FOURTH AMENDMENT TO CREDIT AGREEMENT
This Amendment is made as of the ____ day of August, 1996 by
and between FIELDS AIRCRAFT SPARES INCORPORATED, a California corporation (the
"Borrower"), and NORWEST BUSINESS CREDIT, INC., a Minnesota corporation (the
"Lender").
RECITALS
The Borrower and the Lender have entered into the Credit and
Security Agreement dated as of February 9, 1995 and amended by the First
Amendment to Credit Agreement dated November 21, 1995, the Second Amendment to
Credit Agreement dated February 29, 1996 and the Third Amendment to the Credit
Agreement dated June 30, 1996, (as amended, the "Credit Agreement").
The Borrower may request certain advances from the Lender from
time to time pursuant to the Credit Agreement, and the Lender may, in its
discretion, choose to make loans to the Borrower pursuant to the Credit
Agreement. The Lender may demand repayment of the loans at any time pursuant to
the terms of the Credit Agreement.
The loan advances under the Credit Agreement are evidenced by
the Borrower's demand promissory note dated as of February 9, 1995, in the
maximum principal amount of Ten Million Dollars ($10,000,000) and payable to the
order of the Lender (the "Note").
All indebtedness of the Borrower to the Lender is secured
pursuant to the terms of the Credit Agreement and all other Security Documents
as defined therein (collectively, the "Security Documents") and is guaranteed
pursuant to the unconditional guaranties of the Corporate Guarantors defined
therein and is further guaranteed pursuant to the validity guaranties of the
Individual Validity Guarantors defined therein (the "Validity Guarantors"
collectively with the Corporate Guarantors the "Guarantors")
The Borrower has requested that certain amendments be made to
the Credit Agreement, which the Lender is willing to make pursuant to the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, it is agreed as follows:
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1. Definitions and Amendments.
(a) Terms used in this Fourth Amendment which are defined in
the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein.
(b) The definition of the term "Borrowing Base" is hereby
amended as follows: "Borrowing Base" means, at any time and subject to
change from time to time in the Lender's sole discretion, the lesser of
(i) $6,900,000 provided, however, that the Borrowing
Base shall be decreased by Two Hundred Fifty Thousand Dollars
($250,000) on the 1st day of October, 1996 and on the same day
of each successive month thereafter.
or
(ii) the sum of
(iii) the lesser of (A) 75% of Eligible Accounts or
(B) $6,900,000; provided, however, that such maximum amount of
Eligible Accounts shall be reduced by $250,000 on the first
day of October, 1996 and on the same day of each successive
month thereafter, plus
(iv) the lesser of (A) 50% of Eligible Inventory or
(B) $6,500,000; provided, however, that such maximum amount of
Eligible Inventory shall be reduced by $100,000 on the first
day of October, 1996 and on the same day of each successive
month thereafter, plus
(v) $250,000
(c) The definition of the term "Floating Rate" is hereby
amended to mean an annual rate equal to the sum of the Base Rate plus
five and one-half percent (5.5%), which Floating Rate shall change when
and as the Base Rate changes; provided, however that the Floating Rate
shall be increased by one-half percent (0.5%) on the first day of
October, 1996 and on the same day of each successive month thereafter.
(d) Paragraph (d) and (e) of Section 2.12 Fees, is hereby
amended as follows:
(i) The Borrower agrees to pay to Lender annually,
commencing with the fiscal year ending December 31, 1995 and
for each fiscal year (or portion thereof) thereafter during
the term of this Agreement, a fee equal to 2% of the Gross
Profit in excess of $2,000,000 as shown on the financial
statements delivered pursuant to Section 6.1 hereof, with
respect to each such fiscal year, privided that such fee shall
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in no event be greater than $150,000 or less than $50,000.
Such fee shall be payable annually upon the earliest of (i)
the delivery of the audited financial statements for the
fiscal year with respect to which such fee is paid as required
pursuant to Section 6.1 hereof, (ii) the termination of this
Agreement, or (iii) demand for repayment of the Advances. The
fee payable upon termination or demand shall be equal to the
sum of any unpaid fee for the fiscal year ended prior to
such termination regardless of whether the audited financial
statements have been delivered with respect to such year, plus
the fee for the portion of the fiscal year ended as of the
end of the month immediately proceeding the date of such
termination of demand. The fee for such partial year shall
be equal to 2% of the Gross Profit therefor in excess of
$2,000,000, as shown on the interim financial statements
delivered pursuant to Section 6.1 hereof for the month
immediately preceding the date of termination or demand,
provided that such fee shall in no event be greater than
$150,000 or less than $4,166.67 times the number of
months of such partial fiscal year prior to the date of
termination or demand.
(e) Commencing July 25, 1996, the Borrower hereby agrees to
pay the Lender monthly in advance an accommodation fee of $7,500. This
accommodation fee will be increased to $15,000 per month beginning
October 25, 1996.
1. Fee. Borrower agrees to pay a fee of Fifty-Thousand Dollars
($50,000) for this Amendment.
2. No Other Amendments. Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall remain
in full force and effect and shall apply to any advance thereunder.
3. Conditions. This Fourth Amendment shall be effective (the
"Effective Date") upon receipt by the Lender of an executed original hereof,
together with each of the following, each in substance and form acceptable to
the Lender in its sole discretion:
(a) The Acknowledgement and Agreement of Guarantors set forth
at the end of this Amendment, duly executed by each of the Guarantors
and the Acknowledgment and Agreement of Validity Guarantors.
(b) Supplemental Secretary's Certificate certifying (i) the
resolutions of the board of directors of the Borrower approving the
execution and delivery of this Amendment, (ii) the fact that the
Articles of Incorporation and the Bylaws of the Borrower, which were
certified and delivered to the Lender pursuant to the Certificate of
the Borrower's Secretary dated as of February 9, 1995 in connection
with the execution and delivery of the Credit Agreement continue in
full force and effect and have not been amended or otherwise modified
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except as set forth in the Certificate to bedelivered, and (iii)
certifying that the officers and agents of the Borrower who have been
certified to the Lender, pursuant to the Certificate of the Borrower's
Secretary dated as of February 9, 1995, as being authorized to sign and
to act on behalf of the Borrower continue to be so authorized or
setting forth the sample signatures of each of the officers and agents
of the Borrower authorized to execute and deliver this Third Amendment
and all other documents, agreements and certificates on behalf of the
Borrower.
(c) Such other documents as the Lender in its sole
discretion may require.
4. Representations and Warranties.
(a) The Borrower has all requisite power and authority to
execute this Fourth Amendment and to perform all of its obligations
hereunder, and this Amendment has been duly executed and delivered by
the Borrower and constitutes the legal, valid and binding obligation of
the Borrower, enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate
action and does not (i) require any authorization, consent or approval
by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the
articles of incorporation or by-Laws of the Borrower, or (iii) result
in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound
or affected.
(c) All of the representations and warranties contained in
Article V of the Credit Agreement are correct on and as of the date
hereof as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date.
5. References. Upon the Effective Date, all references in the Credit
Agreement to "this Agreement" shall be deemed to refer to the Credit Agreement
as amended hereby; and any and all references in the Security Documents to the
Credit Agreement shall be deemed to refer to the Credit Agreement as amended
hereby.
6. No Waiver. The Borrower acknowledges that it failed to demonstrate
minimum Net Earnings as required by Section 6.13 of the Credit Agreement and
that this failure constitutes an Event of Default under the Credit Agreement. In
addition to any other rights under the Credit agreement, the Lender is entitled
to have the outstanding principal of the Advances bear interest at the Default
Rate. As of the date hereof, the Lender in its discretion has not elected to
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exercise such right. The execution of the Fourth Amendment and any documents
related hereto shall not be deemed to be a waiver of (i) such events of Default
or any other Event of Default under the Credit Agreement or breach, default or
event of default under any Security Document or other document held by the
Lender, whether or not known to the Lender and whether or not existing on the
date of this Fourth Amendment or (ii) any of Lender's rights and remedies under
the Loan Documents, including without limitation its rights under Section 2.3 of
the Credit Agreement to have the outstanding principal of the Advances bear
interest at the Default Rate.
7. Release. The Borrower hereby absolutely and unconditionally releases
and forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.
8. Expenses. The Borrower hereby reaffirms its agreement under the
Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Security Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Fourth Amendment and the documents and instruments incidental hereto. The
Borrower hereby agrees that the Lender may, at any time or from time to time in
its sole discretion and without further authorization by the Borrower, make a
loan to the Borrower under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and
expenses.
9. Counterparts. This Fourth Amendment and the Acknowledgement and
Agreement of Corporate Guarantors and the Acknowledgment and Agreement of
Validity Guarantors may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be duly executed as of the day and year first above written.
BORROWER:
FIELDS AIRCRAFT SPARES INCORPORATED (SEAL)
By:______________________________________
Its:_____________________________________
LENDER:
NORWEST BUSINESS CREDIT, INC. (SEAL)
By:_____________________________________
Its:____________________________________
ACKNOWLEDGMENT AND AGREEMENT OF CORPORATE GUARANTORS
The undersigned, a guarantor of the indebtedness of FIELDS AIRCRAFT
SPARES INCORPORATED (the "Borrower") to NORWEST BUSINESS CREDIT, INC. (the
"Lender") pursuant to Corporate Guaranty dated as of February 9, 1996 hereby (i)
acknowledge receipt of the foregoing Fourth Amendment.
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