Document:

Exhibit 10.1

 

FIRST AMENDMENT TO LOAN AGREEMENT

 

THIS FIRST AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made and entered into as of September 22, 2011 by and among HCC INSURANCE HOLDINGS, INC., a Delaware corporation (the “Borrower”); each of the Lenders which is a party to the Loan Agreement (as defined below) (individually, a “Lender” and, collectively, the “Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, Administrative Agent for the Lenders and Lead Arranger (in such capacity, together with its successors in such capacity, the “Agent”).

 

RECITALS

 

A.                                   The Borrower, the Lenders and the Agent executed and delivered that certain Loan Agreement dated as of March 8, 2011.  Said Loan Agreement, as heretofore amended,  is herein called the “Loan Agreement”.  Any capitalized term used in this Amendment and not otherwise defined shall have the meaning ascribed to it in the Loan Agreement.

 

B.                                     The Borrower, the Lenders and the Agent desire to amend the Loan Agreement in certain respects.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and warranties herein set forth, and further good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the Agent do hereby agree as follows:

 

SECTION 1. Amendment to Loan Agreement.  Section 8.5 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

8.5                                 Redemption, Dividends and Distributions.  At any time:  (a) redeem, retire or otherwise acquire, directly or indirectly, any equity interest in Borrower other than redemptions, retirements and stock repurchases not exceeding, in the aggregate and on a cumulative basis from and after the Effective Date, $750,000,000 which may be made so long as no Event of Default has occurred which is continuing (or would result therefrom) or (b) make any distributions of any Property or cash to the owner of any of the equity interests in Borrower or any of its Material Subsidiaries other than Permitted Dividends.

 

SECTION 2. Ratification.  Except as expressly amended by this Amendment, the Loan Agreement and the other Loan Documents shall remain in full force and effect.  None of the rights, title and interests existing and to exist under the Loan Agreement are hereby released, diminished or impaired, and the Borrower hereby reaffirms all covenants, representations and warranties in the Loan Agreement (except such representations and warranties which are, by their express terms, limited to a prior date).

 

SECTION 3. Expenses.  The Borrower shall pay to the Agent all reasonable fees and expenses of its respective legal counsel (pursuant to Section 11.3 of the Loan Agreement) incurred in connection with the execution of this Amendment.

 

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SECTION 4. Certifications.  The Borrower hereby certifies that after giving effect to this Amendment (a) no material adverse change in the assets, liabilities, financial condition, business or affairs of the Borrower has occurred since December 31, 2010 and (b) no uncured Default or uncured Event of Default has occurred and is continuing or will occur as a result of this Amendment.

 

SECTION 5. Miscellaneous.  This Amendment (a) shall be binding upon and inure to the benefit of the Borrower, the Lenders and the Agent and their respective successors, assigns, receivers and trustees; (b) may be modified or amended only by a writing signed by the required parties; (c) shall be governed by and construed in accordance with the laws of the State of Texas and the United States of America; (d) may be executed in several counterparts by the parties hereto on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original agreement, and all such separate counterparts shall constitute but one and the same agreement and (e) together with the other Loan Documents, embodies the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements, consents and understandings relating to such subject matter.  The headings herein shall be accorded no significance in interpreting this Amendment.

 

NOTICE PURSUANT TO TEX. BUS. & COMM. CODE §26.02

 

THE LOAN AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES PRIOR HERETO OR SUBSTANTIALLY CONCURRENTLY HEREWITH CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have caused this Amendment to be signed by their respective duly authorized officers, effective as of the date first above written.

 

	
 
    	
HCC   INSURANCE HOLDINGS, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brad T. Irick
    
	
 
    	
 
    	
Brad   T. Irick, Executive Vice President &
    
	
 
    	
 
    	
Chief   Financial Officer
    

 

[Signature Page for First Amendment to Loan Agreement]

 

 

	
 
    	
WELLS   FARGO BANK, NATIONAL
    
	
 
    	
ASSOCIATION,   as Administrative Agent
    
	
 
    	
and   as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Chad D. Johnson
    
	
 
    	
Name:
    	
Chad   D. Johnson
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

[Signature Page for First Amendment to Loan Agreement]

 

 

	
 
    	
BANK   OF AMERICA, N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Debra Basler
    
	
 
    	
Name:
    	
Debra   Basler
    
	
 
    	
Title:
    	
Managing   Director
    

 

[Signature Page for First Amendment to Loan Agreement]

 

 

	
 
    	
BARCLAYS   BANK PLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John French
    
	
 
    	
Name:
    	
John   French
    
	
 
    	
Title:
    	
Director   - Insurance
    

 

[Signature Page for First Amendment to Loan Agreement]

 

 

	
 
    	
JPMORGAN   CHASE BANK, N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas A. Kiepura
    
	
 
    	
Name:
    	
Thomas   A. Kiepura
    
	
 
    	
Title:
    	
Vice   President
    

 

[Signature Page for First Amendment to Loan Agreement]

 

 

	
 
    	
THE   ROYAL BANK OF SCOTLAND PLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Barrie Davison
    
	
 
    	
Name:
    	
Barrie   Davison
    
	
 
    	
Title:
    	
Director
    

 

[Signature Page for First Amendment to Loan Agreement]

 

 

	
 
    	
KEYBANK   NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas J. Purcell
    
	
 
    	
Name:
    	
Thomas   J. Purcell
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

[Signature Page for First Amendment to Loan Agreement]

 

 

	
 
    	
AMEGY   BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kelly Nash
    
	
 
    	
Name:
    	
Kelly   Nash
    
	
 
    	
Title:
    	
Assistant   Vice President
    

 

[Signature Page for First Amendment to Loan Agreement]ex101.htm

CONVERTIBLE LOAN AGREEMENT

 

This Convertible Loan Agreement (this “Agreement”) is made as of September [__], 2011, by and among Phoenix Aerospace, Inc., a company incorporated under the laws of the State of Nevada of 61B Industrial Parkway, Mound House, NV 89706, U.S.A (the “Borrower”); Phoenix International Ventures, Inc., a company incorporated under the laws of the State of Nevada of 61B Industrial Parkway, Mound House, NV 89706, U.S.A
(“Phoenix”); and Zvi Bar-Nes Nissensohn Nissensohn, Israeli Passport no. 9379265 of 27 Alexander Penn, Tel-Aviv 69641, Israel and\or a company under his control (at least more than 50%) (collectively, the “Lender”). The Borrower, Phoenix and the Lender may be referred to as “Party” and collectively, as the “Parties”.

 

W I T N E S S E T H:

 

WHEREAS,                      the Board of Directors of the Borrower (the "Board") resolved to raise financing for the going forward business activity of the Borrower by means of a convertible loan of up to the aggregate amount of One Million United States Dollars (USD$1,000,000) on the terms set forth herein; and

 

WHEREAS,                      the Borrower is a wholly-owned subsidiary of Phoenix; and

 

WHEREAS,                      the Borrower has requested the Lender and the Lender has agreed, to provide the Borrower with a loan of up to the Principal Amount (as defined below) under the terms and subject to the conditions set forth in this Agreement;

 

NOW THEREFORE, based on the representations contained herein and in consideration of the mutual promises and covenants set forth herein, and intending to be legally bound hereby, the Parties hereto agree as follows:

 

1. Principal Amount

 

1.1           Under the terms and subject to the conditions set forth in this Agreement, the Lender shall lend to the Borrower a loan (the “Loan”) of up to the aggregate amount of One Million United States Dollars (USD$1,000,000) (the “Maximum Amount”).

 

1.2           The Loan shall be made by the Lender to the Borrower in one or more advances (each an “Advance”) in the Lender’s sole discretion based upon the Lender’s assessment of the financial needs of the Borrower. Unless otherwise agreed by the Lender, the aggregate amount of Advances shall not exceed the Maximum Amount. The aggregate amount of all of the Advances actually provided by the Lender to the Borrower under this Agreement shall be referred to “Principal Amount”.

 

2. Disbursement

 

2.1. At the Closing (as defined below), the Lender shall disburse an initial Advance of Three Hundred Fifty Thousand United States Dollars (USD$350,000) to the Borrower (the “Initial Advance”) by means of wire-transfer to the Borrower's bank account, which details are: Account Name: Phoenix Aerospace, Inc.; Bank: Nevada State Bank; Address: 2200 Highway 50 East, Dayton, Nevada 89403; Account #: 0532006764; Routing #: 122400779 (the “Designated Account”).

 

2.2. Following receipt of the Initial Advance, the Borrower may, from time to time, deliver to the Lender, not less than 7 (seven) days in advance of the expected date of each funding of an Advance, a written document specifying the amount of money it requests the Lender to disburse to the Designated Account and the proposed use of such Advance in the business of the Borrower (the “Advance Request”), provided, however, that the amount specified in the Advance Requests in the aggregate shall not exceed the Maximum Amount. The Lender shall review
the Advance Request and shall determine, upon his sole discretion, whether to confirm it or not. In the event the Lender determined to confirm the respective Advance Request the Lender shall disburse the amount of the Advance Request to the Designated Account.

 

3. Interest

 

3.1. The Principal Amount shall accrue interest at the rate of 8% (eight percent) per annum (the “Interest”). The Interest shall be compounded annually on the basis of a 365-day year for the actual days elapsed as of the date of disbursement of each Advance to the Borrower and until the full repayment or conversion thereof in accordance with the provisions of this Agreement.

 

3.2. The Interest shall be due and payable together with the Principal Amount on the Maturity Date. The Principal Amount together with the Interest accrued thereon shall be referred to as the “Loan Amount”.

 

4. Maturity Date; Early Repayment

 

4.1. Maturity Date. The Loan Amount shall mature on a date which shall be twelve (12) months following the date of the Closing, or such other later date mutually agreed upon by the Borrower and the Lender (the “Maturity Date”).

 

4.2. Early Repayment. Notwithstanding Section ‎4.1 above, the Lender shall be entitled to demand immediate and early repayment of the outstanding and not repaid balance of the Loan Amount (“Balance of the Loan”) or any part of the Balance of the Loan, in the event that prior to the Maturity Date:

 

4.2.1. the balance of the Designated Account is positive (“Positive Balance”), provided, however, that in no event the amount actually repaid under this section ‎4.2.1 shall exceed the Positive Balance; or .

 

4.2.2. Phoenix shall consummate and close one or more rounds of either debt or equity financing (or any combination thereof), in an amount equal to not less than Five Million United States Dollars (USD$5,000,000) in the aggregate (a “Qualified Financing”).

 

5. Security Interest

 

5.1. To secure the prompt repayment of the Loan Amount:

 

5.1.1. Phoenix shall unconditionally guaranty the Loan Amount as per Exhibit A hereto;

 

5.1.2. The Borrower hereby grants to the Lender and his successors a continuing security interest in Phoenix’ present and future right(s) in and to the Designated Account and the Proceeds (as defined in Section ‎9.3 below), as fully set forth under the Security Agreement, Exhibit B hereto.

 

5.1.3. As collateral to secure its guaranty of the Loan Amount, Phoenix shall pledge to the Lender and grant the Lender and his successors a first ranking lien, security interest and fixed charge in one hundred percent (100%) of the shares of common stock of the Borrower registered under the name of Phoenix or in which Phoenix is the beneficial owner, as fully set forth under the Pledge agreement, Exhibit C hereto.

 

(collectively, the “Collateral”).

 

5.2. Upon repayment of the Loan Amount in its entirety or conversion of the Loan Amount in its entirety into shares of Phoenix the Collateral shall be cancelled simultaneous with such repayment or within five (5) days of such conversion.

 

6. Conditions of Lender's Obligations at Closing

 

The obligations of the Lender to disburse the Principal Amount or any part thereof to the Borrower are subject to the fulfillment on or before the Closing of each of the following conditions, the waiver of which shall not be effective against such Lender if it does not consent in writing thereto:

 

6.1. The Borrower's and Phoenix’s Board of Directors shall adopt resolutions approving the transactions contemplated by this Agreement.

 

6.2. The representations and warranties of the Borrower and Phoenix set forth in this Agreement shall be true and correct in every material respect at the time of Closing, as certified in writing by the CEO of the Borrower and the CEO of Phoenix.

 

7. Closing

 

7.1. Subject to the terms and conditions of this Agreement, the Lender shall advance the Principal Amount or any part thereof in accordance with Section ‎2.1 hereof at a closing to take place remotely by exchange of signatures and documents, at 11:00 a.m. (GMT-7) in 61B Industrial Parkway, Mound House, NV 89706, U.S.A, or such other time and place as may be agreed upon either orally or in writing by the Borrower and the Lender (the “Closing” and
the “Closing Date”, respectively).

 

7.2. At the Closing, the following transactions shall occur, which transactions shall be deemed to take place simultaneously and no transaction shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered.

 

7.2.1. the Borrower shall deliver to the Lender a certified copy of each of the documents listed in Section ‎6 hereof; and

 

7.2.2. the Lender shall wire the Principal Amount, net of any bank or transfer costs, in immediately available funds in United States currency to the corresponding bank account specified in Section ‎2.1 hereof.

 

8. Conversion of the Loan

 

8.1. Voluntary Conversion. Up to the Maturity Date the Lender may, upon his sole discretion, convert the Loan Amount into such number of fully paid and non-assessable shares of Series A Preferred Stock US$0.001 par value of Phoenix (“Preferred Stock”) or if such exist, then the most senior class of shares of Phoenix at the time of the conversion at a conversion price per share of US$0.15 (fifteen United States Cents) (the
“Voluntary Conversion Shares”).

 

8.2. Conversion Upon Default. If, by the Maturity Date either (a) the Borrower shall not have repaid the Loan Amount, or (b) the Lender shall have not elected to receive the Voluntary Conversion Shares, then the Lender shall have the right to convert the Loan Amount into shares of Preferred Stock (the “Default Conversion Shares”), at a conversion price per share of US$0.10 (ten United States Cents).

 

8.3. Default Conversion Shares and Voluntary Conversion Shares. The Default Conversion Shares or the Voluntary Conversion Shares (as applicable) shall confer upon the holders thereof the same rights, preferences, privileges and obligations conferred upon the holders of the existing shares of Preferred Stock, or if such exist, then the most senior class of shares of the Phoenix at the time of the conversion.

 

8.4. For the avoidance of doubt, in any case of conversion of the Loan Amount into equity under the terms of any section of this Agreement, for the purposes of dividend preference, liquidation preference and anti-dilution rights, the Lender shall be deemed to have invested at 100% (one hundred percent) of the price per share of such transaction.

 

9. Covenants

 

Each of the Borrower and Phoenix hereby covenants to the Lender that, unless otherwise agreed upon in writing by the Parties, as of the Closing:

 

9.1. Designated Account; Signing Rights. The Lender or its designee shall be a required signatory in the Designated Account.

 

9.2. Use of the Loan Amount. Each Advance shall be used by the Borrower as a working capital solely to finance business activities of the Borrower as of the Closing Date. Unless otherwise agreed upon in writing among the Parties, in no event the Loan amount shall be used to pay debts of the Borrower or Phoenix prior to the Closing Date (“Prior Debts”), provided, however, that the Lender shall have the sole discretion to determine whether to confirm use of the Principal Amount for
payments of Prior Debts.

 

9.3. Deposit of Proceeds. All proceeds generated by the Borrower from execution of work provided to customers or other third parties (“Proceeds”) shall be deposited in the Designated Account, unless upon receipt of the Borrower prior written request the Lender at his sole discretion confirm that such Proceeds are to be promptly reinvested in inventory or other assets used solely to provide additional products or services for customers or other third parties.

 

9.4. Distribution; Dividends. For as long as the Loan Amount or any part thereof is outstanding, the Borrower shall not be entitled to make any distribution or pay any dividend (including, without limitation any liquidation dividend) to its stockholders.

 

10. Representations and Warranties of the Borrower and Phoenix

 

Each of the Borrower and Phoenix hereby represents and warrants to the Lender that as at the Closing:

 

10.1. Organization. It is duly organized and validly existing under the laws of the State of Nevada and has full corporate power and authority to own, lease and operate its properties and assets and to conduct its business as now being conducted and as proposed to be conducted. It has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions and perform its obligations contemplated hereby, subject to receipt of Board and shareholder approval as provided for herein. It has not taken any action or
failed to take any action, which action or failure would preclude or prevent it from conducting its business after the Closing in the manner heretofore conducted or proposed to be conducted. It has all authorizations, approvals, permits, licenses, and any similar authority necessary or required under any law, regulation, rule or ordinance, for the conduct of its business as now being conducted and as proposed to be conducted by it, and to own and operate its properties as now conducted and as proposed to be conducted, owned, leased and operated by it.

 

10.2. Authorization; Approvals. All corporate action on its part, its directors necessary for the authorization, execution, delivery, and performance of all of its obligations under this Agreement has been (or will be) taken prior to the Closing. This Agreement, when executed and delivered by or on its behalf, shall be duly and validly authorized, executed and delivered, by it and shall constitute its valid and legally binding obligations, legally enforceable against it in accordance with its terms. No consent, approval, order, license, permit,
action by, or authorization of or designation, declaration, or filing with any governmental authority on its part is required that has not been, or will not have been, obtained by it prior to the Closing in connection with the valid execution, delivery and performance of this Agreement or the consummation of any other transaction contemplated hereby, except for the adoption and filing of an amendment to the Articles of Incorporation and other notices with the Secretary of State of the State of Nevada necessary to effectuate the increase of the number of registered share of the Preferred Stock.

 

10.3. No Breach. Neither the execution and delivery of this Agreement, nor the issuance of the Default Conversion Shares nor the Voluntary Conversion Shares (as applicable) nor compliance by it with the terms and provisions hereof, will conflict with, or result in a breach or violation of, any of the terms, conditions and provisions of: (i) its Articles of Incorporation, (ii) any judgment, order, injunction, decree, or ruling of any court or governmental authority, domestic or foreign, (iii) any agreement, contract, lease, license or
commitment to which it is a party or to which it is subject, or (iv) to its best knowledge, applicable law. The execution and delivery of, and compliance with, this Agreement will not (a) give to others any rights, including rights of termination, cancellation or acceleration, in or with respect to any agreement, contract or commitment referred to in this paragraph, or to any of its properties, or (b) otherwise require the consent or approval of any person, which consent or approval has not heretofore been obtained.

 

11. Representations and Warranties of Phoenix

 

Phoenix hereby represents and warrants to each of the Lender that as at the Closing:

 

11.1. The Default Conversion Shares or the Voluntary Conversion Shares (as applicable) issued upon conversion of the Loan Amount, and the ordinary shares issued upon conversion of the Default Conversion Shares or the Voluntary Conversion Shares (as applicable), when issued and allotted in accordance with this Agreement, will be duly authorized, validly issued, fully paid, nonassessable, and free of any preemptive rights, and will have the rights, preferences, privileges, and restrictions applicable to the Preferred Stock as set forth in the Articles of Incorporation and the By-Laws, and subject to the provisions
thereof, or if such exist, then the most senior class of shares of Phoenix at the time of the conversion, will be free and clear of any liens, claims, encumbrances or third party rights of any kind and duly registered in the name of the Lender in the Phoenix’ register of stockholders.

 

12. Miscellaneous

 

12.1. Governing Law. This Agreement shall be governed exclusively by and construed solely in accordance with, the laws of the State of Nevada, and the United States District Court of Nevada shall have exclusive jurisdiction over the interpretation of this Agreement and any dispute between Parties hereto arising in connection herewith.

 

12.2. Assignment. This Agreement may not be assigned by either party (except to Permitted Transferees (as defined in the Articles of Association of the Borrower) subject to such transferee agreeing in writing to be bound by the terms hereof), without the prior written consent of the other parties. Subject to the foregoing restriction, this Agreement shall inure to the benefit of the parties and their respective successors, assigns and heirs.

 

12.3. Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

12.4. Notices Any notice required or permitted hereunder shall be in writing and shall be sent by registered mail or confirmed facsimile to the parties hereto at the respective addresses as set forth above, as may be changed by each of the parties in a written notice from time to time.

 

12.5. Amendment and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance), only with the written consent of the Borrower and the Lender.

 

12.6. Severability If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

12.7. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

 

[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK. SIGNATURE PAGES FOLLOW]

 

[Signature Page to Convertible Loan Agreement]

 

 

 

BORROWER:                                           PHOENIX AEROSPACE, INC.

 

________________________________

 

By:           ____________________

 

Title:           ____________________

 

 

PHOENIX:                                PHOENIX INTERNATIONAL VENTURES, INC.

 

________________________________

 

By:           ____________________

 

Title:           ____________________

 

 

LENDER:

 

_______________________

 

 

________________________________

 

__________________________

 

By:           ____________________

 

Title:           ____________________

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