SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
between
PRECISION STANDARD INC.
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
entered into as of December 31, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Definitional Provisions. . . . . . . . . . . . . . . . . 10
ARTICLE II
THE TERM CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.01 The Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . 10
2.02 Term Note. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.03 Scheduled Repayments of Term Loan. . . . . . . . . . . . . . . 11
2.04 Mandatory Prepayments of Term Loan . . . . . . . . . . . . . . 11
2.05 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . 11
2.06 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
THE REVOLVING LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.01 Payment in Full. . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 Interest Payment; Forgiveness. . . . . . . . . . . . . . . . . 12
ARTICLE IV
PAYMENTS; TAXES; CHANGES IN CIRCUMSTANCES. . . . . . . . . . . . . . . . 13
4.01 Computation of Interest. . . . . . . . . . . . . . . . . . . . 13
4.02 Payments by the Company. . . . . . . . . . . . . . . . . . . . 13
4.03 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.04 Increased Cost and Reduced Return. . . . . . . . . . . . . . . 14
4.05 Certificates of Lender . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 15
5.01 Corporate Existence and Power. . . . . . . . . . . . . . . . . 15
5.02 Corporate Authorization; No Contravention. . . . . . . . . . . 16
5.03 Governmental Authorization . . . . . . . . . . . . . . . . . . 16
5.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 16
5.05 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.07 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.08 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . 17
5.09 Use of Proceeds; Margin Regulations. . . . . . . . . . . . . . 19
5.10 Title to Properties. . . . . . . . . . . . . . . . . . . . . . 19
5.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12 Financial Condition. . . . . . . . . . . . . . . . . . . . . . 19
5.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 20
5.14 Collateral Agreements. . . . . . . . . . . . . . . . . . . . . 20
5.15 Investment Company . . . . . . . . . . . . . . . . . . . . . . 21
5.16 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 21
5.17 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 21
5.18 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . 21
5.19 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.20 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . 21
5.21 Copyrights, Patents, Trademarks and Licenses,
Supplemental Type Certificates issued by the
FAA and Parts Manufacturing Authorizations, etc. . . . . . . . 22
5.22 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.01 Conditions of Closing. . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII
AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . 24
7.02 Certificates; Other Information. . . . . . . . . . . . . . . . 25
7.03 Preservation of Corporate Existence. . . . . . . . . . . . . . 26
7.04 Maintenance of Property. . . . . . . . . . . . . . . . . . . . 27
7.05 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.06 Payment of Obligations . . . . . . . . . . . . . . . . . . . . 27
7.07 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 28
7.08 Inspection of Property and Books and Records . . . . . . . . . 28
7.09 Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . 28
7.10 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.11 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.12 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . 30
7.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 30
7.14 Compliance with Assignment of Claims Act . . . . . . . . . . . 31
ARTICLE VIII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.01 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . 31
8.02 Disposition of Assets. . . . . . . . . . . . . . . . . . . . . 33
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . . . . 33
8.04 Acquisitions and Investments . . . . . . . . . . . . . . . . . 34
8.05 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . 34
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . 34
8.07 Contingent Obligations . . . . . . . . . . . . . . . . . . . . 35
8.08 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . 35
8.09 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 36
8.10 Lease Obligations. . . . . . . . . . . . . . . . . . . . . . . 36
8.11 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 37
8.12 Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . 37
8.13 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 37
8.14 Consolidated Tangible Net Worth. . . . . . . . . . . . . . . . 38
8.15 Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . . . 38
8.16 Change in Business . . . . . . . . . . . . . . . . . . . . . . 39
8.17 Tax Election . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 39
9.02 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.01 Amendments and Waivers. . . . . . . . . . . . . . . . . . 43
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.03 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . 44
10.04 Costs and Expenses. . . . . . . . . . . . . . . . . . . . 44
10.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 44
10.06 Successors and Assigns. . . . . . . . . . . . . . . . . . 45
10.07 Confidentiality . . . . . . . . . . . . . . . . . . . . . 46
10.08 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.09 Counterparts; Effective Date. . . . . . . . . . . . . . . 46
10.10 Severability. . . . . . . . . . . . . . . . . . . . . . . 47
10.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . 47
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the
"Agreement") is entered into as of December 31, 1996, between PRECISION
STANDARD INC. a Colorado corporation (the "Company") and Bank of America
National Trust and Savings Association (the "Lender").
WHEREAS, the Company and the Lender (both in its capacity as
Lender and as an agent for members of a syndicate which was never formed)
are parties to a Credit Agreement dated as of September 9, 1988, an
Amended and Restated Credit Agreement dated as of November 30, 1988, a
First Amendment dated as of June 14, 1989, a Second Amendment and Waiver
dated as of March 31, 1991, a Third Amendment and Waiver dated as of
December 5, 1991, a Fourth Amendment and Waiver dated as of April 28,
1992, a Fifth Amendment and Waiver dated as of December 31, 1993, a Sixth
Amendment and Waiver dated as of March 31, 1995, a Seventh Amendment and
Limited Forbearance Agreement dated as of September 30, 1995 and an Eighth
Amendment dated as of April 12, 1996 (as amended, the "Existing
Agreement"); and
WHEREAS, the parties hereto wish to further amend the Existing
Agreement and to restate the Existing Agreement in its entirety, upon the
terms and provisions and subject to the conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADDITIONAL ADJUSTMENT PROCEEDS" means any payment,
reimbursement or other proceeds received by the Company or any Affiliate
thereof after October 21, 1996 relating to services rendered, or materials
provided, on aircraft redelivered under the KC-135 contract prior to
September 30, 1996 exceeding $25,000,000.
"ADVANCE" means an extension of credit by Lender to the Company
pursuant to the Revolving Commitment of the Lender in the Existing
Agreement.
"AFFILIATE" means as to any Person, any other Person (other than
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with such Person. A Person shall be deemed
to control another Person if such controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise. Any director, executive
officer or beneficial owner of five percent (5%) or more of the equity of
a Person shall for the purposes of this Agreement, be deemed an Affiliate
of such Person. Notwithstanding the foregoing, under no circumstances
shall the Lender be deemed to be an Affiliate of the Company or any
Subsidiary of the Company.
"AGREEMENT" means this Second Amended and Restated Credit
Agreement, as amended, supplemented or modified from time to time.
"AMENDED WARRANT" means a warrant in the form of Exhibit A
hereto.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco are
authorized or required by law to close.
"CAPITAL EXPENDITURES" means for any period and with respect to
any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing of fixed or capital assets or
additions to equipment (including, but not limited to, replacements,
capitalized repairs and improvements during such period) which should be
capitalized under generally accepted accounting principles on a
consolidated balance sheet of such Person and its Subsidiaries, LESS net
proceeds from sales of fixed or capital assets received by such Person or
any of its Subsidiaries during such period. For the purpose of this
definition, the purchase price of equipment which is purchased
simultaneously with the trade-in of existing equipment owned by such
Person or any of its Subsidiaries or with insurance proceeds shall be
included in Capital Expenditures only to the extent of the gross amount of
such purchase price less the credit granted by the seller of such
equipment for such equipment being traded in at such time, or the amount
of such proceeds, as the case may be.
"CASH EQUIVALENTS" means
(a) securities issued or fully guaranteed or insured by the
United States Government or any agency thereof having maturities of
not more than six (6) months from the date of acquisition; and
(b) certificates of deposit, time deposits, Eurodollar time
deposits, bankers' acceptances having maturities not more than six
(6) months from the date of acquisition issued by any Lender or by
any U.S. commercial bank having combined capital and surplus of not
less than One Hundred Million dollars ($100,000,000);
(c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corporation or P-1 by Xxxxx'x Investors Service
Inc. and in either case maturing within six (6) months after the date
of acquisition.
"CASH FLOW" means, for any period, (a) EBITDA for such period
PLUS (b) any decrease in consolidated working capital of the Company and
its Subsidiaries during such period LESS (c) the sum of (i) Capital
Expenditures actually made by the Company and its Subsidiaries; (ii) any
increase in consolidated working capital of the Company and its
Subsidiaries during such period; and (iii) taxes paid in cash during such
period by the Company and its Subsidiaries; PROVIDED, HOWEVER, that for
the purposes of this definition consolidated working capital shall be
computed without giving effect to "estimated losses on contracts in
progress" set forth in the Company's balance sheet under the heading
"current liabilities".
"CLOSING DATE" means the date the conditions described in
Article VI hereof are fully satisfied.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.
"COLLATERAL" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by the Company or any
Guarantor and their respective Subsidiaries in or upon which a security
interest, lien or mortgage is granted to the Lender whether under this
Agreement or under any other documents, instruments or writings executed
by any such persons and delivered to the Lender.
"COLLATERAL DOCUMENTS" means, collectively, the Company Security
Agreement, the Subsidiary Security Agreement, the Xxxxx Guaranty, the
Subsidiary Guaranty and the Pledge Agreements.
"COMPANY SECURITY AGREEMENT" means the pledge of assets by the
Company securing the obligations of the Company hereunder.
"COMPANY STOCK PLEDGE AGREEMENT" means the pledge of shares by
the Company securing the obligations of the Company hereunder.
"CONSOLIDATED NET INTEREST EXPENSE" means, for any period, gross
consolidated interest expense for such period determined in conformity
with GAAP (adjusted to eliminate the effect, if any, on interest expense
of the redemption provisions of the Amended Warrant) and capitalized lease
expense, PLUS (a) the portion of the upfront costs for Interest Rate
Contracts (to the extent not included in gross interest expense) fairly
allocated to such Interest Rate Contracts as expenses for such period,
LESS (b) interest income for such period and cash payments received, in
such period pursuant to any Interest Rate Contracts.
"CONTINGENT OBLIGATION" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
"PRIMARY OBLIGATIONS") of another Person (the "PRIMARY OBLIGOR"),
including, without limitation, any obligation of such Person, whether or
not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation, or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain
the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor or (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation of (d) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by the Company in good faith.
"CONTRACTUAL OBLIGATIONS" means as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which
such Person is a party or by which it or any of its property is bound.
"DEFAULT" means any of the events specified in Article IX,
whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"DOL" means the United States Department of Labor.
"DOLLARS" and "$" means dollars in lawful currency of the United
States of America.
"EBITDA" means, for any period, the sum of (a) the consolidated
net income of the Company and its Subsidiaries (before income taxes) for
such period, as determined in accordance with generally accepted
accounting principles; (b) the amount of Consolidated Net Interest
Expense; (c) all amounts treated as expenses for depreciation; (d) all
amounts of amortization of fees and intangibles; and (e) the amount of
non-cash charges; less (x) the amount of non-operating cash income for
such period; and (y) non-cash income credits.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time and any regulation promulgated
thereunder.
"ERISA AFFILIATE" means all trades or businesses (whether or not
incorporated) under common control with the Company and which, together
with the Company, are treated as a single employer under Section 414(b),
414(c) or 414(m) of the Code.
"ERISA EVENT" means as to the Company or any ERISA Affiliate (a)
a Reportable Event described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC under such regulations); or (b)
the withdrawal of the Company or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; or (c) the filing of a notice of intent to terminate
a Plan, if such Plan is underfunded, or the treatment of a Plan amendment
as a termination under Section 4041 of ERISA; or (d) the institution of
proceedings to terminate a Plan by the PBGC; or (e) the imposition of a
lien under Section 412 of the Code or Section 302 of ERISA; or (f) any
other event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or to result in the
imposition of any liability under Title IV of ERISA other than PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"EVENT OF DEFAULT" means any of the events specified in Article
IX, PROVIDED, HOWEVER, that any requirement for the giving of notice, the
lapse of time, or both, or any other condition, event or act has been
satisfied.
"FAA" means the Federal Aviation Administration, or any
successor agency.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System or any successor thereof.
"GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof and any central bank thereof
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"XXXXX" means Pemco Aeroplex Corporation (formerly known as
Xxxxx International Corporation), or any successor corporation.
"XXXXX GUARANTY" means the guaranty securing the obligations of
the Company executed by Xxxxx.
"HAZARDOUS MATERIALS" means those substances which are regulated
by or form the basis of liability under any Hazardous Materials Laws.
"HAZARDOUS MATERIALS CLAIM" has the meaning set forth in Section
7.10.
"HAZARDOUS MATERIALS LAWS" means the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et
seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801
et seq.), the Resource Conservation and Recovery, Act (42 U.S.C. Section
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section
1251 et seq.), the Clean Air Act (42 U.S.C. Section 1251 et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), as
such laws have been amended or supplemented and any analogous future
federal, or present or future state or local, statutes and the regulations
promulgated thereunder.
"INDEBTEDNESS" means as applied to any Person, (a) all
obligations of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not
matured), (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all obligations to pay for the deferred purchase
price of property or services except trade accounts payable and accrued
liabilities arising in the ordinary course of business; (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property); (e) all obligations under leases which have been or should
be, in accordance with GAAP, recorded as capital leases; and (f) all
indebtedness secured by any Lien or any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is non-recourse to the credit of that
Person.
"INTEREST PAYMENT DATE" means the last day of each calendar
month.
"INTEREST RATE CONTRACTS" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest
rate insurance, and other agreements or arrangements designed to provide
protection against fluctuations in interest rates.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge of deposit arrangement, encumbrance, lien (statutory of
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a
lessor under a capitalized lease obligation, any financing lease having
substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which
such lien relates as debtor, under the Uniform Commercial Code or
comparable law of any jurisdiction).
"LOAN DOCUMENTS" means this Agreement, the Note, the Warrant and
the Collateral Documents.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATURITY DATE" means January 31, 1998.
"MULTIEMPLOYER PLAN" means, at any time, a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA and to which the Company
or any ERISA Affiliate is making, or is obligated to make contributions or
has made, or been obligated to make, contributions.
"NET PROCEEDS" means proceeds in cash or Cash Equivalents as and
when received by the Person making a sale (the "Seller") from the sale to
any Person of any asset outside of the ordinary course of business
(including, without limitation, the sale of any division, plant,
warehouse, stock of subsidiary of the Company or other real estate or
interest in real estate), net of the direct costs relating to such sale,
taxes paid or payable as a result thereof and amounts required to be
applied to repay principal, interest and prepayment premiums and penalties
on Indebtedness secured by a Lien on the asset which is the subject of
such sale. Net Proceeds shall also include proceeds of insurance paid on
account of loss or damage to any property and condemnation awards (or
payments made in lieu thereof) by reason of, or in anticipation of, a
permanent taking of any property pursuant to condemnation proceedings or
by the exercise of the right of eminent domain or by conveyance in lieu of
condemnation but only if the insurance proceeds or condemnation awards (or
payments in lieu thereof) exceed Five Hundred Thousand dollars ($500,000)
in any such instance and, in any event, net of (i) all money actually
applied to repair or reconstruct the damaged property or property affected
by the condemnation or taking, (ii) all of the costs and expenses
reasonably incurred in connection with the collection of such proceeds,
award or other payments and (iii) any amounts retained by or paid to
parties having rights to such proceeds, awards or other payments superior
to the rights of the Seller.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture of Governmental Authority.
"PLAN" means, with respect to the Company or any ERISA
Affiliate, at any time, an employee pension benefit plan as defined in
Section 3(2) of ERISA (including a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is maintained for employees of the Company or
any ERISA Affiliate.
"PLEDGE AGREEMENTS" means (i) the Company Stock Pledge Agreement
and (ii) the Subsidiary Stock Pledge Agreement.
"PLEDGED SHARES" has the meaning given to such term in the
Pledge Agreements.
"PLEDGORS" means the Company, Xxxxx Holdings I Inc., Xxxxx
Holdings II Inc., and Xxxxx.
"REFERENCE RATE" means the rate of interest publicly announced
from time to time by the Lender in San Francisco, California, as its
reference rate. It is a rate set by the Lender based upon various factors
including Lender's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any
change in the reference rate announced by the Lender shall take effect at
the opening of business on the day specified in the public announcement of
such change.
"REQUIREMENT OF LAW" means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESPONSIBLE OFFICER" means the Chief Executive officer or the
President of the Company or, with respect to financial matters, the Chief
Financial Officer or the Treasurer of the Company.
"REVOLVING COMMITMENT" means the former commitment of the Lender
to make Advances pursuant to Article III of the Existing Agreement.
"SENIOR DEBT" means, at a particular date, the aggregate
outstanding principal amount of all Indebtedness of the Company and its
consolidated Subsidiaries including any extensions, renewals or
replacements thereof, other than the Subordinated Note.
"SENIOR SUBORDINATED LOAN AGREEMENT" means the Second Amended
and Restated Senior Subordinated Loan Agreement dated of even date
herewith between the Company and the Lender.
"SOLVENT" means, with respect to any Person, that the fair
saleable value of the property of such Person is, on the date of
determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person as of such date
and that, as of such date, such Person is able to pay all liabilities of
such Person as such liabilities mature and does not have unreasonably
small capital. In computing the amount of contingent or liquidated
liabilities at any time, such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
"SUBORDINATED NOTE" means the promissory note of the Company
evidencing the indebtedness of the Company incurred pursuant to the Senior
Subordinated Loan Agreement.
"SUBSIDIARY" means as to any Person, (i) a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation
are at the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person and (ii) any partnership of which such Person or any
Subsidiary is a general partner or any partnership more than 50% of the
equity interests of which are owned, directly or indirectly, by such
Person or by one or more other Subsidiaries, or by such Person and one or
more other Subsidiaries. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company.
"SUBSIDIARY GUARANTY" means the guaranty securing the
obligations of the Company to the Lender executed by Xxxxx Holdings I
Inc., Xxxxx Holdings II Inc., Space Vector Corporation and Air
International Incorporated.
"SUBSIDIARY PLEDGE AGREEMENT" means the pledge of Xxxx Holdings
I Inc., Xxxxx Holding II Inc., and Xxxxx securing the obligations
hereunder of Xxxxx Holdings I Inc., Xxxxx Holding II Inc., and Xxxxx under
the Subsidiary Guaranty and the Xxxxx Guaranty.
"SUBSIDIARY SECURITY AGREEMENT" means the security agreement
securing the obligations of Xxxxx Holdings I Inc., Xxxxx Holdings II Inc.,
Xxxxx, Space Vector Corporation and Air International Incorporated under
the Subsidiary Guaranty and the Xxxxx Guaranty.
"TANGIBLE NET WORTH" means shareholders' equity as determined in
accordance with GAAP, less goodwill, patents, unamortized organizational
expenses, unamortized debt discount and any other intangible assets.
"TERM LOAN" means the term credit outstanding under the Existing
Agreement.
"TERM NOTE" means an Amended and Restated Promissory Note of the
Company payable to the order of Lender, in substantially the form of
Exhibit D hereto.
1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified herein, all terms defined in
this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto.
(b) All accounting terms not expressly defined herein shall be
construed, except where the context otherwise requires, and all financial
computations required under this Agreement shall be made, in accordance
with GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
section, schedule and exhibit references are to this Agreement unless
otherwise specified. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms.
(d) In the event that GAAP changes during the term of this
Agreement from GAAP as in effect on the date hereof such that the
covenants contained in Article VIII would then be calculated in a
different manner or have a different effect, (a) the Company and the Agent
agree to amend this Agreement in such respects as are necessary to conform
those covenants as criteria for evaluating the Company's financial
condition to substantially the same criteria as were effective prior to
such change in GAAP and (b) the Company shall be deemed to be in
compliance with the covenants contained in Article VII during the sixty
(60) day period following any change in GAAP coming to the attention of
the Chief Financial Officer of the Company if and to the extent that the
Company would have been in compliance therewith under GAAP as in effect
immediately prior to such change.
ARTICLE II
THE TERM CREDIT
2.01 THE TERM LOAN. On the date hereof the unpaid
principal balance of the Term Loan (including any capitalized deferred
interest) is $5,007,799. On or before the Closing Date, the Company shall
make an additional principal payment on the Term Loan of not less than the
Additional Adjustment Proceeds, if any.
2.02 TERM NOTE. The Term Loan is evidenced by the Term
Note with an initial principal amount equal to $5,007,799. The Lender
shall endorse on the schedule annexed to the Term Note the date and amount
of each payment of principal made by the Company with respect thereto.
The Lender is irrevocably authorized by the Company to so endorse such
schedule and such record shall be conclusive absent manifest error;
provided, however, that the failure of Lender to make, or an error in
making, a notation thereon with respect to any payment shall not limit or
otherwise affect the obligations of the Company hereunder or under the
Term Note.
2.03 SCHEDULED REPAYMENTS OF TERM LOAN. The Company shall
make interim principal installment payments of $100,000 on the last day of
each month, commencing on July 31, 1997. Any remaining unpaid principal
balance of the Term Loan shall be due and payable in full on the Maturity
Date.
2.04 MANDATORY PREPAYMENTS OF TERM LOAN.
(a) If prior to the Maturity Date, the Company shall at any
time or from time to time agree to sell, assign, lease or transfer or
otherwise dispose of assets in a transaction permitted under Section 8.02
or, if not so permitted, as to which the Lender shall have consented in
writing (each such transaction, a "disposition"), or shall receive
proceeds of insurance paid on account of loss or damage to any property or
condemnation awards, the Company shall promptly notify the Lender of such
proposed disposition or receipt of proceeds or award (including the amount
of the estimated Net Proceeds to be received by the Company in respect
thereof). After the Subordinated Note has been repaid in full, the
Company shall use 85% of all such remaining monies to prepay the principal
of the Term Loan. Any such prepayments shall be applied to the most
remote principal installments to become due.
Notwithstanding the foregoing, the Company may retain the
proceeds of insurance resulting from property damage or casualty losses,
provided that the Company uses the proceeds to repair and/or replace any
damaged property.
(b) If Additional Adjustment Proceeds are received by the
Company after the Closing Date, the Company shall within one (1) Business
Day of receipt prepay the Term Loan in an amount equal to one hundred
percent (100%) of such Additional Adjustment Proceeds. Any such
prepayment shall be applied to the most remote principal installment to
become due.
2.05 OPTIONAL PREPAYMENTS. The Company may prepay the Term
Loan in whole or in part in amounts of Five Hundred Thousand dollars
($500,000) or any larger multiple of One Hundred Thousand ($100,000).
Each such prepayment shall be accompanied by payment of accrued interest
on the amount prepaid. Any such prepayments shall be applied to the most
remote principal installments to become due.
2.06 INTEREST.
(a) On the Closing Date, any interest accrued on the Term Loan
after April 30, 1996 and prior to October 1, 1996 and not previously paid
shall be forgiven. Any interest accrued on the Term Loan on and after
October 1, 1996 shall be paid in full on the Closing Date.
(b) Subject to subsection (d) below, the Term Loan shall bear
interest on the outstanding principal amount thereof until it becomes due,
at a rate per annum equal to the Reference Rate plus one and three-
quarters percentage points (1-3/4%).
(c) Interest on each Loan shall be payable in arrears on the
last Business Day of each month. Interest shall also be payable on the
date of any prepayment pursuant to Sections 2.04 and 2.05 for the portion
of the Term Loan so prepaid and upon payment (including prepayment) in
full thereof and, after the occurrence and during the continuance of any
Event of Default, interest shall be payable on demand.
(d) During the period between (a) the stated due date for
payment of any amount under this Agreement or the date of acceleration of
any amount pursuant to Section 9.01 which the Company fails to pay on such
due date or date of acceleration, and (b) the date on which such amount is
paid in full, the Company shall, to the extent permitted by applicable
law, pay interest on demand on such unpaid amount at a rate per annum
equal to the sum of the Reference Rate plus three and three quarters
percentage points (3-3/4%).
ARTICLE III
THE REVOLVING LOAN
3.01 PAYMENT IN FULL. The unpaid principal balance of the
Advances made pursuant to the Revolving Commitment in the Existing
Agreement was paid in full on October 25, 1996. Any commitment by the
Lender to make additional Advances has previously terminated.
3.02 INTEREST PAYMENT; FORGIVENESS. On the Closing Date,
any interest accrued on the Advances after April 30, 1996 and prior to
October 1, 1996 and not previously paid is hereby forgiven. Any interest
accrued on the Advances on and after October 1, 1996 shall be paid in full
on the Closing Date.
ARTICLE IV
PAYMENTS; TAXES; CHANGES IN CIRCUMSTANCES
4.01 COMPUTATION OF INTEREST.
(a) All computations of interest payable hereunder shall be
made on the basis of a year of three hundred sixty-five (365) or three
hundred sixty-six (366) days, as the case may be, and actual days elapsed.
Interest shall accrue during each period during which interest is computed
from and including the first day thereof to but excluding the last day
thereof.
(b) Each determination of an interest rate by the Lender
pursuant to any provision of this Agreement shall be conclusive and
binding on the Company in the absence of manifest error.
4.02 PAYMENTS BY THE COMPANY.
(a) All payments (including prepayments) to be made by the
Company hereunder shall be made without set-off or counterclaim and shall
be made to the Lender at its office at 0000 Xxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, in Dollars and in immediately available
funds no later than 12:00 noon (New York time). Any payment which is
received by the Lender later than 12:00 noon (New York time) shall be
deemed to have been received on the immediately succeeding Business Day.
(b) Whenever any payment hereunder shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.
4.03 TAXES.
(a) Any and all payments by the Company to the Lender under
this Agreement shall be made free and clear of, and without deduction or
withholding for, any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding such taxes (including income taxes or franchise taxes)
as are imposed on or measured by the Lender's net income by the
jurisdiction under the laws of which the Lender is organized or any
political subdivision thereof or payable by the Company pursuant to any
other provision hereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes").
(b) In addition, the Company agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or the Collateral Agreements (hereinafter referred to
as "Other Taxes").
(c) The Company will indemnify and hold harmless the Lender for
the full amount of Taxes or Other Taxes (including without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 4.03) paid by the Lender and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within
thirty (30) days from the date the Lender makes written demand therefor.
The Company shall be subrogated to the Lender's right to contest such
Taxes or Other Taxes.
(d) If the Company shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to the Lender then,
(i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
4.03) the Lender receives an amount equal to the sum it would have
received had no such deductions been made,
(ii) the Company shall make such deductions, and
(iii) the Company shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law.
(e) Within thirty (30) days after the date of any payment by
the Company of Taxes or Other Taxes, the Company will furnish to the
Lender the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Lender.
(f) The agreements and obligations of the Company contained in
this Section 4.03 shall survive the payment in full of principal and
interest hereunder.
4.04 Increased Cost and Reduced Return. If the Lender
shall have determined that the introduction of any applicable law, rule or
regulation regarding capital adequacy, or any change therein or any change
in administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or the compliance by the Lender or any corporation controlling
the Lender with any request, guideline or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, affects or would affect the amount of
capital required or expected to be maintained by the Lender or any
corporation controlling such Lender and the Lender, (taking into
consideration the Lender's or such corporation's policies with respect to
capital adequacy and the Lender's desired return on capital) determines
that the amount of such capital is increased as a consequence of the
Lender's obligation under this Agreement, then the Lender's obligations
under this Agreement, upon demand of the Lender, the Company shall within
fifteen (15) days of such demand pay to the Lender, from time to time as
specified by the Lender, additional amounts sufficient to compensate the
Lender for such increase.
4.05 Certificates of Lender. The Lender shall deliver to
the Company a certificate setting forth in reasonable detail the basis for
computing any amount payable to the Lender under this Article and such
certificate shall be conclusive and binding on the Company in the absence
of manifest error.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Lender that,
as of the Closing Date:
5.01 CORPORATE EXISTENCE AND POWER. The Company and each
of its Subsidiaries:
(a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation,
(b) has the corporate power and authority and all governmental
licenses, authorizations, consents and approvals to own and operate
its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation, licensed and in
good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its
business requires such qualification; and
(d) is in compliance with all Requirements of Law, except, in
each case referred to in clause (c) or clause (d), to the extent that
the failure to do so would not have a material adverse effect on the
business, operations, properties or condition (financial or
otherwise), of the Company and its Subsidiaries taken as a whole;
5.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The
execution, delivery and performance by the Company and each of its
Subsidiaries of this Agreement and any other Loan Document to which such
Person a party:
(a) are within such Person's corporate power and authority and
when delivered will have been duly authorized by all necessary
corporate action; and
(b) do not contravene the terms of such Person's certificate of
incorporation or By-Laws, or any amendment thereof;
5.03 GOVERNMENTAL AUTHORIZATION. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority other than the filing of financing
statements in accordance with the Uniform Commercial Code and, as to the
federal government, compliance with federal law governing the assignment
of contracts with the federal government, is necessary or required in
connection with the execution, delivery, performance or enforcement
against the Company or any of its Subsidiaries of the Agreement, any other
Loan Document or any other instrument or agreement required hereunder to
be made by the Company or any of its Subsidiaries, except those already
obtained, those required of municipal lessors and those required in
connection with the performance of the covenants set forth in Article VII;
5.04 BINDING EFFECT. This Agreement and each other Loan
Document to which the Company or any of its Subsidiaries is a party when
delivered will constitute the legal, valid and binding obligations of the
Company and any of its Subsidiaries to the extent of a party thereto
enforceable against such Person in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability;
5.05 NO LEGAL BAR. The execution, delivery and performance
of this Agreement and the Loan Documents will not violate any Requirement
of Law or any Contractual Obligation of the Company or of any of its
Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or
revenues pursuant to any Requirement of Law. No material contract between
the Company and any Governmental Authority forbids assignment and no
material contract between any of its Subsidiaries and any Governmental
Authority forbids assignment, to the best knowledge of the Company;
5.06 LITIGATION. Except as disclosed in Schedule 5.06,
there are no actions, suits, proceedings, claims or disputes pending, or
to the best knowledge of the Company, threatened or contemplated at law,
in equity, in arbitration or before any Governmental Authority against the
Company or any of its Subsidiaries or any of their respective properties:
(a) with respect to this Agreement or any Loan Document or any
of the transactions contemplated hereby or thereby; or
(b) which, if determined adversely to the Company or its
Subsidiaries, is reasonably likely to have a material adverse effect
on the assets, business or operations of the Company or which is
reasonably likely to have a material adverse effect on the ability of
the Company to perform its obligations under this Agreement or any
Loan Document. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the
execution, delivery and performance of this Agreement or any Loan
Document or directing that the transactions provided for herein not
be consummated as herein provided;
5.07 NO DEFAULT. No event has occurred and is continuing
or would result from the incurring of obligations by the Company under
this Agreement or any Loan Document which constitutes a Default or an
Event of Default. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could be
materially adverse to the business, operations, property or financial or
other condition of the Company and its Subsidiaries taken as a whole or
which could materially adversely affect the ability of the Company to
perform its obligations under this Agreement or any Loan Document;
5.08 ERISA COMPLIANCE.
(a) Neither the Company nor any ERISA Affiliate maintains or
contributes to any Plan or Multiemployer Plan other than those listed on
Schedule 5.08. Each Plan of the Company and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable Federal and state laws and the
rules and regulations promulgated thereunder. With respect to each Plan
(other than a Multiemployer Plan) all reports required under ERISA or any
other applicable law or regulation to be filed with the relevant
Governmental Authority with respect to which the failure to file has any
reasonable likelihood of resulting in liability of the Company or any
ERISA Affiliate in excess of Two Hundred Thousand dollars ($200,000) have
been duly filed, and all such reports are true and correct in all material
respects as of the date given. No Plan of the Company or its ERISA
Affiliates has been terminated other than any Plan as to which all
liabilities have been fully paid or provided for solely from such
terminated Plan's assets without the requirement of any further
contributions by the Company or any ERISA Affiliate after the original
date of the notice of intent to terminate given to either the Plan's
Participants (or the PBGC) nor has any accumulated funding deficiency (as
defined in Section 412(a) of the Code) been incurred (without regard to
any waiver granted under Section 412(a) of the Code) nor has any funding
waiver from the IRS been received or requested;
(b) Neither the Company nor any of its ERISA Affiliates has
failed to make any contribution or pay any amount due and owing as
required by Section 412 of the Code or Section 302 of ERISA or the terms
of any Plan prior to the due date under Section 412 of the Code and
Section 302 of ERISA, which amount remains due and owing. There has been
no ERISA Event or any event requiring disclosure under Section
4041(c)(3)(C), 4062(f) or 4063(a) of ERISA with respect to any Plan of the
Company or its ERISA Affiliates since the effective date of ERISA.
(c) Except as set forth in Schedule 5.08, the value of the
assets of each Plan (other than a Multiemployer Plan) of the Company or
any ERISA Affiliate equalled or exceeded 90% of the present value of the
benefit liabilities, as defined in Title IV of ERISA, of each such Plan as
of the most recent valuation date of each Plan using the Plan actuarial
assumptions at such date. There are no pending or threatened claims,
lawsuits or actions (other than routine claims for benefits and expenses
in the ordinary course) asserted or instituted against, and neither the
Company nor any of its ERISA Affiliates has any knowledge of any
litigation or claims against (i) the assets of any Plan or trust or
against any fiduciary of a Plan (other than a Multiemployer Plan) with
respect to the operation of such Plan or (ii) the assets of any employee
welfare benefit plan within the meaning of Section 3(1) of ERISA or
against any fiduciary thereof with respect to the operation of any such
plan.
(d) Neither the Company nor any ERISA Affiliate has engaged in
any prohibited transactions, within the meaning of Section 406 of ERISA or
Section 4975 of the Code which would subject the Company or such ERISA
Affiliates to any tax or penalty, provided the "amount involved" under
Section 4975 of the Code is in excess of Two Million dollars ($2,000,000).
Neither the Company nor any of its ERISA Affiliates (i) has incurred or
reasonably expects to incur (A) any liability under Title IV of ERISA
(other than premiums due under Section 4007 of ERISA to the PBGC) or (B)
any withdrawal liability (and no event has occurred which with the giving
of notice under Section 4201 of ERISA, would result in such liability)
under Section 4201 of ERISA as a result of a complete or partial
withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from a
Multiemployer Plan or (C) any liability under Section 4062 of ERISA to the
PBGC or to a trustee appointed under Section 4042 of ERISA, or (ii) has
withdrawn from a Multiemployer Plan. Neither the Company nor any of its
ERISA Affiliates nor any organization to which the Company or any of its
ERISA Affiliates is a successor or parent corporation, within the meaning
of Section 4069(b) of ERISA, has engaged in any transaction that could be
covered by Section 4069 of ERISA; and
(e) Except as disclosed on Schedule 5.08, neither the Company
nor any ERISA Affiliate maintains or has established any welfare benefit
plan within the meaning of Section 3(1) of ERISA which provides for
continuing benefits or coverage for any participant or any beneficiary of
a participant after such participant's termination of employment, except
as may be required by the Consolidated Budget Reconciliation Act of 1985,
as amended ("COBRA") and the regulations thereunder, and at the expense of
the participant or the beneficiary of the participant. The Company and
each of its ERISA Affiliates that maintains a welfare benefit plan within
the meaning of Section 3(1) of ERISA has complied in all material respects
with the notice and continuation coverage requirements of COBRA and the
regulations thereunder;
5.09 USE OF PROCEEDS; MARGIN REGULATIONS. No portion of
the Term Loan will be used, directly or indirectly, (i) to purchase or
carry margin stock as defined in Regulation U of the Federal Reserve Board
or (ii) to repay or otherwise refinance Indebtedness of the Company or
others incurred to purchase or carry margin stock, or (iii) to extend
credit for the purpose of purchasing or carrying any margin stock. No
proceeds of the Term Loan will be used to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities
Exchange Act;
5.10 TITLE TO PROPERTIES. Each of the Company and its
Subsidiaries has good record and marketable title in fee simple to or
valid leasehold interests in all its real and personal property, except
for such defects in title as could not, individually or in the aggregate,
have a materially adverse effect on the business, operations, property,
prospects or financial condition of the Company and its Subsidiaries taken
as a whole or the ability of the Company to perform its obligations under
the Agreement or the Loan Documents;
5.11 TAXES. Except as otherwise disclosed in Schedule
5.11, the Company and its Subsidiaries have filed all Federal and other
material tax returns and reports required to be filed and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided;
5.12 FINANCIAL CONDITION. The consolidated financial
statements of financial condition of the Company and its Subsidiaries
dated December 31, 1995, and the related consolidated statements of
income, earnings, stockholders' equity and changes in financial position
for the fiscal year ended on that date, together with the Company's
unaudited financial statements dated September 30, 1996:
(a) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise noted
therein,
(b) are complete, accurate and a fair presentation of the
financial condition of the Company and its Subsidiaries as of the
date thereof and results of operations for the period covered
thereby; and
(c) show all material indebtedness liabilities, direct or
contingent, of the Company and its Subsidiaries as of the date
thereof (including, without limitation, liabilities for taxes and
material commitments);
5.13 ENVIRONMENTAL MATTERS. Except as set forth in
Schedule 5.13, as of the Closing Date:
(a) the operations of the Company and its Subsidiaries comply
in all material respects with all applicable Hazardous Materials
Laws;
(b) to the knowledge of the Company, none of the operations of
the Company nor any of its Subsidiaries is the subject of federal or
state investigation evaluating whether any remedial action, involving
expenditures, is needed to respond to a release of any Hazardous
Materials into the environment; and
(c) neither the Company nor any of its Subsidiaries has any
material contingent liability in connection with any release of any
Hazardous Materials into the environment;
5.14 COLLATERAL AGREEMENTS.
(a) The provisions of each of the Collateral Agreements when
delivered shall be effective to create in favor of the Lender a legal,
valid and enforceable security interest in all right title and interest of
the Company and the Subsidiaries in the collateral described therein; and
financing statements have been filed in the offices in the jurisdiction
listed in the schedule to the Security Agreement and each such Security
Agreement will have been filed in the U.S. Patent and Trademark Office and
the U.S. Copyright Office. Such Security Agreement when delivered shall
constitute a fully perfected first lien on, and security in, all right,
title and interest of the Company or such Subsidiary in the collateral
described therein and except for the Liens permitted under Section 8.01.
(b) The provisions of the Pledge Agreements are effective to
create, in favor of the Lender a legal, valid and enforceable Lien on or
security interest in all of the Pledged Shares (as defined in the Pledge
Agreements) when the same are delivered to the Lender. Each such Pledge
Agreement constitutes a fully perfected first security interest in all
right, title and interest of the Company, or its Subsidiaries, as the case
may be, in the Pledged Shares described therein, prior and superior to all
other Liens except for the Liens permitted under Section 8.01;
5.15 INVESTMENT COMPANY. Neither the Company nor any
Person controlling the Company is an "Investment Company" within the
meaning of the Investment Company Act of 1940, as amended;
5.16 FULL DISCLOSURE. All factual information heretofore
or contemporaneously furnished in writing by or on behalf of the Company
in writing to the Lender (including without limitation, all information
contained in the Loan Documents) for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all other
such factual information hereafter furnished in writing by or on behalf of
the Company in writing to the Lender will be, true and accurate in all
material respects on the date as of which such information is dated or
certified and not made incomplete by omitting to state any fact necessary
to make such information not misleading at such time in light of the
circumstances under which such information was provided;
5.17 ADVERSE CHANGE. Since the date of the consolidated
pro forma financial statement of Company and its Subsidiaries heretofore
delivered to the Lender, there has been no material adverse change in the
business, operations, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole;
5.18 NO BURDENSOME RESTRICTIONS. Neither the Company nor
any of its Subsidiaries is a party to or bound by any Contractual
Obligation or subject to any charter or corporate restriction or any
Requirement of Law which is expected to materially adversely affect the
business, operations, properties, assets, or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole or the
rights of the Lender under any Loan Document, or may materially impair the
ability of the Company or its Subsidiaries to perform or observe its
obligations under this Agreement;
5.19 SOLVENCY. On and as of the Closing Date the Company
and its Subsidiaries will be Solvent;
5.20 LABOR RELATIONS. Neither the Company nor any of its
Subsidiaries is engaged in any unfair labor practice that could have a
material adverse effect on the Company and its Subsidiaries. Except as
previously disclosed to the Lender in writing, there is (i) no significant
unfair labor practice complaint pending against the Company or any of its
Subsidiaries before the National Labor Relations Board or threatened
against any of them, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Company or any of its Subsidiaries or
threatened against any of them, (ii) no significant strike, labor dispute,
slowdown or stoppage pending against the Company or any of its
Subsidiaries, and (iii) to the best knowledge of the Company, no union
representation question existing with respect to the employees of the
Company or any of its Subsidiaries and, to the best knowledge of the
Company, no union organizing activities are taking place, except (with
respect to any matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as could not have a material
adverse effect on the business, operations property, assets, conditions
(financial or otherwise) or prospects of the Company or any of its
Subsidiaries taken as a whole;
5.21 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES,
SUPPLEMENTAL TYPE CERTIFICATES ISSUED BY THE FAA AND PARTS MANUFACTURING
AUTHORIZATIONS, ETC. The Company and its Subsidiaries own or are licensed
or otherwise have the right to use all of the patents, trademarks,
supplemental type certificates, parts manufacturing authorizations,
service marks, trade names, copyrights, franchises, authorizations and
other rights that are reasonably necessary for the operations of their
respective businesses, without conflict with the rights of any other
Person with respect thereto except those which would not be likely to
materially adversely affect the business, condition or operations of the
Company or any of its Subsidiaries taken as a whole. To the best
knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed by the Company or any of its Subsidiaries
infringes upon any rights owned by any other Person; except as set forth
on Schedule 5.21, no claim or litigation regarding any of the foregoing is
pending or threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is
pending or, to the knowledge of the Company, proposed, which, in either
case, would be likely to materially adversely affect the business,
condition or operations of the Company or any of its Subsidiaries taken as
a whole; and
5.22 SUBSIDIARIES. As of the Closing Date, the Company has
no Subsidiaries other than those listed on Schedule 5.22(a) hereto and has
no equity investments in any other corporation or entity other than those
listed on Schedule 5.22(b) hereto.
ARTICLE VI
CONDITIONS PRECEDENT
6.01 CONDITIONS OF CLOSING. The Closing Date shall not
occur, and the Existing Agreement shall instead remain in full force and
effect, until the Lender shall have received all of the following, in form
and substance satisfactory to the Lender and its counsel:
(a) CREDIT AGREEMENT AND NOTE. This Agreement and the Term
Note payable to the order of Lender, executed and delivered by a
Responsible Officer of the Company;
(b) BOARD RESOLUTIONS.
(i) Certified copies of the resolutions of the Board
of Directors of the Company approving and authorizing the execution,
delivery and performance by the Company of this Agreement and the
transactions contemplated thereby and the other Loan Documents to be
delivered hereunder, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Company;
(ii) Certified copies (as of the time of delivery) of
the resolutions of the Board of Directors of each Subsidiary of the
Company approving the Loan Documents to which each respective entity
is a party; and
(iii) All documents evidencing other necessary and
appropriate corporate action with respect thereto.
(c) INCUMBENCY CERTIFICATES. A certificate of the Secretary or
Assistant Secretary of the Company and each Subsidiary of the Company
certifying the names and true signatures of the officers authorized
to execute and deliver, as applicable, this Agreement, and all other
Loan Documents to be delivered hereunder;
(d) SENIOR SUBORDINATED AGREEMENT. The Senior Subordinated
Agreement, duly executed and delivered by the Company, together with
evidence that all conditions precedent to its effectiveness specified
therein have been satisfied;
(e) COMPANY REAFFIRMATION AGREEMENT. The Company Reaffirmation
Agreement in the form of Exhibit B hereto, duly executed by the
Company;
(f) SUBSIDIARY REAFFIRMATION AGREEMENT. The Subsidiary
Reaffirmation Agreement in the form of Exhibit C hereto, duly
executed by each Subsidiary;
(g) AMENDED WARRANT. The Amended Warrant, duly executed and
delivered by the Company, together with evidence that all shares
issuable upon exercise of the Amended Warrant have been authorized;
(h) PAYMENTS. All payments due the Lender pursuant to Article
II hereof;
(i) LEGAL OPINION. An opinion of counsel to the Company and
addressed to the Lender with respect to the enforceability of the
Amended Warrant;
(j) KC 135 CONTRACT. A copy of the current KC 135 contract and
all amendments thereto;
(k) LOCKUP AGREEMENT. A Lockup Agreement in the form of
Exhibit E hereto, duly executed by Xxxxxxx Xxxx; and
(l) OTHER DOCUMENTS. Such other approvals, opinions or
documents as the Lender may reasonably request.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees that, so long as the
Term Loan or other amount payable hereunder remains unpaid, unless the
Lender waives compliance in writing:
7.01 FINANCIAL STATEMENTS. The Company shall deliver to
the Lender, in form and substance satisfactory to the Lender:
(a) as soon as available, but not later than one hundred twenty
(120) days after the end of each fiscal year of the Company, a copy
of the audited consolidated balance sheet of the Company as at the
end of such year and the related consolidated statements of income,
stockholders' equity and cash flow for such fiscal year, setting
forth in each case in comparative form the figures for the previous
year, all in reasonable detail and accompanied by the opinion of
Xxxxxx Xxxxxxxx LLP or another nationally recognized independent
public accounting firm, which report shall state that such
consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years;
(b) as soon as available, but in any event not later than
ninety (90) days after the end of each fiscal year of the Company, an
unaudited consolidating balance sheet of the Company and each of its
Subsidiaries as at the end of such fiscal year and the related
consolidating statement of income such fiscal year, all in reasonable
detail certified by an appropriate Responsible Officer as having been
used in connection with the preparation of the financial statements
referred to in paragraph (a) of this Section;
(c) as soon as available, but in any event not later than
forty-five (45) days after the end of each calendar month, unaudited
monthly and year-to-date reconciled statements of income and balance
sheets of the Company and its consolidated Subsidiaries
(consolidated, consolidating and by facility) as of the end of such
month, all in reasonable detail and certified by the appropriate
Responsible Officer of the Company as being complete and correct and
fairly presenting in accordance with GAAP the financial position and
results of operations of the Company and its Subsidiaries; and
7.02 CERTIFICATES; OTHER INFORMATION. The Company shall
furnish to the Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 7.01(a) above, a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;
(b) not later than forty-five (45) days after the end of each
fiscal quarter, a certificate of a Responsible Officer (i) stating
that, to the best of such officer's knowledge, the Company, during
such quarter, has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate, and (ii) showing in detail
the calculations supporting such statement in respect of Sections
8.14 and 8.15;
(c) concurrently with the delivery of the financial statements
referred to in Section 7.01(c) and (d), a monthly backlog report and
contract profit and loss statement for the Company and each of its
Subsidiaries prepared in the ordinary course of business;
(d) as soon as available but in any event not later than thirty
(30) days after the end of each fiscal year, annual projections by
quarter of the budgeted financial statements of the Company and its
Subsidiaries;
(e) as soon as available but in any event not later than one
hundred twenty (120) days after the end of each fiscal year, copies
of all management letters issued by the Company's independent public
accountants with respect to such year;
(f) promptly after the same are sent, copies of all financial
statements and reports which the Company sends to its stockholders,
and promptly after the same are filed, copies of all financial
statements and regular, periodical or special reports which the
Company may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority
regulating securities; and
(g) concurrently with the delivery of the financial statements
referred to in Section 7.01(c) above, a certificate of a Responsible
Officer of the Company certifying that the Company and its
Subsidiaries have paid each and every installment of rent due under
each and every facility lease;
(h) as soon as available, copies of all leases of real property
in Birmingham and Dothan entered into between the Company and any
lessor and copies of all projections of rent due for the current
lease year that have been provided to any lessor;
(i) not later than thirty (30) days after being delivered to
the relevant authority, copies of all audit letters from the
Company's independent auditors with respect to the fairness of the
Company's schedule of gross sales which is the basis for its rental
payment calculations;
(j) ten days' prior notice of any lease payment that the
Company is unable to make;
(k) no later than the last day of each month (and more
frequently at the request of the Lender), in a form satisfactory to
the Lender, a cash flow summary, a payables aging report and an aged
summary of held checks, in each case with respect to the prior week;
(l) no later than the last day of each month, a cash flow
forecast in the form previously provided to the Lender for the
succeeding two months which, in the event Lender so requests, will
have been reviewed by a public accounting firm reasonably
satisfactory to the Lender;
(m) as soon as available, a copy of any offering memorandum,
term sheet, prospectus or similar document used, or intended to be
used, by the Company to arrange for debt or equity financing of any
kind; and
(n) promptly, such additional financial and other information
as the Lender may from time to time reasonably request.
7.03 PRESERVATION OF CORPORATE EXISTENCE. The Company
shall and shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of the state of
incorporation except as permitted by Section 8.03;
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, licenses and franchises necessary or
desirable in the normal conduct of its business, except those the
non-preservation of which has no reasonable likelihood of having a
material adverse effect on the business, operations, properties,
assets or condition (financial or otherwise) of the Company and its
respective Subsidiaries taken as a whole and except for transactions
permitted by Section 8.03 and sales of assets permitted by Section
8.02.
(c) use its reasonable efforts, in the ordinary course and
consistent with past practice to preserve its business organization
and preserve the goodwill and business of the customers, suppliers
and others having business relations with it except those the non-
preservation of which has no reasonable likelihood of having a
material adverse effect on the business, operations, properties,
assets or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; and
(d) preserve all of its registered patents, trademarks, trade
names and service marks except those the non-preservation of which
has no reasonable likelihood of having a material adverse effect on
the business, operations, properties, assets or condition (financial
or otherwise) of the Company and its Subsidiaries taken as a whole.
7.04 MAINTENANCE OF PROPERTY. The Company shall maintain
and preserve, and shall cause each of its Subsidiaries to maintain and
preserve, all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted, and make all
necessary repairs thereto and renewals and replacements thereof except
where the failure to do so would not, in the aggregate, have a material
adverse effect on the business, operations, property or financial or other
condition of the Company and its Subsidiaries taken as a whole.
7.05 INSURANCE. The Company shall maintain, and shall
cause each Subsidiary to maintain, with financially sound and reputable
insurers, insurance with respect to its properties and business against
loss or damage of the kinds customarily insured against by Persons engaged
in the same or similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons
including, without limitation, workers' compensation insurance, public
liability and property and casualty insurance. The Company shall
maintain, and shall cause each Subsidiary to maintain, flood insurance on
any of its improved real estate, if the law so requires. All such sources
of insurance (except workers compensation) shall name the Lender as loss
payee and an additional insured for the benefit of the Lender.
7.06 PAYMENT OF OBLIGATIONS. The Company shall, and shall
cause its Subsidiaries to, pay and discharge as the same shall become due
and payable, all of their respective obligations and liabilities
including, without limitation:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and adequate
reserves in accordance with GAAP are being maintained by the Company
or such Subsidiary;
(b) all lawful claims which, if unpaid, might by law become a
Lien upon its property; and
(c) all Indebtedness as and when due and payable but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
7.07 COMPLIANCE WITH LAWS. The Company shall comply, and
shall cause each Subsidiary to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over
it or its business, except such:
(a) as may be contested in good faith or as to which a bona
fide dispute may exist, and
(b) as to which such failure to comply would not have a
material adverse effect on the business, operations, properties,
assets or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole.
7.08 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The
Company will maintain, and will cause each Subsidiary to maintain, proper
books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and the assets and business of the Company and such
Subsidiaries. The Company will permit, and will cause each Subsidiary to
permit, representatives of the Lender to visit and inspect any of their
respective properties, to examine their respective corporate, financial
and operating records and make copies thereof or abstracts therefrom, and
to discuss their respective affairs, finances and accounts with their
respective directors, officers, employees and independent public
accountants, all at such reasonable times during normal business hours and
as often as may be reasonably desired, upon reasonable advance notice to
the Company, provided, however, during the continuation of an Event of
Default the Lender may visit and inspect at the expense of the Company
such properties at any time during business hours and without advance
notice.
7.09 HAZARDOUS MATERIALS.
(a) The Company will, and will cause each Subsidiary to,
conduct its operations and keep and maintain its property in material
compliance with all Hazardous Materials Laws.
(b) The Company will conduct, and cause to be conducted, the
ongoing operations of the Company and its Subsidiaries in a manner that
will not give rise to the imposition of liability, or require
expenditures, under or in connection with any Hazardous Materials Law,
except for any liabilities or expenditures which, in the aggregate, would
not have a reasonable likelihood of having a material adverse effect on
the business, operations, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.
7.10 NOTICES. The Company shall promptly give notice to
the Lender:
(a) of the occurrence of any Default or Event of Default,
accompanied by a certificate specifying the nature of such Default or
Event of Default, the period of existence thereof and the action that
the Company has taken or proposes to take with respect thereto;
(b) of any (i) default or event of default under any material
Contractual Obligation of the Company or any of its Subsidiaries; or
(ii) dispute, litigation, investigation, proceeding or suspension
which may exist at any time between the Company or any of its
Subsidiaries and any Governmental Authority;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary (i)
in which the amount of damages claimed is One Million dollars
($1,000,000) (or its equivalent in another currency or currencies) or
more, (ii) in which injunctive or similar relief is sought and which,
if adversely determined, could have a material adverse effect on the
business, operations or financial or other condition of the Company
and its Subsidiaries taken as a whole or the ability of the Company
or any Subsidiary to perform its obligations under the Agreement or
the Loan Documents; or (iii) in which the relief sought is an
injunction or other stay of the performance of this Agreement or any
Loan Document or the operations of the Company or its Subsidiaries;
(d) upon, but in no event later than ten (10) days after,
becoming aware of (i) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or
threatened against the Company or any Subsidiary or any of their
properties pursuant to any applicable Hazardous Materials Laws, (ii)
all claims made or threatened by any third party against the Company
or any Subsidiary with respect to or because of its or their property
relating to damage, responsibility, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials
(the matters set forth in clauses (i) and (ii) above are hereinafter
referred to as "Hazardous Materials Claims"), and (iii) any
environmental or similar condition on any real property adjoining or
in the vicinity of the property of the Company or any Subsidiary that
could reasonably be anticipated to cause such property or any part
thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use of such property under any
Hazardous Material Laws;
(e) of any other litigation or proceeding affecting the Company
or any of its Subsidiaries which the Company would be required to
report to the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, within four days after reporting the
same to the Securities and Exchange Commission;
(f) any ERISA Event affecting the Company or any member of its
Controlled Group (but in no event more than ten (10) days after such
ERISA Event) together with (i) a certificate of the Company setting
forth the details of such ERISA Event and the action which the
Company or such member proposes to take with respect thereto; (ii) a
copy of any notice with respect to such ERISA Event that may be
required to be filed with the PBGC; or (iii) any notice delivered by
the PBGC to the Company or any member of its Controlled Group with
respect to such ERISA Event; and
(g) promptly following receipt by the Company of notice from
any holder of a Subordinated Note, a copy of such notice.
Each notice pursuant to this Section shall be accompanied by a
statement by a Responsible Officer of the Company setting forth details of
the occurrence referred to therein and stating what action the Company
proposes to take with respect thereto.
7.11 SOLVENCY. The Company and its Subsidiaries will
continue to be Solvent on a consolidated basis.
7.12 ACCOUNTING CHANGES. The Company shall not permit, and
shall not permit any of its Subsidiaries to, make any significant change
in accounting treatment and reporting practices from those used in the
preparation of their respective December 31, 1996 financial statements, or
change their fiscal year end from December 31, except as required by GAAP.
7.13 FURTHER ASSURANCES. The Company and each of its
Subsidiaries shall, upon the Lender's written request, make, execute,
acknowledge, deliver, file and record all such instruments, including,
without limitation, financing statements, and security agreements,
mortgages and deeds of trust, and take all such action, including using
its best efforts to obtain any necessary consents to a transfer or
assignment of any interest or right in any of the Collateral, as the
Lender may deem necessary or advisable for creating and perfecting a
security interest in and lien upon any of the Collateral.
7.14 COMPLIANCE WITH ASSIGNMENT OF CLAIMS ACT. If at any
time the Company's ratio of (a) Cash Flow to (b) Consolidated Net Interest
Expense plus principal payments required hereunder plus all payments in
cash, if any, made and permitted to be made pursuant to 8.11 as of the
twelve (12) month period ending on such date, is less than 1.0 to 1.0,
then the Company and each of its Subsidiaries shall, upon the Lender's
written request, promptly comply with all requirements of the Assignment
of Claims Act, 31 USC Sections 3727 and 41 USC Sections 15 to perfect the
Lender's security interest in receivables arising under each contract for
goods or services in excess of Five Hundred Thousand dollars ($500,000)
that are subject to the Assignment of Claims Act.
ARTICLE VIII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as the
Term Loan or other amount payable hereunder remains unpaid, unless the
Lender waives compliance in writing:
8.01 LIMITATION ON LIENS. The Company shall not, directly
or indirectly, nor shall it permit any of its Subsidiaries to, make,
create, incur, assume or suffer to exist any Lien upon or with respect to
any part of its property or assets, whether now owned or hereafter
acquired, or offer or agree to do so except for:
(a) any Lien existing on the property of the Company or its
Subsidiaries on the Closing Date and set forth in Schedule 8.01
securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or which
are being contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof and for which adequate
reserves or other appropriate provision has been made;
(d) carriers' warehousemen's, mechanics' landlords'
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain
payable without penalty or which are being contested in good faith
and by appropriate proceedings;
(e) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business which do not
in the aggregate materially detract from the value of the encumbered
asset or materially impair the use thereof in the operation of the
business of the Company or any Subsidiary thereof;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the businesses of
the Company and its Subsidiaries;
(h) Liens on assets of Persons which become Subsidiaries after
the date of this Agreement provided, however, that such Liens existed
at the time such Persons became Subsidiaries and were not created in
anticipation thereof and the aggregate amount of all Indebtedness
secured by such Liens shall not exceed One Million dollars
($1,000,000);
(i) Liens on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of
acquiring such asset; provided that any such Lien attaches to such
asset concurrently with or within ninety (90) days after the
acquisition thereof and the aggregate Indebtedness secured by all
such Liens does not at the time exceed five percent (5%) of the
assets of the Company and its Subsidiaries as shown on the balance
sheet of the Company and its Subsidiaries for the most recent month
for which such information is available;
(j) Liens on any asset securing Indebtedness permitted to be
incurred pursuant to Section 8.10(c);
(k) Liens upon specific items of inventory or other goods and
proceeds, securing obligations in respect of bankers' acceptances
issued or created to facilitate the purchase, shipment or storage of
such inventory or other goods;
(l) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(m) Judgment Liens not giving rise to an Event of Default;
(n) Liens securing reimbursement obligations with respect to
letters of credit opened in the ordinary course of business;
(o) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of the
Company or one of its Subsidiaries relating to such property or
assets; and
(p) Liens arising out of consignment or similar arrangements
for the sale of goods entered into by the Company or any of its
Subsidiaries in the ordinary course of business in accordance with
past practices.
8.02 DISPOSITION OF ASSETS. The Company shall not, nor
shall it permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or
a series of transactions) all or a substantial part of its assets,
business or property (including without limitation, accounts and notes
receivable (with or without recourse)) or enter into any agreement to do
any of the foregoing except:
(a) dispositions of inventory, or used, worn-out or surplus
property, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
traded in for credit against the purchase price of similar
replacement equipment or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
and
(c) dispositions not otherwise permitted hereunder which are
made for fair market value and the Net Proceeds of which are applied
as provided in Section 2.04 provided, that (i) at the time of any
disposition, no Event of Default shall have occurred and be
continuing or shall result from such disposition; (ii) the aggregate
sales price from such disposition shall be paid in cash; and (iii)
aggregate dispositions in any twelve (12) month period shall not
exceed fifteen percent (15%) of the Company's total assets.
8.03 CONSOLIDATIONS AND MERGERS. The Company shall not,
and shall not permit any of its Subsidiaries to, merge, consolidate or
combine directly or indirectly with or into any Person except (a) any
Subsidiary of the Company may merge, consolidate or combine with or into,
or transfer assets to the Company or any wholly-owned Subsidiary of the
Company and in the case of any such merger to which the Company is a
party, the Company is the surviving corporation and (b) the Company may
merge, consolidate or combine with another entity if (i) the Company is
the corporation surviving the merger or the corporation into which the
Company shall be merged or formed by any such consolidation shall assume
the Company's obligations hereunder in an agreement or instrument
satisfactory in form and substance to the Lender, and (ii) if immediately
after giving effect thereto, no Default or Event of Default would exist.
8.04 ACQUISITIONS AND INVESTMENTS.
(a) The Company shall not purchase or acquire, or permit any of
its Subsidiaries to purchase or acquire, or make any commitment therefor,
any capital stock, equity interest or other security interest of, or make
or permit any subsidiary to make any capital contribution to any Person
(including, without limitation, any Subsidiary) if any term, condition or
covenant of this Agreement would be breached thereby;
(b) The Company shall not directly or indirectly, and shall not
permit its Subsidiaries to, make any advance, loan, extension of credit
to, or assume any obligations of, any Person including, without
limitation, any Affiliates of the Company, except for investments in Cash
Equivalents and wholly-owned Subsidiaries;
provided, that, the Company may, with the consent of the Lender, make an
equity investment in or an advance not in excess of the amount of
dividends permitted under Section 8.11 to a fifty percent owned
Subsidiary.
8.05 LIMITATION ON INDEBTEDNESS. The Company shall not,
and shall not permit its Subsidiaries to, create, incur, assume, guaranty,
suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) the Subordinated Note;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 8.05;
(d) Indebtedness secured by Liens permitted by Section 8.01(h),
(i) and (j);
(e) Indebtedness incurred in connection with leases permitted
pursuant to Section 8.10;
(f) Indebtedness represented by Interest Rate Contracts or
Contingent Obligations permitted by Section 8.07; and
(g) after the principal of the Term Loan and the Subordinated
Note have been reduced by an aggregate amount of $5,000,000 after the
Closing Date, additional Indebtedness not exceeding $10,000,000 which
may be designated senior to the Subordinated Note, on terms
satisfactory to the Lender.
8.06 TRANSACTIONS WITH AFFILIATES. The Company shall not
and shall not permit any of its Subsidiaries to enter into any transaction
with any Affiliate of the Company or of any such Subsidiary except as
contemplated by this Agreement or in the ordinary course of business and
pursuant to the reasonable requirements of the business of the Company or
such Subsidiary and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would obtain in a comparable arm's-
length transaction with a Person not an Affiliate of the Company or such
Subsidiary.
8.07 CONTINGENT OBLIGATIONS. The Company shall not, nor
shall it permit any Subsidiary to, create, incur, assume or suffer to
exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary
course of business;
(b) Contingent Obligations with respect to Indebtedness
permitted under Section 8.05;
(c) Interest Rate Contracts;
(d) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 8.07;
(e) Contingent Obligations in favor of the Lender;
(f) Reimbursement obligations under letters of credit issued in
the ordinary course of business;
(g) Reimbursement obligations due bonding companies incurred in
the ordinary course of business;
(h) Penalty and indemnification provisions in contracts entered
into in connection with the offer or sale of securities of the
Company or otherwise in the ordinary course of business; and
(i) Penalty and indemnification provisions contained in the
Loan Documents.
8.08 COMPLIANCE WITH ERISA. The Company shall not directly
or indirectly and will not permit any ERISA Affiliate to directly or
indirectly (i) terminate any Plan subject to Title IV of ERISA so as to
result in any material (in the opinion of the Lender) liability to the
Company or any ERISA Affiliate, (ii) permit to exist any ERISA Event or
any other event or condition, which presents the risk of a material (in
the opinion of the Lender) liability of the Company or any ERISA
Affiliate, or (iii) make a complete or partial withdrawal (within the
meaning of ERISA Section 4201 from any Multiemployer Plan so as to result
in any material in the opinion of the Lender) liability to the Company or
any ERISA Affiliate, (iv) enter into any new Plan or modify any existing
Plan so as to increase its obligations thereunder except in the ordinary
course of business consistent with past practice which could result in any
material (in the opinion of the Lender) liability to the Company or any
ERISA Affiliate, or (v) permit the present value of all nonforfeitable
accrued benefits under each Plan (using actuarial assumptions reasonably
acceptable to the Company's actuaries and auditors and the Lender) to
materially exceed the fair market value of Plan assets allocable to such
benefits, all determined as of the most recent valuation date for each
such Plan.
8.09 USE OF PROCEEDS. No portion of the proceeds of the
Term Loan will be used, directly or indirectly, (i) to purchase or carry
margin stock as defined in Regulation U of the Federal Reserve Board or
(ii) to repay or otherwise refinance indebtedness of the Company or others
incurred to purchase or carry margin stock, or (iii) to extend credit for
the purpose of purchasing or carrying any margin stock.
8.10 LEASE OBLIGATIONS. The Company shall not, nor shall
it permit any Subsidiary to, create or suffer to exist any obligations for
the payment of rent for any property under lease or agreement to lease
except for:
(a) leases of the Company and its Subsidiaries in existence on
the Closing Date and any renewal, extension or refinancing thereof
and listed in Schedule 8.10;
(b) after the Closing Date, any operating leases entered into
by the Company or any of its Subsidiaries in the ordinary course of
business;
(c) after the Closing Date, subject to the provisions of
Section 8.01(j), any financing or capital lease entered into by the
Company or any of its Subsidiaries provided, that:
(i) immediately prior to giving effect to such lease,
the property or asset subject to such lease was sold by the Company
or any such Subsidiary to the lessor under such lease for at least
its fair market value;
(ii) the Net Proceeds of such sale are applied
simultaneously to reduce the Term Loan as provided in Section 2.04;
and
(iii) no Default or Event of Default would occur as a
result of such sale and subsequent lease.
(d) after the Closing Date, capital leases other than those
permitted under clauses (a), (b) and (c) of this Section 8.10 entered
into by the Company or any of its Subsidiaries to finance the
acquisition of equipment provided, that the aggregate annual rental
payments for all such capital leases shall not exceed $2,500,000.
8.11 RESTRICTED PAYMENTS. The Company shall not declare or
make any dividend payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any shares of any
class of capital stock of the Company or purchase, redeem or otherwise
acquire for value (or permit any of its Subsidiaries to do so) any shares
of capital stock of the Company or any warrants, rights or options to
acquire such shares, now or hereafter outstanding except the Company may,
subject to Section 8.14 below, (i) declare and make dividend payments or
other distributions payable solely in its common stock, and (ii) purchase,
redeem or otherwise acquire shares of its common stock or warrants or
options to acquire any such shares with the proceeds received from the
substantially concurrent issue of new shares of its common or preferred
stock; provided, however, that the Subsidiaries may make dividend payments
to the Company or any wholly-owned Subsidiary of the Company and the
Company may repurchase or redeem the Amended Warrant or issue new
Indebtedness in exchange therefor.
8.12 SUBORDINATED DEBT. The Company shall not:
(a) make any voluntary or optional payment or prepayment on any
Indebtedness subordinated hereto now or hereafter outstanding or make
any redemption, retirement, purchase or other acquisition, direct or
indirect, of any Subordinated Debt or set aside money or securities
for a sinking or similar fund for the payment of principal or a
premium or interest on any such Indebtedness or set apart money for
the defeasance of any Indebtedness, in each case except for the
Subordinated Note;
(b) amend, modify or change, or consent or agree to any
amendment, modification or change to, any of the terms relating to
any Indebtedness subordinated hereto (other than any such amendment,
modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the
rate or extend the date of payment of interest thereon), except as
relates to the Subordinated Note.
8.13 CAPITAL EXPENDITURES. The Company shall not make or
commit to make Capital Expenditures (less any amount already included in
Capital Expenditures for capitalized equipment leases as required by
generally accepted accounting principles but adjusted to include the total
annual capital lease rental payments through the end of any fiscal year)
exceeding the amount set forth below with respect to each fiscal year:
FISCAL YEAR ENDING CAPITAL EXPENDITURES
December 31, 1997 $4,000,000
8.14 CONSOLIDATED TANGIBLE NET WORTH. The Company shall not
permit its consolidated Tangible Net Worth at the end of any fiscal
quarter ending after March 31, 1997 to be less than the sum of (a) its
consolidated Tangible Net Worth at March 31, 1997, plus (b) 100% of the
Net Proceeds of the issuance and sale of any equity securities by the
Company or any Affiliate thereof after December 31, 1996, plus or minus
(c) 100% of any change in shareholders' equity accounts resulting from
changes in liabilities related to the mandatory redemption provision of
the Amended Warrant after December 31, 1996, but less (d):
(i) $750,000 as of June 30, 1997; and
(ii) as of any quarter end thereafter, $750,000 plus
50% of all net income (calculated quarterly, on a cumulative basis,
without allowance for net losses) earned in all quarters ending after
June 30, 1997.
8.15 FIXED CHARGE COVERAGE RATIO. The Company shall not
permit its ratio of EBITDA to the sum of the current portion of long term
debt ("CPLTD") plus Consolidated Net Interest Expense, as determined as of
the end of each fiscal quarter, to be less than the respective ratio set
forth below.
(a) For the calculation performed as of June 30, 1997, EBITDA
shall be four (4) times EBITDA for the fiscal quarter ending on such date;
Consolidated Net Interest Expense shall be four (4) times Consolidated Net
Interest Expense for the fiscal quarter ending on such date; and CPLTD
shall be the actual CPLTD shown on the Company's June 30, 1997 balance
sheet;
(b) For the calculation performed as of September 30, 1997,
EBITDA shall be two (2) times EBITDA for the two fiscal quarters ending on
such date; Consolidated Net Interest Expense shall be two (2) times
Consolidated Net Interest Expense for the two fiscal quarters ending on
such date; and CPLTD shall be the actual CPLTD shown on the Company's
September 30, 1997 balance sheet; and
(c) For the calculation performed as of December 31, 1997,
EBITDA shall be the result of multiplying the fraction four-thirds (4/3)
times EBITDA for the three fiscal quarters ending on such date;
Consolidated Net Interest Expense shall be the result of multiplying the
fraction four-thirds (4/3) times Consolidated Net Interest Expense for the
three fiscal quarters ending on such date; and CPLTD shall be the actual
CPLTD shown on the Company's December 31, 1997 balance sheet.
DATE RATIO
June 30, 1997 0.17 to 1.00
September 30, 1997 0.82 to 1.00
each quarter end
thereafter 0.95 to 1.00
8.16 CHANGE IN BUSINESS. Except as permitted by Section
8.03, the Company shall not and shall not permit any of its Subsidiaries
to make any changes in any of its business objectives, purposes or
operations, except as otherwise permitted hereunder.
8.17 TAX ELECTION. The Company shall not make any election
under Section 338 of the Code other than a protection carryover election
pursuant to the Treasury Regulations issued thereunder without the prior
consent of the Lender not to be unreasonably withheld.
ARTICLE IX
EVENTS OF DEFAULT
9.01 EVENTS OF DEFAULT. Upon the occurrence and during the
continuation of any of the following events:
(a) NON-PAYMENT. The Company shall (i) fail to pay when due
any portion of principal of the Term Loan or fail to make any
mandatory prepayment hereunder when due; (ii) fail to pay any portion
of interest, fee or any other amount payable hereunder or pursuant to
any other Loan Document within the earlier of (A) twenty (20) days
after the same shall become due in accordance with the terms hereof
or (B) in the event that a principal or interest payment shall be due
under the terms of the Subordinated Note within such twenty (20) day
period, one (1) day prior to such payment date in respect of the
Subordinated Note; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty
made or deemed by the Company or any of its Subsidiaries herein, in
any Loan Document or which is contained in any certificate, document
or financial or other statement furnished at any time under this
Agreement, or in or under any Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) SPECIFIC DEFAULTS. The Company shall fail to perform or
observe any term, covenant or agreement contained in Article VII or
Article VIII other than Sections 7.01 through 7.06, 7.08, 7.09, 7.10,
7.13, 8.04 and 8.06; or
(d) OTHER DEFAULTS. The Company or any Subsidiary shall fail
to perform or observe any other term or covenant contained in this
Agreement or any Loan Document, and such default shall continue
unremedied for a period of thirty (30) days after the earlier of (i)
the date upon which a Responsible Officer of the Company knew of such
failure or (ii) the date upon which written notice thereof has been
given to the Company by the Lender; or
(e) CROSS-DEFAULT. The Company or any of its Subsidiaries
shall (i) fail to make any payment in respect of any Indebtedness
(including the Subordinated Note) or Contingent Obligation, in each
case in excess of Two Hundred Fifty Thousand Dollars ($250,000) when
due (whether by scheduled maturity, required prepayment, acceleration
demand, or otherwise); or (ii) default in the observance or
performance of any other condition or covenant or any other event
shall occur or condition exist under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, if the
effect of such event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Indebtedness to be
declared to be due and payable prior to its stated maturity or such
Contingent Obligation to become payable; or
(f) BANKRUPTCY OR INSOLVENCY. The Company or any of its
Subsidiaries shall (i) become insolvent or generally fail to pay, or
admit in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated
maturity or otherwise, (ii) voluntarily cease to conduct its business
in the ordinary course substantially as it is conducted on the date
hereof or on the Closing Date, (iii) commence any proceeding or file
any petition seeking liquidation or reorganization or any other
relief under any bankruptcy, reorganization, arrangement, insolvency,
or other similar law, whether federal or state, relating to the
relief of debtors, (iv) acquiesce in the appointment of a receiver,
trustee, custodian or liquidator for itself or a substantial portion
of its property, assets or business or effect a plan or other
arrangement with its creditors, (v) admit the material allegations of
a petition filed against it in any bankruptcy, reorganization,
arrangement, insolvency or other proceeding, whether federal or
state, relating to the relief of debtors, or (vi) take action to
effectuate any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. Involuntary proceedings of any
involuntary petition shall be commenced or filed against the Company
or any Subsidiary under any bankruptcy, insolvency or similar law or
seeking the dissolution, liquidation or reorganization of the Company
or any Subsidiary or the appointment of a receiver, trustee,
custodian or liquidator for the Company or any Subsidiary or any
writ, judgment, warrant of attachment, execution or similar process,
shall be issued or levied against a substantial part of the Company's
or any Subsidiary's assets and any such proceedings or petition shall
not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully
bonded within sixty (60) days after commencement, filing or levy; or
(h) ERISA. The Company or any ERISA Affiliate shall fail to
pay when due an amount or amounts aggregating in excess of One
Million dollars ($1,000,000) which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having an accumulated funding deficiency (as defined in ERISA)
in excess of One Million dollars ($1,000,000) shall be filed under
Title IV of ERISA, or the PBGC shall institute proceedings under
Title IV of ERISA to terminate a Plan or Plans, having an aggregate
accumulated funding deficiency in excess of One Million dollars
($1,000,000) or a proceeding shall be instituted by a fiduciary of
any such Plan or Plans against any such Person to enforce Section 515
of ERISA to collect contributions in excess of One Million dollars
($1,000,000); or a condition shall exist by reason of which the PBGC
would be entitled under Section 4042 of ERISA to obtain a decree
adjudicating that a Plan or Plans having an aggregate accumulated
funding deficiency in excess of One Million dollars ($1,000,000) must
be terminated; or
(i) MONETARY JUDGMENTS. One or more final judgments or decrees
shall be entered against the Company or any of its Subsidiaries
involving in the aggregate a liability (not paid or fully covered by
insurance) of One Million dollars ($1,000,000) or more and the same
shall not have been vacated, satisfied, undischarged, stayed or
bonded pending appeal within sixty (60) days from the entry thereof;
or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment or order
shall be rendered against the Company or any of its Subsidiaries
which does or could be expected to (i) cause a material adverse
change in the condition (financial or otherwise), operations,
properties or prospects of the Company or any such Subsidiary, or
(ii) have a material adverse effect on the rights and remedies of the
Lender under any Loan Document, and either (A) enforcement
proceedings shall have been commenced by any Person upon such
judgment or order, or (B) there shall be any period of ten (10)
consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) COLLATERAL. Any material provision of any Collateral
Agreement shall for any reason cease to be valid and binding on or
enforceable against the Company or any Subsidiary or the Company or
any Subsidiary shall state in writing that it does not consider
itself bound by any provision in any Collateral Agreement or shall
bring an action to limit its obligations or liabilities under any
Collateral Agreement; or
(l) OWNERSHIP. Xxxxxxx Xxxx shall at any time cease to
maintain in the aggregate a direct or indirect beneficial equity
interest in the Company at least equal to thirty five percent (35%)
of the capital stock entitled to vote in the election of directors;
or
(m) LOSS OF LICENSES OR FRANCHISES. The FAA or any other
Governmental Authority shall revoke or fail to renew any material
license or franchise of the Company or any Subsidiary, or the Company
or any Subsidiary shall for any reason lose any material license,
franchise, or the Company or any Subsidiary shall suffer the
imposition of any restraining order, escrow, suspension or impound of
funds in connection with any proceeding (judicial or administrative)
with respect to such material license, franchise or contract; or
(n) INTEREST RATE CONTRACTS. The Company shall breach or
default under any Interest Rate Contract, if the effect of such
breach or default is to allow the counterparty to proceed against, or
otherwise realize from, the Company or any collateral to satisfy any
claim arising under such Interest Rate Contract;
then, and in any such event,
(A) any obligation of the Lender to extend any credit or
financial accommodation hereunder shall automatically terminate;
and
(B) the Lender may, at its option, declare the unpaid
principal amount of all outstanding indebtedness hereunder, all
interest accrued and unpaid thereon and all other amounts
payable hereunder to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company; and/or
(C) subject to the Collateral Agreements, the Lender may
exercise all rights and remedies available to it under the
Collateral Agreements or any other agreement;
provided, however, that upon the occurrence of any event specified in
clause (f) or (g) above (in the case of such clause (g) upon the
expiration of the sixty (60) day period mentioned therein), the obligation
of the Lender to extend any credit or financial accommodation hereunder
shall automatically terminate and the unpaid principal amount of all
outstanding indebtedness hereunder and all interest and other amounts as
aforesaid shall automatically become due and payable without further act
of the Lender.
9.02 RIGHTS NOT EXCLUSIVE. The rights provided for in this
Article are cumulative and are not exclusive of any other rights, powers,
privileges or remedies provided by law or in equity.
ARTICLE X
MISCELLANEOUS
10.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any Loan Document and no consent with
respect to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Lender,
and then such waiver shall be effective only in the specific instance and
for the specific purpose for which given.
10.02 NOTICES. All notices, requests and other
communications provided for hereunder shall be in writing (including
facsimile transmission) and mailed, delivered or faxed to the Company and
the Lender as follows:
The Company: Precision Standard Inc.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Gold
Telecopier: (000) 000-0000
with a copy to: Corporate Counsel
Precision Standard Inc.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
The Lender: Bank of America NT&SA
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Credit Products #5618
Telecopier: (000) 000-0000
with a copy to: Bank of America NT&SA
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Unit #4346
Telecopier: (000) 000-0000
or, as to each party at such other address as shall be designated by such
party in a written notice to the other party. All such notices and
communications shall, when mailed or sent by facsimile transmission and
confirmed by telephone be effective three (3) Business Days after deposit
in the mails, or confirmed by telephone respectively, except that notices
pursuant to Article II, III or VII shall not be effective until received
by the Lender.
10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
10.04 COSTS AND EXPENSES. The Company agrees:
(a) to pay or reimburse the Lender on demand for all its
reasonable attorneys fees and out-of-pocket costs and expenses
incurred in connection with the preparation, delivery, administration
and execution of, and any amendment, supplement or modification to,
this Agreement, any Loan Document and any other documents prepared in
connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel
to the Lender (and the allocated cost of staff counsel) with respect
thereto;
(b) to pay or reimburse the Lender on demand for all reasonable
attorneys fees, costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, any
Loan Document, and any such other documents (including all fees
incurred in connection with a bankruptcy proceeding), including,
without limitation, reasonable fees and out-of-pocket expenses of
counsel (and the allocated cost of staff counsel) to the Lender; and
(c) to pay or reimburse the Lender on demand for all reasonable
appraisal, audit, search and filing fees, incurred or sustained by
the Lender in connection with the matters referred to under
subsections (a) and (b) above.
10.05 INDEMNITY.
(a) The Company agrees to indemnify and hold harmless the
Lender and each of its officers, directors, agents and employees from and
against any and all claims, damages, liabilities, costs and expenses
(including, without limitation, reasonable fees, expenses and
disbursements of counsel) which may be incurred by or asserted against the
Lender or any such other indemnified Person in connection with or arising
out of any investigation, litigation or proceeding related to this
Agreement or its negotiation and the preparation of documentation in
connection therewith, whether or not the Lender is a party thereto;
provided, however, that the Company shall not be required to indemnify any
such indemnified Person from or against any portion of such claims,
damages, liabilities or expenses arising out of the gross negligence or
willful misconduct of such indemnified Person.
(b) The Company hereby agrees to indemnify, defend and hold
harmless the Lender and each of its officers, directors, employees and
agents, from and against any and all claims, losses, liabilities, damages
and expenses (including, without limitation, reasonable attorneys' fees),
which may be incurred by or asserted against the Lender or any such other
indemnified Person in connection with or arising out of any investigation,
litigation or proceeding, or any action taken by any Person, with respect
to any environmental claim (including, without limitation, any Hazardous
Materials Claim arising out of or relating to any (i) release of Hazardous
Materials on, upon or into any property or (ii) damage to real or personal
property or natural resources and/or harm or injury to Persons alleged to
have resulted from such release of Hazardous Materials on, upon or into
any property); provided, however, that the Company shall not be required
to indemnify, defend or hold harmless any such indemnified Person from or
against any portion of such loss, liability, damage or expense arising out
of the gross negligence or willful misconduct of such indemnified Person.
(c) The Lender agrees that in the event that any such
investigation, litigation or proceeding is asserted or threatened in
writing or instituted against it or any of its officers, directors, agents
and employees, or any remedial, removal or response action is requested of
it or any of its officers, directors, agents and employees, for which the
Lender may desire indemnity or defense hereunder, the Lender shall
promptly notify the Company in writing.
(d) The Company at the request of the Lender shall have the
obligation to defend against such investigation, litigation or proceeding
or requested remedial, removal or response action, and the Lender, in any
event, may participate in the defense thereof with legal counsel of the
Company's choice. In the event that the Lender requests the Company to
defend against such investigation, litigation or proceeding or requested
remedial, removal or response action, the Company shall promptly do so and
the Lender shall have the right to have legal counsel of its choice
participate in such defense. No action taken by legal counsel chosen by
the Lender in defending against any such investigation, litigation or
proceeding or requested remedial, removal or response action shall vitiate
or in any way impair the Company's obligation and duty hereunder to
indemnify and hold harmless the Lender.
10.06 SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the
Company may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Lender.
10.07 CONFIDENTIALITY. The Lender agrees to take normal and
reasonable precautions and exercise due care to maintain the
confidentiality of all non-public information provided to it by the
Company or any Subsidiary of the Company in connection with this Agreement
or any Collateral Document. The Lender may disclose such information (i)
at the request of any bank regulatory authority or in connection with an
examination of the Lender by any such authority; (ii) pursuant to subpoena
or other court process; (iii) when required to do so in accordance with
the provisions of any, applicable law; (iv) at the express direction of
any other agency of any State of the United States of America or of any
other jurisdiction in which the Lender conducts its business; and (v) to
the Lender's independent auditors and other professional advisors.
Notwithstanding the foregoing, the Company authorizes the Lender to
disclose to any participant or assignee (each, a "Transferee") and any
prospective Transferee such financial and other information in the
Lender's possession concerning the Company or its Subsidiaries which has
been delivered to the Lender pursuant to this Agreement or which has been
delivered to the Lender by the Company in connection with the Lender's
credit evaluation of the Company prior to entering into this Agreement;
provided that such Transferee agrees in writing to keep such information
confidential to the same extent required of the Lender hereunder.
10.08 SET-OFF. In addition to any rights and remedies of
the Lender provided by law, upon the occurrence and during the continuance
of any Event of Default, the Lender is hereby authorized at any time and
from time to time, without prior notice to the Company, any such notice
being expressly waived by the Company to the fullest extent permitted by
applicable law, to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held, and other
indebtedness at any time owing by the Lender to or for the credit or the
account of the Company, against any and all obligations of the Company now
or hereafter existing under this Agreement or any Loan Document
irrespective of whether or not the Lender shall have made demand under
this Agreement or any Loan Document and although such obligations may be
unmatured. The Lender agrees promptly to notify the Company after any
such set-off and application made by the Lender; provided; however, that
the failure to give such notice shall not affect the validity of such set-
off and application. The rights of the Lender under this Section are in
addition to the other rights and remedies (including without limitation,
other rights of set-off) which the Lender may have.
10.09 COUNTERPARTS; EFFECTIVE DATE. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.10 SEVERABILITY. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
10.11 GOVERNING LAW. This Agreement and the rights and
obligations of the parties under this Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State of
California.
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
PRECISION STANDARD INC.
By:/s/Xxxxxxx X. Gold
Title: President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Lender
By:/s/Xxxxxxx Xxxxxxx
Title: Vice President
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
EXHIBITS
A. Amended Warrant
B. Company Reaffirmation Agreement
C. Subsidiary Reaffirmation Agreement
D. Term Note
E. Lockup Agreement
SCHEDULES
5.06 Litigation
5.08 ERISA Compliance
5.11 Tax Matters
5.13 Environmental Matters
5.18 Burdensome Restrictions
5.21 Intellectual Property Matters
5.22(a) Subsidiaries
5.22(b) Equity Investments
8.01 Existing Liens
8.05 Existing Indebtedness
8.07 Contingent Obligations
8.10 Lease Obligations
EXHIBIT A
AMENDED AND RESTATED WARRANT
[Filed as separate exhibit]
EXHIBIT B
COMPANY REAFFIRMATION AGREEMENT
(Senior Term Loan)
The undersigned Precision Standard Inc. (the "Company") hereby agrees
and confirms that:
1. The Company Stock Pledge Agreement dated as of September 9, 1988
previously executed and delivered by the Company in favor of Bank of
America NT&SA (the "Bank") as Agent remains in full force and effect
provided, that:
(a) any reference therein to the Credit Agreement shall be
deemed a reference to the Second Amended and Restated Credit
Agreement between the Company and Bank of America NT&SA as Lender
dated as of December 31, 1996 (the "Revised Agreement"); and
(b) any reference therein to the Bank as Agent shall be deemed
a reference to the Bank as Lender under the Revised Agreement; and
2. The Company Security Agreement dated as of September 9, 1988
previously executed and delivered by the Company in favor of the Bank as
Agent remains in full force and effect provided, that:
(a) any reference therein to the Credit Agreement shall be
deemed a reference to the Second Amended and Restated Credit
Agreement between the Company and Bank of America NT&SA as Lender
dated as of December 31, 1996 (the "Revised Agreement"); and
(b) any reference therein to the Bank as Agent shall be deemed
a reference to the Bank as Lender under the Revised Agreement.
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In Witness Whereof, this Company Reaffirmation Agreement
is executed and delivered as of December 31, 1996.
PRECISION STANDARD, INC.
By:----------------------------------
Title: President
EXHIBIT C
SUBSIDIARY REAFFIRMATION AGREEMENT
(Senior Term Loan)
Each of the undersigned (each a "Subsidiary") hereby agrees and
confirms that:
1. The Subsidiary Stock Pledge Agreement dated as of September 9,
1988 previously executed and delivered by Xxxxx Holding I Inc., Xxxxx
Holding II Inc. and Pemco Aeroplex Corporation (formerly known as Xxxxx
International Corporation) ("Pemco") in favor of Bank of America NT&SA
(the Bank") as Agent remains in full force and effect provided, that:
(a) any reference therein to the Credit Agreement shall be
deemed a reference to the Second Amended and Restated Credit
Agreement between the Company and the Bank as Lender dated as of
December 31, 1996 (the "Revised Agreement"); and
(b) any reference therein to the Bank as Agent shall be deemed
a reference to the Bank as Lender under the Revised Agreement;
2. The Subsidiary Security Agreement dated as of September 9, 1988
previously executed and delivered by Pemco, Space Vector Corporation and
Air International Corporation in favor of the Bank as Agent remains in
full force and effect provided, that:
(a) any reference therein to the Credit Agreement shall be
deemed a reference to the Second Amended and Restated Credit
Agreement between the Company and the Bank as Lender dated as of
December 31, 1996 (the "Revised Agreement"); and
(b) any reference therein to the Bank as Agent shall be deemed
a reference to the Bank as Lender under the Revised Agreement;
3. The Subsidiary Guaranty dated as of September 9, 1988 previously
executed and delivered by Xxxxx Holdings I Inc., Xxxxx Holding II Inc.,
Space Vector Corporation and Air International Corporation in favor of the
Bank as Agent remains in full force and effect provided, that:
(a) any reference therein to the Credit Agreement shall be
deemed a reference to the Second Amended and Restated Credit
Agreement between the Company and Bank of America NT&SA as Lender
dated as of December 31, 1996 (the "Revised Agreement"); and
(b) any reference therein to the Bank as Agent shall be deemed
a reference to the Bank as Lender under the Revised Agreement; and
4. The Xxxxx Guaranty dated as of September 9, 1988 previously
executed and delivered by Pemco in favor of the Bank as Agent remains in
full force and effect provided, that:
(a) any reference therein to the Credit Agreement shall be
deemed a reference to the Second Amended and Restated Credit
Agreement between the Company and Bank of America NT&SA as Lender
dated as of December 31, 1996 (the "Revised Agreement"); and
(b) any reference therein to the Bank as Agent shall be deemed
a reference to the Bank as Lender under the Revised Agreement.
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In Witness Whereof, this Subsidiary Reaffirmation
Agreement is executed and delivered as of December 31, 1996.
PRECISION STANDARD, INC.
By:----------------------------------
Title: President
PEMCO AEROPLEX, INC.
By:----------------------------------
Title: Chairman of the Board
XXXXX HOLDINGS I INC.
By:----------------------------------
Title: President
XXXXX HOLDINGS II INC.
By:----------------------------------
Title: President
SPACE VECTOR CORPORATION
By:----------------------------------
Title: Chairman of the Board
AIR INTERNATIONAL INCORPORATED
By:----------------------------------
Title: President
PEMCO CAPITAL CORPORATION
By:----------------------------------
Title: President
PEMCO NACELLE SERVICES, INC.
By:----------------------------------
Title: President
PEMCO WORLD AIR SERVICES, INC.
By:----------------------------------
Title: President
PEMCO AIR SERVICES SYSTEM, INC.
By:----------------------------------
Title: President
PRECISION STANDARD CORP.
By:----------------------------------
Title: President
EXHIBIT D
TERM NOTE
US$5,007,799 Dated: December 31, 1996
FOR VALUE RECEIVED, the undersigned, PRECISION STANDARD INC., a
Colorado corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order
of BANK OF AMERICA NT&SA (the "Lender") the aggregate unpaid principal
amount of the Term Loan (as defined in the Credit Agreement referred to
below), at such times, and in such amounts, as are specified in the Credit
Agreement.
The Borrower promises to pay interest on the unpaid principal
amount of the Term Loan from December 31, 1996 until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to the Lender, at 0000 Xxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, in immediately available funds. All
payments made on account of principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Note; provided, however, that the failure to
so record or so endorse the grid attached hereto shall not affect the
validity of such Term Loan or such payments.
This Note is the Note referred to in, and is entitled to the
benefits of, the Second Amended and Restated Credit Agreement dated as of
December 31, 1996 (the "Credit Agreement") between the Borrower and the
Lender. The Credit Agreement provides, among other things, (i) for the
payment of costs and attorneys fees incurred in the enforcement hereof,
and (ii) for acceleration of the maturity hereof upon the happening of
certain stated events and also for required prepayments hereof prior to
the maturity hereof upon the terms and conditions therein specified.
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This Note shall be governed by and construed in accordance with
the laws of the State of California.
PRECISION STANDARD, INC.
By:----------------------------------
Title: President
LOAN AND PAYMENTS OF PRINCIPAL
Amount of
Principal Paid Unpaid Principal Notation
Date or Prepaid Balance Made By
---- -------------- ---------------- ----------
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EXHIBIT E
LOCKUP AGREEMENT
Each of the undersigned is an executive officer of Precision Standard
Inc., a Colorado corporation (the "Company"). The Company has issued an
Amended and Restated Warrant as of December 31, 1996 (the "Warrant") to
Bank of America NT&SA (the "Bank"). The terms of the Warrant require the
Company to redeem the Warrant in installments, each due on an Installment
Date. The prices at which the Warrant must be redeemed are determined by
reference to the market price of the common stock of the Company during
specified time periods. The undersigned is an owner of common stock of
the Company. Any capitalized term used herein and not otherwise defined
herein shall have the meaning given such term in the Warrant.
In order to induce the Bank to accept the Warrant and in the context
of the foregoing recitals, the undersigned hereby agrees as follows:
1. The undersigned agrees that he will not sell, and will not
authorize the sale of, any Common Stock of the Company, or any warrant or
option to acquire Common Stock of the Company, or any security convertible
into the Common Stock of the Company, or permit any Affiliate (as
hereinafter defined) to do any of the foregoing, during any of the periods
beginning thirty-five (35) Trading Days prior to each Installment Date and
ending on each respective Installment Date provided, that any such
transactions not exceeding 1,000 shares of Common Stock (or the equivalent
number of warrants, options or convertible securities) in the aggregate on
each Trading Day shall be excluded from this prohibition.
2. The undersigned acknowledges that it would be difficult to
conclusively establish that any change in the market price of the common
stock of the Company was due, in whole or in part, to sales of such stock
by the undersigned or his Affiliates in violation of this Agreement. The
undersigned therefore agrees that any drop in the market price of the
Company's common stock on any day that a transaction in violation of this
Agreement occurs, and during the five Trading Days immediately following
such day, shall be conclusively presumed to be caused by the violation.
Any such differential would then be multiplied by the number of Trading
Days remaining in the period for the calculation of the Warrant's
redemption price and the number of shares to be redeemed to establish the
amount of actual damages resulting from the violation. This provision is
intended as a reasonable liquidated damages clause and not as a penalty.
The undersigned understands that, pursuant to the Warrant, the
Company is agreeing to hold the undersigned harmless from liability
pursuant to this Section 2. The undersigned shallhave liability to the
Bank pursuant to this Section 2 only in the event that a demand made by
the Bank on the Company for damages accrued pursuant to this Section 2
remains unsatisfied in whole or in part more than ninety (90) days after
the date of such demand.
3. As used herein, the term "Affiliate" shall mean:
(a) all relatives of the undersigned, by blood or marriage;
(b) any trust or estate in which any of the undersigned or any
person described in clause (a) above has (on an aggregate basis) at
least a 10% beneficial interest or which any of the undersigned or
any person described in clause (a) above serves as trustee or
executor or any similar function; and
(c) any corporation, partnership or other business entity in
which the undersigned or any person or entity described in clauses
(a) or (b) above has (on an aggregate basis) at least a 10%
beneficial interest or serves as an executive officer or director.
4. The Bank is authorized, but not required, to deliver stop
transfer instructions to the Company's transfer agent with respect to any
shares affected hereby.
5. In any litigation with respect to this Agreement the prevailing
party shall be entitled to recover its costs and reasonable attorneys
fees.
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PRECISION STANDARD, INC.
By:----------------------------------------
Title: President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:----------------------------------------
Title:----------------------------------
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
