EXHIBIT 99.2
FIRST MODIFICATION TO LOAN AGREEMENT
By this First
Modification to Loan Agreement ("First Modification") made
and entered into as of the ____ day of
October, 2005, GLOBAL AIRCRAFT SOLUTIONS,
INC., FKA RENEGADE VENTURE CORPORATION, a
Nevada corporation, whose address is
P.O. Box 23009, Tucson, Arizona 85734-3009,
WORLD JET CORPORATION, a Nevada
corporation, whose address is P.O. Box
23009, Tucson, Arizona 85734-3009, and
HAMILTON AEROSPACE TECHNOLOGIES, INC., a
Delaware corporation, whose address is
P.O. Box 23009, Tucson, Arizona 85734-3009
(collectively, "Borrower"), and
[CONFIDENTIAL PORTION DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] BANK, a banking
corporation organized and existing under
the laws of the State of Wisconsin
("Lender"), whose address is c/o Commercial
Loan Department, for and in consideration
of the recitals and mutual promises
contained herein, confirm and agree as
follows:
SECTION 1. RECITALS
1.1 Lender and
Borrower have entered into that certain Loan Agreement (the
"Initial Loan Agreement"), dated as of the
5th day of May, 2005 (the Initial
Loan Agreement as modified, including the
modifications contained in this First
Modification, is referred to herein as the
"Loan Agreement"), and Lender and
Borrower wish by this First Modification to
amend the Loan Agreement, and
certain other Loan Documents, as provided
herein.
SECTION 2. DEFINITIONS
2.1 Capitalized Terms. The
capitalized terms used in this First
Modification shall have the meanings given
to them in the Initial Loan
Agreement, unless otherwise defined herein
or unless the context dictates
otherwise. Section 2 of the Initial Loan
Agreement is deleted and replaced with
the following:
"2.1 Accounts: All trade accounts, accounts receivable, or
other
rights to
payment for goods sold or services rendered owing to Borrower,
including any
rights to payment under any rental or lease agreements for
the rental or
lease of equipment entered into in the ordinary course of
Borrower's
business. "Accounts" shall not include depository accounts of
Borrower.
2.2 Account
Debtor: Any person or entity obligated on any of the Accounts.
2.3 Advance: An
individual disbursement under a Loan; disbursements are
collectively called "Advances".
2.4 Affiliate:
Any person or entity (i) that directly or indirectly
controls, or is controlled by, or is under
common control with, Borrower; (ii)
that directly or indirectly beneficially
owns or holds five percent (5%) or more
of any class of voting stock of Borrower;
(iii) five percent (5%) or more of the
voting stock of which entity is directly or
indirectly beneficially owned or
held by Borrower or by a shareholder or
member of Borrower; (iv) that is an
officer, director or partner of Borrower;
(v) of which another Affiliate is an
officer, director or partner; or (vi) who
is related by blood, adoption, or
marriage to another Affiliate. The term
"control" means the possession, directly
or indirectly, of the power to direct or
cause the direction of the management
and policies of an entity, whether through
the ownership of voting securities,
by contract, or otherwise.
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2.5 Borrower:
Global Aircraft Solutions, Inc., fka Renegade Venture
Corporation, a Nevada corporation, World
Jet Corporation, a Nevada corporation,
and Hamilton Aerospace Technologies, Inc.,
a Delaware corporation.
2.6 Borrowing
Base: As defined in Section 3.4 hereof.
2.7 Business
Day: Any day other than a Saturday, Sunday or public holiday.
In addition to the foregoing, any other day
when commercial banks in Arizona are
authorized or required to close shall not
constitute a Business Day.
2.8 Closing: The
satisfaction of all of the conditions precedent set forth
in Section 6 hereof and the consummation of
all of the loan transactions
contemplated by this Loan Agreement.
2.9 Closing
Date: The date, on or before May 15, 2005, on which the Closing
occurs, or such later date as is approved
by Lender in its sole discretion.
2.10 Collateral:
All property encumbered by the Security Documents as
security for the Indebtedness and
Obligations.
2.11
Consolidated Group: Borrower and Johnstone Softmachine
Corporation.
2.12 Current
Condition Appraised Value: As defined in Section 3.A.4(a)
hereof.
2.13 Debt
Subordination Agreements: As defined in Section 5.4 hereof.
2.14 Eligible
Accounts: As defined in Section 3.4 hereof.
2.15 Eligible
Aircraft: As defined in Section 3.A.4(a) hereof.
2.16 Eligible
Inventory: As defined in Section 3.4 hereof.
2.17
Environmental Law: Any federal, state or local statute, ordinance,
or
regulation pertaining to the environment,
including, without limitation, the
Comprehensive Environmental Response,
Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"); the Resource
Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901, et seq. ("RCRA");
the Arizona Environmental Quality Act,
Title 49, Arizona Revised Statutes; any
statute, ordinance or regulation pertaining
to such matters in any other state
or jurisdiction in which Borrower has any
interest in real property or transacts
any business; and all rules adopted and
guidelines promulgated pursuant to all
of the foregoing.
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2.18 ERISA: The
Employee Retirement Income Security Act of 1974, as amended
and as in effect from time to time.
2.19 Event of
Default: As defined in Section12.1 hereof.
2.20 Facility:
Any real property and improvements (i) owned or occupied by
Borrower in the conduct of its business, or
(ii) upon which any Collateral is
located.
2.21 GAAP. Those
generally accepted accounting principles and practices
that are recognized as such by the American
Institute of Certified Public
Accountants acting through its Accounting
Principles Board or by the Financial
Accounting Standards Board or through other
appropriate boards or committees
thereof and which are consistently applied
for all periods after the date
thereof so as to properly reflect the
financial condition, and the results of
operations and changes in the financial
position, of Borrower.
2.22 Guarantor:
Intentionally omitted.
2.23 Guidance
Line of Credit. As defined in Section 3.A.1 hereof.
2.24 Guidance
Line of Credit Note. As defined in Section 3.A.2 hereof.
2.25 Hazardous
Substance: Includes:
(a) those substances included within the definitions of
"hazardous
substances,"
"hazardous materials," "toxic substances," or "solid waste" in
CERCLA, RCRA,
and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et
seq., and in the regulations promulgated pursuant thereto;
(b) those substances defined as "hazardous substances" in
A.R.S.
Section 49-201
and in rules adopted or guidelines promulgated pursuant
thereto;
(c) those substances listed in the United States Department of
Transportation
Table (49 CFR 172.101 and amendments thereto) or by the
Environmental
Protection Agency as hazardous substances (40 CFR Part 302
and amendments
thereto); and
(d) all other substances, materials and wastes that are, or
that
become,
regulated under, or that are classified as hazardous or toxic
under, any
Environmental Law.
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2.26 Improved
Condition Appraised Value: As defined in Section 3.A.4(a)
hereof
2.27
Indebtedness: The total outstanding indebtedness owed Lender by
Borrower from time to time, including
without limitation the indebtedness owing
under or in connection with any Loan,
including principal and interest accrued
but not previously paid.
2.28 Landlord
Consent: An agreement in form acceptable to Lender, signed by
the landlord of a Facility, subordinating
all lien rights and other rights in
the Collateral, to Lender, giving Lender
notice of a default under the lease for
the Facility, and giving Lender the right
to enter the Facility and remove the
Collateral.
2.29 Lender:
[CONFIDENTIAL PORTION DELETED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] Bank, a
banking corporation organized and
existing under the laws of the State of
Wisconsin.
2.30 Line of
Credit: As defined in Section 3.1 hereof.
2.31 Line of
Credit Note: As defined in Section 3.2 hereof.
2.32 Letter of
Credit Facility As defined in Section 3.B.1 hereof.
2.33 Loan
Documents. This Agreement, the Notes, the Security Documents,
and
all other documents now or hereafter
executed or delivered in connection with or
in any way related to the Indebtedness, the
Obligations, or any Loan, or any
portion thereof.
2.34 Loan(s):
The Line of Credit and any other loan now or hereafter
extended to Borrower by Lender, severally
and collectively, including, without
limitation, the Guidance Line of Credit and
each Letter of Credit Facility.
2.35 Material
Adverse Effect: Any event or condition that either (i) would
have a material adverse effect upon the
validity, performance or enforceability
of this Agreement, or any of the other Loan
Documents, (ii) is material and
adverse to a material portion of the
Collateral, any Facility, the financial
condition, credit or business operations or
prospects of Borrower or Guarantor,
(iii) would materially impair the ability
of Borrower or Guarantor to fulfill
its obligations under this Agreement, or
any of the other Loan Documents, or
(iv) causes an Event of Default or an event
or condition that with notice or
lapse of time or both, would become an
Event of Default.
2.36 Note(s):
The Line of Credit Note, the Guidance Line of Credit Note,
and any notes executed in furtherance of
any other Loan, severally and
collectively.
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2.37
Obligations: Any and all of the representations, warranties,
covenants
and other obligations made or undertaken by
Borrower in this Agreement, any Note
or in any of the other Loan Documents.
2.38 PBGC: The
Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions
under ERISA.
2.39 Plan: Each
pension, profit sharing, stock bonus, thrift, savings, and
employee stock ownership plan established
or maintained, or to which
contributions have been made, by Borrower
or any trade or business which
together with the Borrower would be treated
as a single employer under ERISA.
2.40
Intentionally Omitted.
2.41 Principal
Indebtedness: The principal portion of the Indebtedness.
2.42 Prohibited Liens/Approved
Liens: "Prohibited Liens" are any liens,
security interests or encumbrances against
the Collateral except: (i) liens and
security interests granted to Lender; (ii)
other liens, security interests and
encumbrances approved in writing by Lender,
or those described in Schedule 2.40,
attached, if any; and (iii) the lien of
taxes and assessments not past due or
delinquent. "Approved Liens" are those
liens listed in items (i) through (iii)
in the preceding sentence.
2.43 Proposed
Improvements As defined in Section 3.A.4(b) hereof.
2.44 Purchase
Agreement: As defined in Section 3.A.4(a) hereof.
2.45 Readvance:
An individual disbursement under the Line of Credit, any
Letter of Credit Facility, or Guidance Line
of Credit that is made from
available funds that were previously
advanced and repaid by Borrower; such
disbursements are collectively called
"Readvances."
2.46
Registration: As defined in Section 3.A.4(g) hereof.
2.47 Release:
Any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping,
leaching, disposing or dumping.
2.48 Security
Documents: The documents required by Section 6 of this Loan
Agreement and any and all other documents
or instruments now or hereafter
executed by Borrower or any other party to
secure the payment of the
Indebtedness or the performance of the
Obligations, or any portion thereof."
SECTION 3. MODIFICATIONS
3.1 Amount of
Line of Credit. The words and figure "TWO MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS
($2,500,000.00)" as they appear in
Paragraphs 1.1 and 3.2 of the Initial Loan
Agreement, and in the first paragraph
of the Revolving Line of Credit Note on
page one, are deemed changed to read:
"FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00)". The figure "$2,500,000.00" as
it appears at the top of page one of the
Revolving Line of Credit Note is deemed
changed to read: "$5,000,000.00". Paragraph
3.1 of the Initial Loan Agreement is
deleted and replaced with the
following:
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"3.1 Line of Credit. Subject to the conditions herein set
forth,
Lender agrees to
loan to or for the benefit of Borrower, and Borrower
agrees to draw
upon and borrow, in the manner and upon the terms and
conditions
herein expressed, amounts that shall not exceed at any time the
lesser of (i)
the "Borrowing Base" or (ii) the difference between (a) FIVE
MILLION AND
NO/100 DOLLARS ($5,000,000.00) and (b) the total amount of all
Letters of
Credit Facilities outstanding or which Lender is obligated to
provide (the
"Line of Credit")."
3.2 Maturity
Date of Line of Credit. The date "April 30, 2006" as it
appears in Paragraph 3.7 of the Initial
Loan Agreement, and as it appears in
Paragraph B on page one of the Revolving
Line of Credit Note, is deemed changed
to read: "October 31, 2007".
3.3 Interest
Rate on Line of Credit. The words and figure "three and one
half (3.50%)" as they appear in Paragraph A
on page one of the Revolving Line of
Credit note are deemed changed to read:
"three percent (3.00%)".
3.4 Foreign
Accounts. The period at the end of paragraph 3.4 (c) of the
Initial Loan Agreement s deleted and the
following is deemed inserted therein:
", unless (and then only for so long as)
the Account arises out of work and
materials performed on an aircraft, the
aircraft remains in the possession of
Borrower at a Facility in Tucson, Arizona
until collected funds are received by
Borrower as payment in full of the Account,
and Borrower retains the right under
Arizona law to a valid lien upon the
aircraft in the amount of the Account until
collected funds are received by Borrower as
payment in full of the Account.
3.5 Eligible
Inventory. The figure "$1,000,000.00" as it appears in line
five of Paragraph 3.4 of the Initial Loan
Agreement is deemed changed to read
"$2,500,000.00." Eligible Inventory does
not include any Eligible Aircraft
against which funds have been advanced
under the Guidance Line of Credit.
3.6 Tangible Net
Worth. The figure "$5,000,000.00" as it appears in
Paragraph 10.6 of the Initial Loan
Agreement is deemed changed to read
"$7,000,000.00".
3.7 Guidance
Line. The following is deemed inserted in the Initial Loan
Agreement as Section 3.A:
"SECTION 3.A GUIDANCE LINE OF CREDIT
3.A.1 Guidance
Line of Credit. Subject to the conditions herein set forth,
Lender and Borrower hereby establish the
parameters for a guidance line of
credit which will at no time exceed SEVEN
MILLION AND NO/100 DOLLARS
($7,000,000.00) (the "Guidance Line of
Credit").
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3.A.2 Guidance
Line of Credit Note. The Guidance Line of Credit shall be
evidenced by a Promissory Note in the form
attached as Schedule 3.A.2 (the
"Guidance Line of Credit Note") of
Borrower, executed and delivered in the
amount of SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00), payable to Lender
upon the terms and conditions contained
therein and herein. Borrower
acknowledges and agrees that the interest
rate contracted for in the Guidance
Line of Credit Note includes the interest
rate set forth therein and any other
charges, fees, costs and expenses incident
to the Guidance Line of Credit paid
by Borrower to the extent that the same are
deemed interest under applicable
law.
3.A.3 Advances.
If access is permitted to the Guidance Line of Credit by
Lender, Advances may be made to Borrower,
repaid by Borrower (subject to the
limitations contained herein), and
Readvances made to Borrower upon the same
terms and conditions as are required for
Advances hereunder, provided that there
shall be no Advance or Readvance that would
cause the outstanding principal
balance of the Guidance Line of Credit to
exceed the limitations of Section
3.A.1 hereof. BORROWER SHALL HAVE NO RIGHT,
EXPLICIT OR IMPLIED, TO RECEIVE, AND
LENDER SHALL HAVE NO OBLIGATION TO MAKE,
ANY ADVANCES UNDER THE GUIDANCE LINE OF
CREDIT. WHETHER OR NOT AN ADVANCE IS MADE
SHALL BE IN LENDER'S SOLE AND ABSOLUTE
DISCRETION.
3.A.4 Conditions
Precedent. If Borrower requests an Advance and if Lender
(in its sole discretion) agrees in writing
to an Advance, an Advance will be
made if, and only if, all of the following
conditions precedent are met when the
Advance is requested:
(a) Borrower shall have identified for
purchase by Borrower an aircraft
(an "Eligible Aircraft") which (i) will upon the purchase by
Borrower
be owned by Borrower free and clear of all claims, liens and
encumbrances, other than any security interests of Lender, (ii) has
an
appraised value (the "Current Condition Appraised Value"),
acceptable
to Lender established by an appraiser acceptable to Lender and
an
appraiser which specializes in aviation asset evaluation, (iii) is
not
and will not be included as Inventory for purposes of calculating
the
Borrowing Base, (iv) has not had and will not have labor or
materials
supplied to it which have given or will give rise to an
Eligible
Account for purposes of calculating the Borrowing Base, (v) has
an
appraised value (the "Improved Condition Appraised Value")
acceptable
to Lender, established by an appraiser acceptable to Lender and
an
appraiser which specializes in aviation asset evaluation,
appraising
what the value will be after the Proposed Improvements have been
made,
(vi) will be held until the Advance or Readvance requested in
connection therewith has been repaid to Lender in full at a
Facility
for which Lender has received all Landlord Consents it requires,
(vii)
is the subject of a fully executed purchase agreement (the
"Purchase
Agreement") in form and content and with a buyer satisfactory
to
Lender, wherein the buyer has agreed to purchase the Eligible
Aircraft
after the Proposed Improvements are made, for a purchase price of
not
less than the Improved Condition Appraised Value and with a
required
down payment upon the signing of the Purchase Agreement of not
less
than twenty-five percent (25%) of the purchase price, and (viii)
is
otherwise satisfactory to Lender.
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(b) Borrower shall have provided
Lender with an itemization of all labor
and materials Borrower (i) is required to supply to the
Eligible
Aircraft pursuant to the Purchase Agreement, and (ii) otherwise
intends to supply to the Eligible Aircraft (the "Proposed
Improvements"), together with a breakdown of all costs
associated
therewith, and the cost of delivery of the Eligible Aircraft to
Borrower and to the ultimate purchaser, all in form and content
satisfactory to Lender.
(c) The amount of the requested
Advance cannot exceed seventy-five percent
(75%) of the lesser of: (i) Borrower's cost of the Eligible
Aircraft
and Borrower's cost of the Proposed Improvements, or (ii) the
Improved
Condition Appraised Value.
(d) Lender shall have received (i) an
Aircraft Security Agreement in the
form attached hereto as Schedule 3.A.4(d), which grants to Lender
a
valid lien on the Eligible Aircraft, subject to no other claims,
liens
or encumbrances, properly perfected, and (ii) if requested by
Lender,
a specific assignment of Lender's rights under the Purchase
Agreement,
acknowledged by
the buyer, in form acceptable to Lender.
(e) Lender shall have been paid a loan
fee in an amount equal to one
percent (1%) of the amount of the requested Advance, provided,
however, once Borrower has paid under this subparagraph
cumulative
loan fees of $52,500.00 (i.e., after Advances totaling
$5,250,000.00),
no further loan fees will be due under this subparagraph.
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(f) There shall exist no Event of
Default and no event or condition which
with the lapse of time or the giving of notice or both would result
in
an Event of Default.
(g) Borrower shall have obtained and
delivered to Lender the following
items, all of which shall be in form and content satisfactory
to
Lender and shall be subject to approval in writing by Lender:
(i)
evidence confirming that the FAA Bill of Sale, the Aircraft
Registration Application on FAA Form 8050-1 (the "Registration"),
and
the Aircraft Security Agreement have been duly filed with the FAA
with
respect to the Eligible Aircraft which is the subject of the
Advance,
and (ii) evidence (which may be in the form of a title policy from
a
title insurer satisfactory to Lender or an opinion from a law
firm
satisfactory to Lender), confirming that Borrower is the owner of
the
Eligible Aircraft and that Lender has a first, prior and
exclusive
security
interest in the Eligible Aircraft.
(h) Lender shall have received a
written request for the Advance at least
one (1) business day prior to the date the Advance is to be
made,
s
