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Loan Agreement

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Sectors: Aerospace and Defense
Governing Law: North Carolina, View North Carolina State Laws
Effective Date: April 09, 1998
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Exhibit 10.4.8



This Loan Agreement (the "Agreement") dated as of April 9, 1998, by and between NationsBank, N.A., a national banking association ("Bank") 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:

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:

A. BORROWER: American Aircarriers Support, Inc.

a South Carolina corporation


3516 Centre Circle Drive

Fort Mill, South Carolina 29715

C. CURRENT ASSETS. Current Assets means the aggregate amount of all of

Borrower's assets which would, in accordance with GAAP, properly be defined as

current assets.

D. CURRENT LIABILITIES. Current Liabilities means the aggregate amount

of all current liabilities as determined in accordance with GAAP, but in any

event shall include all liabilities except those having a maturity date which

is more than one year from the date as of which such computation is being made.

E. HAZARDOUS MATERIALS. Hazardous Materials include all materials

defined as hazardous materials or substances under any local, state or

federal environmental laws, rules or regulations, and petroleum, petroleum

products, oil and asbestos.

F. LOAN. Any loan described in Section 2 hereof and any subsequent loan

which states that it is subject to this Loan Agreement.

G. 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 guarantor or third party in connection with any

H. TANGIBLE NET WORTH. Tangible Net Worth means the amount by which

total assets exceed total liabilities in accordance with GAAP, less leasehold

improvements, organizational expense, transfers to affiliates, employees,

shareholders and related parties, and all other intangible assets.

I. 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, with respect to the financial statements

referenced in Section 3.H. hereof.


A. LOAN. Bank hereby agrees to make (or has made) one or more loans to Borrower in the aggregate principal face amount of $10,000,000.00. The obligation to repay the loans is evidenced by a promissory note or notes dated ___________________________________________________ (the promissory note or notes together with any and all renewals, extensions or rearrangements thereof being hereafter collectively referred to as the "Note") having a maturity date, repayment terms and interest rate as set forth in the Note.

i. REVOLVING CREDIT FEATURE. The Loan provides for a revolving line of credit (the "Line") under which Borrower may from time to time, borrow, repay and re-borrow funds. The obligation of the Bank to make any advance or to issue any Letter of Credit shall be subject to satisfaction by the Borrower that the representations and warranties set forth in Section 3 hereof shall be true and correct in all material respects on the Closing Date. Each advance made at the request of the Borrowers hereunder shall be deemed to be a reaffirmation on the date of such transaction as to the matters specified in the representations and warranties in Section 3. Advances on this Loan will be requested by telephonic or written communication from a person reasonably believed by the Bank to be an authorized representative of the Borrower. Unless otherwise agreed by the Bank, all advances will be made to a demand deposit account maintained at the Bank in the name of the Borrower.

ii. BORROWING BASE. The Line is subject to the Borrowing Base Agreement attached hereto as Exhibit "A" and by reference made a part hereof.

a. Advances. The Bank agrees, on the terms herein set forth, to make advances to the Borrower from time to time during the period from the date hereof to the Termination Date for purposes of financing working capital (accounts receivable and inventory), aircraft engine leasing, issuance of letters of credit and for general corporate purposes); provided that immediately after giving effect to each advance, the Line plus the Letter of Credit obligations shall not exceed the lesser of the amount of the Note or the Borrowing Base. Each advance shall be in the aggregate amount of $1,000.00, or a multiple thereof, and shall be debited by the Bank to the Note. Within the limits herein set forth and as requested by the Borrower, the Bank shall make advances, accept payments and prepayments pursuant to the terms hereof, and re-advance any amount so paid or prepaid.

If on any date, the Note Balance plus the Letter of Credit Obligations exceeds the Borrowing Base, the Borrowers shall immediately pay the then outstanding Note Balance in an amount sufficient to reduce such excess to zero (0). The Borrowers shall pay the outstanding balance on the Termination Date.

iii. LETTER OF CREDIT SUBFEATURE. As a subfeature under the Line, Bank may from time to time up to and including September 30, 1998, 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 $2,000,000.00. No Letter of Credit shall have an expiration date subsequent to September 25, 1998. 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 Line 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 Line and shall be repaid in accordance with the terms of the Line; provided however, that if the Line is not available for any reason whatsoever, at the time any draft is paid by Bank, or if advances are not available under the Line 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 Line. 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.

a. The request for the issuance of a Letter of Credit shall be submitted to the Bank at least three business days prior to the requested date of issuance.

b. In the event of any drawing under any Letter of Credit, the Bank will promptly notify the Borrower. Unless the Borrower shall immediately notify the Bank of its intent to otherwise reimburse the Bank, the Borrower shall be deemed to have requested an advance in the amount of the drawing, the proceeds of which will be used to satisfy the reimbursement obligations. The Borrower's reimbursement obligations hereunder shall be absolute and unconditional under all circumstances, irrespective of any rights of set-off, counterclaim or defense to payment the Borrower may claim or have against the Bank, the beneficiary of the Letter of Credit drawn upon or any other Person, including without limitation any defense based on any failure of the Borrower to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit. The issuance of any supplement, modification, amendment, renewal, or extension to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder.

c. Indemnification; Nature of Bank's Duties.

(1) In addition to its other obligations under this Section, the Borrower hereby agrees to protect, indemnify, pay and save the Bank harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorney fees) that the Bank may incur or be subject to as a consequence, direct or indirect, of (a) the issuance of any Letter of Credit, or (b) the failure of the Bank to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions, herein called "Governmental Acts").

(a) As between the Borrower on the one hand and the Bank on the other hand, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Bank shall not be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should, in fact, prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part,

that may prove to be invalid or ineffective for any reason; (iii) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they may be in cipher; (iv) for errors in interpretation of technical terms; (v) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (vi) for any consequences arising from causes beyond the control of the Bank, including, without limitation, any Governmental Acts. None of the above shall affect, impair, or prevent the vesting of the Bank's rights or powers hereunder.

(b) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Bank, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put the Bank under any resulting liability to the Borrowers. It is the intention of the parties that this Loan Agreement shall be construed and applied to protect and indemnify the Bank against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any present or future Government Acts. The Bank shall not, in any way, be liable for any failure by the Bank or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Bank.

(c) Nothing in this Subsection (c) is intended to limit the reimbursement obligation of the Borrower contained in this Loan Agreement. The obligations of the Borrower shall survive the termination of this Loan Agreement. No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the Bank to enforce any right, power or benefit under this Loan Agreement.

(d) Notwithstanding anything to the contrary contained in this Subsection (c), the Borrower shall have no obligation to indemnify the Bank in respect of any liability incurred by the Bank arising solely out of the gross negligence or willful misconduct of the Bank as determined by a court of competent jurisdiction.

The Borrower shall pay the Bank its standard fees in effect from time to time in connection with the issuance of each Letter of Credit. Each such fee shall be payable in advance on the date of the issuance of the applicable Letter of Credit.

3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants to Bank as follows:

A. GOOD STANDING. Borrower is a corporation, duly organized, validly existing and in good standing under the laws of South Carolina and has the power and authority to own its property and to carry on its business in each jurisdiction in which Borrower does business.

B. AUTHORITY AND COMPLIANCE. Borrower has 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 the appropriate governing body of Borrower. 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, to the best of Borrower's knowledge after due inquiry, Borrower is in compliance with all laws and regulatory requirements to which it is subject.

C. BINDING AGREEMENT. This Agreement and the other Loan Documents executed by Borrower constitute valid and legally binding obligations of Borrower, enforceable in accordance with their terms.

D. LITIGATION. There is no proceeding involving Borrower 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.

E. NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock provision, partnership agreement or other document pertaining to the organization, power or authority of Borrower and no provision of any existing agreement, mortgage, indenture or contract binding on Borrower or affecting its property, 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.

F. OWNERSHIP OF ASSETS. Borrower has good title to its assets, and its assets are free and clear of liens, except those granted to Bank and as disclosed to Bank in writing prior to the date of this Agreement.

G. TAXES. All taxes and assessments due and payable by Borrower have been paid or are being contested in good faith by appropriate proceedings and the Borrower has filed all tax returns which it is required to file.

H. FINANCIAL STATEMENTS. The financial statements of Borrower heretofore delivered to Bank have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved and fairly present Borrower's financial condition as of the date or dates thereof, and there has been no material adverse change in Borrower's financial condition or operations since December 31, 1997. All factual information furnished by Borrower to Bank in connection with this Agreement and the other Loan Documents is and will be accurate and complete 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.

I. PLACE OF BUSINESS. Borrower's chief executive office is located at

3516 Centre Circle Drive

Fort Mill, South Carolina 29715 .

J. ENVIRONMENTAL. The conduct of Borrower's business operations and the condition of Borrower's property does not and will not violate any federal laws, rules or ordinances for environmental protection, regulations of the Environmental Protection Agency, any applicable local or state law, rule, regulation or rule of common law or any judicial interpretation thereof relating primarily to the environment or Hazardous Materials.

K. STOCK. The outstanding stock of Borrower is owned as set forth in Exhibit "3K".

L. CONTINUATION OF REPRESENTATIONS 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 under any Loan.

4. AFFIRMATIVE COVENANTS. Until full payment and performance of all obligations of Borrower under the Loan Documents, Borrower will, unless Bank consents otherwise in writing (and without limiting any requirement of any other Loan Document):

A. FINANCIAL CONDITION. Maintain Borrower'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:

i. Beginning December 31, 1997, maintain Tangible Net Worth of not less than $4,250,000.00 plus 50 percent of all net profit after tax for the fiscal year ending December 31, 1998, and plus 50 percent of all net profit after tax for each fiscal year thereafter, measured annually. If Borrower issues additional shares through an Initial Public Offering, Tangible Net Worth shall be, as of December 31, 1997, not less than $4,250,000.00, plus the net sum received from said issuance, plus 50 percent of all net profit after tax for the fiscal year ending December 31, 1998, and plus 50 percent of all net profit after tax for each fiscal year thereafter, measured annually.

ii. Maintain a ratio of total liabilities to Tangible Net Worth of not more than 1.75 to 1.0 for each calendar quarter.

iii. Maintain a cash flow coverage ratio (defined as the aggregate of net income after taxes plus depreciation, interest expense, amortization, and other non-cash expenses, divided by the aggregate of the current portion of long-term debt and capital lease obligations, interest expenses and dividends of not less than 1.25 to 1.0 on the last day of each fiscal quarter for the period of four consecutive quarters ending
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