Exhibit 4.1
WAIVER AND CONSENT
Please check the appropriate box(es) indicating whether you are a holder of:
|_| Secured Notes |_| Unsecured Notes |_| Preferred Stock
WHEREAS, it is in the best interests of Mooney Aerospace Group, Ltd.
(the "Company") to restructure its outstanding debt; and
WHEREAS, the Company has proposed to the undersigned (the "Creditor") a
plan to restructure the Company's outstanding debt and equity securities (the
"Plan") in accordance with the term sheet attached hereto as Exhibit A (the
"Term Sheet"); and
WHEREAS, it is in the best interests of the Creditor to consent to the
terms of the Plan;
NOW, THEREFORE, upon good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, and contingent upon approval
of the Plan by the board of directors of the Company, the Creditor agrees that:
With respect to the Unsecured Notes:
1. The Creditor shall waive all past defaults under any Unsecured Note
issued by the Company to the Creditor and agrees not to declare a
default upon the occurrence of any new default under the Unsecured
Notes for a period of six months following the Plan Date (as
hereinafter defined);
2. Each Unsecured Note will be amended such that it is convertible into
shares of the Company's common stock at a fixed per share conversion
price equal to twice the per share conversion price of each Secured
Note;
3. The Maturity Date for the Unsecured Notes will be extended for a period
of three (3) years, which Maturity Date shall be the third anniversary
of the Plan Date; and
4. The Unsecured Notes will be amended such that they bear interest at a
rate of three percent (3%) per annum, payable upon maturity or
conversion. Interest may be paid in stock or cash at the Company's
option.
5. The obligations of the Company to register the common stock underlying
any Unsecured Note in a registration statement to be filed with the
Securities and Exchange Commission and to maintain the effectiveness of
such a registration statement shall expire on the second anniversary of
the date of issuance of the Unsecured Note.
6. By checking the box marked "Agree" immediately following this paragraph
the Creditor agrees to purchase new Secured Notes from the Company's
wholly-owned subsidiary, Mooney Airplane Company, Inc. ("Mooney") on
the following terms:
(a) for every $0.40 of new Secured Notes of Mooney Airplane
Company, Inc. ("Mooney") purchased by the Creditor, the
Company and Mooney, respectively, will grant the Creditor a
security interest in the assets of the Company and Mooney to
secure $1.00 of Unsecured Notes previously purchased by the
Creditor; and
(b) the Creditor will execute and deliver to the Company, as
reasonably requested by the Company, any documents necessary
to complete the transactions contemplated by this paragraph.
|_| Agree |_| Disagree
With respect to the Secured Notes;
1. The Creditor shall waive all past defaults under any Secured Note
issued by the Company to the Creditor; and
2. Each Secured Note will be amended such that it is convertible into
shares of the Company's common stock at a fixed per share conversion
price equal to one-half the per share conversion price of each
Unsecured Note.
3. The obligations of the Company to register the common stock underlying
any Secured Notes in a registration statement to be filed with the
Securities and Exchange Commission and to maintain the effectiveness of
such a registration statement shall expire on the second anniversary of
the date of issuance of the Secured Note.
With respect to Preferred Stock;
1. That the Preferred Stock shall be convertible into shares of the
Company's common stock at a per share conversion price equal to the per
share conversion price of the Unsecured Notes; and
2. The obligations of the Company to register the common stock underlying
the Preferred Stock in a registration statement to be filed with the
Securities and Exchange Commission and to maintain the effectiveness of
such a registration statement shall expire on the second anniversary of
the date of issuance of the Preferred Stock.
The Creditor further agrees, with respect to any outstanding Warrants
issued by the Company, to the termination of all such Warrants, effective as of
the Plan Date.
The foregoing amendments will be effective with respect to the Notes,
the Preferred Stock and the Warrants, as applicable, commencing on the date the
board of directors of the Company (the "Board") approves the Plan (the "Plan
Date"); provided, however, that this Waiver and Consent shall expire on May 1,
2003.
The Creditor further represents and warrants that the dollar amount of
Secured Notes, Unsecured Notes and Preferred Stock which the Creditor has set
forth next to the Creditor's name on Schedule A attached hereto accurately and
completely reflects the outstanding principal balance owed by the Company to the
Creditor under the Secured Notes and/or the Unsecured Notes and the amount of
Preferred Stock held by the Creditor as of the date hereof.
The Company represents and warrants that the only conditions required
for the Board to approve the Plan are (a) the receipt by the Company of the
consent of one hundred percent (100%) of the Company's creditor's to the terms
set forth above and (b) the receipt by a special committee the Board of a
preliminary Fairness Opinion and a Valuation Opinion in connection with the Plan
from an independent financial advisor.
The Remainder of This Page Has Been Intentionally Left Blank
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IN WITNESS WHEREOF, the undersigned has caused this Waiver and Consent
to be duly executed.
CREDITOR
By:
------------------------------
Name:
Title:
Acknowledged and Agreed by:
MOONEY AEROSPACE GROUP, LTD.
By:
--------------------------------
Name:
Title:
MOONEY AIRPLANE COMPANY, INC.
By:
-----------------------------------------
Name:
Title:
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SCHEDULE A
The table below accurately and completely states in U.S. Dollars the
outstanding principal balance owed by the Company to the Creditor under the
Secured Notes and/or the Unsecured Notes and the amount of Preferred Stock held
by the Creditor as of the date hereof.
Creditor's Name Secured Notes Unsecured Notes Preferred Stock
- --------------- ------------- --------------- ---------------
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TERM SHEET
PROPOSAL
TO
RESTRUCTURE THE OUTSTANDING DEBT
OF
MOONEY AEROSPACE GROUP, LTD.
("Company")
Current Capital Structure of Parent
- -----------------------------------
EQUITY
Approximately 227 million shares of Common Stock
$3.4 million Series A Convertible Preferred Stock
DEBT
Secured $10 million
Unsecured $17.5 million
Proposal to the Unsecured Note Holders
- --------------------------------------
Proposal: Unsecured convertible debentures ("Unsecured Notes") will be
amended as follows:
Conversion: The Unsecured Notes will be convertible into shares of the
Company's common stock at a fixed per share conversion price
equal to twice the per share conversion price of the Secured
Notes. The Unsecured Notes, as a class, will be convertible
into 13.7% of the Company's common stock assuming that an
additional $2.5 million of Secured Notes will be purchased and
that $6.25 million of Unsecured Notes will be back-secured in
connection with the $2.5 million financing.
Defaults: The Unsecured Note Holders will waive all past defaults under
the Unsecured Notes and will agree not to declare a default
upon the occurrence of any new defaults for a period of six
months.
Maturity: The Maturity Date for the Unsecured Notes will be extended for
a period of three (3) years.
Interest: The Unsecured Notes will bear interest at a rate of three
percent (3%) per annum, payable upon Maturity or conversion.
Interest may be paid in stock or cash at the Company's option.
Option to
Back-Secure: For every $0.40 of new secured notes of Mooney Airplane
Company, Inc. ("Mooney") purchased by an Unsecured Holder, the
Company and Mooney, respectively, will grant that Unsecured
Holder a security interest in the assets of the Company and
Mooney to secure $1.00 of Unsecured Notes previously purchased
by that Holder.
Proposal to Secured Note Holders
- --------------------------------
Proposal: Secured convertible debentures ("Secured Notes") will be
amended as follows:
Conversion: The Secured Notes will be convertible into shares of the
Company's common stock at a fixed per share conversion price
equal to one-half the per share conversion price of the
Unsecured Notes. The Secured Notes, as a class, will be
convertible into 50.4% of the Company's common stock assuming
that an additional $2.5 million of Secured Notes will be
purchased and that $6.25 million of Unsecured Notes will be
back-secured in connection with the $2.5 million financing.
Defaults: The Secured Note Holders will waive all past defaults under
the Secured Notes.
Proposal to the Holders of Preferred Stock
- ------------------------------------------
Conversion: The Preferred Stock shall be convertible into shares of the
Company's common stock at a per share conversion price equal
to the per share conversion price of the Unsecured Notes. The
Preferred Stock, as a class, will be convertible into 4.1% of
the Company's common stock assuming that an additional $2.5
million of Secured Notes will be purchased and that $6.25
million of Unsecured Notes will be back-secured in connection
with the $2.5 million financing.
Ownership Structure of the Company
- ----------------------------------
Assuming that all of the shares of Preferred Stock, all Unsecured Notes, all
Secured Notes and $4 million in debt under the Company's revolving loan facility
are fully converted into the Company's common stock following the restructuring,
the ownership of the Company will be as follows:
Current Common Stock Holders 10.0%
$4 million under revolving loan 21.8%
$3.4 million Preferred Stock 4.1%
$11.25 million in Unsecured Notes 13.7%
$20.75 million in Secured Notes 50.4%
The above table assumes that an additional $2.5 million of Secured Notes will be
purchased and that $6.25 million of Unsecured Notes will be back-secured in
connection with the $2.5 million financing.
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