Exhibit 10.37
FLEET NATIONAL BANK
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
June 27, 2002
Mercury Air Group, Inc.
0000 XxXxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, Chief Financial Officer
Re: Limited Waiver and Consent regarding Sale
Dear Xx. Xxxxxx:
Reference is hereby made to that certain Revolving Credit and Term Loan
Agreement dated as of March 2, 1999 (as amended, modified, supplemented or
restated and in effect from time to time, the "Credit Agreement") by and among
(a) Mercury Air Group, Inc., a Delaware corporation having its principal place
of business at 0000 XxXxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the
"Borrower"), (b) Fleet National Bank (f/k/a BankBoston, N.A.), a national
banking association, as agent (in such capacity, the "Agent") for itself and the
other Banks referred to below, and (c) Fleet National Bank and the other
financial institutions from time to time parties thereto (collectively, the
"Banks"). Capitalized terms used in this letter agreement shall have the
respective meanings assigned to such terms in the Credit Agreement, unless
otherwise defined in this letter agreement.
The Borrower has notified the Agent that it has entered into an Asset
Purchase Agreement (the "Asset Purchase Agreement") dated June 27, 2002 with
Signature Flight Support Corporation ("Signature Flight"), a Delaware
corporation. Pursuant to the terms of the Asset Purchase Agreement, the Borrower
has agreed to sell the "Purchased Assets" (as such term is defined in the Asset
Purchase Agreement) to Signature Flight for the minimum consideration of
$15,500,000 to be used by the Borrower as set forth in this letter agreement
(the "Sale Transaction"). The Borrower has requested that the Agent and the
Banks consent to the Sale Transaction as contemplated by the Asset Purchase
Agreement and waive any defaults which may otherwise be occasioned thereby, to
the limited extent necessary to allow the Sale Transaction. The Agent and the
Banks have agreed to do so, but only upon the terms and conditions contained in
this letter agreement.
1. Subject to the terms and conditions contained herein, and upon the
satisfaction of each of the conditions set forth below, and to the
extent required by the terms of the Credit Agreement, the Agent and
each of the Banks hereby consent to the Sale Transaction as
contemplated by the terms and conditions of the Asset Purchase
Agreement and waive any defaults which may otherwise be occasioned
thereby, to the limited extent necessary to allow the Sale
Transaction.
2. The limited consent and waivers set forth in this letter agreement
shall not be effective until the complete satisfaction of each of
the following conditions, each in form and substance satisfactory to
the Agent:
(a) The Agent's receipt of five (5) original counterpart signature
pages to this letter
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agreement, duly executed and delivered by the Banks, the
Borrower and each of the Guarantors;
(b) The Agent's receipt from the Borrower of Net Proceeds (as
defined below) from the Sale Transaction in the minimum amount
of $15,050,000 to be applied in reduction of the Obligations
as set forth in this letter agreement; and
(c) The Borrower shall have executed and delivered to the Agent
copies, certified by an officer of the Borrower as true,
correct and complete copies, of the Asset Purchase Agreement
and all other documents executed by either the Borrower and/or
Signature Flight in connection with the Sale Transaction.
3. The Borrower hereby covenants and agrees as follows:
(a) That the Borrower shall cause Signature Flight to remit the
proceeds from the Sale Transaction, net of closing costs and
expenses as set forth on the Sources and Uses Schedule
attached hereto as EXHIBIT "A" (the "Net Proceeds"), directly
to the Agent using the wire transfer instructions set forth on
EXHIBIT "B" attached hereto;
(b) The Borrower hereby instructs the Agent to apply the Net
Proceeds as follows:
(i) The amount of $11,520,000 of the Net Proceeds shall be
applied by the Agent in prepayment of the Acquisition
Loans. The Borrower hereby confirms that, in accordance
with Section 6.1 of the Credit Agreement, such
prepayment shall be a permanent payment and shall not be
available for reborrowing, and the Total Acquisition
Loan Commitment shall be automatically reduced by the
amount of such prepayment.
(ii) The remaining amount of the Net Proceeds (namely,
$3,530,000, which amount shall be referred to as the
"Remaining Net Proceeds") shall be held by the Agent as
additional cash Collateral. After such time as the
Borrower has established a demand deposit account (the
"DDA") with the Agent, which the Borrower shall
establish by no later than July 3, 2002, the Agent shall
deposit the Remaining Net Proceeds into the DDA.
Further, to secure the prompt, punctual, and faithful
performance of all and each of the Obligations, the
Borrower hereby grants to the Agent, for the ratable
benefit of the Banks and the Agent, a security interest
in and to, and assigns, pledges, and delivers to the
Agent, for the ratable benefit of the Banks and the
Agent, the DDA and any and all replacements, additions,
and substitutions thereto, and all funds, products,
proceeds, substitutions, additions, income (including,
without limitation, all interest), and other
distributions in respect thereto, and all books,
records, and papers relating to same (all of which is
referred to hereinafter as the "DDA Collateral"). The
Banks agree that the Borrower may withdraw all or a
portion of the DDA Collateral for the sole purpose of
satisfying any capital gains taxes which may become due
and owing by the Borrower as a result of the Sale
Transaction, provided, however, that the Borrower's
ability to withdraw
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any amounts from the DDA Collateral is expressly
conditioned upon each of the following:
(1) No Default or Event of Default has occurred under
the Credit Agreement or any of the other Loan
Documents;
(2) The Borrower has provided the Agent with a written
request to make a withdrawal from the DDA
Collateral, which written request shall contain a
detailed description of the capital gains taxes
which are due and payable, together with a
certification executed by the principal financial
or accounting officer of the Borrower that no
Default or Event of Default has occurred or is
continuing; and
(3) The Borrower has provided the Agent with evidence,
in form and substance satisfactory to the Agent,
in its sole discretion, supporting the written
request referred to in clause (2) above.
(iii) Notwithstanding anything to the contrary contained in
clause (ii) above, in the event that the Borrower fails
to establish the DDA as required by the terms of clause
(ii) above, then the Agent shall have the right, in its
sole discretion, to apply the Remaining Net Proceeds in
reduction of the Acquisition Loans, as set forth in
clause (i) above.
(c) Within three (3) Business Days from the date of this letter
agreement, the Borrower shall execute and deliver to the Agent
a pledge and security agreement (the "DDA Pledge Agreement")
in favor of the Agent, for the ratable benefit of the Banks
and the Agent, to confirm the pledge and grant of a security
interest in and to the DDA Collateral. The DDA Pledge
Agreement shall be in form and substance satisfactory to the
Agent in its sole discretion.
(d) The Borrower acknowledges and agrees that this letter
agreement is being entered into by the Agent and the Banks in
reliance upon the terms of the Asset Purchase Agreement
previously delivered to the Agent by the Borrower, a copy of
which is attached hereto as EXHIBIT "C". Accordingly, the
Borrower covenants and agrees that the Borrower shall not
modify, amend or waive any term or condition of the Asset
Purchase Agreement without the prior written consent of the
Agent.
4. The Borrower hereby acknowledges and agrees that the failure of the
Borrower to comply with any of the covenants and agreements of the
Borrower contained in this letter agreement shall constitute and
immediate Event of Default under the terms of the Credit Agreement.
5. The Borrower hereby acknowledges and agrees that nothing contained
herein shall be deemed to constitute a representation or warranty of
the Agent and/or the Banks that any of the representations,
warranties, covenants and agreements of the Borrower contained in
the Asset Purchase Agreement are true and accurate or will or can be
fulfilled by the Borrower.
6. The Agent and the Banks agree that upon the Agent's determination
that each of the conditions to the effectiveness of this letter
agreement (as set forth in Paragraph 2, above)
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have been satisfied, all liens and encumbrances which the Agent and
the Banks may have in and to the Purchased Assets shall be released
and terminated and, at the Borrower's sole cost and expense, the
Agent shall deliver such UCC-3 Amendments and other documents as may
be reasonably requested by the Borrower necessary to evidence such
release and termination.
7. The limited waivers and consent contained in this letter agreement
are limited strictly to their respective terms, shall apply only to
the specific matters and events described herein, shall not extend
to or affect any of the Borrower's or the Guarantors' other
obligations contained in the Credit Agreement or any other Loan
Document. Except as expressly set forth herein, nothing contained
herein shall be deemed to be a waiver of, or shall in any way impair
or prejudice, any rights of the Agent or the Banks under the Credit
Agreement or any other Loan Document. Nothing contained herein shall
be construed as a willingness on the part of the Agent and the Banks
to grant any similar or other future consent or limited waivers.
8. The Borrower and the Guarantors each acknowledge and agree that (i)
neither the Borrower nor the Guarantors have any claim or cause of
action of any kind against any of the Banks or the Agent (or any of
their respective directors, officers, employees, agents or
affiliates); (ii) neither the Borrower nor the Guarantors have any
offset right, counterclaim or defense of any kind against any of
their respective obligations, indebtedness or liabilities owed to
any of the Banks or the Agent; and (iii) each of the Banks and the
Agent have heretofore performed and satisfied in a timely manner all
of their obligations to either the Borrower and/or the Guarantors.
In order to eliminate any possibility that any past conditions,
acts, omissions, events, circumstances or matters would impair or
otherwise adversely affect any of the Banks' or the Agent's rights,
interests, contracts, collateral security or remedies, the Borrower
and the Guarantors each hereby unconditionally release, waive and
forever discharge (A) any and all liabilities, obligations, duties,
promises or indebtedness of any kind of any of the Banks or the
Agent to either of them, and (B) all claims, offsets, causes of
action, suits or defenses of any kind whatsoever (if any), whether
known or unknown, which either of them might otherwise have against
any of the Banks or the Agent or any of their respective directors,
officers, employees, agents or affiliates for their respective
actions or omissions occurring prior to the date hereof, in either
case (A) or (B) above, on account of any condition, act, omission,
event, contract, liability, obligation, indebtedness, claim, cause
of action, defense, circumstance or matter of any kind whatsoever
which existed, arose or occurred at any time prior to the date
hereof.
9. This letter agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
instrument. THIS LETTER AGREEMENT SHALL BE AN INSTRUMENT UNDER SEAL
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OR CHOICE OF LAW).
Page 4
Kindly acknowledge the Borrower's and the Guarantors' agreement with the
terms and conditions of this letter agreement by signing where indicated below
and returning five (5) original counterpart signatures pages of this letter
agreement to the Agent.
FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.),
as Agent and as a Bank
By:
-------------------------------
Name:
Title:
UNITED CALIFORNIA BANK
(f/k/a Sanwa Bank California)
By:
-------------------------------
Name:
Title:
GE CAPITAL CFE, INC.
By:
-------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
-------------------------------
Name:
Title:
Accepted and Agreed to by the Borrower
and the Guarantors:
MERCURY AIR GROUP, INC.
By:
-----------------------
Name:
Title:
MAYTAG AIRCRAFT CORPORATION
By:
-----------------------
Name:
Title:
MERCURY AIR CARGO, INC.
Page 5
By:
-----------------------
Name:
Title:
MERCURY ACCEPTANCE CORPORATION
By:
-----------------------
Name:
Title:
EXCEL CARGO, INC.
By:
-----------------------
Name:
Title:
MERCURY AIR CENTERS, INC.
(f/k/a Xxxxxxx Flying Service, Inc.)
By:
-----------------------
Name:
Title:
AEG FINANCE CORPORATION
By:
-----------------------
Name:
Title:
JUPITER AIRLINE AUTOMATION SERVICES, INC.
(f/k/a RPA Airline Automation Services, Inc. and
Xxxx Xxxxx and Associates, Inc.)
By:
-----------------------
Name:
Title:
HERMES AVIATION, INC.
Page 6
By:
-----------------------
Name:
Title:
VULCAN AVIATION, INC.
By:
-----------------------
Name:
Title:
MERCFUEL, INC.
By:
-----------------------
Name:
Title:
Page 7
EXHIBIT "A"
MERCURY AIR GROUP, INC.
BEDFORD FBO SALE
SOURCES AND USES STATEMENT
ESTIMATED AS JUNE 28, 2002
(all amounts in thousands of dollars)
SOURCES AND USES
--------------------------------------------------------------------------------
Source of Funds Uses of Funds
Bedford FBO Sale 15,500 Bedford Closing Costs 0
Hold Back Escrow 250
Massport Fee 200
Bedford Taxes 3,530
Fleet Debt Reduction 11,520
------ ------
Total Sources 15,500 Total Uses 15,500
====== ======
EXHIBIT "B"
WIRE TRANSFER INSTRUCTIONS
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ABA #: 000000000
BANK NAME: FLEET NATIONAL BANK
CITY: BOSTON
STATE: MASSACHUSETTS
ACCOUNT NUMBER: 151035241515
ACCOUNT NAME: AGENCY SERVICES WIRE SUSPENSE
REF: MERCURY AIR GROUP 31073133
ATTENTION: AGENCY SERVICES - NEW YORK
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