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Exhibit 10.4.8
NATIONSBANK, N.A.
LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of April 9, 1998,
by and between NationsBank, N.A., a national banking association ("Bank") and
the Borrower described below.
In consideration of the Loan or Loans described below and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, Bank and Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other
terms defined herein, the following terms shall have the meaning set forth with
respect thereto:
A. BORROWER: American Aircarriers Support, Inc.
a South Carolina corporation
B. BORROWER'S ADDRESS:
0000 Xxxxxx Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxx Xxxxxxxx 00000
C. CURRENT ASSETS. Current Assets means the aggregate amount of all of
Borrower's assets which would, in accordance with GAAP, properly be defined as
current assets.
D. CURRENT LIABILITIES. Current Liabilities means the aggregate amount
of all current liabilities as determined in accordance with GAAP, but in any
event shall include all liabilities except those having a maturity date which
is more than one year from the date as of which such computation is being made.
E. HAZARDOUS MATERIALS. Hazardous Materials include all materials
defined as hazardous materials or substances under any local, state or
federal environmental laws, rules or regulations, and petroleum, petroleum
products, oil and asbestos.
F. LOAN. Any loan described in Section 2 hereof and any subsequent loan
which states that it is subject to this Loan Agreement.
G. LOAN DOCUMENTS. Loan Documents means this Loan Agreement and any and
all promissory notes executed by Borrower in favor of Bank and all other
documents, instruments, guarantees, certificates and agreements executed and/or
delivered by Borrower, any guarantor or third party in connection with any
Loan.
H. TANGIBLE NET WORTH. Tangible Net Worth means the amount by which
total assets exceed total liabilities in accordance with GAAP, less leasehold
improvements, organizational expense, transfers to affiliates, employees,
shareholders and related parties, and all other intangible assets.
I. ACCOUNTING TERMS. All accounting terms not specifically defined or
specified herein shall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from time
to time, consistently applied, with respect to the financial statements
referenced in Section 3.H. hereof.
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2. LOANS.
A. LOAN. Bank hereby agrees to make (or has made) one or more
loans to Borrower in the aggregate principal face amount of $10,000,000.00. The
obligation to repay the loans is evidenced by a promissory note or notes dated
___________________________________________________ (the promissory note or
notes together with any and all renewals, extensions or rearrangements thereof
being hereafter collectively referred to as the "Note") having a maturity date,
repayment terms and interest rate as set forth in the Note.
i. REVOLVING CREDIT FEATURE. The Loan provides for a revolving
line of credit (the "Line") under which Borrower may from time to time, borrow,
repay and re-borrow funds. The obligation of the Bank to make any advance or to
issue any Letter of Credit shall be subject to satisfaction by the Borrower that
the representations and warranties set forth in Section 3 hereof shall be true
and correct in all material respects on the Closing Date. Each advance made at
the request of the Borrowers hereunder shall be deemed to be a reaffirmation on
the date of such transaction as to the matters specified in the representations
and warranties in Section 3. Advances on this Loan will be requested by
telephonic or written communication from a person reasonably believed by the
Bank to be an authorized representative of the Borrower. Unless otherwise agreed
by the Bank, all advances will be made to a demand deposit account maintained at
the Bank in the name of the Borrower.
ii. BORROWING BASE. The Line is subject to the Borrowing Base
Agreement attached hereto as Exhibit "A" and by reference made a part hereof.
a. Advances. The Bank agrees, on the terms herein set forth,
to make advances to the Borrower from time to time during the period from the
date hereof to the Termination Date for purposes of financing working capital
(accounts receivable and inventory), aircraft engine leasing, issuance of
letters of credit and for general corporate purposes); provided that immediately
after giving effect to each advance, the Line plus the Letter of Credit
obligations shall not exceed the lesser of the amount of the Note or the
Borrowing Base. Each advance shall be in the aggregate amount of $1,000.00, or a
multiple thereof, and shall be debited by the Bank to the Note. Within the
limits herein set forth and as requested by the Borrower, the Bank shall make
advances, accept payments and prepayments pursuant to the terms hereof, and
re-advance any amount so paid or prepaid.
If on any date, the Note Balance plus the Letter of Credit
Obligations exceeds the Borrowing Base, the Borrowers shall immediately pay the
then outstanding Note Balance in an amount sufficient to reduce such excess to
zero (0). The Borrowers shall pay the outstanding balance on the Termination
Date.
iii. LETTER OF CREDIT SUBFEATURE. As a subfeature under the Line,
Bank may from time to time up to and including September 30, 1998, issue letters
of credit for the account of Borrower (each, a "Letter of Credit" and
collectively, "Letters of Credit"); provided, however, that the form and
substance of each Letter of Credit shall be subject to approval by Bank in its
sole discretion; and provided further that the aggregate undrawn amount of all
outstanding Letters of Credit shall not at any time exceed $2,000,000.00. No
Letter of Credit shall have an expiration date subsequent to September 25, 1998.
The undrawn amount of all Letters of Credit plus any and all amounts paid by
Bank in connection with drawings under any Letter of Credit for which the Bank
has not
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been reimbursed shall be reserved under the Line and shall not be available for
advances thereunder. Each draft paid by Bank under a Letter of Credit shall be
deemed an advance under the Line and shall be repaid in accordance with the
terms of the Line; provided however, that if the Line is not available for any
reason whatsoever, at the time any draft is paid by Bank, or if advances are not
available under the Line in such amount due to any limitation of borrowing set
forth herein, then the full amount of such drafts shall be immediately due and
payable, together with interest thereon, from the date such amount is paid by
Bank to the date such amount is fully repaid by Borrower, at that rate of
interest applicable to advances under the Line. In such event, Borrower agrees
that Bank, at Bank's sole discretion may debit Borrower's deposit account with
Bank for the amount of such draft.
a. The request for the issuance of a Letter of Credit shall
be submitted to the Bank at least three business days prior to the requested
date of issuance.
b. In the event of any drawing under any Letter of Credit,
the Bank will promptly notify the Borrower. Unless the Borrower shall
immediately notify the Bank of its intent to otherwise reimburse the Bank, the
Borrower shall be deemed to have requested an advance in the amount of the
drawing, the proceeds of which will be used to satisfy the reimbursement
obligations. The Borrower's reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances, irrespective of any rights
of set-off, counterclaim or defense to payment the Borrower may claim or have
against the Bank, the beneficiary of the Letter of Credit drawn upon or any
other Person, including without limitation any defense based on any failure of
the Borrower to receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The issuance of any supplement,
modification, amendment, renewal, or extension to any Letter of Credit shall,
for purposes hereof, be treated in all respects the same as the issuance of a
new Letter of Credit hereunder.
c. Indemnification; Nature of Bank's Duties.
(1) In addition to its other obligations under this
Section, the Borrower hereby agrees to protect, indemnify, pay and save the Bank
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorney fees) that
the Bank may incur or be subject to as a consequence, direct or indirect, of (a)
the issuance of any Letter of Credit, or (b) the failure of the Bank to honor a
drawing under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called "Governmental
Acts").
(a) As between the Borrower on the one hand and the
Bank on the other hand, the Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary thereof. The Bank
shall not be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of any Letter of Credit, even if it
should, in fact, prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part,
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that may prove to be invalid or ineffective for any reason; (iii) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they may be in
cipher; (iv) for errors in interpretation of technical terms; (v) for any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under a Letter of Credit or of the proceeds thereof; and (vi) for
any consequences arising from causes beyond the control of the Bank, including,
without limitation, any Governmental Acts. None of the above shall affect,
impair, or prevent the vesting of the Bank's rights or powers hereunder.
(b) In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action taken or omitted by
the Bank, under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put the Bank under
any resulting liability to the Borrowers. It is the intention of the parties
that this Loan Agreement shall be construed and applied to protect and indemnify
the Bank against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower, including,
without limitation, any and all risks of the acts or omissions, whether rightful
or wrongful, of any present or future Government Acts. The Bank shall not, in
any way, be liable for any failure by the Bank or anyone else to pay any drawing
under any Letter of Credit as a result of any Government Acts or any other cause
beyond the control of the Bank.
(c) Nothing in this Subsection (c) is intended to
limit the reimbursement obligation of the Borrower contained in this Loan
Agreement. The obligations of the Borrower shall survive the termination of this
Loan Agreement. No act or omissions of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the rights of the Bank to
enforce any right, power or benefit under this Loan Agreement.
(d) Notwithstanding anything to the contrary contained
in this Subsection (c), the Borrower shall have no obligation to indemnify the
Bank in respect of any liability incurred by the Bank arising solely out of the
gross negligence or willful misconduct of the Bank as determined by a court of
competent jurisdiction.
The Borrower shall pay the Bank its standard fees in
effect from time to time in connection with the issuance of each Letter of
Credit. Each such fee shall be payable in advance on the date of the issuance of
the applicable Letter of Credit.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank as follows:
A. GOOD STANDING. Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of South Carolina and has
the power and authority to own its property and to carry on its business in each
jurisdiction in which Borrower does business.
B. AUTHORITY AND COMPLIANCE. Borrower has full power and authority to
execute and deliver the Loan Documents and to incur and perform the obligations
provided for therein, all of which have been duly authorized by all proper and
necessary action of the appropriate governing body of Borrower. No consent or
approval of any public authority or other third party is required as a condition
to the validity of any Loan Document, and, to the best of Borrower's knowledge
after due inquiry, Borrower is in compliance with all laws and regulatory
requirements to which it is subject.
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C. BINDING AGREEMENT. This Agreement and the other Loan Documents
executed by Borrower constitute valid and legally binding obligations of
Borrower, enforceable in accordance with their terms.
D. LITIGATION. There is no proceeding involving Borrower pending or,
to the knowledge of Borrower, threatened before any court or governmental
authority, agency or arbitration authority, except as disclosed to Bank in
writing and acknowledged by Bank prior to the date of this Agreement.
E. NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to the
organization, power or authority of Borrower and no provision of any existing
agreement, mortgage, indenture or contract binding on Borrower or affecting its
property, which would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement and the other Loan
Documents.
F. OWNERSHIP OF ASSETS. Borrower has good title to its assets, and its
assets are free and clear of liens, except those granted to Bank and as
disclosed to Bank in writing prior to the date of this Agreement.
G. TAXES. All taxes and assessments due and payable by Borrower have
been paid or are being contested in good faith by appropriate proceedings and
the Borrower has filed all tax returns which it is required to file.
H. FINANCIAL STATEMENTS. The financial statements of Borrower
heretofore delivered to Bank have been prepared in accordance with GAAP applied
on a consistent basis throughout the period involved and fairly present
Borrower's financial condition as of the date or dates thereof, and there has
been no material adverse change in Borrower's financial condition or operations
since December 31, 1997. All factual information furnished by Borrower to Bank
in connection with this Agreement and the other Loan Documents is and will be
accurate and complete on the date as of which such information is delivered to
Bank and is not and will not be incomplete by the omission of any material fact
necessary to make such information not misleading.
I. PLACE OF BUSINESS. Borrower's chief executive office is located at
0000 Xxxxxx Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxx Xxxxxxxx 00000 .
J. ENVIRONMENTAL. The conduct of Borrower's business operations and
the condition of Borrower's property does not and will not violate any federal
laws, rules or ordinances for environmental protection, regulations of the
Environmental Protection Agency, any applicable local or state law, rule,
regulation or rule of common law or any judicial interpretation thereof
relating primarily to the environment or Hazardous Materials.
K. STOCK. The outstanding stock of Borrower is owned as set forth in
Exhibit "3K".
L. CONTINUATION OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made under this Agreement shall be deemed to be made at and as of
the date hereof and at and as of the date of any advance under any Loan.
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4. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will, unless Bank
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):
A. FINANCIAL CONDITION. Maintain Borrower's financial condition as
follows, determined in accordance with GAAP applied on a consistent basis
throughout the period involved except to the extent modified by the following
definitions:
i. Beginning December 31, 1997, maintain Tangible Net Worth of not
less than $4,250,000.00 plus 50 percent of all net profit after tax for the
fiscal year ending December 31, 1998, and plus 50 percent of all net profit
after tax for each fiscal year thereafter, measured annually. If Borrower issues
additional shares through an Initial Public Offering, Tangible Net Worth shall
be, as of December 31, 1997, not less than $4,250,000.00, plus the net sum
received from said issuance, plus 50 percent of all net profit after tax for the
fiscal year ending December 31, 1998, and plus 50 percent of all net profit
after tax for each fiscal year thereafter, measured annually.
ii. Maintain a ratio of total liabilities to Tangible Net Worth of
not more than 1.75 to 1.0 for each calendar quarter.
iii. Maintain a cash flow coverage ratio (defined as the aggregate
of net income after taxes plus depreciation, interest expense, amortization, and
other non-cash expenses, divided by the aggregate of the current portion of
long-term debt and capital lease obligations, interest expenses and dividends of
not less than 1.25 to 1.0 on the last day of each fiscal quarter for the period
of four consecutive quarters ending on such day beginning June 30, 1998.
B. FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a system of
accounting satisfactory to Bank and in accordance with GAAP applied on a
consistent basis throughout the period involved. All financial statements called
for below shall be prepared in form and content acceptable to Bank and by
independent certified public accountants acceptable to Bank.
In addition, Borrower will:
i. Furnish to Bank audited financial statements to include
statements of financial condition, income, cash flows, and changes in
shareholder equity of Borrower for each fiscal year of Borrower, within 90 days
after the close of each such fiscal year.
ii. Furnish to Bank internally prepared financial statements
(including a balance sheet and profit and loss statement) of Borrower for each
quarter of each fiscal year of Borrower, within 45 days after the close of each
such period.
iii. Furnish to Bank personal financial statement of guarantor for
each fiscal year, within 30 days after the close of each such fiscal year.
iv. Furnish to Bank a compliance certificate for (and executed by
an authorized representative of) Borrower concurrently with and dated as of the
date of delivery of each of the financial statements as required in paragraphs i
and ii above, containing (a) a certification that the financial statements of
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even date are true and correct and that the Borrower is not in default under the
terms of this Agreement, and (b) computations and conclusions, in such detail as
Bank may request, with respect to compliance with this Agreement, and the other
Loan Documents, including computations of all quantitative covenants.
v. Furnish to Bank promptly such additional information, reports
and statements respecting the business operations and financial condition of
Borrower and guarantor, respectively, from time to time, as Bank may reasonably
request.
C. INSURANCE. Maintain insurance with responsible insurance companies
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same vicinity,
specifically to include fire and extended coverage insurance covering all
assets, business interruption insurance, workers compensation insurance and
liability insurance, all to be with such companies and in such amounts as are
satisfactory to Bank and providing for at least 30 days prior notice to Bank of
any cancellation thereof. Satisfactory evidence of such insurance will be
supplied to Bank prior to funding under the Loan(s) and 30 days prior to each
policy renewal.
D. EXISTENCE AND COMPLIANCE. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.
E. ADVERSE CONDITIONS OR EVENTS. Promptly advise Bank in writing of
(i) any condition, event or act which comes to its attention that would or might
materially adversely affect Borrower's financial condition or operations or
Bank's rights under the Loan Documents, (ii) any litigation filed by or against
Borrower, (iii) any event that has occurred that would constitute an event of
default under any Loan Documents and (iv) any uninsured or partially uninsured
loss through fire, theft, liability or property damage in excess of an aggregate
of $100,000.00.
F. TAXES AND OTHER OBLIGATIONS. Pay all of its taxes, assessments and
other obligations, including, but not limited to taxes, costs or other expenses
arising out of this transaction, as the same become due and payable, except to
the extent the same are being contested in good faith by appropriate proceedings
in a diligent manner.
G. MAINTENANCE. Maintain all of its tangible property in good
condition and repair and make all necessary replacements thereof, and preserve
and maintain all licenses, trademarks, privileges, permits, franchises,
certificates and the like necessary for the operation of its business.
H. ENVIRONMENTAL . Immediately advise Bank in writing of (i) any and
all enforcement, cleanup, remedial, removal, or other governmental or regulatory
actions instituted, completed or threatened pursuant to any applicable federal,
state, or local laws, ordinances or regulations relating to any Hazardous
Materials affecting Borrower's business operations; and (ii) all claims made or
threatened by any third party against Borrower relating to damages,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials. Borrower shall immediately notify Bank of any remedial
action taken by Borrower with respect to Borrower's business operations.
Borrower will not use or permit any other party to use any Hazardous Materials
at any of Borrower's places
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of business or at any other property owned by Borrower except such materials as
are incidental to Borrower's normal course of business, maintenance and repairs
and which are handled in compliance with all applicable environmental laws.
Borrower agrees to permit Bank, its agents, contractors and employees to enter
and inspect any of Borrower's places of business or any other property of
Borrower at any reasonable times upon three (3) days prior notice for the
purposes of conducting an environmental investigation and audit (including
taking physical samples) to insure that Borrower is complying with this covenant
and Borrower shall reimburse Bank on demand for the costs of any such
environmental investigation and audit. Borrower shall provide Bank, its agents,
contractors, employees and representatives with access to and copies of any and
all data and documents relating to or dealing with any Hazardous Materials used,
generated, manufactured, stored or disposed of by Borrower's business operations
within five (5) days of the request therefore.
I. ADDITIONAL COVENANTS. The Borrower shall comply with those
additional covenants set forth on Exhibit "4I" attached hereto and by reference
made a part hereof.
i. SECURITY AGREEMENT. The Borrower shall assign and grant Bank a
first security agreement in any and all of Borrower's accounts and other rights
of Borrower to the payment for goods sold or leased or for services rendered
whether or not earned by performance, contract rights, book debts, checks,
notes, drafts, instruments, chattel paper, acceptances, and any and all amounts
due to Debtor from a factor or other forms of obligations and receivables, now
existing or hereafter arising out of the business of Borrower; any and all of
Borrower's goods held as inventory.
ii. GUARANTY. The loan shall be unconditionally and fully
guaranteed by only Xxxx X. Xxxxx. The Guaranty shall be released by Bank upon
successful completion of the Initial Public Offering by Borrower previously
submitted to Bank and the provisions of the Assignment of Insurance set forth in
paragraph 4I(iii) below. The Bank hereby acknowledges that all guarantors of
Borrower released by Bank are free and clear from all loans of Borrower
previously executed or executed heretofore between Borrower and Bank. iii.
Assignment of Insurance. The Borrower shall cause a first priority assignment of
the proceeds of a life insurance policy issued by an insurance company
satisfactory to the Bank on the life of Xxxx X. Xxxxx in the amount of
$1,000,000.00.
5. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will not, without the
prior written consent of Bank (and without limiting any requirement of any other
Loan Documents):
A. TRANSFER OF ASSETS OR CONTROL. Sell, lease, assign or otherwise
dispose of or transfer any assets, except in the normal course of its business,
or enter into any merger or consolidation, or transfer control or ownership of
the Borrower or form or acquire any subsidiary. Bank hereby consents to Borrower
conducting an Initial Public Offering of 2,000,000+/- shares.
B. LEASE EXPENDITURES. Incur new obligations for the lease or purchase
of real or personal property requiring payments in any fiscal year in excess of
an aggregate of $250,000.00.
C. LIENS. Grant, suffer or permit any contractual or
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noncontractual lien on or security interest in its assets, except in favor of
Bank, without prior written consent of Bank, or fail to promptly pay when due
all lawful claims, whether for labor, materials or otherwise.
D. EXTENSIONS OF CREDIT. Make or permit any subsidiary to make, any
loan or advance to any person or entity, or purchase or otherwise acquire, or
permit any subsidiary to purchase or other wise acquire, any capital stock,
assets, obligations, or other securities of , make any capital contribution to,
or otherwise invest in or acquire any interest in any entity, or participate as
a partner or joint venturer with any person or entity, except for the purchase
of direct obligations of the United States or any agency thereof with maturities
of less than one year.
E. BORROWINGS. Create, incur, assume or become liable in any manner
for any indebtedness (for borrowed money, deferred payment for the purchase of
assets, lease payments, as surety or guarantor for the debt for another, or
otherwise) other than to Bank, except for normal trade debts incurred in the
ordinary course of Borrower's business, and except for existing indebtedness
disclosed to Bank in writing and acknowledged by Bank prior to the date of this
Agreement.
F. CHARACTER OF BUSINESS. Change the general character of business as
conducted at the date hereof, or engage in any type of business not reasonably
related to its business as presently conducted.
G. MANAGEMENT CHANGE. Make any substantial change in its present
executive or management personnel.
6. DEFAULT. Borrower shall be in default under this Agreement and under
each of the other Loan Documents if it shall default in the payment of any
amounts due and owing under the Loan or should it fail to timely and properly
observe, keep or perform any term, covenant, agreement or condition in any Loan
Document or in any other loan agreement, promissory note, security agreement,
deed of trust, deed to secure debt, mortgage, assignment or other contract
securing or evidencing payment of any indebtedness of Borrower to Bank or any
affiliate or subsidiary of NationsBank Corporation.
7. REMEDIES UPON DEFAULT. If an event of default shall occur, Bank
shall have all rights, powers and remedies available under each of the Loan
Documents as well as all rights and remedies available at law or in equity.
8. NOTICES. All notices, requests or demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to the other party at the following
address:
Borrower:
American Aircarriers Support, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxx Xxxx, Xxxx Xxxxxx, XX 00000
Fax. No.________________
with copy to:
Xxxxx X. Xxxx
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Xxxx, Layton, Kersh, Solomon, Sigmon, Xxxx & Xxxxx, P.A.
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Phone No. (000) 000-0000
Fax No. (000) 000-0000
Bank: NationsBank, N.A.
ATTENTION: XXXX XXXXXX
Metrolina Commercial Region
NationsBank Plaza
NC1 000-00-00, Mecklenburg County
Xxxxxxxxx, XX 00000
Fax No._________________
with copy to:
Xxxxx X. Xxxxxx
Mitchell, Rallings, Singer, XxXxxx & Tissue, PLLC
1800 Carillon
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Phone No. (000) 000-0000
Fax No. (000) 000-0000
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by mail, upon the earlier of the date of receipt or
five (5) days after deposit in the U.S. Mail, first class postage prepaid;
B. If sent by any other means , upon delivery.
9. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of Bank's in-house counsel if permitted by applicable law), incurred by
Bank in connection with (a) negotiation and preparation of this Agreement and
each of the Loan Documents, and (b) . all other costs and attorneys' fees
incurred by Bank for which Borrower is obligated to reimburse Bank in accordance
with the terms of the Loan Documents.
10. MISCELLANEOUS. Borrower and Bank further covenant and agree as
follows, without limiting any requirement of any other Loan Document:
A. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to
Bank under any Loan Document, or allowed it by law or equity shall be cumulative
of each other and may be exercised in addition to any and all other rights of
Bank, and no delay in exercising any right shall operate as a waiver thereof,
nor shall any single or partial exercise by Bank of any right preclude any other
or future exercise thereof or the exercise of any other right. Borrower
expressly waives any presentment, demand, protest or other notice of any kind,
including but not limited to notice of intent to accelerate and notice of
acceleration. No notice to or demand on Borrower in any case shall, of itself,
entitle Borrower to any other or future notice or demand in similar or other
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circumstances.
B. APPLICABLE LAW. This Loan Agreement and the rights and obligations
of the parties hereunder shall be governed by and interpreted in accordance with
the laws of North Carolina and applicable United States federal law.
C. AMENDMENT. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an officer of Bank, and then shall be effective only in the specified instance
and for the purpose for which given. This Loan Agreement is binding upon
Borrower, its successors and assigns, and inures to the benefit of Bank, its
successors and assigns; however, no assignment or other transfer of Borrower's
rights or obligations hereunder shall be made or be effective without Bank's
prior written consent, nor shall it relieve Borrower of any obligations
hereunder. There is no third party beneficiary of this Loan Agreement.
D. DOCUMENTS. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to Bank shall be in
form and content satisfactory to Bank and its counsel.
E. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.
F. INDEMNIFICATION. Notwithstanding anything to the contrary contained
in Section 10(G), Borrower shall indemnify, defend and hold Bank and its
successors and assigns harmless from and against any and all claims, demands,
suits, losses, damages, assessments, fines, penalties, costs or other expenses
(including reasonable attorneys' fees and court costs) arising from or in any
way related to any of the transactions contemplated hereby, including but not
limited to actual or threatened damage to the environment, agency costs of
investigation, personal injury or death, or property damage, due to a release or
alleged release of Hazardous Materials, arising from Borrower's business
operations, any other property owned by Borrower or in the surface or ground
water arising from Borrower's business operations, or gaseous emissions arising
from Borrower's business operations or any other condition existing or arising
from Borrower's business operations resulting from the use or existence of
Hazardous Materials, whether such claim proves to be true or false. Borrower
further agrees that its indemnity obligations shall include, but are not limited
to, liability for damages resulting from the personal injury or death of an
employee of the Borrower, regardless of whether the Borrower has paid the
employee under the workmen' s compensation laws of any state or other similar
federal or state legislation for the protection of employees. The term "property
damage" as used in this paragraph includes, but is not limited to, damage to any
real or personal property of the Borrower, the Bank, and of any third parties.
The Borrower's obligations under this paragraph shall survive the repayment of
the Loan and any deed in lieu of foreclosure or foreclosure of any Deed to
Secure Debt, Deed of Trust, Security Agreement or Mortgage securing the Loan.
G. SURVIVABILITY. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of
12
the Loan and shall continue in full force and effect so long as the Loan is
outstanding or the obligation of the Bank to make any advances under the Line
shall not have expired.
H. FIELD EXAM. Bank will conduct a field exam, at the Borrower's
expense, to confirm the appropriateness of the above parameters and overall
advances of the Borrowing Base as collateral. The field exam shall occur between
July 1, 1998 and July 31, 1998 if the outstandings under the Loan are equal to
or less than $4,000,000.00. If the outstandings under the Loan exceed
$4,000,000.00, the Bank reserves the right to require the field exam prior to
July 1, 1998, and, if there are no outstandings under the Loan prior to July 31,
1998, no field exam will be conducted. The Bank will pay for any and all costs
associated with the field exam which exceed $2,000.00.
I. OPINION OF BORROWER'S COUNSEL. Prior to Closing, Borrower shall
provide Bank with an opinion of its counsel in form and substance satisfactory
to Bank and its counsel.
11. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF
ANY BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT,
AGREEMENT OR DOCUMENT OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN
THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, AND ADMINISTERED BY
J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90
DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP
TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE
13
INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
12. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed under seal by their duly authorized representatives as of the
date first above written. BORROWER: American Aircarriers Support, Inc. BANK:
NationsBank, N.A.
By: ________________________ (Seal) By: ______________________________ (Seal)
Name:______________________ Name: ___________________________
Title: ______________________ Title: ____________________________
[Corporate Seal]
If the Borrower is a corporation, the signature should be attested by the
Secretary or Assistant Secretary of the corporation and the corporate seal
affixed.
Attest:______________________ (Seal)
Name:______________________
Title:_______________________
14
EXHIBIT 2.A.ii.
BORROWING BASE AGREEMENT
Borrower will agree to maintain a borrowing base (hereinafter referred
as "Borrowing Base") satisfactory at all times to Bank with the following
parameters.
If outstandings under the Loan are $4,000,000.00 or less, a monthly
Borrowing Base certification will not be required. However, should outstandings
under the Loan exceed $4,000,000.00, the Bank will require at the time that a
draw causes the outstanding balance to exceed $4,000,000.00 and within 10 days
of each month and at which outstanding balance continues to exceed $4,000,000.00
Borrowing Base certificate with the following conditions:
Accounts Receivable. The Bank will lend an amount not to exceed 80
percent of Domestic Receivables less than 90 days from invoice. The
Bank will lend an amount not to exceed 80 percent of Foreign
Receivables less than 90 days from invoice. Eligible Foreign
Receivables shall not exceed $2,000,000.00 of receivable availability
under the Borrowing Base. In addition, ineligible accounts receivable
will also include an entire account should 50 percent of that account
balance be greater than 90 days from invoice.
Eligible Accounts Receivable shall also specifically exclude:
(a) any Account Receivable where an invoice has not been issued to the
Account Debtor (Unbilled);
(b) any account which represents and obligation of a Customer or
Borrower when 50 percent or more of a Borrower's accounts from such
customer are not eligible pursuant to the foregoing formula;
(c) any Account Receivable which represents an obligation of any local,
state or federal government agency or entity (Government);
(d) any Account Receivable which arises out of a contract or order
which, by its terms, forbids or makes void or unenforceable any
assignment by Borrower to Bank of the Account Receivable arising with
respect thereto (Unassignable);
(e) any Account Receivable arising from "sale on approval", "sale or
return", "consignment" or subject to any other repurchase, return or
guaranteed sales agreement (Consigned or Guaranteed);
(f) any Account Receivable where the underlying goods or services have
been rejected and/or returned (Rejected and Returned);
(g) any Account Receivable where delivery to the Account Debtor
pursuant to terms of sale has not been completed (Xxxx and Hold);
(h) any Account Receivable which arises from the sale or lease to or
performance of services for, or represents an obligation of, an
employee, affiliate, partner, parent or subsidiary of Borrower
(Insiders & Related Parties);
(i) that portion of aggregate Accounts Receivable due from a given
Account Debtor to the extent Borrower also owes amounts to that Account
Debtor
15
(Contra);
Parts Inventory. The Bank will advance an amount not to exceed 60
percent of Borrower's total "parts inventory" (defined as inventory
ready for sale excluding whole aircraft engines or leased aircraft
engines).
Eligible Inventory shall also specifically exclude:
(a) The Bank reserves the right to restrict eligible inventory to
Inventory located at Fort Mill, South Carolina, and such other
locations as the Bank deems appropriate.
(b) Inventory either received or sold on consignment (Consigned In and
Consigned Out);
(c) Inventory that the Bank in its sole discretion determines to be
slow moving and/or obsolete (Slow Moving and Obsolete);
(d) Inventory that is not in good condition or that fails to meet any
applicable government standards (Defected and Rejected);
Whole Aircraft Engines (Domestic and Foreign Domiciled). The Bank will
advance 90 percent of the lower of cost or appraised value while the
aircraft engine is being overhauled (the "Overhaul Period"). The
Overhaul Period shall not exceed six (6) months. At the end of the
Overhaul Period, the Bank will then advance 90 percent of the lower of
total documented engine cost or re-appraised value for a period not to
exceed six (6) months (the "Inception Period"). At the end of the
Inception Period, the Bank will, for a period thereafter not to exceed
six (6) months, lend 75 percent against the lower of engine cost or
appraised value. During the following 12 months, the Bank would lend 50
percent against the lower of aircraft engine cost or appraised value.
If the aircraft engine has not sold during the preceding twelve-month
period, the engine would be deleted from the Borrowing Base unless the
aircraft engine is re-appraised by an appraiser acceptable to the Bank
and, at the Bank's sole option, the above percentages may be
re-applied.
As additional expenditures are made on the aircraft engine during the
Overhaul Period, Borrower shall periodically, but no more frequent than
monthly, submit a "report of expenditures" satisfactory to Bank
detailing the additional direct overhaul costs against which the Bank
may advance 90 percent of the invoiced amount.
Leased Aircraft Engines. Leased Aircraft Engines will be eligible for
advances under separate term notes, which will be withdrawn from the
Borrowing Base amount subject to review and assignment of perspective
leases. Said determination shall be at the sole discretion of the Bank.
These notes will be advanced at the lesser of 80 percent of the
aircraft engine's cost or appraised value. Amortization of term notes
will be related to the remaining life of the lease, but not to exceed
forty-eight (48) months. Borrower will agree to furnish quarterly
depreciation reports on each aircraft engine under lease, and a note's
balance may not exceed 80 percent of an engine's depreciated value.
Caps on Borrowing Base Components. Availability under the Borrowing
Base shall be capped at $5,000,000.00 for parts inventory,
$5,000,000.00 for leased aircraft engines, of which no more than
$2,500,000.00 may be leased
16
to foreign lessees, and $2,000,000.00 for Foreign Receivables. There
will be no cap within the Loan on domestic receivables nor on aircraft
engines which have been overhauled and held for resale.
Total advances under the Loan cannot exceed 100 percent of the book
value of the Company's core assets (accounts receivable plus
inventory).
Should a whole aircraft engine or leased engine be dismantled into
parts inventory, the inventory will be required to be reclassified into
the appropriate category under the Borrowing Base.
In addition to any reporting requirements required under the Revolving
Loan and Security Agreement to which this Borrowing Base Agreement
Addendum is attached, the Borrower will submit the following in form
and substance satisfactory to Bank:
Aged Accounts Receivable Trial Balance. Not later than 20 business days
after and as of the end of each month, aged from date of invoice.
Aged Accounts Payable Trial Balance. No later than 20 days after and as
of the end of each month.
Inventory Control Report. In form and content acceptable to Bank and
including, but not limited to, an allocation of Finished Goods, Raw
Materials, Packaging Materials, Work-in-Process and all Other remaining
inventory not later than 20 days after and as of the end of each month.
Collection of Receivables.
(a) BY BORROWER. Until Borrower's authority to do so is terminated,
which Bank shall have the right to do at any time after occurrence and
continuation of a default, Borrower will at Borrower's own cost and
expense but on Bank's behalf and for Bank's account, collect and
otherwise enforce as Bank's property and in trust for Bank, all amounts
unpaid on Accounts Receivable. As to all money so collected, including
all prepayments by Account Debtors, Borrower shall receive in trust,
and deliver to Bank in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and
other evidence of indebtedness.
(b) BY BANK. At any such termination of Borrower's authority, which
Bank shall have the right to do at any time after occurrence and
continuation of a default, Bank shall have the right to send notice of
assignment and/or notice of Bank's security interest to any and all
Account Debtors or any third party holding or otherwise concerned with
any of the Accounts Receivable and Inventory and thereafter Bank shall
have the sole right to collect the Accounts Receivable and/or take
possession of Accounts Receivable and the books, records and systems
relating thereto. All of Bank's collection expenses shall be charged to
Borrower's account and added to the obligations.
Bank shall have the right to receive, endorse, and assign and/or
deliver in Bank's name or Borrower's any and all checks, drafts, and
other instruments for the payment of money relating to Accounts
Receivable, and Borrower hereby waives notice of presentment, protest
and non-payment of any instrument so endorsed. Borrower hereby
constitutes Bank or Bank's designee as Borrower's attorney-in-fact with
power to endorse Borrower's name upon any notes, acceptances, checks
drafts, money orders, or other evidences of
17
payment or Accounts Receivable and Inventory that may come into Bank's
possession; to sign Borrower's name on any invoice or xxxx of lading
relating to any of the Accounts Receivable, drafts against customers,
assignments and verifications of Accounts Receivable and notices to
customers; to send verifications of Accounts Receivable to any Account
Debtor; to notify the Post Office authorities to change the address for
delivery of mail addressed to the undersigned to such address as Bank
may designate; to do all other acts and things necessary to carry out
this Borrowing Base Agreement. All acts of said attorney or designee
are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission, nor for any error
of judgment or mistake of fact or law; this power being coupled with an
interest is irrevocable while advances made pursuant to this Borrowing
Base Agreement remain unpaid.
Bank may, without notice to or consent from Borrower, xxx upon or
otherwise collect, extend the time of payment of, or compromise or
settle for cash, credit or otherwise upon any terms, any of the
Accounts Receivable or any securities, instruments or insurance
applicable thereto and/or release the obligor thereon. Bank is
authorized and empowered to accept the return of the goods represented
by any of the Accounts Receivable without notice to or consent by
Borrower's liability hereunder. Bank does not, by anything herein or in
any assignment or otherwise, assume any of Borrower's obligations under
any contract or agreement assigned to Bank, and Bank shall not be
responsible in any way for the performance by Borrower of any of the
terms and conditions thereof.
Collection Account and Lock Box Agreement. Bank and Borrower shall,
upon request of Bank, establish and maintain one or more special lock
box or blocked accounts for the collection of the Accounts Receivable.
Each such special account shall be with a bank satisfactory to the Bank
(which may be an affiliate of the Bank) and shall be subject to the
Bank's standard form agreement. Any checks or other remittances against
Accounts Receivables which are received by the Borrower shall be held
in trust for the Bank and turned over by the Borrower to the Bank or to
a person designated by the Bank in the identical form received (except
for any necessary endorsement) as soon as possible.
Mandatory Payment. In the event the aggregate principal outstanding
balance of advances under the Note exceed the Maximum Amount, Borrower
shall immediately and without notice or demand of any kind, make such
payments as shall be necessary to reduce the principal balance of the
Note below the Maximum Amount.
