Guarantor is generally not paying any of its material debts
as they mature.
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(f) The admission in writing by Borrower or Guarantor that it is
unable to pay its debts as they mature or that it is generally not paying
its debts as they mature.
(g) The liquidation, death, incompetency, termination or dissolution
of Borrower or Guarantor.
(h) Any levy or execution upon, or judicial seizure of, any material
portion of the Collateral.
(i) Any garnishment or attachment of any material portion of the
Collateral that is not released, bonded or stayed to the satisfaction of
Lender within twenty (20) days after the institution thereof.
(j) The existence or the filing of any Prohibited Lien that is not
removed, released, bonded or stayed to the satisfaction of Lender within
twenty (20) days after the later of its creation or Borrower's receipt of
actual notice thereof, except any Prohibited Lien the validity of which
Borrower is actively contesting in good faith by appropriate proceedings
and for which Borrower has furnished to Lender a cash deposit or other
security in an amount and form satisfactory to Lender against the sale or
forfeiture of the Collateral that is the subject of the Prohibited Lien.
(k) The entry of any judgment, decree, order or any other type of
adverse ruling against Borrower that may have a Material Adverse Effect on
Borrower unless within fifteen (15) days thereafter, Borrower posts a
supercedeas Bond in an amount with an insurer acceptable to Lender,
provided the acts taken by Borrower in connection with obtaining such bond
do not otherwise cause an Event of Default or constitute an event or
condition which with the giving of notice or the lapse of time or both
would result in an Event of Default.
(l) The abandonment by Borrower of all or any material part of its
property, assets, or the Collateral.
(m) The loss, theft or destruction of, or any substantial damage to,
any material part of the property or assets of Borrower, or any material
portion of the Collateral, that is not adequately covered by insurance.
(n) Intentionally Omitted.
(o) The issuance of any order or decree enjoining or prohibiting
Borrower or Lender or any of them from performing under this Agreement,
which order or decree is not vacated within fifteen (15) days after the
granting thereof.
(p) Any failure or neglect to perform or observe any of the terms,
provisions, conditions or covenants of this Agreement, any of the Notes, or
any other Loan Document, or the occurrence of any default under any of the
Notes, any of the Security Documents, or any of the other Loan Documents,
other than those referred to in the foregoing provisions of this Section
12.1, and such failure or neglect either (i) cannot be remedied, or (ii)
can be remedied but it continues unremedied for a period of thirty (30)
days after notice thereof to Borrower.
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(q) Intentionally Omitted.
(r) The occurrence of any default or any event, which with the passage
of time, the giving of notice, or both, could lead to a material default
under any other contract, loan, obligation or agreement of any kind
whatsoever to which Borrower or Guarantor is liable to Lender, as
principal, guarantor or otherwise.
(s) The occurrence of any change in the financial condition of
Borrower that Lender, in its reasonable business judgment, deems to have a
Material Adverse Effect.
(t) Intentionally Omitted.
12.2 Remedies. Upon the occurrence of any Event of Default, and at any time
thereafter while such Event of Default is continuing, Lender may do one or more
of the following:
(a) Cease making Advances and declare the entire amount of the Loans
and the rest of the Indebtedness immediately due and payable, without
notice or demand.
(b) Proceed to protect and enforce its rights and remedies under this
Agreement, the Notes, all Security Documents, and all other Loan Documents.
(c) Avail itself of any other relief to which Lender may be legally or
equitably entitled.
12.3 Payment of Costs. Borrower shall pay all reasonable costs and expenses
including, without limitation, costs of title searches and title policy
commitments, court costs and reasonable attorneys' fees incurred in enforcing
payment of the Indebtedness and performance of the Obligations or in exercising
the rights and remedies of Lender hereunder. All such costs and expenses shall
be secured by all Security Documents. In the event of any court proceedings,
court costs and attorneys' fees shall be set by the court and not by jury and
shall be included in any judgment obtained.
12.4 Right to Pay and Perform. If Borrower shall fail to pay any amount as
required herein or in any of the other Loan Documents, to satisfy any
requirement hereof or of any of the other Loan Documents, or to perform
otherwise as required herein or in any of the other Loan Documents, Lender may
advance the money necessary to pay the same, to satisfy such requirements or to
so perform.
12.5 No Prejudice to Lender. No failure on the part of Lender to exercise
any of its rights hereunder arising upon any Event of Default shall be construed
to prejudice its rights upon the occurrence of any other or subsequent Event of
Default. No delay on the part of Lender in exercising any such rights shall be
construed to preclude it from the exercise thereof at any time during the
continuance of that Event of Default. Lender may enforce any one or more
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remedies or rights hereunder successively or concurrently. By accepting payment
of any of the Indebtedness or performance of any of the Obligations after its
due date, Lender shall not thereby waive the agreement contained herein that
time is of the essence, nor shall Lender waive either its right to require
prompt payment when due of the remainder of the Indebtedness or performance when
due of the remainder of the Obligations or its right to consider the failure to
so pay or perform an Event of Default.
SECTION 13. ACTION UPON AGREEMENT
13.1 No Third Party Beneficiaries. This Agreement is made for the sole
protection and benefit of the parties hereto and no other person or organization
shall have any right of action hereon or be a third party beneficiary hereof.
13.2 Entire Agreement. This Agreement embodies the entire Agreement of the
parties with regard to the subject matter hereof. There are no representations,
promises, warranties, understandings or agreements expressed or implied, oral or
otherwise, in relation thereto, except those expressly referred to or set forth
herein. Borrower acknowledges that the execution and delivery of this Agreement
is its free and voluntary act and deed, and that said execution and delivery
have not been induced by, nor done in reliance upon, any representations,
promises, warranties, understandings or agreements made by Lender, its agents,
officers, employees or representatives.
13.3 Changes in Writing. No promise, representation, warranty or agreement
made subsequent to the execution and delivery of this Agreement by either party
hereto, and no revocation, partial or otherwise, or change, amendment or
addition to, or alteration or modification of, this Agreement shall be valid
unless the same shall be in writing signed by all parties hereto.
13.4 Separate Entities. Lender and Borrower each have separate and
independent rights and obligations under this Agreement. Nothing contained
herein shall be construed as creating, forming or constituting any partnership,
joint venture, merger or consolidation of Borrower and Lender for any purpose or
in any respect.
SECTION 14. GENERAL
14.1 Agreement to Continue. This Agreement, and the representations,
warranties, and covenants contained herein shall survive the making of the Loans
and the Closing, and shall remain in full force and effect until the
Indebtedness as been fully paid and all of the Obligations have been fully
performed.
14.2 Rights to Protect Lender. All rights, powers and remedies granted
Lender herein, or otherwise available to Lender, are for the sole benefit and
protection of Lender, and Lender may exercise any such right, power or remedy at
its option and in its sole and absolute discretion without any obligation to do
so. In addition, if, under the terms hereof, Lender is given two or more
alternative courses of action, Lender may elect any alternative or combination
of alternatives, at its option and in its sole and absolute discretion. All
monies advanced by Lender under the terms hereof and all amounts paid, suffered
or incurred by Lender in exercising any authority granted herein, including
reasonable attorneys' fees, shall be secured by the Security Documents, shall
bear interest at the highest rate payable on any of the Indebtedness until paid,
and shall be due and payable by Borrower to Lender immediately without demand.
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14.3 Indemnity. Borrower shall and hereby does indemnify and hold Lender
harmless from and against all claims, costs, expenses, actions, suits,
proceedings, losses, damages and liabilities of any kind whatsoever, including
but not limited to attorneys' fees and expenses, arising out of any matter
relating, directly or indirectly, to the Loans, whether resulting from internal
disputes of Borrower, disputes between Borrower and Guarantor, or whether
involving other third persons or entities, or out of any other matter whatsoever
related to this Agreement, the other Loan Documents, any Facility, or any
Collateral, including but not limited to (i) any use, generation, manufacture,
production, storage, Release, threatened Release, or presence of a Hazardous
Substance; (ii) any violation or claim of violation of any Environmental Law; or
(iii) any breach of any of the warranties, representations and covenants
contained herein, but excluding any claim or liability which arises as the
direct result of the gross negligence or willful misconduct of Lender. This
indemnity provision shall continue in full force and effect and shall survive
not only the making of the Loans and all Advances but shall also survive the
payment of the Indebtedness and the performance of the Obligations.
14.4 Joint and Several; Context. If Borrower consists of more than one
person or entity their liability shall be joint and several. The provisions
hereof shall apply to the parties according to the context thereof and without
regard to the number or gender of words or expressions used. References herein
to Borrower shall mean each entity comprising Borrower individually and all
entities comprising Borrower collectively. References herein to Guarantor shall
mean each entity comprising Guarantor individually and all entities comprising
Guarantor collectively.
14.5 Time of the Essence. Time is expressly made of the essence of this
Agreement.
14.6 Notices. All notices required or permitted to be given hereunder shall
be in writing and may be given in person or by United States mail, by delivery
service or by electronic transmission. Any notice directed to a party to this
Agreement shall become effective upon the earliest of the following: (i) actual
receipt by that party; (ii) delivery to the designated address of that party,
addressed to that party; or (iii) if given by certified or registered United
States mail, seventy-two (72) hours after deposit with the United States Postal
Service, postage prepaid, addressed to that party at its designated address. The
designated address of a party shall be the address of the party shown below or
such other address within the continental United States as that party, from time
to time, may specify by notice to the other parties:
Borrower: c/x Xxxxxxxx Aerospace Technologies, Inc.
X.X. Xxx 00000
Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxxx
with a copy to: Xxxxx Xxx, Esq.
World Jet Corporation
0000 X. Xxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
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Lender: **********************
Phoenix, Arizona 85012-1647
Attention:
with a copy to: Xxxxxxx & Xxxxx Xxxxxxx Xxxx LLP
One Renaissance Square
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
14.7 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their successors and assigns.
14.8 Headings. The headings or captions of sections and paragraphs in this
Agreement are for convenience and reference only, do not define, control or
limit the provisions of such sections or paragraphs, and shall not affect the
interpretation of this Agreement.
SECTION 15. LOAN FEE
15.1 Lender has earned and Borrower shall pay to Lender upon the execution
of this Agreement a non-refundable loan fee in the amount of $17,500.00.
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
GLOBAL AIRCRAFT SOLUTIONS, INC.,
FKA RENEGADE VENTURE
CORPORATION, a Nevada corporation
By:________________________________
Name:______________________________
Title:_____________________________
WORLD JET CORPORATION,
a Nevada corporation
By:________________________________
Name:______________________________
Title:_____________________________
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XXXXXXXX AEROSPACE TECHNOLOGIES,
INC., a Delaware orporation
By:________________________________
Name:______________________________
Title:_____________________________
BORROWER
**************************** BANK,
a banking corporation organized and
existing under the laws of the State
of Wisconsin
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
LENDER
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List of Schedules:
2.40 Approved Liens
6.2(h) Certification and Reconciliation of Borrowing Base
8.7 Pending or Threatened Litigation Affecting Borrower or
Guarantor
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SCHEDULE 2.40
Approved Liens
None
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SCHEDULE 6.2(h)
Certification and Reconciliation of Borrowing Base
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Schedule 8.7
Pending or Threatened Litigation
GLOBAL AIRCRAFT SOLUTIONS, INC.
-------------------------------
On June 29, 2004, the Company initiated a lawsuit against Xxxxxx Xxxxxx and Xxxx
Xxx Xxxxxx, husband and wife, and Seajay Holdings, LLC a Michigan Limited
Liability Company (the "Defendants") in the United States District Court for the
District of Arizona requesting entry of a judgment for the return of 1,500,000
shares of common stock. Global and HAT have asserted claims that Xxxxxx Xxxxxx
(who is the sole shareholder and president of Seajay Holdings) and Seajay
Holdings acquired 1,500,000 shares of common stock of Global as part of a Stock
Exchange Agreement without consideration for the receipt of such common stock.
The Company is pursuing the return of these shares. This lawsuit emanates from a
stock exchange agreement of April 2002 whereby Old Mission Assessment ("OMAC")
agreed to provide HAT financing and capital for its newly established business.
OMAC and its officers Xxxxxx Xxxxxx and others, entered into two debenture
related agreements on April 15, 2002 whereby OMAC agreed to pay to HAT the sum
of $1,500,000.00 under each debenture agreement on or before July 15, 2002. In
consideration of this agreement HAT agreed to provide to various investing
parties, including Xxxxxx Xxxxxx'x entity Seajay Holdings, shares of stock of
HAT. On May 2, 2002, Global acquired HAT in a stock exchange thereby entitling
the investing parties, including Xxxxxx Xxxxxx'x entity Seajay Holdings, to
Global stock in consideration for the $3,000,000.00 investment. Seajay Holdings
acquired 1,500,000 shares of common stock of Global pursuant to this
transaction. Although Global stock was issued to the investors, including Xxxxxx
Xxxxxx'x entity Seajay Holdings, HAT/Global only received $400,535.00 of the
agreed upon $3,000,000.00 to be paid pursuant to the debenture agreements. Since
payment in full was never received by Global for the shares of common stock
issued as consideration for the debenture agreements, Global was able to secure
the return of all common stock issued in connection with the debenture
agreements except the 1,500,000 shares of common stock issued to Xxxxxx Xxxxxx'x
entity Seajay Holdings. Global has agreed to return the $400,535.00 of the
agreed upon $3,000,000.00 received pursuant to the debenture agreements. This
sum was released from escrow and paid to United Pay Phone, an investor in OMAC,
pursuant to an agreed upon order of court.
Although Global has made repeated demands upon Xxxxxx Xxxxxx and Seajay Holdings
to return the 1,500,000 shares of common stock, Xxxxxx Xxxxxx and Seajay
Holdings have failed and refused to return such stock. As a consequence of
Xxxxxx Xxxxxx'x and Seajay Holdings failure to return the common stock received,
Global initiated legal proceedings for damages in the amount of no less than
$1,000,000.00 plus interest and fees; the return of the 1,500,000 shares of
common stock; and punitive damages in the amount of $10,000,000.00.
XXXXXXXX AEROSPACE TECHNOLOGIES, INC. ("HAT")
---------------------------------------------
On April 8, 2005, HAT mailed a demand letter to Aero Micronesia demanding
immediate payment of $184,684.64 for delinquent invoicing. Aero Micronesia has
failed to respond to this demand letter and HAT will be initiating legal
proceedings to obtain judgment and request a provisional remedy to attach assets
of the debtor.
WORLD JET CORPORATION
---------------------
World Jet is not involved in any legal proceedings.
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