Exhibit 99.1
LOAN AGREEMENT
BY THIS LOAN AGREEMENT (this "Agreement") made and entered into as of the
16th day of December, 2004, XXXXXXXX AEROSPACE TECHNOLOGIES, INC., a Delaware
corporation, whose address is X.X. Xxx 00000, Xxxxxx, Xxxxxxx 00000-0000
(hereinafter called "Borrower"), and M&I XXXXXXXX & ILSLEY BANK, a banking
corporation organized and existing under the laws of the State of Wisconsin,
whose address is Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000-0000
(hereinafter called "Lender"), for and in consideration of the recitals and
mutual promises contained herein, confirm and agree as follows:
SECTION 1. RECITALS
1.1 Term Loan. Borrower has applied to Lender for a term loan in the amount
of SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00), upon the
terms, conditions and provisions set forth herein.
SECTION 2. DEFINITIONS
2.1 Defined Terms. As used herein, the following capitalized terms shall
have the meanings specified below, unless the context otherwise requires.
(a) 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 or membership in Borrower;
(iii) five percent (5%) or more of the voting stock of or membership in
which entity is directly or indirectly beneficially owned or held by
Borrower; (iv) that is an officer, director or manager of Borrower; (v) of
which another Affiliate is an officer, director or manager; 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.
(b) Borrower: Xxxxxxxx Aerospace Technologies, Inc., a Delaware
corporation.
(c) Business Day. Any day other than a Saturday, Sunday, public
holiday, or other day when commercial banks in Arizona are authorized or
required to close.
(d) Closing. The satisfaction of all of the conditions precedent set
forth in Section 8 hereof and the consummation of all of the loan
transactions contemplated by this Agreement.
(e) Closing Date. The date on which the Closing occurs.
(f) Collateral. All property encumbered by the Security Documents as
security for the Indebtedness and Obligations.
(g) Consolidated Group: Borrower, Guarantor, Xxxxxxxxx Softmachine
Corporation, a(n) ____________________, and World Jet Corporation, a(n)
__________________.
(h) CPLTD: Current portion of long term debt (financing that has a
maturity greater than one year), meaning principal payments on long term
debt that are to be paid within one year.
(i) Debt Service Coverage: The sum of (i) net income after taxes, plus
(ii) interest expense and depreciation, divided by CPLTA.
(j) Debt Subordination Agreements: As defined in Section 7.4 hereof.
(k) Environmental Law. Any federal, state or local statute, ordinance,
or regulation pertaining to health, industrial hygiene, or 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"); and the Arizona
Environmental Quality Act, Title 49, Arizona Revised Statutes, and all
rules adopted and guidelines promulgated pursuant to the foregoing.
(l) ERISA. The Employee Retirement Income Security Act of 1974, as
amended and as in effect from time to time.
(m) Event of Default. As defined in Paragraph 14.1 hereof.
(n) Facility. Any real property and improvements owned, occupied or
used by Borrower in the conduct of its business, or upon which any
Collateral is stored or held. The existing Facilities are identified on
Exhibit A attached hereto.
(o) 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.
(p) Guarantor. Renegade Venture Corporation, a Nevada corporation.
(q) Hazardous Substance: Includes:
(i) 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;
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(ii) those substances defined as "hazardous substances" in A.R.S.
Section 49-201 and in rules adopted or guidelines
promulgated pursuant thereto;
(iii) 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
(iv) 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.
(r) Indebtedness. The total outstanding indebtedness owed Lender by
Borrower under or in connection with the Loan, including principal and
interest accrued but not previously paid.
(s) Landlord Consent: An agreement in form acceptable to Lender,
signed byi the landlord of a Facility, subordinating all lien rights to
Lender,i 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.
(t) Lender: M&I Xxxxxxxx & Xxxxxx Bank, a banking corporation
organized and existing under the laws of the State of Wisconsin.
(u) Lien. Any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the payment of any indebtedness or
performance of any obligation, whether arising by agreement or under any
statute or law, or otherwise.
(v) Loan Documents. This Agreement, the Note, the Security Documents,
and all other documents now or hereafter executed or delivered in
connection with the Loan.
(w) Loan. The Term Loan and any other loans, credit facilities or
accommodations now in place or hereafter provided by Lender to Borrower,
severally and collectively.
(x) 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 the properties, financial condition, credit or
business operations and prospects of Borrower or any Guarantor, (iii) would
impair the ability of Borrower or any 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.
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(y) Note. The Term Note and any other note now in place or hereafter
provided by Borrower to Lender in connection with any other loans, credit
facilities or accommodations.
(z) Obligations. Any and all of the representations, warranties,
covenants and other obligations made or undertaken by Borrower or any
Guarantor in this Agreement or in any of the other Loan Documents.
(aa) PBGC. The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
(bb) Permitted Liens. (i) Liens granted to Lender; (ii) future Liens
approved in writing by Lender in its sole discretion; and (iii) Liens for
taxes and assessments not past due or delinquent.
(cc) 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 Borrower would be treated as a single employer under ERISA.
(dd) Release. Any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing,
or dumping.
(ee) Security Documents. The security agreements, assignments,
guarantees, pledges and other documents required by Section 7 hereof and
any and all other documents or instruments now or hereafter executed by
Borrower or any Guarantor to secure or guarantee the payment of the
Indebtedness or the performance of the Obligations.
(ff) Term Loan. As defined in Paragraph 3.1 hereof.
(gg) Term Note. As defined in Paragraph 3.2 hereof.
2.2 Other Terms. All accounting and financial terms used and not otherwise
defined in this Agreement shall have the meanings accorded them under GAAP. All
terms defined in the Uniform Commercial Code and not otherwise defined herein
shall have the meanings given them in the Uniform Commercial Code.
SECTION 3. TERM LOAN
3.1 Term Loan. 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, the
amount of SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00) (the
"Term Loan").
3.2 Term Note. The Term Loan shall be evidenced by that Promissory Note of
even date herewith, executed and delivered by Borrower in the amount of
$750,000.00 payable to Lender upon the terms and conditions contained therein
(the "Term Note").
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SECTION 4. RESERVED
SECTION 5. LOAN; GENERAL
5.1 Application of Payments. Upon the occurrence and during the
continuation of any Event of Default, all payments shall be applied by Lender to
the Indebtedness and Obligations in such order and manner as Lender shall
determine in its sole and absolute discretion. All payments shall be applied to
the Indebtedness and Obligations only when received in immediately available
funds.
5.2 Advances by Lender. Lender, from time to time, may make advances in
payment of insurance premiums, taxes, assessments, liens or encumbrances
existing against the Collateral, interest accrued and payable upon the Loan, and
any charges and expenses that are the obligation of Borrower under this
Agreement or any of the other Loan Documents and any charges or matters
necessary to preserve the Collateral or to cure any Event of Default. All
amounts so advanced shall be secured by the Collateral and immediately repayable
to Lender upon demand. Lender will endeavor to give Borrower prior notice of
each advance where practicable, provided, however, any failure of Lender to give
such notice shall not impact upon Lender's right to make the advance, upon
Lender's right to reimbursement, or upon the advance being secured by the
Collateral.
5.3 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 the 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 6. LOAN FEE
6.1 Loan Fee. Lender has earned and Borrower has paid, or shall pay to
Lender upon the execution of this Agreement, a non-refundable loan fee in the
amount of $7,500.00.
SECTION 7. SECURITY; GUARANTEE, etc.
7.1 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 to the Permitted 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.
7.2 Guarantee. Borrower shall cause the Indebtedness and Obligations to be
guaranteed by Continuing Guarantee of Payment executed by Guarantor.
7.3 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.
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7.4 Debt Subordination Agreements. Borrower shall obtain and provide Lender
with a Debt Subordination Agreements ("Debt Subordination Agreements") in form
and content acceptable to Lender in its sole discretion from each Guarantor and,
if requested by Lender, from each Affiliate of Borrower that is or becomes a
creditor of Borrower.
SECTION 8. CONDITIONS PRECEDENT FOR CLOSING
The obligation of Lender to make the Loan is subject to the following
express conditions precedent, all of which shall have been satisfied, to the
extent then applicable, prior to Closing:
8.1 Documents Required. Borrower shall have executed (or obtained the
execution or issuing of) and delivered to Lender the following documents, all in
form satisfactory to Lender:
(a) This Agreement;
(b) The Term Note;
(c) The Security Agreement;
(d) Continuing Guarantee of Payment from Guarantor;
(e) Landlord's Consents for each Facility that is not owned by Borrower;
and
(f) The Debt Subordination Agreements.
8.2 Loan Fee. Lender shall have received the loan fees required in Section
6 hereof.
8.3 Other Documents and Items Required. Borrower, at its expense, shall
have obtained and delivered to Lender the following items, all of which shall be
in form and content satisfactory to Lender and shall be subject to approval in
writing by Lender:
(a) Evidence that there has been no material adverse change in the
financial condition of the Borrower or the Guarantor collectively since the
information provided to Lender upon which Lender's approval of the Loan was
based.
(b) Copies of the lease agreements for each Facility other than those
owned by Borrower.
(c) Policies of insurance providing comprehensive general liability
insurance with personal liability and property damage liability coverages
in amounts not less than $1,000,000 for each occurrence, $1,000,000 for
injury or death of any person and $1,000,000 for property damage, together
with umbrella coverage for each of the above in an amount of not less than
$1,000,000, that shall be in effect with respect to Borrower and shall name
Lender as an additional insured.
(d) Original policies providing "all risks" property insurance against
loss or damage to the Collateral issued by insurance companies approved by
Lender in its reasonable judgment 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.
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(e) Evidence of worker's compensation insurance coverage in compliance
with state law requirements.
(f) In the case of Borrower and any Guarantor that is other than a
natural person: (i) a copy of the organizational documents for that entity,
(ii) evidence of the proper formation and good standing of that entity in
its state of organization, (iii) evidence of qualification or registration
of that entity in each state in which it is doing business, and (iv) proper
resolutions, authorizations and certificates, and such other documents as
Lender may require, relating to the existence and good standing of that
entity and the authority of any person executing documents on behalf of
that entity.
(g) Evidence that all FICA and other withholding taxes are current.
8.4 UCC Financing Statements; UCC Searches. UCC Financing Statements
covering the Collateral shall have been filed as required by Lender and Lender
shall have obtained UCC and other searches under the name of Borrower and each
corporate Guarantor as required by Lender, in such offices as Lender, in its
reasonable judgment, shall consider necessary, and the results of those searches
shall be satisfactory to Lender.
8.5 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.
8.6 Opinions of Counsel. Borrower, at its expense, shall have provided
Lender with written opinions by counsel acceptable to Lender with respect to the
following: (i) the representations set forth in Paragraphs 10.2 through 10.8
hereof, and (ii) such other matters as Lender may require.
8.7 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 Liens
except Permitted Liens.
8.8 Representative and Warranties True. All representations and warranties
by Borrower shall remain true and correct in all material respects and all
agreements that Borrower is to have performed or complied with by the date
hereof shall have been performed or complied with.
8.9 Financial Statements. Borrower shall have provided to Lender copies of
all statements and reports required pursuant to Paragraph 11.6 hereof for the
most recently completed fiscal year, quarter and/or month, as applicable.
8.10 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.
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SECTION 9. RESERVED
SECTION 10. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
10.1 Recitals True. The recitals appearing in this Agreement are true and
correct.
10.2 Duly Organized. Each of Borrower and each Guarantor that is not a
natural person is duly organized, validly existing and in good standing under
the laws of the state of its organization and is qualified to do business and is
in good standing in each state in which it is doing business.
10.3 Power and Authority. Each of Borrower and each Guarantor has full
power and authority to own its properties and assets and to carry on its
business as now being conducted.
10.4 Authorization; Enforceable. Borrower is fully authorized and permitted
to enter into this Agreement, 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. This Agreement and each of
the other Loan Documents to which Borrower is a party are valid and binding
legal obligations of Borrower and each is enforceable in accordance with its
terms.
10.5 Valid Liens. The liens, security interests, pledges and assignments
created by the Security Documents will, when granted, be valid, effective and
enforceable liens, security interests, pledges and assignments.
10.6 Guarantor. Each Guarantor is fully authorized to enter into, execute,
and perform the terms of all documents to which it is a party. Each Continuing
Guarantee referred to in Paragraph 7.2 hereof and each Debt Subordination
Agreement referred to in Paragraph 7.4 hereof constitutes legal, valid and
binding obligations of each party according to the terms thereof.
10.7 No Breach or Default as to Borrower. The execution, delivery and
performance by Borrower of this Agreement and the other Loan Documents to which
it is a party will not conflict with or result in a default under: (i) any law
or regulation applicable to Borrower, or (ii) 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.
10.8 No Adverse Proceedings. To the knowledge of Borrower, no actions,
suits or proceedings are pending or threatened against Borrower or any Guarantor
that could result in a Material Adverse Effect. To the knowledge of Borrower,
neither Borrower nor any 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 knowledge of Borrower, no actions, suits or proceedings are
pending or threatened against Borrower or any Guarantor other than as set forth
in Exhibit B.
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10.9 No Violation of Environmental Laws. To the best of their respective
knowledge, neither Borrower nor any Guarantor, nor any Facility owned by them or
any Affiliate thereof, is in violation of any Environmental Law and neither
Borrower or any Guarantor, nor any Facility owned by them or any Affiliate
thereof is subject to any existing, pending or, to the best of their respective
knowledge, 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 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, or has any knowledge of the Release or presence of, any
Hazardous Substance on any Facility or the migration of any Hazardous Substance
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.
10.10 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 and each
Guarantor are and shall be true, complete and correct in all material respects
as of the date thereof. There has been no change since the latest financial
statements of Borrower or any Guarantor given to Lender that could have a
Material Adverse Effect.
10.11 Tax Returns Filed. Borrower and, to the knowledge of Borrower, each
Guarantor have 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, with respect to each Guarantor, to Borrower's
knowledge, has paid all of its respective current obligations before delinquent,
including all federal, state and local taxes and all other payments required
under federal, state or local law.
10.12 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.
10.13 ERISA Compliance. Borrower is in compliance in all material respects
with all applicable provisions 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, but Borrower shall not be stopped from becoming a party to, or having
employees who are covered by, a multi-employer pension or benefit plan, at any
time in the future. 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.
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10.14 Commercial Use Purpose. The Loan is for solely commercial purposes,
and the proceeds thereof shall be used solely for the following purpose:
As working capital.
10.15 Survival. All representations and warranties made herein shall
survive the execution of this Agreement, the Closing, Advance of the Loan, and
the execution and delivery of all other Loan Documents, and until the
Indebtedness has been fully paid and all of the Obligations have been fully
performed.
SECTION 11. AFFIRMATIVE COVENANTS
Until the Indebtedness as been fully paid and all of the Obligations have
been fully performed:
11.1 No Change 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 the Collateral, or the ability of Borrower to perform its
obligations under the Loan Documents, without the prior written approval of the
Lender, which consent shall not be unreasonably withheld.
11.2 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 (subject to
ordinary wear and tear) and shall make all needed and proper repairs and
improvements to its properties in order to properly conduct its business.
11.3 Comply With Laws. Borrower shall 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.
11.4 Maintain Insurance. Borrower shall maintain in full force and effect
at all times all insurance coverages required as a condition of the Loan or
required under the terms of the Loan Documents.
11.5 Loan Payments. Borrower shall make all payments of interest and
principal on the Loan and shall keep and comply with all terms, conditions and
provisions of the Loan Documents.
11.6 Statements and Reports. Borrower shall maintain a standard, modern
system of accounting that reflects the application of generally accepted
accounting principles, consistently applied, and shall furnish to Lender the
following:
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(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 of Borrower.
(c) With each statement submitted under subparagraphs (a) and (b)
above, a certificate signed by Borrower and by the principal financial
officer 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) A statement of litigation matters involving Borrower and each
Guarantor that could cause a Material Adverse Effect, such statement to be
furnished within ten (10) days after date of service of such litigation or
the occurrence of any such change.
(e) Reserved.
(f) Reserved.
(g) Reserved.
(h) Promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of Borrower and each
Guarantor as Lender may reasonably request.
11.7 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 shall have the right from time to time upon reasonable
notice to examine and audit and to make abstracts from and photocopies of each
company's books, ledgers, correspondence and other records.
11.8 Accounts Receivable and Collateral Examination. Lender, at Borrower's
expense, 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 notice to Borrower.
11.9 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.
11.10 No Margin Security. Borrower shall not use any proceeds of the Loan,
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
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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.
11.11 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.
11.12 Further Assurance. Borrower shall execute and deliver such additional
documents and do such other acts as Lender may reasonably require in connection
with this Loan.
SECTION 12. NEGATIVE COVENANTS
Until the Indebtedness as been fully paid and all of the Obligations have
been fully performed, without receiving the prior written consent of Lender,
Borrower shall not:
12.1 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.
12.2 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.
12.3 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, 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.
12.4 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.
-12-
12.5 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.
12.6 Tangible Net Worth Covenant. For the Consolidated Group permit
tangible net worth to be less than $3,000,000.00 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.
12.7 Guarantees. Guarantee, directly or indirectly, or otherwise become
contingently liable or obligated for, any indebtedness or obligation of any
other person or entity except for the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection.
12.8 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 Subchapter 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.
12.9 Debt Service Coverage. Permit at any time:
(a) The Debt Service Coverage to exceed 1.25 to 1.0 for the
Consolidated Group (measured quarterly at the end of each calendar quarter
on a rolling four quarter basis).
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 Paragraph 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 13. WAIVER
13.1 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 or in the Notes.
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.
13.2 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 be construed as a
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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. 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 14. DEFAULT
14.1 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 when the same becomes due and payable, subject to any
applicable cure periods.
(b) Any failure or neglect to perform or observe any of the terms,
provisions, conditions or covenants of this Agreement or any other Loan
Document, other than those referred to in the other provisions of this
Paragraph 14.1, and such failure or neglect either (i) cannot be remedied,
(ii) can be remedied within fifteen (15) days by prompt and diligent
action, but it continues unremedied for a period of fifteen (15) days after
notice thereof to Borrower, or (iii) can be remedied, although not within
fifteen (15) days even by prompt and diligent action, but such remedy is
not commenced within fifteen (15) days after notice thereof to Borrower or
is not diligently prosecuted to completion within a total of sixty (60)
days from the date of such notice.
(c) Any warranty, representation or statement contained in this
Agreement, in the Note, in any other Loan Document, or made or furnished to
Lender by or on behalf of Borrower and any Guarantor that shall be or shall
prove to have been false or misleading in any material respect as of the
time made or furnished.
(d) The filing by Borrower or any 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 any Guarantor.
(e) The commencement of any proceeding described in subparagraph (d)
above against Borrower or any Guarantor unless dismissal of such proceeding
is promptly sought and diligently prosecuted and such proceeding is in fact
dismissed within sixty (60) days from the date of such commencement; the
acquiescence by Borrower or such 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 any Guarantor.
(f) The insolvency of Borrower or any Guarantor; or the execution by
Borrower or any Guarantor of an assignment for the benefit of creditors; or
the convening by Borrower or any 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 any
Guarantor to pay its debts as they mature; or if Borrower or any Guarantor
is generally not paying its debts as they mature.
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(g) The admission in writing by Borrower or any Guarantor that it is
unable to pay its debts as they mature or that it is generally not paying
its debts as they mature.
(h) The liquidation, termination or dissolution of Borrower or any
Guarantor who are corporations, limited liability companies, partnerships
or joint ventures or the death or incapacity of any Guarantor who is an
individual plus the elapse of time until sixty (60) days prior to the last
date for filing a claim in the estate of that individual, unless prior to
that date either (A) the contingent claim of Lender under the guarantee by
that Guarantor shall have been accepted and approved by the court
administrating that estate and a plan satisfactory to Lender shall have
been approved by that court to ensure that the assets of the estate will be
available to pay that claim if and when it should mature; or (B) substitute
guarantees, in form satisfactory to Lender, and from guarantors
satisfactory to Lender, have been received and accepted by Lender.
(i) Any levy or execution upon, or judicial seizure of, any portion of
the Collateral; any garnishment or attachment of any Collateral; or the
institution of any legal action or proceedings to enforce any Lien against
the Collateral
(j) The existence or the filing of any Lien, other than Permitted
Liens, against the Collateral that is not removed, released, bonded or
stayed to the satisfaction of Lender within thirty (30) days after its
creation, except any such Lien the validity of which Borrower is actively
contesting in good faith by appropriate proceedings and for which Borrower
has furnished to Lender in its reasonable judgment 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 such Lien.
(k) The entry of any judgment, order or decree, or any other type of
adverse ruling, against Borrower or any Guarantor that could have a
Material Adverse Effect, unless within fifteen (15) days thereafter,
Borrower posts a Supercedeas Bond in an amount and within 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 or any Guarantor of all or any
material part of its property or assets, or any of 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 Guarantor,
or any Collateral, that is not adequately covered by insurance.
(n) The issuance of any order or decree enjoining or prohibiting
Lender or Borrower or any Guarantor from performing under this Agreement or
any of the other Loan Documents, which order or decree is not vacated
within fifteen (15) days after the granting thereof.
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(o) The occurrence of any default under any of the other Loan
Documents that is not cured within any period for cure set forth therein.
(p) Any failure or neglect to satisfy any of the financial covenants
set forth in Paragraph 12.6 hereof which failure or neglect is not fully
remedied and cured by the end of the next calendar month.
(q) The occurrence of any event or condition, that with the giving of
notice or passage of time, or both, could result in a material default by
Borrower under any other contract, loan, obligation or agreement of any
kind to which Borrower is a party that results in a Material Adverse
Effect.
(r) Reserved.
(s) The occurrence of any default under any document or instrument
given by Borrower or an Affiliate in connection with any other indebtedness
of Borrower or any Affiliate to Lender.
(t) The occurrence of any event or condition that Lender, in its
reasonably judgment, believes results in a Material Adverse Effect.
14.2 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 [except that in the case of an Event of Default described in
subparagraphs 14.1(d) through 14.1(g) above relating to Borrower, acceleration
shall be automatic]:
(a) Declare the entire Loan and the rest of the Indebtedness
immediately due and payable, without notice or demand.
(b) Proceed to protect and enforce its rights under this Agreement,
the Note, all Security Documents, and all other Loan Documents.
(c) Avail itself of any other relief to which Lender may be legally or
equitably entitled.
14.3 Payment of Costs. Borrower shall pay all costs and expenses including,
without limitation, costs of UCC and title searches, court costs and attorneys'
fees incurred in enforcing payment of the Indebtedness and performance of the
Obligation 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 reasonable attorneys' fees shall be
set by the court and not by jury and shall be included in any judgment obtained
by Lender.
14.4 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 moneys necessary to pay the same, to satisfy such requirements or to
so perform. Lender will endeavor to give Borrower prior notice of each advance
where practicable, provided, however, any failure of Lender to give such notice
shall not impact upon Lender's right to make the advance.
-16-
14.5 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
remedies or rights hereunder successively or concurrently. By accepting payment
of any of the Indebtedness or performance of any of the Obligation 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 Obligation or its right to consider the failure to so pay
or perform an Event of Default.
SECTION 15. ACTION UPON AGREEMENT
15.1 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.
15.2 Entire Agreement. This Agreement, together with the Loan Documents and
instruments referred to herein, 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, other than as set forth herein.
15.3 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.
15.4 Separate Entities. Lender and Borrower 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 Lender and Borrower for any purpose or in any
respect.
SECTION 16. GENERAL
16.1 Agreement to Continue. This Agreement, and the representations,
warranties, and covenants contained herein shall survive the making of the Loan
and shall remain in full force and effect until the Indebtedness as been fully
paid and all of the Obligations have been fully performed.
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16.2 Lender's Investigations. Borrower and its members shall be solely
responsible for all aspects of Borrower's business and activities. Any
investigation or review by Lender or its counsel shall be solely for Lender's
benefit, including to determine whether Borrower is properly discharging its
obligations to Lender, and may not be relied upon by Borrower or any third
party. Neither Lender, nor Lender's counsel, owes any duty of care to Borrower
or to any third party to protect against, or to inform Borrower or any third
party of, any matters disclosed by any investigation or review by Lender or its
counsel.
16.3 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.
16.4 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 reasonable attorneys' fees and expenses, arising out of any
matter relating, directly or indirectly, to the Loan, whether resulting from
internal disputes of the Borrower, disputes between Borrower and any 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, fraud or willful misconduct
of Lender. This indemnity provision shall continue in full force and effect and
shall survive not only the making of the Loan but shall also survive the payment
of the Indebtedness and the performance of the Obligations.
16.5 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.
16.6 Time of the Essence. Time is expressly made of the essence of this
Agreement.
16.7 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 commercial
delivery service or by electronic transmission with verified receipt. 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, the earlier of the date of delivery
shown on the return receipt or twenty-four (24) hours after deposit with the
United States Postal Service, postage prepaid, addressed to that party at its
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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: 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
Lender: M&I Xxxxxxxx & Ilsley Bank
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to: Xxxxxxx & Xxxxx Xxxxxxx Xxxx LLP
One Renaissance Square
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
16.8 Costs and Expenses. Borrower shall pay all costs and expenses arising
from the preparation of this Agreement, the closing of the Loan and the making
of the Advance, including but not limited to appraisals, recording and filing
fees, costs of Uniform Commercial Code searches, Lender's attorneys' fees, any
intangible or recording taxes and any other charges that may be imposed on
Lender as a result of this transaction.
16.9 Choice of Law. This Agreement shall be governed by and construed
according to the laws of the State of Arizona.
16.10 Venue. Lender may bring any action or proceeding to enforce or
arising out of this Agreement in any court of competent jurisdiction. If Lender
commences such an action in a court located in the County of Maricopa, State of
Arizona, or the United States District Court for the District of Arizona,
Borrower hereby agrees that it will submit and does hereby irrevocably submit to
the personal jurisdiction of such courts and will not attempt to have such
action dismissed, abated, or transferred on the ground of forum non convenience
or similar grounds; provided, however, that nothing contained herein shall
prohibit Borrower from seeking, by appropriate motion, to remove any action
brought in a Arizona state court to the United States District Court for the
District of Arizona. If such action is so removed, however, Borrower shall not
seek to transfer such action to any other district, nor shall Borrower seek to
transfer to any other district any action which Lender originally commences in
such federal court. Any action or proceeding brought by Borrower arising out of
this Agreement or any of the other Loan Documents shall be brought solely in a
court of competent jurisdiction located in the County of Maricopa, State of
Arizona, or in the United States District Court for the District of Arizona.
Borrower waives any objection which it may now or hereafter have to venue of any
such action or proceeding and waives any right to seek removal of any action or
proceeding commenced in accordance herewith.
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16.11 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT THE TRANSACTION
THAT IS THE SUBJECT OF THIS AGREEMENT WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THIS WAIVER HAS BEEN
NEGOTIATED BY THE PARTIES AND IS AN ESSENTIAL PART OF THEIR BARGAIN. EITHER
PARTY MAY FILE A COPY OF THIS PROVISION WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE
TO TRIAL BY JURY.
16.12 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.
16.13 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.
16.14 Participations. Lender, at any time, shall have the right to sell,
assign, or grant participations in all or any portion of the Loan and in any of
the Loan Documents. Lender is authorized to furnish any purchaser or
participant, or prospective purchaser or participant, any documents or
information provided to Lender or that Lender may have obtained relating to
Borrower or any Guarantor or relating to the Loan or the Collateral.
16.15 Loan Agreement to Prevail. In the event of any direct conflict
between the provisions of this Agreement and those of the Note or any other Loan
Document, the provisions of this Agreement shall prevail.
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
BORROWER:
--------
XXXXXXXX AEROSPACE TECHNOLOGIES,
INC. a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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M&I XXXXXXXX & ILSLEY BANK, a
banking corporation organized and
existing under the laws of the State
of Wisconsin
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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List of Exhibits
----------------
Exhibit A Existing Facilities
Exhibit B Pending or Threatened Litigation
-22-
EXHIBIT A
(Existing Facilities)
The Premises described in Exhibit A to that certain Lease between Borrower and
Tucson Airport Authority, with a lease commencement date of May 1, 2003, leasing
a portion of the Tucson International Airport, located in Pima County, Arizona.
Exhibit 1
Page 1
EXHIBIT B
(Pending or Threatened Litigation)
None
Exhibit B
Page 1
