Amended and Restated Intercreditor Agreement among Citicorp USA, Inc. (as Agent and Warrant Holder) and Bank of America, N.A.
Summary
This agreement, dated July 12, 2002, is between Citicorp USA, Inc. (acting as both Agent and Warrant Holder) and Bank of America, N.A. It amends and restates a prior intercreditor agreement, setting out the rights and obligations of each party regarding loans, security interests, and collateral related to certain credit and loan agreements with Aviation Sales Company (now TIMCO Aviation Services, Inc.) and its affiliates. The agreement clarifies how collateral and payments are shared and prioritized among the creditors, ensuring coordination in the event of borrower default or enforcement actions.
EX-10.16 19 dex1016.txt AMENDED AND RESTATED INTERCREDITOR AGREEMENT, CITI Exhibit 10.16 AMENDED AND RESTATED INTERCREDITOR AGREEMENT THIS AMENDED AND RESTATED INTERCREDITOR AGREEMENT (the "Agreement") is entered into as of the 12th day of July, 2002 by and among CITICORP USA, INC., a Delaware corporation, in its capacity as "Agent" (the "Agent") under that certain Fifth Amended and Restated Credit Agreement dated of even date herewith (as more particularly described below and herein referred to as the "Credit Agreement") and under that certain Collateral Documents Amendment dated as of February 18, 2000 (as more particularly described below and herein referred to as the "Collateral Documents Amendment") and that certain Second Collateral Documents Amendment dated as of February 14, 2001 (as more particularly described below and herein referred to as the "Second Collateral Documents Amendment"), CITICORP USA, INC., a Delaware corporation ("CUSA"), in its capacity as holder of that certain Common Stock Warrant Certificate dated May 31, 2000 (as amended and more particularly described below and herein referred to as the "Warrant"), and BANK OF AMERICA, N.A., a national banking association ("BofA"), in its capacity as holder of that certain Term Loan Note dated February 14, 2001 (as re-evidenced by those certain Replacement Term Notes more particularly described below and herein referred to as the "BofA Note"). Capitalized terms used herein which are defined in the Credit Agreement shall have the meanings herein as ascribed thereto in the Credit Agreement. W I T N E S S E T H: WHEREAS, the Agent, 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, AVS/CAI, 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, Aviation Sales Company, a Delaware corporation, now known as TIMCO Aviation Services, Inc. ("AVS"), Citibank, N.A., as Issuing Bank, and certain financial institutions a party thereto as lenders have entered into that certain Fourth Amended and Restated Credit Agreement dated as of May 31, 2000, as amended prior to the date hereof (the "Predecessor Credit Agreement"), pursuant to which certain loans and other financial accommodations have heretofore been made to the borrowers thereunder by the lenders thereunder and the Issuing Bank; WHEREAS, the Predecessor Credit Agreement has been amended and restated in its entirety pursuant to that certain Fifth Amended and Restated Credit Agreement of even date herewith among 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, (collectively, the "Borrowers"), AVS, Citibank, N.A., as Issuing Bank, and certain financial institutions a party thereto as Lenders (as the same may be amended, supplemented, modified or extended, the "Credit Agreement"); WHEREAS, CUSA heretofore made a certain loan to the Borrowers and certain of their Affiliates in the principal amount of $15,500,000 evidenced by a certain Term Loan Note dated February 18, 2000, and in connection with which that certain Common Stock Warrant Certificate was issued on February 18, 2000 by AVS for the purchase of shares of common stock of AVS (as the same has been amended by Amendment No. 1 to Common Stock Warrant Certificate dated as of May 31, 2000 and Amendment No. 2 to Common Stock Warrant Certificate dated as of the date hereof, such Common Stock Warrant Certificate being herein referred to as the "Warrant"); WHEREAS, the Agent, the Borrowers, AVS and certain of AVS' subsidiaries (the Borrowers, AVS and such subsidiaries of AVS being herein referred to as the "Grantors") have entered into certain agreements pursuant to which the Obligations and certain payment and performance guarantees with respect to such Obligations made by AVS and such subsidiaries of AVS (the "Credit Facility Guarantees") are secured by security interests in the Collateral pursuant to various security documents (the "Collateral Documents"); WHEREAS, the Grantors, the Agent and CUSA are parties to that certain Collateral Documents Amendment dated as of February 18, 2000 (the "Collateral Documents Amendment"), pursuant to which, inter alia, the Collateral Documents were amended to provide for the security interests granted thereunder to secure all of the Indebtedness of the Grantors under and with respect to, inter alia, the Warrant; WHEREAS, each of the Credit Agreement, the Warrant, the Collateral Documents, and the Collateral Documents Amendment continue in full force and effect as of the date of this Agreement; WHEREAS, BofA has heretofore made a certain loan to, inter alia, the Borrowers and the outstanding principal balance of such loan has been re-evidenced by (i) that certain Replacement Term Loan Note in the principal amount of $5,000,000 of even date herewith and (ii) that certain Replacement Term Loan Note in the principal amount of $2,500,000 of even date herewith, copies of which Replacement Term Loan Notes are attached hereto as Exhibit A-1 and made a part hereof (such Replacement Term Loan Notes being collectively referred to as the "BofA Note"), which loan is secured pursuant to the terms of that certain Second Collateral Documents Amendment dated as of February 14, 2001, a copy of which is attached hereto as Exhibit B and made a part hereof (the "BofA Collateral Documents Amendment"), pursuant to which, inter alia, the Collateral Documents were further amended to provide for the security interests granted thereunder to secure all of the Indebtedness of the Grantors under and with respect to such loan, as re-evidenced by the BofA Note; WHEREAS, the Guarantors (as defined in the Credit Agreement) have executed that certain Guaranty of even date herewith in respect of the BofA Note, a copy of which is attached hereto as Exhibit A-2 and made a part hereof (the "BofA Guaranty"); 2 WHEREAS, the Agent, CUSA and BofA have heretofore entered into that certain Intercreditor Agreement dated as of February 14, 2001 (the "Predecessor Intercreditor Agreement") to set forth certain agreements with respect to the rights and obligations of the Agent (on behalf of the Holders and CUSA) and BofA under and with respect to the Credit Agreement, the Warrant, the Collateral Documents, the Collateral Documents Amendment, the loans re-evidenced by the BofA Note, and the BofA Collateral Documents Amendment; and WHEREAS, the Agent, CUSA and BofA have agreed to enter into this Agreement to amend and restate in their entirety the agreements with respect to the rights and obligations of the Agent (on behalf of the Holders and CUSA) and BofA under the Credit Agreement, the Warrant, the Collateral Documents, the Collateral Documents Amendment, the BofA Note and the Second Collateral Documents Amendment set forth in the Predecessor Intercreditor Agreement; NOW, THEREFORE, the Agent and BofA hereby agree as follows: SECTION 1. Defined Terms. As used in this Agreement, the capitalized terms defined in the recitals hereto shall have the meanings specified therein and the following terms shall have the meanings set forth below: "Code" means the Uniform Commercial Code as in effect in the State of New York. "Collateral" means all of the property and assets (real, personal, tangible and intangible and whether now or hereafter existing or arising) and interests in such property and assets of the Grantors and shall be deemed to include, without limitation, all payments and distributions of assets of any Grantor, whether in cash or by distribution of any security, instrument or proceeds from any assets of any Grantor, and proceeds of all extensions of credit made to or for the benefit of the Grantors under the terms of the Loan Documents. "Loan Documents" shall mean all of the "Loan Documents" as defined in the Credit Agreement, together with the Warrant. "Permitted Payment" means (i) monthly interest payments under the terms of the BofA Note, as in effect on the date hereof or modified with the consent of the Agent, Requisite Lenders and CUSA, (ii) a principal payment in the amount of $2,500,000 together with accrued and unpaid interest thereon made on the date of this Agreement, and (iii) a principal payment in the amount of $2,500,000 together with accrued and unpaid interest thereon made on August 14, 2002; provided that (a) with respect to interest payments described in clause (i) above, such payments are payable and are paid no earlier than one (1) Business Day prior to the date when the payments are due and (b) with respect to payments described in clauses (i), (ii) and (iii) above, no Potential Event of Default or Event of Default shall have occurred and be continuing or would result after giving effect to any such payment. "Satisfaction of the Obligations" means (i) all of the Obligations and the Supplemental Term Loan Liabilities shall have been paid in full in cash, (ii) all financing 3 arrangements and accommodations among the Holders and the Grantors shall have been terminated, and (iii) the Holders have no further obligation to make loans, financial accommodations or advance funds which would constitute Obligations to any of the Borrowers. "Supplemental Term Loan Liabilities" means all Indebtedness evidenced by the Warrant. "Term Note Debt" means the Indebtedness of the Grantors arising under the BofA Note and the BofA Guaranty. "Term Note Debt Documents" means the BofA Note, the BofA Guaranty and the Second Collateral Documents Amendment. SECTION 2. Reaffirmation of Lien Priorities. BofA acknowledges and agrees that the Agent, for the benefit of itself, the other Holders and CUSA, has been granted a first priority lien and security interest in all of the Collateral to secure the Obligations and the Supplemental Term Loan Liabilities. The Agent acknowledges and agrees that a lien and security interest in the Collateral has been granted to BofA pursuant to the terms of the Second Collateral Documents Amendment to secure the indebtedness and obligations of the Grantors to BofA under and with respect to the Term Note Debt, which lien and security interest is junior and subordinate to that securing the Obligations and Supplemental Term Loan Liabilities as aforesaid. BofA hereby acknowledges and agrees all liens and security interests of BofA, whether now or hereafter existing or arising, in any of the Collateral shall be and hereby are subordinated to the rights and interests of the Agent (for the benefit of itself, the other Holders and CUSA) in the Collateral irrespective of the time or order of attachment or perfection of any liens or security interests, irrespective of the time or order of filing of any financing statement or other document, and irrespective of any statute, rule, law, or court decision to the contrary. BofA shall have no right to possession of any of the Collateral or any proceeds thereof, or to foreclose upon any of the Collateral or any proceeds thereof, whether by judicial action or otherwise, unless and until Satisfaction of the Obligations has occurred. Promptly after Satisfaction of the Obligations, the Agent shall deliver to BofA (or a representative therefor designated in writing to the Agent by BofA) all of the Collateral and proceeds thereof in the Agent's possession (other than payments and distributions of assets through which Satisfaction of the Obligations has been effected). SECTION 3. Provisions in Furtherance of Lien Priorities (a) In the event before Satisfaction of the Obligations, at the request of any Grantor in connection with the sale or other disposition of the Collateral for fair value or in accordance with the provisions of the Loan Documents, the Agent releases any of the Collateral which constitutes part or all of the security for the Term Note Debt, BofA shall thereupon execute and deliver to the Agent such termination statements and releases as the Agent shall request to release BofA's Lien against such property of a Grantor. (b) Upon any distribution, division, or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of any of the Collateral which is made upon or in connection with any dissolution, recapitalization, distribution, winding up, liquidation, arrangements, receivership, or reorganization of any Grantor or any other Person, or 4 upon any assignment of the Collateral for the benefit of creditors or any other marshaling of the Collateral and/or liabilities of such Grantor or otherwise, any payment, dividend or distribution of any kind (whether in cash, securities or other property) other than Permitted Payments, and proceeds of any sale of all or any part of the Collateral, which would otherwise be payable or deliverable with respect to the Term Note Debt, shall be paid or delivered directly to the Agent for application (in the case of cash) to, or as collateral (in the case of securities or other property) for, the Obligations and Supplemental Term Loan Liabilities. (c) In the event that any payment or payments made to any Holder or CUSA with respect to any of the Obligations or Supplemental Term Loan Liabilities or otherwise made to the Agent for the benefit of the Holders or CUSA pursuant to the Loan Documents and/or this Agreement, or any part thereof, are subsequently invalidated, declared to be fraudulent or preferential, set aside or are required to be repaid to any trustee, receiver or any other Person under any bankruptcy statute, state or federal law, common law or equitable cause, then (i) to the extent of such payment or payments, the obligations or part thereof intended to be satisfied shall be revived and continued as part of the Obligations or Supplemental Term Loan Liabilities, as applicable, in full force and effect, as if such payment or payments had not been made and (ii) the Agent, the other Holders and CUSA, as applicable, shall continue to have all rights and benefits under the Loan Documents and this Agreement respecting the Collateral related to such revived obligations which shall constitute Obligations or Supplemental Term Loan Liabilities. (d) Notwithstanding anything herein or elsewhere to the contrary, until payment in full of the Obligations, no Grantor may use the Collateral or any part thereof, directly or indirectly, to acquire, purchase, repurchase, redeem, or otherwise make any prepayment (mandatory or voluntary) of any principal, premium, if any, or interest on any of the Term Note Debt without the prior written consent of the Agent, the other Holders and CUSA, which consent shall not be unreasonably withheld. (e) Notwithstanding anything herein or in any of the Term Note Debt Documents to the contrary, BofA agrees that, until Satisfaction of the Obligations, it will not exercise any rights or remedies against any of the Collateral as a result of any default with respect to the Term Note Debt owing to BofA, or otherwise, including, without limitation, as a result of any Grantor's failure to make a Permitted Payment. (f) Except for Permitted Payments received by BofA as and when permitted under this Agreement, should any payment or distribution of Collateral be received directly or indirectly by BofA from any Grantor upon or with respect to the Term Note Debt or any other obligations of any Grantor to BofA prior to Satisfaction of the Obligations, BofA shall receive and hold the same in trust, as trustee, for the benefit of Holders and CUSA, and shall forthwith deliver the same to the Agent, for the benefit of the Holders and CUSA, in precisely the form received (except for the endorsement or assignment of BofA where necessary), for application in accordance with the terms of the Loan Documents (in the case of cash) or to be held as part of the Collateral for (in the case of securities or other property) any of the Obligations and Supplemental Term Loan Liabilities, due or not due, and, until so delivered, the same shall be held in trust by BofA as the property of the Agent for the benefit of the Holders and CUSA. In the event of the failure of BofA to make any such endorsement or assignment to the Agent, the Agent, or any of its officers or employees, is hereby irrevocably authorized to make the same. 5 Notwithstanding the foregoing, unless BofA has actual knowledge that a payment purportedly made as a Permitted Payment hereunder was not in fact a Permitted Payment or shall have received notice from a Grantor or the Agent of the existence of any condition which would prohibit the receipt of such payment as a purportedly Permitted Payment by BofA hereunder within one year following the date any payment purportedly made as a Permitted Payment is received, BofA shall not be required to deliver the proceeds of such purportedly Permitted Payment to the Agent. (g) In any action or proceeding of the type referenced in clause (b) above, the Agent is hereby irrevocably authorized and empowered, in the Agent's discretion, to file, make and present for and on behalf of BofA such proofs of claims against any Grantor, if BofA has not filed the same 10 days before any applicable bar date, on account of all of any portion of the Term Note Debt and to vote such proofs of claims in issues of the Collateral in any such proceeding and to receive and collect any and all dividends or other payments or disbursements made in respect of Collateral in whatever form the same may be paid or issued and to apply the same on account of any of the Obligations and Supplemental Term Loan Liabilities. In voting such proofs of claim in any proceeding, the Agent may act in a manner consistent with the sole interests of the Holders and CUSA in respect of Collateral and shall have no duty to take any action to maximize BofA's recovery with respect to its claim. BofA authorizes the Agent to sell such property to such buyers in accordance with law on such terms as the Agent shall determine. BofA will execute and deliver to the Agent such powers of attorney, assignments and other instruments or documents, including notes and stock certificates (together with such assignments or endorsements as the Agent shall deem necessary), as may be requested by the Agent in order to enable the Agent to enforce any and all claims upon the Collateral deliverable at any time upon or with respect to the Term Note Debt, all for the Holders' and CUSA's own benefit for application in accordance with the terms hereof. After Satisfaction of the Obligations, the Agent will remit to BofA, in accordance with written directions from BofA, all dividends or other payments or distributions in respect of the Collateral paid to and held by the Agent and Holders in excess of the Obligations and Supplemental Term Loan Liabilities. SECTION 4. Bankruptcy Issues. BofA agrees that the Agent, the other Holders, and CUSA may consent to the use of cash collateral or provide financing to any Grantor on such terms and conditions and in such amounts as such Person, in its sole discretion, and the applicable court may decide and that, in connection with such cash collateral usage or such financing. Subject to applicable court orders, each Grantor (or a trustee appointed for the estate of any or all of them) may grant Liens to the Agent, other Holders or CUSA upon all assets of such Grantor, as applicable, which Liens (i) shall secure payment of all Obligations or Supplemental Term Loan Liabilities, as applicable (whether such Obligations or Supplemental Term Loan Liabilities arose prior to the filing of the petition for relief or arise thereafter); and (ii) shall be superior in priority to the Liens, if any, held by BofA on the assets of such Grantor. All allocations of payments constituting Collateral between the Holders and/or CUSA and BofA shall, subject to any court order, continue to be made after the filing of a petition under the Bankruptcy Code on the same basis that the payments were to be allocated prior to the date of such filing. BofA agrees that it will not object to or oppose a sale or other disposition of any assets securing the Obligations or Supplemental Term Loan Liabilities (or any portion thereof) free and clear of Liens or other claims of BofA under Section 363 of the Bankruptcy Code or any 6 other provision of the Bankruptcy Code if the Agent, the other Holders, CUSA and the applicable court have consented to such sale or disposition of such assets. For purposes of Satisfaction of the Obligations and applying payments or proceeds of Collateral to the Obligations and Supplemental Term Loan Liabilities, the Obligations and Supplemental Term Loan Liabilities shall be deemed to include, without limitation, all interest, fees, and other amounts to be paid on any of the Obligations or Supplemental Term Loan Liabilities pursuant to the terms of any Loan Document regardless of whether any such interest, fees or other amounts are or would be recognized or allowed as a claim in any bankruptcy or similar proceeding. SECTION 5. Waivers of BofA. (a) All of the Obligations and Supplemental Term Loan Liabilities shall be deemed to have been made or incurred in reliance upon this Agreement. BofA expressly waives (i) all notice of the acceptance by the Agent, the other Holders and CUSA of the lien subordination and other provisions of this Agreement, (ii) all other notices not specifically required pursuant to the terms of this Agreement whatsoever, and (iii) reliance by the Agent, the other Holders and CUSA upon the lien subordination and other agreements as herein provided. BofA agrees that it will not interfere with or in any manner oppose a disposition of any assets securing the Obligations or Supplemental Term Loan Liabilities by the Agent, other Holders or CUSA. BofA agrees that neither the Holders nor CUSA has made any warranties or representations with respect to the due execution, legality, validity, completeness or enforceability of the Loan Documents, or the collectability of the Obligations or Supplemental Term Loan Liabilities, that the Holders shall be entitled to manage and supervise the Obligations and that CUSA shall be entitled to manage and supervise the Supplemental Term Loan Liabilities in accordance therewith, modified from time to time as the Holders or CUSA, as applicable, deem appropriate under the circumstances, and in accordance with applicable law, without regard to the existence of any rights that BofA may now or hereafter have in or to any of the assets of any Grantor, and that neither the Holders nor CUSA shall have any liability to BofA for, and waives any claim which BofA may now or hereafter have against, any Holder or CUSA arising out of any and all actions which such Holder, CUSA, or the Agent, on its behalf, in good faith, takes or omits to take (including, without limitation, actions with respect to the creation, perfection or continuation of liens or security interests in the Collateral and other security for the Obligations and Supplemental Term Loan Liabilities, actions with respect to the occurrence of an Event of Default or Potential Event of Default, actions with respect to the foreclosure upon, sale, release, or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the Obligations or Supplemental Term Loan Liabilities from any account debtor, guarantor or any other party) with respect to the Loan Documents or Supplemental Term Loan Note, or any other agreement related thereto, or to the collection of the Obligations or Supplemental Term Loan Liabilities, or the valuation, use, protection or release of the Collateral and/or other security for the Obligations and Supplemental Term Loan Liabilities. (b) BofA agrees that (i) it will not take or cause to be taken any action, the purpose or effect of which is to make any security interest securing the Term Note Debt pari passu with, or to give BofA any preference or priority relative to, any security interest securing the Obligations or Supplemental Term Loan Liabilities; (ii) it will not interfere with, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Collateral by the Agent, any other Holder or CUSA or any action taken by or 7 on behalf of the Agent, any other Holder or CUSA permitted to be taken by it pursuant to the Loan Documents; (iii) it will have no right to (A) direct the Agent, any other Holder or CUSA to exercise any right, remedy or power with respect to the Collateral or pursuant to the Loan Documents or (B) consent to the exercise by the Agent, any other Holder, or CUSA of any right, remedy or power with respect to the Collateral or pursuant to the Loan Documents; (iv) it will not institute any suit or assert in any suit, Bankruptcy Proceeding or other proceeding any claim against the Agent, any other Holder or CUSA seeking damages from or other relief by way of specific performance, instructions or otherwise, with respect to, and none of the Agent, any other Holder or CUSA shall be liable for, any action taken or omitted to be taken by the Agent, such other Holder or CUSA with respect to the Collateral or pursuant to the Loan Documents; (v) until the Satisfaction of the Obligations, it will not make any judicial or non-judicial claim or demand or commence any judicial or non-judicial proceedings against any Grantor under or with respect to the Collateral Documents or Second Collateral Documents Amendment seeking payment or damages from or other relief by way of specific performance, instructions, or otherwise under or with respect to the Collateral Documents or Second Collateral Documents Amendment (other than the filing of a proof of claim as and to the extent permitted herein) or exercise any right, remedy or power under or with respect to, or otherwise take any action to enforce, other than filing of a proof of claim as and to the extent permitted herein, any Collateral Document or the Second Collateral Documents Amendment; (vi) until the Satisfaction of the Obligations, it will not commence judicial or non-judicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of any Collateral, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its interest in or realize upon, the Collateral or pursuant to the Collateral Documents or Second Collateral Documents Amendment; (vii) it will not seek, and hereby waives any right, to have the Collateral or any part thereof marshaled upon any foreclosure or other disposition of the Collateral, and (viii) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement or any Loan Document or the validity, perfection, priority or enforceability of security interests securing the Obligations or Supplemental Term Loan Liabilities. SECTION 6. Enforcement. To the extent permitted by law, the right of the Agent, other Holders and CUSA to enforce the lien subordination provisions and any other provisions hereof shall not in any way be prejudiced or impaired by any act or failure to act on the part of the Agent, any other Holder, any Grantor or CUSA, or by any noncompliance by any Grantor or BofA with the terms, provisions and covenants of this Agreement. SECTION 7. Agent's, Holders' and CUSA's Rights; Certain Duties. (a) Without notice to BofA and without affecting or releasing any obligation or agreement of BofA under this Agreement, the Agent, the other Holders, and CUSA may at any time or times do any of the following with respect to any of the Obligations or Supplemental Term Loan Liabilities: (i) waive or rescind any Potential Event of Default, Event of Default or other default, (ii) exercise any rights or remedies with respect to the Obligations or Supplemental Term Loan Liabilities, (iii) amend, modify, alter or waive any of the terms of any of the Loan Documents, (iv) renew or extend the time for payments of all or any part of the Obligations or Supplemental Term Loan Liabilities, (v) increase or decrease the amount of the Obligations or Supplemental 8 Term Loan Liabilities, (vi) accept additional collateral security or guaranties for all or any part of the Obligations or Supplemental Term Loan Liabilities and sell, exchange, fail to perfect, release or otherwise deal with all or any part of any such collateral or guaranties in connection with a sale or other disposition, (vii) release any party primarily or secondarily obligated on the Obligations or Supplemental Term Loan Liabilities, (viii) grant indulgences and take or refrain from taking any action with regard to the collection or enforcement of all or any part of the Obligations or Supplemental Term Loan Liabilities, and (ix) take any action which might otherwise give rise to any claim by BofA. Nothing in this Agreement shall impair any right of the Agent, any other Holder or CUSA with respect to any of the Obligations or Supplemental Term Loan Liabilities or any collateral security or guaranties therefor or the proceeds thereof. (b) The Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with such Collateral in the same manner as it customarily deals with similar collateral of other parties held by it. (c) The Agent shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties contained in the Collateral Documents by any of the Grantors, all of which are made solely by the Grantors. The Agent makes no representations as to the value or condition of the Collateral or any part thereof, or as to the title of the Grantors thereto, or as to the security afforded by the Collateral Documents, the Second Collateral Documents Amendment, or this Agreement or as to the validity, execution (except its own execution thereof), enforceability, legality or sufficiency of the Collateral Documents or the Second Collateral Documents Amendment or of the Obligations or Supplemental Term Loan Liabilities and shall incur no liability or responsibility with respect to any such matters. The Agent shall not be responsible for insuring the Collateral or for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral. (d) The Agent shall not be required to ascertain or inquire as to the performance by any Grantor or any other Person of any of the covenants or agreements contained in any Collateral Document or the Second Collateral Documents Amendment. (e) The Agent shall not be personally liable for any action taken or omitted to be taken by it in accordance with this Agreement, any Collateral Document or the Second Collateral Documents Amendment, except for such actions or omissions that constitute gross negligence or willful misconduct by the Agent. BofA hereby acknowledges that the Agent and its affiliates have made and may hereafter make credit extensions to, accept deposits from and generally engage in business with the Grantors and agree that the Agent and its affiliates may continue to do so as though the Agent were not acting as agent with respect to the Collateral under and to the extent described in the Second Collateral Documents Amendment. With respect to any Obligations or Supplemental Term Loan Liabilities owing to it, the Agent, in its individual capacity as a Holder and as a holder of the Warrant, shall have the same rights and powers under this Agreement as any other Holder and may exercise the same as though it were not the Agent with respect to the Collateral. 9 (f) The Agent may rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document which it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of telecopies and telexes, to have been sent by the proper party or parties. The Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to it and conforming to the requirements of this Agreement, the Collateral Documents or Second Collateral Documents Amendment. The Agent may consult with counsel, and any opinion of such counsel (whether in-house counsel or independent outside counsel) shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in accordance therewith. (g) The Agent shall not be under any obligation to BofA to exercise any of the rights or powers vested in the Agent by this Agreement, the Collateral Documents or Second Collateral Documents Amendment, unless it shall have been provided adequate security and indemnity against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction, including, without limitation, such reasonable advances as may be requested by the Agent. SECTION 8. Representations and Warranties of BofA. BofA represents and warrants to the Agent for the benefit of itself and other Holders and to CUSA that each of the following statements are true and correct in all material respects: (a) BofA has not previously assigned any interest in the Term Note Debt owing to it or any security interest in connection therewith, that no other party owns an interest in such Term Note Debt or security therefor other than BofA (whether as joint holders of such Term Note Debt, participants or otherwise) and that all of such Term Note Debt is owing only to BofA. (b) The Indebtedness owing to BofA under the BofA Note as of the date hereof constitutes, as of the date hereof, all of the now existing liabilities of any nature whatsoever of the Grantors to BofA under the Term Note Debt Documents. To the knowledge of BofA, there is no event of default or default existing which with the giving of notice, passage of time or both would constitute an event of default under the Term Note Debt Documents. (c) This Agreement has been executed and delivered by or on behalf of BofA and constitutes the legal, valid and binding obligation of BofA, enforceable in accordance with its terms subject to bankruptcy, insolvency, moratorium and other laws affecting creditors' rights generally and equitable principles. SECTION 9. Covenants. (a) BofA agrees it will not accept any collateral security from the Grantors for any Term Note Debt, except to the extent provided in the Second Collateral Documents Amendment and subject to the terms of this Agreement, without the prior written consent of the Holders and CUSA. (b) BofA covenants that all Term Note Debt and collateral therefor shall be and continue to be held solely for the benefit of BofA, its successors and assigns, until the Satisfaction of the Obligations, unless otherwise consented to by the Holders and CUSA or 10 unless the transferee agrees to be bound by the terms of this Agreement. BofA may assign or transfer the Term Note Debt and the collateral therefore, subject to the assumption of all of the terms and provisions of this agreement, only to (a) any affiliate of BofA, (b) the Federal Reserve Bank, and (c) any commercial bank, financial institution or other institutional "accredited investor" (as defined in Regulation D of the Securities Act of 1933, as amended) with the prior written consent of the Agent and CUSA; provided, that in the case of such assignment or transfer to an affiliate of BofA or to the Federal Reserve Bank no consent of the Agent or CUSA shall be required, and provided, further, that in the case of an assignment to a commercial bank, financial institution or other institutional accredited investor the consent of the Agent and CUSA to such transfer shall not be unreasonably withheld. Notwithstanding the foregoing, in no event shall BofA, or its successors or assigns, be permitted to assign or transfer or assign the Term Note Debt and the collateral therefore directly or indirectly to any person who is, or is affiliated with, an "insider" (as defined in 11 U.S.C. 101(31)) of any Borrower or any Guarantor or Grantor. (c) Promptly upon obtaining knowledge thereof, BofA shall deliver written notice to the Agent of the occurrence of an event of default or default which with the giving of notice, passage of time or both would constitute an event of default existing under the Term Note Debt Documents, together with a description of the nature thereof. (d) BofA shall not initiate or prosecute or encourage any other Person to initiate or prosecute any claim, action or other proceeding (i) challenging the enforceability or priority of the Agent, other Holders' or CUSA's respective claims to the Collateral, or (ii) challenging the enforceability or priority of any liens or security interests in the Collateral other than in connection with a breach by the Agent, any Holder or CUSA of its obligations hereunder. (e) BofA hereby agrees to pay, indemnify and hold the Agent harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the Collateral Documents on behalf of BofA, and the Second Collateral Documents Amendment on behalf of BofA. Notwithstanding the foregoing, the Agent shall not be indemnified under this clause to the extent such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent. SECTION 10. Continuing Nature of Agreement. This Agreement shall be effective and may not be terminated or otherwise revoked by BofA until the Satisfaction of the Obligations. In the event BofA shall have any right under applicable law otherwise to terminate or revoke this Agreement which right cannot be waived, such termination or revocation shall not be effective until written notice of such termination or revocation, signed by BofA, is actually received by the Agent in accordance with the notice provisions of this Agreement set forth in Section 14. In the absence of the circumstances described in the immediately preceding sentence, this is a continuing agreement as to the lien subordination and other provisions hereof and the Agent and other Holders may continue, at any time and without notice to BofA, to extend credit or other financial accommodations and loan monies to or for the benefit of the Grantors on the faith hereof. Any termination or revocation described hereinabove shall not affect this Agreement in relation to (a) any of the Obligations or Supplemental Term Loan 11 Liabilities which arose prior to receipt thereof or (b) any of the Obligations or Supplemental Term Loan Liabilities created after receipt thereof, if such Obligations or Supplemental Term Loan Liabilities were incurred for the purpose of protecting any collateral or in respect of enforcement costs, expenses, and attorneys' and paralegals' fees, whensoever made, advanced or incurred by the Holders or CUSA in connection with the Obligations or Supplemental Term Loan Liabilities. If, in reliance on this Agreement, any Holder or CUSA makes loans or other advances to or for the benefit of the Grantors or takes other action under the Loan Documents after such aforesaid termination or revocation by BofA but prior to the receipt by the Agent of said written notice as set forth above, the rights of the Agent, the other Holders and CUSA hereunder shall be the same as if such termination or revocation had not occurred. SECTION 11. Subrogation. After the Satisfaction of the Obligations, BofA shall be subrogated to the rights of the Holders and CUSA to receive payments or distributions of cash, property or securities of the Grantors in respect of the Collateral applicable to the Obligations and Supplemental Term Loan Liabilities until the obligations and liabilities under the Term Note Debt Documents shall be paid in full, and, for the purposes of such subrogation, no payments or distributions to the Holders or CUSA of any cash, property or securities to which BofA would be entitled except for the provisions of this Agreement, and no payment over pursuant to the provisions of this Agreement to the Holders or CUSA by BofA shall, as among the Grantors, their respective creditors other than the Holders and CUSA, and BofA, be deemed to be a payment by the Grantors to or on account of the Obligations or Supplemental Term Loan Liabilities. SECTION 12. Remedies; Severability. (a) The Agent's, other Holders' and CUSA's rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies which the Agent, other Holders or CUSA may have under any other agreement, by operation of law or otherwise. (b) If any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). SECTION 13. Execution in Counterparts; Binding Effect. (a) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. (b) This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and each of the Holders and their respective successors and assigns, and nothing herein or in the Collateral Documents or Second Collateral Document Amendment is intended or shall be construed to give any other person any right, remedy or claim under, to or in respect of this Agreement or the Collateral. 12 (c) Upon this Agreement becoming effective, the terms and provisions of the Predecessor Intercreditor Agreement shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of this Agreement. This Agreement shall not constitute a novation with respect to the Predecessor Intercreditor Agreement. SECTION 14. Notices. All notices, requests, demands and other communications provided for or permitted hereunder shall be in writing (including telecopy or e-mail communications) and shall be sent by mail, telecopier, hand delivery or e-mail delivery as follows: (a) if to Agent, at its address at 388 Greenwich Street, 19th Floor, New York, New York 10013, Attn: Keith R. Gerding, Telecopy No. 212 ###-###-####, e-mail address: ***@***, with a copy to Sidley Austin Brown & Wood, Bank One Plaza, 10 South Dearborn Street, Chicago, Illinois 60603, Attn: Michael D. Wright, Telecopy No. 312 ###-###-####, e-mail address: ***@*** (b) if to CUSA, at its address at 388 Greenwich Street, 19th Floor, New York, New York 10013, Attn: Keith R. Gerding, Telecopy No. 212 ###-###-####, e-mail address: ***@***, with a copy to Sidley Austin Brown & Wood, Bank One Plaza, 10 South Dearborn Street, Chicago, Illinois 60603, Attn: Michael D. Wright, Telecopy No. 312 ###-###-####, e-mail address: ***@*** (c) if to BofA, at its address at 700 Louisiana, 6th Floor, Houston, Texas 77002, Attn: Samantha Kennedy, Telecopy No. 713 ###-###-####, e-mail address: ***@*** with a copy to Porter & Hedges, L.L.P., 700 Louisiana, Suite 3500, Houston, Texas 77002, Attn: Neal M. Kaminsky, Telecopy No. 713 ###-###-####, e-mail address: ***@*** or, in each instance, at such other address as shall be designated by it in a written notice to the other party to this Agreement. All such notices, requests, demands and communications shall be deemed to have been duly given or made, if sent by mail, five (5) days after deposit (as evidenced by the postmark appearing thereon) in the U.S. mails, postage prepaid; if sent by telecopy or e-mail, as of the time of such telecopy or e-mail transmission; and, if delivered by hand, when so delivered. SECTION 15. Governing Law; Consent to Jurisdiction. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (b) Each of the parties hereto hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, any Collateral Document or the Second Collateral Documents Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that, to the extent permitted by applicable law, all claims in respect of any such action or proceeding may be heard and 13 determined in such New York State or, to the extent permitted by law, Federal court. Each of the parties hereto agrees 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. (c) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of our relating to this Agreement in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each of the parties hereto irrevocably consents to service of process in the manner provided for notices in Section 14. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. (e) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 16. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the date first above written. CITICORP USA, INC., CITICORP USA, INC., as Agent as holder of the Warrant By /s/ Keith R. Gerding By /s/ Keith R. Gerding ---------------------------- ---------------------------- Keith R. Gerding Keith R. Gerding Vice President Vice President BANK OF AMERICA, N.A. By /s/ Samantha Kennedy ---------------------------- Samantha Kennedy Vice President 15 Acknowledged and agreed as of the 12th day of July, 2002. AVIATION SALES DISTRIBUTION SERVICES COMPANY AEROCELL STRUCTURES, INC. AVS/M-2, INC. WHITEHALL CORPORATION TRIAD INTERNATIONAL MAINTENANCE CORPORATION AVS/M-3, INC. AIRCRAFT INTERIOR DESIGN, INC. AVS/CAI, INC. AVIATION SALES COMPANY AVIATION SALES LEASING COMPANY TIMCO ENGINE CENTER, INC. AVS/M-1, INC. AVIATION SALES PROPERTY MANAGEMENT CORP. HYDROSCIENCE, INC. AVSRE, L.P. By Aviation Sales Property Management Corp., as general partner TIMCO ENGINEERED SYSTEMS, INC. By /s/ Timothy D. Nolan -------------------------------- Timothy D. Nolan Treasurer LJH, LTD. JAMES INVESTMENTS, INC. By DHL Management, L.L.C. General Partner By /s/ Lacy J. Harber By /s/ Robert Alpert -------------------------------- ------------------- Lacy J. Harber Robert Alpert President President /s/ Don A. Sanders - ---------------------------------- Don A. Sanders 16
