Exhibit 10.15
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is made and entered into as of
November 1, 1996, by and between COMPANIA MEXICANA DE AVIACION, S.A., DE C.V., a
Mexican corporation ("Mexicana"), and its subsidiaries and divisions, and
TURBORREACTORES, S.A., DE C.V., a Mexican corporation, and its subsidiaries and
divisions, on the one hand, and ADI CONSIGNMENT SALES, INC., a California
corporation ("ADICS"), AVIATION DISTRIBUTORS, INC., a Delaware corporation (and
successor corporation to AVIATION DISTRIBUTORS, INC., a California corporation)
and its subsidiaries and divisions ("ADI"), and XXXXXX X. XXXXXX, an individual
("Xx. Xxxxxx"), on the other hand (collectively referred to as the "ADI
Parties"). Mexicana, Turborreactores, and the ADI Parties are sometimes
hereinafter referred to collectively as "the parties" and individually as a
"party."
RECITALS:
A. On or about February 14, 1996, Mexicana filed a complaint in the
United States District Court, Central District of California, Case No. SA CV
96-140 GLT (EEX), against the ADI Parties, which Complaint was later amended
(hereinafter all versions of the Complaint filed by Mexicana are referred to
collectively as the "Complaint").
B. On or about July 25, 1996, ADI and Xx. Xxxxxx filed their answer
to the Complaint. On or about July 25, 1996, ADICS filed its answer to the
Complaint and filed a counterclaim against Mexicana and certain others (the
"Counterclaim"), which Counterclaim
1
was subsequently amended (hereinafter all versions of the Counterclaim filed by
ADICS are referred to as the "Counterclaim"). The Counterclaim has not been
answered due to the intervening settlement discussions that have culminated in
the agreement set forth in more detail below.
C. After consideration of various factors, including the high cost
of protracted litigation and other economic issues, the parties now consider it
to be in their best interests to settle their disputes on the terms and
conditions set forth in this Agreement.
D. Each party hereto is entering into this Agreement voluntarily and
after conferring with counsel of its choice, without duress and without any
promise or assurance other than as expressly contained in this Agreement.
SPECIFIC AGREEMENTS:
NOW, THEREFORE, IN CONSIDERATION OF AND RELIANCE ON THE MUTUAL
PROMISES, COVENANTS, AND UNDERTAKINGS HEREIN CONTAINED AND FOR OTHER GOOD AND
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED LEGALLY AND EQUITABLY, THE PARTIES
AGREE AS FOLLOWS:
1. The ADI Parties shall pay to Mexicana the sum of $1,200,000 USD,
payable as follows:
a. Concurrently with the execution of this Agreement, the ADI
Parties shall pay to Mexicana, through counsel Troop Xxxxxxxxx Xxxxxxx & Xxxxxx,
LLP (hereinafter "Mexicana's counsel"), a cashier's check in the amount of
$300,000 USD made
2
payable to COMPANIA MEXICANA DE AVIACION, S.A., DE C.V., which check may be
deposited by Mexicana concurrently with its execution of this Agreement.
b. On December 15, 1996, and in no event later than December
31, 1996, the ADI Parties will pay to Mexicana, through Mexicana's counsel, a
cashier's check in the amount of $450,000 USD payable to COMPANIA MEXICANA DE
AVIACION, S.A., DE C.V., which check may be deposited by Mexicana upon receipt.
If payment is made after December 15, 1996 but before December 31, 1996, the ADI
Parties shall advise Mexicana, in writing on or before December 15, 1996, of the
circumstances causing the delay.
c. On or before December 15, 1997, the ADI Parties will pay to
Mexicana, through Mexicana's counsel, the additional sum of $450,000 USD,
payable in quarterly installments, each installment bearing interest at the rate
of ten percent (10%) per annum from November 1, 1996. Each quarterly payment
shall be made in a cashier's check payable to COMPANIA MEXICANA DE AVIACION,
S.A., DE C.V., delivered to Mexicana's counsel and which may be deposited by
Mexicana upon receipt, according to the following installment schedule:
i. $112,500 plus interest payable on or before March 15,
1997;
ii. $112,500 plus interest payable on or before
June 15, 1997;
iii. $112,500 plus interest payable on or before
September 15, 1997; and
iv. $112,500 plus interest payable on or before
December 15, 1997.
3
d. As security for the performance of their obligations set
forth in this Agreement, on or before December 31, 1996, the ADI Parties shall
deliver to Mexicana, through Mexicana's counsel, a promissory note in the form
attached hereto as Exhibit A (the "Note"), fully executed by Xx. Xxxxxx on
behalf of ADI in the sum of $450,000 USD with ten percent (10%) interest per
annum from November 1, 1996, reflecting payment in the quarterly installments
set forth in paragraph 1(c) above.
e. As further security for the performance of their
obligations, on or before December 31, 1996, ADI will also provide to Mexicana
an irrevocable standby letter of credit in the sum of $483,503.40 USD from Xxxxx
Fargo Bank, or other financial institution with capital in excess of
$100,000,000 USD, in substantially the form attached hereto as Exhibit B to
secure the payment of the Note (the "Letter of Credit"). Mexicana may present
and draw upon the Letter of Credit, without prior notice to the ADI Parties,
upon default by the ADI Parties on any of the payments set forth in paragraph
1(c) of this Agreement, or any portion thereof. If the parties subsequently
discover a defect in the irrevocable standby Letter of Credit, or if Xxxxx Fargo
Bank or such other financial institution refuses to honor the irrevocable
standby Letter of Credit for any reason whatsoever, within seven (7) calendar
days the ADI Parties agree to replace the apparently defective Letter of Credit
with a non-defective irrevocable standby Letter of Credit, or with other
valuable consideration agreeable to Mexicana to replace the sums provided by the
Letter of Credit. The ADI Parties agree to take no action that will interfere
with Mexicana's ability to draw upon the Letter of Credit.
2. If, despite the best efforts and due to no fault of the ADI
Parties, the Initial Public Offering of ADI's common stock (the "Offering")
contemplated by ADI is not consummated on or before December 31, 1996, and in
that event only, in lieu of performance
4
under paragraph 1(b) and 1(c) of this Agreement only, the ADI Parties will pay
to Mexicana the sum of $900,000 USD plus ten percent (10%) interest per annum
from November 1, 1996, as follows:
a. On or before January 1, 1997, the ADI Parties shall deliver
to Mexicana, through Mexicana's counsel, a promissory note in the form attached
hereto as Exhibit A (the "Note"), executed by Xx. Xxxxxx on behalf of ADI in the
sum of $450,000 USD with ten percent (10%) interest per annum from November 1,
1996.
b. On or before March 15, 1997, the ADI Parties will pay to
Mexicana, through Mexicana's counsel, a cashier's check payable to COMPANIA
MEXICANA DE AVIACION, S.A., DE C.V. in the amount of $450,000 USD, plus ten
percent (10%) interest per annum from November 1, 1996, which check may be
deposited by Mexicana upon receipt;
c. On or before March 15, 1997, the ADI Parties will pay to
Mexicana the sum of $450,000 USD, payable in quarterly installments, each
installment bearing interest at the rate of ten percent (10%) per annum from
November 1, 1996, in accordance with the installment schedule in this paragraph
below. ADI will also deliver to Mexicana on or before March 15, 1997, as
further security for the performance of the ADI Parties' obligations, an
irrevocable standby letter of credit in the sum of $450,000 USD plus interest
thereon for a total of $483,503.40 USD from Xxxxx Fargo Bank, or other financial
institution with capital in excess of $100,000,000 USD, in substantially the
form attached hereto as Exhibit B to provide payment of the Note (the "Letter of
Credit"), according to the following installment schedule:
i. $112,500 plus interest payable on or before
March 15, 1997;
5
ii. $112,500 plus interest payable on or before
June 15, 1997;
iii. $112,500 plus interest payable on or before
September 15, 1997; and
iv. $112,500 plus interest payable on or before
December 15, 1997.
Mexicana may present and draw upon the Letter of Credit, without prior notice to
the ADI Parties, upon default by the ADI Parties on any of the payments set
forth in this paragraph, or any portion thereof. If the parties subsequently
discover a defect in the irrevocable Letter of Credit, or if Xxxxx Fargo Bank or
such other financial institution refuses to honor the irrevocable Letter of
Credit for any reason whatsoever, within seven (7) calendar days the ADI Parties
agree to replace the apparently defective Letter of Credit with a non-defective
irrevocable Letter of Credit, or with other valuable consideration agreeable to
Mexicana to replace the $483,503.40 USD payment provided by the Letter of
Credit. The ADI Parties agree to take no action that will interfere with
Mexicana's ability to draw upon the Letter of Credit.
3. Concurrently with the execution of this Agreement, the ADI
Parties will execute a Judgment Pursuant To Stipulation ("Consent Judgment") in
the amount of $1,200,000 USD, plus interest in the amount of ten percent (10%)
per annum from November 1, 1996, in the form attached hereto as Exhibit C, that
may be filed as follows:
a. Subject only to paragraph 3(c) below, in the event that ADI
fails to meet its payment obligations set forth in paragraphs 1 and 2 of this
Agreement, or in the
6
event ADI fails to deliver the Note or Letter of Credit as set forth in the
paragraphs above, Mexicana shall have the right, by and through this Agreement
alone, to file the stipulated Consent Judgment accompanied by a declaration
under penalty of perjury that the ADI Parties have failed to abide by the terms
of this Agreement as set forth below, and to have judgment entered in favor of
Mexicana and against the ADI Parties, and each of them, jointly and severally.
b. The parties agree that if the ADI Parties have failed to
make the first payment of $450,000 USD, plus interest thereon, or deliver the
Notes or Letter of Credit, as specified in Paragraph 1 of this Agreement, or in
the event that the Offering is not consummated on or before December 31, 1996,
then as specified in Paragraph 2 of this Agreement, Mexicana will prepare a
complaint alleging the entry into and breach of this Agreement, and file it as a
new action in the United States District Court for the Central District of
California, concurrently with the stipulated Consent Judgment and supporting
declaration, provided that Mexicana's counsel has given two (2) hours'
telephonic notice to the ADI Parties' counsel listed in Paragraph 19 of this
Agreement, followed by written confirmation of Mexicana's intention to file and
execute upon the stipulated Consent Judgment, and further provided that upon
filing, a copy of the declaration and Consent Judgment are served on the ADI
Parties by certified mail, return receipt requested, in conformity with
paragraph 19 below. The ADI Parties agree that Mexicana may execute on the
stipulated Consent Judgment immediately and without further notice,
c. In the event that Mexicana is required to file the
stipulated Consent Judgment and to seek enforcement of or execute on the
judgment, the ADI Parties shall be entitled to a credit against the $1,200,000
USD judgment, plus the interest as specified
7
herein, only for those installment payments actually made and sums actually
received by Mexicana as set forth in paragraphs 1(b) and 1(c) or 2(b) and 2(c)
(but not paragraph 1(a)) above, and the ADI Parties shall not be entitled to any
other credit or offset for any other sums paid in connection with this Agreement
or otherwise.
d. The ADI Parties waive any right to respond to or object in
any way to the filing of an action to seek enforcement of this Agreement, to
claim that the action or any cause of action therein is time-barred by any
statute of limitations, waiver, estoppel, laches, statute of repose, or any
other theory, to object to the entry of the stipulated Consent Judgment, and to
answer any action filed or proceeding brought to bring effect to the stipulated
Consent Judgment. The ADI Parties further waive any right to challenge the
stipulated Consent Judgment in the trial court or by appeal on any grounds other
than compliance. The ADI Parties agree not to seek a stay of execution on the
stipulated Consent Judgment, or to stay or interfere with any process to collect
under the stipulated Consent Judgment, except to the extent to show their
compliance with paragraphs 1(b) and 1(c) or paragraphs 2(b) and 2(c) of this
Agreement.
e. In the event that the ADI Parties timely perform each and
all of the obligations set forth in paragraphs 1 and 2 of this Agreement, the
stipulated Consent Judgment shall not be filed with the Court and instead, the
original shall be returned to counsel for ADICS at the address set forth in
paragraph 19 below within ten (10) days of Mexicana's actual receipt of all sums
provided by Paragraphs 1 or 2 of this Agreement, whether by payment of the sums
specified in this Agreement or by drawing upon the Letters of Credit identified
in this Agreement, or some combination thereof.
8
4. The ADI Parties agree that their obligation to pay Mexicana the
total sum of $1,200,000 USD, plus interest thereon as set forth above in this
Agreement, or in the event of partial payment, any portion thereof, is not
dischargeable in bankruptcy in the event that any of the ADI Parties, jointly or
individually, should seek protection under any of the Bankruptcy laws of the
United States.
5. Concurrently with the execution of this Agreement and all
appurtenant documents attached to this Agreement, pursuant to Rule 41(a)(ii) of
the Federal Rules of Civil Procedure, Mexicana and the ADI Parties will execute
a dismissal with prejudice of Case No. SA CV 96-140 GLT (EEX) in its entirety,
including the Complaint and the Counterclaim, in the form attached hereto as
Exhibit D, which Mexicana shall cause to be filed only after execution of this
Agreement and all appurtenant documents and Mexicana's receipt of the $300,000
USD payment set forth in paragraph 1(a) herein.
6. The parties expressly acknowledge that time is of the essence in
the performance of each of the obligations under this Agreement. Each party
also agrees that it will not take any action that would interfere with the
performance of this Agreement by the other party or that would adversely affect
any of the rights provided for herein.
7. Except for Mexicana's and Turborreactores' rights to enforce the
terms and provisions of this Agreement, Mexicana and Turborreactores, and each
of them, on behalf of themselves and their present and former shareholders,
officers, directors, employees, representatives, attorneys, agents, successors,
assigns, subsidiaries, and divisions, and each
9
and all of them, hereby fully, irrevocably and forever waive, release, and
discharge the ADI Parties and the ADI Parties' present and former shareholders,
officers, directors, employees, representatives, attorneys, agents, successors,
assigns, subsidiaries, and divisions, and each and all of them, of, from, and
against any and all claims, demands, debts, liabilities, obligations, expenses,
damages, actions, causes of action, rights of indemnity, liens, and remedies, of
every kind and nature, whether known or unknown, heretofore arising out of, in
connection with, or incidental to any act, omission, transaction, agreement,
dealings, association, matter, or thing, including the claims that either
Mexicana or Turborreactores has or may have against any of the ADI Parties,
including claims that are or could have been included in the Complaint,
excepting therefrom any liability that may be imposed on Mexicana or
Turborreactores by third parties arising from the alleged sale of Mexicana's or
Turborreactores' parts by the ADI Parties, or any of them.
8. Except for the ADI Parties' right to enforce the terms and
provisions of this Agreement, the ADI Parties, and each of them, on behalf of
themselves and their present and former shareholders, officers, directors,
employees, representatives, attorneys, agents, successors, assigns,
subsidiaries, and divisions, and each and all of them, hereby fully, irrevocably
and forever waive, release, and discharge Mexicana and Turborreactores, and
their present and former shareholders, officers, directors, employees,
representatives, attorneys, agents, successors, assigns, subsidiaries, and
divisions, and each and all of them, of, from, and against any and all claims,
demands, debts, liabilities, obligations, expenses, damages, actions, causes of
action, rights of indemnity, liens and remedies, of every kind and nature,
whether known or unknown, heretofore arising out of, in connection with, or
incidental to any act, omission, transaction, agreement, dealings, association,
matter, or thing, including the claims that the ADI Parties have or may have
against Mexicana or Turborreactores, including claims that are or could have
been included in the Counterclaim, excepting therefrom any liability that
10
may be imposed on the ADI Parties by third parties arising from the alleged sale
of Mexicana's or Turborreactores' parts by the ADI Parties, or any of them.
9. The parties hereby acknowledge that they have had the opportunity
to review this Agreement with legal counsel and that they are familiar with the
provisions of section 1542 of the California Civil Code ("section 1542"), which
provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THIS RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED THE SETTLE-MENT WITH THE
DEBTOR.
Each of the parties, being aware of section 1542, hereby expressly waives and
relinquishes any right or benefit that such party has or may have under section
1542 pertaining to the matters released herein, and any law or principle of
similar effect of any state of territory of the United States, to the full
extent that such party may lawfully waive such rights or benefits pertaining to
the subject matter of this Agreement. In connection with such waiver and
relinquishment, each party acknowledges that it is aware that it may hereafter
discover claims presently unknown or unsuspected, or facts in addition to or
different from those which it or he now knows or believes to be true, with
respect to the matters released herein. Nevertheless, it is the intention of
each party hereto, through this Agreement, fully, finally, and forever to settle
and release all such matters, and all claims relative thereto, which do now
exist, may exist, or heretofore have existed between and among the parties
hereto. In furtherance of such intention, the release herein given shall be,
and remain in effect as, a full and complete release
11
of such matters notwithstanding the discovery of the existence of any additional
claims or facts relating thereto.
10. Each party represents, warrants, and covenants that such party
has made no assignment and will make no assignment of any claims, choses in
action, rights of action or any rights of any kind whatsoever, embodied in any
of the claims released under the terms and provisions of this Agreement until
Mexicana has received in full the $450,000 and the Letters of Credit referenced
in paragraphs 1 and 2 of this Agreement. The ADI Parties further agree that no
assets of ADI or ADICS may be transferred except in the normal course of
business without Mexicana's prior written consent until Mexicana has received in
full the $450,000 and the Letters of Credit referenced in paragraphs 1 and 2 of
this Agreement, and that a violation of this limitation on transfer of assets is
a breach of this Agreement and is grounds for avoidance of any such transfer.
11. This Agreement shall bind and inure to the benefit of the
parties, the parties' respective agents, servants, employees, shareholders,
successors, assigns, heirs, executors, administrators, and estates of each of
them.
12. If any party receives an inquiry from any customer or supplier of
the ADI Parties inquiring as to the relationship between Mexicana and the ADI
Parties, the parties agree not to communicate to third parties the existence of
this Agreement, nor the terms and conditions thereof, except under compulsion of
legal process. In the event an inquiry is made of any of the parties regarding
the status or outcome of this matter, the parties agree to use their best
efforts to reply only that "the matter has been settled and concluded to the
mutual satisfaction of all parties," and nothing further.
12
13. The parties agree that this Agreement is a settlement of disputed
claims, and neither this Agreement nor the furnishing of the consideration for
this Agreement shall constitute or be construed as an admission of liability or
wrongdoing on the part of any party, or be admissible as evidence in any
proceeding other than for enforcement of this Agreement or based on the
inaccuracy of the representations of any party provided for by this Agreement.
14. Each of the undersigned represents and warrants that he or she
has the authority to bind the entity or persons on behalf of whom he or she is
signing to the terms and obligations of this Agreement, and that to the extent
necessary, the execution and performance of this Agreement has been duly
authorized and approved by its respective Board of Directors.
15. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. The parties may also execute this
Agreement, transmitting the same by facsimile, in which event a facsimile
signature of any one of the parties shall be treated as an original signature
until such time as the original signature is received by the opposing parties'
counsel at the addresses set forth in paragraph 19 below.
16. This Agreement and the attachments hereto constitute the entire
understanding of the parties with respect to the subject matter herein, and
there are no representations, warranties, or promises other than those contained
herein. This Agreement may not be changed, modified, or amended except by
written agreement executed by all parties.
17. In the event any part or provision of this Agreement, for any
reason, shall be declared invalid, such decision shall not effect the validity
of any remaining portion of this Agreement, which remaining portion shall remain
in complete force and effect as if
13
this Agreement had been executed with the invalid portion thereof eliminated.
18. Each party to this Agreement shall take any and all action
necessary, appropriate or advisable to execute and discharge that party's
responsibilities and obligations created by the provisions of this Agreement and
further to effectuate and carry out the intent and purposes of this Agreement
and the transactions contemplated by the provisions of this Agreement.
19. Should any party hereto institute any action or proceeding in
court to enforce any provision hereof or for damages by reason of any alleged
breach of any provision of this Agreement, the prevailing party shall be
entitled to recover from the losing party or parties all costs and expenses
incurred plus reasonable attorneys' fees for services rendered to the prevailing
party. In the event that the non-prevailing party contests the reasonableness
of the prevailing party's attorneys' fees and more than fifty percent (50%) of
the disputed fees are upheld by the court or other arbitrator appointed to hear
the matter, the prevailing party shall also be entitled to recover from the
contesting party the attorneys' fees and costs incurred to confirm its
entitlement to those sums.
20. If any notice or other document must be delivered or served in
connection with this Agreement, such delivery or service must be made to the
parties at the addresses indicated below unless written notification is given
changing the place or person to whom the notice or other document is to be
given:
FOR THE ADI PARTIES:
Xxxx X. Xxxxxxxx, Esq.
Law Office of Xxxx X. Xxxxxxxx
000 Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
14
FOR MEXICANA AND TURBORREACTORES:
Xxxx Xxxxx Xxxxxxx, Esq.
Troop, Meisinger, Xxxxxxx & Pasich, LLP
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
21. Failure of any party to require the performance of any term in
this Agreement, or the waiver by any party of any breach thereof, shall not
prevent subsequent enforcement of such term nor be deemed a waiver of any
subsequent breach.
22. This Agreement shall be interpreted and construed in accordance
with the laws of the State of California without regard to any conflict of laws.
The parties further agree that the provisions of this Agreement shall be
interpreted in accordance with the fair meaning thereof, and not strictly for or
against any of the parties hereto. Both parties have participated in the
drafting of this Agreement which, accordingly, shall not be interpreted against
either party.
IN WITNESS WHEREOF, the parties voluntarily and freely execute this
Agreement in quadruplicate all as of the date and year first set forth above.
AVIATION DISTRIBUTORS, INC.
Dated:_________________ By:________________________________
XXXXXX X. XXXXXX, President
ADI CONSIGNMENT SALES, INC.
Dated:_________________ By:________________________________
15
XXXXXX X. XXXXXX, President
Dated:________________ _________________________________
XXXXXX X. XXXXXX
COMPANIA MEXICANA DE AVIACION,
S.A., DE C.V.
Dated:________________ By:_________________________________
_________________________________
Its:_____________________________
TURBORREACTORES, S.A. de C.V.
Dated:________________ By:_________________________________
_________________________________
Its:________________________________
16
SECURED PROMISSORY NOTE
$450,000.00 November 1, 1996
FOR VALUE RECEIVED, the undersigned, AVIATION DISTRIBUTORS, INC., a
Delaware corporation, with offices at 0 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000
("Maker"), promises to pay to COMPANIA MEXICANA DE AVIACION, S.A., DE C.V., a
Mexican corporation, with offices at Av. Xola Xx. 000, Xxxx 00, Xxx. xxx Xxxxx,
00000 Xxxxxx, D.F., or holder ("Payee"), the sum of Four Hundred Fifty Thousand
Dollars ($450,000), plus interest at the rate of ten percent (10%) per annum
simple interest from the date hereof on the unpaid principal amount of this Note
from time to time outstanding; interest on the outstanding balance and one-forth
(1/4th) principle payable quarterly on the 15th day of the months of March,
June, September, and December, 1997. Principal and interest shall be payable in
the form of a cashier's check payable to Payee and delivered to Payee in care of
its counsel Xxxx Xxxxx Xxxxxxx of Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP, at
00000 Xxxxxxxx Xxxxxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or such
other address as Payee may direct in writing. All payments on this Note shall
be made in lawful tender of the United States of America.
As security for this Note, Maker agrees to provide Payee with an
irrevocable standby letter of credit ("Letter of Credit") in the sum of Four
Hundred Fifty Thousand Dollars ($450,000) plus sufficient additional credit to
satisfy the interest thereon as specified in this Note from Xxxxx Fargo Bank or
other financial institution with capital in excess of $100,000,000, in
substantially the form attached hereto as Exhibit B to secure the payment of the
Note. Upon demand by Payee, on the dates set forth above for payment, and
without prior notice to Maker, Payee shall receive from the holder of the Letter
of Credit each payment of principle and interest required by this Note.
The Maker shall have the right to prepay all or any portion of this
Note at any time without prepayment penalty or premium. No partial prepayment
of principal shall affect the obligation of Maker to continue to pay in full the
amount of the payments hereunder until the entire obligation evidenced by this
Note is paid and discharged. Partial prepayments will not delay the due dates
of payments.
A default ("Event of Default") shall occur on this Note upon any of
the following: (i) Maker's failure to make the payments required on this Note;
(ii) the filing of a petition in bankruptcy by Maker which is not dismissed
within sixty (60) days; (iii) the appointment of a receiver for Maker; (iv)
an assignment for the benefit of creditors of Maker; or (v) the failure of
Maker to maintain continuous business operations.
1
In the case of an Event of Default and the Payee is unable to obtain
payment of the defaulted amount from the Maker's Irrevocable Letter of Credit,
the Payee shall have the right to declare the entire principal and accrued but
unpaid interest on this Note immediately due and payable. In addition, in the
case of an Event of Default which has required Maker to pay immediately the full
amount of unpaid principal, interest shall continue to accrue at the same rate
from the time of default until such time as Maker has paid all sums due under
this Note in full or the default is cured to Payee's satisfaction. Failure by
Payee to exercise this option shall not constitute a waiver of the right to
exercise it in the event of any subsequent Event of Default.
Payee shall be entitled to collect reasonable attorneys' fees from the
Maker, as well as other costs and expenses incurred in connection with the
enforcement of this Note or the attempt to recover upon nonpayment of this Note
when due.
Maker warrants that the execution, delivery, and performance of this
Note has been duly authorized by all requisite corporation authorizations and is
enforceable against Maker in accordance with the terms thereof.
This Note shall be payable in lawful money of the United States and
shall be governed by and construed solely in accordance with the laws of the
State of California with regard to any conflict of laws. Any action brought
hereunder shall be brought in the United States District Court for the Central
District of California
IN WITNESS WHEREOF, Maker has caused this Promissory Note to be
executed by its Chief Executive Officer and Secretary and has caused the
corporate seal to be affixed as of this date first hereinabove written at
__________________, California.
"MAKER" AVIATION DISTRIBUTORS, INC.
By:_______________________________
Its Chief Executive Officer
By:_______________________________
Its Secretary
2
[FORM OF XXXXX FARGO BANK LETTER OF CREDIT]
XXXXX FARGO BANK
IRREVOCABLE LETTER OF CREDIT NO.___________________
US$483,503.40
Compania Mexicana De Aviacion, S.A., De C.V.
Xxxxxxx Xxxx Xx. 000
Xxxx 00
Col. xxx Xxxxx
00000 Xxxxxx, D.F.
Gentlemen:
We hereby issue our irrevocable letter of credit ("Letter of Credit"),
Letter of Credit No. __________________, for the account of Aviation
Distributors, Inc., Xxx Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("ADI"), in
favor of Compania Mexicana De Aviacion, S.A., De C.V., Xxxxxxx Xxxx Xx. 000,
Xxxx 00, Xxx. xxx Xxxxx, 00000 Xxxxxx, D.F. ("Mexicana"), in the total amount of
US$483,503.40 (Four Hundred Eighty Three Thousand, Five Hundred Three and Forty
Hundredths United States Dollars), expiring at our [Xxxxx Fargo Los Angeles Main
Office] on December 31, 1998, available according to the terms of this Letter of
Credit as set forth below.
We will pay you each installment drawn under this Letter of Credit in
immediately available funds within twenty-four hours after receipt by us of a
Draft for such installment in the form of Exhibit 1 attached hereto, executed by
an officer of Mexicana, and a Certificate of an officer of Mexicana or of
Mexicana's counsel Xxxxxxxxx Xxxxx, Abogado Senior, in the form of Exhibit 2
attached hereto.
SPECIAL CONDITIONS
I. This Letter of Credit allows for drawings in four installments, each of
which installments may be drawn after the respective date set forth below, in an
amount not to exceed the maximum amount for such installment set forth after
such date:
INSTALLMENT DATE AMOUNT
First Installment March 15, 1997 US$125,106.16
Second Installment June 15, 1997 US$122,301.36
Third Installment September 15, 1997 US$119,465.75
Fourth Installment December 15, 1997 US$116,630.13
1. This Letter of Credit automatically decreases by the maximum
amount of each installment for which any payment is made hereunder upon such
payment and for any installment as to which no draft has been presented
hereunder within thirty (30) days of the date set forth for such installment in
Special Condition 1 above.
2. The credit established hereby shall expire on December 31, 1998.
3. The credit established hereby is not transferable.
4. This Letter of Credit is irrevocable.
5. All our fees and charges are for the account of ADI.
We hereby engage with you and any endorsers and bona fide holders that
we will duly honor at sight each draft drawn under, and in conformity with the
terms and conditions of, this Letter of Credit, if accompanied by the above-
specified Certificate and presented at our [address of Xxxxx Fargo Bank Los
Angeles Main Office] on or before the expiry date of this Letter of Credit.
This credit is subject to the Uniform Customs and Practice for
Documentary Credits, 1993 Revision, International Chamber of Commerce
Publication No. 500.
Dated: _______________________ XXXXX FARGO BANK
By:__________________________
[Name]
[Title]
2
Exhibit 1 to Letter of Credit
[FORM OF DRAFT]
XXXXX FARGO BANK
IRREVOCABLE LETTER OF
CREDIT NO.__________________
__________________, 199__
Pay to the order of ___________________________ the amount of
US$_________________ (_____________________________________________________
______________________________________ United States Dollars), drawn on XXXXX
FARGO BANK as issuer of its Irrevocable Letter of Credit No. ________________,
dated [date of Letter of Credit].
COMPANIA MEXICANA De AVIACION, S.A., De C.V.
By ______________________________
[Name]
[Title]
3
Exhibit 2 to Letter of Credit
[Form of Certificate to be Filed by Mexicana]
The undersigned certifies that he is an officer of Compania Mexicana
De Aviacion, S.A., De C.V. ("Mexicana") or counsel of Mexicana, and that he is
authorized to make the following certification on behalf of Mexicana:
1. Mexicana is a party to a Settlement Agreement between Mexicana,
ADI, and others dated as of November 1, 1996 (the "Agreement"), among Mexicana,
Turborreactores S.A., De C.V., ADI, ADI Consignment Sales, Inc., and Xxxxxx X.
Xxxxxx.
2. Under the terms of the Agreement, ADI is to pay to Mexicana the
sum of US$450,000 (Four Hundred Fifty Thousand United States Dollars) plus
interest, payable in quarterly installments, each installment bearing interest
at the rate of ten percent (10%) per annum, from November 1, 1996, according to
the following installment schedule:
a. $112,500 plus interest payable on or before March 15, 1997;
b. $112,500 plus interest payable on or before June 15, 1997;
c. $112,500 plus interest payable on or before September 15,
1997; and
d. $112,500 plus interest payable on or before December 15,
1997.
3. ADI has failed to make payment due in respect of the installment
payments pursuant to the terms of the Agreement for the payment due on or before
[date to be inserted]. [CHOOSE ONE OF THE FOLLOWING TWO TEXTS:] [ADI has not
paid any amount of such payment. The Draft that accompanies this Certificate is
in the full amount due for such payment.] [ADI has paid US$_________________ of
such payment, but has failed to pay the balance of such payment in the amount of
US$___________________. The Draft that accompanies this Certificate is in the
amount of such unpaid balance of such payment.]
4. Pursuant to the terms of the Agreement, at the date hereof,
Mexicana is entitled to payment of the installment in the amount of $112,500,
plus ten percent (10%) interest from November 1, 1996, which sum (or the portion
of which sum identified in paragraph 3 above) has not previously been paid to
Mexicana by ADI.
5. Pursuant to the terms of the Agreement, the Letter of Credit a
draft on which accompanies this Certificate may be drawn upon by Mexicana
without ADI's consent and without notice to ADI.
The undersigned certifies to the truth, accuracy, and completeness of
each of the foregoing statements.
4
Dated: ____________________ COMPANIA MEXICANA DE AVIACION,
S.A., DE C.V.
By:___________________________
Its:__________________________
5
