Exhibit 2.2
May 28, 2004
BY E-MAIL
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Edward Grushko, Esq.
c/o Counselors@AOL.COM
and c/o EdGrushko@AOL.Com
Mark Ross, Esq.
c/o MRoss@srssllp.com
James Turner, Esq.
c/o JTurner@srssllp.com
RE: Draft of Assumption Agreement
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Gentlemen:
I am e-mailing the final version of the Assumption Agreement.
I am also e-mailing the Consent form with a May 28th date inserted.
As I told James Turner earlier today, the title of the document is now
the "Assumption Agreement." All reference to the document in the Stock Purchase
Agreement should be as the "Assumption Agreement."
The Alpha agreement will follow in short order.
Very truly yours,
/s/ Samuel J. Reiser
Samuel J. Reiser
SJR:mc
Enclosure
cc: Abraham Backenroth, Esq.
c/o ABackenroth@BFKlaw.com
ASSUMPTION AGREEMENT
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AGREEMENT, made as of May 28, 2004, by and among ALLEN HOLDING FINANCE,
LTD., a Lichtenstein corporation, having an address at Beethovebstrasse 48,
Postfach 2611, CH-8022 Zurich ("Allen Holdings"), BARBARA MITTMAN, an individual
with an address at Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New
York, New York 10176 ("Collateral Agent"), MOONEY AIRPLANE COMPANY, INC., a
Delaware corporation with an address at Louis Scherner Field, Kerrville, Texas
78028 ("Mooney Airplane") and MOONEY AEROSPACE GROUP, LTD., a Delaware
Corporation with an address at Louis Scherner Field, Kerrville, Texas 78028
("Mooney Group").
WHEREAS, prior to the date hereof Mooney Group owned all of the issued
and outstanding shares of capital stock of Mooney Airplane (the "Stock"); and
WHEREAS, concurrently herewith, Mooney Group is selling and
transferring to Allen Holding all of Mooney Group's right, title and interest in
and to the Stock, subject to a separate Stock Purchase Agreement by and between
Mooney Group and Allen Holdings being executed concurrently herewith and subject
to the terms and conditions set forth below (the "Stock Sale"); and
WHEREAS, the parties identified on Schedule "A" annexed hereto and made
a part hereof (each, individually, a "Lender" and collectively, the "Lenders")
have made loans to Mooney Airplane and Mooney Group (the "Loans"); and
WHEREAS, to secure the Loans and all obligations arising under all
agreements executed by Mooney Group and Mooney Airplane in connection with the
Loans (collectively, the "Obligations"), Mooney Group pledged and granted to
Collateral Agent, for the benefit of the Lenders, a first priority lien and
security interest in the Stock; and
WHEREAS, to further secure the Obligations, Mooney Airplane granted to
Collateral Agent, for the benefit of the Lenders, a first priority lien and
security interest in certain of Mooney Airplane's assets; and
WHEREAS, in connection with the Loans and the pledge of the Stock and
grant of security interest in certain assets (the Stock and the secured assets
sometimes hereinafter referred to as the "Collateral"), certain subscription
agreements, promissory notes (the "Notes"), stock pledge agreements (the "Pledge
Agreements"), security agreements (the "Security Agreements") and other
agreements were executed by and delivered to the appropriate parties (all such
agreements hereinafter sometimes referred to as the "Loan Documents"); and
WHEREAS, Collateral Agent has been designated as the agent of the
Lenders pursuant to the terms of certain separate Collateral Agent Agreements
made between Collateral Agent and each of the Lenders (the "Collateral Agent
Agreements"), and in such capacity has certain rights and duties with regard to
the Loans and all Collateral, including without limitation, the Stock; and
WHEREAS, subparagraph 6.2 of the Pledge Agreement specifically
prohibits Mooney Group from selling, transferring, assigning or pledging the
Stock without the prior written consent of Collateral Agent; and
WHEREAS, an Event of Default (as defined in the Loan Documents) has
occurred and remains uncured; and
WHEREAS, pursuant to the terms of the Collateral Agent Agreements, the
approval of Lenders who hold not less than 65% of the outstanding secured Loans
(a "Majority In Interest") is required to take certain actions under the Loan
Documents; and
WHEREAS, a Majority In Interest have authorized and instructed
Collateral Agent to notice Mooney Airplane and Mooney Group of their default in
payment of the Loans and to take any and all action deemed necessary by
Collateral Agent including, but not limited to, taking possession and disposing
of all Collateral (the "Authorization"); and
WHEREAS, Collateral Agent deems it in the best interest of the Lenders
to consent to the Stock Sale, subject to the terms and conditions set forth
below;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Mooney Airplane and Mooney Group, jointly and severally, hereby (i)
acknowledge and agree that (a) an Event of Default (as defined in the Loan
Documents) has occurred and remains uncured and (b) the aggregate amount of the
Loans due and outstanding as of the date hereof is equal to or greater than
$21,109,894.27 (the "Default Amount") and (ii) irrevocably waive any and all
defenses and counterclaims with regard to the Default Amount and against the
Lenders and the Collateral Agent.
2. Subject to the terms and conditions set forth below, and in reliance
upon the Authorization, Collateral Agent hereby consents to the Stock Sale (the
"Consent").
3. The Stock shall be transferred to Allen Holding subject to the
pledge of and security interest in the Stock granted to Collateral Agent
pursuant to the Pledge Agreements, as amended and supplemented by this
Agreement.
4. In consideration of the Consent granted by Collateral Agent, Allen
Holding hereby assumes and agrees to be jointly and severally liable together
with Mooney Airplane for all of the Obligations, including without limitation
the Default Amount, and agrees to pay each and every installment of the Loans,
from time to time, as same become due. Notwithstanding the assumption by Allen
Holding of liability for the Obligations and the Default Amount, Mooney Airplane
shall remain jointly and severally liable together with Allen Holding for all of
the Obligations and the Default Amount.
5. In further consideration of the Consent granted by Collateral Agent,
Allen Holding, Mooney Airplane and Mooney Group, jointly and severally, hereby
agree to indemnify and hold Collateral Agent harmless from and against any and
all claims, actions, suits, proceedings, demands, assessments (and the costs,
losses, liabilities, damages or expenses, including reasonable attorneys' fees
associated therewith) raised by the Lenders, Allen Holding, Mooney Airplane,
Mooney Group and/or any other creditors of Mooney Airplane and/or Mooney Group
arising out of or in connection with this Agreement, the Collateral, the
Obligations and/or the Default Amount.
6. Allen Holding hereby affirms and agrees to be bound by all of the
Loan Documents, including without limitation, the Notes, the Pledge Agreements
and the Security Agreements and agrees to be bound by all of their terms as if
Allen Holding had originally executed all of the Loan Documents, subject to any
amendments to the Loan Documents effectuated by this Agreement.
7. In further consideration of the Consent granted by Collateral Agent,
Allen Holding, Mooney Airplane and Mooney Group, jointly and severally, hereby
waive all notice and grace periods under any and all of the Loan Documents.
8. The Consent granted by Collateral Agent has been granted in reliance
upon Allen Holding's representation and undertaking to deposit the sum of at
least Four Million ($4,000,000.00) Dollars in a depository account of Mooney
Company as an investment in Mooney Company (the "4,000,000 Investment") on or
before thirty (30) days following the date hereof, i.e., on or before June 27,
2004 (the "Deadline"). In the event Allen Holding fails to deposit the entire
$4,000,000 Investment in a Mooney Company depository account as an investment in
Mooney Company on or before the Deadline, Collateral Agent shall have the
option, in its sole discretion, to declare an "Event of Default." The
declaration of an Event of Default by Collateral Agent pursuant to this
Paragraph 8 shall be deemed an Event of Default under the Loan Documents and
shall have the same effect and consequence as the occurrence of an Event of
Default as defined under any of the Loan Documents.
9. Supplementing and amending each of the Loan Documents, in the event
Collateral Agent, determines in its sole discretion, for any reason whatsoever,
that (i) the financial condition of Mooney Airplane and/or Mooney Group has
deteriorated, (ii) the Collateral has been compromised or deteriorated in value
or (iii) repayment of the Loans is in any way jeopardized, Collateral Agent
shall have the option, in its sole discretion, to declare an "Event of Default."
The declaration of an Event of Default by Collateral Agent pursuant to this
Paragraph 9 shall be deemed an Event of Default under the Loan Documents and
shall have the same effect and consequence as the occurrence of an Event of
Default as defined under any of the Loan Documents.
10. Supplementing and amending each of the Loan Documents, Allen
Holding shall be prohibited from voting its shares in Mooney Airplane for, or in
any other way causing, the issuance of additional capital stock or other equity
in Mooney Airplane or the taking of any other act that causes the dilution of
Allen Holding's one hundred (100%) percent equity interest in Mooney Airplane.
In the event Allen Holding shall at any time for any reason own less than one
hundred (100%) percent of all of the issued and outstanding capital stock and
all other equity interest in Mooney Airplane, Collateral Agent shall have the
option, in its sole discretion, to declare an "Event of Default." The
declaration of an Event of Default by Collateral Agent pursuant to this
Paragraph 10 shall be deemed an Event of Default under the Loan Documents and
shall have the same effect and consequence as the occurrence of an Event of
Default as defined under any of the Loan Documents.
11. Supplementing and amending each of the Loan Documents, in the event
an Event of Default as defined under any of the Loan Documents, as amended and
supplemented by Paragraphs 8, 9 and 10 above, shall occur, Collateral Agent
shall have the right to distribute any and all of the Stock and/or the
Collateral to the Lenders pro rata to their Loan holdings without resort to a
public or private sale or foreclosure.
12. Supplementing and amending each of the Loan Documents, at any
public or private sale of Collateral, a purchasing Lender may receive a credit
against the purchase price for any asset being purchased by such Lender that is
equal to such Lender's proportionate share of the net proceeds of the sale of
the Collateral.
13. Allen Holding hereby represents and warrants to Collateral Agent as
follows: 13.1 Allen Holding is a corporation duly organized, validly existing
and in good standing under the laws of Lichtenstein. Allen Holding has corporate
power to enter into and consummate the transactions contemplated by this
Agreement. All proceedings necessary to authorize delivery and performance of
this Agreement have been properly taken and this Agreement is enforceable
against Allen Holding in accordance with its terms.
13.2 The execution and delivery of this Agreement by Allen
Holding does not, and the compliance with, the fulfillment of and the
consummation of the transactions contemplated by this Agreement will not,
violate or conflict with any provisions of the Articles of Incorporation or
By-Laws of Allen Holding or result in a breach of, or constitute a default
under, or result in the acceleration of any obligation under any agreement or
instrument to which Allen Holding is a party or by which it is bound or violate
any order, judgment, award or decree to which it is a party or to which Allen
Holding is subject.
14. Mooney Airplane hereby represents and warrants to Collateral Agent
as follows:
14.1 Mooney Airplane has corporate power to enter into and
consummate the transactions contemplated by this Agreement. All proceedings
necessary to authorize delivery and performance of this Agreement have been
properly taken and this Agreement is enforceable against Mooney Airplane in
accordance with its terms.
14.2 The execution and delivery of this Agreement by Mooney
Airplane does not, and the compliance with, the fulfillment of and the
consummation of the transactions contemplated by this Agreement will not,
violate or conflict with any provisions of the Articles of Incorporation or
By-Laws of Mooney Airplane or result in a breach of, or constitute a default
under, or result in the acceleration of any obligation under any agreement or
instrument to which Mooney Airplane is a party or by which it is bound or
violate any order, judgment, award or decree to which it is a party or to which
Mooney Airplane is subject.
15. Mooney Group hereby represents and warrants to Collateral Agent as
follows:
15.1 Mooney Group has corporate power to enter into and
consummate the transactions contemplated by this Agreement. All proceedings
necessary to authorize delivery and performance of this Agreement have been
properly taken and this Agreement is enforceable against Mooney Group in
accordance with its terms.
15.2 The execution and delivery of this Agreement by Mooney
Group does not, and the compliance with, the fulfillment of and the consummation
of the transactions contemplated by this Agreement will not, violate or conflict
with any provisions of the Articles of Incorporation or By-Laws of Mooney Group
or result in a breach of, or constitute a default under, or result in the
acceleration of any obligation under any agreement or instrument to which Mooney
Group is a party or by which it is bound or violate any order, judgment, award
or decree to which it is a party or to which Mooney Group is subject.
16. This Agreement may be modified or amended only with the written
consent of each party hereto.
17. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any subsequent breach or condition.
18. All notices, requests, demands and other communications which are
required to be or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person, or transmitted
by telecopy or telex, or upon receipt after dispatch by certified or registered
first class mail, postage prepaid, return receipt requested, to the party to
whom the same is so given or made, at the following addresses (or such others as
shall be provided in writing hereinafter):
(a) If to Collateral Agent:
Barbara Mittman, Esq.
Grushkov & Mittman, P.C.
551 Fifth Avenue, Suite 1601
New York, New York 10176
With a copy to:
Horowitz & Reiser
30 Broad Street, 15th Floor
New York, New York 10004
Attn: Samuel J. Reiser, Esq.
Facsimile: 212-269-4795
(b) If to Allen Holding:
Beethovebstrasse 48
Postfach 2611
CH-8022 Zurich
Facsimile: 011-41-442-000-910
Attn: Francopis Morax, Director
With a copy to:
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
21st Floor
New York, New York 10018
Attn: Marc Ross, Esq.
Facsimile: 212-930-9725
(c) If to Mooney Airplane or Mooney Group:
Louis Scherner Field
Kerrville, Texas 78028
With a copy to:
Jenkins & Gilchrist Parker Chapin, LLP
The Chrysler Building
405 Lexington Avenue
New York, New york 10174
Attn: Martin Eric Weisberg, Esq.
Facsimile: 212-930-9725
19. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and, to the extent permitted by this Agreement, their
respective personal representatives, heirs, successors and permitted assigns.
20. This Agreement shall be construed in accordance with the laws of
the State of New York without reference to the conflicts of laws and rules
thereof. Any legal action or proceeding against a party with respect to this
Agreement may be brought in the Courts of the State of New York or of the United
States for the Southern District of New York, and, by execution and delivery of
this Agreement, each party hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each party hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement brought in
the aforesaid courts and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
21. If any provision of this Agreement, or the application thereof to
any person or circumstance, is held invalid, such invalidity shall not affect
any other provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and effect.
22. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original; but all of such counterparts shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Assumption Agreement
effective as of the date first above written.
ALLEN HOLDING FINANCE, LTD.
By: /s/ Francois Morax
-----------------------------
Francois Morax, Director
BARBARA MITTMAN
MOONEY AIRPLANE COMPANY, INC.
By:
MOONEY AEROSPACE GROUP LTD.
By:
DRAFT
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TO:Barbara R. Mittman - Collateral Agent
c/o Grushko & Mittman, P.C.
551 Fifth Avenue, Suite 1601
New York, New York 10176
Pursuant to various Collateral Agent Agreements entered into on or
about December, 2002 through October, 2003, you were appointed as Collateral
Agent to take action on behalf of the Secured Lenders upon the written
instruction of sixty-five percent (65%) of the Lenders of outstanding Obligation
(as defined in the Loan Documents).
Therefore, you are hereby instructed as Collateral Agent to execute and
deliver a certain Assumption and Modification Agreement, dated as of May 28,
2004, by and among Allen Holdings Finance, Ltd., you as Collateral Agent, Mooney
Airplane Company, Inc. and Mooney Aerospace Group, Ltd., a copy of which is
annexed hereto as Schedule ("A") (the "Assumption and Modification Agreement").
The execution by you as Collateral Agent of the Assumption and
Modification Agreement shall be deemed an act taken by you as Collateral Agent
in furtherance of your duties and obligations under the Collateral Agent
Agreements and subject to such releases of liability and indemnifications as are
provided therein.