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Exhibit 10.1
LOAN AGREEMENT
by and between
NATIONSBANK, N.A. (SOUTH)
and
AVTEAM, INC.
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND REFERENCE TERMS................................... 1
ARTICLE 2
LOANS............................................................. 9
2.01 Loan................................................... 9
2.02 Revolving Credit Feature............................... 10
2.03 Borrowing Base......................................... 10
2.04 Letter of Credit Subfeature............................ 12
2.05 Procedure for Advances................................. 12
2.06 Libodollar Advances.................................... 13
2.07 Conditions Precedent................................... 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES.................................... 15
3.01 Good Standing.......................................... 15
3.02 Authority and Compliance............................... 15
3.03 Binding Agreement...................................... 16
3.04 Litigation............................................. 16
3.05 No Conflicting Agreements.............................. 16
3.06 Ownership of Assets.................................... 16
3.07 Taxes.................................................. 16
3.08 Financial Statements................................... 16
3.09 Place of Business...................................... 17
3.10 Environmental Matters.................................. 17
3.11 Receivables............................................ 17
3.12 Inventory.............................................. 18
3.13 Federal Reserve Regulations............................ 19
3.14 Consents, Etc.......................................... 19
3.15 Governmental Authorizations............................ 19
3.16 Title to Properties.................................... 19
3.17 Solvent................................................ 20
3.18 Subsidiaries........................................... 20
3.19 Shareholders........................................... 20
3.20 Indebtedness........................................... 20
3.21 Contingent Liabilities................................. 20
3.22 Incorporation of Representations and Warranties........ 20
3.23 Material Contracts..................................... 20
3.24 Use of Proceeds........................................ 20
3.25 Pension and Welfare Plans.............................. 21
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3.26 Tax Returns and Payment....................................... 21
3.27 Labor Matters................................................. 21
3.28 Multi-Employer Pension Plan Amendments Act of 1980............ 22
3.29 Investment Company Act of 1940; Public Utility
Holding Company Act of 1935................................. 22
3.30 Employment and Other Agreements............................... 22
3.31 Air Carrier................................................... 22
3.32 Continuation of Representation and Warranties................. 22
ARTICLE 4
AFFIRMATIVE COVENANTS.............................................. 22
4.01 Financial Condition........................................... 22
4.02 Financial Statements and Other Information.................... 23
4.03 Insurance..................................................... 25
4.04 Existence and Compliance...................................... 25
4.05 Adverse Conditions or Events.................................. 25
4.06 Taxes and Other Obligations................................... 26
4.07 Maintenance................................................... 26
4.08 Notification.................................................. 26
4.09 Potential Contingent Liabilities.............................. 26
4.10 Subsidiaries.................................................. 26
4.11 Non-Use Commitment Fee........................................ 26
4.12 Additional Fee................................................ 27
4.13 Compliance with Laws.......................................... 27
4.14 Visitation Rights............................................. 27
4.15 ERISA......................................................... 27
4.16 Payment of Indebtedness....................................... 28
4.17 Parts Agreement............................................... 28
4.18 Subsidiary.................................................... 28
4.19 Purchase of Engines and Propellers............................ 28
4.20 Lock Box...................................................... 28
4.21 Bank Account.................................................. 28
ARTICLE 5
NEGATIVE COVENANTS................................................. 28
5.01 Liens......................................................... 29
5.02 Borrowings.................................................... 29
5.03 Character of Business......................................... 29
5.04 Additional Negative Covenants................................. 29
5.05 ERISA Compliance.............................................. 30
ARTICLE 6
DEFAULT............................................................ 31
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6.01 ..............................................................31
6.02 ..............................................................31
6.03 ..............................................................31
6.04 ..............................................................31
6.05 ..............................................................31
6.06 ..............................................................31
6.07 ..............................................................31
6.08 ..............................................................31
6.09 ..............................................................32
6.10 ..............................................................32
6.11 ..............................................................32
6.12 ..............................................................32
6.13 ..............................................................32
6.14 ..............................................................32
6.15 ..............................................................32
6.16 ..............................................................32
ARTICLE 7
REMEDIES UPON DEFAULT..............................................33
ARTICLE 8
NOTICES............................................................34
ARTICLE 9
COSTS, EXPENSES AND ATTORNEY'S FEES................................35
ARTICLE 10
MISCELLANEOUS......................................................35
10.01 Cumulative Rights and No Waiver...............................35
10.02 Applicable Law................................................35
10.03 Amendment.....................................................36
10.04 Documents.....................................................36
10.05 Partial Invalidity............................................36
10.06 Indemnification...............................................36
10.07 Survivability.................................................36
10.08 Field Audit...................................................36
10.09 Jurisdiction, Service of Process..............................36
10.10 Course of Dealing.............................................37
10.11 Successors and Assigns........................................37
10.12 Net Payments..................................................37
10.13 Further Assurances............................................38
10.14 Counterparts..................................................38
10.15 Resurrection of Borrower's Obligations........................38
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10.16 Equitable Relief...............................................38
10.17 Ambiguity or Conflict..........................................38
ARTICLE 11
PARTIAL RELEASES....................................................39
ARTICLE 12
ARBITRATION.........................................................39
12.01 SPECIAL RULES..................................................39
12.02 RESERVATION OF RIGHTS..........................................40
ARTICLE 13
NO ORAL AGREEMENT...................................................40
ARTICLE 14
CROSS-DEFAULT/CROSS-COLLATERAL......................................40
EXHIBIT 2.03(b)..............................................................42
EXHIBIT 2.05.................................................................43
EXHIBIT 2.06(b)..............................................................45
EXHIBIT 4.02(d)..............................................................47
EXHIBIT 3.18.................................................................50
EXHIBIT 3.19.................................................................51
EXHIBIT 3.20.................................................................52
EXHIBIT 3.21.................................................................53
EXHIBIT 3.30.................................................................54
EXHIBIT 4.02(c)..............................................................55
EXHIBIT 11...................................................................59
EXHIBIT 11(a)................................................................61
AFFIDAVIT FOR EXECUTION OF LOAN AGREEMENT
WITHOUT THE STATE OF FLORIDA........................................62
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NATIONSBANK, N.A. (SOUTH)
LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of the 19th day of
February, 1997, by and between NATIONSBANK, N.A. (SOUTH), a national banking
association, and the Borrower described below:
In consideration of the Loan or Loans described below and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, Bank and Borrower agree as follows:
ARTICLE 1
DEFINITIONS AND REFERENCE TERMS
In addition to any other terms defined herein, the following terms
shall have the meaning set forth with respect thereto:
ACCOUNTING TERMS. All accounting terms not specifically
defined or specified herein shall have the meanings generally attributed to such
terms under generally accepted accounting principles ("GAAP"), as in effect from
time to time, consistently applied.
ACCOUNTS. Accounts shall mean all "accounts" (as defined in
the UCC) now owned or hereafter acquired by Borrower, and shall also mean and
include all accounts receivable, contract rights, book debts, notes, drafts and
other obligations or indebtedness owing to Borrower arising from the sale, lease
or exchange of goods or other property by it and/or the performance of services
by it (including any such obligation which might be characterized as an account,
contract right or general intangible under the Uniform Commercial Code in effect
in any jurisdiction) and all of Borrower's rights in, to and under all purchase
orders for goods, services or other property, and all of Borrower's rights to
any goods, services or other property represented by any of the foregoing
(including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to Borrower under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
by it (whether or not yet earned by performance on the part of Borrower), in
each case whether now in existence or hereafter arising or acquired, including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
ADVANCE. Advance means the principal amount of sums advanced
by Bank to or for the benefit of Borrower.
AFFILIATE. Affiliate means any Person (other than a
Subsidiary) which directly or indirectly through one or more intermediaries
controls, or is controlled by or is under common
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control with, Borrower, or five percent (5%) or more of the equity interest of
which is held beneficially or of record by, Borrower. The term "control" means
the possession, directly or indirectly, of the power to cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
APPLICABLE MARGIN. Applicable Margin means: (a) in the case
of the LIBOR Basis, two hundred seventy-five (275) basis points, and (b) in the
case of the Prime Rate Basis, zero percent (0%).
AUTHORIZED SIGNATORY. Authorized Signatory means any one of
Xxxxxx X. Xxxx, Xxxxx X. Xxxx or Xxxx X. Xxxxxxx.
BANK. NATIONSBANK, N.A. (SOUTH), its successors, assigns and
affiliates.
BORROWER. AVTEAM, INC., a Florida corporation.
BORROWER'S ADDRESS. 0000 Xxxxxxxxx Xxx, Xxxxxxx,
Xxxxxxx 00000.
BORROWING DATE. Borrowing Date means the day as of which an
Advance is made.
BUSINESS DAY. Business Day means, if the applicable day
relates to a prime rate advance, a day on which banks are not authorized or
required to be closed in Fort Lauderdale, Florida, and if the applicable day
relates to any LIBOR Advance, a day on which dealings are carried on in the
London interbank market.
CAPITAL EXPENDITURE. Capital Expenditure shall mean any
expenditure by a Person which is or is required to be capitalized on its balance
sheet for financial reporting purposes in accordance with GAAP including,
without limitation, the incurring by such Person of any capitalized lease
obligations.
CHATTEL PAPER. Chattel Paper shall have the meaning ascribed
to said term in Section 679.105 of the Florida Statutes.
CLIPPER AGREEMENT. Clipper Agreement shall mean, individually
and collectively, the following: (i) that certain Stock Purchase Agreement dated
December 6, 1996, among Borrower and The Clipper Group; (ii) Shareholders'
Agreement among the Borrower, the shareholders of the Borrower and Clipper
Capital Partners, L.P., as Purchaser Representatives; and (iii) Registration
Rights Agreement among the Borrower and the investors identified thereon.
CODE. Code shall mean the Internal Revenue Code of 1986, as
the same may be from time to time hereafter modified or amended.
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COLLATERAL. Collateral means all present and future: Accounts,
Inventory and all Products thereof, reserves, balances, deposits, property of
Borrower and each Subsidiary coming into the possession of Bank, General
Intangibles, Instruments, Chattel Paper, Documents, Equipment, Items and Money
and all Proceeds thereof in which Borrower and each Subsidiary now has and
hereafter acquires any rights of any kind and nature whatsoever, wherever
located and regardless of in whose possession.
COMMITMENT. Commitment shall mean the agreement of Bank to
make Advances hereunder during the term of the commitment pursuant to the terms
and subject to the conditions herein expressed.
COMMITMENT AMOUNT. Commitment Amount shall mean the aggregate
principal amount of Advances which Bank agrees to make available and are
permitted to be outstanding at any one time hereunder, up to the amount set
forth in Section 2.01.
CONTINGENT LIABILITY. Contingent Liability shall mean, without
duplication, as to any Person: (a) any guaranty Obligation of that Person; and
(b) any direct or indirect recourse obligation or liability, contingent or
otherwise, of that Person: (i) in respect of any letter of credit, bond or
similar instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings, (ii) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made if delivery of such materials, supplies or other
property is not made or tendered, or such services are never performed or
tendered, or (iii) incurred pursuant to any interest rate swap or similar
agreement. The amount of any Contingent Liability shall be deemed equal to the
maximum reasonably anticipated liability in respect thereof.
CONTRACT AMOUNT. Contract Amount means the amount of
principal of an Advance selected by Borrower to bear interest at the Libodollar
Rate.
CONTRACT DATE. Contract Date means the date upon which an
Interest Period begins with respect to an outstanding Advance.
DEFAULT. Default means any event or condition which, with the
giving of notice or the passage of time, or both, would become an Event of
Default.
DEFAULT RATE. Default Rate means that certain rate of
interest described in the Note as applicable upon a Default.
DOCUMENTS. Documents shall have the meaning ascribed to said
term in Section 679.015 of the Florida Statutes and shall include all bills of
lading, airway bills, dock warrants, dock receipts, warehouse receipts or orders
for the delivery of goods, and also any other document which
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in the regular course of business or financing is treated as adequately
evidencing that the person in possession of it is entitled to receive, hold and
dispose of the document and the goods it covers.
DOLLARS. Dollars and the symbol $ means lawful money of the
United States of America.
EQUIPMENT. Equipment shall have the meaning ascribed to said
term in Section 678.109 of the Florida Statutes and shall include all of the
Borrower's goods, machinery, equipment, fixed assets, rolling stock, fixtures,
furniture, office equipment, tools, parts and other items of personal property
of every kind and description, now owned or hereafter acquired by the Borrower,
wheresoever located, together with all additions, attachments, accessions,
parts, replacements and substitutions thereof.
ERISA. ERISA means the Employment Retirement Income Security
Act of 1974, as same may be amended from time to time, together with the
regulations thereunder.
EVENT OF DEFAULT. Event of Default shall have the meaning set
forth in Article 6 hereof.
GENERAL INTANGIBLES. General Intangibles shall have the
meaning ascribed to said term in Section 679.106 of the Florida Statutes and
shall include, without limitation, any personal property other than goods,
Accounts, Inventory, Equipment, Chattel Paper and Instruments, including all
franchises, licenses, leases and subleases whereby Borrower leases to another
any of Borrower's Inventory or Equipment, contracts, permits and authorizations
of governmental agencies and others, tradenames, trademarks, service marks,
patents, copyrights, intellectual property and all other intangible property of
the Borrower.
HAZARDOUS MATERIALS. Hazardous Materials include all materials
defined as hazardous or biohazardous wastes or substances under any local, state
or federal environmental laws, rules or regulations, and petroleum, petroleum
products, oil and asbestos.
INDEBTEDNESS. Indebtedness of any Person shall mean (a) all
indebtedness for borrowed money or for the deferred purchase price of any asset
or services (other than accounts payable to trade creditors under customary
trade credit terms) for which the Person is liable as principal, (b) all
indebtedness (excluding unaccrued finance charges) secured by a lien on property
owned or being purchased by the Person, whether or not such indebtedness shall
have been assumed by the Person, (c) all capitalized lease obligations
(excluding unaccrued finance charges) of the Person, (d) any arrangement
(commonly described as a sale-and-leaseback transaction) with any financial
institution or other lender or investor providing for the leasing to the Person
of property which at the time has been or is to be sold or transferred by the
Person to the lender or investor, or which has been or is being acquired from
another Person by the lender or investor for the purpose of leasing the property
to the Person, (e) all obligations of partnerships or joint ventures in respect
of which the Person is primarily or secondarily liable as a partner or joint
venturer (provided that in
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any event for purposes of determining the amount of the Indebtedness, the full
amount of such obligations, without giving effect to the Contingent Liability or
contributions of other participants in the partnership or joint venture, shall
be included), (f) any arrangement commonly known as a take or pay contract, (g)
all redeemable preferred stock of such Person valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, and (h) any Contingent Liability of the Borrower or a Subsidiary.
INSTRUMENTS. Instruments shall have the meaning ascribed to
said term in Section 679.105 of the Florida Statutes.
INTEREST PAYMENT DATE. Interest Payment Date means: (i) with
respect to a Libodollar Advance, the last day of each Interest Period applicable
to such Advance; and (ii) with respect to any Advances or portions thereof which
at any time are not Libodollar Advances, quarterly on the tenth (10th) day of
each calendar quarter commencing April 10, 1997.
INTEREST PERIOD. Interest Period means, in the case of a
Libodollar Advance, the period beginning on a Borrowing Date or a Contract Date,
as may be applicable, and ending for each Libodollar Advance, one (1), two (2)
or three (3) months thereafter, and thereafter each successive one (1), two (2)
or three (3) months as the Borrower shall request hereunder, commencing on the
last day of the immediately preceding Interest Period, and ending one (1), two
(2) or three (3) months thereafter as the Borrower may elect.
The determination of Interest Periods in the case of
a Libodollar Advance shall be subject to the following provisions: (i) each
Interest Period occurring after the initial Interest Period shall commence on
the day on which the next preceding Interest Period expires, (ii) if any
Interest Period would otherwise commence or expire on a day which is not a
Business Day, the Interest Period shall commence or expire, as the case may be,
on the next succeeding Business Day (and interest shall accrue and be payable
for the period of such extension), unless, in the case of an expiration of an
Interest Period for a Libodollar Advance, the next Business Day shall fall in
the next succeeding calendar month, in which event the last day of the Interest
Period shall be the immediately preceding Business Day, which is also a Business
Day, (iii) any Interest Period which begins on the last Business Day of any
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month, (iv) no Interest Period shall extend beyond
the Maturity Date, and (v) no Interest Period shall extend beyond the date upon
which payment or prepayment of the Loan is required hereunder (including,
without limitation, mandatory prepayments and voluntary prepayments after notice
thereof has been given), unless the aggregate amount of the Loan is equal to or
in excess of the amount of any such payment or prepayment. Each Advance shall
therefore bear interest commencing on the date it is made and continuing until
but not including the date it is paid, if timely paid as provided herein.
INVENTORY. Inventory means all inventory of whatsoever name,
nature, kind or description now owned and hereafter acquired, present and
future, by Borrower and any Subsidiary,
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wherever located, including, without limitation, all contract rights with
respect thereto and documents representing the same, all goods held for sale or
lease or to be furnished under contracts of service, finished goods, work in
process, raw materials, materials used or consumed by Borrower and any
Subsidiary and including such inventory as is temporarily out of the Borrower's
or any Subsidiary's custody or possession, including inventory on the premises
of others and items in transit and including any returns and repossessions upon
any accounts, documents, instruments or chattel paper relating to replacements
therefor, and all additions and accessions thereto, and all ledgers, books of
account, records, computer printouts, computer runs and other computer-prepared
information relating to any of the foregoing.
LIBODOLLAR ADVANCE. Libodollar Advance means an Advance which
the Borrower requests be made as a Libodollar Advance in accordance herewith,
and which bears interest at the Libodollar Rate.
LIBODOLLAR RATE. Libodollar Rate means at the time any
determination thereof is to be made and for any Interest Period, an interest
rate per annum (computed on the actual number of days elapsed over a 360-day
year) equal to the sum of (i) the Applicable Margin plus (ii) the quotient of
the LIBOR divided by the sum of 1.00 minus the Libodollar Reserve Requirement.
LIBODOLLAR RATE TRANCHE. Libodollar Rate Tranche means a
Tranche bearing interest, at all times during an Interest Period applicable to
such Tranche, at a fixed rate of interest determined by reference to the
Libodollar Rate.
LIBODOLLAR RESERVE REQUIREMENT. Libodollar Reserve Requirement
means, on any day, that percentage (expressed as a fraction) which is in effect
on such day, as specified by the Board of Governors of the Federal Reserve
System (or any successor governmental body), and applied for determining the
maximum reserve requirements (including, without limitation, basic,
supplemental, marginal and emergency reserves) under Regulation D with respect
to "Eurocurrency liabilities" as currently defined in Regulation D, or under any
similar future regulation with respect to Eurocurrency liabilities or
Eurocurrency fundings. Each determination by the Bank of the Libodollar Reserve
Requirement shall, in the absence of manifest error, be binding and conclusive.
The Libodollar Reserve Requirement is currently 0%; Bank will notify Borrower
promptly when it learns of a change in the Requirement.
LIBOR. LIBOR means, with respect to any Interest Period for a
Libodollar Advance, the interest rate per annum as determined by Bank at which
deposits in Dollars are generally available to the Bank in the London interbank
market with maturities comparable to the Interest Period to be applicable to
such Libodollar Advance, determined prior to 11:00 a.m. Eastern Standard Time on
the date which is two (2) Business Days prior to the commencement of such
Interest Period. All determinations, estimates, assumptions of allocations and
the like required for the determination of the LIBOR shall be made by the Bank
in good faith, but determinations thereof shall be final, binding and conclusive
on the Borrower absent manifest error.
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LOAN(S). Loan(s) means collectively any and all loans
heretofore or hereafter made by Bank to the Borrower.
LOAN DOCUMENTS. Loan Documents means this Loan Agreement and
any and all promissory notes executed by Borrower in favor of Bank and all other
documents, instruments, guarantees, certificates and agreements executed and/or
delivered by Borrower, any Subsidiary, any guarantor or third party in
connection with any Loan.
MATERIAL ADVERSE EFFECT. Material Adverse Effect means a
material adverse effect (as determined in Bank's sole but reasonable discretion)
upon: (i) the business, assets, operating ability or condition (financial or
otherwise) of Borrower and any Subsidiary taken as a whole; or (ii) the ability
of Borrower and any Subsidiary to repay the Obligation or other Indebtedness or
otherwise perform their obligations under the Loan Documents.
MATURITY DATE. Maturity Date means May 31, 1998, or a sooner
Default.
NOTE. Note means the Promissory Note executed by the Borrower
in favor of Bank dated even date herewith in the original principal amount of
Twenty-Five Million Dollars ($25,000,000), together with all modifications,
renewals or substitutions thereof.
OBLIGATION. Obligation means the aggregate of outstanding
indebtedness under the Note, and any outstanding principal indebtedness of
Borrower to Bank arising in connection with any agreement not evidenced by the
Note, however arising, including any outstanding amounts due Bank under any
security agreement executed by Borrower in connection with this Agreement, any
outstanding amount advanced or incurred by Bank to enforce, protect, preserve or
maintain its rights with respect to, or by reason of Borrower's failure to
comply with any agreement contained in the Note or this Agreement, and all of
Bank's expenses, as described in this Agreement, together with all accrued and
unpaid interest on all of the foregoing, all computed and payable in Dollars.
PARTS AGREEMENT. Parts Agreement shall have the meaning set
forth in Paragraph 4.17 hereof.
PBGC. PBGC means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
PERMITTED LIENS shall mean: (i) Liens (if any) granted to Bank
for the benefit of Bank to secure the Obligation; (ii) Liens permitted pursuant
to Paragraph 5.01 below; (iii) pledges or deposits made to secure payment of
worker's compensation insurance (or to participate in any fund in connection
with workers' compensation insurance), unemployment insurance, pensions or
social security programs; (iv) Liens imposed by mandatory provisions of law such
as for materialmen's, mechanics', warehousemen's and other like Liens arising in
the ordinary course of business, securing Indebtedness whose payment is not more
than thirty (30) days past due (any landlord's lien must be subordinated to the
Obligation); (v) Liens for taxes, assessments and
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governmental charges or levies imposed upon a Person or such Person's income or
profits or property, if the same are not yet due and payable or if the same are
being contested in good faith and as to which adequate cash reserves have been
provided; (vi) involuntary Liens which are stayed within thirty (30) days after
the imposition thereof and do not adversely affect the Collateral in Bank's sole
but reasonable discretion; or (vii) Liens arising from good faith deposits in
connection with tenders, bids, contracts (other than for the payment of money),
leases, pledges or deposits to secure public or statutory obligations and
deposits to secure (or in lieu of) surety, stay, appeal or custom bonds and
deposits to secure the payment of taxes, assessments, custom duties or other
similar charges.
PERSON. Person means any natural person, entity, corporation,
limited liability partnership or company, unincorporated organization, trust,
joint-stock company, joint venture, association, company, partnership, or
government, or any agency or political subdivision of any government.
PRIME RATE. Prime Rate means the interest rate (but not
necessarily the best or lowest rate charged borrowing customers of Bank) set by
Bank from time to time as its prime rate.
PRIME RATE ADVANCE. Prime Rate Advance means an Advance which
the Borrower requests to be made as a Prime Rate Advance or which is reborrowed
as a Prime Rate Advance, in accordance with this Agreement, and which bears
interest at the Prime Rate.
RECEIVABLES. Receivables means all Accounts and all other
obligations for the payment of money under General Intangibles, whether or not
such Receivables are specifically assigned.
REPORTABLE EVENT. Reportable Event shall have the meaning
given to such term in ERISA.
SOLVENT. Solvent means, with respect to any Person on a
particular date, that on such date (i) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, Contingent Liabilities and other
commitments as they mature in the normal course of business, (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person is
engaged. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which, in light of
all the facts and
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circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
SUBSIDIARY. Subsidiary means any Person in which Borrower or a
wholly-owned Subsidiary may own, directly or indirectly, an equity interest of
more than fifty percent (50%), during the term of this Agreement, as well as all
Subsidiaries and other Persons from time to time included in the consolidated
financial statements of Borrower.
TERM. Term shall mean the period during which the Loan is
scheduled to be outstanding hereunder, commencing on the date hereof and ending
on the Maturity Date.
TERMINATION EVENT. Termination Event shall have the meaning
set forth in ERISA.
The Clipper Group. The Clipper Group shall mean, jointly and
severally, Clipper Capital Associates, L.P., Clipper/Merchant Partners, L.P.,
Clipper/Merban, L.P., Clipper Equity Partners I, L.P., Clipper/European Re, L.P.
TRANCHE. Tranche means that portion of the principal amount of
the Loan that bears interest at the same rate, and in the case of a Libodollar
Rate Tranche, for the same Interest Period.
ARTICLE 2
LOANS
2.01 LOAN.
(a) Bank hereby agrees to make (or has made) a loan or loans
to Borrower in the aggregate principal amount of Twenty-Five Million Dollars
($25,000,000). The obligation to repay the loan is evidenced by the Note.
(b) Provided all of the conditions for Advances are met, Bank
shall make the Loan to Borrower or disburse to third parties as Borrower may
direct, commencing on the date hereof, until the Maturity Date.
(c) The terms of and the principal payments on the Note shall
be as follows:
(i) Principal and interest outstanding under
each Note shall be payable in accordance with such Note.
(ii) All other notes which may subsequently
become a part of the Obligation shall be paid in accordance with the terms
thereof.
(iii) If any payment of principal of, or interest
on, the Loan shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding
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Business Day; provided, however, that interest shall continue to accrue until
payment is actually received.
(iv) The business records of Bank shall be
conclusive as to the date and amount of any Advance hereunder and any payment or
prepayment of interest or principal thereof, absent manifest error.
(d) The Commitment shall end upon the close of business (5:00
p.m.) on the day prior to the Maturity Date, unless there shall have sooner
occurred an Event of Default under this Agreement, in which event, Bank may
immediately accelerate the Loan without prior notice to Borrower; provided,
however, that, notwithstanding the foregoing, this Agreement shall continue in
full force and effect until the Obligation is paid in full and the Commitment
has been terminated.
(e) The outstanding principal balance under the Note as of any
day shall be the outstanding principal balance as of the beginning of the day,
plus any Advances made pursuant hereto charged to the account on that day
(exclusive of interest) and less any payments of principal credited to the
account on that day. Each Advance shall therefore bear interest commencing on
the date it is made and continuing until but not including the date it is paid,
if timely paid as provided herein.
(f) Any payment of principal or interest or both not made when
due shall itself bear interest on the principal and interest amount of the
payment at the Default Rate, commencing on the due date, until payment,
maturity, or the occurrence of an Event of Default. After maturity of a Note or
the occurrence of an Event of Default hereunder or thereunder, interest shall
accrue on the entire outstanding balance of principal and interest at the
Default Rate.
2.02 REVOLVING CREDIT FEATURE. The Loan provides for a revolving
line of credit under which, provided the provisions of this Agreement are in
compliance and provided no Event of Default exists hereunder, Borrower may from
time to time, borrow, repay and re-borrow funds. Each borrowing shall be
evidenced by a request for advance and a compliance certificate, both in form
and substance required by Bank.
2.03 BORROWING BASE.
(a) Borrowings under the Loan shall be limited to the
"Borrowing Base". Subject to the terms and conditions thereof, and provided
Borrower is not in default under the Loan Documents or any other agreement
between Bank and Borrower, Borrower may borrow, repay and reborrow advances
under the Loan up to the maximum amount of the Note.
(b) Any Advances made under the Note shall be limited to the
amount available under the Borrowing Base. As set forth herein, "Borrowing Base"
shall include: (i) eighty percent (80%) of all eligible accounts receivable; and
(ii) fifty percent (50%) of Borrower's eligible inventory. Only outstanding
accounts receivable and inventory in which the Bank has obtained a
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first perfected security interest shall be included in the Borrowing Base
calculation, which calculations shall exclude: (A) any portion of accounts
receivable which are greater than one hundred twenty (120) days from invoice
date; provided, however, that with respect to those accounts identified on
EXHIBIT 2.03(b) attached hereto, the one hundred twenty (120) days shall be
amended to read one hundred fifty (150) days; (B) the portion of any account to
the extent there are any accounts payable due to the account debtor; (C) foreign
receivables not backed by a letter(s) of credit confirmed by NationsBank or
another major United States bank acceptable to NationsBank in NationsBank's sole
discretion (receivables from foreign subsidiaries of United States corporations
that are guaranteed (pursuant to a guaranty satisfactory to NationsBank) by the
United States parent will, provided the other criteria are satisfied, be allowed
in the Borrowing Base); (D) all inventory held outside the continental United
States; (E) inventory which does not constitute a component of commercial
passenger and cargo jet-powered aircraft (excluding regional aircraft) with the
capacity for a minimum of one hundred (100) passengers (or the equivalent if
retrofitted for cargo); (F) airframe materials to the extent such constitute in
excess of fifty percent (50%) of the Borrower's inventory in the Borrowing Base
(i.e., engines and engine components must constitute at least fifty percent
(50%) of Borrower's inventory in the Borrowing Base); (F) all accounts which
Bank may, from time to time, deem ineligible because of any bankruptcy filing
associated with the account debtor; and (G) all accounts due from related or
affiliated entities of Borrower. As used herein, the term "related or affiliated
entities of Borrower" shall include, without limitation, any person,
corporation, partnership, trust, association or other organization which either
directly or indirectly owns or controls any ownership interest in the Borrower,
or in which the Borrower, either directly or indirectly, owns or controls any
ownership interest.
The foregoing calculations shall be calculated in
accordance with a Borrowing Base certificate in the form attached hereto and
made a part hereof as EXHIBIT 4.02(c) which shall be submitted to Bank on a
monthly basis within ten (10) days following each month end, unless more
frequently requested by Bank or provided by the Borrower, and shall contain such
information related to the Borrowing Base as deemed necessary by Bank. In the
event the outstanding principal balance on the Loan exceeds the Borrowing Base,
Borrower shall immediately pay the Bank an amount equal to such excess. Failure
to make such payment shall constitute a default under the Loan.
(c) Notwithstanding anything herein to the contrary, the
amount available under the Borrowing Base shall not exceed Twenty Million
Dollars ($20,000,000) until such time as Borrower has provided evidence
satisfactory to NationsBank that The Clipper Group had invested an additional
Nine Million One Hundred Thousand Dollars ($9,100,000) in cash equity in the
Borrower.
(d) Upon written notice from Borrower to Bank, Borrower shall
have the right to permanently reduce the amount available under the Loan. Once
reduced as aforesaid, the amount available under the Loan shall not be increased
without the written consent of the Bank, which consent shall be in the Bank's
sole discretion.
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2.04 LETTER OF CREDIT SUBFEATURE. As a subfeature under the Loan,
Bank may, from time to time, issue letters of credit for the account of Borrower
(each, a "Letter of Credit" and collectively, "Letters of Credit"); provided,
however, that the form and substance of each Letter of Credit shall be subject
to approval by Bank in its sole discretion; and provided further that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed Five Million Dollars ($5,000,000). Each Letter of Credit shall be
issued for a term not to exceed three hundred sixty-five (365) days, as
designated by Borrower, provided, however, that no Letter of Credit shall have
an expiration date subsequent to one (1) year after the Maturity Date. In the
event the Loan has matured, then the Borrower shall secure all outstanding
Letters of Credit with cash collateral deposited with the Bank. The undrawn
amount of all Letters of Credit plus any and all amounts paid by Bank in
connection with drawings under any Letter of Credit for which the Bank has not
been reimbursed shall be reserved under the Loan and shall not be available for
advances thereunder. Each draft paid by Bank under a Letter of Credit shall be
deemed an advance under the Loan and shall be repaid in accordance with the
terms of the Loan; provided however, that if the Loan is not available for any
reason whatsoever, at the time any draft is paid by Bank, or if advances are not
available under the Loan in such amount due to any limitation of borrowing set
forth herein, then the full amount of such drafts shall be immediately due and
payable, together with interest thereon, from the date such amount is paid by
Bank to the date such amount is fully repaid by Borrower, at that rate of
interest applicable to advances under the Loan. In such event, Borrower agrees
that Bank, at Bank's sole discretion may debit Borrower's deposit account with
Bank for the amount of such draft.
In conjunction with the issuance of any Letter(s) of Credit,
Borrower shall execute and deliver to Bank any documentation then utilized by
Bank to evidence the issuance of a Letter(s) of Credit.
Borrower shall pay, if applicable, all fees and charges
customarily charged by Bank in connection with the issuance, confirmation,
amendment and other actions with respect to a Letter of Credit as are
customarily charged by Bank with regard to letters of credit.
2.05 PROCEDURE FOR ADVANCES. Any request for an Advance must be
received by Bank prior to: (a) 12:00 noon Eastern Standard Time on a Business
Day, in the case of a Libodollar Advance which is two (2) Business Days prior to
the Borrowing Date, (b) in the case of a Prime Rate Advance, prior to 12:00 noon
on the Borrowing Date, and if each of the other conditions precedent to such
Advance have been satisfied, the Advance will be available prior to 2:00 p.m.
Eastern Standard Time, as the case may be, on such Borrowing Date. Unless Bank
is notified otherwise by Borrower in a signed writing which is accepted and
agreed to by Bank, Bank shall cause the amount of any Advance requested by
Borrower to be paid to the credit of Borrower's deposit account with Bank.
All requests for Advance shall be in the form attached hereto
as EXHIBIT 2.05, and be signed by an Authorized Signatory. Any notice delivered
or given by the Borrower to Bank as provided shall be irrevocable and binding
upon the Borrower upon receipt by Bank. Each Advance
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shall be in a minimum amount of One Hundred Thousand Dollars ($100,000) in the
case of a Libodollar Advance and Fifty Thousand Dollars ($50,000) in the case of
a Prime Rate Advance.
2.06 LIBODOLLAR ADVANCES.
(a) Any principal of a Libodollar Advance and, to the extent
permitted by law, interest thereon, which is not paid when due and as to which
Borrower has not made a Request for Interest Period in compliance herewith shall
become a Prime Rate Advance, except upon the occurrence of an Event of Default,
whereupon such Loan shall, at Bank's option, bear interest at the Default Rate.
(b) Upon timely request for Advance in respect of a Libodollar
Advance, on the date two (2) Business Days prior to the commencement of the
Interest Period, Bank shall determine (which determination, absent manifest
error, shall be final and conclusive) the Libodollar Rate which shall be
applicable to the Libodollar Advance for the next Interest Period and shall
promptly give notice thereof (in writing, by telecopy or by telephone promptly
confirmed in writing) to the Borrower. The form of Request for Interest Period
is attached hereto and made a part hereof as EXHIBIT 2.06(b).
(c) Interest shall be due and payable on each Libodollar
Advance on each Interest Payment Date.
(d) No Interest Period for a Libodollar Advance made pursuant
to this Article shall extend beyond the Maturity Date.
(e) The Borrower shall evidence the Borrower's request for the
Advance by forwarding the Request for Advance in the appropriate one of the
forms of EXHIBIT 2.05 attached hereto. If Borrower fails to give Bank the
request for Advance on a timely basis or if for any reason determination of
Interest Period for any Advance is not timely concluded, without fault of Bank,
or if for any reason, without fault of Bank, the Borrower's selection of an
Interest Period is not available for a particular Advance, said Advance shall be
made as a Prime Rate Advance.
(f) In the event the Borrower shall: (i) fail to borrow any
Libodollar Advance, after having given notice of its intention to borrow in
accordance with subparagraph 2.06(e) above (whether by reason of the election of
the Borrower not to proceed or the nonfulfillment of any of the conditions set
forth in this Agreement); or (ii) pay any Libodollar Advance in whole or in part
(including a prepayment upon a Default) on any day other than on the Payment
Date for such Advance, the Borrower agrees to pay to the Bank upon the earlier
of Bank's demand or the Maturity Date, an amount sufficient to compensate the
Bank for all losses and out-of-pocket expenses directly relating to such failure
or prepayment, as applicable, as reasonably determined by the Bank on the basis
of its own standard practices, which absent manifest error, shall be deemed
correct. In the case of a Libodollar Advance, such loss or expense subject to
reimbursement shall include, without limitation, an amount equal to the present
value of the excess, if any, as reasonably determined by
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the Bank, of: (A) the amount of interest that would have accrued on the
principal amount so prepaid or not borrowed for the period from the date of such
prepayment or failure to borrow (such date being hereinafter referred to as the
"Breakage Date") to the last day of the then current Interest Period for such
Advance (or, in the case of a failure to borrow, the Interest Period for such
Advance that would have commenced on the date of such failure) at the rate of
interest applicable to such Advance under the terms of this Agreement over (B)
the amount of interest that the Bank would have earned had it invested the
entire amount of funds so prepaid or the entire amount of funds acquired to
effect, fund or maintain the Loan not borrowed, as the case may be, in U.S.
Government Treasury Securities with a maturity comparable to such period or
Interest Period. The present value of such excess shall be calculated by
discounting such excess from the end of such period or Interest Period to the
Breakage Date at the interest rate expressly borne by such U.S. Government
Treasury Securities or, if none, the effective interest rate on such Securities.
2.07 CONDITIONS PRECEDENT. The obligation of Bank to make the
Advances under Loan is subject to the following additional conditions precedent:
(a) NO DEFAULT. On the effective date of this Agreement, and
at the date of each Advance after giving effect to the Advance hereunder,
Borrower shall have observed and performed all the terms, conditions, agreements
and provisions set forth herein, on its part to be observed or performed, the
warranties of Borrower contained herein or in any instrument or certificate
executed by Borrower and delivered in connection herewith shall be true and
correct in all material respects, and no Default or Event of Default shall have
occurred and be continuing.
(b) OPINIONS OF COUNSEL. On the date of the Closing, Bank
shall have received from counsel for the Borrower, a favorable opinion (in form
and substance satisfactory to Bank), dated the closing date.
(c) LOAN DOCUMENTS. On the date of Closing, all of the
Loan Documents shall have been executed by the Borrower and delivered to Bank.
(d) LITIGATION. There shall be no order, injunction, decree,
judgment or verdict prohibiting or restraining Bank from making the Loan, or
Borrower or any Subsidiary from performing its obligations hereunder as of the
date of each Advance.
(e) REQUEST FOR ADVANCE. At the time of the requested Advance
hereunder, Borrower shall have timely delivered to Bank prior to the Borrowing
Date the Request for Advance in the form attached as EXHIBIT 2.05, signed by an
Authorized Signatory of Borrower. There shall be no exceptions for material
litigation reflected therein in connection with any Advance.
(f) CLOSING. Closing, execution and delivery of the Loan
Documents shall have been held no later than March 1, 1997.
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(g) DOCUMENTS. This Agreement, all exhibits hereto, and the
other Loan Documents must be simultaneously executed and delivered to Bank at
Closing together with the Collateral.
(h) COMMITMENT LETTER. On the date of Closing, all the
conditions set forth in the commitment letter from Bank to Borrower dated
January 22, 1997, shall have been satisfied or waived in writing by the Bank.
(i) FEE. Borrower shall have paid to Bank the non-refundable
structuring fee in the amount of One Hundred Eighty-Five Thousand Dollars
($185,000).
(j) INSURANCE. Borrower shall have delivered to Bank evidence
of the insurance required pursuant to this Agreement.
(k) BORROWING BASE CERTIFICATE. On the date of closing, the
Borrower shall deliver to the Bank a Borrowing Base Certificate in the form of
EXHIBIT 4.02(c) attached hereto effective as of January 31, 1997.
(l) FAA FILING. Prior to any Advance with respect to any
aircraft engine having at least 750 rate takeoff horsepower or equivalent or any
aircraft propeller capable of absorbing 750 or more rated takeoff shaft
horsepower, Borrower shall be required to: (i) grant to Bank a perfected
security interest therein including, without limitation, filing all applicable
security filings with the Federal Aviation Administration; (ii) provide to the
Bank a lien search satisfactory to the Bank and from a search firm satisfactory
to Bank (Xxxxx Aire shall be deemed acceptable) that such Collateral is free and
clear of any encumbrances; and (iii) provide to Bank a post-closing lien search
indicating that liens other than the Bank's lien has been released. The Bank
acknowledges that engines having at least 750 rate takeoff horsepower or
equivalent or any aircraft propeller capable of absorbing 750 or more rated
takeoff shaft horsepower which are located outside the United States may not
constitute a perfected security interest.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Bank as follows:
3.01 GOOD STANDING. Borrower and each Subsidiary are corporations,
duly organized, validly existing and in good standing under the laws of their
respective states of incorporation and have the power and authority to own their
respective property and to carry on their respective business in each
jurisdiction in which each does business.
3.02 AUTHORITY AND COMPLIANCE. Borrower and each Subsidiary have
full power and authority to execute and deliver the Loan Documents and to
incur and perform the obligations provided for therein, all of which have been
duly authorized by all proper and necessary action of
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the appropriate governing body of Borrower and each Subsidiary. No consent or
approval of any public authority or other third party is required as a condition
to the validity of any Loan Document, and Borrower and each Subsidiary are in
compliance with all laws and regulatory requirements to which they are subject.
3.03 BINDING AGREEMENT. This Agreement and the other Loan
Documents executed by Borrower and each Subsidiary constitute valid and
legally binding obligations of Borrower and each Subsidiary, enforceable in
accordance with their terms.
3.04 LITIGATION. There is no proceeding involving Borrower or any
Subsidiary pending or, to the knowledge of Borrower, threatened before any court
or governmental authority, agency or arbitration authority, except as disclosed
to Bank in writing and acknowledged by Bank prior to the date of this Agreement.
3.05 NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock
provision, shareholder agreement or other document pertaining to the
organization, power or authority of Borrower or any Subsidiary and no provision
of any existing agreement, mortgage, indenture or contract binding on Borrower
or any Subsidiary or affecting any of their respective properties, which would
conflict with or in any way prevent the execution, delivery or carrying out of
the terms of this Agreement and the other Loan Documents.
3.06 OWNERSHIP OF ASSETS. Borrower and each Subsidiary have good
title to their assets, and their assets are free and clear of liens, except the
Permitted Liens and those granted to Bank.
3.07 TAXES. All taxes and assessments due and payable by Borrower
and each Subsidiary have been paid or are being contested in good faith by
appropriate proceedings and the Borrower and each Subsidiary have filed all tax
returns which it is required to file.
3.08 FINANCIAL STATEMENTS. The financial statements of Borrower and
each Subsidiary heretofore delivered to Bank including, without limitation, the
Borrower's annual statement dated December 31, 1995, and Borrower's interim
statement dated September 30, 1996, have been prepared in accordance with GAAP
applied on a consistent basis throughout the period involved and fairly present
Borrower's and each Subsidiary's financial condition as of the date or dates
thereof, and there has been no material adverse change in Borrower's or any
Subsidiary's financial condition or operations since the most recent financial
statement of the Borrower and each Subsidiary furnished to Bank. To the best of
Borrower's knowledge, all factual information furnished by Borrower and each
Subsidiary to Bank in connection with this Agreement and the other Loan
Documents is and will be accurate and complete in all material respects on the
date as of which such information is delivered to Bank and is not and will not
be incomplete by the omission of any material fact necessary to make such
information not misleading. All financial projections represent the Borrower's
best estimate of Borrower's future financial performance and such assumptions
are reasonable and believed by Borrower to be fair in light of current business
conditions.
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3.09 PLACE OF BUSINESS. Borrower's chief executive office is
located at 0000 Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxx 00000.
3.10 ENVIRONMENTAL MATTERS. The conduct of Borrower's and each
Subsidiary's business operations do not and will not violate any federal laws,
rules or ordinances for environmental protection, regulations of the
Environmental Protection Agency and any applicable local or state law, rule,
regulation or rule of common law and any judicial interpretation thereof
relating primarily to the environment or Hazardous Materials and Borrower will
not use or permit any other party to use any Hazardous Materials at any of
Borrower's and/or any Subsidiary's places of business or at any other property
owned by Borrower and/or any Subsidiary except such materials as are incidental
to Borrower's or any Subsidiary's normal course of business, maintenance and
repairs and which are handled in compliance with all applicable environmental
laws. Borrower agrees to permit Bank, its agents, contractors and employees to
enter and inspect any of Borrower's and each Subsidiary's places of business or
any other property of Borrower and/or each Subsidiary at any reasonable times
upon three (3) days prior notice for the purposes of conducting an environmental
investigation and audit (including taking physical samples) to insure that
Borrower and each Subsidiary is complying with this covenant and Borrower shall
reimburse Bank on demand for the costs of any such environmental investigation
and audit. Borrower shall provide Bank, its agents, contractors, employees and
representatives with access to and copies of any and all data and documents
relating to or dealing with any Hazardous Materials used, generated,
manufactured, stored or disposed of by Borrower's and each Subsidiary's business
operations within five (5) days of the request therefore.
3.11 RECEIVABLES. Borrower and each Subsidiary shall take any and
all steps as Bank may request to create and maintain in Bank's favor a valid and
first security interest in and pledge of, all Receivables, whether now existing
or created from time to time hereafter. With respect to all Receivables:
(a) Borrower and each Subsidiary shall, at Bank's request
following an Event of Default, execute and deliver to Bank an assignment or
assignments of any or all of Borrower's and each Subsidiary's Receivables
accompanied by copies of invoices and evidences of shipment or delivery and any
other documents in Borrower's possession concerning same as Bank may reasonably
require for purposes of assisting Bank in the realization upon such Receivables;
(b) Borrower shall, at Bank's request, deliver to Bank all
copies of invoices and evidences of shipment or delivery and any other documents
in Borrower's and each Subsidiary's possession concerning accounts receivable
that are reflected upon any schedule or borrowing base certificate or the like,
furnished to the Bank, as Bank may reasonably request for purposes of assisting
Bank in the conduct of any audit of accounts receivable;
(c) absolute title to the Collateral, free and clear of all
liens, encumbrances and security interests other than Permitted Liens shall be
vested in Borrower and each Subsidiary;
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(d) neither Borrower nor any Subsidiary shall enter into or
allow any other agreements, notices, financing statements, or other matters
which will in any way impair or affect Bank's first lien upon, security interest
in and pledge of such Collateral; and
(e) other than those ineligible Receivables identified on line
34 of the Borrowing Base Certificate, each Receivable represented to Bank:
(i) shall represent a valid and legally
enforceable indebtedness, according to its terms and as represented by the
assigned invoice;
(ii) to the best of Borrower's knowledge, shall
be a Receivable as to what the account debtor shall be liable for and shall make
payment of the amount expressed in such invoice and according to its terms;
(iii) to the best of Borrower's knowledge, shall
be subject to no dispute or claim by the account debtor as to price, terms,
quality, quantity, delay in shipment, offsets, counterclaims, contra-accounts or
any other defense of any other kind and character;
(iv) to the best of Borrower's knowledge, shall
not be subject to discounts, deductions, allowances, offsets, returns, or
special terms of payment, except such as are shown on the face of the invoice
and the receivable aging;
(v) shall not represent a delivery of goods upon
"consignment", "guaranteed sale", "sale or return", "payment on reorder" or
similar terms;
(vi) shall not be subject to any prohibition or
limitation upon assignment; and
(vii) shall be free and clear of all claims,
demands, liens and encumbrances of any kind whatsoever.
3.12 INVENTORY. With respect to Inventory, Borrower warrants and
represents:
(a) the same shall be free and clear of all liens and
encumbrances other than the Permitted Liens and Borrower and each Subsidiary
shall be the absolute owner thereof;
(b) that Borrower shall grant a perfected security interest to
the Bank of all Inventory maintained in the United States, the Borrower and each
Subsidiary shall immediately notify the Bank in writing and shall grant to the
Bank a perfected security interest in such Inventory within five (5) days of
such Inventory being brought into a state in which the Bank does not have a
perfected security interest in the Inventory. Within ten (10) days following the
Bank's request, Borrower and each Subsidiary will advise the Bank in writing of
the address at which the Inventory is located.
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(c) Borrower shall defend Bank's security interest in the
Inventory against any claims or demands of third parties and will promptly pay,
when due, all taxes or assessments levied on account of the Inventory; and
(d) Bank shall have a perfected security interest in the
Collateral at all times during the Term.
3.13 FEDERAL RESERVE REGULATIONS.
(a) Neither Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
of the United States);
(b) no part of the Advances shall be used to purchase or carry
any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock; and
(c) no part of the Advances shall be used for any purpose that
violates, or which is inconsistent with, the provisions of Regulation T, G, U or
X of said Board of Governors.
3.14 CONSENTS, ETC. No consent, approval, authorization of, or
registration (other than the filing of a UCC-1 with the Secretary of State, the
Aircraft Security Agreement filing with the Federal Aviation Administration and
UCC-1 filings in states in which the Borrower maintains inventory), declaration
or filing with any governmental authority (federal, state or local, domestic or
foreign) is required in connection with the execution or delivery by Borrower or
any Subsidiary of the Loan Documents or the performance of or compliance with
the terms, provisions and conditions hereof or thereof.
3.15 GOVERNMENTAL AUTHORIZATIONS. All authorizations, consents,
approvals, licenses, and permits required under applicable law or regulation for
the ownership or operation of the property owned or operated by Borrower and the
Subsidiaries or for the conduct of the business in which Borrower and the
Subsidiaries are engaged have been duly issued (or if not issued, the failure to
have obtained same are of an immaterial nature and would not have a material
adverse effect on Borrower or the Subsidiaries) and are in full force and effect
and neither Borrower nor any of the Subsidiaries is in default under any order,
decree, rule and regulation, closing agreement or other decision or instrument
of any Governmental Authority, which default could reasonably be expected to
have a Material Adverse Effect.
3.16 TITLE TO PROPERTIES. Borrower and each Subsidiary have good
and marketable fee title to all real property, and good and marketable title to
all other property (including leases) and assets reflected in the financial
statements delivered to the Bank or purported to have been acquired
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by Borrower and each Subsidiary subsequent to such date, except the property or
assets sold or otherwise disposed of by Borrower subsequent to such date in the
ordinary course of business. All of the property and assets of any kind of
Borrower and each Subsidiary are free from any liens, except the Permitted Liens
and as otherwise set forth on their financial statement delivered to the Bank.
Borrower and each Subsidiary enjoy peaceful and undisturbed possession under all
of the leases under which it is operating, none of which contains any unusual or
burdensome provisions that could reasonably be expected to have a Material
Adverse Effect. All of such leases are valid, subsisting and in full force and
effect and none of such leases is in default and no event has occurred which
with the passage of time or the giving of notice or both would constitute a
default under any thereof. Borrower and each Subsidiary possess all material
patents, patent rights, licenses, trademarks, trademark rights, trade name,
trade name rights, and copyrights that may be required to conduct its business
as now conducted, all without known conflict with the rights of others.
3.17 SOLVENT. Borrower is, on a consolidated basis, and after the
consummation of the loans contemplated in this Agreement, and after having given
effect to all indebtedness incurred and liens created by Borrower and each
Subsidiary in connection herewith, will be Solvent.
3.18 SUBSIDIARIES. The Subsidiaries of Borrower are all as
reflected on EXHIBIT 3.18 hereto.
3.19 SHAREHOLDERS. All classes of shareholders of the Borrower and
each Subsidiary are reflected on EXHIBIT 3.19 hereto.
3.20 INDEBTEDNESS. All Indebtedness of the Borrower and each
Subsidiary (other than trade payables in the ordinary course of business) are
reflected on EXHIBIT 3.20 hereto.
3.21 CONTINGENT LIABILITIES. All contingent liabilities of the
Borrower and each Subsidiary are reflected on EXHIBIT 3.21 hereto.
3.22 INCORPORATION OF REPRESENTATIONS AND WARRANTIES. Without
limiting the representations and warranties hereunder, the representations and
warranties made by the Borrower to The Clipper Group pursuant to the Clipper
Agreement are incorporated herein by reference and made a part hereof but shall
only be deemed made as of the date of the Clipper Agreement. A breach by the
Borrower of any representation or warranty under the Clipper Agreement shall
constitute a breach of a representation or warranty hereunder.
3.23 MATERIAL CONTRACTS. Neither the execution and delivery of
the Loan Documents nor the consummation of the transaction contemplated by the
Clipper Agreement shall constitute a default or right of termination under any
agreement to which the Borrower or any Subsidiary is a party.
3.24 USE OF PROCEEDS. The proceeds of the Loan shall be used solely
to refinance the existing credit facility in favor of Xxxxxxx Bank, N.A. and
finance the short term working capital
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needs and general corporate needs of the Borrower and to support the issuance of
letter(s) of credit (which will reduce amounts available under the Loan).
3.25 PENSION AND WELFARE PLANS. Each Pension Plan and Welfare Plan
complies with ERISA and all other applicable statutes and governmental rules and
regulations; no Reportable Event has occurred and is continuing with respect to
any Pension Plan; neither Borrower nor any Subsidiary of Borrower nor any ERISA
Affiliate has withdrawn from any Multi-Employer Plan in a "complete withdrawal"
or a "partial withdrawal" as defined in Sections 4203 or 4205 of ERISA,
respectively; neither Borrower nor any Subsidiary nor any ERISA Affiliate has
entered into an agreement pursuant to Section 4204 of ERISA; neither Borrower
nor any Subsidiary nor any ERISA Affiliate has in the past contributed to or
currently contributes to a Multi-Employer Plan; neither Borrower nor any
Subsidiary nor any ERISA Affiliate has any withdrawal liability with respect to
a Multi-Employer Plan; no steps have been instituted by Borrower or any
Subsidiary or any ERISA Affiliate to terminate any Pension Plan; no condition
exists or event or transaction has occurred in connection with any Pension Plan,
Multi-Employer Plan or Welfare Plan which could result in the incurrence by
Borrower or any Subsidiary or any ERISA Affiliate of any liability, fine or
penalty; and neither Borrower nor any Subsidiary nor any ERISA Affiliate is a
"contributing sponsor" as defined in Section 4001(a)(13) of ERISA of a
"single-employer plan" as defined in Section 4001(a)(15) of ERISA which has two
(2) or more contributing sponsors at least two (2) of whom are not under common
control. Neither Borrower nor any Subsidiary nor any ERISA Affiliate has any
liability with respect to any Welfare Plan.
3.26 TAX RETURNS AND PAYMENT. Borrower and its Subsidiaries have
filed all federal, state, local and other tax returns which are required to be
filed and have paid all taxes which have become due pursuant to such returns and
all other taxes, assessments, fees and other governmental charges upon Borrower
and its Subsidiaries and upon their respective properties, assets, income and
franchises which have become due and payable by Borrower or any of its
Subsidiaries, except those wherein the amount, applicability or validity are
being contested by Borrower or any such Subsidiary by appropriate proceedings
being diligently conducted in good faith and in respect of which adequate
reserves in accordance with GAAP have been established. All material tax
liabilities of Borrower and its Subsidiaries were adequately provided for as of
December 31, 1996, and are now so provided for on the books of Borrower and its
Subsidiaries. There is no known proposed, asserted or assessed tax deficiency
against Borrower or any of its Subsidiaries which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect.
3.27 LABOR MATTERS. Neither Borrower nor any Subsidiary is a
party to any pending or threatened labor dispute. There are no pending or
threatened strikes or walkouts relating to any labor contract to which Borrower
or any Subsidiary is subject. Hours worked and payments made to the employees of
Borrower and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters. All
payments due from Borrower or any Subsidiary, or for which any claim may be made
against any of them, in respect of wages, employee health and welfare insurance
and/or other benefits have been paid or accrued as a liability on their
respective books. The consummation of the transactions contemplated by the
Transaction
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Documents will not give rise to a right of termination or right of renegotiation
on the part of any union under any collective bargaining agreement to which
Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary is
bound.
3.28 MULTI-EMPLOYER PENSION PLAN AMENDMENTS ACT OF 1980. Borrower
and each Subsidiary is in compliance with the Multi-Employer Pension Plan
Amendments Act of 1980, as amended ("MEPPAA"), and neither Borrower nor any
Subsidiary has any liability for pension contributions pursuant to MEPPAA.
3.29 INVESTMENT COMPANY ACT OF 1940; PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935. Borrower is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation under, the Investment
Company Act of 1940, as amended. Borrower is not a "holding company" as that
term is defined in, and is not otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
3.30 EMPLOYMENT AND OTHER AGREEMENTS. Except for the employment
agreements and the other agreements described in SCHEDULE 3.30 attached hereto,
true, complete and accurate copies of which have been delivered to Bank, there
are no: (a) employment agreements covering the management of Borrower or any
Subsidiary; (b) collective bargaining agreements or other labor agreements
covering any employees of Borrower or any Subsidiary; or (c) agreements for
managerial, consulting or similar services to which Borrower or any Subsidiary
is a party or by which Borrower or any Subsidiary is bound.
3.31 AIR CARRIER. Borrower is not, and during the Term shall not
be, an air carrier holding an air carrier operating certificate issued by the
Federal Aviation Administration.
3.32 CONTINUATION OF REPRESENTATION AND WARRANTIES. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the date hereof and at and as of the date of any Advance.
ARTICLE 4
AFFIRMATIVE COVENANTS
Until full payment and performance of all Obligations of Borrower under
the Loan Documents and the termination of any obligation of the Bank to make any
Advances, Borrower and each Subsidiary shall maintain the following covenants,
conditions and restrictions:
4.01 FINANCIAL CONDITION. Maintain at all times Borrower's and each
Subsidiary's financial condition as follows, determined in accordance with GAAP
applied on a consistent basis throughout the period involved except to the
extent modified by the following definitions:
(a) A maximum Total Indebtedness ratio of 3.0:1;
provided, however, the ratio shall be 3.25:1 through the quarter ending June 30,
1997. In addition, in the event The Clipper
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Group has not invested the additional equity of Nine Million One Hundred
Thousand Dollars ($9,100,000) by March 31, 1997, then the ratio shall be 3.25:1
for the quarter ending March 31, 1997. The Total Indebtedness ratio shall be
calculated as follows: Borrower's total funded debt (which shall include all
borrowed money, indebtedness evidenced by notes [exclusive of accrued interest
on shareholder debt], indentures or similar instruments, capitalized lease
obligations, contingent liabilities, unfunded pension liabilities, existing and
future shareholder debt) divided by (net income [exclusive of non-operating
income] + interest expense + taxes + depreciation + amortization). The foregoing
shall be tested quarterly on a rolling four (4) quarter basis. With respect to
the Borrower's third fiscal quarter ending September 30, 1996, the net income
shall add back in and, thus, include the amount of One Million One Hundred
Fifty-Four Thousand Dollars ($1,154,000) representing a non-recurring charge.
(b) Borrower shall limit annual aggregate Capital Expenditures
to an amount not to exceed One Million Dollars ($1,000,000) in the aggregate
during any fiscal year.
(c) Borrower shall maintain a minimum net income of no less
than One Dollar ($1) per quarter.
(d) The Bank shall be permitted to perform (for the benefit of
the Bank) inventory and accounts receivable field audits which must be
satisfactory to the Bank. Such audits shall be at the Borrower's expense
provided Borrower shall not be responsible for the expense more than once in any
twelve (12) month period commencing February 1, 1997, unless the Borrower shall
be in Default.
4.02 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a
system of accounting satisfactory to Bank and in accordance with GAAP applied on
a consistent basis throughout the period involved, permit Bank's officers or
authorized representatives to visit and inspect Borrower's and each Subsidiary's
books of account and other records at such reasonable times and as often as Bank
may desire, and pay the reasonable fees and disbursements of any accountants or
other agents of Bank selected by Bank for the foregoing purposes. The foregoing
shall include, without limitation, the Bank's performing a field audit of
Borrower's and each Subsidiary's assets and systems. Unless written notice of
another location is given to Bank, Borrower's books and records will be located
at Borrower's chief executive office set forth above (and with respect to each
Subsidiary, the address provided by the Borrower to the Bank in writing). All
financial statements called for below shall be prepared in form and content
acceptable to Bank and by independent certified public accountants acceptable to
Bank.
In addition, Borrower shall comply with the following:
(a) ANNUAL STATEMENTS. Borrower shall provide Bank with annual
audited financial statements on a consolidated and consolidating basis for the
Borrower and each of its wholly-owned Subsidiaries (together with any management
letter provided to the Borrower by the Borrower's principal accounting firm), in
conformity with generally accepted accounting principles
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applied on a consistent basis, within ninety (90) days of fiscal year end, to be
prepared by and bear the unqualified opinion of a Certified Public Accountant
acceptable to Bank without any impermissible qualification. As used herein,
"impermissible qualification" means relative to the opinion of any independent
public accountant as to any financial statement of Borrower that said opinion
contains no qualification or exception to any such opinion or certification: (i)
which is of a "going concern" or similar nature; (ii) which relates to the
limitation on the scope of examination of matters relevant to such financial
statements; (iii) which relates to the treatment or classification of any item
in such financial statement in which, as a condition to its removal, would
require an adjustment to such item, the effect of which would be to cause the
Borrower (or any Subsidiary) to be in default of any of the financial covenants
under any of the Loan Documents; or (iv) which is otherwise unacceptable to the
Bank in the Bank's sole discretion, acting reasonably.
(b) QUARTERLY STATEMENTS. Borrower shall provide Bank (on an
accrual basis) with company prepared quarterly financial statements (on a
consolidated and consolidating basis for the Borrower and each of its
Subsidiaries) in conformity with generally accepted accounting principles
applied on a consistent basis, within forty-five (45) days of the end of each
quarter. In addition, Borrower shall deliver to Bank quarterly with each
quarterly financial statement a management discussion and analysis of the
financial condition and results of operation of the Borrower, in form and
substance satisfactory to the Bank.
(c) BORROWING BASE. Borrower shall provide Bank a monthly
borrowing base certificate in the form attached hereto as EXHIBIT 4.02(c) within
ten (10) days following each month end and a quarterly accounts receivable aging
and listing, inventory listing (with location) and accounts payable aging and
listing (all in form reasonably acceptable to Bank) together with the quarterly
statement required in subparagraph 4.02(b) above.
(d) COMPLIANCE CERTIFICATE. All required financial statements
must be accompanied by a Certificate of Compliance in the form attached hereto
as EXHIBIT 4.02(d), signed by an officer of the corporation. The foregoing
Certificate of Compliance shall also include the Borrower's calculation of all
financial covenants.
(e) BUDGET. Borrower shall provide Bank an annual budget
prepared on a quarterly basis within forty-five (45) days after each fiscal year
end, together with any subsequent revisions.
(f) SUBSIDIARY STATEMENTS AND TAX RETURNS. Cause each
Subsidiary which is not consolidated with the Borrower to deliver to Bank: (i)
updated financial statements on or prior to ninety (90) days following the
Borrower's fiscal year end; and (ii) a copy of their annual federal income tax
return within ten (10) days following filing. Tax returns must be filed within
the time established by federal law, including the provisions of federal law
regarding extensions of time for filing.
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(g) SEC FILINGS. Borrower shall provide to Bank a copy of all
Securities and Exchange Commission filings and reporting requirements (if
applicable) within ten (10) days following filing.
(h) ADDITIONAL INFORMATION. Furnish to Bank promptly such
additional information, reports and statements respecting the business
operations and financial condition of Borrower and each Subsidiary,
respectively, from time to time, as Bank may reasonably request.
4.03 INSURANCE. Maintain insurance with responsible insurance
companies on such of its properties, in such amounts and against such risks as
is customarily maintained by similar businesses operating in the same vicinity,
specifically to include fire and extended coverage insurance covering all
assets, business interruption insurance, workers compensation insurance and
liability insurance, all to be with such companies and in such amounts as are
satisfactory to Bank and with respect to insurance on the Collateral, to contain
a mortgagee clause naming Bank as a loss payee or an additional insured (as
applicable) as its interest may appear and providing for at least 30 days prior
notice to Bank of any cancellation, nonrenewal or modification thereof.
Satisfactory evidence of such insurance will be supplied to Bank prior to
funding under the Loan(s) and 30 days prior to each policy renewal. Coinsurance
provisions are not permitted in any insurance policies. Further, each insurance
policy provided to Bank by the Borrower shall be written by an insurer having
not less than "A-XII" Best's Rating according to the most current edition of
Best's Key Rating Guide. The address for notices to Bank shall be set forth in
each policy as follows:
NationsBank of Texas
TX1-609-03-01
X.X. Xxx 000000
Xxxxxx, XX 00000
Re: Obligor Number _______________
4.04 EXISTENCE AND COMPLIANCE. Maintain its existence, good
standing and qualification to do business, where required and comply with all
laws, regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.
4.05 ADVERSE CONDITIONS OR EVENTS. Advise Bank in writing within
ten (10) days of: (a) any condition, event or act which comes to its attention
that would or might materially adversely affect Borrower's or any Subsidiary's
financial condition or operations, the Collateral, or Bank's rights under the
Loan Documents; (b) any litigation filed by or against Borrower or any
Subsidiary which, in Borrower's good faith estimate, may reasonably be expected
to aggregate a liability to the Borrower and each Subsidiary of Twenty Thousand
Dollars ($20,000) or more in the aggregate; (c) any event that has occurred that
would constitute an Event of Default under any Loan Documents; and (d) any
uninsured or partially uninsured loss through fire, theft, liability or property
damage in excess of an aggregate of Ten Thousand Dollars ($10,000).
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4.06 TAXES AND OTHER OBLIGATIONS. Pay all of their respective
taxes, assessments and other obligations, including, but not limited to taxes,
costs or other expenses arising out of this transaction, as the same become due
and payable, except to the extent the same are being contested in good faith by
appropriate proceedings in a diligent manner.
4.07 MAINTENANCE. Maintain all of their respective tangible
property in good condition and repair and make all necessary replacements
thereof, and preserve and maintain all licenses, trademarks, privileges,
permits, franchises, certificates and the like necessary for the operation of
their respective business.
4.08 NOTIFICATION. Borrower shall immediately advise Bank in
writing of: (a) any and all enforcement, cleanup, remedial, removal, or other
governmental or regulatory actions instituted, completed or threatened pursuant
to any applicable federal, state, or local laws, ordinances or regulations
relating to any Hazardous Materials affecting Borrower's and/or any Subsidiary's
business operations; (b) all claims made or threatened by any third party
against Borrower or any Subsidiary relating to damages, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous Materials.
Borrower shall immediately notify Bank of any remedial action taken by Borrower
or any Subsidiary with respect to Borrower's or any Subsidiary's business
operations; and (c) the occurrence of any Default or Event of Default of which
the Borrower or any Subsidiary has knowledge.
4.09 POTENTIAL CONTINGENT LIABILITIES. Borrower shall inform Bank
within ten (10) days of any actual or potential contingent liabilities in excess
of One Hundred Thousand Dollars ($100,000) in the aggregate with respect to
either Borrower or any Subsidiary.
4.10 SUBSIDIARIES. The following shall be applicable to each
Subsidiary (whether or not acquired with the proceeds of the Loan):
(a) The Borrower shall cause each Subsidiary to guarantee
the Obligation upon terms and conditions acceptable to Bank;
(b) The Borrower shall collaterally assign (or cause a
Subsidiary to collaterally assign, if applicable) to the Bank the Borrower's (or
Subsidiary's) interest in each Subsidiary upon terms and conditions acceptable
to the Bank; and
(c) Borrower shall cause each Subsidiary to pledge all of such
Subsidiary's assets to the Bank upon terms and conditions acceptable to the Bank
which may include, without limitation, an opinion of counsel acceptable to the
Bank.
4.11 NON-USE COMMITMENT FEE. Borrower shall pay to the Bank a
non-use commitment fee in the amount of three-eights of one percent (0.375%) of
any unused portion of the Loan based
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on the average daily unused portion of the committed portion of the Loan, which
amount shall accrue and be due and payable quarterly on the tenth (10th) day of
each calendar quarter.
4.12 ADDITIONAL FEE. Borrower shall pay to Bank an additional sum
of Forty-Six Thousand Two Hundred Fifty Dollars ($46,250) to the extent Borrower
elects to increase the Borrower Base available Loan amount from Twenty Million
Dollars ($20,000,000) to Twenty-Five Million Dollars ($25,000,000), which fee
shall be prorated based upon the amount of time remaining to the Maturity Date,
rounded up to the end of the month.
4.13 COMPLIANCE WITH LAWS. Borrower and each Subsidiary shall duly
observe, conform and comply with all laws, decisions, judgments, rules,
regulations and orders of all governmental authorities relative to the conduct
of its or his business, its or his properties, and assets, except those being
contested in good faith by appropriate proceedings diligently pursued; and
obtain, maintain and keep in full force and effect all governmental licenses,
authorizations, consents and permits necessary to the proper conduct of the
business of the Borrower and each Subsidiary.
4.14 VISITATION RIGHTS. Permit any authorized representative of the
Bank from time to time, upon reasonable notice to the Borrower and during normal
business hours, to examine and copy the records and books of, and visit and
inspect the properties of, the Borrower or any of its Subsidiaries, and to
discuss the affairs and finances of the Borrower or any of its Subsidiaries with
any of their respective officers or directors, and at the expense of the Bank so
long as no Default exists, independent public accountants. In addition to the
foregoing, Borrower shall assist Bank in examining the Borrower's Inventory
whether at the Borrower's Address or otherwise.
4.15 ERISA. Borrower shall furnish to Bank:
(a) As soon as available and in any event within fifteen (15)
days after Borrower knows or has reason to know that any Termination Event has
occurred, a statement of a senior officer of the Borrower describing the
Termination Event and the action which the Borrower proposes to take so that the
Termination Event shall not be continuing;
(b) Promptly after receipt of request therefor by the Bank,
copies of each annual report filed by the Borrower or any of its Subsidiaries
pursuant to Section 104 of ERISA with respect to each Plan (including, to the
extent required by Section 103 of ERISA, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information referred to in said Section 103) and each annual
report, if any, required to be filed with respect to each Plan under Section
4065 of ERISA;
(c) Promptly and after receipt thereof by the Borrower or any
of its Subsidiaries from the Pension Benefit Guaranty Corporation, copies of
each notice received by such party of the Pension Benefit Guaranty Corporation's
intent to terminate any Plan or to have a Trustee appointed to administer any
Plan; and
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(d) Promptly after such request, any other documents and
information relating to any Plan that the Bank may reasonably request from time
to time.
4.16 PAYMENT OF INDEBTEDNESS. Borrower shall pay all of its
Indebtedness and obligations promptly and in accordance with normal terms and
comply in all respects with all agreements, indentures, mortgages or documents
binding on it; and, unless being contested in good faith (for which Bank may
require the posting of a bond acceptable to the Bank), pay and discharge or
cause to be paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon it or upon its property or upon any part thereof,
before the same shall become in default, as well as all claims for labor,
materials and supplies or otherwise which, if unpaid, might become a Lien upon
such properties or any part thereof.
4.17 PARTS AGREEMENT. Advise Bank in writing within ten (10) days
of any notice of cancellation, default or alleged breach of the Surplus Parts
Supply Agreement between Borrower and United Technologies Corporation ("Parts
Agreement").
4.18 SUBSIDIARY. The Subsidiary identified on EXHIBIT 3.18 attached
hereto does not and, until the provisions of Paragraph 4.10 are complied with,
will not contain any assets. Borrower shall, on or prior to March 7, 1997,
comply with the provisions of Paragraph 4.10 with respect to the Subsidiary
identified on EXHIBIT 3.18 attached hereto.
4.19 PURCHASE OF ENGINES AND PROPELLERS. Prior to the purchase of
any engine having at least 750 rate takeoff horsepower or equivalent or any
aircraft propeller capable of absorbing 750 or more rated takeoff shaft
horsepower, the Borrower shall: (a) comply with the requirements of
subparagraphs (i), (ii) and (iii) of Paragraph 2.07(l) hereof; and (b) forward
to the Bank the requested form of partial release with respect to such
Inventory.
4.20 LOCK BOX. Upon request of the Bank, the Borrower agrees to
enter into a lock box agreement reasonably acceptable to the Bank wherein all
the Borrower's Receivables shall be deposited.
4.21 BANK ACCOUNT. For Collateral purposes, the Borrower
covenants to maintain Borrower's primary depository accounts with the Bank.
ARTICLE 5
NEGATIVE COVENANTS
Until full payment and performance of all Obligations of Borrower under
the Loan Documents and the termination of any obligation of the Bank to make any
Advances, neither Borrower nor any Subsidiary will, without the prior written
consent of Bank (and without limiting any requirement of any other Loan
Documents):
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5.01 LIENS. Incur, create or permit to exist any pledge, security
interest, lien, charge or other encumbrance of any nature whatsoever on any of
Borrower's or any Subsidiary's property (including the Collateral), whether now
owned or hereafter acquired, other than the Permitted Liens and purchase money
security interests and capital leases not to exceed One Million Dollars
($1,000,000) in the aggregate during any twelve (12) month period.
5.02 BORROWINGS. Other than trade payables in the ordinary course
of business, create, incur, assume or become liable in any manner for any
indebtedness, direct or indirect (for borrowed money, deferred payment for the
purchase of assets, capital lease payments, as surety or guarantor for the debt
for another, or otherwise) other than purchase money security interests and
capital leases not to exceed One Million Dollars ($1,000,000) in the aggregate
during any twelve (12) month period and the existing shareholder debt in the
approximate amount of Four Million Seven Hundred Seventy-Six Thousand Dollars
($4,776,000), together with accrued interest thereon (provided such shareholder
debt is fully subordinated to the Bank pursuant to a subordination agreement
acceptable to the Bank in the Bank's sole discretion).
5.03 CHARACTER OF BUSINESS. Change the general character of
business as conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently conducted.
5.04 ADDITIONAL NEGATIVE COVENANTS. During the Term of the Loan,
neither the Borrower nor any Subsidiary shall:
(a) repurchase, redeem or retire any of its stock;
(b) make investments, acquisitions or enter into
transactions with or in any affiliate, third party, Subsidiary, joint venture,
persons or securities; provided, however, Borrower shall be permitted to make
investments in Borrower's Subsidiaries to the extent Borrower and each
Subsidiary have complied with the provisions of Paragraph 4.10 hereof;
(c) make investments other than U.S. Government and
Federal Agency Obligations, Certificates of Deposit from federally insured banks
and commercial paper rated A1-P1, all with maturities not to exceed six (6)
months;
(d) guarantee, endorse or assume debt, except in the
normal course of business;
(e) merge with or acquire the assets, stock or ownership
interest of another entity, without the prior written consent of the Bank;
(f) sell, lease, assign, or otherwise dispose of or
transfer any assets, except in the ordinary course of business;
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(g) make, permit or suffer any change in the ownership,
control or management of any Subsidiary whereby the Borrower does not own and
control at least fifty-one percent (51%) of all ownership and voting stock of
the Subsidiary;
(h) make, permit or suffer any change in the ownership,
control or management of Borrower and/or any Subsidiary whether by agreements,
shareholder agreements or otherwise or enter into any agreement of merger, sale
of assets or other agreement which would: (x) be in violation of any applicable
law or regulation; and/or (y) have the effect of a change of control of Borrower
or its assets, whereby the existing shareholders of the Borrower do not
maintain, in the aggregate, at least fifty-one percent (51%) of the ownership
and voting control of the Borrower.
(i) make, permit or suffer any change in senior
management of the Borrower whereby Xxxxxx X. Xxxx and Xxxxx X. Xxxx fail to
remain active in the daily operations of the Borrower;
(j) other than the Permitted Liens, grant, suffer or permit
any contractual or non-contractual lien or security interest in its assets, or
fail to promptly pay when due all lawful claims, whether for labor, materials or
otherwise;
(k) amend the Clipper Agreement without the prior written
consent of the Bank;
(l) pay dividends or make distributions; or
(m) accept returned goods following an Event of Default
except as contemplated by the Parts Agreement.
5.05 ERISA COMPLIANCE. If Borrower, any Subsidiary or any ERISA
Affiliate shall have any Pension Plan, Borrower, such Subsidiary or such ERISA
Affiliate, as the case may be, shall comply with all requirements of ERISA
relating to such Pension Plan. Without limiting the generality of the foregoing,
Borrower will not, and it will not cause or permit any Subsidiary or any ERISA
Affiliate to:
(a) permit any Pension Plan maintained by Borrower, any
Subsidiary of Borrower or any ERISA Affiliate to engage in any nonexempt
"prohibited transaction", as such term is defined in Section 4975 of the Code;
(b) permit any Pension Plan maintained by Borrower, any
Subsidiary or any ERISA Affiliate to incur any "accumulated funding deficiency",
as such term is defined in Section 302 of ERISA, 29 U.S.C. Section 1082, whether
or not waived;
(c) terminate any Pension Plan in a manner which could
result in the imposition of a Lien on any Property of Borrower, any Subsidiary
or any ERISA Affiliate pursuant to Section 4068 of ERISA, 29 U.S.C. Section
1368; or
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(d) take any action which would constitute a complete or
partial withdrawal from a Multi-Employer Plan within the meaning of Sections
4203 or 4205 of Title IV of ERISA.
ARTICLE 6
DEFAULT
The occurrence of any of the following as they relate to the Borrower
or any Subsidiary shall constitute an Event of Default:
6.01 Failure to pay principal or interest or any other payment due
to Bank (or Bank's affiliates) under any note or collateral security document
executed in connection with the Loan, whether parent or subsidiary, or to other
creditors within ten (10) days following the date due.
6.02 Failure to perform any covenant or agreement of the Borrower
or any Subsidiary contained in this Agreement within ten (10) days following
notice of the default (other than a monetary default, a default under Section
4.01 hereof or a default under Article 5 hereof for which no notice or right to
cure shall be applicable).
6.03 Failure to perform any other obligation imposed upon Borrower
or any Subsidiary by the Loan Documents within the time period specified, or as
may be specified by the Bank.
6.04 Any representation, warranty, statement or certificate made by
Borrower or any Subsidiary determined by Bank to be untrue in any material
respect.
6.05 Violation, termination (other than in accordance with its
terms) or default following any applicable cure period of any agreement or
contract with Bank (or its affiliates) or other lenders or under any other
material agreement involving Borrower.
6.06 Filing of any petition for adjudication as a bankrupt or for
reorganization, whether voluntary or involuntary; the appointment of a receiver
or trustee or other similar officer with respect to any substantial part of
their property; a general assignment for the benefit of creditors; any other
insolvency proceeding, any dissolution or liquidation or winding up of the
affairs of the Borrower or any Subsidiary which, with respect to any involuntary
filing, is not dismissed within thirty (30) days following filing.
6.07 A default under any agreement Borrower or any Subsidiary may
have with the Bank (or its affiliates) which is not cured within any applicable
cure period shall constitute a default under the Loan and a default under the
Loan which is not cured within any applicable period shall constitute a default
under any other agreement between Bank (or its affiliates) and Borrower.
6.08 (a) A final judgment, other than a final judgment in
connection with any condemnation, and including any judgment or other final
determination of any contest is entered
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against Borrower that (i) adversely affects the value, use or operation of the
collateral; (ii) adversely affects, or may reasonably adversely affect, the
validity, enforceability or priority of the lien or security interest created by
any Loan Document in the Bank's sole judgment; or both; or (b) execution of
other final process issues thereon with respect to the collateral; and (c)
Borrower does not discharge the same or provide for its discharge in accordance
with its terms, or procure a stay of execution therein, in any event within
thirty (30) days of entry.
6.09 Any federal, state or local tax lien or any claim of lien for
labor, materials or any other lien or encumbrance of any nature whatsoever is
recorded against the Borrower or any Subsidiary or against the Borrower's or any
Subsidiary's assets and is not removed by payment or transferred to substitute
security in the manner provided by law within ten (10) days after it is recorded
in accordance with applicable law, or is not contested by Borrower or any
Subsidiary.
6.10 Borrower or any Subsidiary shall cease to exist or to be
qualified to do or transact business in the State in which the Borrower's or any
Subsidiary's assets are located to the extent required under applicable law, or
shall be dissolved or shall be a party to a merger or consolidation, or shall
sell all or substantially all of its assets.
6.11 Any sale, conveyance, transfer, assignment or other
disposition of all or any part (other than in the ordinary course of the
Borrower's and Subsidiary's business) of the Borrower's assets or any
Subsidiary's assets or any ownership interest in: (i) Borrower whereby the
existing shareholders of the Borrower do not maintain a majority ownership and
voting interest in the Borrower; and/or (ii) any Subsidiary whereby the Borrower
does not maintain a majority ownership and voting interest in such Subsidiary.
6.12 Borrower or any Subsidiary shall default under any obligation
imposed by any indemnity whether contained within any of the Loan Documents, the
Hazardous Waste Certification, or otherwise.
6.13 If at any time the Bank shall reasonably deem itself insecure
or shall determine that there has been a material change in the financial
condition or prospects of Borrower or any Subsidiary and such is not cured to
the satisfaction of the Bank within ten (10) days following notice.
6.14 The results of any field audit performed by Bank are not
satisfactory to the Bank, as determined in the Bank's sole discretion, acting
reasonably.
6.15 A default following any applicable grace period by Borrower
under any agreement between Borrower and The Clipper Group.
6.16 A Termination Event has occurred; or a trustee shall be
appointed to administer any Plan or Plans under Section 4042 of ERISA; or the
Pension Benefit Guaranty Corporation shall institute proceedings to terminate or
to have a trustee appointed to administer, any Plan or Plans, and the proceeding
shall not be dismissed within thirty (30) days; or a voluntary notice of intent
to
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terminate is filed under Section 4041 of ERISA which would, in the opinion of
Bank, have a material adverse effect on the financial condition of the Borrower
and its Subsidiaries taken as a whole; or, with respect to any Plan as to which
the Borrower or any Subsidiary may have any liability, there shall exist a
deficiency in the Plan assets available to satisfy the benefits guaranteeable
under ERISA with respect to the Plan which is material to the financial
condition of the Borrower and such Subsidiary taken as a whole, and (a) steps
are undertaken to terminate the Plan, or (b) the Plan is terminated, or (c) any
Reportable Event which presents a material risk of termination with respect to
the Plan shall occur.
ARTICLE 7
REMEDIES UPON DEFAULT
If an Event of Default shall occur Bank may declare this Agreement in
default and all amounts owing under this Agreement and all other Obligations
owing by Borrower to Bank shall upon demand by Bank immediately become due and
payable (notwithstanding that the maturity date or dates expressed in any
evidence of such indebtedness may be otherwise) and Bank may foreclose Bank's
lien or security interest in the Collateral in any way permitted by law, and
Bank shall have, without limitation, the remedies of a secured party under the
Uniform Commercial Code as enacted in Florida as of the date hereof. Bank may
thereupon enter Borrower's and each Subsidiary's premises without legal process,
but in accordance with applicable laws and without incurring liability other
than liability to Borrower arising out of Bank's gross negligence or willful
misconduct, and remove the Collateral to such place as Bank may deem advisable,
or Bank may require Borrower and each Subsidiary to make the Collateral
available to Bank at Borrower's and each Subsidiary's place of business and,
with or without having the Collateral at the time or place of sale, Bank may
sell or otherwise dispose of all or any part of the Collateral whether in its
then condition or after further preparation or processing, either at public or
private sale or at any broker's board, with or without notice and with or
without advertisement, in lots or in bulk, for cash or for credit, at any time
or place, in one or more sales, and upon such terms and conditions as Bank may
elect but in all events in accordance with applicable laws. At any such sale
Bank may be the purchaser. If any Inventory shall require rebuilding, repairing,
maintenance, preparation, or is in process or other unfinished state, Bank shall
have the right, at Bank's option, to do such rebuilding, repairing, preparation,
processing or completing of manufacturing, for the purpose of putting the
Inventory in such saleable form as Bank shall deem appropriate.
If after receipt of any payment of or any part of the Obligation, the
Bank is for any reason compelled to surrender such payment to any person because
such payment is determined to be void or voidable as preference, impermissible
setoff, or a diversion of trust funds, or for any other reason, this Agreement
shall continue in full force and the Borrower shall remain liable to Bank 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 the Bank in reliance upon such payment, and any such contrary action so
taken shall be without prejudice to the Bank's rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become
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final and irrevocable. The provisions of this Section shall survive the
termination of this Agreement until all periods for such surrender have ended
without such action having been instituted.
Borrower hereby makes, constitutes and appoints Bank (and all persons
designated by Bank) the true and lawful agent and attorney-in-fact of Borrower
with full power of substitution: (a) if an Event of Default has occurred, to
receive, open and dispose of all mail addressed to Borrower relating to the
Collateral; (b) if an Event of Default has occurred, to notify and direct the
United States Post Office authorities by notice given in the name of Borrower
and to sign on behalf of Borrower, to change the address for delivery of all
mail addressed to Borrower relating to the Collateral to an address to be
designated by Bank, and to cause such mail to be delivered to such designated
address where Bank may open all such mail and remove therefrom any notes,
checks, acceptances, drafts money orders or other instruments included in the
Collateral in which Bank has a security interest under the terms of this
Agreement, with full power to endorse the name of Borrower upon any such notes,
checks, acceptances, drafts, money orders, instruments or other documents
relating to the Collateral or security of any kind and to effect the deposit and
collection thereof, and Bank shall have the further right and power to endorse
the name of Borrower on any documents relating to the Collateral; (c) to sign
the name of Borrower to drafts against its lessees or other debtors, to notices
to such lessees or other debtors, to assignments and notices of assignments,
financing statements or other public records or notices and all other
instruments and documents; (d) to do any and all things necessary and take such
actions in the name and on behalf of Borrower to carry out the intent of this
Agreement, including, without limitation, the grant of the security interest
granted under this Agreement and to perfect and protect the security interest
granted to Bank in respect of the Collateral and the Bank's rights created under
this Agreement. Borrower agrees that neither Bank nor any of its agents,
designees or attorneys-in-fact will be liable for any acts of commission or
omission (other than for acts of commission or omission which constitute gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, nonappealable order), or for any error of judgment or
mistake of fact or law in respect to the exercise of the power of attorney
granted under this Article. The power of attorney granted under this Article
shall be irrevocable during the Term of this Agreement.
ARTICLE 8
NOTICES
All notices, requests or demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be
in writing delivered to the other party at the following address:
Borrower: AVTEAM, INC.
0000 Xxxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Bank: NationsBank, N.A. (South)
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Xxx Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Financial Strategies Group
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
8.01 If sent by hand delivery, upon delivery.
8.02 If sent by mail, upon the earlier of the date of receipt or
five (5) days after deposit in the U.S. Mail, first class postage prepaid.
8.03 If sent by overnight express mail, one (1) business day
following mailing, postage prepaid.
ARTICLE 9
COSTS, EXPENSES AND ATTORNEY'S FEES
Borrower shall pay to Bank immediately upon demand the full amount of
all costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel if permitted by
applicable law), incurred by Bank in connection with (a) negotiation and
preparation of this Agreement and each of the Loan Documents (not to exceed
Thirty-Five Thousand Dollars [$35,000] plus costs), and (b) Bank's continued
administration thereof.
ARTICLE 10
MISCELLANEOUS
Borrower and Bank further covenant and agree as follows, without
limiting any requirement of any other Loan Document:
10.01 CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted
to Bank under any Loan Document, or allowed it by law or equity shall be
cumulative of each other and may be exercised in addition to any and all other
rights of Bank, and no delay in exercising any right shall operate as a waiver
thereof, nor shall any single or partial exercise by Bank of any right preclude
any other or future exercise thereof or the exercise of any other right.
Borrower expressly waives any presentment, demand, protest or other notice of
any kind, including but not limited to notice of intent to accelerate and notice
of acceleration. No notice to or demand on Borrower in any case shall, of
itself, entitle Borrower to any other or future notice or demand in similar or
other circumstances.
10.02 APPLICABLE LAW. This Loan Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the laws of Florida and applicable United States federal law.
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10.03 AMENDMENT. No modification, consent, amendment or waiver of
any provision of this Loan Agreement, nor consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an officer of Bank, and then shall be effective only in the specified instance
and for the purpose for which given. This Loan Agreement is binding upon
Borrower, its successors and assigns, and inures to the benefit of Bank, its
successors and assigns; however, no assignment or other transfer of Borrower's
rights or obligations hereunder shall be made or be effective without Bank's
prior written consent, nor shall it relieve Borrower of any obligations
hereunder. There is no third party beneficiary of this Loan Agreement.
10.04 DOCUMENTS. All documents, certificates and other items
required under this Loan Agreement to be executed and/or delivered to Bank shall
be in form and content satisfactory to Bank and its counsel.
10.05 PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.
10.06 INDEMNIFICATION. Except to the extent caused by the Bank's
gross negligence or willful misconduct, Borrower shall indemnify, defend and
hold Bank and its successors and assigns harmless from and against any and all
claims, demands, suits, losses, damages, assessments, fines, penalties, costs or
other expenses (including reasonable attorneys' fees and court costs) arising
from or in any way related to any of the transactions contemplated hereby and
the operation of the Borrower's business including, but not limited to, the
payment of "Taxes" (as hereinafter defined). The Borrower's obligations under
this paragraph shall survive the repayment of the Loan and any deed in lieu of
foreclosure or foreclosure of any Deed to Secure Debt, Deed of Trust, Security
Agreement or Mortgage securing the Loan.
10.07 SURVIVABILITY. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of the Loan and shall continue in full force and effect so long as the Loan is
outstanding or the obligation of the Bank to make any advances under the Loan
shall not have expired.
10.08 FIELD AUDIT. The Bank shall be permitted to perform (for the
benefit of the Bank) inventory and accounts receivable field audits which must
be satisfactory to the Bank. Such audits shall be at the Borrower's expense (not
to exceed Six Hundred Fifty Dollars [$650] per day plus out-of-pocket expenses)
provided Borrower shall not be responsible for the expense more than once in any
twelve (12) month period commencing February 1, 1997, unless the Borrower shall
be in default.
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10.09 JURISDICTION, SERVICE OF PROCESS.
(a) Any suit, action or proceeding against Borrower with
respect to this Agreement, the Note, the Loan Documents or any judgment entered
by any court in respect of any thereof shall be brought in the courts of Broward
County in the State of Florida or in the U.S. District Court for the Southern
District of Florida as Bank (in its sole discretion) may elect, and Borrower
hereby accepts the nonexclusive jurisdiction of those courts for the purpose of
any suit, action or proceeding.
(b) In addition, Borrower hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, the Note, the Loan Documents or any judgment entered
by any court in respect of any thereof brought in the State of Florida, and
hereby further irrevocably waives any claim that any suit, action or proceeding
brought in the State of Florida has been brought in an inconvenient forum.
Borrower hereby further agrees that if any such suit, action or proceeding is
pending in more than one jurisdiction, Bank's selection of the forum shall be
binding upon the parties hereto.
10.10 COURSE OF DEALING. No course of dealing between Bank and
Borrower or any Subsidiary shall be effective to amend, modify or change any
provision of this Agreement.
10.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
Borrower and each Subsidiary and shall inure to the benefit of the Bank, and
their respective heirs, personal representatives, trustees, estates, successors
and assigns; provided, that the Borrower may not assign any of its rights
hereunder without the prior written consent of the Bank, which consent may be
withheld in the Bank's sole discretion. The Bank may, without the consent of the
Borrower or any other Person, assign, negotiate, hypothecate, or grant
participations in this Agreement or in any of its rights and security under this
Agreement and each of the other documents contemplated to be executed in
conjunction herewith. The Borrower and each Subsidiary shall accord full
recognition to any such assignment, and all rights and remedies of the Bank in
connection with the interest so assigned shall be as fully enforceable by such
assignee as they were by the Bank before such assignment. In connection with any
proposed assignment, the Bank may disclose to the proposed assignee any
information that the Borrower or any Subsidiary is required to deliver to the
Bank pursuant to this Agreement.
10.12 NET PAYMENTS. All payments by the Borrower under this
Agreement and the Note shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all payments, after deduction or
withholding for or on account of any present or future taxes, levies, imposts,
duties, or other charges of whatsoever nature imposed by any government or any
political subdivision or taxing authority thereof including, without limitation,
documentary and intangible taxes (collectively, the "Taxes") shall not be less
than the amounts otherwise specified to be paid under this Agreement and the
Note. Notwithstanding anything to the contrary contained in this Paragraph
10.12, the Borrower shall not be liable for the payment of any tax on or
measured by net income imposed on the Bank pursuant to the income tax laws of
the United States or any of the United States or any political subdivision
thereof. The Borrower shall pay all Taxes when due (and
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indemnify the Bank against any liability therefor) and shall promptly (and in
any event not later than thirty [30] days thereafter) furnish to the Bank any
certificates, receipts and other documents which may be required (in the
judgment of Bank) to establish any tax credit to which the Bank may be entitled.
The obligations of the Borrower under this Paragraph 10.12 shall survive the
termination of this Agreement and the repayment of the Loan, but such
obligations shall terminate as to any claim or liability for Taxes for which the
Borrower is responsible pursuant to this Paragraph 10.12 on the same date that
any such claim or liability for Taxes is barred by any applicable statute of
limitations.
10.13 FURTHER ASSURANCES. Borrower will at its own cost and expense
execute and deliver to Bank, at any time and from time to time, any and all
further agreements, documents and instruments, and take any and all further
actions which may be required under applicable law, or which Bank may from time
to time reasonably request, in order to effectuate the intent of the
transactions contemplated by this Agreement and the other Loan Documents,
including all such actions to establish, preserve, protect and perfect the
estate, right, title and interest of the Bank to the Collateral including that
which is not Collateral on the date hereof.
10.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and same instrument.
10.15 RESURRECTION OF BORROWER'S OBLIGATIONS. To the extent that
Bank receives any payment on account of any of Borrower's Obligations, and any
such payment(s) or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
Federal law, common law or equitable cause, then, to the extent of such
payment(s) received, Borrower's Obligations or part thereof intended to be
satisfied and any and all Liens upon or pertaining to any property or assets of
Borrower and theretofore created and/or existing in favor of Bank as security
for the payment of such Borrower's Obligations shall be revived and continue in
full force and effect, as if such payment(s) had not been received by Bank and
applied on account of Borrower's Obligations.
10.16 EQUITABLE RELIEF. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of Borrower's Obligations
under this Agreement, any remedy at law may prove to be inadequate relief to
Bank; the Borrower agrees that Bank, if Bank so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
10.17 AMBIGUITY OR CONFLICT. In the event of an ambiguity or
conflict of terms between any of the provisions of the Note, Security Agreement,
any Loan Document and this Agreement, the terms of this Agreement shall be
deemed to amend and control all of the other agreements; and, to the extent that
any of the agreements are silent, each shall supplement the others; provided,
however, in the event of any conflict between the terms of this Agreement, the
Security Agreement, any Loan
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Document, the Note and any of them, the terms which, in Bank's sole discretion,
grant Bank the greater protection with respect to the prospect of payment of the
Note, or in any other manner are of greater benefit to Bank, shall control. All
other provisions of contemporaneous or previous agreements and understandings
between Borrower, and Bank relating to the commitment of Bank and the Note in
conflict with any expressed provision hereof shall be merged into this Agreement
and be extinguished and of no further force and effect.
ARTICLE 11
PARTIAL RELEASES
In conjunction with Paragraph 2.07(l) of this Agreement, the Bank
agrees, provided no Default exists hereunder, to execute partial releases of the
engines which are the subject of such filing and deliver such releases in escrow
to a mutually-acceptable escrow agent (Xxxxx Aire shall be deemed to be an
acceptable escrow agent) pursuant to a mutually-agreeable escrow agreement
whereby the Borrower may sell such engines in the ordinary course of the
Borrower's business provided: (i) no Default exists hereunder; and (ii) Borrower
remains in compliance with the Borrowing Base. Upon Bank's receipt of the
executed Affidavit in the form of EXHIBIT 11 attached hereto signed by an
Authorized Signatory and provided no Default exists hereunder, Bank agrees to
release the engine(s) which are the subject of the Affidavit pursuant to the
Authorization to Release in the form of EXHIBIT 11(a) attached hereto.
ARTICLE 12
ARBITRATION
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING,
BUT NOT LIMITED TO, THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM
AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH
THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW),
THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES
OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL
RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
12.01 SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
CITY OF FORT LAUDERDALE, FLORIDA, AND ADMINISTERED BY ENDISPUTE, INC.,
D/B/A ENDISPUTE/J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
ENDISPUTE/J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING
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THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE.
ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF
THE DEMAND FOR ARBITRATION.
12.02 RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED TO: (A) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (B) BE A
WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (C) LIMIT THE RIGHT OF THE BANK HERETO
(I) TO EXERCISE SELF-HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (II)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (III) TO
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED
TO) INJUNCTIVE RELIEF OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE
SUCH SELF-HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL
OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. AT BANK'S OPTION, FORECLOSURE
UNDER A DEED OF TRUST OR MORTGAGE MAY BE ACCOMPLISHED BY ANY OF THE FOLLOWING:
THE EXERCISE OF A POWER OF SALE UNDER THE DEED OF TRUST OR MORTGAGE, OR BY
JUDICIAL SALE UNDER THE DEED OF TRUST OR MORTGAGE, OR BY JUDICIAL FORECLOSURE.
NEITHER THIS EXERCISE OF SELF-HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE
OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY
SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
ARTICLE 13
NO ORAL AGREEMENT
THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
ARTICLE 14
CROSS-DEFAULT/CROSS-COLLATERAL
An Event of Default hereunder or under any of the documents evidencing
or securing the Loan shall constitute an Event of Default under any other
indebtedness (now or hereafter existing) of the Borrower or any Subsidiary to
Bank. Further, all collateral for the Loan shall also secure any other
indebtedness (now or hereafter existing) of the Borrower or any Subsidiary to
Bank, and any
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collateral pledged by the Borrower or any Subsidiary to Bank to secure such
other indebtedness shall also secure the Loan. Any default under any document
evidencing or securing such other indebtedness following any applicable cure
period, whether by the Borrower or any Subsidiary, shall constitute an Event of
Default hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.
WITNESS: BORROWER:
AVTEAM, INC., a Florida corporation
By: (SEAL)
------------------------------ --------------------------------
Name:
------------------------------ --------------------------------
Title:
------------------------------ --------------------------------
BANK:
NATIONSBANK, N.A. (SOUTH), a national banking
association
By: (SEAL)
------------------------------ --------------------------------
Name:
------------------------------ --------------------------------
Title:
------------------------------ --------------------------------
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EXHIBIT 2.03(b)
Xxxxx & Whitney
Greenwich Air Services
Gas Turbine Corporation
Dallas Aerospace
AeroThrust Corporation
Interturbine -- Dallas
Interturbine TEAM
Chromalloy Dallas
Specialized Overhaul Services
Chromalloy Gas Turbine Corp.
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EXHIBIT 2.05
Request for Advance
I, ________________________________, Authorized Signatory for AVTEAM,
INC. ("Borrower"), pursuant to the provisions of that certain Loan Agreement
dated effective as of February 19, 1997, (as amended, modified, or supplemented
from time to time, the "Loan Agreement") between Borrower and NATIONSBANK, N.A.
(SOUTH) ("Bank"), hereby certify that:
1. Borrower hereby requests an Advance in the aggregate principal
amount of $__________ to be made on ______________________________, 19____. The
Interest Period hereby selected by the Borrower for the Advance shall be (check
applicable box):
[ ] PRIME interest rate option on the amount of $________________.
[ ] LIBOR interest rate option on the amount of
$_________________, under a one (1) month interest period at a
quoted rate of ____% to mature on ___________________, 19___.
[ ] LIBOR interest rate option on the amount of
$_________________, under a two (2) month interest period at a
quoted rate of ____% to mature on _________________, 19___.
[ ] LIBOR interest rate option on the amount of
$_________________, under a three (3) month interest period at
a quoted rate of ____% to mature on ______________________,
19___.
The proceeds of the Advance shall be disbursed into the
Borrower's account with Bank. The forgoing instructions shall be irrevocable as
provided in the Loan Agreement.
2. All representations and warranties of the Borrower made in the Loan
Agreement are true and correct in all material respects as of the date hereof as
if made on the date hereof, with and after giving effect to the application of
the proceeds of the Advance in connection with which this Request for Advance is
given.
3. There does not exist and will not exist on the date of the requested
Advance, both before and after giving effect to the requested Advance, a Default
or an Event of Default.
4. All conditions precedent in the Loan Agreement to the funding of the
requested Advance have been met.
5. Following the funding of this Advance, the Borrower will remain in
compliance with the Borrowing Base contemplated by Paragraph 2.03(b) of the Loan
Agreement.
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6. The proceeds of the requested advance will be used for the purposes
set forth in the Loan Agreement.
7. Terms used in this Request for Advance, not otherwise defined or
limited herein, are used as defined in the Loan Agreement.
Done and executed on the _____day of __________________________, 19___.
---------------------------------------------
Authorized Signatory under the Loan Agreement
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EXHIBIT 2.06(b)
Request for Interest Period
I,__________________________ , Authorized Signatory for AVTEAM, INC.
("Borrower"), pursuant to the provisions of that certain Loan Agreement dated
effective as of February 19, 1997, (as amended, modified, or supplemented from
time to time, the "Loan Agreement") between Borrower and NATIONSBANK, N.A.
(SOUTH) ("Bank"), hereby certify that:
1. Borrower hereby applies for an interest rate or interest period
conversion effective on _____________________, 19___. The following outstanding
funds under the (check applicable box):
[ ] PRIME interest rate option on the amount of $________________.
[ ] LIBOR interest rate option on the amount of
$_________________, under a one (1) month interest period at a
quoted rate of ____% to mature on ___________________, 19___.
[ ] LIBOR interest rate option on the amount of
$_________________, under a two (2) month interest period at a
quoted rate of ____% to mature on _________________, 19___.
[ ] LIBOR interest rate option on the amount of
$_________________, under a three (3) month interest period at
a quoted rate of ____% to mature on ______________________,
19___.
The foregoing instructions shall be irrevocable as provided in
the Loan Agreement.
2. All representations and warranties of the Borrower made in the Loan
Agreement are true and correct in all material respects as of the date hereof as
if made on the date hereof, with and after giving effect to the application of
the proceeds of the Advance in connection with which this Request for Interest
Period is given.
3. There does not exist and will not exist on the date of the requested
Advance, both before and after giving effect to the requested Advance, a Default
or an Event of Default.
4. All conditions precedent in the Loan Agreement to the funding of the
requested Advance have been met.
45
51
5. The proceeds of the requested advance will be used for the purposes
set forth in the Loan Agreement.
6. Terms used in this Request for Interest Period, not otherwise
defined or limited herein, are used as defined in the Loan Agreement.
Done and executed on the ____ day of ________________________, 199____.
---------------------------------------------
Authorized Signatory under the Loan Agreement
46
52
EXHIBIT 4.02(d)
Certificate of Compliance
I, _____________________________, Authorized Signatory for AVTEAM, INC.
("Borrower") under the Loan Agreement (as amended, modified, or supplemented
from time to time, the "Loan Agreement") between Borrower and NATIONSBANK, N.A.
(SOUTH) ("Bank"), dated effective as of February 19, 1997, do hereby certify
that:
1. This Compliance Certificate is furnished pursuant to the Loan
Agreement and is made as of _________________________, 19___; unless otherwise
defined herein, terms used in this Compliance Certificate have the meanings
assigned to such terms in the Loan Agreement.
2. As of the date of this Compliance Certificate, no Default or Event
of Default has occurred and is continuing.
3. Borrower and each Subsidiary is in compliance with all requirements,
covenants and agreements of Borrower and each Subsidiary contained in the Loan
Agreement including, without limitation, the Borrowing Base. Borrower warrants
and represents that the calculations set forth on EXHIBIT A hereto accurately
represent the financial condition of the Borrower as of the dates set forth
therein (and as of the date hereof if not otherwise specified) and the
calculations are computed in compliance with the financial covenants required
pursuant to the Loan Agreement.
4. The most recent financial statements furnished by Borrower and each
Subsidiary pursuant to the Loan Agreement fairly present the financial condition
of Borrower and each Subsidiary as of the respective dates thereof.
5. There has not been any material adverse change in the financial
condition of Borrower from that reflected on, and as of the date of, the
financial statement most recently furnished to Bank.
6. There is no pending or, to the best of Borrower's knowledge,
threatened material litigation against Borrower or any Subsidiary which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
7. Neither Borrower nor any Subsidiary is a party to any agreement or
instrument or subject to any other order, rule, regulation or other restriction
materially and adversely affecting Borrower's or any Subsidiary's properties,
assets or financial condition, or Borrower's or any Subsidiary's ability to
perform the agreements contained in the Loan Agreement.
47
53
Done and executed on the ____ day of ________________________, 199___.
---------------------------------------------
Authorized Signatory under the Loan Agreement
48
54
EXHIBIT A
to Compliance Certificate
49
55
EXHIBIT 3.18
Subsidiaries
AVTEAM Field Services, Inc.
50
56
EXHIBIT 3.19
Shareholders
Common Preferred Preferred
Class A Class A Class B
------- --------- ---------
Xxxx Xxxxxxxxx 3,500,000
Xxxxxxx Xxxxxxx 500,000
Xxxxxx Xxxx 500,000
Xxxxx Xxxx 500,000
Clipper/Merchant Partners, L.P. 509,890
Clipper Equity Partners I, L.P. 382,418
Clipper/Merban, L.P. 287,890 220,000
Clipper Capital Associates, L.P. 42,857
Clipper/European Re, L.P. 254,945
--------- --------- -------
5,000,000 1,480,000 220,000
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EXHIBIT 3.20
Indebtedness
To Shareholders
Xxxx Xxxxxxxxx $ 3,423,735.00
Xxxxxxx Xxxxxxx 488,962.00
Xxxxxx Xxxx 463,875.00
Xxxxx Xxxx 395,406.00
--------------
$ 4,771,978.00
CAPITAL LEASES
#4212 Coastal Leasing 18,408.68
#4343 Coastal Leasing 9,231.61
#4215 Coastal Leasing 17,550.61
#6371 Coastal Leasing 26,215.25
#6555 Coastal Leasing 6,678.15
#6594 Coastal Leasing 15,063.42
STEEL CASE 36,376.72
--------------
TOTAL $ 4,901,502.44
52
58
EXHIBIT 3.21
Contingent Liabilities
NONE
53
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EXHIBIT 3.30
Employment Agreement
1. Amended and Restated Employment Agreement dated December 5,
1996, between the Borrower and Xxxxxx X. Xxxx.
2. Amended and Restated Employment Agreement dated December 5,
1996, between the Borrower and Xxxxx X. Xxxx.
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60
EXHIBIT 4.02(c)
BORROWING BASE CERTIFICATE NO._____________
Status as of______________________
In accordance with the terms of the Loan Agreement between NATIONSBANK, N.A.
(SOUTH) and AVTEAM, INC. dated effective February 19, 1997, we hereby
represent and warrant as follows:
ACCOUNTS RECEIVABLE
1. Beginning Balance (Line 5 of Last Report) $
------------
2. Plus: Net Credit Sales as of _______________
------------
3. Less: Cash Remittances as of ________________
------------
4. Less: Other A/R Reductions as of _____________ (Detail attached)
------------
5. ENDING BALANCE
------------
6. Less: Ineligible Accounts Receivable (Line 35 below)
------------
7. ELIGIBLE ACCOUNTS RECEIVABLE
------------
8. Times: Accounts Receivable Advance Rate 80%
------------
9. ACCOUNTS RECEIVABLE AVAILABILITY $
------------
INVENTORY
10. Beginning Balance (Line 14 of the Last Report) $
------------
11. Plus: Purchases as of _________________
------------
12. Less: Cost of Sales as of _________________
------------
13. Plus/Minus: Adjustments as of ________________ (Detail attached)
------------
14. ENDING BALANCE
------------
15. Less: Ineligible Inventory (Line 40 below)
------------
16. ELIGIBLE INVENTORY
------------
17. Times: Inventory Advance Rate 50%
------------
18. INVENTORY AVAILABILITY $
------------
TOTAL BORROWING BASE AVAILABILITY
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61
19. AVAILABILITY (Sum of lines 9 and 18) $
------------
LOAN ACTIVITY
20. Beginning Balance (Line 25 of the Last Report) $
------------
21. Less: Principal Payments as of _______________
------------
22. Plus: Principal Advances as of _______________
------------
23. Plus/Minus: Change in Outstanding Letters of Credit as of ________
------------
24. Plus/Minus: Adjustments as of ______________ (Detail attached)
------------
25. ENDING BALANCE $
------------
AVAILABILITY
26. Calculated Availability (Line 19 above) $
------------
27. Less: Ending Loan Balance (Line 25 above)
------------
28. NET AVAILABILITY $
------------
INELIGIBLE ACCOUNTS RECEIVABLE
29. Outstanding in Excess of 120 Days (All) $
------------
30. Less: Preapproved Outstanding Between 120-150 Days
------------
31. Receivables with Offsetting Accounts Payable
------------
32. Foreign Accounts Receivable (Less than 120 Days)
------------
33. Less: Approved Foreign Accounts Receivable
------------
34. Plus: Other Ineligible Accounts Receivable (see SCHEDULE A
attached hereto and made a part hereof)
------------
35. TOTAL INELIGIBLE ACCOUNTS RECEIVABLE $
------------
INELIGIBLE INVENTORY
36. Engine Material Inventory of Aircraft with Capacity of Less than 100 $
------------
37. Airframe Material Inventory in Excess of 50% of Total Inventory
------------
38. Inventory Held Outside of Continental United States
------------
39. Other Ineligible Inventory
------------
40. TOTAL INELIGIBLE INVENTORY $
------------
56
62
SCHEDULE A TO BORROWING BASE CERTIFICATE
(See Line 34)
57
63
CERTIFICATION TO BORROWING BASE CERTIFICATE
This certificate is furnished to the Bank by the Borrower in accordance
with its obligations under the Loan Agreement dated as of February 19, 1997. The
undersigned does hereby certify that (a) the computation of the Borrowing Base
set forth above complies with all the applicable provisions of the Loan
Agreement; (b) the data has been prepared from the books of account and records
of the Borrower in accordance with GAAP and represents fairly and accurately the
status of the Borrower's accounts as of the dates referenced herein; (c) the
inventory value is based on the fair market value of such inventory or the
actual cost, whichever is lower; (d) the Borrower holds title to such inventory
free and clear of any liens or other security interests except that created by
the aforesaid Loan Agreement; and (e) the goods are held for sale to others. The
Borrower further reaffirms the representations, warranties, and covenants
contained in the Loan Agreement, and represents and warrants that the
information set forth above is true and complete.
BORROWER:
AVTEAM, INC., a Florida corporation
By:
---------------------------------
Print Name:
-------------------------
Title: Authorized Signatory
-----------------------------
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64
EXHIBIT 11
AFFIDAVIT
STATE OF )
-------------------------- ) SS:
COUNTY OF )
-------------------------- )
THE UNDERSIGNED, being duly sworn, hereby makes the following
representations and warranties to NationsBank, N.A. (South), its successors and
assigns:
1. This Affidavit is being delivered in connection with the Loan
Agreement ("Agreement") dated February 19, 1997, between AVTEAM, INC.
("Borrower") and NATIONSBANK, N.A. (SOUTH) ("Lender").
2. The undersigned is an Authorized Signatory under the Agreement.
3. That the undersigned as the _______________________ of Borrower has
knowledge of all the business affairs of Borrower.
4. The undersigned hereby requests that the following engines be
released from the lien of the Agreement: ______________________________________
("Engines").
5. No "Default" or Event of Default" (as such terms are defined in the
Agreement) has occurred or is continuing under the Agreement.
6. The Engines have been sold by Borrower in the ordinary course of the
Borrower's business. A copy of the executed purchase order is attached hereto as
EXHIBIT A.
7. Following the partial release of the Engines, Borrower will continue
to be in compliance with the Borrowing Base requirements set forth in the
Agreement.
IN WITNESS WHEREOF, Borrower has caused this Affidavit to be sworn,
executed and sealed this _____ day of __________________________, 19___.
---------------------------------
Print Name:
59
65
STATE OF )
-------------------------- ) SS:
COUNTY OF )
-------------------------- )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by
___________________________, the ____________ of AVTEAM, INC., a Florida
corporation, freely and voluntarily under authority duly vested in him by said
corporation and that the seal affixed thereto is the true corporate seal of said
corporation. He is personally known to me or who has produced _________________
__________ as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this ______ day of ________________________________________, 199 ____.
---------------------------------------------
Notary Public, State of ____________ at Large
---------------------------------------------
Typed, printed or stamped name
My Commission Expires:
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66
EXHIBIT 11(a)
AUTHORIZATION TO RELEASE
THE UNDERSIGNED authorizes Xxxxx Aire to release from escrow the
partial releases being held by Xxxxx Aire with respect to the following engines:
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
and to record such partial releases.
NATIONSBANK, N.A. (SOUTH)
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date:
------------------------------------
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67
AFFIDAVIT FOR EXECUTION OF LOAN AGREEMENT
WITHOUT THE STATE OF FLORIDA
COMMONWEALTH OF THE BAHAMAS )
) SS:
CITY OF NASSAU )
BEFORE ME, the undersigned Notary Public, duly authorized in the
Commonwealth and City aforesaid to administer oaths and take acknowledgments,
personally appeared the undersigned, to me well known and to me known to be the
persons described as witnesses to the foregoing Loan Agreement and who witnessed
the execution and delivery of the foregoing Loan Agreement, and who, first being
duly sworn by me did each depose, say and acknowledge before me that they were
present at the time that the said Loan Agreement was executed, that they saw the
same executed and delivered by ______________________________, and that the
other subscribing witness was likewise present and witnessed the execution and
delivery of the foregoing Loan Agreement, to a representative of NationsBank,
N.A. (South) at the City of ________________, County of _______________________,
State of __________________________, on the date written below via Federal
Express by delivery to Federal Express in the State and County above written in
accordance with the Sender's copy/receipt of a Federal Express airbill attached
as "Exhibit A".
------------------------------------------------
Subscribing Witness
Print Name:
-------------------------------------
Address:
---------------------------------------
-------------------------------------------------
------------------------------------------------
Subscribing Witness
Print Name:
-------------------------------------
Address:
---------------------------------------
-------------------------------------------------
SWORN TO AND SUBSCRIBED before me and acknowledged to me this
________day of ____________________, 1997.
(SEAL)
-------------------------------------------------
Notary Public, Commonwealth of the Bahamas
Printed Name:
-----------------------------------
Address:
----------------------------------------
-------------------------------------------------
My Commission Expires:
My Commission No. is:
62
