EXHIBIT 10.16
December 1, 2000
▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Reference is made to that certain Equipment Lease Agreement dated
December 1, 2000 (the "Equipment Lease"), among ▇▇▇▇▇▇▇▇▇ Industries, Inc.
("▇▇▇▇▇▇▇▇▇"), Aviation Sales Company ("AVS") and Aviation Sales Distribution
Services Company ("ASDSC"). Capitalized terms used herein but not otherwise
defined herein shall have the meanings given to them in the Equipment Lease.
Pursuant to the terms of the Equipment Lease, ASDSC has agreed to lease
to ▇▇▇▇▇▇▇▇▇ the Equipment for an initial period of twelve (12) months. In
connection therewith and in addition to the agreements contained in the
Equipment Lease, both ▇▇▇▇▇▇▇▇▇ and ASDSC have agreed to enter into this letter
agreement ("Letter Agreement") to memorialize certain rights and options to
extend the term of the Equipment Lease and to purchase and sell the Equipment,
all pursuant to the provisions contained herein. Accordingly, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, ▇▇▇▇▇▇▇▇▇ and ASDSC hereby agree as follows:
1. Notwithstanding anything to the contrary contained in the Equipment
Lease, ▇▇▇▇▇▇▇▇▇ and ASDSC shall have the following rights and options
(each, an "Option," and collectively, the "Options"):
(a) On the Termination Date (as the Termination Date may
be extended pursuant to this Letter Agreement, as set
forth below), and for a period of sixty (60) days
thereafter, ASDSC shall have the right and option to
require ▇▇▇▇▇▇▇▇▇ to purchase the Equipment from
ASDSC at a price equal to the Net Book Value for the
Equipment being purchased (the "Purchase Price"); and
(b) At any time during the Term and for a period of sixty
(60) days after the expiration or earlier termination
of the Term (also as may be extended), ▇▇▇▇▇▇▇▇▇
shall have the right and option to require ASDSC to
sell the Equipment at a price equal to the Purchase
Price.
For purposes of computing the time in which either party may exercise
the Option (but not for any other purposes under the Equipment Lease),
the Termination Date shall not be deemed to have occurred until both
(i) the Termination Date has
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occurred in accordance with the Equipment Lease, as modified hereby,
and (ii) the earlier of the Closing, or twenty (20) days after either
party hereto has notified the other party in accordance with Section 15
of the Equipment Lease that the Termination Date (as modified) has
occurred.
2. In the event that either party desires to exercise its Option, such
party (the "Obligating Party") shall notify the other party (the
"Obligated Party") in accordance with Section 15 of the Equipment Lease
of its exercise of its Option (an "Exercise Notice"). Following such
notice, the Obligated Party shall complete the purchase and sale of the
Equipment (the "Closing") within fifteen (15) days after the date of
receipt of the Exercise Notice (the "Closing Date"), or as soon as
practicable thereafter, but not later than thirty (30) days after
receipt of such notice. The Closing shall take place at the office of
▇▇▇▇▇▇▇▇▇'▇ counsel in Fort Lauderdale, Florida. Notwithstanding the
exercise of the Option, ▇▇▇▇▇▇▇▇▇ shall be obligated to continue making
the applicable rental payments to ASDSC under the Equipment Lease until
the Closing.
3. At the Closing:
(a) ASDSC shall provide an appropriate ▇▇▇▇ of sale
delivering title to the Equipment, and shall
represent and warrant to ▇▇▇▇▇▇▇▇▇ that ASDSC has
good and marketable title to the Equipment free and
clear of any liens, with full power to sell the
Equipment, and that the Equipment being purchased,
taken as a whole, is in good operating condition,
normal wear and tear excepted and any deterioration
in the condition of the Equipment while in
▇▇▇▇▇▇▇▇▇'▇ possession under the Equipment Lease
excepted; provided, however, the representations
contained in such ▇▇▇▇ of sale shall not survive
beyond the survival of the representations of ASDSC
with respect to conveyed assets contained in the
Asset Purchase Agreement, as defined in the Equipment
Lease.
(b) ▇▇▇▇▇▇▇▇▇ shall pay to ASDSC the Purchase Price in
cash or other immediately available funds.
4. The parties hereby agree as follows with respect to the extension of
the Termination Date:
(a) The term of the Equipment Lease may be extended by
▇▇▇▇▇▇▇▇▇ for up to six-one month periods in the
event and for so long as ▇▇▇▇▇▇▇▇▇ does not have
sufficient Availability (as defined in the Senior
Loan Agreement, hereafter defined) under the terms of
the Senior Loan Agreement to permit the purchase of
the Equipment in accordance with this Letter
Agreement.
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(b) For purposes hereof, the term "Senior Loan Agreement"
means that certain Amended and Restated Loan and
Security Agreement dated as of December 14, 1998
among ▇▇▇▇▇▇▇▇▇ and certain subsidiaries of
▇▇▇▇▇▇▇▇▇, as borrowers, and Bank of America, N.A.,
certain other lenders and other parties thereto, as
amended through the date hereof.
(c) In the event ▇▇▇▇▇▇▇▇▇ desires to extend the
Equipment Lease beyond the initial twelve (12) month
term contained therein, ▇▇▇▇▇▇▇▇▇ may do so for one
month at a time upon providing notice to ASDSC at
least five (5) days prior to what would otherwise be
the Termination Date, along with a schedule certified
by the Chief Financial Officer of ▇▇▇▇▇▇▇▇▇ setting
forth the Availability of ▇▇▇▇▇▇▇▇▇ under the Senior
Loan Agreement.
(d) During each month after the initial twelve (12) month
Term in which the Equipment Lease continues,
▇▇▇▇▇▇▇▇▇ agrees to pay to ASDSC Rent equal to one
and one-quarter percent (1-1/4%) of the Net Book
Value of the Equipment, subject to adjustment in
accordance with subsection 4(h) if applicable and any
other adjustment provision of the Equipment Lease.
(e) If ▇▇▇▇▇▇▇▇▇ shall purchase the Equipment pursuant to
this Letter Agreement, then ▇▇▇▇▇▇▇▇▇ shall not be
required to return the Equipment to ASDSC as provided
in Section 12 of the Equipment Lease.
(f) If ▇▇▇▇▇▇▇▇▇ shall elect to purchase the Equipment
from ASDSC pursuant to this Letter Agreement, then,
notwithstanding the provisions of the Equipment Lease
to the contrary, following the Termination Date, the
Equipment Lease shall not be considered terminated
and all provisions of the Equipment Lease shall
remain in full force and effect until the Equipment
has been purchased pursuant to this Letter Agreement
and all payments due under the Equipment Lease (other
than Rent accruing after the date of such purchase)
have been received in full by ASDSC.
(g) Upon the occurrence of an event of default under the
Equipment Lease by Lessee, Lessor may at its option
trigger the Option under this Letter Agreement.
(h) In the event that ▇▇▇▇▇▇▇▇▇ exercises the Option for
a portion of the Equipment as provided in Section
1(b) of this Letter Agreement (and thus the Equipment
Lease remains in effect for the remainder of the
Equipment), Net Book Value for all of the Equipment
shall be reduced by the Net Book Value for the
Equipment so purchased, thus resulting in reduced
Rent for the remaining Equipment.
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(i) The definition of the word "Term" contained in the
Equipment Lease shall take into consideration any of
the six-one month extensions that are utilized in
accordance with this Letter Agreement.
5. This Letter Agreement is subject to the same Governing Law
provisions as is contained in Section 20 of the Equipment Lease. Upon
the breach by either party of the terms of this Letter Agreement, the
non-breaching party, at its option, may proceed by appropriate court
action or action either at law or in equity to enforce performance by
the other party of the applicable covenants and terms of this Letter
Agreement or to recover from the applicable party any and all damages
(but not consequential damages) or expenses, including reasonable
attorneys' fees, which such party shall have sustained by reason of the
defaulting party in any covenant or covenants of this letter agreement
or on account of such party's enforcement of its remedies hereunder.
ASDSC may collaterally assign any or all of its rights under this
Letter Agreement to and for the benefit of (i) its senior revolving credit
lenders and their agent (collectively, "Senior Lenders"), and (ii) the holder of
the Supplemental Term Loan Note (as defined in the Senior Lenders' Credit
Agreement) and its agent; provided that no such assignment shall release ASDSC
from its obligations hereunder or create any obligation on the part of the
Senior Lenders or the holder of the Supplemental Term Loan Note in respect
hereof.
(Remainder of Page Intentionally Left Blank)
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Please confirm your acknowledgment, agreement and acceptance of the
foregoing by signing where indicated below.
AVIATION SALES DISTRIBUTION
SERVICES COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
AVIATION SALES COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: President
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Acknowledged, Agreed and Accepted:
▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ Zivi ▇. ▇▇▇▇▇▇
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Zivi ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
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