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Replacement Term Loan Note

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EXHIBIT 10.2


REPLACEMENT TERM LOAN NOTE
--------------------------


$13,000,000 May 24, 2001


FOR VALUE RECEIVED, the undersigned, AVIATION SALES DISTRIBUTION SERVICES COMPANY, a Delaware corporation, AEROCELL STRUCTURES, INC., an Arkansas corporation, AVS/M-2, INC., a Delaware corporation, WHITEHALL CORPORATION, a Delaware corporation, TRIAD INTERNATIONAL MAINTENANCE CORPORATION, a Delaware corporation, AVS/M-3, INC., an Arizona corporation, CARIBE AVIATION, INC., a Florida corporation, AIRCRAFT INTERIOR DESIGN, INC., a Florida corporation, AVIATION SALES LEASING COMPANY, a Delaware 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 THIRTEEN MILLION 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 rate ceiling as specified in Article 5069-1.04 of Vernon's Annotated Texas Statutes. 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 this Note shall be used (i) first, to make dividends and distributions to Aviation Sales Company to enable it to pay accrued interest due under the Indenture (as hereinafter defined), and (ii) second, for working capital and general business purposes.


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 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 (the "Indenture"), equal in right of payment and on parity with all other "Senior Debt" of each Borrower as defined in the 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 Fourth Amended and Restated Credit Agreement dated as of May 31, 2000 among 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 "Requirement of Law" (as such term is defined in the Credit Agreement) or Contractual Obligation of any Borrower or Affiliate Guarantor, or require 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 in accordance with the terms hereof.


(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 subject to the Second Collateral Documents Amendment (as such term is defined in 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.


(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, exp
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