LOAN AGREEMENT
LOAN
AGREEMENT (this “Agreement”) dated as of March
2, 2009, by and among Airborne, Inc., a New York corporation (the “Borrower”), FirstFlight, Inc.,
a Nevada corporation (the “Lender”) Xxxx X. Xxx, an
individual (“X. Xxx”),
and Xxxxxx Xxx, an individual (“X. Xxx” and together with X.
Xxx the “Shareholders”).
WITNESSETH:
WHEREAS,
the Borrower has requested that the Lender make loans (each, a “Loan” and collectively, the
“Loans”) to the Borrower
in the aggregate principal amount of Seven Hundred Fifty Thousand Dollars
($750,000), the proceeds of which will be used for working capital and other
general corporate purposes of the Borrower;
WHEREAS,
the parties hereto have entered into a Share Exchange Agreement dated as of the
date hereof pursuant to which the Shareholders agreed to exchange all of the
capital stock of the Lender owned by the Shareholders for all of the capital
stock of the Borrower owned by the Lender (collectively, the “Exchange”);
WHEREAS,
in consideration for the Lender making the Loans to the Borrower and agreeing to
the Exchange, the Borrower has agreed to make certain payments to the Lender
hereunder;
WHEREAS,
the Lender is willing to make the Loans and the Exchange, subject to the terms
and conditions of this Agreement.
NOW
THEREFORE, in consideration of the covenants and promises herein contained, the
parties agree as follows:
ARTICLE
I: AGREEMENT FOR THE LOAN
Section
1.1 Loans. Subject
to the terms and conditions of this Agreement, the Lender agrees to make Loans
without interest to the Borrower as follows: (a) a Loan in the amount
of $500,000 in a single advance on the Closing Date (as hereinafter defined);
and (b) a Loan in the amount of $250,000 in a single advance on the Execution
Cuts Date (as hereinafter defined), and the Borrower agrees to borrow the same
from the Lender. “Execution Cuts Date” means the
date on which the Borrower shall have presented to the Lender the Borrower’s
reasonably detailed agreement setting forth reductions in the Borrower’s
operating expenditures that will yield Eight Hundred Thousand and 00/100ths
Dollars ($800,000.00) in annual savings.
ARTICLE
II: FINANCING TERMS
Section
2.1 Promissory
Notes. The Loans shall be evidenced by a Promissory Note in
the form of Exhibit
A hereto (the “Note”) delivered by the
Borrower to the Lender in the aggregate principal amount of the
Loan.
Section
2.2 Monthly
Payments.
(a) Beginning
the first day of September, 2009 and continuing the first day of each and every
month thereafter until July 31, 2015 the Borrower shall pay to the Lender the
sum of TEN THOUSAND FIVE HUNDRED and 00/100ths DOLLARS
($10,500.00). Beginning the first day of August, 2014 and continuing
the first day of each month thereafter the monthly payment shall be reduced to
EIGHT THOUSAND and 00/100ths DOLLARS ($8,000.00). The Lender shall
first apply the payments to the reduction of the outstanding principal balance
of the Loan. Once the entire aggregate principal amount of the Loan
has been paid in full the Lender shall apply the payments reduction in the
principal balance of a One Million and 00/100ths Dollar ($1,000,000.00) Line of
Credit Note on Demand dated September 10, 2008 between the Lender as borrower
thereunder and Five Star Bank (the “Line of Credit”). The Lender shall not
charge the Borrower any interest on the Line of Credit.
Section
2.3 Payment Upon a Sale of the
Borrower.
(a) Repayment. The
Borrower and the Shareholder, whichever is the recipient of the Net Proceeds of
the Sale of the Company, shall repay the Lender in full upon the closing of a
Sale of the Company the aggregate principal amount of all of the Loans and Line
of Credit outstanding on such date up to the amount of the Net Proceeds
(calculated before payment of the Loans and Line of Credit under this Section 2.3(a)) of
such Sale of the Company. “Sale of the Company” means the
sale of any securities of the Borrower by any Shareholder or other shareholder
of the Borrower and any sale of the Borrower (whether by merger, consolidation,
recapitalization, reorganization, sale of securities, sale of assets or
otherwise) in one transaction or series of related transactions to person or
entity not an Affiliate, directly or indirectly, of the Shareholders or the
Borrower pursuant to which such person or entity (together with its Affiliates)
(i) acquires from the Borrower, the Shareholders or any other shareholder of the
Borrower (A) any securities of the Borrower or (B) all or substantially all of
the Borrower’s assets, or (ii) is the surviving entity or owns capital stock of
the surviving entity of any merger, consolidation, recapitalization or
reorganization involving the Borrower (in such event the parties shall negotiate
in good faith the amount of the Net Proceeds).
(b) In
addition to repayment of the Loans and Line of Credit required pursuant to Section 2.3(a), in
the event of a Sale of the Company prior to the five (5) year anniversary of the
date hereof the Borrower and, in the event of a sale of securities of the
Borrower, the selling shareholders of the Borrower shall pay to the Lender, and
the Lender shall be entitled to receive, twenty percent (20%) of the Net
Proceeds of such Sale of the Company. “Net Proceeds” means with
respect to any Sale of the Company, the proceeds thereof paid to the Borrower
and its shareholders net of (i) reasonable brokerage commissions and other
reasonable fees and expenses (including without limitation reasonable fees and
expenses of legal counsel and accountants and reasonable fees, expenses and
discounts or commissions of underwriters, placement agents and investment
bankers) related to such Sale of the Company and (ii) provisions for all taxes
payable as a result of such Sale of the Company; provided, however, that if such
Sale of the Company is a sale of all or substantially all of the Borrower’s
assets the calculation of Net Proceeds shall also be net of amounts required to
repay the Loans, Line of Credit, and amounts required to be applied
to the repayment of all other indebtedness and liabilities of the
Borrower.
(c) In
addition to repayment of the Loans and Line of Credit required pursuant to Section 2.3(a), in
the event of a Sale of the Borrower after the five (5) year anniversary of the
date hereof the Borrower and, in the event of a sale of securities of the
Borrower, the selling shareholders of the Borrower shall pay to the Lender, and
the Lender shall be entitled to receive, ten percent (10%) of the Net Proceeds
of such Sale of the Borrower.
(d) Each
Shareholder agrees that it will not, directly or indirectly, sell, transfer,
assign or otherwise dispose of any capital stock of the Borrower or any interest
therein unless the person or entity receiving such capital stock agrees in
writing to be bound by the terms of this Agreement as a
Shareholder. Any attempt by any Shareholder to make transfer of
capital stock of the Borrower in violation of this Agreement shall be null and
void. Each certificate representing Restricted Securities shall be
endorsed with the following legends and such other legends as may be required by
applicable state securities laws:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOAN AGREEMENT,
DATED AS OF MARCH 2, 2009, AS SUCH AGREEMENT MAY BE AMENDED, RESTATED OR
MODIFIED FROM TIME TO TIME, AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE PROVISIONS
THEREOF AND ANY TRANSFEREE OF THESE SECURITIES SHALL BE SUBJECT TO THE TERMS OF
SUCH AGREEMENT..”
Section
2.4 Manner and Time of
Payment. All payments by the Borrower hereunder shall be made
without defense, set off or counterclaim, and in same day funds and delivered to
the Lender on the date due at the addresses indicated for the Lender in Exhibit A hereto for
the account of the Lender. Funds received by the Lender or the
Shareholders after that time shall be deemed to have been paid by the Borrower
on the next succeeding business day. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a business day, the
payment shall be made on the next succeeding business day and such extension of
time shall be included in the computation of the payment of interest
hereunder.
Section
2.5 Use of
Proceeds. Proceeds of the Loans shall be used only for working
capital and other general corporate purposes of the Borrower.
Section
2.6 Financial Statements and
Reports.
(a) Books and
Records. The Borrower shall at all times maintain correct and
complete books and records in which full and correct entries shall be made of
all its business transactions pursuant to a system of accounting established and
administered in accordance with GAAP to the extent applicable and set aside on
its books all such proper accruals and reserves as shall be required under
GAAP. The Borrower shall provide the Lender with reasonable access to
its books and records and shall furnish to the Lender any reports provided by
the Borrower to any other institutional lender.
(b) Quarterly
Statements. As soon as available, and in any event within
forty-five (45) days after the end of each respective quarterly fiscal period
(except the last) of each fiscal year of the Borrower, the Borrower shall
deliver to the Lender copies of the balance sheets of the Borrower as of the end
of such quarterly fiscal period, and the related statements of income and cash
flows of the Borrower for such quarterly fiscal period and for the portion of
the fiscal year ending with such period, in each case setting forth in
comparative form the figures for the corresponding period of the preceding
fiscal year, all in reasonable detail, and certified by the chief financial
officer of the Borrower, as being true and correct in all material respects and,
except for the lack of notes, as having been prepared in accordance with GAAP,
subject to year-end audit adjustments.
(c) Annual
Statements. As soon as available and in any event within one
hundred twenty (120) days after the close of each respective fiscal year of the
Borrower, the Borrower shall deliver to the Lender copies of the balance sheets
of the Borrower as of the close of such fiscal year and the related statements
of income and cash flows of the Borrower for such fiscal year, in each case,
setting forth in comparative form the figures for the preceding fiscal year, all
in reasonable detail and accompanied by (i) an opinion thereon of independent
public accountants of the Borrower to the effect that such financial statements
have been prepared in accordance with GAAP and fairly present the financial
conditions and results of operations of the Borrower and (ii) such accountant’s
management letter.
Section 2.7 Debt
Subordination. This Agreement is subject to the terms and
conditions of (i) a Debt Subordination Agreement of even date by and among the
Borrower, the Lender, and Five Star Bank and (ii) a Loan Agreement of even date
by and among Borrower, Lender, Five Star Bank, and certain affiliated entities
identified as Guarantors therein, copies of both the Debt Subordination
Agreement and Loan Agreement are incorporated herein by reference.
ARTICLE
III: MISCELLANEOUS PROVISIONS
Section
3.1 Notices. All
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service against receipt, mailed
by certified or registered mail, return receipt requested, or sent by confirmed
telecopy, as follows:
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(a)
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if
to the Borrower:
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Airborne,
Inc.
000 Xxxx
Xxxx Xxxx
Xxxxxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxx
Xxx
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(b)
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if
to the Lender, to.
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000
Xxxxxx Xxxx
Xxxxx,
Xxxxxxxxxxxx 00000
Facsimile
No.: (000) 000-0000
Attention: Xxx
Xxxxxxxxx
With a
copy to:
Xxxxxxx
& Masyr, LLP
000 Xxxx
00xx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxxxxx
X. Xxxxxxx
Section
3.2 Governing
Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to conflict of law principles
which might indicate the applicability of the laws of any other
State.
Section
3.3 Severability. If
any part of this Agreement is contrary to, prohibited by, or deemed invalid
under any applicable law of any jurisdiction, such provision shall, as to such
jurisdiction, be inapplicable and deemed omitted to the extent so contrary,
prohibited, or invalid, without invalidating the remainder hereof or affecting
the validity or enforceability of such provision in any other
jurisdiction.
Section
3.4 Counterparts. This
Agreement may be executed in any number of counterparts and by the different
parties hereto 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 instrument, and all signatures need not appear on any one
counterpart.
Section
3.5 Benefit of
Agreement. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns; provided, however, that the
Borrower shall not assign or transfer any interest or delegate any duty
hereunder without the prior written consent of the Lender. The Lender
shall have the absolute right to assign or transfer any interest herein or in
the other Credit Documents, including, without limitation, the right to sell
participation interests in the Loan.
Section
3.6 Further
Documentation. The parties hereto agree that, from
time to time after the Closing Date, the Borrower shall execute and deliver to
the Lender such further document or documents as the Lender may reasonably
request and which is or are necessary or desirable in order to confirm or
further evidence the respective obligations of the Borrower and/or the rights
and privileges of the Lender under this Agreement or the other Credit Documents,
or carry out the intent of the parties under this Agreement or the other Credit
Documents.
Section
3.7 Waivers;
Amendments. Any term, covenant, agreement or condition of this
Agreement or the other Credit Documents may be amended or waived, and any
departure therefrom may be consented to, if, but only if, such amendment, waiver
or consent is in writing and is signed by the Lender and by the
Borrower. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
Section
3.8 No Waiver; Cumulative
Remedies. No failure to exercise and no delay in exercising,
on the part of the Lender, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
Section
3.9 Entire
Agreement. This Agreement and the other Credit Documents
embody the entire agreement among Borrower, the Guarantors and the Lender and
supersede all prior agreements, representations and understandings, if any,
relating to the subject matter hereof.
IN
WITNESS WHEREOF, the authorized representatives of the parties have executed
this agreement as of the date first written above.
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By:
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/s/ Xxxxxx X. Xxxxxxxxx |
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Name:
Xxxxxx X. Xxxxxxxxx
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Title:
Vice Chairman
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AIRBORNE,
INC.
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By:
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/s/ Xxxx X. Xxx |
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Name:
Xxxx X. Xxx
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Title:
President
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