Exhibit 10.6
REPLACEMENT TERM LOAN NOTE
$2,500,000 July 12, 2002
FOR VALUE RECEIVED, the undersigned, AEROCELL STRUCTURES, INC., an
Arkansas corporation, TRIAD INTERNATIONAL MAINTENANCE CORPORATION, a Delaware
corporation, AIRCRAFT INTERIOR DESIGN, INC., a Florida corporation, and TIMCO
ENGINE CENTER, INC., a Delaware corporation (each a "Borrower" and collectively,
the "Borrowers"), HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of
BANK OF AMERICA, N.A., a national banking association (the "Lender"), the
principal amount of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS (or such lesser
amount as shall have been advanced and remain outstanding hereunder) on August
14, 2002 (the "Maturity Date").
1. Interest. The Borrowers further, jointly and severally, promise to
pay interest on the unpaid principal amount of the indebtedness evidenced hereby
from the date advanced until such principal amount is paid in full at a per
annum rate of interest equal to The Wall Street Journal LIBOR Rate plus two
percent (2%). "The Wall Street Journal LIBOR Rate" is the fluctuating rate of
interest equal to the one-month London Interbank Offered Rate as published in
the "Money Rates" section of The Wall Street Journal on the immediately
preceding Business Day (as hereinafter defined), as adjusted from time to time
in the Lender's sole discretion for then applicable reserve requirements,
deposit insurance assessment rates and other regulatory costs. Interest will
accrue on any non-Business Day at the rate in effect on the immediately
preceding Business Day. Accrued interest shall be payable, in arrears, on the
first day of each calendar month (for the immediately preceding calendar month)
commencing on the first such day following the date hereof and, if not
theretofore paid in full, on the Maturity Date. Notwithstanding the foregoing,
effective immediately upon the occurrence of an Event of Default (as such term
is defined below), and for as long thereafter as such Event of Default shall be
continuing unwaived, the principal balance outstanding hereunder, shall bear
interest at eighteen percent (18%) per annum. Interest at the rate set forth
above will be calculated by the 365/360 day method (a daily amount of interest
is computed for a hypothetical year of 360 days; that amount is multiplied by
the actual number of days for which any principal is outstanding hereunder).
Notwithstanding any provision of this Note, the Lender does not intend to charge
and the Borrowers shall not be required to pay any amount of interest or other
charges in excess of the maximum permitted by applicable law. The Borrowers,
jointly and severally, agree that during the full term hereof, the maximum
lawful interest rate for this Note as determined under Texas law shall be the
indicated weekly ceiling as specified in Chapter 303 of the Texas Finance Code,
as amended. Further, to the extent that any other lawful rate ceiling exceeds
the rate ceiling so determined then the higher rate ceiling shall apply. Any
payment in excess of such maximum shall be refunded to Borrower or credited
against principal, at the option of the Lender.
2. Use of Proceeds. The Borrowers further, jointly and severally, agree
and covenant that proceeds of the loan advanced under the Existing Note (defined
in Section 26 hereof) that this Note replaces in part were used (i) first, to
make dividends and distributions to Timco Aviation Services, Inc., a Delaware
corporation, to enable it to pay accrued interest due under the SunTrust
Indenture (as hereinafter defined), and (ii) second, for working capital and
general business purposes.
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3. Payments. All payments of principal and interest in respect of this
Note shall be made to the Lender in lawful money of the United States of America
in same day funds on the date due at the Lender's office designated below. Funds
received by the Lender as aforesaid no later than 4:00 p.m. (Houston time) on
any given Business Day shall be credited against payment to be made that day and
funds received by the Lender after that time shall be deemed to have been paid
on the next succeeding Business Day. "Business Day" shall mean a day in the
applicable local time which is not a Saturday or Sunday or a legal holiday and
on which banks are not required or permitted by law or other governmental action
to close in Houston, Texas. All payments made on account of principal hereof and
interest thereon shall be recorded by the Lender on its books and records. The
Borrowers have elected to authorize the Lender to effect payment of sums due
under this Note by means of debiting the Borrowers' account number 3661094818 at
Bank of America, N.A The Lender will endeavor to advise the Borrower of the
amount of each debit at least two Business Days prior thereto by written or oral
notice (but the failure of the Borrower to receive any such notice shall not
negate the Lender's right to debit such account.) This authorization shall not
affect the obligation of the Borrowers to pay such sums when due, without
notice, if there are insufficient funds in such account to make such payment in
full on the due date thereof, or if the Lender fails to debit the account.
4. Subordination Agreement; Indenture. Indebtedness evidenced by this
Note shall constitute "Senior Debt" of each Borrower as defined in (i) that
certain Indenture dated as of February 17, 1998 by and among AVIATION SALES
COMPANY, certain subsidiaries of AVIATION SALES COMPANY, and SunTrust Bank,
Central Florida, National Association as supplemented by that Supplemental
Indenture dated as of February 28, 2002 by and among AVIATION SALES COMPANY,
certain subsidiaries of AVIATION SALES COMPANY and SunTrust Bank (formerly
SunTrust Bank, Central Florida, National Association) (the "SunTrust Indenture")
and (ii) that certain Indenture dated February 28, 2002 among AVIATION SALES
COMPANY, certain subsidiaries of AVIATION SALES COMPANY, and HSBC Bank USA, as
Trustee (the "HSBC Bank Indenture"), equal in right of payment and on parity
with all other "Senior Debt" of each Borrower as defined in the SunTrust
Indenture and the HSBC Bank Indenture.
5. Representations. Each of the Borrowers hereby represents and
warrants to the Lender that the execution, delivery and performance of this Note
by the Borrowers and the other agreements and documents executed and delivered
in connection therewith by the Borrowers and certain corporate affiliates of the
Borrowers (collectively, the "Affiliate Collateral Documents") do not and will
not (i) conflict with the "Organizational Documents" (as such term is defined in
that certain Fifth Amended and Restated Credit Agreement dated as of July ___,
2002 among TIMCO Aviation Services, Inc., a Delaware corporation, the Borrowers,
the lenders and other financial institutions from time to time a party thereto,
and Citicorp USA, Inc., a Delaware corporation ("Citicorp"), as Agent for the
lenders and issuing banks thereunder, as amended (the "Credit Agreement")) or
by-laws of any Borrower or any other affiliate of any Borrower a party to any of
the Affiliate Collateral Documents (each an "Affiliate Guarantor"), (ii)
constitute a tortious interference with any "Contractual Obligation" (as such
term is defined in the Credit Agreement) of any Borrower or Affiliate Guarantor,
or conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any "Requirements of Law" (as such term
is defined in the Credit Agreement) or Contractual Obligation of any Borrower or
Affiliate Guarantor, or require
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termination of any such Contractual Obligation, or (iii) require any approval of
the shareholders of any Borrower or Affiliate Guarantor.
6. Authority and Enforceability. Each Borrower has the requisite power
and authority to execute, deliver and perform this Note and the other agreements
and documents executed and delivered by it in connection herewith and each of
the Affiliate Guarantors has the requisite power and authority to execute,
deliver and perform such Affiliate Collateral Documents. The execution, delivery
and performance of this Note and the Affiliate Collateral Documents have been
duly authorized by all necessary corporate action and such authorization has not
been rescinded. No other corporate action or proceedings on the part of any
Borrower or Affiliate Guarantor are necessary to consummate such transactions.
This Note and the Affiliate Collateral Documents have been duly executed and
delivered on behalf of the Borrowers and constitutes such person's legal, valid
and binding obligation, enforceable against the Borrowers and the Affiliate
Guarantors in accordance with its terms.
7. Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Note:
(a) Failure to Make Payments When Due. The Borrowers shall fail to pay
when due any principal of or interest on the indebtedness evidenced by this Note
or by that certain Replacement Term Loan Note in the principal amount of
$5,000,000 of even date herewith executed by the Borrowers and payable to the
order of Lender (the "$5,000,000 Note") in accordance with the terms hereof and
thereof.
(b) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An
involuntary case shall be commenced against any Borrower, any Affiliate
Guarantor or any other guarantor of all or any portion of the indebtedness
evidenced hereby (a "Guarantor") and the petition shall not be dismissed,
stayed, bonded or discharged within thirty (30) days after commencement of the
case; or a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of any Borrower, any Affiliate Guarantor or any
Guarantor in an involuntary case, under any applicable bankruptcy, insolvency or
other similar law now or hereinafter in effect; or any other similar relief
shall be granted under any applicable federal, state, local or foreign law; or
(ii) A decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over any Borrower, any Affiliate Guarantor or any
Guarantor or over all or a substantial part of the property securing this Note
or the Credit Agreement or of the property securing any guaranty of any
Guarantor ("Property") shall be entered; or an interim receiver, trustee or
other custodian of any Borrower, any Affiliate Guarantor or any Guarantor or of
all or a substantial part of the Property shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of the
Property shall be issued and any such event shall not be stayed, dismissed,
bonded or discharged within thirty (30) days after entry, appointment or
issuance.
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(c) Voluntary Bankruptcy; Appointment of Receiver, Etc. Any Borrower,
Affiliate Guarantor or Guarantor shall have an order for relief entered with
respect to it or commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its Property; or any Borrower,
Affiliate Guarantor or Guarantor shall make any assignment for the benefit of
creditors or shall be unable or fail, or admit in writing its inability, to pay
its debts as such debts become due; or the shareholders or board of directors
(or equivalent) of any Borrower, or Affiliate Guarantor (or any committee
thereof) or any Guarantor adopts any resolution or otherwise authorizes any
action to approve any of the foregoing.
(d) Dissolution. Any order, judgment or decree shall be entered against
any Borrower or any Affiliate Guarantor decreeing its involuntary dissolution or
split-up and such order shall remain undischarged and unstayed for a period in
excess of thirty (30) days; or any Borrower or any Affiliate Guarantor shall
otherwise dissolve, be dissolved, or cease to exist except as specifically
permitted by this Note.
Upon the occurrence and during the continuance of any Event of Default
described in clauses (b) through (d) above, the unpaid principal amount
evidenced by this Note shall become, and upon the occurrence and during the
continuance of all other Events of Default, such unpaid principal amount may be
declared by the Lender to be, due and payable. Upon the occurrence and during
the continuance of any Event of Default, the Lender is hereby authorized at any
time, at its option and without notice or demand, to set off and charge against
any deposit accounts of any Borrower (as well as any money, instruments,
securities, documents, chattel paper, credits, claims, demands, income and any
other property, rights and interests of any Borrower), which at any time shall
come into the possession or custody or under the control of the Lender or any of
its agents, affiliates or correspondents, any and all obligations due hereunder.
Additionally, the Lender shall have all rights and remedies available under the
Note and each of the agreements and documents executed and delivered in
connection therewith, as well as all rights and remedies available at law or in
equity.
8. Transaction Expenses. The Borrowers, jointly and severally, agree
upon demand to pay, or reimburse the Lender for all of the Lender's reasonable
internal and external audit, legal, appraisal, valuation, filing, document
duplication and reproduction, and investigation expenses and for all other
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of legal counsel,
auditors, accountants, appraisers, printers, insurance and environmental
advisers, and other consultants and agents) incurred by the Lender in connection
with (i) the preparation, negotiation, and execution of this Note and the
agreements and documents executed and delivered in connection therewith and the
Lender's periodic reviews and audits of the Borrowers, Affiliate Guarantors and
Guarantors; (ii) the preparation, negotiation, execution and interpretation of
this Note and the agreements and documents executed and delivered in connection
therewith; (iii) the creation, perfection or protection of the liens securing
this Note (including, without limitation, any reasonable fees and expenses for
local counsel in various jurisdictions); (iv) consultation with attorneys in
connection therewith and with respect to the
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Lender's rights and responsibilities under this Note and the agreements and
documents executed and delivered in connection therewith; (v) the protection,
collection or enforcement of any of the obligations evidenced hereby or by such
other agreements and documents; (vi) the commencement, defense or intervention
in any court proceeding relating in any way to such obligations, any security
therefor, any Borrower, any guarantor thereof, this Note or any of such other
agreements and documents; (vii) the response to, and preparation for, any
subpoena or request for document production with which the Lender is served or
deposition or other proceeding in which the Lender is called to testify, in each
case, relating in any way to such obligations, any security therefor, any
Borrower, any guarantor thereof, this Note or any of such other agreements and
documents; and (viii) any amendments, consents, waivers, assignments,
restatements, or supplements to this Note or any of such agreements and
documents and the preparation, negotiation, and execution of the same.
9. Enforcement Expenses. The Borrowers, jointly and severally, further
agree to pay or reimburse the Lender, upon demand, for all out-of-pocket costs
and expenses, including, without limitation reasonable attorneys' fees
(including costs of settlement) incurred by the Lender after the occurrence of
an Event of Default (i) in enforcing this Note and the agreements and documents
executed and delivered in connection therewith and the security therefor or
exercising or enforcing any other right or remedy available by reason of such
Event of Default; (ii) in connection with any refinancing or restructuring of
the credit arrangements provided under this Note in the nature of a "work-out"
or in any insolvency or bankruptcy proceeding; (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer, motion
or other pleadings in any legal proceeding relating to the obligations evidenced
hereby, any Borrower, any guarantor thereof, or security therefor and related to
or arising out of the transactions contemplated hereby or by any of the
agreements and documents executed in connection herewith, and (iv) in taking any
other action in or with respect to any suit or proceeding (bankruptcy or
otherwise) described in clauses (i) through (iii) above.
10. Indemnity. The Borrowers, jointly and severally, further agree (a)
to indemnify and hold harmless the Lender and each of its officers, directors,
employees, attorneys and agents (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses (other than loss of
profits), damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever and including, without
limitation, the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitees shall be designated a party thereto), imposed
on, incurred by, or asserted against such Indemnitees in any manner relating to
or arising out of (i) this Note or the agreements and documents executed and
delivered in connection therewith, the making of the loan evidenced hereby, the
management of such loan, the use or intended use of the proceeds of such loan,
or any of the other transactions contemplated by any of the agreements and
documents executed and delivered in connection herewith, or (ii) any liabilities
and costs relating to any violation by any Borrower, any Affiliate Guarantor or
their respective predecessors-in-interest of any environmental, health or safety
requirements of law, the past, present or future operations of any Borrower, any
Affiliate Guarantor or their respective predecessors-in-interest, or the past,
present or future environmental, health or safety condition of any respective
past, present or future property of such persons, the presence of
asbestos-containing materials at any respective past, present or future
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property of such persons, or the release or threatened release of any
contaminant into the environment by any Borrower, any Affiliate Guarantor or
their respective predecessors-in-interest, or the release or threatened release
of any contaminant into the environment from or at any facility to which any
Borrower, any Affiliate Guarantor or their respective predecessors-in-interest
sent or directly arranged the transport of any contaminant (collectively, the
"Indemnified Matters"), provided, however, the Borrowers shall have no
obligation to an Indemnitee hereunder with respect to Indemnified Matters caused
by or resulting from the "willful misconduct" or "gross negligence" of such
Indemnitee, as determined by a final, nonappealable order of a court of
competent jurisdiction and (b) not to assert any claim against any of the
Indemnified Parties on any theory of liability for special, indirect,
consequential or punitive damages arising out of, or in any way in connection
with, the loans made hereunder or the transactions evidenced by the agreements
and documents executed and delivered in connection herewith, and/or any other
matters governed by this Note and such other agreements and documents. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each Borrower shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnitees. The Lender
agrees to notify the Borrowers of the institution or assertion of any
Indemnified Matter, but the parties hereto hereby agree that the failure to so
notify the Borrowers shall not release any Borrower from its obligations
hereunder, except to the extent of any material increase in the liabilities of
such Borrower hereunder directly resulting from such failure to receive notice
from such Indemnitees.
11. Communications. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served, sent
by facsimile transmission or courier service or United States certified mail and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of a facsimile transmission, or four (4) Business Days
after deposit in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided herein) shall be as set
forth below:
If to the Borrowers:
c/o TIMCO Aviation Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-1704
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: 305-374-5095
If to the Lender:
Bank of America, N.A.
Private Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or, as to each party, at such other address as may be designated by such party
in a written notice to all of the other parties to this Agreement.
12. Certain Waivers. Demand, presentment, diligence, protest and notice
of nonpayment are hereby waived by the Borrowers.
13. Successors and Assigns. This Note shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of the Lender. The
rights hereunder of the Borrowers, or any interest therein may not be assigned
without the written consent of the Lender.
14. Certain Rights. No failure or delay on the part of the Lender in
the exercise of any power, right or privilege under this Note shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right. power or privilege. All rights and remedies existing under this Note are
cumulative with and not exclusive of any rights or remedies otherwise available.
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15. Jurisdiction. THE LENDER AND EACH OF THE BORROWERS EACH IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY TEXAS STATE COURT OR FEDERAL COURT SITTING IN TEXAS, AND ANY
COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY
ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS NOTE OR ANY
OTHER AGREEMENT OR DOCUMENT EXECUTED AND DELIVERED IN CONNECTION THEREWITH,
WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH BORROWER IRREVOCABLY DESIGNATES
AND APPOINTS ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, AS ITS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE LENDER AND THE
BORROWERS AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. EACH BORROWER WAIVES IN ALL DISPUTES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
16. Additional Waivers. EACH BORROWER AGREES THAT THE LENDER SHALL HAVE
THE RIGHT TO PROCEED AGAINST SUCH BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE THE LENDER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF THE LENDER. EACH BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE LENDER TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF THE LENDER. EACH BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE LENDER MAY COMMENCE A
PROCEEDING DESCRIBED IN THIS SECTION.
17. Service of Process. EACH BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWERS' NOTICE ADDRESS SPECIFIED
ABOVE, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH
BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER AGREEMENT OR
DOCUMENT EXECUTED AND DELIVERED IN CONNECTION THEREWITH IN ANY JURISDICTION SET
FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWERS IN THE COURTS OF ANY OTHER JURISDICTION.
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18. Trial by Jury Waiver. EACH OF THE LENDER AND BORROWERS IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT. ANY OF THE BORROWERS OR THE LENDER MAY FILE AN
ORIGINAL OR A COPY OF THIS NOTE WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
19. Governing Law. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
20. Advice of Counsel. Each Borrower represents and warrants to the
Lender that it has discussed this Note with its counsel. Each of the Borrowers
agrees that it shall be jointly and severally liable for all of the indebtedness
evidenced by this Note. Each of the Borrowers is accepting joint and several
liability hereunder in consideration of the financial accommodations to be
provided by the Lender hereunder, for the mutual benefit, directly and
indirectly, of each of the Borrowers and in consideration of the undertakings of
each of the Borrowers to accept joint and several liability for the obligations
of each of them. Each of the Borrowers jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers with respect to the payment
and performance of all of the indebtedness evidenced hereby, it being the
intention of the parties hereto that all of such indebtedness shall be the joint
and several obligations of each of the Borrowers without preferences or
distinction among them. If and to the extent that any of the Borrowers shall
fail to make any payment with respect to any of such indebtedness as and when
due or to perform any of the agreements contained herein in accordance with the
terms thereof, then in each such event, the other Borrowers will make such
payment with respect to, or perform, such agreement.
21. Further Waivers. The obligations of each Borrower under the
provisions hereof constitute full recourse obligations of such Borrower,
enforceable against it to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Note or any
other circumstances whatsoever. Except as otherwise expressly provided herein,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of the advance of the principal amount of the loan made
hereunder, notice of occurrence of any Event of Default, or of any demand for
any payment under this Note, notice of any action at any time taken or omitted
by the Lender under or in respect of any of the obligations hereunder, any
requirement of diligence and, generally, all demands, notices and other
formalities of every kind in connection with this Note. Each Borrower hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of such obligations, the acceptance of any partial payment
thereon, any waiver, consent or other action or acquiescence by the Lender at
any time or times in respect of any default by any Borrower in the performance
or satisfaction of any term, covenant, condition or provision of this Note, any
and all other indulgences whatsoever by the Lender in respect of any of such
obligations, and the taking, addition, substitution or release, in whole or in
part, at any time or times, of any security for any of such obligations or the
addition, substitution or release, in whole or in part, of any Borrower. Without
limiting the generality of the foregoing, each Borrower assents to any other
action or delay in acting or failure to act on the part of the Lender,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with the
9
applicable laws or regulations thereunder which might, but for the provisions of
this paragraph, afford grounds for terminating, discharging or relieving such
Borrower, in whole or in part, from any of its obligations hereunder, it being
the intention of each Borrower that, so long as any of the obligations evidenced
by this Note remain unsatisfied, the obligations of such Borrower under this
paragraph shall not be discharged except by performance and then only to the
extent of such performance. The obligations of each Borrower under this
paragraph shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement liquidation, reconstruction or similar proceeding
with respect to any Borrower or the Lender. The joint and several liability of
the Borrowers hereunder shall continue in full force and effect notwithstanding
any absorption, merger, amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any Borrower or the Lender.
The provisions of this paragraph are made for the benefit of the Lender and its
successors and assigns, and may be enforced by any such person from time to time
against any of the Borrowers as often as occasion therefor may arise and without
requirement on the part of any such person first to marshal any of its claims or
to exercise any of its rights against any other person or to exhaust any
remedies available to it against any other person or to resort to any other
source or means of obtaining payment of any of the indebtedness evidenced hereto
or to elect any other remedy. The provisions of this paragraph shall remain in
effect until all the indebtedness evidenced hereby shall have been paid in full
or otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of such indebtedness, is rescinded or must otherwise be
restored or returned by the Lender upon the insolvency, bankruptcy or
reorganization of any of the Borrowers, or otherwise, the provisions of this
paragraph will forthwith be reinstated in effect, as though such payment had not
been made.
Notwithstanding any provision to the Excess Funding Borrower (as
defined below), each other Borrower shall, on demand of such Excess Funding
Borrower (but subject to the next sentence hereof and to subsection (B) below),
pay to such Excess Funding Borrower an amount equal to such Borrower's Pro Rata
Share (as defined below and determined, for this purpose, without reference to
the properties, assets, liabilities and debts of such Excess Funding Borrower)
of such Excess Payment (as defined below). The payment obligation of any
Borrower to any Excess Funding Borrower under this paragraph shall be
subordinate and subject in right of payment to the prior payment in full of the
indebtedness of such Borrower under the other provisions of this Note, and such
Excess Funding Borrower shall not exercise any right or remedy with respect to
such excess until payment and satisfaction in full of all of such obligations.
For purposes hereof, (i) "Excess Funding Borrower" shall mean, in respect of any
obligations arising under the other provisions of this Note (hereafter, the
"Joint Obligations"), a Borrower that has paid an amount in excess of its Pro
Rata Share of the Joint Obligations, (ii) "Excess Payment" shall mean, in
respect of any Joint Obligations, the amount paid by an Excess Funding Borrower
in excess of its Pro Rata Share of such Joint Obligations, and (iii) "Pro Rata
Share", for the purposes of this paragraph, shall mean, for any Borrower, the
ratio (expressed as a percentage) of (A) the amount by which the aggregate
present fair saleable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Borrower (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Borrower hereunder) to (B) the amount by which the aggregate
present fair saleable value of all assets and other properties of such Borrower
and all of the other Borrowers exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured,
10
matured and unliquidated liabilities, but excluding the obligations of such
Borrower and the other Borrowers hereunder) of such Borrower and all of the
other Borrowers, all as of the date hereof.
22. Conditions to Lending. The Lender shall not be obligated to advance
the Loan to be evidenced by this Note unless and until it shall have received
the following items, each satisfactory to it in form and substance:
(a) an amount equal to $2,500,000 plus accrued and unpaid interest
thereon as a principal prepayment of the Existing Note;
(b) this Note;
(c) the $5,000,000 Note;
(d) payment of the upfront fee as provided in Section 22(d) of the
$5,000,000 Note;
(e) a Loan Parties Agreement with the Borrowers and the Affiliate
Guarantors;
(f) a Guaranty from the Affiliate Guarantors;
(g) fully-executed copies of material Loan Documents (as defined in
the Credit Agreement) and material TROL Documents (as defined in
the Credit Agreement);
(h) an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., the Borrowers'
and Affiliate Guarantors' legal counsel;
(i) Second Amendment to the Limited Guaranty dated February 14, 2001,
from ▇▇▇▇▇ Investments, Inc.;
(j) a new opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇ PC, ▇▇▇▇▇ Investments, Inc.'s
legal counsel;
(k) satisfaction or waiver of all conditions precedent to the
effectiveness of the Credit Agreement and written evidence of the
same in the form of a certificate from the Borrowers;
(l) satisfaction or waiver of all conditions precedent to the
effectiveness of the $5,000,000 Note and written evidence of the
same in the form of a certificate from the Borrowers;
(m) the Borrowers' Certificates of Corporate Resolutions and
Incumbency; and
(n) payment of the fees and expenses of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., legal
counsel to the Lender, in connection with this transaction through
closing, as evidenced by their invoice dated of even date
herewith.
11
23. Arbitration. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
NOTE OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, 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 J.A.M.S./ENDISPUTE OR ANY SUCCESSOR
THEREOF ("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 NOTE MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS NOTE APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY
OF ANY BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS NOTE
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF
CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP
TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY /WAIVERS CONTAINED
IN THIS NOTE; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION
AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT
STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER HERETO (A) TO
EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C)
TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT
NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER. THE LENDER 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 NOTE. 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.
12
24. NOTICE OF FINAL AGREEMENT. THIS WRITTEN NOTE REPRESENTS THE FINAL
AGREEMENT AMONG 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 AMONG THE PARTIES.
25. Headings. Section headings in this Note are included for
convenience only and shall not constitute a part of this Note for any other
purpose.
26. Replacement Term Loan Note. This Note and the $5,000,000 Note are
issued together as a replacement for (but not a novation of) the Replacement
Term Loan Note dated May 24, 2001, executed by certain of the Borrowers and
payable to the order of Lender in the principal amount of $13,000,000, which,
after giving effect to the payment required by Section 22(c) hereof will have an
outstanding principal balance of $7,500,000 (the "Existing Note").
Notwithstanding anything herein to the contrary, each Borrower that was a party
to the Existing Note assumes and agrees to be bound by the terms and conditions
of this Note.
IN WITNESS WHEREOF, each of the Borrowers has caused this Note to be
executed and delivered by its duly authorized officer as of the day and year
first above written.
[Signature Page Follows]
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TRIAD INTERNATIONAL MAINTENANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Treasurer
--------------------------------
AIRCRAFT INTERIOR DESIGN, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Treasurer
--------------------------------
AEROCELL STRUCTURES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Treasurer
--------------------------------
TIMCO ENGINE CENTER, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Treasurer
--------------------------------
14
