1
Exhibit 10.30
LOAN AND SECURITY AGREEMENT
BETWEEN
MERCURY AIR CARGO, INC.
("DEBTOR")
0000 XxXxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
and
MARINE MIDLAND BUSINESS LOANS, INC.
("SECURED PARTY")
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Dated as of June 12, 1995
2
TABLE OF CONTENTS
Page
----
1. DEFINITIONS................................................................ 1
1.1 CERTAIN SPECIFIC TERMS......................................... 1
1.2 SINGULARS AND PLURALS.......................................... 2
1.3 U.C.C. DEFINITIONS............................................. 2
2. CREDIT FACILITY............................................................ 2
2.1 REQUESTS FOR AN ADVANCE........................................ 2
2.2 PROCEEDS OF AN ADVANCE......................................... 2
3. COLLATERAL AND INDEBTEDNESS SECURED........................................ 2
3.1 SECURITY INTEREST.............................................. 2
3.2 OTHER COLLATERAL............................................... 2
3.3 INDEBTEDNESS SECURED........................................... 2
4. REPRESENTATIONS AND WARRANTIES............................................. 2
4.1 CORPORATE EXISTENCE............................................ 2
4.2 CORPORATE CAPACITY............................................. 2
4.3 VALIDITY OF RECEIVABLES........................................ 2
4.4 INTENTIONALLY DELETED.......................................... 2
4.5 TITLE TO COLLATERAL............................................ 2
4.6 NOTES RECEIVABLE............................................... 3
4.7 EQUIPMENT...................................................... 3
4.8 PLACE OF BUSINESS.............................................. 3
4.9 FINANCIAL CONDITION............................................ 3
4.10 TAXES.......................................................... 3
4.11 LITIGATION..................................................... 3
4.12 ERISA MATTERS.................................................. 3
4.13 ENVIRONMENTAL MATTERS.......................................... 3
4.14 VALIDITY OF TRANSACTION DOCUMENTS.............................. 3
4.15 NO CONSENT OR FILING........................................... 3
4.16 NO VIOLATIONS.................................................. 3
4.17 TRADEMARKS AND PATENTS......................................... 3
4.18 CONTINGENT LIABILITIES......................................... 3
4.19 COMPLIANCE WITH LAWS........................................... 3
4.20 LICENSES, PERMITS, ETC......................................... 3
4.21 LABOR CONTRACTS................................................ 3
4.22 CONSOLIDATED SUBSIDIARIES...................................... 3
4.23 AUTHORIZED SHARES.............................................. 3
5. CERTAIN DOCUMENTS TO BE DELIVERED TO SECURED PARTY......................... 4
5.1 DOCUMENTS...................................................... 4
5.2 INVOICES....................................................... 4
5.3 CHATTEL PAPER.................................................. 4
6. COLLECTIONS................................................................ 4
7. PAYMENT OF PRINCIPAL, INTEREST, FEES, AND COSTS AND EXPENSES............... 4
7.1 PROMISE TO PAY PRINCIPAL....................................... 4
7.2 PROMISE TO PAY INTEREST........................................ 4
7.3 PROMISE TO PAY FEES............................................ 4
7.4 PROMISE TO PAY COSTS AND EXPENSES.............................. 4
7.5 METHOD OF PAYMENT OF PRINCIPAL, INTEREST,
FEES, AND COSTS AND EXPENSES................................... 4
7.6 COMPUTATION OF DAILY OUTSTANDING BALANCE....................... 4
7.7 ACCOUNT STATED................................................. 4
8. PROCEDURES AFTER SCHEDULING RECEIVABLES.................................... 4
8.1 INTENTIONALLY DELETED.......................................... 4
8.2 CREDITS AND EXTENSIONS......................................... 4
8.3 RETURNED INSTRUMENTS........................................... 5
8.4 DEBIT MEMORANDA................................................ 5
8.5 NOTES RECEIVABLE............................................... 5
9. AFFIRMATIVE COVENANTS...................................................... 5
9.1 FINANCIAL STATEMENTS........................................... 5
9.2 GOVERNMENT AND OTHER SPECIAL RECEIVABLES....................... 5
9.3 TERMS OF SALE.................................................. 5
9.4 BOOKS AND RECORDS.............................................. 5
9.5 INTENTIONALLY DELETED.......................................... 5
9.6 EXAMINATIONS................................................... 5
9.7 VERIFICATION OF COLLATERAL..................................... 5
9.8 RESPONSIBLE PARTIES............................................ 5
9.9 TAXES.......................................................... 5
9.10 LITIGATION..................................................... 5
9.11 INSURANCE...................................................... 5
9.13 PENSION REPORTS................................................ 5
9.14 NOTICE OF NON-COMPLIANCE....................................... 5
9.15 COMPLIANCE WITH ENVIRONMENTAL LAWS............................. 5
9.16 DEFEND COLLATERAL.............................................. 6
9.17 USE OF PROCEEDS................................................ 6
9.18 COMPLIANCE WITH LAWS........................................... 6
9.19 MAINTENANCE OF PROPERTY........................................ 6
9.20 LICENSES, PERMITS, ETC......................................... 6
9.21 TRADEMARKS AND PATENTS......................................... 6
9.22 ERISA.......................................................... 6
9.23 MAINTENANCE OF OWNERSHIP....................................... 6
9.24 ACTIVITIES OF CONSOLIDATED SUBSIDIARIES........................ 6
10. NEGATIVE COVENANTS......................................................... 6
10.1 LOCATION OF INVENTORY, EQUIPMENT AND BUSINESS RECORDS.......... 6
10.2 BORROWED MONEY................................................. 6
10.3 SECURITY INTEREST AND OTHER ENCUMBRANCES....................... 6
10.4 STORING AND USE OF THE COLLATERAL.............................. 6
10.5 MERGERS, CONSOLIDATIONS, OR SALES.............................. 6
10.6 CAPITAL STOCK.................................................. 6
10.7 DIVIDENDS OR DISTRIBUTIONS..................................... 6
10.8 INVESTMENTS AND ADVANCES....................................... 6
10.9 GUARANTIES..................................................... 6
10.10 ............................................................... 6
10.11 CAPITAL EXPENDITURES........................................... 6
10.12 INTENTIONALLY DELETED.......................................... 6
10.13 NAME CHANGE.................................................... 6
10.14 DISPOSITION OF COLLATERAL...................................... 6
10.15 FINANCIAL COVENANTS............................................ 6
11. EVENTS OF DEFAULT.......................................................... 6
11.1 EVENTS OF DEFAULT.............................................. 6
11.2 EFFECTS OF AN EVENT OF DEFAULT................................. 7
12. SECURED PARTY'S RIGHTS AND REMEDIES........................................ 7
12.1 GENERALLY...................................................... 7
12.2 NOTIFICATION OF ACCOUNT DEBTORS................................ 7
12.3 POSSESSION OF COLLATERAL....................................... 7
12.4 COLLECTION OF RECEIVABLES...................................... 7
12.5 INDORSEMENT OF CHECKS; DEBTOR'S MAIL........................... 7
12.6 LICENSE TO USE PATENTS, TRADEMARKS, AND TRADENAMES............. 7
13. MISCELLANEOUS.............................................................. 7
13.1 PERFECTING THE SECURITY INTEREST; PROTECTING THE COLLATERAL.... 7
13.2 PERFORMANCE OF DEBTOR'S DUTIES................................. 7
13.3 NOTICE OF SALE................................................. 7
13.4 WAIVER BY SECURED PARTY........................................ 7
13.5 WAIVER BY DEBTOR............................................... 8
13.6 SETOFF......................................................... 8
13.7 ASSIGNMENT..................................................... 8
13.8 SUCCESSORS AND ASSIGNS......................................... 8
13.9 MODIFICATION................................................... 8
13.10 COUNTERPARTS................................................... 8
13.11 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES....................... 8
13.12 INDEMNIFICATION................................................ 8
13.13 TERMINATION; PREPAYMENT PREMIUM................................ 8
13.14 FURTHER ASSURANCES............................................. 8
13.15 HEADINGS....................................................... 8
13.16 CUMULATIVE SECURITY INTEREST, ETC.............................. 8
13.17 SECURED PARTY'S DUTIES......................................... 8
13.18 NOTICES GENERALLY.............................................. 8
13.19 SEVERABILITY................................................... 8
13.20 INCONSISTENT PROVISIONS........................................ 9
13.21 ENTIRE AGREEMENT............................................... 9
13.22 APPLICABLE LAW................................................. 9
13.23 CONSENT TO JURISDICTION........................................ 9
13.24 JURY TRIAL WAIVER.............................................. 9
(i)
3
Debtor and Secured Party agree as follows:
1. DEFINITIONS.
1.1 CERTAIN SPECIFIC TERMS. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) ACCOUNT DEBTOR means the person, firm, or entity
obligated to pay a Receivable.
(b) ADVANCE means a revolving loan made to Debtor by
Secured Party pursuant to Section 2.1.
(c) BORROWING CAPACITY means, at the time of computation,
the amount specified in Item 1 of the Schedule.
(d) BUSINESS DAY means a day other than a Saturday, Sunday
or other day on which banks are authorized or required to close under the laws
of the State.
(e) COLLATERAL means collectively all of the property of
Debtor subject to the Security Interest and described in Sections 3.1 and 3.2.
(f) CONSOLIDATED SUBSIDIARY means any corporation of which
at least 50% of the voting stock is owned by Debtor directly, or indirectly
through one or more Consolidated Subsidiaries. If Debtor has no Consolidated
Subsidiaries, the provisions of this Agreement relating to Consolidated
Subsidiaries shall be inapplicable without affecting the applicability of such
provisions to Debtor alone.
(g) CREDIT means any discount, allowance, credit, rebate,
or adjustment granted by Debtor with respect to a Receivable, other than a cash
discount described in Item 3 of the Schedule.
(h) DEBTOR means the person or entity defined on the cover
page to this Agreement.
(i) DISPOSAL means the intentional or unintentional
abandonment, discharge, deposit, injection, dumping, spilling, leaking, storing,
burning, thermal destruction, or placing of any Hazardous Substance so that it
or any of its constituents may enter the environment.
(j) INTENTIONALLY DELETED.
(k) ENVIRONMENT means any water including, but not limited
to, surface water and ground water or water vapor; any land including land
surface or subsurface; stream sediments; air; fish, wildlife, plants; and all
other natural resources or environmental media.
(l) ENVIRONMENTAL LAWS means all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances, regulations, codes, and rules relating to the
protection of the Environment and/or governing the processing, handling,
production, or disposal of Hazardous Substances and the policies, guidelines,
procedures, interpretations, decisions, orders, and directives of federal,
state, and local governmental agencies and authorities with respect thereto.
(m) ENVIRONMENTAL PERMITS means all licenses, permits,
approvals, authorizations, consents, or registrations required by any applicable
Environmental Laws and all applicable judicial and administrative orders in
connection with ownership, lease, purchase, transfer, closure, use and/or
operation of any property owned, leased, or operated by Debtor or any
Consolidated Subsidiary and/or as may be required for the storage, treatment,
generation, transportation, processing, handling, production, or disposal of
Hazardous Substances.
(n) ENVIRONMENTAL QUESTIONNAIRE means a questionnaire and
all attachments thereto concerning (i) activities and conditions affecting the
Environment at any property of Debtor or any Consolidated Subsidiary or (ii) the
enforcement or possible enforcement of any Environmental Law against Debtor or
any Consolidated Subsidiary.
(o) ENVIRONMENTAL REPORT means a written report prepared
for Secured Party by an environmental consulting or environmental engineering
firm.
(p) ERISA means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
(q) EVENT OF DEFAULT means an Event of Default or Events of
Default as defined in Section 11.1.
(r) EXTENSION means the granting to an Account Debtor of
additional time within which such Account Debtor is required to pay a
Receivable.
(s) FEDERAL BANKRUPTCY CODE means Title 11 of the United
States Code, entitled "Bankruptcy", as amended, or any successor federal
bankruptcy law.
(t) HAZARDOUS SUBSTANCES means, without limitation, any
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated piphenyls, petroleum and petroleum products, ethane,
hazardous materials, hazardous wastes, hazardous or toxic substances, and any
other material defined as a hazardous substance in Section 104(14) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601(14).
(u) INDEBTEDNESS means the indebtedness secured by the
Security Interest and described in Section 3.3.
(v) INELIGIBLE RECEIVABLES means the following described
Receivables and any other Receivables which, in the reasonable credit judgment
of Secured Party, are not satisfactory for credit or any other reason.
(i) Any Receivable which has remained unpaid for
more than the number of days specified in Item 4 of the Schedule.
(ii) Any Receivable with respect to which a
representation or warranty contained in Section 4.3, 4.5 or 4.6 is not, or does
not continue to be, true and accurate, including, without limitation, any
Receivable subject to a setoff.
(iii) Any Receivable with respect to which Debtor
has extended the time for payment without the consent of Secured Party, except
as provided in Section 8.2(a).
(iv) Any Receivable as to which any one or more of
the following events occurs: a Responsible Party shall die or be judicially
declared incompetent; a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, or other relief
under the bankruptcy, insolvency, or similar laws of the United States, any
state or territory thereof, or any foreign jurisdiction, now or hereafter in
effect shall be filed by or against a Responsible Party; a Responsible Party
shall make any general assignment for the benefit of creditors; a receiver or
trustee, including, without limitation, a "custodian" as defined in the Federal
Bankruptcy Code, shall be appointed for a Responsible Party or for any of the
assets of a Responsible Party; any other type of insolvency proceeding with
respect to a Responsible Party (under the bankruptcy laws of the United States
or otherwise) or any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, a
Responsible Party shall be instituted; all or any material part of the assets of
a Responsible Party shall be sold, assigned, or transferred; a Responsible Party
shall fail to pay its debts as they become due; or a Responsible Party shall
cease doing business as a going concern.
(v) All Receivables owed by an Account Debtor
owing Receivables classified as ineligible under the criterion set forth in
Section 1.1(v)(i) or Receivables, if the outstanding dollar amount of such
Receivables constitutes a percentage of the aggregate outstanding dollar amount
of all Receivables owed by such Account Debtor equal to or greater than the
percentage specified in Item 5 of the Schedule.
(vi) All Receivables in which the perfection,
enforceability or validity of Secured Party's Security Interest is governed by
statutory requirements other than the Uniform Commercial Code.
(vii) All Receivables owed by an Account Debtor
which does not maintain its chief executive office in the United States or which
is not organized under the laws of the United States or any state, unless
otherwise specified in Item 6 of the Schedule.
(viii) All Receivables owed by an Account Debtor if
Debtor or any person who, or entity which, directly or indirectly controls
Debtor, either owns in whole or material part, or directly or indirectly
controls, such Account Debtor.
(ix) Any Receivable arising from a consignment or
other arrangement pursuant to which the subject Inventory is returnable if not
sold or otherwise disposed of by the Account Debtor; any Receivable constituting
a partial billing under terms providing for payment only after full shipment or
performance; any Receivable arising from a xxxx and hold sale or in connection
with any prebilling where the Inventory or services have not been delivered,
performed, or accepted by the Account Debtor if Secured Party has not entered
into a satisfactory written agreement with such Account Debtor relating to such
Receivables; and any Receivable as to which the Account Debtor contends the
balance reported by Debtor is incorrect or not owing in any material respect.
(x) Any Receivable which is unenforceable against
the Account Debtor for any reason.
(xi) Any Receivable which is an Instrument,
Document or Chattel Paper or which is evidenced by a note, draft, trade
acceptance, or other instrument for the payment of money where such Instrument,
Document, Chattel Paper, note, draft, trade acceptance, or other instrument has
not been endorsed and delivered by Debtor to Secured Party.
(w) INTERNAL REVENUE CODE means the Internal Revenue Code
of 1986, as amended from time to time.
(x) INVENTORY means inventory as defined in the Uniform
Commercial Code as in effect in the State as of the date of this Agreement, and
in any event shall include returned or repossessed Goods.
(y) INTENTIONALLY DELETED.
(z) INVOICE means any document or documents used or to be
used to evidence a Receivable.
(aa) INTENTIONALLY DELETED.
(bb) MARINE PAYMENT ACCOUNT means the special bank
account owned by Secured Party to which Proceeds of Collateral, including,
without limitation, payments on Receivables and other payments from sales or
leases of Inventory, are credited. There is a Marine Payment Account if so
indicated in Item 8 of the Schedule.
(cc) PENSION EVENT means, with respect to any Pension Plan,
the occurrence of (i) any prohibited transaction described in Section 406 of
ERISA or in Section 4975 of the Internal Revenue Code, (ii) any Reportable
Event, (iii) any complete or partial withdrawal or proposed complete or partial
withdrawal of Debtor or any Consolidated Subsidiary from such Pension Plan, (iv)
any complete or partial termination or proposed complete or partial termination
of such Pension Plan, or (v) any accumulated funding deficiency (whether or not
waived) as defined in Section 302 of ERISA or in Section 412 of the Internal
Revenue Code.
(dd) PENSION PLAN means any pension plan as defined in
Section 3(2) of ERISA which is a multiemployer plan or a single employer plan as
defined in Section 4001 of ERISA and subject to Title IV of ERISA and which is
(i) a plan maintained by Debtor or any Consolidated Subsidiary for employees or
former employees of Debtor or of any Consolidated Subsidiary, (ii) a plan to
which Debtor or any Consolidated Subsidiary contributes or is required to
contribute, (iii) a plan to which Debtor or any Consolidated Subsidiary was
required to make contributions at any time during the five (5) calendar years
preceding the date of this Agreement, or (iv) any other plan with respect to
which Debtor or any Consolidated Subsidiary has incurred or may incur liability,
including, without limitation, contingent liability, under Title IV of ERISA
either to such plan or to the Pension Benefit Guaranty Corporation. For purposes
of this definition and for purposes of
4
Sections 1.1(cc), 4.12, and 11.1(h), Debtor shall include any trade or business
(whether or not incorporated) which, together with Debtor or any Consolidated
Subsidiary, is deemed to be a "single employer" within the meaning of Section
4001(b)(1) of ERISA.
(ee) PRIME RATE means the rate of interest publicly
announced by Marine Midland Bank from time to time as its prime rate and is a
base rate for calculating interest on certain loans. The rate announced by
Marine Midland Bank as its prime rate may or may not be the most favorable rate
charged by Marine Midland Bank to its customers.
(ff) RECEIVABLE means the right to payment for Goods sold or
leased or services rendered by Debtor, whether or not earned by performance, and
may, without limitation, in whole or in part be in the form of an Account,
Chattel Paper, Document, or Instrument.
(gg) RECEIVABLES BORROWING BASE means, at the time of its
computation, the aggregate amount of the outstanding Receivables in which
Secured Party has a first priority perfected security interest (adjusted with
respect to Credits and returned merchandise as provided in Article 8 hereof)
less the amount of Ineligible Receivables and any reserves established by
Secured Party in accordance with Section 2.3.
(hh) RELEASE means "release," as defined in Section 101(22)
of the Comprehensive, Environmental Response, Compensation and Liability act of
1980, 42 U.S.C. Section 9601(22), and the regulations promulgated thereunder.
(ii) REPORTABLE EVENT means any event described in Section
4043(b) of ERISA or in regulations issued thereunder with regard to a Pension
Plan.
(jj) RESPONSIBLE PARTY means an Account Debtor, a general
partner of an Account Debtor, or any party otherwise in any way directly or
indirectly liable for the payment of a Receivable.
(kk) SCHEDULE means the schedule executed in connection
with, and which is a part of, this Agreement.
(ll) SECURED PARTY means the person or entity defined on the
cover page of this Agreement and any successors or assigns of Secured Party.
(mm) SECURITY INTEREST means the security interest granted
to Secured Party by Debtor as described in Section 3.1.
(nn) STATE means the State of the United States specified in
Item 34 of the Schedule.
(oo) THIRD PARTY means any person or entity who has executed
and delivered, or who in the future may execute and deliver, to Secured Party
any agreement, instrument, or document pursuant to which such person or entity
has guarantied to Secured Party the payment of the Indebtedness or has granted
Secured Party a security interest in or lien on some or all of such person's or
entity's real or personal property to secure the payment of the Indebtedness.
(pp) TRANSACTION DOCUMENTS means this Agreement and all
documents including, without limitation, collateral documents, letter of credit
agreements, notes, acceptance credit agreements, security agreements, pledges,
guaranties, mortgages, title insurance, assignments and subordination agreements
required to be executed by Debtor, any Third Party or any Responsible Party
pursuant hereto or in connection herewith.
1.2 SINGULARS AND PLURALS. Unless the context otherwise requires,
words in the singular number include the plural, and in the plural include the
singular.
1.3 U.C.C. DEFINITIONS. Unless otherwise defined in Section 1.1 or
elsewhere in this Agreement, capitalized words shall have the meanings set forth
in the Uniform Commercial Code as in effect in the State as of the date of this
Agreement.
2. CREDIT FACILITY.
2.1 REQUESTS FOR AN ADVANCE. From time to time, Debtor may make a
written or oral request for an Advance, so long as the sum of the aggregate
principal balance of outstanding Advances and the requested Advance does not
exceed the Borrowing Capacity as then computed; and Secured Party shall make
such requested Advance, provided that (i) the Borrowing Capacity would not be so
exceeded, (ii) there has not occurred an Event of Default or an event which,
with notice or lapse of time or both, would constitute an Event of Default, and
(iii) all representations and warranties contained in this Agreement and in the
other Transaction Documents are true and correct on the date such requested
Advance is made as though made on and as of such date. Notwithstanding any
other provision of this Agreement, Secured Party may from time to time reduce
the percentages applicable to the Receivables Borrowing Base as it relates to
amounts of the Borrowing Capacity if Secured Party determines in its reasonable
credit judgment that there has been a material change in circumstances related
to any or all Receivables from those circumstances in existence on or prior to
the date of this Agreement or in the financial or other condition of Debtor.
Each oral request for an Advance shall be conclusively presumed to be made by a
person authorized by Debtor to do so; and the making of the Advance to Debtor as
hereinafter provided shall conclusively establish Debtor's obligation to repay
the Advance.
2.2 PROCEEDS OF AN ADVANCE. Advances shall be made in the manner
agreed by Debtor and Secured Party in writing or, absent any such agreement, as
determined by Secured Party.
3. COLLATERAL AND INDEBTEDNESS SECURED.
3.1 SECURITY INTEREST. Debtor hereby grants to Secured Party a
security interest in and a lien on the following property of Debtor wherever
located and whether now owned or hereafter acquired:
(a) All Accounts, Inventory, General Intangibles, Chattel
Paper, Documents, and Instruments, whether or not specifically assigned to
Secured Party, including, without limitation, all Receivables and all Equipment,
whether or not affixed to realty, and Fixtures.
(b) All guaranties, collateral, liens on or security
interests in real or personal property, leases, letters of credit, and other
rights, agreements, and property securing or relating to payment of Receivables.
(c) All books, records, ledger cards, data processing
records, computer software, and other property at any time evidencing or
relating to Collateral.
(d) All monies, securities, and other property now or
hereafter held or received by, or in transit to, Secured Party from or for
Debtor, and all of Debtor's deposit accounts, credits, and balances with Secured
Party existing at any time.
(e) All parts, accessories, attachments, special tools,
additions, replacements, substitutions, and accessions to or for all of the
foregoing.
(f) All Proceeds and products of all of the foregoing in
any form including, without limitation, amounts payable under any policies of
insurance insuring the foregoing against loss or damage, and all increases and
profits received from all of the foregoing.
3.2 OTHER COLLATERAL. Nothing contained in this Agreement shall
limit the rights of Secured Party in and to any other Collateral securing the
Indebtedness which may have been or may hereafter be granted to Secured Party by
Debtor or any Third Party pursuant to any other agreement.
3.3 INDEBTEDNESS SECURED. The Security Interest secures payment of
any and all indebtedness, and performance of all obligations and agreements, of
Debtor to Secured Party, whether now existing or hereafter incurred or arising,
of every kind and character, primary or secondary, direct or indirect, absolute
or contingent, sole, joint or several, and whether such indebtedness is from
time to time reduced and thereafter increased, or entirely extinguished and
thereafter reincurred, including, without limitation: (a) all Advances; (b) all
interest which accrues on any such indebtedness, until payment of such
indebtedness in full, including, without limitation, all interest provided for
under this Agreement; (c) all other monies payable by Debtor, and all
obligations and agreements of Debtor to Secured Party, pursuant to the
Transaction Documents; (d) all debts owed or to be owed by Debtor to others
which Secured Party has obtained, or may obtain, by assignment or otherwise; (e)
all monies payable by any Third Party, and all obligations and agreements of any
Third Party to Secured Party, pursuant to any of the Transaction Documents; and
(f) all monies due and to become due pursuant to Section 7.3.
4. REPRESENTATIONS AND WARRANTIES. To induce Secured Party to enter into
this Agreement and make Advances to Debtor from time to time as herein provided,
Debtor represents and warrants and, so long as any Indebtedness remains unpaid
or this Agreement remains in effect, shall be deemed continuously to represent
and warrant as follows:
4.1 CORPORATE EXISTENCE. Debtor and each Consolidated Subsidiary is
duly organized and existing and in good standing under the laws of the state
specified in Item 9 of the Schedule and is duly licensed or qualified to do
business and in good standing in every state in which the nature of its business
or ownership of its property requires such licensing or qualification.
4.2 CORPORATE CAPACITY. The execution, delivery, and performance of
the Transaction Documents are within Debtor's corporate powers, have been duly
authorized by all necessary and appropriate corporate and shareholder action,
and are not in contravention of any law or the terms of Debtor's articles or
certificate of incorporation or by-laws or any amendment thereto, or of any
indenture, agreement, undertaking, or other document to which Debtor is a party
or by which Debtor or any of Debtor's property is bound or affected.
4.3 VALIDITY OF RECEIVABLES. (a) Each Receivable is genuine and
enforceable in accordance with its terms and represents an undisputed and bona
fide indebtedness owing to Debtor by the Account Debtor obligated thereon; (b)
there are no defenses, setoffs, or counterclaims against any Receivable except
as disclosed to Secured Party in writing; (c) no payment has been received on
any Receivable and no Receivable is subject to any Credit or Extension or
agreements therefor unless written notice specifying such payment, Credit,
Extension, or agreement has been delivered to Secured Party; (d) each copy of
each Invoice is a true and genuine copy of the original Invoice sent to the
Account Debtor named therein and accurately evidences the transaction from which
the underlying Receivable arose; and the date payment is due as stated on each
such Invoice or computed based on the information set forth on each such Invoice
is correct; (e) all Chattel Paper, and all promissory notes, drafts, trade
acceptances, and other instruments for the payment of money relating to or
evidencing each Receivable, and each indorsement thereon, are true and genuine
and in all respects what they purport to be, and are the valid and binding
obligation of all parties thereto; and the date or dates stated on all such
items as the date on which payment in whole or in part is due is correct; (f)
any Inventory described in each Invoice has been delivered to the Account Debtor
named in such Invoice or placed for such delivery in the possession of a carrier
not owned or controlled directly or indirectly by Debtor; (g) any evidence of
the delivery or shipment of Inventory is true and genuine; (h) all services to
be performed by Debtor in connection with each Receivable have been performed by
Debtor; and (i) all evidence of the performance of such services by Debtor is
true and genuine.
4.4 INTENTIONALLY DELETED.
4.5 TITLE TO COLLATERAL. (a) Debtor is the owner of the Collateral
free of all security interests, liens, and other encumbrances except the
Security Interest and except as described in Item 11 of the Schedule; (b) Debtor
has the unconditional authority to grant the Security Interest to Secured Party;
and (c) assuming that all necessary Uniform
2
5
Commercial Code filings have been made and, if applicable, assuming compliance
with the Federal Assignment of Claims Act of 1940, as amended, Secured Party has
an enforceable first lien on all Collateral, subordinate only to those security
interests, liens, or encumbrances described as having priority over the Security
Interest in Item 11 of the Schedule.
4.6 NOTES RECEIVABLE. No Receivable is an Instrument, Document or
Chattel Paper or is evidenced by any note, draft, trade acceptance, or other
instrument for the payment of money, except such Instrument, Document, Chattel
Paper, note, draft, trade acceptance, or other instrument as has been indorsed
and delivered by Debtor to Secured Party and has not been presented for payment
and returned uncollected for any reason; provided, however, that Debtor, Mercury
Air Group, Inc. and Maytag Aircraft Corporation shall not be required to endorse
or deliver to Secured Party Instruments having an aggregate outstanding balance
of not more than $300,000.
4.7 EQUIPMENT. Equipment is located, and Equipment which is a
Fixture is affixed to real property, only at the address or addresses of Debtor
set forth at the beginning of this Agreement, the locations specified in Item 10
of the Schedule, or such other place or places as approved by Secured Party in
writing.
4.8 PLACE OF BUSINESS. (a) Unless otherwise disclosed to Secured
Party in Item 10 or Item 12 of the Schedule, Debtor is engaged in business
operations which are in whole or in part carried on at the address or addresses
specified at the beginning of this Agreement and at no other address or
addresses; (b) if Debtor has more than one place of business, its chief
executive office is at the address specified as such at the beginning of this
Agreement; and (c) Debtor's records concerning the Collateral are kept at the
address or addresses specified at the beginning of this Agreement or in Item 12
of the Schedule.
4.9 FINANCIAL CONDITION. Debtor has furnished to Secured Party
Debtor's most current financial statements, which statements represent correctly
and fairly the results of the operations and transactions of Debtor and the
Consolidated Subsidiaries as of the dates and for the period referred to, and
have been prepared in accordance with generally accepted accounting principles
consistently applied during each interval involved and from interval to
interval. Since the date of such financial statements, there have not been any
materially adverse changes in the financial condition reflected in such
financial statements, except as disclosed in writing by Debtor to Secured Party.
4.10 TAXES. Except as disclosed in writing by Debtor to Secured
Party: (a) all federal and other tax returns required to be filed by Debtor and
each Consolidated Subsidiary have been filed and all taxes required by such
returns have been paid; and (b) neither Debtor nor any Consolidated Subsidiary
has received any notice from the Internal Revenue Service or any other taxing
authority proposing additional taxes.
4.11 LITIGATION. Except as disclosed in writing by Debtor to Secured
Party, there are no actions, suits, proceedings, or investigations pending or,
to the knowledge of Debtor, threatened against Debtor or any Consolidated
Subsidiary or any basis therefor which, if adversely determined, would, in any
case or in the aggregate, materially adversely affect the property, assets,
financial condition, or business of Debtor or any Consolidated Subsidiary or
materially impair the right or ability of Debtor or any Consolidated Subsidiary
to carry on its operations substantially as conducted on the date of this
Agreement.
4.12 ERISA MATTERS. (a) No Pension Plan maintained has been
terminated or partially terminated or is insolvent or in reorganization, nor
have any proceedings been instituted to terminate or reorganize any Pension
Plan; (b) the assets held under such Pension Plan are sufficient to discharge
when due all obligations of such Pension Plan; (c) neither Debtor nor any
Consolidated Subsidiary has withdrawn from any Pension Plan in a complete or
partial withdrawal, nor has a condition occurred which if continued would result
in a complete or partial withdrawal; (d) neither Debtor nor any Consolidated
Subsidiary has incurred any withdrawal liability, including, without limitation,
contingent withdrawal liability, to any Pension Plan pursuant to Title IV of
ERISA; (e) neither Debtor nor any Consolidated Subsidiary has incurred any
liability to the Pension Benefit Guaranty Corporation other than for required
insurance premiums which have been paid when due; (f) no Reportable Event has
occurred; (g) no Pension Plan or other "employee pension benefit plan" as
defined in Section 3(2) of ERISA to which Debtor or any Consolidated Subsidiary
is a party has an "accumulated funding deficiency" (whether or not waived) as
defined in Section 302 of ERISA or in Section 412 of the Internal Revenue Code;
(h) the present value of all benefits vested under any Pension Plan does not
exceed the value of the assets of such Pension Plan allocable to such vested
benefits; (i) each Pension Plan and each other "employee benefit plan" as
defined in Section 3(3) of ERISA to which Debtor or any Consolidated Subsidiary
is a party is in substantial compliance with ERISA, and no such plan or any
administrator, trustee, or fiduciary thereof has engaged in a prohibited
transaction described in Section 406 of ERISA or in Section 4975 of the Internal
Revenue Code; (j) each Pension Plan and each other "employee benefit plan" as
defined in Section 3(2) of ERISA to which Debtor or any Consolidated Subsidiary
is a party has received a favorable determination by the Internal Revenue
Service with respect to qualification under Section 401(a) of the Internal
Revenue Code; and (k) neither Debtor nor any Consolidated Subsidiary has
incurred any liability to a trustee or trust established pursuant to Section
4049 of ERISA or to a trustee appointed pursuant to Section 4042(b) or (c) of
ERISA.
4.13 ENVIRONMENTAL MATTERS.
(a) Any Environmental Questionnaire previously provided to
Secured Party was and is accurate and complete and does not omit any material
fact the omission of which would make the information contained therein
materially misleading.
(b) Except as previously disclosed to Secured Party, no
above ground or underground storage tanks containing Hazardous Substances (other
than pesticides and fertilizer) are or have been during Debtor's occupancy or,
to the best of Debtor's knowledge, have been prior to such occupancy, located
on, any property owned, leased, or operated by Debtor or any Consolidated
Subsidiary.
(c) No property owned, leased, or operated by Debtor or any
Consolidated Subsidiary is or has been during Debtor's occupancy or, to the best
of Debtor's knowledge, has been prior to such occupancy, used for the Disposal
of any Hazardous Substance, except in the ordinary course of Debtor's business
and as permitted by Environmental Laws.
(d) No Release of a Hazardous Substance has occurred during
Debtor's occupancy or, to the best of Debtor's knowledge, previously occurred,
or is threatened on, at, from, or near any property owned, leased, or operated
by Debtor or any Consolidated Subsidiary except in the ordinary course of
Debtor's business and as permitted by Environmental Laws.
(e) Neither Debtor nor any Consolidated Subsidiary is
subject to any existing, pending, or threatened suit, claim, notice of violation
under any Environmental Law.
(f) Debtor and each Consolidated Subsidiary are in
compliance with, and have obtained all Environmental Permits required by, all
Environmental Laws.
4.14 VALIDITY OF TRANSACTION DOCUMENTS. The Transaction Documents
constitute the legal, valid and binding obligations of Debtor and each
Consolidated Subsidiary and any Third Parties thereto, enforceable in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy and insolvency laws and laws affecting creditors' rights
generally.
4.15 NO CONSENT OR FILING. No consent, license, approval or
authorization of, or registration, declaration or filing with, any court,
governmental body or authority or other person or entity is required in
connection with the valid execution, delivery or performance of the Transaction
Documents or for the conduct of Debtor's business as now conducted, other than
filings and recordings to perfect security interests in or liens on the
Collateral in connection with the Transaction Documents.
4.16 NO VIOLATIONS. Neither Debtor nor any Consolidated Subsidiary
is in violation of any term of its articles or certificate of incorporation or
by-laws, or of any mortgage, borrowing agreement or other instrument or
agreement pertaining to indebtedness for borrowed money. Neither Debtor nor any
Consolidated Subsidiary is in violation of any term of any other indenture,
instrument, or agreement to which it is a party or by which it or its property
may be bound, resulting, or which might reasonably be expected to result, in a
material and adverse effect upon its business or assets. Neither Debtor nor any
Consolidated Subsidiary is in violation of any order, writ, judgment, injunction
or decree of any court of competent jurisdiction or of any statute, rule or
regulation of any governmental authority which might reasonably be expected to
result, in a material and adverse effect upon its business or assets. The
execution and delivery of the Transaction Documents and the performance of all
of the same is and will be in compliance with the foregoing and will not result
in any violation thereof or result in the creation of any mortgage, lien,
security interest, charge or encumbrance upon any properties or assets except in
favor of Secured Party. There exists no fact or circumstance (whether or not
disclosed in the Transaction Documents) which materially adversely affects or in
the future (so far as Debtor can now foresee) may materially adversely affect
the condition, business or operations of Debtor or any Consolidated Subsidiary.
4.17 TRADEMARKS AND PATENTS. Debtor and each Consolidated Subsidiary
possesses all trademarks, trademark rights, patents, patent rights, licenses,
tradenames, tradename rights and copyrights that are required to conduct its
business as now conducted without conflict with the rights or claimed rights of
others. A list of the foregoing is set forth in Item 13 of the Schedule.
4.18 CONTINGENT LIABILITIES. There are no suretyship agreements,
guaranties, or other contingent liabilities of Debtor or any Consolidated
Subsidiary which are not disclosed by the financial statements described in
Section 4.9 or Item 29 of the Schedule.
4.19 COMPLIANCE WITH LAWS. Debtor is in compliance with all
applicable laws, rules, regulations, and other legal requirements with respect
to its business and the use, maintenance, and operations of the real and
personal property owned or leased by it in the conduct of its business.
4.20 LICENSES, PERMITS, ETC. Each franchise, grant, approval,
authorization, license, permit, easement, consent, certificate and order of and
registration, declaration, and filing with, any court, governmental body, or
other person or entity required for or in connection with the conduct of
Debtor's and each Consolidated Subsidiary's business as now conducted is in full
force and effect, except where the failure to maintain such items would not have
a material adverse effect on Debtor's business or financial condition.
4.21 LABOR CONTRACTS. Neither Debtor nor any Consolidated Subsidiary
is a party to any collective bargaining agreement or to any existing or
threatened labor dispute or controversies except as set forth in Item 15 of the
Schedule.
4.22 CONSOLIDATED SUBSIDIARIES. Debtor has no Consolidated
Subsidiaries other than those listed in Item 36 of the Schedule and the
percentage ownership of Debtor in each such Consolidated Subsidiary is specified
in such Item 36.
4.23 AUTHORIZED SHARES. Debtor's total authorized common shares, the
par value of such shares, and the number of such shares issued and outstanding,
are set forth in Item 16 of the Schedule. All of such shares are of one class
and have been validly issued in full compliance with
3
6
all applicable federal and state laws, and are fully paid and non-assessable. No
other shares of the Debtor of any class or type are authorized or outstanding.
5. CERTAIN DOCUMENTS TO BE DELIVERED TO SECURED PARTY.
5.1 DOCUMENTS. Debtor shall deliver to Secured Party, all
documents specified in Item 17 of the Schedule, as frequently as indicated
therein or at such other times as Secured Party may request, and all other
documents and information reasonably requested by Secured Party, all in form,
content and detail satisfactory to Secured Party. The documents and schedules
to be provided under this Section 5.1 are solely for the convenience of Secured
Party in administering this Agreement and maintaining records of the Collateral.
Debtor's failure to provide Secured Party with any such schedule shall not
affect the Security Interest.
5.2 INVOICES. Debtor shall cause all of its Invoices to be printed
and to bear consecutive numbers and shall prepare and issue its Invoices in such
consecutive numerical order. If requested by Secured Party, all copies of
Invoices not previously delivered to Secured Party shall be delivered to Secured
Party with each schedule of Receivables. Copies of all Invoices which are
voided or canceled or which for any other reason do not evidence a Receivable
shall be included in such delivery. If any Invoice or copy thereof is lost,
destroyed, or otherwise unavailable, Debtor shall account in writing, in form
satisfactory to Secured Party, for such missing Invoice.
5.3 CHATTEL PAPER. The original of each item of Chattel Paper
evidencing a Receivable shall be delivered to Secured Party with the schedule
listing the Receivable which it evidences, together with an assignment in form
and content satisfactory to Secured Party of such Chattel Paper by Debtor to the
Secured Party.
6. COLLECTIONS. Upon Secured Party's request, all Proceeds of Collateral
received by Debtor, including, without limitation, payments on Receivables,
shall be held by Debtor in trust for Secured Party, shall not be commingled with
any assets of Debtor, and shall be immediately delivered to Secured Party. If
Secured Party elects, Debtor shall establish the Marine Payment Account wherein
Debtor shall deposit all Proceeds of Collateral and shall, on the day of each
such deposit, forward to Secured Party a copy of the deposit receipt of the
depository bank indicating that such deposit has been made. Upon receipt of
Proceeds of Collateral, Secured Party shall apply such Proceeds directly to the
Indebtedness in the manner provided in Section 7.5. Checks drawn on the Marine
Payment Account and all any part of the balance of the Marine Payment Account
shall be applied from time to time to the Indebtedness in the manner provided in
Section 7.5.
7. PAYMENT OF PRINCIPAL, INTEREST, FEES, AND COSTS AND EXPENSES.
7.1 PROMISE TO PAY PRINCIPAL. Debtor promises to pay to Secured
Party the outstanding principal of Advances, in full upon termination of this
Agreement pursuant to Section 13.13, or acceleration of the time for payment of
the Indebtedness, pursuant to Section 11.2. Whenever the outstanding principal
balance of Advances exceeds the Borrowing Capacity, Debtor shall immediately pay
to Secured Party the excess of the outstanding principal balance of Advances
over the Borrowing Capacity.
7.2 PROMISE TO PAY INTEREST.
(a) Debtor promises to pay to Secured Party, interest on the
principal of Advances from time to time unpaid at the fluctuating per annum rate
specified in Item 18 of the Schedule. From the date of the occurrence of, and
during the continuance of, an Event of Default, Debtor, as additional
compensation to Secured Party for its increased credit risk promises to pay
interest on (i) the principal of Advances, whether or not past due; and (ii)
past due interest and any other amount past due under the Transaction Documents,
at a per annum rate of 3% greater than the rate of interest specified in Item 18
of the Schedule.
(b) Interest shall be paid (i) on the first day of each
month in arrears, (ii) on termination of this Agreement, pursuant to Section
13.13, (iii) on acceleration of the time for payment of the Indebtedness,
pursuant to Section 11.2, and (iv) on the date the Indebtedness is paid in full.
(c) Any change in the interest rate resulting from a change
in the Prime Rate shall take effect simultaneously with such change in the Prime
Rate. Interest shall be computed on the daily unpaid principal balance of
Advances. Interest shall be calculate for each calendar year at 1/360th of the
applicable per annum rate which will result in an effective per annum rate
higher than that specified in Item 18 of the Schedule. In no event shall the
rate of interest exceed the maximum rate permitted by applicable law. If Debtor
pays to Secured Party interest in excess of the amount permitted by applicable
law, such excess shall be applied in reduction of the principal of Advances made
pursuant to this Agreement, and any remaining excess interest, after application
thereof to the principal of Advances, shall be refunded to Debtor.
7.3 PROMISE TO PAY FEES. Debtor promises to pay to Secured Party
any fees specified in Item 19 of the Schedule on the applicable due dates also
specified in Item 19 of the Schedule.
7.4 PROMISE TO PAY COSTS AND EXPENSES.
(a) Debtor agrees to pay to Secured Party, on demand, all
reasonable costs and expenses as provided in this Agreement, and all costs and
expenses incurred by Secured Party from time to time in connection with this
Agreement, including, without limitation, those incurred in: (i) preparing,
negotiating, amending, waiving or granting consent with respect to the terms of
any or all of the Transaction Documents; (ii) enforcing the Transaction
Documents; (iii) performing, pursuant to Section 13.2, Debtor's duties under the
Transaction Documents upon Debtor's failure to perform them; (iv) filing
financing statements, assignments, or other documents relating to the
Collateral, (e.g., filing fees, recording taxes, and documentary stamp taxes);
(v) maintaining the Marine Payment Account; (vi) administering the Transaction
Documents, including any bank fees such as returned check and wire transfer
fees, but not ordinary general and administrative expenses; (vii) compromising,
pursuing, or defending any controversy, action, or proceeding resulting,
directly or indirectly, from Secured Party's relationship with Debtor,
regardless of whether Debtor is a party to such controversy, action, or
proceeding and of whether the controversy, action, or proceeding occurs before
or after the Indebtedness has been paid in full; (viii) realizing upon or
protecting any Collateral; (ix) enforcing or collecting any Indebtedness or
guaranty thereof; (x) employing collection agencies or other agents to collect
any or all of the Receivables; (xi) examining Debtor's books and records or
inspecting the Collateral, including, without limitation, the reasonable costs
of examinations and inspections conducted by third parties, provided that
nothing herein shall limit Secured Party's right to audit, examination,
inspection, or other fees otherwise payable under Section 7.3 and (xii)
obtaining independent appraisals from time to time as reasonably deemed
necessary or appropriate by Secured Party.
(b) Without limiting Section 7.4(a), Debtor also agrees to
pay to Secured Party, on demand, the actual reasonable fees and disbursements
incurred by Secured Party for attorneys retained by Secured Party for advice,
suit, appeal, or insolvency or other proceedings under the Federal Bankruptcy
Code or otherwise, or in connection with any purpose specified in Section
7.4(a).
7.5 METHOD OF PAYMENT OF PRINCIPAL, INTEREST, FEES, AND COSTS AND
EXPENSES. Without limiting Debtor's obligation pursuant to Sections 7.1, 7.2.,
7.3, and 7.4 to pay the principal of Advances, interest, fees, and costs and
expenses, the following provisions shall apply to the payment thereof:
(a) Payment of Principal. Debtor authorizes Secured Party
to apply any Proceeds of Collateral, including, without limitation, payments on
Receivables and any funds in the Marine Payment Account, to the unpaid principal
of Advances.
(b) Payment of Interest, Fees, and Costs and Expenses.
Without limiting Debtor's obligation to pay accrued interest, fees, costs and
expenses, Debtor authorizes Secured Party in its sole discretion to (provided,
however, Secured Party shall have no obligation to): (i) make an Advance to pay
for such items; or (ii) apply Proceeds of Collateral, including, without
limitation, payments on Receivables and any funds in the Marine Payment Account,
to the payment of such items.
(c) Notwithstanding any other provision of this Agreement,
Secured Party, in its sole discretion, shall determine the manner and amount of
application of payments and credits and Proceeds of Collateral, if any, to be
made on all or any part of any component or components of the Indebtedness,
whether principal, interest, fees, costs and expenses, or otherwise.
7.6 COMPUTATION OF DAILY OUTSTANDING BALANCE. For the purpose of
calculating the aggregate principal balance of outstanding Advances under
Section 2.1, Advances shall be deemed to be paid on the date that checks drawn
on or other funds received from the Marine Payment Account are applied by
Secured Party to Advances, and on the date any other payments on Receivables or
other payments from sales or leases of Inventory to be so applied have been
processed for collection by Secured Party. Notwithstanding any other provision
of this Agreement, if any Item presented for collection by Secured Party is not
honored, Secured Party may reverse any provisional credit which has been given
for the Item and make appropriate adjustments to the amount of interest and
principal due.
7.7 ACCOUNT STATED. Debtor agrees that each monthly or other
statement of account mailed or delivered by Secured Party to Debtor pertaining
to the outstanding balance of Advances, the amount of interest due thereon,
fees, and costs and expenses shall be final, conclusive, and binding on Debtor
and shall constitute an "account stated" with respect to the matters contained
therein unless, within thirty (30) calendar days from when such statement is
mailed or, if not mailed, delivered to Debtor, Debtor shall deliver to Secured
Party written notice of any objections which it may have as to such statement of
account, and in such event, only the items to which objection is expressly made
in such notice shall be considered to be disputed by Debtor. Secured Party
shall use reasonable care in the preparation of such statements.
8. PROCEDURES AFTER SCHEDULING RECEIVABLES.
8.1 INTENTIONALLY DELETED.
8.2 CREDITS AND EXTENSIONS.
(a) Granting of Credits and Extensions. Debtor may grant
such Credits and such Extensions as are ordinary in the usual course of Debtor's
business without the prior consent of Secured Party; provided, however, that any
such Extension shall not extend the time for payment beyond thirty (30) days
after the original due date as shown on the Invoice evidencing the related
Receivable, or as computed based on the information set forth on such Invoice.
(b) Accounting for Credits and Extensions. Debtor shall
make a full accounting of each grant of a Credit or an Extension, including a
brief description of the reasons therefor and a copy of all credit memoranda.
Such accountings shall be in form satisfactory to Secured Party and shall be
delivered to Secured Party daily or at such other intervals as may be specified
in Item 17 of the Schedule. All credit memoranda issued by Debtor shall be
numbered consecutively and copies of the same, when delivered to Secured Party,
shall be in numerical order and accounted for in the same manner as provided in
Section 5.2 with respect to Invoices.
(c) Adjustment to Receivables Borrowing Base. The
Receivables Borrowing Base will be reduced by the amount of all Credits
reflected in an accounting required by Section 8.2(b) and may, in the
4
7
reasonable discretion of Secured Party, be reduced by the full amount of any
Receivables for which Extensions were granted.
8.3 RETURNED INSTRUMENTS. In the event that any check or other
instrument received in payment of a Receivable shall be returned uncollected for
any reason, Secured Party shall again forward the same for collection or return
the same to Debtor. Upon receipt of a returned check or instrument by Debtor,
Debtor shall immediately make the necessary entries on its books and records to
reinstate the Receivable as outstanding and unpaid and immediately notify
Secured Party of such entries. All Receivables of an Account Debtor with
respect to which such check or instrument was received shall thereupon become
Ineligible Receivables.
8.4 DEBIT MEMORANDA.
(a) Unless Secured Party otherwise notifies Debtor in
writing, Debtor shall deliver at least weekly to Secured Party, together with
the schedule of Receivables provided for in Item 17 on the Schedule, copies of
all debit memoranda issued by Debtor since the last such debit memoranda
delivered to Secured Party.
(b) All debit memoranda issued by Debtor shall be numbered
consecutively and copies of the same, when delivered to Secured Party, shall be
in numerical order and accounted for in the same manner as provided in Section
5.2 with respect to Invoices.
8.5 NOTES RECEIVABLE. Debtor shall not accept any note or other
instrument (except a check or other instrument for the immediate payment of
money) with respect to any Receivable without the prior written consent of
Secured Party. If Secured Party in its reasonable judgment, consents to the
acceptance of any such note or instrument, the same shall be considered as
evidence of the Receivable giving rise to such note or instrument, shall be
subject to the Security Interest, and shall not constitute payment of such
Receivable, and Debtor shall forthwith indorse such note or instrument to the
order of Secured Party and deliver the same to Secured Party, together with the
Schedule listing the Receivables which it evidences. Upon collection, the
proceeds of such note or instrument may be applied directly to unpaid Advances,
interest, and costs and expenses as provided in Section 7.5.
9. AFFIRMATIVE COVENANTS. So long as any part of the Indebtedness remains
unpaid or this Agreement remains in effect, Debtor shall comply with the
covenants contained in Item 21 of the Schedule or elsewhere in this Agreement,
and with the covenants listed below:
9.1 FINANCIAL STATEMENTS. Debtor shall furnish or have furnished,
as applicable, to Secured Party:
(a) Within ninety (90) days after the end of each fiscal
year, audited consolidated and consolidating financial statements of Mercury Air
Group, Inc. ("Mercury") and each Consolidated Subsidiary of Mercury as of the
end of such year, fairly presenting Mercury's and each of its Consolidated
Subsidiaries' financial position, which statements shall consist of a balance
sheet and related statements of income, retained earnings, cash flow covering
the period of Mercury's immediately preceding fiscal year, and which shall be
prepared by independent certified public accountants satisfactory to Secured
Party.
(b) Within thirty (30) days after the end of each month,
consolidated and consolidating financial statements of Mercury and each
Consolidated Subsidiary of Mercury as of the end of such month fairly presenting
Mercury's and its Consolidated Subsidiaries' financial position, which
statements shall consist of a balance sheet and related statements of income and
retained earnings covering the period from the end of the immediately preceding
fiscal year to the end of such month, all in such detail as Secured Party may
request signed and certified to be correct by the president or chief financial
officer of Mercury or other financial officer satisfactory to Secured Party in
the form of Exhibit A attached hereto and made a part hereof.
(c) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which Mercury sends to its
shareholders, and copies of any and all periodic and special reports and
registration statements which Debtor files with the Securities and Exchange
Commission.
(d) Such additional information as Secured Party may from
time to time reasonably request regarding the financial and business affairs of
Debtor or any Consolidated Subsidiary.
9.2 GOVERNMENT AND OTHER SPECIAL RECEIVABLES. Debtor shall promptly
notify Secured Party in writing of the existence of any Receivable as to which
the perfection, enforceability, or validity of Secured Party's Security Interest
in such Receivable, or Secured Party's right or ability to obtain direct payment
to Secured Party of the Proceeds of such Receivable, is governed by any federal
or state statutory requirements other than those of the Uniform Commercial Code,
including, without limitation, any Receivable subject to the Federal Assignment
of Claims Act of 1940, as amended.
9.3 TERMS OF SALE. The terms on which sales or leases giving rise
to Receivables are made shall be as specified in Items 3 and 25 of the Schedule.
9.4 BOOKS AND RECORDS. Debtor shall maintain, at its own cost and
expense, accurate and complete books and records with respect to the Collateral,
in form reasonably satisfactory to Secured Party, and including, without
limitation, records of all payments received and all Credits and Extensions
granted with respect to the Receivables, of the return, rejection, repossession,
stoppage in transit, loss, damage, or destruction of any Inventory, and of all
other dealings affecting the Collateral. Debtor shall deliver such books and
records to Secured Party or its representative on request. At Secured Party's
request, Debtor shall xxxx all or any records to indicate the Security Interest.
Debtor shall further indicate the Security Interest on all financial statements
issued by it or shall cause the Security Interest to be so indicated by its
accountants. The Marine Payment Account, if any, is not an asset of Debtor and
shall not be shown as an asset of Debtor in such books and records or in such
financial statements, except to the extent the funds therein exceed the
Indebtedness.
9.5 INTENTIONALLY DELETED.
9.6 EXAMINATIONS. Debtor shall at all reasonable times and from
time to time permit Secured Party or its agents upon request to inspect the
Collateral and to examine and make extracts from or copies of any of Debtor's
books, ledgers, reports, correspondence, and other records.
9.7 VERIFICATION OF COLLATERAL. Secured Party shall have the right
to verify all or any Collateral in any manner and through any medium Secured
Party may reasonably consider appropriate and Debtor agrees to furnish all
reasonable assistance and reasonable information and perform any acts which
Secured Party may reasonably require in connection therewith.
9.8 RESPONSIBLE PARTIES. Debtor shall notify Secured Party of the
occurrence of any event specified in Section 1.1(v)(iv) with respect to any
Responsible Party promptly after receiving notice thereof.
9.9 TAXES. Debtor shall promptly pay and discharge all of its
taxes, assessments, and other governmental charges prior to the date on which
penalties are attached thereto, establish adequate reserves for the payment of
such taxes, assessments, and other governmental charges, make all required
withholding and other tax deposits, and, upon request, provide Secured Party
with receipts or other proof that such taxes, assessments, and other
governmental charges have been paid in a timely fashion; provided, however, that
nothing contained herein shall require the payment of any tax, assessment, or
other governmental charge so long as its validity is being contested in good
faith and by appropriate proceedings diligently conducted and adequate reserves
for the payment thereof have been established.
9.10 LITIGATION.
(a) Debtor shall promptly notify Secured Party in writing of
any litigation, proceeding, or counterclaim against, or of any investigation of,
Debtor or any Consolidated Subsidiary if: (i) the outcome of such litigation,
proceeding, counterclaim, or investigation may materially and adversely affect
the finances or operations of Debtor or any Consolidated Subsidiary or title to,
or the value of, any Collateral; or (ii) such litigation, proceeding,
counterclaim, or investigation questions the validity of any Transaction
Document or any action taken or to be taken pursuant to any Transaction
Document.
(b) Debtor shall furnish to Secured Party such information
regarding any such litigation, proceeding, counterclaim, or investigation as
Secured Party shall request.
9.11 INSURANCE.
(a) Debtor shall at all times carry and maintain in full
force and effect such insurance as Secured Party may reasonably from time to
time require, in coverage, form, and amount, and issued by insurers,
satisfactory to Debtor and Secured Party, including, without limitation:
workers' compensation or similar insurance; public liability insurance; and
insurance against such other risks as are usually insured against by business
entities of established reputation engaged in the same or similar businesses as
Debtor and similarly situated. The insurance presently maintained by Debtor is
satisfactory to Secured Party; however, Secured Party reserves the right, in the
exercise of its reasonable credit judgment, to require additional or other
insurance in light of new or different circumstances from those presently known
to Secured Party.
(b) Debtor shall deliver to Secured Party the policies of
insurance required by Secured Party, with appropriate endorsements designating
Secured Party as an additional insured mortgagee and loss payee as requested by
Secured Party. Each policy of insurance shall provide that if such policy is
canceled for any reason whatsoever, if any substantial change is made in the
coverage which affects Secured Party, or if such policy is allowed to lapse for
nonpayment of premium, such cancellation, change, or lapse shall not be
effective as to Secured Party until thirty (30) days after receipt by Secured
Party of written notice thereof from the insurer issuing such policy.
9.12 GOOD STANDING; BUSINESS.
(a) Debtor shall take all necessary steps to preserve its
corporate existence and its right to conduct business in all states in which the
nature of its business or ownership of its property requires such qualification
except where the failure to maintain such qualification would not have a
material adverse effect on the Debtor's business or financial condition.
(b) Debtor shall engage only in the same or similar business
conducted by it on the date of this Agreement.
9.13 PENSION REPORTS. Upon the occurrence of any Pension Event,
Debtor shall furnish to Secured Party, as soon as possible and in any event
within thirty (30) days after Debtor knows or has reason to know of such
occurrence, the statement of the president or chief financial officer of Debtor
setting forth the details of such Pension Event and the action which Debtor
proposes to take with respect thereto.
9.14 NOTICE OF NON-COMPLIANCE. Debtor shall notify Secured Party in
writing of any failure by Debtor or any Third Party to comply with any provision
of any Transaction Document immediately upon learning of such non-compliance, or
if any representation or warranty contained in any Transaction Document is no
longer true.
9.15 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Debtor shall comply with all Environmental Laws.
(b) Debtor shall, at Secured Party's request, provide, at
Debtor's expense, updated Environmental Questionnaires, concerning any property
owned, leased, or operated by Debtor or any Consolidated Subsidiary.
5
8
(c) Debtor shall deliver promptly to Secured Party (i)
copies of any documents received from the United States Environmental Protection
Agency or any state, county, or municipal environmental or health agency
concerning Debtor's or any Consolidated Subsidiary's violation of any
Environmental Law; and (ii) copies of any documents submitted by Debtor or any
Consolidated Subsidiary to the United States Environmental Protection Agency or
any state, county, or municipal environmental or health agency concerning its
violation of any Environmental Law.
(d) Debtor shall conduct its operations in compliance with
the provisions of all federal, state, and local laws, ordinances, rules,
regulations, and orders applicable to any natural or environmental resource or
media located on, above, within, or in the vicinity of, related to, or affected
by, any real property.
9.16 DEFEND COLLATERAL. Debtor shall defend the Collateral against
the claims and demands of all other parties (other than Secured Party)
including, without limitation, defenses, setoffs, and counterclaims asserted by
any Account Debtor against Debtor or Secured Party; provided, however, that
nothing herein shall restrict the ability of Debtor to handle, compromise,
settle or concede any dispute or claim as Debtor may deem reasonable.
9.17 USE OF PROCEEDS. Debtor shall use the proceeds of Advances
solely for Debtor's working capital and for such other legal and proper
corporate purposes as are consistent with all applicable laws, Debtor's articles
or certificate of incorporation and by-laws, resolutions of Debtor's Board of
Directors, and the terms of this Agreement.
9.18 COMPLIANCE WITH LAWS. Debtor shall comply with all applicable
laws, rules, regulations, and other legal requirements with respect to its
business and the use, maintenance, and operations of the real and personal
property owned or leased by it in the conduct of its business, except where the
failure to so comply would not have a material adverse effect on the business or
financial condition of Debtor.
9.19 MAINTENANCE OF PROPERTY. Debtor shall maintain its material
property including, without limitation, the Collateral, in good condition and
repair, subject to ordinary course of business wear and tear, and shall prevent
waste.
9.20 LICENSES, PERMITS, ETC. Debtor shall maintain all of its
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, and orders, if any, in full force and effect until their
respective expiration dates.
9.21 TRADEMARKS AND PATENTS. Debtor shall maintain all of its
trademarks, trademark rights, patents, patent rights, licenses, permits,
tradenames, tradename rights, and approvals, if any, in full force and effect
until their respective expiration dates, except where the failure to maintain
such items would not have a material adverse effect on the business or financial
condition of Debtor.
9.22 ERISA. Debtor shall comply with the provisions of ERISA and the
Internal Revenue Code with respect to each Pension Plan.
9.23 MAINTENANCE OF OWNERSHIP. Debtor shall at all times maintain
ownership of the percentages of issued and outstanding capital stock of each
Consolidated Subsidiary set forth in Item 36 of the Schedule and notify Secured
Party in writing prior to the incorporation of any new Consolidated Subsidiary.
9.24 ACTIVITIES OF CONSOLIDATED SUBSIDIARIES. Unless the provisions
of this Section 9.24 are expressly waived by Secured Party in writing, Debtor
shall cause each Consolidated Subsidiary to comply with Sections 9.1(b), 9.9,
9.11(a), 9.12, 9.15 and 9.18 through 9.22, inclusive, and any of the provisions
contained in Item 21 of the Schedule, and shall cause each Consolidated
Subsidiary to refrain from doing any of the acts proscribed by Sections 10.2,
10.3, and 10.5 through 10.14, inclusive, or proscribed by any of the provisions
contained in Item 21 of the Schedule.
10. NEGATIVE COVENANTS. So long as any part of the Indebtedness remains
unpaid or this Agreement remains in effect, Mercury and its Consolidated
Subsidiaries, without the written consent of Secured Party, which consent shall
not be unreasonably withheld, shall not violate any covenant contained in Item
21 of the Schedule and shall not:
10.1 LOCATION OF INVENTORY, EQUIPMENT AND BUSINESS RECORDS. Move
the Inventory, Equipment or the records concerning the Collateral from the
location where they are kept as specified in Items 10 and 12 of the Schedule.
10.2 BORROWED MONEY. Create, incur, assume, or suffer to exist any
liability for borrowed money, except to Secured Party and except as may be
specified in Item 27 of the Schedule.
10.3 SECURITY INTEREST AND OTHER ENCUMBRANCES. Create, incur, assume,
or suffer to exist any mortgage, security interest, lien, or other encumbrance
upon any of its properties or assets, whether now owned or hereafter acquired,
except mortgages, security interests, liens, and encumbrances (a) in favor of
Secured Party and (b) as may be specified in Item 11 of the Schedule.
10.4 STORING AND USE OF THE COLLATERAL. Place the Collateral in any
warehouse which may issue a negotiable Document with respect thereto or use the
Collateral in violation of any provision of the Transaction Documents, of any
applicable statute, regulation, or ordinance, or of any policy insuring the
Collateral.
10.5 MERGERS, CONSOLIDATIONS, OR SALES. (a) Merge or consolidate
with or into any corporation; (b) enter into any joint venture or partnership
with any person, firm, or corporation; (c) convey, lease, or sell all or any
material portion of its property or assets or business to any other person,
firm, or corporation except for the sale of Inventory in the ordinary course of
its business and in accordance with the terms of this Agreement; or (d) convey,
lease, or sell any of its assets to any person, firm, or corporation for less
than the fair market value thereof.
10.6 CAPITAL STOCK. Purchase or retire any of its capital stock or
issue any capital stock, except pro rata to its present stockholders, or
otherwise change the capital structure of Debtor or change the relative rights,
preferences or limitations relating to any of its capital stock.
10.7 DIVIDENDS OR DISTRIBUTIONS. Pay or declare any cash or other
dividends or distributions on any of its corporate stock, except that stock
dividends may be paid, and except that a Consolidated Subsidiary may pay
dividends of any kind to Debtor and so long as no Event of Default shall have
occurred and is continuing, Debtor may pay lawful, cash dividends to Mercury.
10.8 INVESTMENTS AND ADVANCES. Make any investment in or advances to
any other person, firm, or corporation, except (a) advance payments or deposits
against purchases made in the ordinary course of Debtor's regular business; (b)
direct obligations of the United States of America; (c) any existing investments
in, or existing advances to, the Consolidated Subsidiaries; or (d) any
investments or advances that may be specified in Item 28 of the Schedule.
10.9 GUARANTIES. Become a guarantor, a surety, or otherwise liable
for the debts or other obligations of any other person, firm, or corporation,
whether by guaranty or suretyship agreement, agreement to purchase
indebtedness, agreement for furnishing funds through the purchase of goods,
supplies, or services (or by way of stock purchase, capital contribution,
advance, or loan) for the purpose of paying or discharging indebtedness, or
otherwise, except in favor of Secured Party, except as an indorser of
instruments for the payment of money deposited to its bank account for
collection in the ordinary course of business and except as may be specified
in Item 29 of the Schedule.
10.10 INTENTIONALLY DELETED.
10.11 CAPITAL EXPENDITURES. Together with Mercury and its other
Consolidated Subsidiaries make or incur any capital expenditures in any one
fiscal year in an aggregate amount in excess of the amount, if any, specified in
Item 31 of the Schedule.
10.12 INTENTIONALLY DELETED.
10.13 NAME CHANGE. Change its name without giving at least thirty
(30) days prior written notice of its proposed new name to Secured Party,
together with delivery to Secured Party of UCC-1 Financing Statements reflecting
Debtor's new name, all in form and substance satisfactory to Secured Party.
10.14 DISPOSITION OF COLLATERAL. Sell, assign, or otherwise transfer,
dispose of or encumber the Collateral or any interest therein, or grant a
security interest therein or license thereof, except to Secured Party and except
the sale or lease of Inventory and obsolete Equipment in the ordinary course of
business of Debtor and in accordance with the terms of this Agreement.
10.15 FINANCIAL COVENANTS. Fail to comply with the financial
covenants set forth in Item 26 of the Schedule.
11. EVENTS OF DEFAULT.
11.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an Event of
Default and, collectively, Events of Default):
(a) Nonpayment. Nonpayment when due of any principal,
interest, premium, fee, cost, or expense due under the Transaction Documents.
(b) Negative Covenants. Default in the observance of any of
the covenants or agreements of Debtor contained in Article 10.
(c) Article 6. Default in the observance of any of the
covenants or agreements of Debtor contained in Article 6.
(d) Other Covenants. Default in the observance of any of
the covenants or agreements of Debtor contained in the Transaction Documents,
other than in Article 11 or Sections 7.1, 7.2, 7.3 or 7.4 or in any other
agreement with Secured Party which is not remedied within the earlier of ten
(10) days after (i) notice thereof by Secured Party to Debtor, or (ii) the date
Debtor was required to give notice to Secured Party under Section 9.14.
(e) Cessation of Business or Voluntary Insolvency
Proceedings. The (i) cessation of operations of Debtor's business as conducted
on the date of this Agreement in any material respect; (ii) filing by Debtor of
a petition or request for liquidation reorganization, arrangement, adjudication
as a bankrupt, relief as a debtor, or other relief under the bankruptcy,
insolvency, or similar laws of the United States of America or any state or
territory thereof or any foreign jurisdiction now or hereafter in effect; (iii)
making by Debtor of a general assignment for the benefit of creditors; (iv)
consent by the Debtor to the appointment of a receiver or trustee, including,
without limitation, a "custodian" as defined in the Federal Bankruptcy Code for
Debtor or any of Debtor's assets; (v) making of any, or sending of any notice of
any intended, bulk sale by Debtor; or (vi) execution by Debtor of a consent to
any other type of insolvency proceeding (under the Federal Bankruptcy Code or
otherwise) or any formal or informal proceeding for the dissolution or
liquidation of, or settlement of claims against or winding up of affairs of,
Debtor.
(f) Involuntary Insolvency Proceedings. (i) The appointment
of a receiver, trustee, custodian, or officer performing similar functions,
including, without limitation, a "custodian" as defined in the Federal
Bankruptcy Code, for Debtor or any of Debtor's assets; or the filing against
Debtor of a request or petition for liquidation, reorganization, arrangement,
adjudication as a bankrupt, or other relief under the bankruptcy, insolvency, or
similar laws of the United States of America, any state or territory thereof, or
any foreign jurisdiction now or hereafter in effect; or of any other type of
insolvency proceeding (under the Federal Bankruptcy Code
6
9
or otherwise) or any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against or winding up of affairs of Debtor
shall be instituted against Debtor and (ii) such appointment shall not be
vacated or such petition or proceeding shall not be dismissed within sixty (60)
days after such appointment, filing, or institution.
(g) Other Indebtedness and Agreements. Failure by Debtor to
pay when due (or, if permitted by the terms of any applicable documentation,
within any applicable grace period) any indebtedness owing by Debtor to Secured
Party or any other person or entity (other than the Indebtedness incurred
pursuant to this Agreement and including, without limitation indebtedness
evidencing a deferred purchase price), whether such indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise, or failure by the Debtor to perform any term, covenant, or agreement
on its part to be performed under any agreement or instrument (other than a
Transaction Document) evidencing or securing or relating to any indebtedness
owing by Debtor when required to be performed if the effect of such failure is
to permit the holder to accelerate the maturity of such indebtedness, unless
Debtor is contesting such matter in good faith with appropriate proceedings and
reserves.
(h) Judgments. Any judgment or judgments against Mercury
and its Consolidated Subsidiaries in excess of an aggregate amount of $250,000
(other than any judgment which is fully insured) shall remain unpaid, unstayed
on appeal, undischarged, unbonded, or undismissed for a period of forty-five
(45) days.
(i) Pension Default. Any Reportable Event which Secured
Party shall determine in good faith constitutes grounds for the termination of
any Pension Plan by the Pension Benefit Guaranty Corporation or for the
appointment by an appropriate United States district court of a trustee to
administer any Pension Plan shall occur and shall continue thirty (30) days
after written notice thereof to Debtor by Secured Party; or the Pension Benefit
Guaranty Corporation shall institute proceedings to terminate any Pension Plan
or to appoint a trustee to administer any Pension Plan; or a trustee shall be
appointed by an appropriate United States district court to administer any
Pension Plan; or any Pension Plan shall be terminated; or Debtor or any
Consolidated Subsidiary shall withdraw from a Pension Plan in a complete
withdrawal or a partial withdrawal; or there shall arise vested unfunded
liabilities under any Pension Plan that, in the good faith opinion of Secured
Party, have or will or might have a material adverse effect on the finances or
operations of Debtor; or Debtor or any Consolidated Subsidiary shall fail to pay
to any Pension Plan any contribution which it is obligated to pay under the
terms of such plan or any agreement or which is required to meet statutory
minimum funding standards.
(j) Collateral; Impairment. There shall occur with respect
to the Collateral any (i) misappropriation, conversion, diversion, or fraud,
(ii) levy, seizure, or attachment, or (iii) material loss, theft, or damage, in
each case, if such event has a material adverse effect on the Debtor's business
or financial condition.
(k) Cross Default. There shall occur an "Event of Default"
as defined in those two (2) certain Loan and Security Agreements dated as of
December 6, 1989, as amended, between Secured Party and Mercury or Maytag
Aircraft Corporation, respectively.
(l) Third Party Default. There shall occur with respect to
any Third Party, including, without limitation, any guarantor (i) any event
described in Section 11.1(d), 11.1(e), 11.1(f) or 11.1(g), (ii) any pension
default event such as described in Section 11.1(h) with respect to any pension
plan maintained by such Third Party, or (iii) any failure by Third Party to
perform in accordance with the terms of any agreement between such Third Party
and Secured Party.
(m) Representations. Any certificate, statement,
representation, warranty, or financial statement furnished by or on behalf of
Debtor or any Third Party pursuant to or in connection with this Agreement
(including, without limitation, representations and warranties contained herein)
or as an inducement to Secured Party to enter into this Agreement or any other
lending agreement with Debtor shall prove to have been false in any material
respect at the time as of which the facts therein set forth were certified or to
have omitted any substantial contingent or unliquidated liability or material
claim against Debtor or any such Third Party, or if on the date of the execution
of this Agreement there shall have been any materially adverse change in any of
the facts disclosed by any such statement or certificate which shall not have
been disclosed in writing to Secured Party at or prior to the time of such
execution.
(n) Challenge to Validity. Debtor or any Third Party
commences any action or proceeding to contest the validity or enforceability of
any Transaction Document, or any lien or security interest granted or
obligations evidenced by any Transaction Document.
(o) Death or Incapacity; Termination. Any Third Party dies
or becomes incapacitated, or terminates or attempts to terminate, in accordance
with its terms or otherwise, any guaranty or other Transaction Document executed
by such Third Party.
(p) Change of Ownership. If all or a controlling interest
of the capital stock of Debtor shall be sold, assigned, or otherwise transferred
or if a security interest or other encumbrance shall be granted or otherwise
acquired therein or with respect thereto.
11.2 EFFECTS OF AN EVENT OF DEFAULT.
(a) Upon the happening of one or more Events of Default
(except an Event of Default under either Section 11.1(d) or 11.1(e), Secured
Party may declare any obligations it may have hereunder to be canceled and the
principal of the Indebtedness then outstanding to be immediately due and
payable, together with all interest thereon and costs and expenses accruing
under the Transaction Documents. Upon such declaration, any obligations Secured
Party may have hereunder shall be immediately canceled and the Indebtedness then
outstanding shall become immediately due and payable without presentation,
demand or further notice of any kind to Debtor.
(b) Upon the happening of one or more Events of Default
under Section 11.1(d) or 11.1(e), Secured Party's obligations hereunder shall be
canceled immediately, automatically, and without notice, and the Indebtedness
then outstanding shall become immediately due and payable without presentation,
demand, or notice of any kind to the Debtor.
12. SECURED PARTY'S RIGHTS AND REMEDIES.
12.1 GENERALLY. Secured Party's rights and remedies with respect to
the Collateral, in addition to those rights granted herein and in any other
agreement between Debtor and Secured Party now or hereafter in effect, shall be
those of a secured party under the Uniform Commercial Code as in effect in the
State and under any other applicable law.
12.2 NOTIFICATION OF ACCOUNT DEBTORS. At any time during the
continuance of an Event of Default, Secured Party may, at any time and from time
to time, notify any or all Account Debtors of the Security Interest and may
direct such Account Debtors to make all payments on Receivables directly to
Secured Party.
12.3 POSSESSION OF COLLATERAL. Whenever Secured Party may take
possession of the Collateral pursuant to Section 12.1, Secured Party may take
possession of the Collateral on Debtor's premises or may remove the Collateral
or any part thereof to such other places as the Secured Party may in its sole
discretion determine to be commercially reasonable. If requested by Secured
Party, Debtor shall assemble the Collateral and deliver it to Secured Party at
such place as may be designated by Secured Party.
12.4 COLLECTION OF RECEIVABLES. At any time during the continuance
of an Event of Default, Secured Party may demand, collect, and xxx for all
monies and Proceeds due or to become due on the Receivables (in either Debtor's
or Secured Party's name at the latter's option) with the right to enforce,
compromise, settle, or discharge any or all Receivables. If Secured Party takes
any action contemplated by this Section with respect to any Receivable, Debtor
shall not exercise any right that Debtor would otherwise have had to take such
action with respect to such Receivable.
12.5 INDORSEMENT OF CHECKS; DEBTOR'S MAIL. Debtor hereby irrevocably
appoints Secured Party the Debtor's agent with full power, in the same manner,
to the same extent, and with the same effect as if Debtor were to do the same:
to indorse Debtor's name on any Instruments or Documents pertaining to any
Collateral, or, at any time during the continuance of an Event of Default, or
upon Secured Party's reasonable belief that Debtor has committed fraud or has
failed to remit collections on Receivables or other Proceeds of Collateral to
Secured Party as required hereunder, to receive and collect all mail addressed
to Debtor, direct the place of delivery of such mail to any location designated
by Secured Party, open such mail, remove all contents therefrom and retain all
contents thereof constituting or relating to the Collateral. This agency is
unconditional and shall not terminate until all of the Indebtedness is paid in
full and this Agreement has been terminated. Secured Party agrees to give Debtor
notice in the event it exercises this agency, except with respect to the
indorsement of Debtor's name on any instruments or documents pertaining to any
Collateral.
12.6 LICENSE TO USE PATENTS, TRADEMARKS, AND TRADENAMES. Debtor
grants to Secured Party a royalty-free license to use any and all patents,
trademarks, and tradenames now or hereafter owned by, or licensed to, Debtor for
the purposes of manufacturing and disposing of Inventory after the occurrence of
an Event of Default. All Inventory shall at least meet quality standards
maintained by Debtor prior to such Event of Default.
13. MISCELLANEOUS.
13.1 PERFECTING THE SECURITY INTEREST; PROTECTING THE COLLATERAL.
Debtor hereby authorizes Secured Party to file such financing statements
relating to the Collateral without Debtor's signature thereon as Secured Party
may deem appropriate, and appoints Secured Party as Debtor's attorney-in-fact
(without requiring Secured Party) to execute any such financing statement or
statements in Debtor's name and to perform all other acts which Secured Party
deems appropriate to perfect and continue the Security Interest and to protect,
preserve, and realize upon the Collateral.
13.2 PERFORMANCE OF DEBTOR'S DUTIES. Upon Debtor's failure to
perform any of its duties under the Transaction Documents, including, without
limitation, the duty to obtain insurance as specified in Section 9.11, Secured
Party may, but shall not be obligated to, perform any or all such duties
following written notice to Debtor or during the continuance of an Event of
Default.
13.3 NOTICE OF SALE. Without in any way requiring notice to be given
in the following manner, Debtor agrees that any notice by Secured Party of sale,
disposition, or other intended action hereunder or in connection herewith,
whether required by the Uniform Commercial Code as in effect in the State or
otherwise, shall constitute reasonable notice to Debtor if such notice is mailed
by regular or certified mail, postage prepaid, at least five (5) days prior to
such action, to Debtor's address or addresses specified above or to any other
address which Debtor has specified in writing to Secured Party as the address to
which notices hereunder shall be given to Debtor.
13.4 WAIVER BY SECURED PARTY. No course of dealing between Debtor
and Secured Party and no delay or omission by Secured Party in exercising any
right or remedy under the Transaction Documents or with respect to any
Indebtedness shall operate as a waiver thereof or of any other right or remedy,
and no single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of
7
10
any other right or remedy. All rights and remedies of Secured Party are
cumulative.
13.5 WAIVER BY DEBTOR. Secured Party shall have no obligation to
take, and Debtor shall have the sole responsibility for taking, any and all
steps to preserve rights against any and all Account Debtors and against any and
all prior parties to any note, Chattel Paper, draft, trade acceptance, or other
instrument for the payment of money covered by the Security Interest whether or
not in Secured Party's possession. Secured Party shall not be responsible to
Debtor for loss or damage resulting from Secured Party's failure to enforce any
Receivables or to collect any moneys due or to become due thereunder or other
Proceeds constituting Collateral hereunder, unless such loss or damage results
from Secured Party's gross negligence or wilfull misconduct. Debtor waives
protest of any note, check, draft, trade acceptance, or other instrument for the
payment of money constituting Collateral at any time held by Secured Party on
which Debtor is in any way liable and waives notice of any other action taken by
Secured Party, including, without limitation, notice of Secured Party's intent
to accelerate the Indebtedness or any part thereof.
13.6 SETOFF. Without limiting any other right of Secured Party,
whenever Secured Party has the right to declare any Indebtedness to be
immediately due and payable (whether or not it has so declared), Secured Party
at its sole election may setoff against the Indebtedness any and all monies then
or thereafter owed to Debtor by Secured Party in any capacity, whether or not
the Indebtedness or the obligation to pay such monies owed by Secured Party is
then due, and Secured Party shall be deemed to have exercised such right of
setoff immediately at the time of such election even though any charge therefor
is made or entered on Secured Party's records subsequent thereto.
13.7 ASSIGNMENT. The rights and benefits of Secured Party hereunder
shall, if Secured Party so agrees, inure to any party acquiring any interest in
the Indebtedness or any part thereof.
13.8 SUCCESSORS AND ASSIGNS. Secured Party and Debtor as used herein
shall include the successors or assigns of those parties, except that Debtor
shall not have the right to assign its rights hereunder or any interest herein.
13.9 MODIFICATION. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement shall be made, except as may be
provided in Item 38 of the Schedule or by a written agreement signed by Debtor
and a duly authorized officer of Secured Party.
13.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by Secured Party and Debtor on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same Agreement.
13.11 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Any financial
calculation to be made, all financial statements and other financial information
to be provided, and all books and records to be kept in connection with the
provisions of this Agreement, shall be in accordance with generally accepted
accounting principles consistently applied during each interval and from
interval to interval; provided, however, that in the event changes in generally
accepted accounting principles shall be mandated by the Financial Accounting
Standards Board or any similar accounting body of comparable standing, or should
be recommended by Debtor's certified public accountants, to the extent such
changes would affect any financial calculations to be made in connection
herewith, such changes shall be implemented in making such calculations only
from and after such date as Debtor and Secured Party shall have amended this
Agreement to the extent necessary to reflect such changes in the financial and
other covenants to which such calculations relate.
13.12 INDEMNIFICATION.
(a) If after receipt of any payment of all or any part of
the Indebtedness, Secured Party is for any reason compelled to surrender such
payment to any person or entity because such payment is determined to be void or
voidable as a preference, an impermissible setoff, or a diversion of trust
funds, or for any other reason, the Transaction Documents shall continue in full
force and Debtor shall be liable, and shall indemnify and hold Secured Party
harmless for, the amount of such payment surrendered. The provisions of this
Section shall be and remain effective notwithstanding any contrary action which
may have been taken by Secured Party in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to Secured Party's rights
under the Transaction Documents and shall be deemed to have been conditioned
upon such payment having become final and irrevocable. The provisions of this
Section 13.12(a) shall survive the termination of this Agreement and the
Transaction Documents.
(b) Debtor agrees to indemnify, defend, and hold harmless
Secured Party from and against, any and all liabilities, claims, damages,
penalties, expenditures, losses, or charges, including, but not limited to, all
costs of investigation, monitoring, legal representations, remedial response,
removal, restoration, or permit acquisition, which may now, or in the future, be
undertaken, suffered, paid, awarded, assessed, or otherwise incurred by Secured
Party or any other person or entity as a result of the presence of, Release of,
or threatened Release of Hazardous Substances on, in, under, or near the
property owned, leased, or operated by Debtor or any Consolidated Subsidiary.
The liability of Debtor under the covenants of this Section 13.12(b) is not
limited by any exculpatory provisions in this Agreement or any other documents
securing the Indebtedness and shall survive repayment of the Indebtedness or any
transfer or termination of this Agreement regardless of the means of such
transfer or termination. Debtor agrees that Secured Party shall not be liable
in any way for the completeness or accuracy of any Environmental Report or the
information contained therein. Debtor further agrees that Secured Party has no
duty to warn Debtor or any other person or entity about any actual or potential
environmental contamination or other problem that may have become apparent, or
will become apparent, to Secured Party.
(c) Debtor agrees to pay, indemnify, and hold Secured Party
harmless, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, counsel and
special counsel fees and disbursements in connection with any litigation,
investigation, hearing or other proceeding) with respect or in any way related
to the existence, execution, delivery, enforcement, performance and
administration of this Agreement and any other Transaction Document (all of the
foregoing, collectively, the "Indemnified Liabilities"). The agreements in this
Section 13.12(c) shall survive repayment of the Indebtedness.
13.13 TERMINATION; PREPAYMENT PREMIUM.
(a) Termination. This Agreement is and is intended to be a
continuing Agreement and shall remain in full force and effect for an initial
term equal to the term set forth in Item 35 of the Schedule and for any renewal
term also specified in Item 35 of the Schedule; provided, however, that either
party may terminate this Agreement as of the end of the initial term or any
subsequent renewal term by giving the other party notice to terminate in writing
at least sixty (60) days prior to the end of any such period whereupon at the
end of such period all Indebtedness shall be due and payable in full without
presentation, demand, or further notice of any kind, whether or not all or any
part of such Indebtedness is otherwise due and payable pursuant to the agreement
or instrument evidencing same. Secured Party may terminate this Agreement
immediately and without notice upon the occurrence of an Event of Default.
Notwithstanding the foregoing or anything in this Agreement or elsewhere to the
contrary, the Security Interest, Secured Party's rights and remedies under the
Transaction Documents and Debtor's obligations and liabilities under the
Transaction Documents, shall survive any termination of this Agreement and shall
remain in full force and effect until all of the Indebtedness outstanding, or
contracted or committed for (whether or not outstanding), before the receipt of
such notice by Secured Party, and any extensions or renewals thereof (whether
made before or after receipt of such notice), together with interest accruing
thereon after such notice, shall be finally and irrevocably paid in full. No
Collateral shall be released or financing statement terminated until such final
and irrevocable payment in full of the Indebtedness as described in the
preceding sentence.
(b) Prepayment Premium. If Debtor pays in full all or
substantially all of the principal balance of Advances prior to the end of the
initial term or any renewal term of this Agreement as set forth in Item 37 of
the Schedule, other than temporarily from funds internally generated in the
ordinary course of business, at the time of any such payment Debtor shall also
pay to Secured Party the prepayment premium set forth in Item 37 of the
Schedule. Any tender of payment in full of such principal balance following an
acceleration by Secured Party of the Indebtedness pursuant to Section 11.2 shall
be for purposes of this Section 13.13(b), deemed to be considered a prepayment
requiring Debtor to pay the prepayment premium set forth in Item 37 of the
Schedule.
13.14 FURTHER ASSURANCES. From time to time, Debtor shall take such
action and execute and deliver to Secured Party such additional documents,
instruments, certificates, and agreements as Secured Party may reasonably
request to effectuate the purposes of the Transaction Documents.
13.15 HEADINGS. Article and Section headings used in this Agreement
are for convenience only and shall not affect the construction of this
Agreement.
13.16 CUMULATIVE SECURITY INTEREST, ETC. The execution and delivery
of this Agreement shall in no manner impair or affect any other security (by
endorsement or otherwise) for payment or performance of the Indebtedness and no
security taken hereafter as security for payment or performance of the
Indebtedness shall impair in any manner or affect this Agreement or the security
interest granted hereby, all such present and future additional security to be
considered as cumulative security.
13.17 SECURED PARTY'S DUTIES. Without limiting any other provision of
this Agreement: (a) the powers conferred on Secured Party hereunder are solely
to protect its interests and shall not impose any duty to exercise any such
powers and (b) except as may be required by applicable law, Secured Party shall
not have any duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Collateral.
13.18 NOTICES GENERALLY. All notices and other communications
hereunder shall be made by telegram, telex, electronic transmitter, overnight
air courier, or certified or registered mail, return receipt requested, and
shall be deemed to be received by the party to whom sent one Business Day after
sending, if sent by telegram, telex, electronic transmitter, or overnight air
courier, and three Business Days after mailing, if sent by certified or
registered mail. All such notices and other communications to a party hereto
shall be addressed to such party at the address set forth on the cover page
hereof or to such other address as such party may designate for itself in a
notice to the other party given in accordance with this Section 13.18.
13.19 SEVERABILITY. The provisions of this Agreement are independent
of and separable from each other, and no such provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any reason any
other such provision may be invalid or unenforceable in whole or in part. If
any provision of this Agreement is prohibited or unenforceable in any
jurisdiction, such provision shall be ineffective in such jurisdiction only to
the extent of such prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate the balance of such provision to the
extent it is not prohibited or unenforceable nor render prohibited or
unenforceable such provision in any other jurisdiction.
8
11
13.20 INCONSISTENT PROVISIONS. The terms of this Agreement and the
other Transaction Documents shall be cumulative except to the extent they are
specifically inconsistent with each other, in which case the terms of this
Agreement shall prevail.
13.21 ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents constitute the entire agreement and understanding between the parties
hereto with respect to the transactions contemplated hereby and supersede all
prior negotiations, understandings, and agreements between such parties with
respect to such transactions, including, without limitation, those expressed in
any commitment letter delivered by Secured Party to Debtor.
13.22 APPLICABLE LAW. THIS AGREEMENT AND THE TRANSACTIONS EVIDENCED
HEREBY SHALL BE GOVERNED BY AND CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, AS THE SAME MAY FROM TIME TO
TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE UNIFORM COMMERCIAL CODE AS
IN EFFECT IN THE STATE.
13.23 CONSENT TO JURISDICTION. DEBTOR AND SECURED PARTY AGREE THAT
ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THE TRANSACTION DOCUMENTS
MAY BE COMMENCED IN ANY COURT OF THE STATE IN LOS ANGELES COUNTY, OR IN THE
DISTRICT COURT OF THE UNITED STATES IN LOS ANGELES COUNTY, AND DEBTOR WAIVES
PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING
AN ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE PROPERLY SERVED AND SHALL
CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO
DEBTOR, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE STATE OR THE UNITED STATES.
13.24 JURY TRIAL WAIVER. DEBTOR AND SECURED PARTY HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY DEBTOR OR
SECURED PARTY MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN
CONNECTION WITH THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
DEBTOR REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SECURED PARTY WILL NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THIS RIGHT TO JURY TRIAL WAIVER. DEBTOR
ACKNOWLEDGES THAT SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION 13.24.
MARINE MIDLAND BUSINESS MERCURY AIR CARGO, INC.
LOANS, INC.
By By
---------------------------------- --------------------------------
(Title) (Title)
At Newport Beach, California At Los Angeles, California
9
12
SCHEDULE
This Schedule is a part of a Loan and Security Agreement, dated as of
June 12, 1995, between MERCURY AIR CARGO, INC. and MARINE MIDLAND BUSINESS
LOANS, INC. (the "Agreement").
1. Borrowing Capacity (Section 1.1(c))
Borrowing Capacity at any time shall be the net amount determined by
taking the lesser of the following amounts:
(A) $16,000,000 minus the total outstanding "Advances" to Mercury
Air Group, Inc. ("Mercury") and Maytag Aircraft Corporation
("Maytag") as defined in their respective Loan and Security
Agreements dated as of December 6, 1989, as amended, with
Secured Party (collectively, the "Other Loan Agreements");
or
(B) up to 85% of the Receivables Borrowing Base;
or
(C) $1,000,000.
2. INTENTIONALLY DELETED.
3. Cash Discount (Section Section 1.1(g) & 9.3)
NONE
4. Receivables--Age (Section 1.1(v)(i))
90 days after the Invoice date.
5. Receivables Disqualification Percentage (Section 1.1(v)(v))
50% or more
6. Permissible Foreign Account Debtors (Section 1.1(v)(vi))
NONE
7. INTENTIONALLY DELETED.
8. Marine Payment Account (Section 1.1(bb))
There shall be no Marine Payment Approval unless and until Secured Party
elects otherwise.
9. State of Incorporation (Section 4.1)
California.
10. Locations of Inventory and Equipment (Section Section 4.4(c), 4.7,
4.8(a) & 10.1)
See attached Schedule 1.
11. Permitted Encumbrances (Section Section 4.5(a), 4.5(c) & 10.3)
Purchase money security interests against and leases of equipment
acquired in accordance with the capital expenditures limitation set
forth in Section 10.11 of the Other Loan Agreements and Item 31 below.
12. Business Records Location (Section Section 4.8(a), 4.8(c) & 10.1)
0000 XxXxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
13. Trademarks and Patents (Section 4.17)
NONE
14. INTENTIONALLY DELETED.
15. Labor Contracts (Section 4.21)
NONE
16. Authorized Shares (Section 4.23)
No. of authorized common shares: 10,000
Par Value of common shares: $.01
No. of issued and outstanding common shares: 9,500
13
Check If Frequency
Required Due
-------- ---------
17. Required Documents(Sections 5.1, 8.2(b))
Receivables Schedules /X/ Upon Request
Receivables Aging /X/ Monthly - within 25 days after month end
Credits and Extensions Reports /X/ Upon Request
Cash Receipts Journal and Schedule of Payments on Receivables /X/ Upon Request
List of names and addresses of Account Debtors /X/ Quarterly
Reconciliation report, showing all Receivables, collections, /X/ Monthly
payments, Credits, and Extensions since the preceding report
Payables aging report, showing the amounts due and owing on /X/ Monthly
all Debtor's payables according to Debtor's records as of
the close of such periods as shall be specified by Secured Party
Reconciliation of Receivables and payables aging reports to /X/ Monthly
financial statements
Loan Request, Remittance and Collateral Report (L4085F) /X/ On the date of each Advance request
Certificate signed by the president and/or chief financial /X/ Monthly
officer of Debtor that no Event of Default has occurred and
is continuing, and that no event has occurred which may
constitute an Event of Default with lapse of time or notice
or both.
18. Interest Rate (Section 7.2)
one half percent (1/2%) plus the greater of (i) the Prime Rate or (ii)
five percent (5%), provided that Debtor may exercise the "LIBOR" option
upon the terms, conditions and provisions of that certain Amendment to
Loan and Security Agreements dated as of December 20, 1994 among Mercury,
Maytag and Secured Party.
19. Fees and Due Dates (Section 7.3)
Type Amount Due Date(s)
---- ------ -----------
Wire Transfer Fee $15.00 for each wire transfer initiated Upon initiation or receipt of the
or received by Secured Party wire transfer by Secured Party
Annual Facility Fee .125% of $16,000,000 or such different Annually in advance, on December 12,
(jointly with Mercury maximum aggregate Borrowing Capacity 1995 on each anniversary thereof
and Maytag) as may hereafter be agreed to by
Borrower, Mercury, Maytag and Secured
Party.
20. INTENTIONALLY DELETED.
21. Additional Covenants (Section Xxxxxxx 0 & 00)
XXXX
00. INTENTIONALLY DELETED.
23. INTENTIONALLY DELETED.
24. INTENTIONALLY DELETED.
25. Terms of Sale (Section 9.3)
Due dates of no more than net 60 calendar days from date of Invoice.
26. Financial Covenants (Section 10.15)
Mercury and its Consolidated Subsidiaries shall maintain the following
levels of financial performance on a consolidated basis:
(A) Tangible Net Worth of not less than $15,000,000.00 as of the end
of each fiscal quarter.
"Tangible Net Worth" shall mean the amount by which the assets,
but excluding goodwill, exceed liabilities computed in accordance
with generally accepted accounting principles consistently
applied.
(B) Working Capital of not less than $6,000,000.00 as of the end of
each fiscal quarter.
"Working Capital" shall mean the amount by which current assets,
exceed current liabilities, including the Advances, computed in
accordance with generally accepted accounting principles
consistently applied.
(C) Current Ratio of not less than 1.0:1 as of the end of each fiscal
quarter.
2
14
"Current Ratio" shall mean the ratio of current assets to
current liabilities, including the Advances, computed in
accordance with generally accepted accounting principles
consistently applied..
(D) Debt/Worth Ratio of not more than 3.5:1 as of the end of each
fiscal quarter.
"Debt/Worth Ratio" shall mean the ratio of total liabilities to
Tangible Net Worth, computed in accordance with generally
accepted accounting principles consistently applied.
(E) Net income after provision for taxes (determined in accordance
with generally accepted accounting principles consistently
applied) of not less than $3,000,000.00 during each fiscal year
ending on or after June 30, 1995.
27. Permitted Borrowings (Section 10.2)
As permitted in Sections 11.2 of the Other Loan Agreements
28. Permitted Investments and Advances (Section 10.8(d))
As permitted in Sections 11.9 of the Other Loan Agreements
29. Permitted Guaranties (Section Section 4.18, 10.9)
As permitted in Sections 11.10 of the Other Loan Agreements
30. INTENTIONALLY DELETED.
31. Permitted Capital Expenditures (Section 10.11)
$1,500,000
32. INTENTIONALLY DELETED.
33. INTENTIONALLY DELETED.
34. State (Section 1.1(oo))
California
35. Initial Term and Renewal Term (Section 13.13)
Initial Term: Through October 31, 1997
Renewal Term: 12 months
36. Percentage of Stock Ownership of Consolidated Subsidiaries (Section
4.22, Section 9.23)
Not applicable.
37. Prepayment Premium (Section 13.13)
$1/2% of the sum of the maximum aggregate Borrowing Capacity (presently
$16,000,000), plus the principal balances of any Term Loans to
Borrower, Mercury and/or Maytag, as they may hereafter be increased or
decreased (payable jointly with Mercury and Maytag)
38. Other Provisions (Section 13.9)
NONE
The undersigned have executed this Schedule as of June 12, 1995.
MARINE MIDLAND BUSINESS LOANS, INC. MERCURY AIRCARGO, INC.
By By
--------------------------------- -------------------------------
(Title) (Title)
At Newport Beach, California At Los Angeles, California
3
15
EXHIBIT A
FINANCIAL STATEMENT CERTIFICATION
The undersigned, the _____________________________ of Mercury
Air Cargo, Inc. ("Debtor") hereby certifies to Marine Midland Business Loans,
Inc. that attached hereto is a true, correct and complete copy of the Debtor's
financial statements as of the month ending _________, 19__, which financial
statements fairly present Debtor's [and each consolidated subsidiary's]
financial position and consist of a balance sheet and related statements of
income, retained earnings, and cash flow covering the period from the end of the
immediately preceding fiscal year to the end of such month.
------------------------------------------
Name:
Title:
Date: , 19
-------- --
16
AMENDMENT TO
LOAN AND SECURITY AGREEMENTS
THIS AMENDMENT (this "Amendment") dated as of June 12, 1995 is
entered into by and among MARINE MIDLAND BUSINESS LOANS, INC., a Delaware
corporation ("Lender"), and MERCURY AIR GROUP, INC., a New York corporation
formerly known as IPM Technology, Inc. ("Mercury"), and MAYTAG AIRCRAFT
CORPORATION, a Colorado corporation ("Maytag"). Mercury and Maytag shall
collectively be referred to herein as "Borrowers".
RECITALS
A. Lender and the respective Borrowers are parties to those two (2)
certain Loan and Security Agreements dated as of December 6, 1989, as amended
(singly, the "Agreement," and collectively, the "Agreements").
B. Lender and Borrowers desire to amend the Agreements in certain
respects, but subject to the terms and conditions set forth below.
AGREEMENT
In consideration of the above recitals and of the mutual covenants
contained herein, Lender and Borrowers agree as follows:
1. Defined Terms. Each of the terms defined in the Agreements which
are used herein shall have the same meaning as set forth in the Agreements,
unless otherwise specified herein.
2. Maximum Borrowing Capacity. With respect to clauses (a) of the
definitions of "Borrowing Capacity" in Sections 1.1 of the Agreements, the
maximum aggregate Borrowing Capacity of Borrowers shall be $16,000,000.00 less
the total outstanding "Advances" to Cargo under its Loan and Security Agreement
with Lender of even date herewith as it may hereafter be amended, modified,
substituted or replaced.
3. Financial Covenants. With respect to Sections 10.13 of the
Agreements, Mercury and its Consolidated Subsidiaries shall maintain Tangible
Net Worth and Working Capital of not less than $15,000,000.00 and $6,000,000.00,
respectively, as of the end of each fiscal quarter on a consolidated basis. For
the purposes of Sections 10.13, "Tangible Net Worth" shall mean the amount by
which the assets of Mercury and its Consolidated Subsidiaries, but excluding
goodwill, exceed liabilities computed in accordance with GAAP.
17
4. Events of Default. With respect to Sections 12.1 of the
Agreements, an Event of Default shall be deemed to have occurred if an "Event of
Default" occurs under, and as defined in, that certain Loan and Security
Agreement of even date herewith between Mercury Air Cargo, Inc., a California
corporation, and Secured Party.
5. Continuing Effect of Loan Documents.
(a) Except as specifically amended as set forth above, the
Agreements and all other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed; and
(b) Upon the effectiveness of this Amendment, each reference in
the Loan Documents to the Agreements shall mean and be a reference to the
Agreements as amended hereby.
6. Borrowers' Representations and Warranties. Borrowers represent and
warrant as follows:
(a) Each of the representations and warranties contained in the
Agreements is hereby reaffirmed as of the date hereof, each as if set forth
herein;
(b) The execution, delivery and performance of this Amendment are
within Borrowers' powers, have been duly authorized by all necessary action,
have received all necessary approvals, if any, and do not contravene any law or
any contractual restrictions binding on Borrowers;
(c) This Amendment is the legal, valid and binding obligation of
Borrowers, enforceable against Borrowers in accordance with its terms; and
(d) No event has occurred and is continuing which constitutes an
Event of Default under the Agreements after giving effect to this Amendment.
7. Conditions Precedent. This Amendment shall become effective when,
and only when, Lender shall have received all of the following, in form and
substance satisfactory to Lender:
(a) A counterpart of this Amendment duly executed by Borrowers and
acknowledged by the guarantors indicated hereinbelow; and
(b) Such other documents, instruments or agreements as Lender may
reasonably request.
8. Governing Law. This Amendment shall be deemed to be a contract
under and subject to, and shall be construed for all
2
18
purposes and in accordance with, the internal laws of the State of California.
9. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
WITNESS the due execution hereof as of the date first above written.
MARINE MIDLAND BUSINESS LOANS, INC.
By:
----------------------------------
Title:
-------------------------------
MERCURY AIR GROUP, INC.
By:
----------------------------------
Title:
-------------------------------
MAYTAG AIRCRAFT CORPORATION
By:
----------------------------------
Title:
-------------------------------
3
19
CONSENT AND REAFFIRMATION OF GUARANTORS
The undersigned, as guarantors under their respective Guaranties
dated December 6, 1989 or April 1, 1992, hereby consent to the foregoing
Amendment and acknowledge and reaffirm their obligations and liabilities under
such Guaranties, which shall remain in full force and effect.
Dated: As of June , 1995
----
MERCURY AIR CARGO, INC.,
a California corporation
By:
----------------------------------
Title:
-------------------------------
HERMES AVIATION, INC.,
a California corporation
By:
----------------------------------
Title:
-------------------------------
