EXHIBIT 10.40
AMENDMENT NO. 9, WAIVER, CONSENT AND STANDSTILL
Dated as of March 31, 2000
to
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 17, 1997
This Amendment No. 9, Waiver, Consent and Standstill (the
"Amendment") dated as of March 31, 2000 is entered into among AVIATION SALES
DISTRIBUTION SERVICES COMPANY, a Delaware corporation ("ASOC"), AEROCELL
STRUCTURES, INC., an Arkansas corporation ("Aerocell"), AVS/XXXXX-XXXXX MACHINE
COMPANY, a Delaware corporation ("Xxxxx-Xxxxx"), WHITEHALL CORPORATION, a
Delaware corporation ("Whitehall"), TRIAD INTERNATIONAL MAINTENANCE CORPORATION,
a Delaware corporation ("TIMCO"), APEX MANUFACTURING, INC., an Arizona
corporation ("Apex"), CARIBE AVIATION, INC., a Florida corporation ("Caribe"),
AIRCRAFT INTERIOR DESIGN, INC., a Florida corporation ("Design"), AVIATION SALES
LEASING COMPANY, a Delaware corporation ("Leasing"), TIMCO ENGINE CENTER, INC.,
a Delaware corporation ("TIMCO Engine"), AVIATION SALES COMPANY, a Delaware
corporation ("Parent"), and the "Lenders" (as defined in the Credit Agreement
identified below) a party hereto. Capitalized terms used herein without
definition are used herein as defined in the Credit Agreement.
PRELIMINARY STATEMENT:
WHEREAS, ASOC, Aerocell, Xxxxx-Xxxxx, Whitehall, TIMCO, Apex,
Caribe, Design,, Leasing and TIMCO Engine, as Borrowers, Parent, Citicorp USA,
Inc., as Agent, and certain financial institutions, as Lenders and Issuing
Banks, are parties to that certain Third Amended and Restated Credit Agreement
dated as of October 17, 1997, as heretofore amended (the "Credit Agreement");
WHEREAS, the Borrowers and Lenders have entered into a certain
Standstill Letter dated January 31, 2000, the agreements under which expire by
their terms on March 31, 2000 and the Borrowers and Parent have requested that
the Lenders continue, beyond March 31, 2000, to provide Revolving Loans, the
Issuing Bank continue, beyond March 31, 2000, to provide Letters of Credit, and
the Lenders and Issuing Bank continue to forbear beyond March 31, 2000 from
exercising their rights and remedies under the Credit Agreement with respect to
certain Events of Default which have heretofore occurred, are continuing, and
are identified on SCHEDULE 1 attached hereto and made a part hereof (the
"Continuing Defaults");
WHEREAS, the Borrowers and Lenders have agreed to amend the
definition of Borrowing Base for determination of availability of Revolving
Loans and Letters of Credit under the Revolving Credit Commitments from and
after the date hereof;
WHEREAS, the Lenders have agreed to continue providing
Revolving Loans, the Issuing Bank has agreed to continue providing Letters of
Credit and the Lenders and Issuing Banks have agreed to continue to forbear from
exercising or waive, as specified herein, their rights and remedies under the
Credit Agreement with respect to certain Events of Default and amend the
Borrowing Base as aforesaid, subject to the terms and conditions set forth
below;
WHEREAS, due to increased costs related to the construction of
improvements on the real property which is the subject of the TROL Lease, the
principal amount of Indebtedness with respect to Series A Notes guaranteed under
the TROL Guaranties will increase from $36,252,056 to $37,840,000, with a
concurrent increase in the obligations under the TROL Lease guaranteed under the
TROL Guaranties, and the consent of the Requisite Lenders is required to permit
such increase and any Restricted Junior Payments required to be made in
connection therewith; and
WHEREAS, the parties hereto have agreed to amend the Credit
Agreement as set forth below in SECTION 1, subject to the terms and conditions
stated in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT. Effective as of
March 31, 2000, subject to the satisfaction of the conditions precedent set
forth in SECTION 3 hereof, SECTION 1.01 of the Credit Agreement is hereby
amended to add the following provision at the end of the definition of
"Borrowing Base" included therein:
For purposes of this definition during the period April 1, 2000 through
May 31, 2000, (A) the provisions of CLAUSE (V)(B)(2) shall not be
applicable to the calculation of the Borrowing Base and (B) the
Borrowing Base calculated in accordance with the foregoing shall be
reduced at all times by $12,000,000.
SECTION 2. WAIVER, CONSENT AND STANDSTILL.
2.1 The Issuing Bank and Lenders hereby waive the rights and
remedies afforded them under the Credit Agreement arising as a result of the
Borrowers' failure to make payments required under Section 2.02(a)(ii) and
Section 4.01(b)(iii) of the Credit Agreement during the period May 20, 1999
through March 31, 2000 and the Change of Control arising by virtue of the sole
Director of ASOC being Xxxx X. Xxxxx.
2.2 The Lenders hereby consent to the increase to $37,840,000
of the principal amount of the Indebtedness evidenced by the Series A Notes
issued by First Security Bank, National Association, as trustee under Aviation
Sales Trust 1998-1, a trust formed under the laws of the State of Florida
guaranteed pursuant to the terms of the TROL Guaranties and the concurrent
increase in obligations under the TROL Lease guaranteed pursuant to the terms of
the TROL Guaranties, and any increased Restricted Junior Payments required to be
made in connection therewith as more particularly described in Section 10.06(d).
2.3 The Lenders hereby agree, notwithstanding the existence of
the Continuing Defaults, to (a) make Revolving Loans as and when provided in
SECTION 2.02(A)(II) of the Credit Agreement from the date of this Amendment
through May 31, 2000 and (b) forbear from
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exercising any rights and remedies with respect to the Continuing Defaults
during the period commencing on the date of this Amendment through May 31, 2000,
in each instance, subject to the conditions set forth in SECTION 3 below.
2.4 The Issuing Bank hereby agrees, notwithstanding the
existence of the Continuing Defaults, to (a) issue Letters of Credit as and when
provided in SECTION 3.01 of the Credit Agreement from the date of this Amendment
through May 31, 2000 and (b) forbear from exercising any rights and remedies
with respect to the Continuing Defaults during the period commencing on the date
of this Amendment through May 31, 2000, in each instance, subject to the
conditions set forth in SECTION 3 below.
2.5 The Lenders and Issuing Bank hereby acknowledge and agree
that the Guaranty dated February 18, 2000 with respect to the Supplemental Term
Loan may be amended to add TIMCO Engineered Systems, Inc. as a guarantor
thereunder and that Liens may be granted to the Agent against the Capital Stock
and assets of such Subsidiary as security for the Supplemental Term Loan,
subordinated to the same extent provided in that certain Collateral Documents
Amendment attached as part of Exhibit A to Amendment No. 8 and Waiver to the
Credit Agreement dated as of February 18, 2000 ("Amendment No. 8").
2.6 Notwithstanding any agreement to the contrary in Amendment
No. 8, in the event any Net Cash Proceeds of Sale of the property identified on
Exhibit B to Amendment No. 8 is received on or before May 31, 2000, such Net
Cash Proceeds of Sale in the amount by which the Borrowing Base is reduced by
virtue of the related sale, transfer or other disposition shall thereupon be
applied to the Revolving Loans then outstanding as a Designated Prepayment
thereof and the balance, if any, of such Net Cash Proceeds of Sale shall be
remitted to the Agent to be held, in escrow until June 1, 2000, for application
on such date in accordance with the provisions of Section 2 of Amendment No. 8.
SECTION 3. CONDITIONS PRECEDENT.
3.1 This Amendment shall become effective as of March 31,
2000, if, and only if (1) the Agent shall have received:
(a) a facsimile or original executed copy of this Amendment executed by
the Parent, each Borrower, the Issuing Bank and Lenders;
(b) a plan and financial forecast consisting of a balance sheet, income
statement and statement of cash flows by month for the Fiscal Year
ending December 31, 2000, accompanied by a discussion of the underlying
assumptions with respect to each of the business segments referred to
as "Distribution", "Xxxxx Aerospace", "Aerocell", "Caribe", "Airframe
Maintenance/Engine Overhaul", "Apex", "Xxxxx-Xxxxx", and "Leasing"
prepared by Parent and the Borrowers, in form and substance
satisfactory to the Agent and Lenders;
(c) a plan and financial forecast for each of the Fiscal Years ending
December 31, 2001 and December 31, 2002, including forecasted
consolidated balance sheet, income statement, and statement of cash
flow for the Parent and its Subsidiaries for each such Fiscal Year;
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(d) projected cash flow statements of Parent and its Subsidiaries, by
week, for the period March 31 - May 31, 2000;
(e) an agreement executed and delivered by the respective parties to
the TROL Documents pursuant to which all events of default and defaults
under the TROL Documents and the rights and remedies of the parties
thereunder arising with respect thereto have been waived or an
agreement in form and substance satisfactory to the Agent with respect
to forbearance from exercising such rights and remedies (either such
agreement being referred to as the "TROL Standstill");
(f) an agreement executed and delivered by the parties to that certain
Term Loan Agreement dated June 5, 1998 among Norlease, Inc., Aviation
Sales SPS I, Inc., and Aviation Sales Company (the "Norlease
Agreement") pursuant to which all events of default thereunder and the
rights and remedies of the parties thereunder arising with respect
thereto have been waived or an agreement in form and substance
satisfactory to the Agent with respect to forbearance from exercising
such rights and remedies (either such agreement being referred to as
the "Norlease Standstill")
(g) guaranty and security agreements, UCC financing statements and
other instruments and documents executed by TIMCO Engineered Systems,
Inc., a newly formed Subsidiary of TIMCO in form and substance
satisfactory to the Agent, reaffirmation agreements from all
Guarantors, and an amended and restated contribution agreement among
the Guarantors in substantially the form heretofore entered into by and
among the Guarantors;
(h) an opinion of counsel to the Borrowers and Parent with respect to
non-contravention of the TROL Documents and agreements under which the
Senior Subordinated Notes have been issued, this Amendment and the
instruments and documents executed by the Borrowers and Guarantors in
connection herewith;
(i) corporate resolutions of the Parent, Borrowers and Guarantors
authorizing the execution and delivery of this Amendment and all
instruments and documents required to be executed and delivered in
connection herewith;
(j) a Borrowing Base Certificate dated as of March 24, 2000, but giving
effect to the amendment attendant thereto set forth in Section 1 of
this Amendment;
(k) all instruments and agreements required to perfect Liens against
all Property included on the March 24, 2000 Borrowing Base Certificate,
in proper form for recordation, signed by the appropriate Borrower, and
(l) the acknowledgement and agreement of Citicorp USA, Inc., as obligee
with respect to the Supplemental Term Loan, to the terms set forth in
Section 2.6 above.
(2) no "Event of Default" shall have occurred and be continuing under the terms
of the Indenture under which the Senior Subordinated Notes have been issued, as
supplemented through the date of this Amendment, and (3) no "Change of Control"
(as defined in such Indenture) shall have occurred.
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3.2 The agreements of the Lenders and Issuing Bank set forth
in Sections 2.3 and 2.4 above shall be subject to each of the following
conditions:
(a) no Event of Default other than the Continuing Defaults shall exist
on the date of this Amendment and no Potential Event of Default or
Event of Default, other than the Continuing Defaults, shall occur on or
after the date hereof;
(b) on the date hereof, the Borrowers pay to the Agent, for the benefit
of the Lenders, a fee in consideration of their executing and
delivering this letter, in the amount of one-quarter of one percent
(0.25%) of the Revolving Credit Commitments in effect on the date
hereof, which fee shall be shared by the Lenders in accordance with
their respective Pro Rata Shares;
(c) on the date hereof, the Borrowers reimburse the Agent for the
expenses identified on SCHEDULE 2 attached hereto and made a part
hereof;
(d) for so long as the Continuing Defaults continue unwaived, the
Borrowers pay interest on the Obligations at the rate applicable
pursuant to Section 5.01(c) of the Credit Agreement;
(e) from and after the date of this Amendment, Parent and the Borrowers
continue to use their best efforts, in good faith, to either (a)
provide the Agent and Lenders with results of due diligence sufficient
to permit an amendment of the Credit Agreement and continued provision
of financial accommodations thereunder or (b) refinance or restructure
the Obligations by May 31, 2000;
(f) the Borrowers continue provision of weekly cash flow projections to
the Agent and Lenders on Friday of each calendar week from and after
the date of this Amendment through May 26, 2000;
(g) no events of default or defaults under the TROL Documents or
Norlease Agreement in addition to those described in and subject to the
agreements set forth in the TROL Standstill and Norlease Standstill,
respectively, shall occur on or after the date of this Amendment;
(h) no "Event of Default" shall have occurred and be continuing under
the terms of the Indenture under which the Senior Subordinated Notes
have been issued, as supplemented through the date of this letter, and
no "Change of Control" (as defined in such Indenture) shall have
occurred;
(i) the Financial Statements described in SECTION 8.01(C) for the
Fiscal Year ending December 31, 1999 together with the report of Xxxxxx
Xxxxxxxx LLP on such Financial Statements, which report shall not be
materially different, as determined by the Agent, from that represented
to be expected by the Parent and Borrowers to the Agent and Lenders at
the meeting held in New York, New York on March 17, 2000 shall have
been delivered to the Agent and Lenders by no later than April 15, 2000
or the Requisite Lenders shall have agreed in writing to an extension
of such delivery date;
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(j) by no later than April 15, 2000, all Collection Account Agreements
and landlord/bailee/consignee letters required by the Agent shall have
been executed and delivered to the Agent and an insurance report and
off-site inventory report reflecting the information required by
SECTION 8.06 and SECTION 8.02, respectively, as of April 15, 2000 shall
have been delivered to the Agent; and
(k) the Borrowers and their Subsidiaries shall not have made Capital
Expenditures during the period (i) March 31 - May 31, 2000, in excess
of $2,500,000 in the aggregate or (ii) January 1 - May 31, 200, in
excess of $10,070,000 in the aggregate.
SECTION 4. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENT. The
Borrowers hereby represent and warrant as follows:
4.1 This Amendment and the Credit Agreement as previously
executed and delivered and as amended hereby constitute legal, valid and binding
obligations of the Borrowers and are enforceable against the Borrowers in
accordance with their terms.
4.2 After giving effect to this Amendment, no Event of Default
or Potential Event of Default other than the Continuing Defaults exists or would
result from any of the transactions contemplated by this Amendment. No event of
default or default has occurred and is continuing under the terms of any of the
TROL Documents, except as described in the TROL Standstill, or under the terms
of the Norlease Agreement, except as described in the Norlease Standstill,
copies of which TROL Standstill and Norlease Standstill are attached hereto as
EXHIBIT A and made a part hereof, or any of the agreements and documents
executed with respect to the Senior Subordinated Notes or under which the Senior
Subordinated Notes have been issued. The Borrowers hereby acknowledge that the
Agent, Lenders and Issuing Bank have reserved all rights with respect to the
Continuing Defaults, subject only to the agreement of the Lenders and Issuing
Bank to continue providing financing accommodations under the Credit Agreement
during the period and on the conditions set forth in this Amendment.
4.3 Upon the effectiveness of this Amendment and subject to
the existence of the Continuing Defaults, each Borrower hereby reaffirms all
covenants, representations and warranties made by it in the Credit Agreement to
the extent the same are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been remade as of the
date this Amendment becomes effective (unless a representation and warranty is
stated to be given on and as of a specific date, in which case such
representation and warranty shall be true, correct and complete as of such
date).
SECTION 5. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
5.1 Upon the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import shall mean and be a reference to the Credit Agreement, as
amended hereby, each reference to the Credit Agreement in any other document,
instrument or agreement executed and/or delivered in connection with the Credit
Agreement shall mean and be a reference to the Credit Agreement as amended
hereby.
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5.2 Except as specifically amended or agreed above, the Credit
Agreement, the Notes and all other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
5.3 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of any
Lender or Issuing Bank or the Agent under the Credit Agreement, the Notes or any
of the other Loan Documents, nor constitute a waiver of any provision contained
therein, except as specifically set forth herein.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument. Delivery of an executed counterpart of this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
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SECTION 7. GOVERNING LAW. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 8. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the date first above written.
CITICORP USA, INC. XXXXXX FINANCIAL, INC.
as Agent and Lender
__________________________ By__________________________
Name: Name:
Title: Title:
NATIONAL CITY COMMERCIAL CITIBANK, N.A.
FINANCE, INC. as Issuing Bank
By____________________________ By__________________________
Name: Name:
Title: Title:
FIRST UNION COMMERCIAL SALOMON BROTHERS HOLDING
CORPORATION COMPANY, INC.
By___________________________ By__________________________
Name: Name:
Title: Title:
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IBJ WHITEHALL BUSINESS CREDIT BANKBOSTON, N.A.
CORPORATION
By__________________________ By__________________________
Name: Name:
Title: Title:
SUNTRUST BANK, MIAMI, N.A. BANKATLANTIC
By_________________________ By_________________________
Name: Xxx X. Xxxxxx
Title: Senior Vice President
THE INTERNATIONAL BANK OF NATIONAL BANK OF CANADA
MIAMI, N.A. A Canadian Chartered Bank
By_________________________ By_________________________
Xxxxxxx X. Xxxxxxxxx Xxx Xxxxxxxxx
Vice President Vice President
Trade Finance Division
By_________________________
Xxxxxxx X. Xxxxxxxxxxx
Vice President & Manager
MERCANTILE BUSINESS CREDIT, INC. CITIZENS BUSINESS CREDIT
COMPANY
By_________________________ By_________________________
Xxxxxx X. Xxxxxxxx Xxxx Xxxxxxxxx
Assistant Vice President Vice President
AMSOUTH BANK PNC BANK NATIONAL ASSOCIATION
By__________________________ By_________________________
Name: Name:
Title: Title:
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AVIATION SALES DISTRIBUTION AEROCELL STRUCTURES, INC.
SERVICES COMPANY
By___________________________ By________________________
Name: Name
Title: Title:
AVS/XXXXX-XXXXX MACHINE COMPANY WHITEHALL CORPORATION
By___________________________ By________________________
Name: Name
Title: Title:
TRIAD INTERNATIONAL MAINTENANCE APEX MANUFACTURING, INC.
CORPORATION
By___________________________ By________________________
Name: Name
Title: Title:
AIRCRAFT INTERIOR DESIGN, INC. CARIBE AVIATION, INC.
By___________________________ By________________________
Name: Name
Title: Title:
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AVIATION SALES COMPANY AVIATION SALES LEASING COMPANY
By__________________________ By________________________
Name: Name
Title: Title:
TIMCO ENGINE CENTER, INC.
By__________________________
Name:
Title:
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