EXHIBIT 10.1
CONSENT AND AMENDMENT NO. 3 TO
LOAN AND SECURITY AGREEMENT
This Consent and Amendment No. 3 to Loan and Security Agreement (this
"Amendment") is made as of May 29, 1998, among XxXxxxx Aircraft Holdings, Inc.,
a Delaware corporation ("Borrower"), Bank of America National Trust and Savings
Association, successor-by-merger to Bank of America Illinois, individually as a
lender ("BoA") and as agent ("Agent"), Comerica Bank--California ("Comerica"),
Mellon Bank, N.A. ("Mellon"), and Sumitomo Bank of California ("Sumitomo";
Sumitomo, BoA, Comerica and Mellon being collectively referred to as "Lenders").
Reference is made to that certain Loan and Security Agreement dated as of
April 15, 1997 among Borrower, Agent and Lenders (as amended or otherwise
modified from time to time, the "Loan Agreement"; capitalized terms used herein
without definition shall have the meanings ascribed to such terms in the Loan
Agreement).
Borrower has requested that Requisite Lenders consent to the acquisition
(the "Avtech Acquisition") by Borrower of not less than 99.44% of the
outstanding capital stock of Avtech Corporation, a Washington corporation
("Avtech"). Absent the written consent of Requisite Lenders, consummation of the
Avtech Acquisition would cause a breach of each of SECTIONS 5.11 and 5.17 of the
Loan Agreement.
Borrower has also requested that all of the Lenders agree to amend the Loan
Agreement in certain respects.
NOW, THEREFORE, Agent, Lenders and Borrower agree as follows:
1. CONSENT. Subject to the conditions precedent set forth in Section 2 of
this Amendment, Lenders hereby consent to the consummation of the Avtech
Acquisition. This consent shall not constitute (a) a modification or alteration
of the terms, conditions or covenants of the Loan Agreement or any document
entered into in connection therewith, or (b) a waiver, release or limitation
upon the exercise by Agent or any Lender of any of its rights, legal or
equitable, hereunder. Except as set forth above, Agent and each Lender reserves
any and all rights and remedies which it has had, has or may have under the Loan
Agreement.
2. AVTECH ACQUISITION CONDITIONS PRECEDENT. The consent of the Lenders to
the consummation of the Avtech Acquisition shall become effective as of the date
of this Amendment upon the satisfaction of the following conditions precedent:
2.1. Borrower shall have delivered to Agent a manually executed original
of this Agreement;
2.2. The terms of the Avtech Acquisition shall be no less favorable to
the Borrower from those set forth in a draft Stock Purchase Agreement
concerning the Avtech Acquisition delivered to counsel to Agent with a draft
date of May 13, 1998. In furtherance, and not by way of limitation, of the
foregoing:
2.2.1. The aggregate purchase price of the Avtech Acquisition shall
not exceed $83,000,000 PLUS cash and cash equivalents of Avtech and minus
indebtedness for borrowed money of Avtech; and
2.2.2. The Avtech Acquisition shall be consummated on or prior to
July 7, 1998.
2.3. No Event of Default or Unmatured Event of Default shall be in
existence at the time of the consummation of the Avtech Acquisition, or
would be caused after giving effect thereto;
2.4. Agent and Lenders shall have completed an environmental due
diligence review of Avtech, and shall be satisfied with the results thereof;
2.5. Agent and Lenders shall have received an executed copy of the
purchase agreement between the Borrower and the current shareholders of
Avtech (the "Purchase Agreement"), and Agent and
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Lenders shall be satisfied with the terms and conditions thereof, including
without limitation the representations, warranties and indemnities made
therein in favor of the Borrower;
2.6. Agent shall have received (i) executed copies of all additional
agreements, documents and instruments pertaining to the consummation of the
Avtech Acquisition (collectively with the Purchase Agreement, the "Avtech
Acquisition Documents") and (ii) a collateral assignment executed by the
Borrower, in form and substance acceptable to Agent, of all representations,
warranties, covenants and other agreements (including indemnification
agreements) made in favor of the Borrower under the Avtech Acquisition
Documents, for the benefit of the Agent, the Lenders and Issuer;
2.7. Agent, for the benefit of itself, Issuer and the Lenders, shall
have received (i) a guaranty executed by Avtech in form substantially
similar to guaranties previously executed by the presently existing
Subsidiaries of the Borrower in connection with the execution of the Loan
Agreement, (ii) first priority Liens on the stock and assets of Avtech,
granted pursuant to (x) a certain Pledge Agreement dated as of April 15,
1997 executed by Borrower in favor of Agent and (y) a security agreement in
form substantially similar to security agreements previously executed by the
presently existing Subsidiaries of the Borrower in connection with the
execution of the Loan Agreement and (iii) such opinions of legal counsel,
stock certificates, insurance certificates, insurance endorsements and
assignments, certificates, articles of incorporation, good standing
certificates and other agreements, instruments and documents as reasonably
requested by Agent, each in form and substance reasonable acceptable to
Agent;
2.8. The board of directors of Avtech shall have approved the
consummation of the Avtech Acquisition;
2.9. Agent shall have received a certificate from Borrower's chief
executive officer, president or chief financial officer (i) certifying that
all of conditions precedent set forth in Section 2 of this Amendment have
been satisfied and (ii) containing a computation of, and showing compliance
with, each of SECTIONS 5.24, 5.25, 5.26, 5.27 and 5.28 of the Loan Agreement
after giving effect to the Avtech Acquisition and the amendments set forth
herein, together with such financial information as Requisite Lenders shall
request to verify such compliance;
2.10. There shall not have been instituted or threatened any litigation
or proceeding in any court or administrative forum adversely concerning or
affecting the consummation of the Avtech Acquisition;
2.11. Agent shall have received evidence reasonably acceptable to Agent
that the Borrower has received all permits, consents and regulatory
approvals necessary to consummate the Avtech Acquisition;
2.12. Avtech shall have incurred no material liabilities, contingent or
otherwise, other than as disclosed on Avtech's most recently audited
financial statements, copies of which shall have been delivered to Agent;
2.13. Between the date of this Amendment and the consummation of the
Avtech Acquisition, no event, circumstance or condition shall have occurred
or exist which has a Material Adverse Effect; and
2.14. Between September 30, 1997 and the consummation of the Avtech
Acquisition (i) no event, circumstance or condition shall have occurred or
exist which has a material adverse effect upon the condition (financial or
otherwise), operations, performance or properties of Avtech and (ii) Avtech
shall have neither created nor acquired any Subsidiary.
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3. AMENDMENTS TO LOAN AGREEMENT. Subject to the conditions precedent set
forth in Section 4 of this Amendment, the Loan Agreement is hereby amended as
follows:
3.1. The first row of the table set forth under the definition of
"Applicable Margin" in SECTION 1.1 of the Loan Agreement is hereby amended
and restated as follows:
APPLICABLE IBOR APPLICABLE BASE
MARGIN FOR THE MARGIN FOR THE APPLICABLE NON-USE
LEVERAGE RATIO REVOLVING LOANS REVOLVING LOANS FEE MARGIN
----------------------------------------------------------- ------------------- ----------------- -------------------
Greater than 3.00:1.00..................................... 2.25% 1.00% 0.425%
Greater than or equal to 2.50:1.00, but less than
3.00:1.00................................................ 2.00% 0.75% 0.375%
3.2. The definition of the term "Maximum Revolving Loan Amount" in
SECTION 1.1 of the Loan Agreement is hereby amended by adding the following
sentence to the end of such definition:
"Upon the satisfaction of the conditions precedent set forth in
that certain Amendment No. 3 to Loan and Security Agreement dated
as of May 29, 1998 among Borrower, Agent and Lenders ("Amendment
No. 3"), and notwithstanding anything to the contrary contained in
this definition, each Lender's then existing Maximum Revolving
Loan Amount shall automatically reduce by such Lender's Pro Rata
Share (determined immediately prior to the applicability of this
sentence with respect to any Lender for any applicable date) of
the sum of (x) without duplication, the aggregate net proceeds of
Indebtedness permitted under SECTION 5.14(B), not to exceed
$45,000,000, PLUS (y) the Step-Down Amount. For purposes of this
definition and the definition of the term "Revolving Credit
Amount", the "Step-Down Amount" shall mean (x) $500,000 on the
last day of each calendar month for the period commencing on
October 31, 1998 and ending on May 31, 1999 and (y) $1,000,000 on
the last day of each calendar month commencing on June 30, 1999."
3.3. The definition of the term "Revolving Credit Amount" in SECTION 1.1
of the Loan Agreement is hereby amended and restated as follows:
"Revolving Credit Amount" means the maximum amount of Revolving
Loans which Lenders will make available to Borrower. Prior to the
satisfaction of the conditions precedent set forth in Amendment
No. 3, the Revolving Credit Amount shall be equal to $75,000,000.
Upon the satisfaction of the conditions precedent set forth in
Amendment No. 3, the Revolving Credit Amount shall be equal to
$105,000,000, subject to automatic reduction by the sum of (x)
without duplication, the aggregate net proceeds of Indebtedness
permitted under SECTION 5.14(B), not to exceed $45,000,000, plus
(y) the Step-Down Amount. The Revolving Credit Amount shall be
subject to reduction pursuant to SECTION 2.1.2."
3.4. The clause "Four Million Five Hundred Thousand Dollars
($4,500,000)" set forth twice in SECTION 5.24 of the Loan Agreement is
hereby amended and restated in each instance to read "Five Million Five
Hundred Thousand Dollars ($5,500,000)".
3.5. SECTION 5.25 is hereby amended and restated as follows:
"5.25 MINIMUM WORKING CAPITAL RATIO.
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Not permit the Working Capital Ratio as of the last day of each
calendar quarter ending during the periods (inclusive) set forth below to
be less than the amount set forth opposite such period:
PERIOD AMOUNT
------------------------------------------------------------------------------------- -----------
June 30, 1997 through September 30, 1999............................................. .20
December 31, 1999 and the last day of each calendar quarter thereafter............... .33
3.6. The ratio "3.00:1.00" set forth in the first row of the table set
forth in SECTION 5.27 is hereby amended and restated to read "3.50:1.00".
3.7. The Maximum Revolving Loan Amount of each Lender shall be amended
and restated as set forth on the signature pages to this Amendment.
4. AMENDMENT CONDITIONS PRECEDENT. The amendments to the Loan Agreement
set forth in Section 3 of this Amendment shall become effective as of the date
of this Amendment upon the satisfaction of the following conditions precedent:
4.1. The Avtech Acquisition shall have been consummated on or prior to
July 7, 1998, and in accordance with the terms of the Avtech Acquisition
Documents and applicable law;
4.2. Borrower shall have executed and delivered to Agent for
distribution to the Lenders amended and restated Revolving Credit Notes in
form and substance substantially similar to Revolving Credit Notes
previously executed by the Borrower in connection with the execution of the
Loan Agreement, each in an amount equal to each Lender's Maximum Revolving
Loan Amount;
4.3. The Subsidiaries of Borrower (other than Avtech) shall have
executed and delivered a certain Reaffirmation of Guaranties, in the form of
EXHIBIT A to this Amendment;
4.4. No Event of Default or Unmatured Event of Default shall have
occurred and be continuing;
4.5. Borrower shall have delivered to Agent a certificate in form and
substance satisfactory to Agent of Borrower's Secretary or an Assistant
Secretary as to Borrower's certificate of incorporation and by-laws, the
incumbency of Borrower's officers and corporate resolutions adopted by
Borrower's board of directors with respect to this Amendment;
4.6. Agent shall have received an opinion of Borrower's legal counsel,
in form and substance substantially similar to a legal opinion delivered by
such counsel to Agent in connection with the execution and delivery of the
Loan Agreement;
4.7. Agent shall have received on or prior to the date hereof an
amendment fee (the "Amendment Fee") in the amount of $131,250, for further
distribution to the Lenders based on the amounts set forth below each
Lender's signature hereto; and
4.8. Agent shall have received on or prior to the date hereof, for its
own account, a fee in respect of the transactions contemplated hereby as set
forth in a certain letter agreement of even date herewith between Agent and
Borrower.
5. LOAN REALLOCATION. Effective immediately upon satisfaction of the
conditions precedent set forth in each of Sections 2 and 4, (i) Sumitomo shall
be deemed automatically to have sold and assigned to BoA, without recourse and
without representation and warranty, and BoA shall be deemed automatically to
have purchased and assumed from Sumitomo, that interest in Revolving Loans
funded by Sumitomo immediately prior to the satisfaction of such conditions
precedent so that, after giving effect to such purchase and sale, the ratio of
the amount of Revolving Loans funded by each Lender to the aggregate outstanding
amount of Revolving Loans equals such Lender's Pro Rata Share after giving
effect to the
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amendments contemplated by this Amendment and (ii) BoA shall wire transfer to
Sumitomo immediately available funds in full satisfaction of the purchases and
sales contemplated by the preceding clause (i).
6. COVENANT. Borrower covenants and agrees that Borrower shall (i) acquire
(either pursuant to stock purchase, statutory reverse stock split or merger of
Avtech into a wholly-owned Subsidiary of Borrower), within 30 days of the
effective date of the Avtech Acquisition, 100% of the outstanding capital stock
of Avtech not acquired by Borrower in connection with the Avtech Acquisition
(the "Follow-Up Acquisition") and (ii) deliver to Agent evidence reasonably
acceptable to Agent of the consummation of the Follow-Up Acquisition, together
with such additional documents, agreements, instruments and legal opinions
reasonably requested by Agent in connection with the consummation of the
Follow-Up Acquisition. Borrower acknowledges and agrees that a breach of any of
the foregoing covenants and agreements shall constitute an Event of Default.
7. MISCELLANEOUS.
7.1. EXPENSES. Borrower agrees to pay on demand all costs and expenses
of Agent (including Attorneys' Fees) in connection with the preparation,
negotiation, execution, delivery and administration of this Amendment and
all other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith. In addition, Borrower agrees
to pay, and save Agent and each Lender harmless from all liability for, any
stamp or other taxes which may be payable in connection with the execution
or delivery of this Amendment, the borrowings under the Loan Agreement, as
amended hereby, and the execution and delivery of any instruments or
documents provided for herein or delivered or to be delivered hereunder or
in connection herewith. All obligations provided in this SECTION 7.1 shall
survive any termination of this Amendment or the Loan Agreement as amended
hereby.
7.2. GOVERNING LAW. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.
7.3. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate
counterparts, and each such counterpart, when executed and delivered, shall
be deemed to be an original, but all such counterparts shall together
constitute but one and the same Amendment.
7.4. REFERENCE TO LOAN AGREEMENT. Except as herein amended, the Loan
Agreement shall remain in full force and effect and is hereby ratified in
all respects. On and after the effectiveness of the amendments to the Loan
Agreement accomplished hereby, each reference in the Loan Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of like import, and
each reference to the Loan Agreement in any note and in any Related
Agreements, or other agreements, documents or other instruments executed and
delivered pursuant to the Loan Agreement, shall mean and be a reference to
the Loan Agreement, as amended by this Amendment.
7.5. SUCCESSORS. This Amendment shall be binding upon Borrower, each
Lender, Agent and their respective successors and assigns, and shall inure
to the benefit of Borrower, each Lender, Agent and their respective
successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered at
Chicago, Illinois as of the date first above written.
XXXXXXX AIRCRAFT HOLDINGS, INC., as Borrower
By
------------------------------------------
Its
------------------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, successor-by-merger to Bank of
America Illinois, as Agent
By
------------------------------------------
Its
------------------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, successor-by-merger to Bank of
America Illinois, as a Lender
By
------------------------------------------
Its
------------------------------------------
Maximum Revolving Loan Amount: $42,600,000
Share of Amendment Fee: $59,250
COMERICA BANK--CALIFORNIA, as a Lender
By
------------------------------------------
Its
------------------------------------------
MELLON BANK, N.A., as a Lender
By
------------------------------------------
Its
------------------------------------------
Maximum Revolving Loan Amount: $25,200,000
Share of Amendment Fee: $31,500
SUMITOMO BANK OF CALIFORNIA, as a Lender
By
------------------------------------------
Its
------------------------------------------
Maximum Revolving Loan Amount: $12,000,000
Share of Amendment Fee: $9,000
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EXHIBIT A
REAFFIRMATION OF GUARANTIES
, 1998
Bank of America National Trust
and Savings Association, individually
and as agent ("Agent")
Comerica Bank--California
Mellon Bank, N.A.
Sumitomo Bank of California
Ladies and Gentlemen:
Each of the undersigned has executed and delivered to Agent, for your
collective benefit, a certain Guaranty dated as of April 15, 1997 (November 14,
1997, in the case of Audio International, Inc. and Audio International Sales,
Inc.) (each, a "Guaranty"). Each of the undersigned acknowledges receipt of
copies of (i) that certain Consent and Amendment No. 3 to Loan and Security
Agreement of even date herewith between you and XxXxxxx Aircraft Holdings, Inc.
(the "Amendment") and (ii) each additional instrument, agreement and document
required to be delivered to any of you pursuant to the terms of the Amendment
(the "Additional Documents"). Each of the undersigned hereby reaffirms the
validity of the Guaranty executed by such entity and its obligations thereunder,
in each case after giving effect to the execution and delivery of the Amendment
and the Additional Documents, and the consummation of the transactions
contemplated thereby.
AEROSPACE DISPLAY SYSTEMS, INC.
XXXX COMPONENTS, INC.
ELSINORE AEROSPACE SERVICES, INC.
ELSINORE ENGINEERING, INC.
XXXXXXXXXXX INTERNATIONAL, INC.
TRI-STAR ELECTRONICS INTERNATIONAL, INC.
Each
By ----------------------------------------
Its
----------------------------------------
AUDIO INTERNATIONAL, INC.
AUDIO INTERNATIONAL SALES, INC.
Each
By ----------------------------------------
Its
----------------------------------------
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