CONSENT AND AMENDMENT NO. 1 TO
LOAN AND SECURITY AGREEMENT
This Consent and Amendment No. 1 to Loan and Security Agreement (this
"Amendment") is made as of October 21, 1997, 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 (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 "AII Acquisition") by Borrower of all of the outstanding
capital stock of Audio International, Inc. ("AII"). Absent the written consent
of Requisite Lenders, consummation of the AII 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
AII 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. AII ACQUISITION CONDITIONS PRECEDENT. The consent of the Lenders
to the consummation of the AII 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 AII Acquisition shall be no less favorable to
the Borrower from those set forth in a certain proposal letter concerning the
AII Acquisition dated September 12, 1997, delivered by the Borrower to AII and
the current shareholders of AII. In furtherance, and not by way of limitation,
of the foregoing:
2.2.1. The aggregate purchase price, including deferred
purchase price, of the AII Acquisition shall not exceed $30,000,000;
2.2.2. The cash purchase price paid by the Borrower at the
closing of the AII Acquisition shall not exceed $24,000,000;
2.2.3. The AII Acquisition shall be consummated on or prior to
December 5, 1997;
2.3. No Event of Default or Unmatured Event of Default shall be in
existence at the time of the consummation of the AII Acquisition, or would be
caused after giving effect thereto;
2.4. Agent and Lenders shall have completed an environmental due
diligence review of AII and its Subsidiaries, 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 AII (the
"Purchase Agreement"), and Agent and 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 AII
Acquisition (collectively with the Purchase Agreement, the "AII 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 AII Acquisition Documents, for the benefit of the Agent, the
Lenders and the Issuer;
2.7. Agent, for the benefit of itself, Issuer and the Lenders, shall
have received (i) guaranties executed by AII and each Subsidiary of AII, each 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 AII and
each Subsidiary of AII, granted pursuant to security agreements and pledge
agreements, each in form substantially similar to security agreements and pledge
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 boards of directors of AII and each Subsidiary of AII shall
have approved the consummation of the AII 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 AII Acquisition and the amendments set forth herein,
together with such financial information as Requisite Lenders shall request to
verify such compliance;
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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 AII 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 AII Acquisition;
2.12. AII and its Subsidiaries shall have incurred no material
liabilities, contingent or otherwise, other than as disclosed on AII's most
recently audited financial statements, copies of which have been delivered to
Agent;
2.13. Between the date of this Amendment and the consummation of
the AII Acquisition, no event, circumstance or condition shall have occurred or
exist which has a Material Adverse Effect; and
2.14. Between December 31, 1996 and the consummation of the AII
Acquisition, 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 AII or any Subsidiary of AII.
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 clause "Forty Million Dollars ($40,000,000)" set forth in the
definition of the term "Revolving Credit Amount" in SECTION 1.1 of the Loan
Agreement is hereby amended and restated to read "Sixty Million Dollars
($60,000,000)".
3.2. The clause "Two Hundred Fifty Thousand Dollars ($250,000)" set
forth in SECTION 5.14(h) of the Loan Agreement is hereby amended and restated to
read "One Million Dollars ($1,000,000)".
3.3. The word "and" immediately preceding clause (e) of SECTION 5.15,
is hereby deleted, and SECTION 5.15(e) of the Loan Agreement is hereby amended
and restated as follows:
"(e) Liens on (i) real estate owned by Audio International,
Inc., an Arkansas corporation and a Subsidiary of Borrower
("AII"), and (ii) machinery and equipment owned by AII
constituting legal fixtures to such real estate, securing
Indebtedness in an aggregate amount not to exceed Seven
Hundred Fifty Thousand Dollars ($750,000); and (f) Liens
consented to in writing by Requisite Lenders.
3.4. The clause "Four Million Dollars ($4,000,000)" set forth twice in
SECTION 5.24 of the Loan Agreement is hereby amended and restated in each
instance to read "Four Million Five Hundred Thousand Dollars ($4,500,000)".
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3.5. The word "or" immediately preceding clause (iv) set forth in
SECTION 10.11 of the Loan Agreement is hereby deleted, and said clause (iv) is
hereby amended and restated as follows:
"(iv) if approved, authorized or ratified in writing by
Agent at the direction of Requisite Lenders, PROVIDED, that
the then existing fair market value of the Collateral to be
released in any single or series of related transactions
does not exceed ten percent (10%) of the then existing fair
market value of all Collateral, or (v) if approved,
authorized or ratified in writing by Agent at the direction
of all Lenders."
3.6. 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 AII Acquisition shall have been consummated on or prior to
December 5, 1997, and in accordance with the terms of the AII 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 AII and its
Subsidiaries) 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; and
4.7. Agent shall have received, for the benefit of the Lenders based
on each Lender's pro rata share of the increase in the Revolving Credit Amount
pursuant to the terms of this Amendment, an amendment fee in the amount of
$20,000.
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5. MISCELLANEOUS.
5.1. 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 5.1 shall survive
any termination of this Amendment or the Loan Agreement as amended hereby.
5.2. GOVERNING LAW. This Amendment shall be a contract made under
and governed by the internal laws of the State of Illinois.
5.3. 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.
5.4. 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.
5.5. 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
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, successor-by-merger
to Bank of America Illinois, as Agent
By
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Its
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, successor-by-merger
to Bank of America Illinois, as a Lender
By
----------------------------------------
Its
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Maximum Revolving Loan Amount: $24,000,000
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COMERICA BANK - CALIFORNIA, as a Lender
By
----------------------------------------
Its
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Maximum Revolving Loan Amount: $12,000,000
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MELLON BANK, N.A., as a Lender
By
----------------------------------------
Its
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Maximum Revolving Loan Amount: $12,000,000
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SUMITOMO BANK OF CALIFORNIA, as a Lender
By
----------------------------------------
Its
---------------------------------------
Maximum Revolving Loan Amount: $12,000,000
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EXHIBIT A
REAFFIRMATION OF GUARANTIES
October 21, 1997
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 (each, a
"Guaranty"). Each of the undersigned acknowledges receipt of copies of (i) that
certain Consent and Amendment No. 1 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.
XXXX HOLDINGS, INC.
ELSINORE AEROSPACE SERVICES, INC.
ELSINORE ENGINEERING, INC.
XXXXXXXXXXX INTERNATIONAL, INC.
TRI-STAR ELECTRONICS INTERNATIONAL, INC.
TRI-STAR HOLDINGS, INC.
TRI-STAR TECHNOLOGIES, INC.
Each By
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Its
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