EXHIBIT 10.25
FLEET NATIONAL BANK
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
As of December 31, 2001
Mercury Air Group, Inc.
0000 XxXxxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Chief Financial Officer
Re: Limited Waiver and Consent regarding Sale/Leaseback
Ladies and Gentlemen:
Reference is made to the Revolving Credit and Term Loan Agreement dated
as of March 2, 1999 (as amended, modified, supplemented or restated and in
effect from time to time, the "Credit Agreement") by and among (a) MERCURY AIR
GROUP, INC., a Delaware corporation having its principal place of business at
0000 XxXxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the "Borrower"), (b) FLEET
NATIONAL BANK (formerly known as BankBoston, N.A.), a national banking
association, as agent (in such capacity the "Agent") for itself and the other
Banks referred to below; and (c) FLEET NATIONAL BANK and the other financial
institutions from time to time parties thereto (collectively, the "Banks").
Capitalized terms defined in the Credit Agreement that are not otherwise defined
in this letter agreement shall have the respective meanings assigned to such
terms in the Credit Agreement.
The Borrower has notified the Agent that it wishes to enter into a sale
and leaseback transaction with CFK Realty Partners, LLC, an Illinois limited
liability company ("CFK") involving the Real Estate located at 0000 XxXxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the "XxXxxxxxx Headquarters"), pursuant
to which the Borrower will receive minimum consideration of $4,200,000, of which
$2,800,000 shall be paid in cash at closing of such transaction and $1,400,000
shall be paid in the form of a promissory note (the "Sale-Leaseback
Transaction"). Pursuant to Section 13.6 of the Credit Agreement, the Borrower is
prohibited from entering into the Sale Leaseback Transaction.
Subject to terms contained herein, and upon satisfaction of the
conditions set forth below, the Agent and the Majority Banks hereby (i) waive
the prohibition contained in Section 13.6 of the Credit Agreement to the limited
extent necessary to allow the Sale Leaseback Transaction, (ii) consent to the
Sale Leaseback Transaction and (iii) waive the provisions of Sections 8.3 and
8.4 to the limited extent such provisions are inconsistent with the terms
contained herein with respect to the application of Net Cash Proceeds received
in connection with the Asset Sale occurring as part of the Sale Leaseback
Transaction.
The limited waivers and consent set forth in this letter agreement shall
be effective upon the satisfaction of each of the following conditions, each to
be in form and substance satisfactory to the Agent:
(i) delivery to the Agent of six (6) original counterpart
signature pages to this letter agreement, duly executed and delivered by
the Majority Banks, the Borrower and each of the Guarantors;
(ii) the Agent shall have received from the Borrower Net Cash
Proceeds from the Sale Leaseback Transaction in the minimum of
$2,300,000, representing a prepayment of the Term Loan to be applied in
accordance with the provisions of Section 8.4 of the Credit Agreement;
(iii) the Borrower shall have delivered to the Agent the original
promissory note issued in connection with the Sale Leaseback Transaction
by CFK in favor of the Borrower in the original principal amount of
$1,400,000 (the "CFK Note"), together with an allonge endorsement from
the Borrower in favor of the Agent, to be held by the Agent as
collateral security for the Borrower's Obligations under the Credit
Agreement;
(iv) the Borrower shall have delivered to the Agent a guaranty
made by each of Xxxxxx X. Xxxxxx, Xx. Xxxxxx X. Xxxxx and Xxxxxxxxx X.
Xxxxx, Xx. (collectively, the "Partners") in favor of the Borrower,
pursuant to which the Partners jointly and severally guaranty the
obligations of CFK under the CFK Note (the "Guaranty"), which such
Guaranty shall be assigned by the Borrower to the Agent and the Banks
pursuant to a separate assignment that shall be consented to by each of
the Partners;
(v) the Borrower shall have duly executed and delivered to the
Agent a leasehold mortgage with respect to the XxXxxxxxx Headquarters,
to be recorded in the appropriate real estate recording office by the
Agent after the consummation of the Sale Leaseback Transaction;
(vi) the Borrower shall have delivered to the Agent a landlord
waiver and consent in form and substance reasonably satisfactory to the
Agent, which has been executed by CFK as landlord of the XxXxxxxxx
Headquarters; and
(vii) the Borrower shall have delivered to the Agent copies,
certified by an officer of the Borrower as true, correct and complete
copies, of the asset purchase and sale agreement, the lease agreement
and all other documents executed by the Borrower in connection with the
Sale Leaseback Transaction.
The Borrower or CFK, as the case may be, covenants and agrees that:
(a) the Borrower shall, immediately upon receipt of Net Cash
Proceeds from the Sale Leaseback Transaction (including all Net Cash
Proceeds in the form of principal and interest payments received by the
Borrower with respect to the CFK Note), prepay the Term Loan in an
amount equal to one hundred percent (100%) of such Net Cash Proceeds,
such prepayments to be applied in accordance with the provisions of
Section 8.4 of the Credit Agreement.
(b) CFK shall expend $400,000 on leasehold improvements on the
XxXxxxxxx Headquarters and shall from time to time, within ten (10) days
after a request by the Agent therefor, deliver to the Agent written line
item reports detailing the specific leasehold improvements made to the
XxXxxxxxx Headquarters and the amounts expended thereon as of the date
of each such request and otherwise in form and detail satisfactory to
the Agent.
(c) CFK shall use commercially reasonable efforts to complete the
leasehold improvements referred to in paragraph (b) above no later than
September 30, 2002 and, to the extent the aggregate cost of such
leasehold improvements expended as of such date is less than $400,000,
CFK shall pay over to Mercury the difference, which shall be applied
against the obligations of CFK under the CFK Note.
(d) if either (i) the payment made by the Borrower to United
California Bank (f/k/a Sanwa Bank California) to discharge its
obligations under the mortgage on the XxXxxxxxx Headquarters is less
than $280,000, or (ii) the actual amount of taxes paid by the Borrower
in connection with the Sale Leaseback Transaction is less than $220,000,
then in each case the Borrower shall pay over to the Agent the
difference between such amounts and the actual amounts paid, which such
difference shall be used to prepay the Term Loan.
(e) the Borrower shall deliver, or cause the Partners to deliver,
to the Agent, within thirty (30) days of the date of this letter
agreement and thereafter, upon the request of the Agent, annually on
each anniversary of this letter agreement for so long as the CFK Note
remains outstanding, the personal net worth statements of each of the
Partners, each in form and substance satisfactory to the Agent, together
with such other information as the Agent may reasonably request.
(f) the Borrower shall not amend, modify, or otherwise change the
terms of the CFK Note or the Guaranty without the prior written consent
of the Agent.
(g) Upon the occurrence of a default by CFK under the CFK Note,
the Borrower shall seek to enforce its rights under the Guaranty in a
manner that is prompt, diligent and otherwise satisfactory to the Agent.
Failure to comply with the covenants contained in this letter agreement
shall constitute an immediate Event of Default under the Credit Agreement.
The limited waivers and consent contained in this letter agreement are
limited strictly to their respective terms, shall apply only to the specific
matters and events described herein, shall not extend to or affect any of the
Borrower's or the Guarantors' other obligations contained in the Credit
Agreement or any other Loan Document. Except as expressly set forth herein,
nothing contained herein shall be deemed to be a waiver of, or shall in any way
impair or prejudice, any rights of the Agent or the Banks under the Credit
Agreement or any other Loan Document. Nothing contained in this letter agreement
shall be construed to imply a willingness on the part of the Agent and the Banks
to grant any similar or other future consents.
You acknowledge and agree that, based upon the facts and circumstances
existing as of the date hereof: (i) you have no claim or cause of action against
any of the Banks or the Agent (or any of their directors, officers, employees,
agents or Affiliates); (ii) you have no offset right, counterclaim or defense of
any kind against any of your obligations, indebtedness or liabilities to us; and
(iii) each of the Banks and the Agent has heretofore performed and satisfied in
a timely manner all of its obligations to you. We wish (and you agree) to
eliminate any possibility that any past conditions, acts, omissions, events,
circumstances or matters would impair or otherwise adversely affect any of our
rights, interests, contracts, collateral security or remedies. Therefore, you
unconditionally release, waive and forever discharge (A) any and all
liabilities, obligations, duties, promises or indebtedness of any kind of any of
the Banks or the Agent to you, except the obligations to be performed by the
Banks or the Agent hereafter as expressly stated in this letter agreement and
the other Loan Documents, and (B) all claims, offsets, causes of action, suits
or defenses of any kind whatsoever (if any), whether known or unknown, which you
might otherwise have against any of the Banks or the Agent or any of their
directors, officers, employees, agents or Affiliates for their respective
actions or omissions occurring prior to the date hereof, in either case (A) or
(B) above, on account of any condition, act, omission, event, contract,
liability, obligation, indebtedness, claim, cause of action, defense,
circumstance or matter of any kind whatsoever which existed, arose or occurred
at any time prior to the date hereof.
This letter agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument. THIS LETTER
AGREEMENT SHALL BE AN INSTRUMENT UNDER SEAL AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW).
Kindly acknowledge your agreement with the terms of this letter
agreement by signing in the space indicated below and returning six (6) original
counterpart signature pages of this letter agreement to the Agent.
FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.),
individually and as Agent
By:
---------------------------------
Name:
Title:
UNITED CALIFORNIA BANK
FORMERLY KNOWN AS SANWA BANK CALIFORNIA
By:
---------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
---------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
---------------------------------
Name:
Title:
Accepted and Agreed by the Borrower, CFK,
and each of the Partners, individually:
MERCURY AIR GROUP, INC.
By:
---------------------------------
Name:
Title:
CFK REALTY PARTNERS, LLC
By:
---------------------------------
Name:
Title:
XXXXXX X. XXXXXX
------------------------------------
XX. XXXXXX X. XXXXX
------------------------------------
XXXXXXXXX X. XXXXX, XX.
------------------------------------
Each of the Guarantors hereby consents to the terms of the foregoing letter
agreement, and each confirms its obligation to the Agent and the Banks under its
Guaranty.
MERCFUEL, INC.
By:
---------------------------------
Name:
Title:
MAYTAG AIRCRAFT CORPORATION
By:
---------------------------------
Name:
Title:
MERCURY AIR CARGO, INC.
By:
---------------------------------
Name:
Title:
MERCURY ACCEPTANCE CORPORATION
By:
---------------------------------
Name:
Title:
EXCEL CARGO, INC.
By:
---------------------------------
Name:
Title:
MERCURY AIR CENTERS, INC.
(f/k/a Xxxxxxx Flying Service, Inc.)
By:
---------------------------------
Name:
Title:
AEG FINANCE CORPORATION
By:
---------------------------------
Name:
Title:
JUPITER AIRLINE AUTOMATION
SERVICES, INC.
(f/k/a RPA Airline Automation Services, Inc. and
Xxxx Xxxxx and Associates, Inc.)
By:
---------------------------------
Name:
Title:
HERMES AVIATION, INC.
By:
---------------------------------
Name:
Title:
VULCAN AVIATION, INC.
By:
---------------------------------
Name:
Title: