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EXHIBIT 10.38
FOURTH AMENDMENT
This FOURTH AMENDMENT dated as of November 14, 2000 (this "Amendment"),
is made by and among (a) MERCURY AIR GROUP INC., a New York corporation (the
"Borrower"), having its principal place of business at 0000 XxXxxxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, (b) the direct and indirect Subsidiaries of the
Borrower listed as Guarantors on the signature pages hereto (the "Guarantors"),
(c) FLEET NATIONAL BANK (formerly known as BankBoston, N.A.), a national banking
association, as agent (in such capacity the "Agent") for the Banks referred to
below; and (d) FLEET NATIONAL BANK and the other financial institutions from
time to time parties to the Credit Agreement referred to below (collectively,
the "Banks"). Terms defined in the Credit Agreement referred to below that are
not otherwise defined herein shall have the respective meanings assigned to such
terms in the Credit Agreement.
WHEREAS, the Borrower, the Banks and the Agent are parties 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"); and
WHEREAS, the Borrower has requested that the Credit Agreement be amended
in order to provide, among other things, that (i) following a Permitted
Acquisition certain financial covenants be calculated on a Pro Forma Basis, (ii)
usage of the revolving credit facility be measured against a borrowing base, and
(iii) the compliance levels of certain financial covenants be adjusted; and
WHEREAS, the Agent and the Banks have agreed, subject to the terms and
conditions set forth in this Amendment, to an amendment to provide for such
changes;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the
satisfaction of the conditions set forth in Section 4 below, the Credit
Agreement is hereby amended as follows:
(a) Amendment to Definitions. Section 1.1 of the Credit Agreement is
hereby amended by inserting therein the following new definitions in the
appropriate place in the alphabetical order:
"Accounts Receivable. All rights of the Borrower or any of its
Domestic Subsidiaries to payment for goods sold, leased or otherwise
marketed in the ordinary course of business and all rights of the
Borrower or
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any of its Domestic Subsidiaries to payment for services rendered in the
ordinary course of business and all sums of money or other proceeds due
thereon pursuant to transactions with account debtors, as recorded on
books of account in accordance with generally accepted accounting
principles; provided that upon the occurrence of the Upgrade Date there
shall be excluded from Accounts Receivable that portion of the sum of
money or other proceeds due thereon that relate to sales, use or
property taxes in conjunction with such transactions."
"Borrowing Base. At the relevant time of reference thereto, an
amount determined by the Agent by reference to the most recent Borrowing
Base Report delivered to the Banks and the Agent pursuant to Section
12.4(k), which is equal to:
(a) eighty percent (80%) of Eligible Accounts Receivable for
which invoices (on the Borrower's or the applicable Domestic
Subsidiary's standard payment terms) have been issued and are
payable; minus
(b) the Tax Reserve then in effect."
"Borrowing Base Report. A Borrowing Base Report signed by the chief
financial officer of the Borrower and in substantially the form of
Exhibit E hereto."
"Eligible Accounts Receivable. The aggregate of the unpaid portions
of Accounts Receivable (net of any credits, rebates, offsets, holdbacks
or other adjustments or commissions payable to third parties that are
adjustments to such Accounts Receivable) (i) that the Borrower
reasonably and in good faith determines to be collectible unless the
Agent determines in its discretion that any such Account Receivable is
not collectible; provided that if determined not to be collectible, such
Accounts Receivable may be included to the extent insured by insurance
naming the Agent as loss payee; (ii) that are with account debtors or
other obligors that (A) are not Affiliates of the Borrower or any of its
Subsidiaries, (B) purchased the goods or services giving rise to the
relevant Account Receivable in an arm's length transaction, (C) are not
insolvent or involved in any case or proceeding, whether voluntary or
involuntary, under any bankruptcy, reorganization, arrangement,
insolvency, adjustment of debt, dissolution, liquidation or similar law
of any jurisdiction and (D) are, in the Agent's reasonable judgment,
creditworthy; (iii) that are in payment of obligations that have been
fully performed, do not consist of progress xxxxxxxx or xxxx and hold
invoices and are not subject to dispute or any other similar claims that
would reduce the cash amount payable therefor; (iv) that are not subject
to any pledge, restriction, security interest or other lien or
encumbrance other than those created by the Loan Documents; (v) in which
the Agent has a valid and perfected first priority security interest;
(vi) that are not outstanding for more than thirty (30) days past the
date payment thereof is due as set forth on the respective original
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invoices therefor; (vii) that are not due from an account debtor or
other obligor located in Minnesota unless the Borrower or the applicable
Domestic Subsidiary to whom such Account Receivable is owing (A) has
received a certificate of authority to do business and is in good
standing in such state or (B) has filed a notice of business activities
report with the appropriate office or agency of such state for the
current year; (viii) that are not due from any single account debtor or
other obligor if more than twenty percent (20%) of the aggregate amount
of all Accounts Receivable owing from such account debtor or other
obligor are outstanding for more than sixty (60) days past the date
payment thereof is due as set forth on the respective original invoices
therefor; (ix) that are payable in Dollars; and (x) that are not secured
by a letter of credit unless the Agent has a prior, perfected security
interest in such letter of credit."
"Tax Reserve. At any time of reference, an amount (not less than
zero) equal to the net liability account for sales, use and property
taxes in respect of goods sold, leased or otherwise marketed and
services rendered by the Borrower and its Domestic Subsidiaries, as
recorded on the books of account of the Borrower and its Domestic
Subsidiaries in accordance with generally accepted accounting
principles; provided that upon occurrence of the Upgrade Date the Tax
Reserve shall be deemed to be reduced to zero."
"Upgrade Date. The date of implementation (as a fully operational,
tested and accepted system) by the Borrower and its Domestic
Subsidiaries of a computer information processing system capable of
accurately determining the portion of Accounts Receivable corresponding
to sales, use or property taxes in respect of the transactions giving
rise to such Accounts Receivable."
(b) Amendment to Definition of Pro Forma Basis. The definition of the
term Pro Forma Basis is hereby amended by deleting such definition in its
entirety and by replacing it with the following new definition:
"Pro Forma Basis. In connection with any proposed Permitted
Acquisition, Pro Forma Basis shall mean that the calculation of
compliance with the financial covenants set forth in Section 14 hereof
by the Borrower and its Subsidiaries (including the Person or asset(s)
to be acquired) shall be made by combining the audited historical
financial results of such Person for the Test Period ending immediately
prior to the date of such proposed Permitted Acquisition with the
audited historical financial results of the Borrower and its
Subsidiaries for such Test Period as if such Permitted Acquisition
occurred on the first day of such Test Period, adjusted in the manner
described in (i), (ii) and (iii) below. Following a Permitted
Acquisition, Pro Forma Basis shall mean that the calculation of
compliance with the financial covenants set forth in Section 14 hereof
for the fiscal quarter in which such Permitted Acquisition occurred and
each of the three fiscal quarters immediately following such Permitted
Acquisition shall be made by combining the audited historical financial
results of such Person for the portion of the applicable Test Period
occurring prior to the date of such
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Permitted Acquisition with the audited historical financial results of
the Borrower and its Subsidiaries for such portion of such Test Period
as if to such Permitted Acquisition occurred on the first day of such
Test Period, adjusted in the manner described in (i), (ii) and (iii)
below. In each case, in the event that no audited historical financial
results are available or in the event that such Permitted Acquisition is
an asset acquisition, such calculations shall be made with reference to
such management certified financial results of such Person (or the
financial results attributable to such assets) and of the Borrower and
its Subsidiaries as shall be reasonably acceptable to the Agent. The
following adjustments to such combined financial results shall be made:
(i) all Indebtedness (whether under this Credit Agreement
or otherwise) and any other balance sheet adjustments incurred or
made in connection with the Permitted Acquisition shall be deemed
to have been incurred or made on the first day of the Test
Period, and all Indebtedness of the Person acquired or to be
acquired in such Permitted Acquisition which was or will have
been repaid in connection with the consummation of the Permitted
Acquisition shall be deemed to have been repaid concurrently with
the incurrence of the Indebtedness incurred in connection with
the Permitted Acquisition;
(ii) all Indebtedness assumed to have been incurred
pursuant to the preceding clause (i) shall be deemed to have
borne interest at the sum of (a) the arithmetic mean of (x) the
Eurodollar Rate for Eurodollar Rate Loans having an Interest
Period of one month in effect on the first day of the Test Period
and (y) the Eurodollar Rate for Eurodollar Rate Loans having an
Interest Period of one month in effect on the last day of the
Test Period plus (b) the Applicable Margin then in effect; and
(iii) other reasonable cost savings, expenses and other
income statement or operating statement adjustments which are
attributable to the change in ownership and/or management
resulting from such Permitted Acquisition as may be approved by
the Agent in writing (which approval shall not be unreasonably
withheld) shall be deemed to have been realized on the first day
of the Test Period.
Notwithstanding and in lieu of the forgoing, after giving effect to the
Borrower's acquisitions of fixed based operators in Birmingham, AL,
Tulsa, OK and Fort Xxxxx, IN, Consolidated EBITDA on a Pro Forma Basis
for the period of four fiscal quarters ending on each of the dates set
forth in the table below, for purposes of the Leverage Ratio (for
purposes of Section 14.1), the Senior Debt Ratio (for purposes of
Section 14.2), and Consolidating Operating Cash Flow (for purposes of
Section 14.3), shall be the actual Consolidated EBITDA of the Borrower
and its Subsidiaries for such period plus the amount set forth opposite
such date in such table; provided that any other calculations of
compliance with the financial covenants set forth in Section 14 (or
components
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thereof) on a Pro Forma Basis shall be determined in accordance with the
foregoing definition:
Four Fiscal Quarters Ending Consolidated EBITDA Increase
--------------------------- ----------------------------
September 30, 2000 $2,000,000
December 31, 2000 $1,350,000
March 31, 2001 $700,000
June 30, 2001 $217,000"
(c) Amendment to Definition of Applicable Margin. The definition of the
term Applicable Margin is hereby amended by deleting the table set forth in such
definition in its entirety and by replacing it with the following new table:
BASE
RATE EURODOLLAR RATE
"LEVEL SENIOR DEBT RATIO LOANS LOANS
------ ------------------------------ ----- ---------------
I > 2.75:1.00 0.50% 2.75%
-
II > 2.25:1.00 and less than 0.25% 2.50%
-
2.75:1.00
III > 1.75:1.00 and less than 0.00% 2.00%
-
2.25:1.00
IV > 1.25:1.00 and less than 0.00% 1.50%
-
1.75:1.00
V < 1.25:1.00 0.00% 1.25%"
(d) Amendment to Section 2.1. Section 2.1 of the Credit Agreement is
hereby amended by deleting the first sentence thereof in its entirety and
replacing it with the following sentence:
"Subject to the terms and conditions set forth in this Credit Agreement,
each of the Banks severally agrees to lend to the Borrower and the
Borrower may borrow, repay and reborrow from time to time between the
Closing Date and the Maturity Date upon notice by the Borrower to the
Agent given in accordance with Section 2.6, such sums as are requested
by the Borrower up to a maximum aggregate amount outstanding (after
giving effect to all amounts requested) at any one time equal to such
Bank's Revolving Credit Commitment minus such Bank's Revolving Credit
Commitment Percentage of the sum of (i) the Maximum Drawing Amount, (ii)
all Unpaid Reimbursement Obligations and (iii) the aggregate principal
amount of all
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Swing Line Loans; provided that the sum of the outstanding amount of the
Revolving Credit Loans (after giving effect to all amounts requested)
plus the Maximum Drawing Amount, all Unpaid Reimbursement Obligations
and the aggregate principal amount of all Swing Line Loans shall not at
any time exceed the lesser of (x) Total Revolving Credit Commitment and
(y) the Borrowing Base."
(e) Insertion of New Section 2.10. The Credit Agreement is hereby
amended by inserting the following new Section 2.10 immediately after Section
2.9 thereof:
"2.10. CHANGE IN BORROWING BASE. The Borrowing Base shall be
determined monthly (or at such other interval as may be specified
pursuant to Section 12.4(k)) by the Agent by reference to the Borrowing
Base Report delivered to the Banks and the Agent pursuant to Section
12.4(k)."
(f) Amendment to Section 3.2. Section 3.2 of the Credit Agreement is
hereby amended by deleting the first sentence thereof in its entirety and
replacing it with the following sentence:
"If at any time the sum of the outstanding principal amount of the
Revolving Credit Loans, the outstanding principal amount of the Swing
Line Loans, the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations exceeds the lesser of (x) the Total Revolving Credit
Commitment and (y) the Borrowing Base, then the Borrower shall
immediately pay the amount of such excess to the Agent for the
respective accounts of the Banks for application: first, to any Unpaid
Reimbursement Obligations; second, to the Swing Line Loans; third, to
the Revolving Credit Loans; and fourth, to provide to the Agent cash
collateral for Reimbursement Obligations as contemplated by Section
5.2(b) and (c)."
(g) Amendment to Section 5.1.1. Section 5.1.1 of the Credit Agreement is
hereby amended by deleting the proviso at the end of the first sentence thereof
in its entirety and replacing it with the following proviso:
"provided, however, that, after giving effect to such request, at no
time shall (a) the sum of the aggregate Maximum Drawing Amount and all
Unpaid Reimbursement Obligations exceed the Letter of Credit Limit in
effect at such time, and (b) the sum of (i) the Maximum Drawing Amount
on all Letters of Credit, (ii) all Unpaid Reimbursement Obligations,
(iii) the amount of all Swing Line Loans outstanding, and (iv) the
amount of all Revolving Credit Loans outstanding exceed the lesser of
(x) Total Revolving Credit Commitment and (y) the Borrowing Base."
(h) Amendment to Section 6.1. Section 6.1 of the Credit Agreement is
hereby amended by inserting the following new sentence at the end of such
section:
"No amounts repaid or prepaid with respect to the Acquisition Loans may
be reborrowed, and upon each repayment or prepayment of the Acquisition
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Loans, the Total Acquisition Loan Commitment shall be automatically
reduced by the amount of such prepayment or repayment."
(i) Amendment to Section 12.4. Section 12.4 of the Credit Agreement is
hereby amended by replacing the period at the end of subsection (j) thereof with
a semicolon and the word "and" and by inserting immediately thereafter the
following new subsection:
"(k) within twenty-five (25) days after the end of each calendar
month or at such earlier time as the Agent may reasonably request, a
Borrowing Base Report setting forth the Borrowing Base as at the end of
such calendar month or other date so requested by the Agent."
(j) Insertion of New Section 12.9.5. The Credit Agreement is hereby
amended by inserting the following new Section 12.9.5 immediately after Section
12.9.4 thereof:
"12.9.5. COLLATERAL REPORTS. No more frequently than two (2)
times during each calendar year, or more frequently as determined by the
Agent if an Event of Default shall have occurred and be continuing, upon
the request of the Agent, the Borrower will obtain and deliver to the
Agent, or, if the Agent so elects, will cooperate with the Agent in the
Agent's obtaining, a report of an independent collateral auditor
satisfactory to the Agent (which may be affiliated with one of the
Banks) with respect to the Accounts Receivable included in the Borrowing
Base, which report shall indicate whether or not the information set
forth in the Borrowing Base Report most recently delivered is accurate
and complete in all material respects based upon a review by such
auditors of the Accounts Receivable (including verification with respect
to the amount, aging, identity and credit of the respective account
debtors and the billing practices of the Borrower or its applicable
Subsidiary). All such collateral value reports shall be conducted and
made at the expense of the Borrower."
(k) Amendment to Section 14.1. Section 14.1 of the Credit Agreement is
hereby amended by deleting the table set forth therein in its entirety and by
replacing it with the following new table and text:
"Fiscal Quarter Ending Ratio
----------------------------- -----
Closing Date -- 6/29/2000 4.00 to 1.00
6/30/2000 -- 9/29/2000 3.75 to 1.00
9/30/2000 -- 6/29/2001 3.65 to 1.00
6/30/2001 -- 6/29/2002 3.50 to 1.00
6/30/2002 and for each fiscal 3.25 to 1.00
quarter ending thereafter
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To the extent a Permitted Acquisition has occurred during any period of
four consecutive fiscal quarters being tested in the foregoing covenant,
the calculation of compliance with such covenant will be determined on a
Pro Forma Basis."
(l) Amendment to Section 14.2. Section 14.2 of the Credit Agreement is
hereby amended by deleting the table set forth therein in its entirety and by
replacing it with the following new table and text:
"Fiscal Quarter Ending Ratio
----------------------------- -----
Closing Date -- 6/29/2000 3.25 to 1.00
6/30/2000 -- 9/29/2000 3.00 to 1.00
9/30/2000 -- 6/29/2002 2.75 to 1.00
6/30/2002 -- 6/29/2003 2.65 to 1.00
6/30/2003 and for each fiscal 2.50 to 1.00
quarter ending thereafter
To the extent a Permitted Acquisition has occurred during any period of
four consecutive fiscal quarters being tested in the foregoing covenant,
the calculation of compliance with such covenant will be determined on a
Pro Forma Basis."
(m) Amendment to Section 14.3. Section 14.3 of the Credit Agreement is
hereby amended by deleting the table set forth therein it its entirety and by
replacing it with the following new table and text:
"Fiscal Quarter Ending Ratio
----------------------------- -----
Closing Date -- 9/29/2000 1.25 to 1.00
9/30/2000 and for each fiscal 1.30 to 1.00
quarter ending thereafter
To the extent a Permitted Acquisition has occurred during any period of
four consecutive fiscal quarters being tested in the foregoing covenant,
the calculation of compliance with such covenant will be determined on a
Pro Forma Basis."
(n) Deletion of Section 14.5. Section 14.5 of the Credit Agreement is
hereby deleted in its entirety and replaced with the words "[Intentionally
Omitted]".
(o) Insertion of New Section 16.6. The Credit Agreement is hereby
amended by inserting the following new Section 16.6 immediately after Section
16.5 thereof:
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"16.6. BORROWING BASE REPORT. The Agent shall have received the
most recent Borrowing Base Report required to be delivered to the Agent
in accordance with Section 12.4(k) and, if requested by the Agent, a
Borrowing Base Report dated within five (5) days of the Drawdown Date of
such Loan or of the date of issuance, extension or renewal of such
Letter of Credit."
(p) Amendment to Exhibits. The Credit Agreement is hereby amended by
attaching as Exhibit E thereto the form of Borrowing Base Certificate attached
to this Amendment as Exhibit E.
SECTION 2. GUARANTORS' CONSENT. Each of the Guarantors hereby consents
to the amendments to the Credit Agreement set forth in this Amendment, and each
confirms its obligation to the Agent and the Banks under its Guaranty and agrees
that its guaranty of the Obligations thereunder shall extend to and include the
Credit Agreement as amended by this Amendment.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS; NO DEFAULT;
AUTHORIZATION. The Borrower hereby represents, warrants and covenants to the
Agent and the Banks as follows:
(a) each of the representations and warranties of the Borrower contained
in the Credit Agreement was true as of the date as of which it was made and is
true as and at the date of this Amendment, and after giving effect to this
Amendment and the amendment and waiver of the WMF Purchase Agreement referred to
in Section 4 below, no Default or Event of Default has occurred and is
continuing;
(b) this Amendment has been duly authorized, executed and delivered by
each of the Borrowers and Guarantors and is in full force and effect; and
(c) upon the execution and delivery of this Amendment by the respective
parties hereto, this Amendment shall constitute the legal, valid and binding
obligation of the Borrowers and the Guarantors, enforceable in accordance with
its terms, except that the enforceability thereof may be subject to any
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally.
SECTION 4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be subject to the satisfaction of the following conditions
precedent:
(a) This Amendment shall have been duly executed and delivered by the
Borrower, each Guarantor, the Agent and each Bank and shall be in full force and
effect.
(b) The receipt by the Agent of a certified copy of a duly executed
amendment and waiver to that certain Securities Purchase Agreement (the "WMF
Purchase Agreement") dated as of September 10, 1999, between the Borrower and
WMF, whereby WMF agrees to (i) amend Section 9.8 of the WMF Purchase Agreement,
and (ii) waive noncompliance (if any) by the Borrower with certain financial
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covenants contained in Section 9.8 of the WMF Purchase Agreement, in each case
in form and substance satisfactory to the Agent. The Agent shall have received
evidence satisfactory to it that all conditions to the effectiveness of such
amendment and waiver shall have been satisfied.
SECTION 5. INITIAL BORROWING BASE REPORT. The Borrower covenants and
agrees that it shall deliver an initial Borrowing Base Report as at the end of
the immediately preceding month to the Agent and the Banks no later than the
earlier to occur of (i) November 30, 2000, or (ii) five (5) days prior to the
Drawdown Date of any Revolving Credit Loan or Letter of Credit requested
hereunder.
SECTION 6. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement and all documents, instruments and agreements related thereto
are hereby ratified and confirmed in all respects. All references in the Credit
Agreement or any related agreement or instrument to the Credit Agreement shall
hereafter refer to the Credit Agreement as amended hereby.
SECTION 7. NO IMPLIED WAIVER. Nothing contained herein shall constitute
a waiver of, impair or otherwise affect any Obligations, any other obligations
of any of the Borrowers or Guarantors or any right of the Agent or any Bank
consequent thereon.
SECTION 8. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL FOR ALL PURPOSES BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW).
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IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as
a sealed instrument as of the date first above written.
Borrower: MERCURY AIR GROUP, INC.
By:
----------------------------------------
Name:
Title:
Guarantors: MAYTAG AIRCRAFT CORPORATION
By:
----------------------------------------
Name:
Title:
MERCURY AIR CARGO, INC.
By:
----------------------------------------
Name:
Title:
MERCURY ACCEPTANCE
CORPORATION
By:
----------------------------------------
Name:
Title:
EXCEL CARGO, INC.
By:
----------------------------------------
Name:
Title:
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MERCURY AIR CENTERS, INC.
(f/k/a Xxxxxxx Flying Service, Inc.)
By:
----------------------------------------
Name:
Title:
AEG FINANCE CORPORATION
By:
----------------------------------------
Name:
Title:
RPA AIRLINE AUTOMATION SERVICES,
INC.(f/k/a Xxxx Xxxxx and Associates, Inc.)
By:
----------------------------------------
Name:
Title:
HERMES AVIATION, INC.
By:
----------------------------------------
Name:
Title:
VULCAN AVIATION, INC.
By:
----------------------------------------
Name:
Title:
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Agent and Banks: FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.),
individually and as Agent
By:
----------------------------------------
Name:
Title:
SANWA BANK CALIFORNIA
By:
----------------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
----------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA,
N.A.
By:
----------------------------------------
Name:
Title:
