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EXHIBIT 99.1
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (the "AGREEMENT") dated as of February 2,
2001, relating to the Credit Agreement referenced below, is by and among AVTEAM,
INC., a Florida corporation, the Subsidiaries of the Borrower identified as
Guarantors on the signature pages hereto, the Lenders identified herein, and
Bank of America, N.A., a national banking association, successor to NationsBank,
N.A., as Administrative Agent. Terms used herein but not otherwise defined
herein shall have the meanings provided to such terms in the Credit Agreement.
RECITALS
A. A $70 million credit facility has been extended pursuant to the
terms of that Credit Agreement dated as of April 30, 1998 (as amended and
modified prior to the date hereof, the "CREDIT AGREEMENT") among the Borrower,
the Subsidiaries of the Borrower identified as Guarantors therein, the Lenders
identified therein, and NationsBank, N.A. (predecessor to Bank of America,
N.A.), as Administrative Agent.
B. The Borrower has been and remains in default of: (i) each of the
Financial Covenants set forth in paragraphs 7.9(b), 7.9(c), 7.9(d), 7.9(f) and
7.9(g) of the Credit Agreement; (ii) paragraph 5 of the Third Amendment to the
Credit Agreement requiring the payment on or before January 31, 2001 of the
balance of the Amendment Fee in the amount of $75,000; (iii) the interest
payment due January 31, 2001 in the amount of $579,736.48; and (iv) the
principal payment due on January 31, 2001 in the amount of $750,000, thereby
resulting in the occurrence of Events of Default under the terms of the Credit
Agreement which have not been cured.
C. Lenders have the right to accelerate the maturity of the Obligations
and demand payment in full of all amounts due thereunder, although they have not
done so to date.
D. As of January 31, 2001, the principal balance on the Obligations
totals $64,610,372.57, in addition to which Lenders are owed interest as of
January 31, 2001 in the amount of $579,736.48 and certain legal and accounting
fees and other expenses incurred by the Lenders.
E. The Borrower and the Guarantors have requested that the Lenders
forbear from: (i) enforcing the terms of the Credit Agreement and the other
Credit Documents pending Borrowers attempt to sell certain of its assets and
apply the proceeds to the Obligations as part of a plan to restructure the
Borrower's business; (ii) exercising their rights and remedies under the Credit
Documents in light of the Events of Default now existing thereunder; and (iii)
collecting the sums due Lenders described in Recital B above, and interest and
principal payments that otherwise will become due and payable during the
Forbearance Period as defined below.
F. Lenders are willing to so forbear only if certain assets of Borrower
are sold in a timely fashion.
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G. Borrower and Guarantors have agreed that the terms and conditions of
this Agreement are reasonably calculated to protect the Lenders' position.
H. The requested forbearance requires the consent of the Lenders.
I. The Lenders have consented to the forbearance requested by the
Borrower and the Guarantors on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing Recitals, all of
which Recitals the Credit Parties acknowledge are true and correct, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. INCREASED ROLE FOR FINANCIAL ADVISOR. On or before February 9, 2001,
the Borrower shall select, and retain through the Forbearance Period defined
below, a Financial Advisor ("ADVISOR") that is acceptable to the Administrative
Agent in its sole discretion to direct the restructuring of the Borrower's and
its Subsidiaries' business affairs. Advisor will provide to the Administrative
Agent and the Lenders with respect to Borrower and its Subsidiaries: (i)
Borrowing Base Reports on a weekly basis, (ii) consolidated and consolidating
financial statements compared to budget on a monthly basis, (iii) on a weekly
basis, forward-looking cash flow projections for the succeeding 13-week period,
and (iv) such other reports and information as shall be requested from time to
time by the Administrative Agent.
2. ROLE FOR INVESTMENT BROKER. Notwithstanding the retention of an
Advisor, the Administrative Agent and the Lenders agree that the Borrower and
its Subsidiaries may continue to perform under that certain engagement agreement
dated December 21, 2000 by and between Seabury Securities LLC, a NASD registered
broker-dealer ("Seabury") and AVTEAM, Inc. (the "Company") (the "Engagement
Agreement") in which Seabury shall serve as the exclusive financial advisor to
pursue strategic alternatives available to the Company including, but not
limited to (i) a sale of the Company in whole or in part; (ii) an equity
participation in the Company; (iii) a joint-venture arrangement with a strategic
partner and/or (iv) a divestiture of one or more of its wholly-owned
subsidiaries.
3. DISPOSITION OF PROCEEDS OF SALE OF AIRCRAFT ENGINES.
(a) Twenty-five percent (25%) of the proceeds, net of direct
expenses of sale, from the sale of all aircraft engines included in the
Borrowing Base shall be paid to the Administrative Agent in reduction of the
Obligations as and when such proceeds are received.
(b) Fifty percent (50%) of the proceeds, net of direct
expenses of sale, from the sale of all owned aircraft engines which are not
included in the Borrowing Base shall be paid to the Administrative Agent in
reduction of the Obligations as and when such proceeds are received.
(c) Fifty percent (50%) of any commission due Borrower from
the sale of any and all engines consigned to Borrower or any Subsidiary shall be
paid to the Administrative Agent in reduction of the Obligations as and when
such proceeds are received.
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4. INTERIM PAYMENT; APPLICATION. On or before February 28, 2001,
Borrower will make a payment to the Lenders in reduction of the Obligations in
an amount equal to the amount, if any, by which $350,000 exceeds the amount
theretofore paid to Lenders pursuant to the provisions of paragraph 3 above. All
payments made from the proceeds of aircraft engine sales or otherwise shall be
applied as provided in Section 3.14(b) of the Credit Agreement.
5. EXCLUSION OF AIRCRAFT ENGINES FROM BORROWING BASE. Any aircraft
engines which were not included in the Borrowing Base as reflected in the last
Borrowing Base Report delivered to the Administrative Agent prior to the date of
this Agreement shall not be included in the Borrowing Base in the future.
6. FORBEARANCE PERIOD.
(a) The Forbearance Period shall commence on February 2, 2001
and end on March 31, 2001 subject to earlier termination in the sole discretion
of the Lenders in the event of the occurrence of an Additional Default as
defined herein.
(b) As used herein, the term "ADDITIONAL DEFAULT" means the
failure of the Borrowers to comply with any of the provisions of this Agreement
during the Forbearance Period or the occurrence of an Event of Default (other
than a financial covenant default or payment default) under the Credit
Agreement.
7. LENDERS FORBEARANCE. During the Forbearance Period, but not
thereafter, the Lenders shall:
(a) Defer collection of interest on the line of credit loans
(including interest due on January 31, 2001); provided, however, the interest
rate accruing after January 31, 2001 shall be at the Default Rate specified in
the Credit Agreement; provided further, however, that if no Additional Default
shall have occurred and be continuing, such Default Rate shall be replaced,
retroactive to the beginning of the Forbearance Period (with any necessary
adjustment being made in the interest paid or accrued during the Forbearance
Period), with the non-default interest rate that would have been in effect
during Forbearance Period under the Credit Agreement.
(b) Forbear from instituting proceedings or taking any other
action to collect the $750,000 principal payment and the $75,000 Amendment Fee
both due on January 31, 2001, accelerate the Obligations, or enforce any of
their other rights and remedies under the Loan Documents.
8. NO WAIVER OF DEFAULTS. Lenders are not waiving any defaults that
existed on January 31, 2001 or that occurred or exist thereafter. After the
expiration of the Forbearance Period, if any Event of Default exists, the
Administrative Agent and the Lenders shall be entitled to exercise all their
rights and remedies under the Credit Agreement and the other Credit Documents,
foreclose their security interests in the Collateral, and take any further
action authorized under the provisions of the Credit Agreement.
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9. AUTOMATIC STAY WAIVER, ETC.. The Credit Parties hereby agree that,
in consideration for the Lenders' entry into this Agreement and the other
agreements made in the prior Amendments to the Credit Agreement and the other
agreements made herein, in the event that any Borrower or Guarantor shall (i)
file with any Bankruptcy Court of competent jurisdiction or be the subject of
any petition under Title 11 of the U.S. Code, as amended ("BANKRUPTCY CODE"),
(ii) be the subject of any order for relief issued under the Bankruptcy Code,
(iii) be the subject of any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future federal or state act or law relating to bankruptcy,
insolvency, or other relief for debtors, (iv) have sought or consented to or
acquiesced in the appointment of any trustee, receiver, conservator, or
liquidator, or (v) be the subject of an order, judgment or decree entered by any
court of competent jurisdiction approving a petition filed against Credit
Parties for any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future federal
or state act or law relating to bankruptcy, insolvency or relief for debtors,
then, subject to court approval, the Administrative Agent and Lenders shall
thereupon be entitled, and the Borrower and Guarantors hereby irrevocably
consent to and agree to stipulate to, relief from any automatic stay imposed by
Section 362 of the Bankruptcy Code, or otherwise, on or against the exercise of
the rights and remedies otherwise available to Lenders as provided in the Credit
Agreement and the other Credit Documents, and as otherwise provided by law; and
provided, however, that such waiver of the automatic stay shall apply only to
all engine parts and airframe parts owned by the Credit Parties, and shall not
apply to all engines or all other assets necessary to the operation of the
Credit Parties' Maintenance Repair and Overhaul Business, and Credit Parties
hereby irrevocably waive any rights to object to such relief. This covenant is a
material inducement for Lenders to accept this Agreement. The foregoing
paragraph 9 of this Agreement shall survive and remain in full force and effect
notwithstanding the expiration of the Forbearance Period or the termination of
this Agreement prior to the expiration of the Forbearance Period.
10. EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective as of
the date hereof upon the last to occur of (i) it being executed and delivered by
the Borrower to the Administrative Agent, (ii) the execution and delivery to the
Administrative Agent of counterpart copies hereof executed by the Required
Lenders, and (iii) receipt by the Administrative Agent of evidence of payment of
all fees and expenses of the Administrative Agent in connection with this
Agreement.
11. NO OTHER AMENDMENTS. Except as modified hereby, all of the terms
and provisions of the Credit Agreement and the other Credit Documents (including
schedules and exhibits thereto) shall remain in full force and effect.
12. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES. Each Credit Party
hereby represents and warrants that (a) after giving effect to this Agreement,
each of the representations and warranties contained in the Credit Agreement and
the other Credit Documents are true and correct as of the date hereof (except
those which expressly relate to an earlier period), (b) except as set forth on
SCHEDULE 1 to this Agreement, no Credit Party is in default under or with
respect to any Contractual Obligation (including, without limitation, any
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Operating Lease or any Capital Lease), and (c) no Credit Party has any claims,
counterclaims, offsets or defenses to the Credit Documents and the performance
of its obligations thereunder, including but not limited to the repayment of the
Obligations.
13. ACKNOWLEDGMENT AND CONSENT OF GUARANTORS; REAFFIRMATIONS. Each of
the Guarantors (i) acknowledges and consents to all of the terms and conditions
of this Agreement, (ii) affirms all of its obligations under the Credit
Documents and (iii) agrees that this Agreement and all documents executed in
connection herewith do not operate to reduce or discharge the Guarantors'
obligations under the Credit Agreement or the other Credit Documents.
14. RELEASE OF ADMINISTRATIVE AGENT AND LENDERS. In consideration of
the Lenders' willingness to enter into this Agreement, each of the Credit
Parties hereby releases the Administrative Agent, the Lenders, and the
Administrative Agent's and the Lender's respective officers, employees,
representatives, agents, counsel, trustees and directors from any and all
actions, causes of action, claims, demands, damages and liabilities of whatever
kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected, to the extent that any of the foregoing arises from any action or
failure to act on or prior to the date of this Agreement.
15. EXPENSES OF ADMINISTRATIVE AGENT. The Borrower agrees to pay upon
demand all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, execution and delivery of this Agreement,
including without limitation the reasonable fees and expenses of Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxxx Xxxxxxxx & Xxxxxxxxx, P.A. Notwithstanding any provision herein
to the contrary, Borrower remains obligated to pay when due all of the
professional fees and expenses incurred by the Administrative Agent and the
Lenders as set forth in paragraph 6 of the Fourth Amendment to the Credit
Agreement.
16. INTREGATION. Each of the parties agree that this Agreement reflects
the complete understanding of the parties, and supercedes any and all prior
drafts of this Agreement, none of which prior drafts or other writings relating
to this Agreement shall be admissible in any court in any case or proceeding to
evidence the intention of any of the parties in making this Agreement.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
18. GOVERNING LAW. This Agreement shall be deemed to be a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of Florida.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Forbearance Agreement to be duly executed and delivered as of the date
first above written.
BORROWER: AVTEAM, INC.
-------- a Florida corporation
By:
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Name:
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Title:
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GUARANTORS: AVTEAM AVIATION FIELD SERVICES, INC.
---------- a Florida corporation
By:
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Name:
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Title:
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LENDERS: BANK OF AMERICA, N.A., a national banking
------- association formerly known as NationsBank, N.A.,
individually in its capacity as a Lender and in its
capacity as Administrative Agent
By:
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Name:
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Title:
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[Lenders' signatures continue on following page]
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SOUTHTRUST BANK
By:
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Name:
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Title:
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NATIONAL CITY BANK
By:
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Name:
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Title:
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NATIONAL BANK OF CANADA
By:
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Name:
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Title:
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BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
By:
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Name:
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Title:
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XXXXXXX X. XXXXX & SONS SPECIAL SITUATION PARTNERS,
L.P.
(by assignment from CITIZENS BANK OF MASSACHUSETTS,
as successor to USTRUST)
By:
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Name:
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Title:
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BANK LEUMI LE-ISRAEL B.M. MIAMI AGENCY
By:
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Name:
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Title:
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SCHEDULE 1 TO FORBEARANCE AGREEMENT
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