EXHIBIT 99.2
FIRST MODIFICATION TO LOAN AGREEMENT
By this First Modification to Loan Agreement ("First Modification") made
and entered into as of the ____ day of October, 2005, GLOBAL AIRCRAFT SOLUTIONS,
INC., FKA RENEGADE VENTURE CORPORATION, a Nevada corporation, whose address is
X.X. Xxx 00000, Xxxxxx, Xxxxxxx 00000-0000, WORLD JET CORPORATION, a Nevada
corporation, whose address is X.X. Xxx 00000, Xxxxxx, Xxxxxxx 00000-0000, and
XXXXXXXX AEROSPACE TECHNOLOGIES, INC., a Delaware corporation, whose address is
X.X. Xxx 00000, Xxxxxx, Xxxxxxx 00000-0000 (collectively, "Borrower"), and
[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] BANK, a banking corporation organized and existing under
the laws of the State of Wisconsin ("Lender"), whose address is c/o Commercial
Loan Department, for and in consideration of the recitals and mutual promises
contained herein, confirm and agree as follows:
SECTION 1. RECITALS
1.1 Lender and Borrower have entered into that certain Loan Agreement (the
"Initial Loan Agreement"), dated as of the 5th day of May, 2005 (the Initial
Loan Agreement as modified, including the modifications contained in this First
Modification, is referred to herein as the "Loan Agreement"), and Lender and
Borrower wish by this First Modification to amend the Loan Agreement, and
certain other Loan Documents, as provided herein.
SECTION 2. DEFINITIONS
2.1 Capitalized Terms. The capitalized terms used in this First
Modification shall have the meanings given to them in the Initial Loan
Agreement, unless otherwise defined herein or unless the context dictates
otherwise. Section 2 of the Initial Loan Agreement is deleted and replaced with
the following:
"2.1 Accounts: All trade accounts, accounts receivable, or other
rights to payment for goods sold or services rendered owing to Borrower,
including any rights to payment under any rental or lease agreements for
the rental or lease of equipment entered into in the ordinary course of
Borrower's business. "Accounts" shall not include depository accounts of
Borrower.
2.2 Account Debtor: Any person or entity obligated on any of the Accounts.
2.3 Advance: An individual disbursement under a Loan; disbursements are
collectively called "Advances".
2.4 Affiliate: Any person or entity (i) that directly or indirectly
controls, or is controlled by, or is under common control with, Borrower; (ii)
that directly or indirectly beneficially owns or holds five percent (5%) or more
of any class of voting stock of Borrower; (iii) five percent (5%) or more of the
voting stock of which entity is directly or indirectly beneficially owned or
held by Borrower or by a shareholder or member of Borrower; (iv) that is an
officer, director or partner of Borrower; (v) of which another Affiliate is an
officer, director or partner; or (vi) who is related by blood, adoption, or
marriage to another Affiliate. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of an entity, whether through the ownership of voting securities,
by contract, or otherwise.
2.5 Borrower: Global Aircraft Solutions, Inc., fka Renegade Venture
Corporation, a Nevada corporation, World Jet Corporation, a Nevada corporation,
and Xxxxxxxx Aerospace Technologies, Inc., a Delaware corporation.
2.6 Borrowing Base: As defined in Section 3.4 hereof.
2.7 Business Day: Any day other than a Saturday, Sunday or public holiday.
In addition to the foregoing, any other day when commercial banks in Arizona are
authorized or required to close shall not constitute a Business Day.
2.8 Closing: The satisfaction of all of the conditions precedent set forth
in Section 6 hereof and the consummation of all of the loan transactions
contemplated by this Loan Agreement.
2.9 Closing Date: The date, on or before May 15, 2005, on which the Closing
occurs, or such later date as is approved by Lender in its sole discretion.
2.10 Collateral: All property encumbered by the Security Documents as
security for the Indebtedness and Obligations.
2.11 Consolidated Group: Borrower and Xxxxxxxxx Softmachine Corporation.
2.12 Current Condition Appraised Value: As defined in Section 3.A.4(a)
hereof.
2.13 Debt Subordination Agreements: As defined in Section 5.4 hereof.
2.14 Eligible Accounts: As defined in Section 3.4 hereof.
2.15 Eligible Aircraft: As defined in Section 3.A.4(a) hereof.
2.16 Eligible Inventory: As defined in Section 3.4 hereof.
2.17 Environmental Law: Any federal, state or local statute, ordinance, or
regulation pertaining to the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"); the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq. ("RCRA");
the Arizona Environmental Quality Act, Title 49, Arizona Revised Statutes; any
statute, ordinance or regulation pertaining to such matters in any other state
or jurisdiction in which Borrower has any interest in real property or transacts
any business; and all rules adopted and guidelines promulgated pursuant to all
of the foregoing.
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2.18 ERISA: The Employee Retirement Income Security Act of 1974, as amended
and as in effect from time to time.
2.19 Event of Default: As defined in Section12.1 hereof.
2.20 Facility: Any real property and improvements (i) owned or occupied by
Borrower in the conduct of its business, or (ii) upon which any Collateral is
located.
2.21 GAAP. Those generally accepted accounting principles and practices
that are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the date
thereof so as to properly reflect the financial condition, and the results of
operations and changes in the financial position, of Borrower.
2.22 Guarantor: Intentionally omitted.
2.23 Guidance Line of Credit. As defined in Section 3.A.1 hereof.
2.24 Guidance Line of Credit Note. As defined in Section 3.A.2 hereof.
2.25 Hazardous Substance: Includes:
(a) those substances included within the definitions of "hazardous
substances," "hazardous materials," "toxic substances," or "solid waste" in
CERCLA, RCRA, and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., and in the regulations promulgated pursuant thereto;
(b) those substances defined as "hazardous substances" in A.R.S.
Section 49-201 and in rules adopted or guidelines promulgated pursuant
thereto;
(c) those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency as hazardous substances (40 CFR Part 302
and amendments thereto); and
(d) all other substances, materials and wastes that are, or that
become, regulated under, or that are classified as hazardous or toxic
under, any Environmental Law.
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2.26 Improved Condition Appraised Value: As defined in Section 3.A.4(a)
hereof
2.27 Indebtedness: The total outstanding indebtedness owed Lender by
Borrower from time to time, including without limitation the indebtedness owing
under or in connection with any Loan, including principal and interest accrued
but not previously paid.
2.28 Landlord Consent: An agreement in form acceptable to Lender, signed by
the landlord of a Facility, subordinating all lien rights and other rights in
the Collateral, to Lender, giving Lender notice of a default under the lease for
the Facility, and giving Lender the right to enter the Facility and remove the
Collateral.
2.29 Lender: [CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] Bank, a banking corporation organized and
existing under the laws of the State of Wisconsin.
2.30 Line of Credit: As defined in Section 3.1 hereof.
2.31 Line of Credit Note: As defined in Section 3.2 hereof.
2.32 Letter of Credit Facility As defined in Section 3.B.1 hereof.
2.33 Loan Documents. This Agreement, the Notes, the Security Documents, and
all other documents now or hereafter executed or delivered in connection with or
in any way related to the Indebtedness, the Obligations, or any Loan, or any
portion thereof.
2.34 Loan(s): The Line of Credit and any other loan now or hereafter
extended to Borrower by Lender, severally and collectively, including, without
limitation, the Guidance Line of Credit and each Letter of Credit Facility.
2.35 Material Adverse Effect: Any event or condition that either (i) would
have a material adverse effect upon the validity, performance or enforceability
of this Agreement, or any of the other Loan Documents, (ii) is material and
adverse to a material portion of the Collateral, any Facility, the financial
condition, credit or business operations or prospects of Borrower or Guarantor,
(iii) would materially impair the ability of Borrower or Guarantor to fulfill
its obligations under this Agreement, or any of the other Loan Documents, or
(iv) causes an Event of Default or an event or condition that with notice or
lapse of time or both, would become an Event of Default.
2.36 Note(s): The Line of Credit Note, the Guidance Line of Credit Note,
and any notes executed in furtherance of any other Loan, severally and
collectively.
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2.37 Obligations: Any and all of the representations, warranties, covenants
and other obligations made or undertaken by Borrower in this Agreement, any Note
or in any of the other Loan Documents.
2.38 PBGC: The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
2.39 Plan: Each pension, profit sharing, stock bonus, thrift, savings, and
employee stock ownership plan established or maintained, or to which
contributions have been made, by Borrower or any trade or business which
together with the Borrower would be treated as a single employer under ERISA.
2.40 Intentionally Omitted.
2.41 Principal Indebtedness: The principal portion of the Indebtedness.
2.42 Prohibited Liens/Approved Liens: "Prohibited Liens" are any liens,
security interests or encumbrances against the Collateral except: (i) liens and
security interests granted to Lender; (ii) other liens, security interests and
encumbrances approved in writing by Lender, or those described in Schedule 2.40,
attached, if any; and (iii) the lien of taxes and assessments not past due or
delinquent. "Approved Liens" are those liens listed in items (i) through (iii)
in the preceding sentence.
2.43 Proposed Improvements As defined in Section 3.A.4(b) hereof.
2.44 Purchase Agreement: As defined in Section 3.A.4(a) hereof.
2.45 Readvance: An individual disbursement under the Line of Credit, any
Letter of Credit Facility, or Guidance Line of Credit that is made from
available funds that were previously advanced and repaid by Borrower; such
disbursements are collectively called "Readvances."
2.46 Registration: As defined in Section 3.A.4(g) hereof.
2.47 Release: Any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping.
2.48 Security Documents: The documents required by Section 6 of this Loan
Agreement and any and all other documents or instruments now or hereafter
executed by Borrower or any other party to secure the payment of the
Indebtedness or the performance of the Obligations, or any portion thereof."
SECTION 3. MODIFICATIONS
3.1 Amount of Line of Credit. The words and figure "TWO MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00)" as they appear in
Paragraphs 1.1 and 3.2 of the Initial Loan Agreement, and in the first paragraph
of the Revolving Line of Credit Note on page one, are deemed changed to read:
"FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00)". The figure "$2,500,000.00" as
it appears at the top of page one of the Revolving Line of Credit Note is deemed
changed to read: "$5,000,000.00". Paragraph 3.1 of the Initial Loan Agreement is
deleted and replaced with the following:
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"3.1 Line of Credit. Subject to the conditions herein set forth,
Lender agrees to loan to or for the benefit of Borrower, and Borrower
agrees to draw upon and borrow, in the manner and upon the terms and
conditions herein expressed, amounts that shall not exceed at any time the
lesser of (i) the "Borrowing Base" or (ii) the difference between (a) FIVE
MILLION AND NO/100 DOLLARS ($5,000,000.00) and (b) the total amount of all
Letters of Credit Facilities outstanding or which Lender is obligated to
provide (the "Line of Credit")."
3.2 Maturity Date of Line of Credit. The date "April 30, 2006" as it
appears in Paragraph 3.7 of the Initial Loan Agreement, and as it appears in
Paragraph B on page one of the Revolving Line of Credit Note, is deemed changed
to read: "October 31, 2007".
3.3 Interest Rate on Line of Credit. The words and figure "three and one
half (3.50%)" as they appear in Paragraph A on page one of the Revolving Line of
Credit note are deemed changed to read: "three percent (3.00%)".
3.4 Foreign Accounts. The period at the end of paragraph 3.4 (c) of the
Initial Loan Agreement s deleted and the following is deemed inserted therein:
", unless (and then only for so long as) the Account arises out of work and
materials performed on an aircraft, the aircraft remains in the possession of
Borrower at a Facility in Tucson, Arizona until collected funds are received by
Borrower as payment in full of the Account, and Borrower retains the right under
Arizona law to a valid lien upon the aircraft in the amount of the Account until
collected funds are received by Borrower as payment in full of the Account.
3.5 Eligible Inventory. The figure "$1,000,000.00" as it appears in line
five of Paragraph 3.4 of the Initial Loan Agreement is deemed changed to read
"$2,500,000.00." Eligible Inventory does not include any Eligible Aircraft
against which funds have been advanced under the Guidance Line of Credit.
3.6 Tangible Net Worth. The figure "$5,000,000.00" as it appears in
Paragraph 10.6 of the Initial Loan Agreement is deemed changed to read
"$7,000,000.00".
3.7 Guidance Line. The following is deemed inserted in the Initial Loan
Agreement as Section 3.A:
"SECTION 3.A GUIDANCE LINE OF CREDIT
3.A.1 Guidance Line of Credit. Subject to the conditions herein set forth,
Lender and Borrower hereby establish the parameters for a guidance line of
credit which will at no time exceed SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00) (the "Guidance Line of Credit").
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3.A.2 Guidance Line of Credit Note. The Guidance Line of Credit shall be
evidenced by a Promissory Note in the form attached as Schedule 3.A.2 (the
"Guidance Line of Credit Note") of Borrower, executed and delivered in the
amount of SEVEN MILLION AND NO/100 DOLLARS ($7,000,000.00), payable to Lender
upon the terms and conditions contained therein and herein. Borrower
acknowledges and agrees that the interest rate contracted for in the Guidance
Line of Credit Note includes the interest rate set forth therein and any other
charges, fees, costs and expenses incident to the Guidance Line of Credit paid
by Borrower to the extent that the same are deemed interest under applicable
law.
3.A.3 Advances. If access is permitted to the Guidance Line of Credit by
Lender, Advances may be made to Borrower, repaid by Borrower (subject to the
limitations contained herein), and Readvances made to Borrower upon the same
terms and conditions as are required for Advances hereunder, provided that there
shall be no Advance or Readvance that would cause the outstanding principal
balance of the Guidance Line of Credit to exceed the limitations of Section
3.A.1 hereof. BORROWER SHALL HAVE NO RIGHT, EXPLICIT OR IMPLIED, TO RECEIVE, AND
LENDER SHALL HAVE NO OBLIGATION TO MAKE, ANY ADVANCES UNDER THE GUIDANCE LINE OF
CREDIT. WHETHER OR NOT AN ADVANCE IS MADE SHALL BE IN LENDER'S SOLE AND ABSOLUTE
DISCRETION.
3.A.4 Conditions Precedent. If Borrower requests an Advance and if Lender
(in its sole discretion) agrees in writing to an Advance, an Advance will be
made if, and only if, all of the following conditions precedent are met when the
Advance is requested:
(a) Borrower shall have identified for purchase by Borrower an aircraft
(an "Eligible Aircraft") which (i) will upon the purchase by Borrower
be owned by Borrower free and clear of all claims, liens and
encumbrances, other than any security interests of Lender, (ii) has an
appraised value (the "Current Condition Appraised Value"), acceptable
to Lender established by an appraiser acceptable to Lender and an
appraiser which specializes in aviation asset evaluation, (iii) is not
and will not be included as Inventory for purposes of calculating the
Borrowing Base, (iv) has not had and will not have labor or materials
supplied to it which have given or will give rise to an Eligible
Account for purposes of calculating the Borrowing Base, (v) has an
appraised value (the "Improved Condition Appraised Value") acceptable
to Lender, established by an appraiser acceptable to Lender and an
appraiser which specializes in aviation asset evaluation, appraising
what the value will be after the Proposed Improvements have been made,
(vi) will be held until the Advance or Readvance requested in
connection therewith has been repaid to Lender in full at a Facility
for which Lender has received all Landlord Consents it requires, (vii)
is the subject of a fully executed purchase agreement (the "Purchase
Agreement") in form and content and with a buyer satisfactory to
Lender, wherein the buyer has agreed to purchase the Eligible Aircraft
after the Proposed Improvements are made, for a purchase price of not
less than the Improved Condition Appraised Value and with a required
down payment upon the signing of the Purchase Agreement of not less
than twenty-five percent (25%) of the purchase price, and (viii) is
otherwise satisfactory to Lender.
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(b) Borrower shall have provided Lender with an itemization of all labor
and materials Borrower (i) is required to supply to the Eligible
Aircraft pursuant to the Purchase Agreement, and (ii) otherwise
intends to supply to the Eligible Aircraft (the "Proposed
Improvements"), together with a breakdown of all costs associated
therewith, and the cost of delivery of the Eligible Aircraft to
Borrower and to the ultimate purchaser, all in form and content
satisfactory to Lender.
(c) The amount of the requested Advance cannot exceed seventy-five percent
(75%) of the lesser of: (i) Borrower's cost of the Eligible Aircraft
and Borrower's cost of the Proposed Improvements, or (ii) the Improved
Condition Appraised Value.
(d) Lender shall have received (i) an Aircraft Security Agreement in the
form attached hereto as Schedule 3.A.4(d), which grants to Lender a
valid lien on the Eligible Aircraft, subject to no other claims, liens
or encumbrances, properly perfected, and (ii) if requested by Lender,
a specific assignment of Lender's rights under the Purchase Agreement,
acknowledged by the buyer, in form acceptable to Lender.
(e) Lender shall have been paid a loan fee in an amount equal to one
percent (1%) of the amount of the requested Advance, provided,
however, once Borrower has paid under this subparagraph cumulative
loan fees of $52,500.00 (i.e., after Advances totaling $5,250,000.00),
no further loan fees will be due under this subparagraph.
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(f) There shall exist no Event of Default and no event or condition which
with the lapse of time or the giving of notice or both would result in
an Event of Default.
(g) Borrower shall have obtained and delivered to Lender the following
items, all of which shall be in form and content satisfactory to
Lender and shall be subject to approval in writing by Lender: (i)
evidence confirming that the FAA Xxxx of Sale, the Aircraft
Registration Application on FAA Form 8050-1 (the "Registration"), and
the Aircraft Security Agreement have been duly filed with the FAA with
respect to the Eligible Aircraft which is the subject of the Advance,
and (ii) evidence (which may be in the form of a title policy from a
title insurer satisfactory to Lender or an opinion from a law firm
satisfactory to Lender), confirming that Borrower is the owner of the
Eligible Aircraft and that Lender has a first, prior and exclusive
security interest in the Eligible Aircraft.
(h) Lender shall have received a written request for the Advance at least
one (1) business day prior to the date the Advance is to be made,
specifying the date and amount of the requested Advance.
(i) All representations and warranties by Borrower under the Loan
Documents shall remain true and correct in all material respects and
all agreements under the Loan Documents that Borrower is to have
performed or complied with by the date of the requested Advance shall
have been performed or complied with.
(j) For any Advances requested after March 31, 2006, there must have been
exercised subsequent to October 20, 2005 and prior to March 31, 2006,
upon terms satisfactory to Lender of warrant rights in Borrower at a
cumulative price (and there must have been payment to Borrower) of not
less than NINE MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS
($9,800,000.00) and there must have occurred the satisfaction of all
obligations in connection therewith.
(k) Lender's most recent audit of the Consolidated Group has been
completed and the results are satisfactory to Lender.
(l) Borrower has paid to Lender all fees, costs and expenses associated
with the Advances, including, without limitation, all attorneys' fees,
registration fees, title insurance fees, and legal opinion fees.
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(m) Borrower has provided Lender, in form acceptable to Lender, with an
alternative plan to sell the Eligible Aircraft if the original
purchase, does not complete the Purchase Agreement in accordance with
its terms.
3.A.5 Advances. Advances of the Line of Credit shall be subject to
satisfaction of the conditions precedent set forth in this Section and in
Sections 6 and 7 hereof.
3.A.6 Termination. Unless renewed or extended by written notice from Lender
to Borrower, the Guidance Line of Credit shall terminate on October 31, 2007,
and the entire outstanding principal balance, all accrued and unpaid interest,
and all other sums payable in connection with the Guidance Line of Credit shall
be due and payable on that date. The termination of the Guidance Line of Credit
shall not impair Lender's liens and security interests in the Collateral, and
those liens and security interests shall continue subject only to Approved
Liens.
3.A.7 Repayment. Borrower, from time to time, may repay the Guidance Line
of Credit in whole or in part at any time, without penalty. Borrower shall repay
to Lender, from time to time: (i) an amount equal to any amount by which the
outstanding principal balance of the Guidance Line of Credit exceeds the limits
set forth in Paragraph 3.A.1 hereof, (ii) all amounts received by Borrower under
any Purchase Agreement, other than an initial down payment to the extent it does
not exceed twenty-five percent (25%) of the purchase price, and (iii) any
portion of an Advance or Readvance not paid within ninety (90) days of the
Advance or Readvance. Borrower shall pay to Lender as soon as received all
proceeds from the sale of an Eligible Aircraft. Borrower shall immediately repay
to Lender the amount of the Advance attributed to an Eligible Aircraft upon any
breach of the Purchase Agreement relative to such Eligible Aircraft.
3.A.8 Purpose. Each Advance under this facility shall only be used for the
purpose of acquiring the Eligible Aircraft to which it applies, and completing
the Proposed Improvements thereto, and for no other purpose.
3.A.9 Sole Discretion. As used in this Section the terms "acceptable to
Lender," and "satisfactory to Lender" shall be deemed to mean acceptable to
Lender or satisfactory to Lender in Lender's sole and absolute discretion.
3.A.10 Completion of Purchase Agreement. Borrower will not transfer title
or release the Eligible Aircraft to the purchaser until the full purchase price
has been paid to Borrower in collected funds. Borrower will not amend, alter,
modify or terminate the Purchase Agreement without the prior written consent of
Lender, and will take all steps and actions necessary to enforce its rights
thereunder, and to perform all of its obligations thereunder when due."
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3.8 Eligible Accounts. Eligible Accounts do not include: (i) any Account
arising out of labor or materials supplied to an Eligible Aircraft against which
funds have been advanced under the Guidance Line of Credit, or (ii) any amounts
owed under any Purchase Agreement.
3.9 Additional Financial Covenants. The following shall be deemed inserted
in the Initial Loan Agreement as Paragraph 10.7:
"10.7 Additional Financial Covenants. Permit at any time for the
Consolidated Group:
(a) The ratio of earnings before interest, taxes, depreciation and
amortization, less non-financed capital expenditures and
distributions for the preceding twelve months, to the current
portion of long-term indebtedness from borrowings to be less than
1.1 to 1.0.
(b) Losses for any two consecutive calendar quarters."
(c) The quick ratio (defined as cash, liquid cash equivalents and
accounts receivable, divided by current liabilities), to be worse
than .90 to 1.0.
3.10 Future Adjustments of Final Covenants. The financial covenants
referenced in Paragraphs 10.6 and 10.7 of the Loan Agreement shall be adjusted
to reflect requirements satisfactory to Lender in its sole discretion following
any future conversion of warrants for members of the Consolidated Group that
materially affect the net worth of any company which is part of the Consolidated
Group.
3.11 Audits. Borrower will pay for audits of the Consolidated Group by
Lender.
3.12 Letter of Credit Facility. The following is deemed inserted in the
Initial Loan Agreement as Section 3.B:
"SECTION 3.B LETTER OF CREDIT FACILITY
3.B.1 Letter of Credit Facility. Lender will make available for the benefit of
Borrower, in accordance with the terms and conditions contained herein,
one or more letters of credit, in combined amounts not to exceed TWO
HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00) with the beneficiary
and terms and conditions reasonably satisfactory to Lender, given in
connection with (i) requests by the Tucson Airport Authority for letters
of credit to secure the lease payments under its lease with Borrower, or
(ii) any other business purpose of Borrower which is approved by Lender
in Lender's sole discretion (each such letter of credit is referred to
herein as a "Letter of Credit Facility"). Each Letter of Credit Facility
shall be for the benefit of Borrower, in the manner and upon the terms
and conditions expressed herein, and in any subsequent agreement and
documents between Lender and Borrower at the time of that Loan.
3.B.2 Promissory Note. If elected by Lender, each Letter of Credit Facility may
be evidenced by one or more promissory notes now or hereafter executed by
Borrower for the benefit of Lender. Unless otherwise elected by Lender,
each Letter of Credit Facility shall be deemed a part of the Line of
Credit, and evidenced by the Line of Credit Note, subject, however, to
the provisions of Paragraph 3.B.5, below. Borrower acknowledges that the
interest rate contracted for in any Note evidencing a Letter of Credit
Facility includes the interest rate set forth therein and any other
charges, fees, costs and expenses incident to such Letter of Credit
Facility paid by Borrower to the extent the same are deemed interest
under applicable law.
3.B.3 Conditions. As conditions precedent to Lender's obligations to issue each
Letter of Credit Facility, (i) Borrower shall not be in material default
under any term, condition or provision of any Loan Document, and there
shall not exist any event or condition that with notice or lapse of time
or both, would result in any such material default, (ii) Lender shall
have received, in form and substance reasonably satisfactory to Lender,
all documentation Lender shall reasonably request in connection with such
Letter of Credit Facility, (iii) Lender shall have no obligation to
provide a Letter of Credit Facility if as a result thereof the sum of (a)
the total amount owing under each Letter of Credit Facility and (b) the
Line of Credit, will exceed the limit set for the Line of Credit in
Paragraph 3.1, above, and (iv) Lender shall have no obligation to provide
a Letter of Credit Facility if Lender's security interest in any property
to be purchased thereby will be subject to any prior claim, lien,
security interest or encumbrance.
3.B.4 Interest Rate. The interest rate for each Letter of Credit Facility, if
the letter of credit is drawn upon, shall be the same as the interest
rate then in effect under the Line of Credit. The interest rate on this
Indebtedness shall change from time to time on the effective date of, and
in conformity with, changes in the interest rate on the Line of Credit.
3.B.5 Payment. If the letter of credit is drawn upon, all principal and accrued
and unpaid interest shall be payable to Lender by Borrower upon demand.
Borrower may use an Advance under the Line of Credit to pay the same,
provided (i) sufficient money is available under the Line of Credit, and
(ii) Borrower is entitled to the Advance under the terms and conditions
of the Loan Documents.
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3.B.6 Security. Each Letter of Credit Facility shall be secured by a first
position security interest in the Collateral, subject only to the
Approved Liens.
3.B.7 Additional Documents. Borrower agrees to execute any additional security
agreements, financing statements, applications, loan agreements and other
documents reasonably required by Lender at any time hereafter, and, in
particular, contemporaneously with the funding of each Letter of Credit
Facility. The additional documents required by Lender shall be in form
and content reasonably satisfactory to Lender. Any such additional
documents shall be included as Loan Documents and, to the extent
applicable, Security Documents, both as defined herein.
3.B.8 Fee. Borrower shall pay to Lender immediately prior to the issuance of a
letter of credit, and any renewal, and as a condition precedent to its
issuance, and any renewal, a fee in the amount of two percent (2%) of the
amount of the letter of credit.
3.B.9 Term. The facility created by this Section, and Lender's obligation to
issue any Letter of Credit Facility, shall terminate contemporaneously
with the termination of the Line of Credit, and if any letters of credit
are outstanding at that point, Borrower shall promptly provide Lender
with cash in the total amount of all letters of credit then outstanding
to secure in full the total amounts of all letters of credit then
outstanding.
SECTION 4. ACKNOWLEDGEMENTS
4.1 Acknowledgement. Borrower hereby acknowledges and agrees that (i) the
Indebtedness is just, due and owing, without offset or reduction, (ii) the Loans
and all Loan Documents were duly authorized and executed by Borrower, and are
fully enforceable against Borrower strictly in accordance with their terms, and
(iii) the Indebtedness and the Loans and the Loan Documents have not and will
not result in any breach of or violate or constitute a default under any
mortgage, bylaws, operating agreements, deed of trust, loan or credit agreement,
articles of partnership, formation or incorporation, or other instruments to
which Borrower is a party or by which Borrower is or will be bound or affected
SECTION 5. GENERAL
5.1 Full Force and Effect. Except as otherwise provided herein, the Initial
Loan Agreement and all other Loan Documents shall continue in full force and
effect, unaffected or modified by the terms and conditions of this First
Modification. This First Modification shall be attached to and deemed a part of
the Initial Loan Agreement.
5.2 Counterparts and Facsimiles. This instrument may be signed in one or
more counterparts, all of which when taken together shall constitute one and the
same instrument. Signatures transmitted by facsimile shall bind the parties
signing.
13
5.3 Costs and Fees. Borrower will upon the execution of this First
Modification pay to Lender (i) all costs, fees and expenses (including without
limitation attorneys' fees) incurred by Lender in connection with this First
Modification, and (ii) a non-refundable and fully earned loan fee in the amount
of $37,500.00.
5.4 Ratification. All Loan Documents previously executed by Borrower, or
purported to be executed in the name of Borrower, are hereby authorized,
ratified and adopted by Borrower.
5.5 Representations and Warranties. Borrower represents and warrants to
Lender as follows: (i) the statements contained in the Recitals are true and
correct; and the statements, representations and warranties of Borrower
contained herein and in the other Loan Documents and all information supplied or
to be supplied by Borrower was and will be true and correct as of the date
hereof and as of the date supplied; and (ii) the consummation of this First
Modification and the performance of the obligations hereunder and under the
other Loan Documents have been authorized by all necessary parties, persons and
entities and have not and will not result in any breach of, or violate or
constitute a default under, any mortgage, deed of trust, loan or credit
agreement, articles of partnership, formation or incorporation, trust
agreements, bylaws, operating agreements, partnership agreements or other
instruments to which any of the parties hereto is a party or by which any of the
parties hereto may be bound or affected.
5.6 Entire Agreement. This First Modification and the other Loan Documents
contain the entire agreement between the parties with respect to the
transactions referenced herein and therein and supersede all previous written or
oral negotiations, commitments and writings.
5.7 Additional Documents. Borrower agrees to (i) execute such additional
and further documents as Lender shall require to carry out the intent of the
parties contained herein or in any other Loan Document, and/or to maintain,
preserve or perfect any security interest or lien of Lender in any item of
Collateral, and (ii) provide such corporate and other non-individual
certificates as Lender shall require to evidence authority to execute this First
Modification and all other Loan Documents.
5.8 Miscellaneous. Borrower further agrees as follows:
(a) In the event any provision of this First Modification shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not affect the validity or enforceability of any other
provision hereof.
(b) This First Modification shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns, provided that Borrower may not
voluntarily assign any right or interest hereunder.
(c) Each of the representations, warranties and covenants described in
this First Modification shall survive the execution of this First
Modification and shall continue until the Loans are paid in full.
14
(d) This First Modification shall be governed by the laws of the State
of Arizona.
(e) Whenever used the singular number shall include and be applicable
to the plural, and the plural the singular, and the use of any gender shall
include and be applicable to all genders.
(f) Time is of the essence hereunder.
DATED as of the day and year written above.
GLOBAL AIRCRAFT SOLUTIONS, INC., FKA
RENEGADE VENTURE CORPORATION, a Nevada
corporation
By:___________________________________
Name:_________________________________
Title:________________________________
WORLD JET CORPORATION, a Nevada
corporation
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX AEROSPACE TECHNOLOGIES, INC.,
a Delaware corporation
By:___________________________________
Name:_________________________________
Title:________________________________
BORROWER
15
[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] BANK, a
banking corporation organized and
existing under the laws of the State
of Wisconsin
By:___________________________________
Name:_________________________________
Title:________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
LENDER
16
Schedule 3.A.2
--------------
PROMISSORY NOTE
(Revolving)
(Guidance Line of Credit)
$7,000,000.00 Phoenix, Arizona
____________ 2005
FOR VALUE RECEIVED, the undersigned GLOBAL AIRCRAFT SOLUTIONS, INC., FKA
RENEGADE VENTURE CORPORATION, a Nevada corporation, WORLD JET CORPORATION, a
Nevada corporation, and XXXXXXXX AEROSPACE TECHNOLOGIES, INC., a Delaware
corporation (hereinafter collectively called "Borrower"), jointly and severally
promise to pay to the order of [CONFIDENTIAL PORTION DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] BANK, a banking
corporation organized and existing under the laws of the State of Wisconsin
(together with all subsequent holders of this Note, hereinafter called
"Lender"), the principal sum of SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00), or so much as may be outstanding, plus interest (based on a
360-day year and charged on the basis of actual days elapsed) from the date
hereof on the principal balance from time to time outstanding as hereinafter
provided, principal, interest and all other sums payable hereunder to be paid in
lawful money of the United States of America as follows:
A. Interest shall accrue at the rate of three percent (3%) per annum
in excess of the Applicable LIBOR Rate (defined below). The interest rate
on this indebtedness shall change from time to time on the effective date
of, and in conformity with, changes in the Applicable LIBOR Rate. All
accrued interest only shall be due and payable on the first day of each and
every month commencing with the first month after the date of this Note. In
addition, all accrued interest shall be due and payable on the last day of
this Note. If a payment date falls on a Saturday, Sunday or a day that
Lender's offices are closed for a holiday, the payment shall be deemed due
in the next day which is not a Saturday, Sunday or a day that Lender's
offices are closed for a holiday.
B. The entire unpaid principal balance, all accrued and unpaid
interest and all other sums payable hereunder shall be due and payable in
full on October 31, 2007.
C. In addition to accrued interest, repayments of principal shall be
due and payable from time to time as required under the terms of the Loan
Agreement, defined below.
The principal balance of this Note represents a revolving credit all or any
part of which may be advanced to Borrower, repaid by Borrower, and re-advanced
to Borrower from time to time, subject to and only in accordance with the other
terms, conditions and provisions hereof and the terms, conditions and
provisions, contained in the Loan Agreement, defined below, and provided that
the principal balance outstanding at any one time shall not exceed the face
amount hereof.
17
"Applicable LIBOR Rate" shall mean the U.S. Dollar rate (rounded upward to
the nearest one-sixteenth of one percent) listed on page 3750 (i.e., the LIBOR
Page) of the Telerate News Services titled British Banker Association Interest
Settlement Rates for a designated maturity of one (1) month, determined as of
11:00 a.m. London Time on the Determination Date. If the Telerate News Services
publishes more than one (1) such LIBOR Rate, the average of such rates shall
apply. If the Telerate News Services ceases to publish the LIBOR Rate, then the
LIBOR Rate shall be determined from such substitute financial reporting service
as Lender in its discretion shall determine. If requested by Lender, Borrower
shall acknowledge in writing Borrower's agreement to such substitute financial
reporting service designated by Lender, and if Borrower fails to so acknowledge
Lender may declare immediately due and payable all principal then outstanding
hereunder together with all interest then accrued and unpaid, and Lender shall
have no further obligation to advance any funds to borrower under any of the
Loan Documents.
"Determination Date" shall mean (i) the day that is both a Eurodollar
Business Day and a Business Day immediately preceding the date on which any
portion of the loan evidenced by this Note is first advanced to or for the
benefit of Borrower; and (ii) thereafter, the day that is both a Eurodollar
Business Day and a Business Day immediately preceding each calendar month, or
more frequently if elected by Lender.
"Eurodollar Business Day" means any day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"Business Day" means any day other than a Saturday, Sunday, public holiday,
or other day when commercial banks in Arizona are authorized or required to
close.
Borrower agrees to an effective rate of interest that is the rate stated
above plus any additional rate of interest resulting from any other charges in
the nature of interest paid or to be paid by or on behalf of Borrower, or any
benefit received or to be received by Lender, in connection with this Note. No
provision of this Note is intended to or shall require or permit Lender,
directly or indirectly, to take, collect or receive in money, goods or in any
other form, any interest (including amounts deemed by law to be interest) in
excess of the maximum rate of interest permitted by applicable law. If any
amount due from or paid by Borrower shall be determined by a court of competent
jurisdiction to be interest in excess of such maximum rate, Borrower shall not
be obligated to pay such excess and, if paid, such excess shall be applied
against the unpaid principal balance of this Note, or if and to the extent that
this Note has been paid in full, such excess shall be remitted to Borrower.
If any amount required under this Note to be paid, including balloon
payments and matured or accelerated amounts, is not paid within ten (10) days
after the date it is due, then Borrower shall pay a "late charge" equal to five
percent (5%) of the amount which was due to compensate Lender for administrative
expenses and other costs of delinquent payments. This late charge may be
assessed without notice, shall be immediately due and payable whether or not
Lender undertakes an affirmative action to assess it, and shall be in addition
to all other rights and remedies available to Lender.
18
All payments on this Note shall be applied first to the payment of any
costs, fees or other charges incurred in connection with the indebtedness
evidenced hereby, next to the payment of accrued interest and then to the
reduction of the principal balance.
This Note is issued pursuant to that certain Loan Agreement (the "Loan
Agreement") dated May 5, 2005, as amended, between Borrower and Lender. This
Note and the Loan Agreement, together with all other documents or instruments
evidencing, securing, or executed or delivered in connection with the
indebtedness evidenced by this Note, are hereinafter called the "Loan
Documents." Capitalized terms used and not otherwise defined herein shall have
the meanings given to them in the Loan Agreement, unless the context dictates
otherwise.
Time is of the essence of this Note. At the option of Lender, the entire
unpaid principal balance, all accrued and unpaid interest and all other amounts
payable hereunder shall become immediately due and payable without notice upon
the failure to pay any sum due and owing hereunder as provided herein if such
failure continues for fifteen (15) days after written notice thereof to Borrower
or upon the occurrence of any Event of Default, as defined in the Loan Agreement
or any of the other Loan Documents.
After maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable hereunder
shall bear interest at that rate that is six percent (6%) above the rate that
would otherwise be payable under the terms hereof. In the event of any court
proceedings, court costs and attorneys' fees shall be set by the court and not
by jury, shall be included in any judgment obtained by the prevailing party,
and, if the prevailing party is Lender, shall be secured by the Loan Documents.
Failure of Lender to exercise any option hereunder shall not constitute a
waiver of the right to exercise the same in the event of any subsequent default
or in the event of continuance of any existing default after demand for strict
performance hereof.
Borrower, sureties, guarantors and endorsers hereof: (a) agree to be
jointly and severally bound, (b) severally waive any homestead or exemption
right against said debt, (c) severally waive demand, diligence, presentment for
payment, protest and demand, and notice of extension, dishonor, protest, demand
and nonpayment of this Note, except Borrower does not waive any rights to notice
prior to an acceleration and (d) consent that Lender may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person primarily liable
hereon, and such consent shall not alter nor diminish the liability of any
person.
This Note shall be binding upon Borrower and its successors and assigns and
shall inure to the benefit of Lender and their successors and assigns.
All notices required or permitted in connection with this Note shall be
given at the place and in the manner provided in the Loan Agreement for the
giving of notices.
This Note may be prepaid at any time without penalty.
19
This Note shall be governed by and construed according to the laws of the
State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
GLOBAL AIRCRAFT SOLUTIONS, INC., FKA
RENEGADE VENTURE CORPORATION, a Nevada
corporation
By:___________________________________
Name:_________________________________
Title:________________________________
WORLD JET CORPORATION, a Nevada
corporation
By:___________________________________
Name:_________________________________
Title:________________________________
XXXXXXXX AEROSPACE TECHNOLOGIES, INC.,
a Delaware corporation
By:___________________________________
Name:_________________________________
Title:________________________________
BORROWER
20
Schedule 3.A.4(d)
-----------------
AIRCRAFT SECURITY AGREEMENT
THIS AIRCRAFT SECURITY AGREEMENT ("Agreement") is entered into, for good
and valuable consideration, as of ______________, 200__, between [CONFIDENTIAL
PORTION DELETED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] BANK, a banking corporation organized and existing under the laws of
the State of Wisconsin ("Lender"), and _______________________________________,
a _______________ corporation, having a mailing address of X.X. Xxx 00000,
Xxxxxx, Xxxxxxx 00000-0000 (collectively "Debtor").
1. Representations and Warranties of Debtor. In consideration of Lender
making an extension of credit to Debtor and/or the other borrowers who are
parties with Lender and Debtor to that that certain Loan Agreement dated as of
May 5, 2005, as the same may have been amended (the Loan Agreement, as amended
or replaced from time to time, is referenced herein as the "Loan Agreement"),
Debtor as of the date hereof: reaffirms all of the representations and
warranties of Debtor as set forth in the Loan Agreement, in the Security
Documents (as defined in the Loan Agreement) and/or in the other Loan Documents
(as defined in the Loan Agreement); reaffirms all of the duties and obligations
of Debtor with respect to aircraft and inventory as set forth in the Loan
Agreement and/or the other loan documents; and acknowledges that all such duties
and obligations shall apply to the Aircraft (as defined below). Debtor further
acknowledges that if an Event of Default (as defined in the Loan Agreement)
occurs, the Lender may exercise against Debtor and/or any collateral given as
security under this Agreement and/or the other Loan Documents (including,
without limitation, the Aircraft) any and all of the remedies it may have under
the Loan Documents and/or at law and/or in equity.
2. Grant of Security Interest. To secure Debtor's payment and performance
of the Indebtedness and the Obligations (as those terms are defined in the Loan
Agreement), Debtor grants to Secured Party a security interest in the aircraft
and other property described below and in all additions and accessions thereto
and substitutions therefor, now or hereafter owned, all unearned insurance
premiums and insurance proceeds relating to such property, and the proceeds of
all of the foregoing (all of such property and proceeds are collectively
referred to as the "Aircraft").
Aircraft:
Make: _____________________________ Model No.: _________________________
Serial No.: _______________________ Registration No. ___________________
21
Engine(s) (which are rated at 750 or more maximum takeoff horsepower, or
equivalent):
Make: _____________________________ Model No.: _________________________
Serial Number(s): L:_______________ R: _________________________________
Propeller(s) (which are able to absorb 750 or more maximum takeoff shaft
horsepower):
Make: _____________________________ Model No.: _________________________
Serial Number(s): _________________ _________________________________
together with all other property essential and appropriate to the operation of
the above-described Aircraft, including, without limitation, all engines,
propellers, instruments, avionics, equipment and accessories attached to and
connected with the Aircraft, and all logs, manuals and other documents issued
for or reflecting use or maintenance of the Aircraft. Debtor acknowledges that
this Agreement is not intended to limit the security interest given by Debtor to
Lender in any of the other Loan Documents.
The security interest in the above-described inventory is a purchase money
security interest under the Uniform Commercial Code. The proceeds of the Loan
Agreement will be used to purchase the Aircraft.
3. Primary Hangar Location: Debtor agrees that the Aircraft will be based
at _________________________.
4. Power of Attorney: Debtor hereby appoints Lender as Debtor's attorney in
fact to sign in Debtor's name and on Debtor's behalf all financing statements,
FAA bills of sale and registration documents and any and all other papers and
documents necessary or appropriate to assist Lender in establishing and
maintaining a valid security interest in the Aircraft and to assure that the
Aircraft is titled, registered and the security interest perfected to Lender's
satisfaction, and to do all other things and take all other actions reasonably
necessary to give effect to such security interest.
Executed by the parties' duly authorized representatives on ______________,
200__.
LENDER: DEBTOR:
[CONFIDENTIAL PORTION DELETED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] BANK
____________________________________
By: _______________________________ By: ________________________________
Name: _____________________________ Name: ______________________________
Title: ____________________________ Title: _____________________________
22
