Waiver And Sixth Amendment/loan And Security Agreement

EXHIBIT 10.2


WAIVER AND SIXTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT


THIS WAIVER AND SIXTH AMENDMENT TO LOAN AND SECURITY Agreement (this "Amendment") is made and entered into as of the 7th day of August, 2000, by and among BANK OF AMERICA, N.A., formerly NationsBank, N.A., as agent (the "Agent") for the lenders (the "Lenders") from time to time party to the Loan Agreement (as hereafter defined), the Lenders, AMERICAN AIRCARRIERS SUPPORT, INCORPORATED, a Delaware corporation ("AAS"), and the Subsidiaries of AAS party to the Loan Agreement as borrowers (together with AAS, the "Borrowers").


W I T N E S S E T H :


WHEREAS, the Agent, the Lenders and the Borrowers entered into that certain Loan and Security Agreement, dated as of May 25, 1999 (as amended from time to time, the "Loan Agreement"), pursuant to which the Agent and the Lenders agreed to extend certain financial accommodations to the Borrowers; and


WHEREAS, pursuant to the Loan Agreement, the Borrowers agreed, among other things, to maintain the outstanding loan balance within a borrowing base and to comply with certain minimum availability and financial covenants; and


WHEREAS, the Borrowers have allowed the outstanding loan balance to exceed the borrowing base and have violated and continue to violate the minimum availability and financial covenants set forth in the Loan Agreement; and


WHEREAS, the Borrowers' agreements to maintain the outstanding loan balance within a borrowing base, and to comply with certain minimum availability and financial covenants, were material inducements to the Agent's and the Lenders' agreement to enter into the Loan Agreement, and the Lenders would not have agreed to make loans available to the Borrowers without the assurance that the Borrowers would comply with such agreements; and


WHEREAS, the Borrowers requested that the Agent and the Lenders forbear from exercising their rights and remedies with respect to such defaults; and


WHEREAS, the Borrowers, the Agent and the Lenders entered into that certain Fifth Amendment and Forbearance Agreement dated as of June 22, 2000 (the "Forbearance


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Agreement"), pursuant to which the Agent and the Lenders agreed, subject to the terms and conditions set forth therein, to forbear from exercising their rights and remedies for a limited period of time; and


WHEREAS, the forbearance period set forth in the Forbearance Agreement has expired, and the Borrowers have been unable to cure such defaults; and


WHEREAS, as a result of such expiration, the Agent and the Lenders have the right, as set forth in the Loan Agreement and the other Loan Documents, to immediately accelerate all of the Secured Obligations and exercise all of their rights and remedies with respect to the Collateral, all without notice to the Borrowers; and


WHEREAS, the Borrowers have requested that the Agent and the Lenders waive such defaults and amend the Loan Agreement on the terms and conditions set forth herein; and


WHEREAS, the Agent and the Lenders are willing to grant such waivers and amend the Loan Agreement, subject to the terms and conditions set forth herein.


NOW, THEREFORE, in consideration of the foregoing premises, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


1. All capitalized terms used herein and not otherwise expressly defined herein shall have the respective meanings given to such terms in the Loan Agreement.


2. The Borrowers acknowledge that they are in default under (a) SECTION 2A.3(B) of the Loan Agreement, for periods up to and including the date hereof, as a result of the fact that the unpaid principal amount of the Revolving Credit Loans has exceeded, and continues to exceed, the Borrowing Base, (b) SECTION 11.1(B) of the Loan Agreement for the fiscal quarter ending on June 30, 2000, as a result of the Borrowers' failure to maintain the Consolidated Funded Indebtedness to Consolidated EBITDA ratio set forth therein, (c) SECTION 11.1(C) of the Loan Agreement for the fiscal quarter ending on June 30, 2000, as a result of the Borrowers' failure to maintain the Consolidated fixed charge coverage ratio set forth therein, (d) SECTION 11.5 of the Loan Agreement for fiscal year 2000, as a result of the Borrowers' failure to comply with the Capital Expenditure limit set forth therein, and (e) SECTION 11.17 of the Loan Agreement for periods up to and including the date hereof, as a result of the Borrowers' failure to comply with the minimum Availability covenant set forth therein (collectively, the "Specified Defaults"). The Borrowers acknowledge that, because of the Specified Defaults, the Agent and the Lenders have the right, among other things, to declare all of the Secured Obligations to be immediately due, payable and performable, and to enforce collection of the Secured Obligations by repossessing and disposing of any interest in the Collateral thereunder, as more fully set forth in ARTICLE 12 of the Loan Agreement. In consideration of the Borrowers' timely and strict compliance with their agreements set forth in the Loan Agreement, and in reliance upon the representations, warranties, agreements and covenants of the Borrowers set forth herein and in the Loan Agreement, as amended hereby, the Agent and the Lenders hereby waive the Specified Defaults. Notwithstanding the foregoing, the Agent and the


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Lenders reserve their rights and remedies at all times with respect to any Default or Event of Default under the Loan Agreement or this Amendment other than a Specified Default, whether presently existing or occurring hereafter.


3. To induce the Agent and the Lenders to enter into this Amendment and grant the accommodations set forth herein, the Borrowers agree with the Agent and the Lenders as follows:


(a) Until the Required Lenders otherwise consent in writing,
the Borrowers shall provide to the Agent and the Lenders a Borrowing
Base Certificate on each Business Day, prepared as of the close of
business on the immediately preceding Business Day to reflect
information with respect to Receivables (including, without limitation,
sales and collections) as of such immediately preceding Business Day;
provided, however, that information on such Borrowing Base Certificates
with respect to Inventory shall only be required to be updated as of
the close of business on the last Business Day of each calendar month
within fifteen Business Days of the end of such calendar month.


(b) Until Availability first equals or exceeds $1,000,000
after the date hereof, the Borrowers shall have no right to request or
receive, and the Lenders shall have no obligation to make, any LIBOR
Rate Loans (nor shall any existing Loan be converted to or continued as
a LIBOR Rate Loan) or Capital Expenditure Loans.


(c) Until Availability first equals or exceeds $1,000,000
after the date hereof, each Borrower agrees that it shall not return
$50,000 (based on such Borrower's cost therefor) or more of Inventory
to any vendor for any reason without the prior written consent of the
Agent and the Lenders.


(d) Until Availability first equals or exceeds $1,000,000
after the date hereof, no Receivable included in any Borrowing Base
Certificate on or after the date hereof in excess of $250,000 shall
constitute an Eligible Receivable until approved by the Agent. For each
such Receivable, the Borrowers shall provide the Agent with true and
complete copies of the invoice and purchase order with respect thereto
(such copies to be sent to the attention of both Byron Turner and John
Bohan (facsimile number 404-607-6437)). With respect to any Receivable
that is not approved by the Agent pursuant to this paragraph, the Agent
agrees to notify the Borrowers' Agent of such disapproval on the
Business Day following the actual receipt by the Agent of the
applicable invoice and purchase order for such Receivable and, if such
notification is not sent to the Borrowers' Agent on such following
Business Day, and such Receivable would otherwise constitute an
Eligible Receivable, such Receivable shall be included in the Borrowing
Base.


(e) It shall constitute an immediate Event of Default if AAS
does not receive, following the date hereof, at least $1,000,000 of
equity by August 15, 2000 (such equity is hereafter referred to as the
"Initial Equity Investment") on terms and conditions (including all
applicable legal documents) acceptable to the Agent and the Lenders in
their discretion.


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(f) It shall constitute an immediate Event of Default if AAS
does not receive, following the date hereof and in addition to the
Initial Equity Investment, at least $5,000,000 of equity by August 31,
2000 (such equity is hereafter referred to as the "Secondary Equity
Investment") on terms and conditions (including all applicable legal
documents) acceptable to the Agent and the Lenders in their discretion.


(g) It shall constitute an immediate Event of Default if AAS
does not receive, following the date hereof and in addition to the
Initial Equity Investment and the Secondary Equity Investment, at least
$10,000,000 of equity or Subordinated Indebtedness by September 30,
2000 (such equity or Subordinated Indebtedness is hereafter referred to
as the "Subordinated Indebtedness Investment"; the Initial Equity
Investment, the Secondary Equity Investment and the Subordinated
Indebtedness Investment are sometimes collectively referred to as the
"Additional Capital") on terms and conditions (including all applicable
legal documents) acceptable to the Agent and the Lenders in their
discretion.


(h) The proceeds from the Additional Capital described above,
together with the proceeds of any Asset Disposition with respect to the
stock or assets of AAS Aircraft Services, Inc. ("Aircraft Services";
any such Asset Disposition with respect to Aircraft Services is
sometimes referred to herein as an "Aircraft Services Disposition"),
shall be applied by the Borrowers to the partial repayment of the
then-outstanding Secured Obligations as provided in SECTION 4.9 of the
Loan Agreement; provided, however, that (i) the proceeds from the
Additional Capital shall be applied to the Secured Obligations on the
date such proceeds are received by the Borrowers; and (ii) (A) with
respect to the Additional Capital, such proceeds shall be applied first
to the outstanding Revolving Credit Loans to the extent thereof and
then to Capital Expenditure Loans to the extent thereof, and (B) with
respect to any Aircraft Services Disposition, the first $1,425,000 of
such proceeds shall be applied to the outstanding Capital Expenditure
Loans made to finance assets of Aircraft Services and then to the
outstanding Revolving Credit Loans to the extent thereof. Nothing
contained in this paragraph shall be construed to permit any Borrower
to consummate any Asset Disposition or other merger, consolidation or
asset sale (other than sales and leases of Inventory in the ordinary
course of business) without the prior written consent of the Required
Lenders.


(i) Notwithstanding anything to the contrary set forth in any
of the Loan Documents, the Borrowers shall not cause or permit an
Overadvance in excess of $7,200,000 to exist during the period from the
date hereof to and including the earlier of September 30, 2000, and the
occurrence of a Default or Event of Default (it being understood that,
upon the occurrence of any Default or Event of Default prior to
September 30, 2000, the Borrowers shall be required to immediately and
permanently reduce all Overadvances to zero); provided, however, that
the Overadvance limit set forth above shall be immediately and
permanently reduced (and, upon the elimination of the Overadvances, the
minimum Availability which the Borrowers are required to maintain shall
be increased but shall not exceed $1,000,000) by an amount equal to (i)
70% of the


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proceeds from the Secondary Equity Investment on the date of receipt by
AAS thereof; (ii) 100% of the proceeds of the Subordinated Indebtedness
Investment on the date of the funding thereof; and (iii) 100% of the
amount applied to the Revolving Credit Loans as the result of the
receipt of the proceeds from an Aircraft Services Disposition;
provided, further, that the Lenders shall not be obligated to make any
Loan to the Borrowers if the making of such Loan would create an
Overadvance in excess of $7,000,000, it being understood that the Agent
intends to fund any Overadvance between $7,000,000 and $7,200,000 as an
Agent Advance under SECTION 4.7(D)(II) of the Loan Agreement. (By way
of example, if, on August 20, 2000, Overadvances equal $7,200,000 and
the Borrowers receive the Secondary Equity Investment in an amount of
$5,000,000, the Overadvance limit would decrease to $3,700,000
($7,200,000 minus 70% of $5,000,000). If the Subordinated Indebtedness
Investment were then funded on September 15, 2000, in the amount of
$10,000,000, the Overadvance limit would decrease to zero and the
Borrowers would be required to maintain Availability of at least
$1,000,000 thereafter.) From and after the earlier of October 1, 2000
and the first date on which Availability equals or exceeds $1,000,000,
the Borrowers shall be required to comply with the $1,000,000 minimum
Availability covenant set forth in SECTION 11.17 of the Loan Agreement.
As used herein, "Overadvance" shall mean, as of any date of
determination, the amount by which the outstanding principal balance of
Revolving Credit Loans exceeds the Borrowing Base. In the event an
Overadvance exists at any time in excess of the applicable limit, the
Agent and the Lenders may immediately exercise all of their rights and
remedies under the Loan Documents as a result thereof.


(j) If the Borrowers fail to obtain any portion of the
Additional Capital by the applicable date required by paragraphs (e),
(f) and (g) above, or if the Borrowers fail to reduce the Overadvances
or maintain the minimum Availability as required by paragraph (i)
above, the Borrowers shall (i) within thirteen (13) Business Days of
any such failure, engage a liquidation consultant reasonably acceptable
to the Agent, and (ii) within twenty-two (22) Business Days of any such
failure, deliver to the Agent and the Lender ...