Exhibit 10.38
CREDIT AGREEMENT
Dated as of April 23, 1998
between
AIRCRAFT PARTS INTERNATIONAL XXXXX, INC.
and
FLEET NATIONAL BANK
CREDIT AGREEMENT dated as of April 23, 1998 between AIRCRAFT PARTS
INTERNATIONAL XXXXX, INC., a Delaware corporation (the "Borrower"), and FLEET
NATIONAL BANK, a national banking association organized under the laws of the
United States of America (the "Bank").
WHEREAS, the Borrower desires that the Bank extend credit as
provided herein and the Bank is prepared to extend such credit; and
NOW THEREFORE, in consideration of the foregoing, and other valuable
consideration, receipt of which is acknowledged, the parties, intending to be
legally bound, agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
Section 1.1. Definitions. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Acquisition" means any transaction pursuant to which the Borrower
(a) acquires greater than 5% of the equity securities (or warrants, options or
other rights to acquire such securities) of any Person, (b) causes or permits
any Person to be merged into the Borrower, in any case pursuant to a merger,
purchase of assets or any reorganization providing for the delivery or issuance
to the holders of such Person's then outstanding securities, in exchange for
such securities, of cash or securities of the Borrower, or a combination
thereof, or (c) purchases all or substantially all of the business or assets of
any Person.
"Affiliate" means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with, the Borrower or
any of its respective Subsidiaries; (b) which directly or indirectly
beneficially owns or holds more than ten percent or more of any class of voting
stock of the Borrower or any of its respective Subsidiaries; (c) ten percent or
more of the voting stock of which is directly or indirectly beneficially owned
or held by the Borrower or any of its respective Subsidiaries; or (d) which is a
partnership in which the Borrower or any of its respective Subsidiaries is a
general partner. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time. References to Articles, Sections, Exhibits, Schedules and the
like refer to the Articles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
2
"Banking Day" means, in respect of any date that is specified in
this Agreement to be subject to adjustment in accordance with the applicable
Banking Day Convention, a day on which commercial banks settle payments in (i)
New York or London if the payment obligation is calculated by reference to any
LIBO Rate, or (ii) New York, if the payment obligation is calculated by
reference to the Prime Rate or the Cost of Funds Rate.
"Banking Day Convention" means the convention for adjusting any
relevant date if it would otherwise fall on a day that is not a Business Day so
that the date will be the first following day that is a Business Day.
"Borrowing" means any Loan requested by the Borrower hereunder.
"Borrowing Base" means an amount equal to the sum of (a) 85% of
Eligible Receivables, and (b) 50% of Eligible Inventory (but in no event more
than $3,500,000); provided, however, in no event shall the aggregate amount
under clause (b) exceed $3,500,000. Unless the Bank shall otherwise determine,
the Borrowing Base as of any date shall be the Borrowing Base set forth on the
most current Borrowing Base Certificate certified and delivered by the Borrower
pursuant to either Section 6.8 or Section 4.2. If, at any time, the Borrowing
Base shall exceed the Commitment, for purposes of this Agreement the Borrowing
Base shall be deemed to be equal to the Commitment.
"Borrowing Base Certificate" means a certificate substantially in
the form of Exhibit C hereto or such other form agreed to in writing by the Bank
and the Borrower.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Change of Control" means any one or more of the following events:
(b) the stockholders of the Borrower shall
approve a plan or proposal for the acquisition of, merger, liquidation or
dissolution of the Borrower, or a sale of more than 50% of its assets in one or
a series of related transactions; or
(c) a Person or group of Persons acting in concert (other than
the direct or indirect beneficial owners of the capital stock of the Borrower as
of the date of this Agreement) shall, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or otherwise, have become
the direct or indirect beneficial owner (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended from time to time) of securities
of the Borrower representing 50% or more of the combined voting power of the
outstanding voting securities for the election of directors or shall have the
right to elect a majority of the board of directors of the Borrower.
3
"Closing Date" means the date this Agreement has been executed by
the Borrower and the Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" has the meaning given thereto in the Security
Agreement.
"Commitment" means the obligation of the Bank to make the Loans
under this Agreement in the aggregate outstanding principal amount of up to
$10,000,000, as such amount may be reduced or otherwise modified from time to
time.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of a Person in accordance with
GAAP.
"Cost of Funds Loan" means any Loan when and to the extent the
interest rate therefor is determined on the basis of the Cost of Funds Rate plus
one and one-half (1 1/2%) percentage points.
"Cost of Funds Rate" means the per annum rate of interest which the
Bank is required to pay, or is offering to pay, for wholesale liabilities
adjusted for reserve requirements and such other requirements as may be imposed
by federal, state or local government and regulatory agencies, as determined by
Fleet Treasury Group.
"Current Assets" of any Person at any time means all assets of a
Person treated as current assets in accordance with GAAP.
"Current Liabilities" means all liabilities of a Person treated as
current liabilities in accordance with GAAP, including without limitation (a)
all obligations payable on demand or within one year after the date in which the
determination is made and (b) installment and sinking fund payments required to
be made within one year after the date on which determination is made, but
excluding all such liabilities or obligations which are renewable or extendible
at the option of such Person to a date more than one year from the date of
determination.
"Debt" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) indebtedness for the deferred purchase price of
property or services (except trade payables in the ordinary course of business);
(c) Unfunded Benefit Liabilities of such Person; (d) the face amount of any
outstanding letters of credit issued for the account of such Person; (e)
obligations of such Person arising under acceptance facilities; (f) guaranties,
endorsements (other than for collection in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person, or otherwise to assure a creditor against
loss, including any contingent obligations under swaps, derivatives, currency
exchanges and
4
similar transactions; (g) obligations secured by any Lien on property of such
Person; and (h) obligations of such Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and,
to the extent permitted by law, any other amount payable by the Borrower under
this Agreement or the Note that is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the period from
and including the due date, to, but excluding the date on which such amount is
paid in full equal to three percentage points above the Prime Rate as in effect
from time to time (provided that, if the amount so in default is principal of a
LIBOR Loan and the due date thereof is a day other than the last day of the
Interest Period therefor, the "Default Rate" for such principal shall be, for
the period from and including the due date and to but excluding the last day of
the Interest Period therefor, three (3) percentage points above the interest
rate for such Loan as provided in Section 2.10 hereof and, thereafter, the rate
provided for above in this definition).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBIT" means, for any Person, for any period, earnings before
Interest Expense and taxes for such Person determined in accordance with GAAP.
"EBITDA" means, for any Person, for any period, earnings before
Interest Expense, taxes, depreciation, amortization and extraordinary items for
such Person determined in accordance with GAAP.
"Eligible Inventory" means, as of any date of determination thereof,
all Inventory (valued at the lower of cost or its net realizable value as
determined using GAAP) owned by the Borrower, but excluding (a) all Inventory in
which the Bank does not have a first perfected security interest, subject to no
other Lien prior to or on a parity with such security interest, (b) all
Inventory for which warehouse receipts or documents of title have been issued,
unless the same are delivered to the Bank, and (c) all other Inventory deemed
ineligible by the Bank because of any circumstance that could, in the Bank's
judgment, reasonably exercised, adversely affect the quality of such Inventory
as collateral security. Notwithstanding the preceding sentence, "Eligible
Inventory" shall not include any Inventory not located at premises owned by or
leased to or contracted to the Borrower.
"Eligible Receivables" means, as of any date of determination
thereof, all Receivables net of the Borrower's customary reserves, discounts,
credits, returns, rebates, allowances or set-offs, excluding the following:
5
(i) any Receivable unpaid for 90 or more days from the date of
the original invoice;
(ii) any Receivable evidenced by chattel paper or an
instrument of any kind unless such chattel paper or instrument is pledged and
delivered to the Bank or unless the total amount of such Receivables at any one
time does not exceed 5% of total Eligible Receivables at such time;
(iii) any Receivable which is owed by an account debtor which
is insolvent or the subject of any bankruptcy or insolvency proceedings of any
kind or of any other proceeding or action, which might have an adverse effect on
the business of such account debtor;
(iv) all Receivables deemed uncollectable by the Borrower or
turned over to collection agencies or outside collection attorneys;
(v) any Receivable which is not a valid, legally enforceable
obligation of the account debtor or is subject to any present or contingent, or
any fact exists which is the basis for any future, offset or counterclaim or
other defense on the part of such account debtor;
(vi) any Receivable not evidenced by an invoice or other
documentation in form reasonably acceptable to the Bank;
(vii) any Receivable which arises out of any transaction
between the Borrower and FAvS;
(viii) any Receivable which arises out of any transaction
between (A) the Borrower and (B) National Airmotive Corporation or any other
Subsidiary or Affiliate of FAvS or the Borrower, but only to the extent that
such Receivables exceed 10% of all Eligible Receivables;
(ix) any Receivable which is subject to any provision
prohibiting its assignment or requiring notice not theretofor given of or
consent not theretofor obtained to such assignment;
(x) all Receivables from customers having their place of
business outside of the United States of America, Canada and Mexico, except for
such Receivables backed by either (A) letters of credit denominated in Dollars
issued to the Borrower by banks acceptable to the Administrative Agent or (B)
credit insurance policies acceptable to the Administrative Agent;
6
(xi) all Receivables arising out of or in connection with
advance xxxxxxxx of a customer's requirements of supplies over a period of time,
but only to the extent that such Receivables exceed 10% of all Eligible
Receivables;
(xii) all Receivables that do not conform to the
representations and warranties contained in Article 2 of the Security Agreement;
(xiii) all Receivables in which the Bank does not have a first
perfected security interest, subject to no other Lien prior to or on a parity
with such security interest;
(xiv) all Receivables not denominated in Dollars;
(xv) all Receivables from an account debtor if more than 50%
of the aggregate Dollar amount of invoices billed with respect to such account
debtor is more than 90 days past due according to the original terms of payment;
(xvi) if any account debtor owes greater than 15% of the
Dollar value of total Receivables collectively owed to the Parent and its
Subsidiaries on a consolidated basis, then all Receivables owed by such account
debtor in excess of such 15% limitation shall be ineligible;
(xvii) any Receivable in respect of which the U.S. Government
or any agency thereof is the account debtor;
(xviii) any Receivable which is owed by an account debtor who
has disputed liability or made any claim with respect to any other account due
from such account debtor to the Borrower, except the foregoing exclusion shall
not apply to any account debtor unless and until such disputed amounts equal or
exceed twenty percent (20%) of the aggregate Dollar amount of accounts due from
such account debtor; and
(xix) any Receivable which is determined by the Bank, in the
exercise of its reasonable judgment, to be ineligible for any other reason
generally accepted in the commercial finance business as a reason for
ineligibility.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
7
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which
is a member of any group of organizations (i) described in section 414(b) or (c)
of the Code of which the Borrower is a member, or (ii) solely for purposes of
potential liability under section 302(c)(11) of ERISA and section 412(c)(11) of
the Code and the lien created under section 302(f) of ERISA and section 412(n)
of the Code, described in section 414(m) or (o) of the Code of which the
Borrower is a member.
"Event of Default" has the meaning given such term in Section 9.1.
"Facility Documents" means this Agreement, the Note, the
Subordination Agreement, the Security Agreement and each of the documents,
certificates or other instruments referred to in Article 4 hereof as well as any
other document, instrument or certificate to be delivered by the Borrower in
connection with this Agreement or in connection with the documents, certificates
or instruments referred to in Article 4, including documents delivered in
connection with any Borrowing.
"FAvS" means First Aviation Services, Inc., the parent corporation
of the Borrower.
"FCC" means Fleet Capital Corporation.
"Forfeiture Proceeding" means any action, proceeding or
investigation affecting FAvS, the Borrower or any of their respective
Subsidiaries before any court, governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which results in an
indictment of any of them or the seizure or forfeiture of any of their property.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.5 (except for changes concurred in by the Borrower's independent
public accountants).
"Interest Coverage Ratio" means, with respect to any Person, for any
period, the ratio of (i) EBITDA to (ii) Interest Expense for such period.
"Interest Expense" shall mean, with respect to any Person, for any
period, the sum, for such Person in accordance with GAAP, of (a) all interest on
Debt that is accrued as an expense during such period (including, without
limitation, imputed interest on Capital Lease obligations), plus (b) all amounts
paid, accrued or amortized as an expense during such period in respect of
interest rate protection agreements, minus (c) all
8
amounts received or accrued as income during such period in respect of interest
rate protection agreements.
"Interest Period" means with respect to any LIBOR Loan, the period
commencing on the date such Loan is made, converted from another type of Loan or
renewed, as the case may be, and ending, as the Borrower may select pursuant to
Section 2.11, on the numerically corresponding day in the first, second or third
calendar month thereafter, provided that each such Interest Period which
commences on the last Banking Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate calendar month. With
respect to Cost of Funds Loans, "Interest Period" means the period commencing on
the date such Loan is made and ending on any Banking Day up to 90 days
thereafter as the Borrower may select. With respect to Prime Rate Loans,
"Interest Period" means the period commencing on the date such Loan is made and
ending on the Banking Day on which such Prime Rate Loan is repaid. No Interest
Period shall extend beyond the Termination Date.
"Inventory" means all inventory, now or hereafter owned and wherever
located, of the Borrower, including (without limitation) raw materials,
work-in-process, finished goods, supplies and packaging materials.
"Lending Office" means the lending office of the Bank set forth on
the signature page.
"Leverage Ratio" shall have the meaning given thereto in Section 8.2
hereof.
"LIBO Rate" means, as applicable to any LIBOR Loan, the rate per
annum (rounded upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to such LIBOR Loan which appears on the Telerate page
3750 as of 11:00 a.m. London time on the day that is two London Banking Days
preceding the first day of such LIBOR Loan; provided, however, if the rate
described above does not appear on the Telerate System on any applicable
interest determination date, the LIBOR rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in dollars for a period
substantially equal to the interest period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the beginning of such interest period.
If both the Telerate and Reuters system are unavailable, then the
rate for that date will be determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable to such LIBOR Loan
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is
9
two (2) London Banking Days preceding the first day of such LIBOR Loan as
selected by the Bank. The principal London office of each of the four major
London banks will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two quotations
are provided as requested, the rate for that date will be determined on the
basis of the rates quoted for loans in U.S. dollars to leading European banks
for a period of time comparable to such LIBOR Loan offered by major banks in New
York City at approximately 11:00 a.m. New York City time, on the day that its
two London Banking Days preceding the first day of such LIBOR Loan. In the event
that Bank is unable to obtain any such quotation as provided above, it will be
deemed that LIBOR pursuant to a LIBOR Loan cannot be determined.
In the event that the Board of Governors of the Federal Reserve
System shall impose a Reserve Requirement with respect to LIBOR deposits of the
Bank then for any period during which such Reserve Requirement shall apply, LIBO
Rate shall be equal to the amount determined above divided by an amount equal to
1 minus the Reserve Requirement.
"LIBOR Loan" means any Loan when and to the extent the interest rate
therefor is determined on the basis of the definition "LIBO Rate."
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, negative pledge, charge, conditional
sale, title retention agreement, financing lease or other encumbrance or similar
right of others.
"Loans" shall have the meaning set forth in Section 2.1(a) herein.
"Margin" means the percentage points to be added to the Bank's Prime
Rate, the Bank's Cost of Funds Rate or the then applicable LIBOR Rate, as set
forth in the Agreement.
"Multiemployer Plan" means a Plan defined as such in section 3(37)
of ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Net Income (Loss)" of any Person for any period means the net
income (loss) of such Person for such period determined in accordance with GAAP.
"Note" means the Promissory Note of the Borrower in the form of
Exhibit A hereto evidencing the Loans made by the Bank hereunder and all
Promissory Notes delivered in substitution or exchange therefore, as amended or
supplemented from time to time.
10
"Notice of Borrowing" shall mean the notice of each Borrowing
described in Section 2.8 and in the form of Exhibit E hereto.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time announced
by the Bank at its office located at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx
Xxxxxx 00000, which rate may not be the Bank's lowest or best rate.
"Prime Rate Loan" means any Loan when and to the extent the interest
rate therefor is determined in relation to the Prime Rate.
"Receivables" means all accounts owing to a Person arising out of or
in connection with the bona fide sale or lease of goods or services in the
ordinary course of business.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means any change after the date of this
Agreement in United States federal, state, municipal or foreign laws or
regulations (including without limitation Regulation D) or the adoption or
making after such date of any interpretations, directives or requests applying
to a class of banks including the Bank of or under any United States, federal,
state, municipal or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Reserve Requirement" means, for any Interest Period for any LIBOR
Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in Boston with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in
11
Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks by reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the LIBO Rate for
LIBOR Loans is to be determined as provided in the definition of "LIBO Rate" in
this Section 1.1 or (ii) any category of extensions of credit or other assets
which include LIBOR Loans.
"Security Agreement" means the security agreement dated as of the
Closing Date by the Borrower in favor of the Bank, in substantially the form of
Exhibit C.
"Senior Liabilities" means for any Person at any time, all Debt,
other than contingent liabilities and Subordinated Debt.
"Subordinated Debt" means all funded Debt of a Person subordinated
to the Loans on terms satisfactory to the Bank.
"Subordination Agreement" means the subordination agreement referred
to in Section 4.1(j) hereof relating to the Borrower's outstanding debt to FAvS.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Tangible Capital Base" shall mean the sum of Tangible Net Worth
plus Subordinated Debt.
"Tangible Net Worth" means, at any date of determination thereof,
the excess of total assets of a Person over total liabilities of such Person,
excluding, however, from the determination of total assets: loans and advances
to officers and non-consolidated Affiliates, goodwill, trademarks, patents,
organizational costs, unamortized debt discounts and expenses and other like
intangible assets as defined by GAAP.
"Termination Date" means April 22, 1999; provided that if such date
is not a Banking Day, the Termination Date shall be the next succeeding Banking
Date.
"Total Funded Debt" means, with respect to any Person, all Debt of
such Person for money borrowed, current or otherwise (including any senior and
subordinated indebtedness of such Person), which by its terms matures more than
one year from the date as of which such Debt is incurred, and any Debt of such
Person for money borrowed maturing within one year from such date which is
renewable or extendible at the option of the obligor to a date beyond one year
from such date (whether or not theretofor renewed or extended), including any
such indebtedness renewable or extendible at the option of the
12
obligor under, or payable from the proceeds of other indebtedness which may be
incurred pursuant to, the provisions of any revolving credit agreement or
similar agreement.
"Total Liabilities" means all liabilities of a Person which would be
classified as such on a balance sheet in accordance with GAAP.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA.
Section 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2. THE CREDIT
Section 2.1. The Loans. Subject to the terms and conditions of this
Agreement, the Bank agrees to make loans (the "Loans") to the Borrower from time
to time from and including the date hereof to and including the Termination
Date, up to but not exceeding in the aggregate principal amount at any one time
outstanding the amount of the Commitment, and provided that the aggregate
outstanding principal amount of Loans shall at no time exceed the Borrowing
Base. The Loans may be outstanding as Prime Rate Loans, Cost of Funds Loans or
LIBOR Loans (each a "type" of Loan). The Loans shall be due and payable on the
Termination Date. Each type of Loan shall be made and maintained at the Bank's
Lending Office for such type of Loan.
Section 2.2. The Note. The Loans shall be evidenced by a promissory
note in favor of the Bank in the form of Exhibit A, dated the date of this
Agreement, duly completed and executed by the Borrower.
Section 2.3. Purpose. The Borrower shall use the proceeds of the
Loans for general corporate purposes, including working capital, leasehold
improvements and equipment needs, and, subject to the Bank's approval, any
Acquisitions. No proceeds of the Loans shall be used to directly or indirectly
fund the needs of any Subsidiary of the Borrower if such Subsidiary is not also
the Borrower hereunder. No proceeds of the Loans shall be used for the purpose,
whether immediate, incidental or ultimate, of buying or carrying "margin stock"
within the meaning of Regulation U.
Section 2.4. Borrowing Procedures. The Borrower shall give the Bank
notice of each Borrowing to be made hereunder as provided in Section 2.8. Not
later than 1:00 p.m. Hartford, Connecticut time on the date of such Borrowing,
the Bank shall,
13
subject to the conditions of this Agreement, make the amount of the Loan to be
made by it on such day available to the Borrower, in immediately available
funds, by the Bank crediting an account of the Borrower designated by the
Borrower and maintained with the Bank at the Lending Office.
Section 2.5. Prepayments and Conversions.
(a) Optional Prepayments and Conversions. The Borrower shall
have the right to make prepayments of principal, or to convert one type of Loan
into another type of Loan, at any time or from time to time; provided that: (i)
the Borrower shall give the Bank notice of each such prepayment or conversion as
provided in Section 2.8; and (ii) LIBOR Loans and Cost of Funds Loans may be
prepaid or converted only on the last day of an Interest Period for such Loans,
unless the Borrower compensates the Bank as required pursuant to Section 3.4
hereof, and (iii) conversions from any type of Loans into LIBOR Loans or Cost of
Funds Loans may not be made at any time that a Default or Event of Default
exists.
(b) Mandatory Prepayments. The Borrower shall immediately
repay no later than one Banking Day after delivery of any Borrowing Base
Certificate an amount by which (A) the aggregate principal amount of all
outstanding Loans exceeds the Borrowing Base, and (B) an amount by which the
aggregate principal amount of all outstanding Loans exceeds the Commitment,
together with accrued interest to the date of such prepayment on the principal
amount prepaid. In addition, amounts outstanding as Loans will be reduced by
100% of the net cash proceeds from any sale by the Borrower of any material
assets (other than Inventory) outside of the normal course of business. In
addition, upon the occurrence of any Change of Control, the Borrower shall
immediately, at the option of and upon demand by the Bank, repay all outstanding
amounts under the Loans. Each such prepayment in accordance with the foregoing
provisions shall be applied first to any expenses required to be paid under
Section 3.4 herein in connection with a mandatory prepayment and then to any
other expenses incurred by the Bank, second to any interest due on the amount
prepaid, and last to the outstanding principal amount of the Loans prepaid.
(c) Yield Maintenance Fee. If, at any time (i) the interest
rate on any Loan is a fixed rate, and (ii) the Bank in its sole discretion
should determine that current market conditions can accommodate a prepayment
request, Borrower shall have the right at any time and from time to time to
prepay the Loan in whole (but not in part), and Borrower shall pay to the Bank a
yield maintenance fee in an amount computed as follows: The current rate for
United States Treasury securities (bills on a discounted basis shall be
converted to a bond equivalent) with a maturity date closest to the maturity
date of the term chosen pursuant to the Fixed Rate Election as to which the
prepayment is made, shall be subtracted from the "cost of funds" component of
the fixed rate in effect at the time of prepayment. If the result is zero or a
negative number, there shall be no yield maintenance
14
fee. If the result is a positive number, then the resulting percentage shall be
multiplied by the amount of the principal balance being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of the days
remaining in the term chosen pursuant to the Fixed Rate Election as to which the
prepayment is made. Said amount shall be reduced to present value calculated by
using the number of days remaining in the designated term and using the
above-referenced United States Treasury security rate and the number of days
remaining in the term chosen shall be the yield maintenance fee due to the Bank
upon prepayment of the fixed rate Loan. Each reference in this paragraph to
"Fixed Rate Election" shall mean the election by Borrower pursuant to Section
2.11 hereof.
If by reason of an Event of Default the Bank elects to declare
such Loan to be immediately due and payable, then any yield maintenance fee with
respect to the Loan shall become due and payable in the same manner as though
Borrower had exercised such right of prepayment.
Section 2.6. Late Charges. Payments not received within 10 days of
the due date therefor (including payments which are incomplete due to
insufficient funds in the Borrower's operating account at the Bank) will be
subject to a one-time charge equal to 5% of the amount overdue, with a minimum
charge of $15.
Section 2.7. Changes of Commitment. The Borrower shall have the
right to reduce or terminate the amount of the unused portion of the Commitment
at any time or from time to time, provided that: (i) the Borrower shall give
notice of each such reduction or termination to the Bank as provided in Section
2.8; and (ii) each partial reduction shall be in an aggregate amount at least
equal to $500,000 (and integral multiples of $100,000 in excess thereof). Once
reduced or terminated, such Commitment may not be reinstated.
Section 2.8. Certain Notices. Notices by the Borrower to the Bank of
each Borrowing pursuant to Section 2.4, and each prepayment or conversion
pursuant to Section 2.5(a), and each reduction or termination of a Commitment
pursuant to Section 2.7 shall be irrevocable and shall be effective only if
received by the Bank not later than 12:00 noon Hartford, Connecticut time, and
(a) in the case of Borrowings and prepayments of, conversions into and (in the
case of LIBOR Loans) renewals of (i) Prime Rate Loans or Cost of Funds Loans,
given one Banking Day prior thereto; and (ii) LIBOR Loans, given two Banking
Days prior thereto; and (b) in the case of reductions or termination of the
Commitment, given three Banking Days prior thereto. Each such Notice of
Borrowing shall be in the form of Exhibit E hereto and shall specify the Loans
to be borrowed, prepaid, converted or renewed and the amount (subject to Section
2.9) and type of the Loans to be borrowed, or converted, or renewed or prepaid
and the date of the Borrowing or prepayment, or conversion or renewal (which
shall be a Banking Day). Each such notice of reduction or termination shall
specify the amount of the Commitment to be reduced or terminated.
15
Section 2.9. Minimum Amounts. Except for Borrowings which exhaust
the full remaining amount of the unused portion of the Commitment or prepayments
or conversions which result in the prepayment or conversion of all Loans, as the
case may be, of a particular type, each Borrowing, optional prepayment,
conversion and renewal of principal of Loans of a particular type shall be in an
amount at least equal to (a) $50,000 with respect to Prime Rate Loans, (b)
$100,000 and integral amounts of $50,000 with respect to Cost of Funds Loans,
and (c) $500,000 and integral multiples of $100,000 in excess thereof with
respect to LIBOR Loans (borrowings, prepayments, conversions or renewals of or
into Loans of different types or, in the case of LIBOR Loans, having different
Interest Periods at the same time hereunder to be deemed separate borrowings,
prepayments, conversions and renewals for the purposes of the foregoing, one for
each type of Interest Period).
Section 2.10. Interest.
(a) Interest shall accrue on the outstanding and unpaid
principal amount of each Loan for the period from and including the date of such
Loan to but excluding the date such Loan is due at the following rates per
annum: (i) for Prime Rate Loans, at a variable rate per annum equal to the Prime
Rate (ii) for Cost of Funds Loans, at a variable rate equal to the Cost of Funds
Rate plus one and one-half (1 1/2%) percentage points, and (iii) for LIBOR
Loans, at a fixed rate equal to the LIBO Rate plus one and one-half (1 1/2%)
percentage points, for the period from and including the first day of the
Interest Period therefore to but excluding the last day of such Interest Period.
Notwithstanding the foregoing, in the event that the Borrower's Leverage Ratio
during any period is equal to or greater than 1.80 to 1.00, the Margin over any
Cost of Funds Rate or LIBOR Rate will be one and three-quarters percentage
points. If the principal amount of any Loan and any other amount payable by the
Borrower hereunder or under the Note shall not be paid when due (at stated
maturity, by acceleration or otherwise), interest shall accrue on such amount to
the fullest extent permitted by law from and including such due date to but
excluding the date such amount is paid in full at the Default Rate for such type
of Loan.
(b) The interest rate on Prime Rate Loans shall change when
the Prime Rate changes, and interest on each such Loan shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed. Interest
on each LIBOR Loan and Cost of Funds Loan shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed.
(c) Accrued interest on Prime Rate Loans shall be due and
payable in arrears upon any payment of principal and on the last day of each
calendar month, commencing May 29, 1998, and on the Termination Date. Accrued
interest on all LIBOR Loans and Cost of Funds Loans shall be due and payable in
arrears upon any payment of principal and on the last day of each Interest
Period, commencing May 29,
16
1998, and on the Termination Date. Notwithstanding the foregoing, interest
accruing at the Default Rate shall be due and payable from time to time on
demand of the Bank.
Section 2.11. Interest Periods; Renewals.
(a) In the case of each LIBOR Loan or Cost of Funds Loan, the
Borrower shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.1, subject to the following
limitations: (i) no Interest Period may extend beyond the Termination Date; (ii)
notwithstanding clauses (i) above, no Interest Period for a LIBOR Loan shall
have a duration less than one month, and if any such proposed Interest Period
would otherwise be for a shorter period, such Interest Period shall not be
available; (iv) if an Interest Period would end on a day which is not a Banking
Day, such Interest Period shall be extended to the next Banking Day; and (v) no
more than five Interest Periods may be outstanding at any one time.
(b) Upon notice to the Bank as provided in Section 2.8, the
Borrower may renew any LIBOR Loan or Cost of Funds Loan on the last day of the
Interest Period therefor as a LIBOR Loan or Cost of Funds Loan with an Interest
Period of the same or different duration in accordance with the limitations
provided above. If the Borrower shall fail to give notice to the Bank of such a
renewal, such LIBOR Loan or Cost of Funds Loan shall automatically become a
Prime Rate Loan on the last day of the current Interest Period.
Section 2.12. Facility Fees. The Borrower shall pay to the Bank, on
the Closing Date, a facility fee equal to $20,000.
Section 2.13. Payments Generally. All payments under this Agreement
or the Note shall be made in Dollars in immediately available funds not later
than 1:00 p.m. Hartford, Connecticut, time on the relevant dates specified above
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Banking Day) at the Lending Office of the Bank.
The Bank may (but shall not be obligated to) debit the amount of any such
payment which is not made by such time to any ordinary deposit account of the
Borrower with the Bank. Until the Bank and the Borrower otherwise agree, the
Bank shall debit the Borrower's account number __________ with the Bank for the
amount of any payment required hereunder, but the Bank may also debit any
ordinary deposit account of the Borrower if the amount in account number
__________ is insufficient to make any required payment. The Borrower shall, at
the time of making each payment under this Agreement or the Note, specify to the
Bank the principal or other amount payable by the Borrower under this Agreement
or the Note to which such payment is to be applied (and in the event that it
fails to so specify, or if a Default or Event of Default has occurred and is
continuing, the Bank may apply such payment as it may elect in its sole
discretion). If the due date of any payment under this Agreement or the Note
would otherwise fall on a day which is not a Banking Day, such date shall be
extended to
17
the next succeeding Banking Day and interest shall be payable for any principal
so extended for the period of such extension.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.1. Additional Costs.
(a) The Borrower shall pay to the Bank from time to time on
demand such amounts as the Bank may determine to be necessary to compensate it
for any costs which the Bank determines are attributable to its making or
maintaining any LIBOR Loans under this Agreement or the Note or its obligation
to make any such Loans hereunder, or any reduction in any amount receivable by
the Bank hereunder in respect of any such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to the Bank under this Agreement or the
Note in respect of any of such Loans (other than taxes imposed on the overall
net income of the Bank or of its Lending Office for any of such Loans by the
jurisdiction in which the Principal Office or such Lending Office is located);
or (ii) imposes or modifies any reserve, special deposit, deposit insurance or
assessment, minimum capital, capital ratio or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of, the Bank (including any of such Loans or any deposits referred
to in the definition of "LIBO Rate" in Section 1.1); or (iii) imposes any other
condition affecting this Agreement or the Note (or any of such extensions of
credit or liabilities). The Bank will notify the Borrower of any event occurring
after the date of this Agreement which will entitle the Bank to compensation
pursuant to this Section 3.1(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation.
(b) Without limiting the effect of the foregoing provisions of
this Section 3.1, in the event that, by reason of any Regulatory Change, the
Bank either (i) incurs Additional Costs based on or measured by the excess above
a specified level of the amount of a category of deposits or other liabilities
of the Bank which includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of the Bank which includes LIBOR Loans or
(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if the Bank so elects by notice
to the Borrower, the obligation of the Bank to make or renew, and to convert
Loans of any other type into, Loans of such type hereunder shall be suspended
until the date such Regulatory Change ceases to be in effect, and the Borrower
shall on the last day(s) of the then current Interest Period(s) for the
outstanding Loans of such type, either prepay such Loans or convert such Loans
into another type of Loan in accordance with Section 2.5.
18
(c) Without limiting the effect of the foregoing provisions of
this Section 3.1 (but without duplication), the Borrower shall pay to the Bank
from time to time on request such amounts as the Bank may determine to be
necessary to compensate the Bank for any costs which it determines are
attributable to the maintenance by it or any of its affiliates pursuant to any
law or regulation of any jurisdiction or any interpretation, directive or
request (whether or not having the force of law and whether in effect on the
date of this Agreement or thereafter) of any court or governmental or monetary
authority of capital in respect of its Loans hereunder or its obligation to make
Loans hereunder (such compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of the Bank to a level
below that which it could have achieved but for such law, regulation,
interpretation, directive or request). The Bank will notify the Borrower if it
is entitled to compensation pursuant to this Section 3.1(c) as promptly as
practicable after it determines to request such compensation.
(d) Determinations and allocations by the Bank for purposes of
this Section 3.1 of the effect of any Regulatory Change pursuant to subsections
(a) or (b), or of the effect of capital maintained pursuant to subsection (c),
on its costs of making or maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, it in respect of Loans or
such obligation, and of the additional amounts required to compensate the Bank
under this Section 3.1, shall be conclusive, provided that such determinations
and allocations are made on a reasonable basis; provided, however, that the Bank
shall provide ninety days' notice of any additional amounts required to
compensate the Bank under this Section 3.1 (the "Adjustment"), and the Borrower
may thereafter attempt to negotiate the amount of the Adjustment in good faith
with the Bank within ninety days of the day on which the Borrower are so
notified. If the Borrower and the Bank are unable to agree on the amount of the
Adjustment within such ninety-day period, then the amount of the Adjustment
shall be the amount set forth in the aforementioned notice from the Bank to the
Borrower. Whatever the final Adjustment may be, if the Bank shall still have any
Loans outstanding to the Borrower upon the expiration of such ninety-day period,
then the Adjustment shall be effective retroactive to the date on which the
Borrower first received notice of the Adjustment. The Bank shall not be
obligated to offer LIBO Rates with respect to Interest Periods commencing during
the period following any such notice and prior to agreement by the Bank and the
Borrower as to the amount of the Adjustment.
Section 3.2. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if the Bank determines (which determination shall be
conclusive) that:
(a) quotations of interest rates for the relevant deposits
referred to in the definition of "LIBO Rate" in Section 1.1 are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for any LIBOR Loans as provided in this
Agreement; or
19
(b) the relevant rates of interest referred to in the
definition of "LIBO Rate" in Section 1.1 upon the basis of which the rate of
interest for any LIBOR Loans is to be determined do not adequately cover the
cost to the Bank of making or maintaining such Loans; then the Bank shall give
the Borrower prompt notice thereof, and so long as such condition remains in
effect, the Bank shall be under no obligation to make or renew Loans of such
type or to convert Loans of any other type into Loans of such type and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Loans of the affected type, either prepay such Loans or convert
such Loans into another type of Loans in accordance with Section 2.5.
Section 3.3. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for the Bank or its Lending
Office to (a) honor its obligation to make or renew LIBOR Loans hereunder or
convert Loans of any type into Loans of such type, or (b) maintain LIBOR Loans
hereunder, then the Bank shall promptly notify the Borrower thereof and the
Bank's obligation to make or renew LIBOR Loans and to convert other types of
Loans into Loans of such type hereunder shall be suspended until such time as
the Bank may again make, renew or convert and maintain such affected Loans and
the Borrower shall, on the last day(s) of the then current Interest Period for
the outstanding LIBOR Loans, as the case may be (or on such earlier date as the
Bank may specify to the Borrower), either prepay such Loans or convert such
Loans into another type of Loans in accordance with Section 2.5.
Section 3.4. Certain Compensation. The Borrower shall pay to the
Bank, upon the request of the Bank, such amount or amounts as shall be
sufficient (in the reasonable opinion of the Bank) to compensate it for any
loss, cost or expense which the Bank determines is attributable to:
(a) any payment, prepayment, conversion or renewal of a LIBOR
Loan or Cost of Funds Loan on a date other than the last day of an Interest
Period for such Loan (whether by reason of acceleration or otherwise); or
(b) any failure by the Borrower to borrow, convert into or
renew a LIBOR Loan or Cost of Funds Loan to be made, converted into or renewed
by the Bank on the date specified therefor in the relevant notice under Section
2.4, 2.5 or 2.11, as the case may be.
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.1. Documentary Conditions Precedent. The obligation of the
Bank to make the Loans is subject to the conditions precedent that the Bank
shall have received on or before the date of such Borrowing each of the
following, in form and substance satisfactory to the Bank and its counsel:
(a) the Note duly executed by the Borrower;
20
(b) the Security Agreement duly executed by the Borrower,
together with (i) acknowledgment copies of the financing statements (UCC-1) duly
filed under the Uniform Commercial Code of all jurisdictions necessary or, in
the opinion of the Bank, desirable to perfect the security interest created by
the Security Agreement; (ii) certified copies of requests for information (Form
UCC-11) identifying all of the financing statements on file with respect to the
Borrower in all jurisdictions referred to under (i), including the financing
statements filed by the Bank against the Borrower, indicating that no party
claims an interest in any of the Collateral (as defined in the Security
Agreement);
(c) a certificate of the Secretary or Assistant Secretary of
the Borrower, dated the Closing Date, attesting to all corporate action taken by
the Borrower, including resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Facility Documents and each other
document to be delivered pursuant to this Agreement and certifying copies of the
Certificate of Incorporation and by-laws of the Borrower;
(d) a certificate of the Secretary or Assistant Secretary of
the Borrower, dated the Closing Date, certifying the names and true signatures
of the officers of the Borrower authorized to sign the Facility Documents and
the other documents to be delivered by the Borrower under this Agreement;
(e) a certificate of a duly authorized officer of the
Borrower, dated the Closing Date, stating that its representations and
warranties in Article 5 of this Agreement, and Article 2 of the Security
Agreement, and in each other Facility Document, are true and correct on such
date as though made on and as of such date and that no event has occurred and is
continuing which constitutes a Default or Event of Default;
(f) an Environmental Indemnification Agreement duly signed by
the Borrower in form and substance satisfactory to the Bank;
(g) a certificate of good standing for the Borrower from the
Secretary of the State of the state in which the Borrower is incorporated and
each other jurisdiction in which the Borrower is qualified to do business;
(h) payment by the Borrower to the Bank of the facility fee as
required by Section 2.12, and all other expenses and fees incurred by the Bank
for which the Bank has furnished the Borrower with an invoice;
(i) a favorable opinion of counsel for the Borrower, dated the
Closing Date, in substantially the form of Exhibit D and as to such other
matters as the Bank may reasonably request;
21
(j) a Subordination Agreement, in form acceptable to the Bank,
duly executed by the Borrower and FAvS together with copies of all instruments
evidencing any Subordinated Debt of the Borrower and a satisfactory review of
the same;
(k) evidence of no material adverse change in the business,
management, operations, properties, prospects or condition (financial or
otherwise) of the Borrower since the date of the commitment letter;
(l) a Borrowing Base Certificate and a recent Receivables
aging of the Borrower;
(m) appropriate landlord waivers and consents; and
(n) evidence of insurance required by this Agreement.
Section 4.2. Additional Conditions Precedent. The obligation of the
Bank to make the Loans pursuant to a Borrowing which increases the amount
outstanding hereunder (including the initial Borrowing) shall be subject to the
further conditions precedent that on the date of such Borrowing:
(a) the following statements shall be true:
(i) the representations and warranties of the
Borrower contained in Article 5 herein, and in Article 2 of the Security
Agreement, and in each other Facility Document, are true and correct on and as
of the date of such Loan as though made on and as of such date; and
(ii) no Default or Event of Default has occurred
and is continuing, or would result from such Loan; and
(iii) there has been no material adverse change
in the business, management, operations, properties, prospects or
condition (financial or otherwise) of the Borrower or any of its
Subsidiaries since the Closing Date;
(b) audited financial statements of FAvS for the fiscal year
ending January 31, 1998 shall have been delivered to Fleet not later than April
30, 1998 and shall have been deemed satisfactory in all respects by the Bank;
(c) Management-prepared financial statements of the Borrower
for the fiscal year ending January 31, 1998 shall have been delivered to the
Bank not later than April 30, 1998 and shall have been deemed satisfactory in
all respects by the Bank; and
(d) the Bank shall have received such other documents or items
as the Bank may reasonably request.
22
Without limiting any of the foregoing, a field examination of
the Borrower satisfactory to the Bank in all respects shall be completed within
90 days of the Closing Date, and, to the extent such field examination is not
completed on a timely basis, the Bank shall not be obligated to make any Loans
to the Borrower after the expiration of such 90-day period unless the Bank, at
its sole option, otherwise determines to make such Loans available to the
Borrower. During the 90-day period following the Closing Date and prior to the
completion of the field examination, the Bank shall continue to make Loans to
the Borrower provided that the Borrower complies with all other additional
conditions precedent set forth in this Section 4.2.
Section 4.3. Deemed Representations. Each Notice of Borrowing
hereunder and acceptance by the Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty that the statements contained in
Section 4.2(a) are true and correct both on the date of such notice and, unless
the Borrower otherwise notifies the Bank prior to such Borrowing, as of the date
of such Borrowing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
Section 5.1. Incorporation, Good Standing and Due Qualification.
Each of the Borrower and its Subsidiaries is duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged, and is duly
qualified as a foreign corporation and in good standing under the laws of each
other jurisdiction in which such qualification is required.
Section 5.2. Corporate Power and Authority; No Conflicts. The
execution, delivery and performance by the Borrower of the Facility Documents
have been duly authorized by all necessary corporate action and do not and will
not: (a) require any consent or approval of its stockholders; (b) contravene its
charter or by-laws; (c) violate any provision of, or require any filing (other
than the filing of the financing statements contemplated by the Security
Agreement), registration, consent or approval under, any law, rule, regulation
(including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower or any of its Subsidiaries; (d) result in a breach
of or constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien (other than as
created under the Facility Documents), upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower; or (f) cause the
Borrower (or any Subsidiary or Affiliate, as the case may be) to be in default
under any
23
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
Section 5.3. Legally Enforceable Agreements. Each Facility Document
to which the Borrower is a party is, or when delivered under this Agreement will
be, a legal, valid and binding obligation of the Borrower enforceable against
the Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
Section 5.4. Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened, against or affecting
the Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may, in any one case or in the aggregate, materially adversely
affect the financial condition, operations, properties or business of the
Borrower and its Subsidiaries on a consolidated basis or of the ability of the
Borrower to perform its obligation under the Facility Documents to which it is a
party.
Section 5.5. Financial Statements. (a) The balance sheet of the
Borrower as at September 30, 1996, and the related income statement and
statements of cash flows and changes in stockholders' equity of the Borrower for
the nine-month period then ended, and the accompanying footnote, together with
the opinion thereon as to the statements, of Ernst & Young LLP, independent
certified public accountants, and the unaudited balance sheet of the Borrower as
at December 31, 1995, and the related income statement and statements of cash
flows and changes in stockholders' equity for the fiscal year then ended, copies
of which have been furnished to the Bank, are complete and correct and fairly
present the financial condition of the Borrower as at such dates and the results
of the operations of the Borrower for the periods covered by such statements,
all in accordance with GAAP consistently applied (subject to year-end
adjustments in the case of the interim financial statements). There are no
liabilities of the Borrower, fixed or contingent, which are material but are not
reflected in the financial statements or in the Note thereto, other than
liabilities arising in the ordinary course of business since September 30, 1996.
No information, exhibit or report furnished by the Borrower to the Bank in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading. Since
September 30, 1996, there has been no material adverse change in the condition
(financial or otherwise), business, operations or prospects of the Borrower.
(b) The consolidated balance sheet of FAvS and its Consolidated
Subsidiaries as at January 31, 1997, and the related consolidated income
statement and statements of cash flows and changes in stockholders' equity of
FAvS and its Consolidated Subsidiaries for the fiscal year then ended, and the
accompanying footnote, together with
24
the opinion thereon as to the consolidated statements, of Ernst & Young LLP,
independent certified public accountants, and the unaudited consolidated balance
sheet of FAvS and its Consolidated Subsidiaries as at October 31, 1997, and the
related consolidated income statement and statements of cash flows and changes
in stockholders' equity for the fiscal year then ended, copies of which have
been furnished to the Bank, are complete and correct and fairly present the
financial condition of FAvS and its Consolidated Subsidiaries as at such dates
and the results of the operations of FAvS and its Consolidated Subsidiaries for
the periods covered by such statements, all in accordance with GAAP consistently
applied (subject to year-end adjustments in the case of the interim financial
statements). There are no liabilities of the FAvS or its Consolidated
Subsidiaries, fixed or contingent, which are material but are not reflected in
the financial statements or in the Note thereto, other than liabilities arising
in the ordinary course of business since October 31, 1997. No information,
exhibit or report furnished by FAvS to the Bank in connection with the
negotiation of this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statement
contained therein not materially misleading. Except as otherwise set forth on
Schedule 5.5(b) attached hereto, since October 31, 1997, there has been no
material adverse change in the condition (financial or otherwise), business,
operations or prospects of FAvS and its Consolidated Subsidiaries on a
consolidated basis.
Section 5.6. Ownership and Liens. The Borrower and each of its
Subsidiaries has title to, or valid leasehold interests in, all of its
properties and assets, real and personal, including the properties and assets,
and leasehold interests reflected in the financial statements referred to in
Section 5.5 (other than any properties or assets disposed of in the ordinary
course of business), and none of the properties and assets owned by the Borrower
or any of its Subsidiaries and none of its leasehold interests is subject to any
Lien, except as disclosed in such financial statements or as may be permitted
hereunder and except for the Lien created by the Security Agreement.
Section 5.7. Taxes. The Borrower and each of its Subsidiaries has
filed all tax returns (federal, state and local) required to be filed and has
paid all taxes, assessments and governmental charges and levies thereon to be
due, including interests and penalties, except where the failure to so file or
pay would not have a material adverse effect on the condition (financial or
otherwise), business, operations or prospects of the Borrower and its
Subsidiaries on a consolidated basis.
Section 5.8. ERISA. Each Plan, and, to the best knowledge of the
Borrower, each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable federal or
state law, and no event or condition is occurring or exists concerning which the
Borrower would be under an obligation to furnish a report to the Bank in
accordance with Section 6.8(k) hereof. As of the most recent valuation date for
each Plan, each Plan was "fully funded," which for purposes of this
25
Section 5.8 shall mean that the fair market value of the assets of the Plan is
not less than the present value of the accrued benefits of all participants in
the Plan, computed on a Plan termination basis. To the best knowledge of the
Borrower, no Plan has ceased being fully funded as of the date these
representations are made with respect to any Loan under this Agreement.
Section 5.9. Subsidiaries and Ownership of Stock. Schedule 5.9 is a
complete and accurate list of the Subsidiaries of the Borrower, showing the
jurisdiction of incorporation or organization of each Subsidiary and showing the
percentage of the Borrower's ownership of the outstanding stock or other
interest of each such Subsidiary. All of the outstanding capital stock or other
interest of each such Subsidiary has been validly issued, is fully paid and
nonassessable and is owned by the Borrower free and clear of all Liens.
Section 5.10. Credit Arrangements. Schedule 5.10 is a complete and
correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases and other investments, agreements and arrangements
presently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrower or any of its
Subsidiaries is in any manner directly or contingently obligated and which
involve liabilities or obligations in excess of $50,000; and the maximum
principal or face amounts of the credit in question, outstanding and which can
be outstanding, are correctly stated, and all Liens of any nature given or
agreed to be given as security therefor are correctly described or indicated in
such Schedule.
Section 5.11. Operation of Business. The Borrower and each of its
Subsidiaries possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, and
neither the Borrower nor any of its Subsidiaries is in violation of any valid
rights of others with respect to any of the foregoing.
Section 5.12. Hazardous Materials. The Borrower and each of its
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not have a material adverse
effect on the consolidated financial condition, operations, business or
prospects of the Borrower and its Subsidiaries. The Borrower and each of its
Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply would
26
not have a material adverse effect on the consolidated financial condition,
operations, business or prospects of the Borrower and its Subsidiaries.
In addition, except as set forth in Schedule 5.12 hereto:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Borrower or any of its Subsidiaries to have any permit, license
or authorization required in connection with the conduct of the business of the
Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. s/s 9601(22) ("Release") of any substance
regulated under Environmental Laws ("Hazardous Materials") generated by the
Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries has
handled any Hazardous Material, other than as a generator, on any property now
or previously owned or leased by the Borrower or any of its Subsidiaries to an
extent that it has, or may reasonably be expected to have, a material adverse
effect on the consolidated financial condition, operations, business or
prospects taken as a whole of the Borrower and its Subsidiaries; and
(i) to the best of its knowledge, no PCB is or has been
present at any property now or previously owned or leased by the Borrower or any
of its Subsidiaries;
(ii) to the best of its knowledge, no asbestos is or has
been present at any property now or previously owned or leased by the Borrower
or any of its Subsidiaries;
(iii) to the best of its knowledge, there are no
underground storage tanks for Hazardous Materials, active or abandoned, at any
property now or previously owned or leased by the Borrower or any of its
Subsidiaries;
(iv) to the best of its knowledge, no Hazardous
Materials have been Released, in a reportable quantity, where such a quantity
has been established by statute, ordinance, rule, regulation or order, at, on or
under any property now or previously owned by the Borrower or any of its
Subsidiaries.
(c) Neither the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency
27
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLIS") or on any similar state or foreign list or which is the subject
of federal, state, foreign or local enforcement actions or other investigations
which may lead to claims against the Borrower or any of its Subsidiaries for
clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA.
(d) No Hazardous Material generated by the Borrower or any of
its Subsidiaries has been recycled, treated, stored, disposed of or Released by
the Borrower or any of its Subsidiaries at any location other than those listed
in Schedule 5.12 hereto.
(e) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property now or previously owned or leased by the Borrower
or any of its Subsidiaries is listed or proposed for listing on the National
Priority List promulgated pursuant to CERCLA, on CERCLIS or on any similar state
or foreign list of sites requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property or properties owned or leased by
the Borrower or any of its Subsidiaries, and no government actions have been
taken or are in process which could subject any of such properties to such Liens
and neither the Borrower nor any of its Subsidiaries would be required to place
any notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(g) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of the Borrower or any of its Subsidiaries in relation to any
property or facility now or previously owned or leased by the Borrower or any of
its Subsidiaries which have not been made available to the Bank.
Section 5.13. No Default on Outstanding Judgments or Orders. The
Borrower and each of its Subsidiaries has satisfied all judgments which would
have a material adverse effect on the condition (financial or otherwise),
business, operations or prospects of the Borrower and its Subsidiaries on a
consolidated basis, and neither the Borrower nor any of its Subsidiaries is in
default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court, arbitrator or federal, state, municipal or other
governmental authority, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would have a material adverse effect on the condition
(financial or otherwise), business, operations or prospects of the Borrower and
its Subsidiaries on a consolidated basis.
28
Section 5.14. No Defaults on Other Agreements. Neither the Borrower
nor any of its Subsidiaries is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction which could have a material adverse effect on
the business, properties, assets, operations or conditions, financial or
otherwise, of the Borrower or any of its Subsidiaries, or the ability of the
Borrower to carry out its obligations under the Facility Documents. Neither the
Borrower nor any of its Subsidiaries is in default in any respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business to
which it is a party.
Section 5.15. Labor Disputes and Acts of God. Neither the business
nor the properties of the Borrower or of any of its Subsidiaries are affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), materially and adversely
affecting such business or properties or the operation of the Borrower or such
Subsidiary.
Section 5.16. Governmental Regulation. Neither the Borrower nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the Interstate Commerce
Act, the Federal Power Act or any statute or regulation limiting its ability to
incur indebtedness for money borrowed as contemplated hereby.
Section 5.17. Partnerships. Neither the Borrower nor any of its
Subsidiaries is a partner in any partnership.
Section 5.18. No Forfeiture. Neither the Borrower nor any of its
Subsidiaries is currently subject to a Forfeiture Proceeding, and, to the best
knowledge of the Borrower, no Forfeiture Proceeding against any of them is
pending or threatened.
Section 5.19. Solvency.
(a) The present fair salable value of the assets of the
Borrower after giving effect to all the transactions contemplated by the
Facility Documents and the funding of the Commitment hereunder exceeds the
amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of the Borrower and its
Subsidiaries as they mature.
(b) The property of the Borrower does not constitute
unreasonably small capital for the Borrower to carry out its business as now
conducted and as proposed to be conducted, including the capital needs of the
Borrower.
(c) The Borrower does not intend to, nor does it believe that
it will, incur debts beyond its ability to pay such debts as they mature (taking
into account
29
the timing and amounts of cash to be received by the Borrower, and of amounts to
be payable on or in respect of debt of the Borrower). The cash available to the
Borrower, after taking into account all other anticipated uses of the cash of
the Borrower, is anticipated to be sufficient to pay all such amounts on or in
respect of debt of the Borrower when such amounts are required to be paid.
(d) The Borrower does not believe that final judgments against
it in actions for money damages will be rendered at a time when, or in an amount
such that, the Borrower will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). The cash available to the Borrower after
taking into account all other anticipated uses of the cash of the Borrower
(including the payments on or in respect of debt referred to in paragraph (c) of
this Section 5.19), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
ARTICLE 6. AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or the Bank shall have the
Commitment under this Agreement, the Borrower shall:
Section 6.1. Maintenance of Existence. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, their corporate
existence and good standing in the jurisdiction of their incorporation, and
qualify and remain qualified, and cause each of its Subsidiaries to qualify and
remain qualified, as a foreign corporation in each jurisdiction in which such
qualification is required.
Section 6.2. Conduct of Business. Continue, and cause each of its
Subsidiaries to continue, to engage in an efficient and economical manner in a
business of the same general type as conducted by it on the date of this
Agreement.
Section 6.3. Maintenance of Properties. Maintain, keep and preserve,
and cause each of its Subsidiaries to maintain, keep and preserve, all of their
properties (tangible and intangible), necessary or useful in the proper conduct
of their business in good working order and condition, ordinary wear and tear
excepted.
Section 6.4. Maintenance of Records. Keep, and cause each of its
Subsidiaries to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrower and their respective Subsidiaries.
Section 6.5. Maintenance of Insurance. Maintain, and cause each of
its Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried
30
by companies engaged in the same or similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof;
with suitable endorsements for the benefit of the Bank, naming the Bank as loss
payee.
Section 6.6. Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, in all respects with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property.
Section 6.7. Right of Inspection. At any reasonable time and from
time to time and upon reasonable notice, permit the Bank or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the properties of, FAvS, the Borrower
and any of their respective Subsidiaries, and to discuss the affairs, finances
and accounts of FAvS, the Borrower and any such Subsidiary with any of its
officers and directors and the Borrower' independent accountants.
Section 6.8. Reporting Requirements. Furnish to the Bank:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and a
consolidated income statement and statements of cash flows and changes in
stockholders' equity and working capital of the Borrower and its Subsidiaries
for such fiscal year, all in reasonable detail and stating in comparative form
the respective consolidated figures for the corresponding date and period in the
prior fiscal year and all prepared in accordance with GAAP and as to the
consolidated statements accompanied by an opinion thereon acceptable to the Bank
by an independent accounting firm of national standing selected by the Borrower
and acceptable to the Bank; (c) as soon as available and in any event within 90
days after the end of each fiscal year of FAvS, a consolidated balance sheet of
FAvS and its Consolidated Subsidiaries as of the end of such fiscal year and a
consolidated income statement and statements of cash flows and changes in
stockholders' equity and working capital of FAvS and its Consolidated
Subsidiaries for such fiscal year, all in reasonable detail and stating in
comparative form the respective consolidated figures for the corresponding date
and period in the prior fiscal year and all prepared in accordance with GAAP and
as to the consolidated statements accompanied by an opinion thereon acceptable
to the Bank by an independent accounting firm of national standing selected by
the Borrower and acceptable to the Bank;
(b) as soon as available and in any event within [60] days
after the end of each fiscal quarter of FAvS, a true and complete copy of FAvS'
Report on Form 10-Q;
31
(c) as soon as available and in any event within [60] days
after the end of each of the first three fiscal quarters, a consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such quarter and a
consolidated income statement and statements of cash flows and changes in
stockholders' equity and working capital, of the Borrower and its Subsidiaries
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, all in reasonable detail and stating in comparative
form the consolidated figures for the corresponding date and period in the
previous fiscal year and all prepared in accordance with GAAP and certified by
the President or Chief Financial Officer of the Borrower (subject to year-end
adjustments);
(d) promptly upon receipt thereof, copies of any reports,
inclusive of any management letters, submitted to FAvS, the Borrower or any of
their respective Subsidiaries by independent certified public accountants in
connection with examination of the financial statements of FAvS, the Borrower or
any such Subsidiary made by such accountants;
(e) promptly and in any event with 45 days after the end of
each fiscal quarter, a certificate of the President or Chief Financial Officer
of the Borrower (i) certifying that to the best of his knowledge no Default or
Event of Default has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action which is proposed to be taken with respect thereto, and (ii) with
computations demonstrating compliance with the covenants contained in Article 8;
(f) as soon as available and in any event within 90 days after
the end of each fiscal year of FAvS, a true and complete copy of FAvS' Report on
Form 10-K;
(g) simultaneously with the delivery of the annual financial
statements referred to in Section 6.8(a), a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(h) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any of its Subsidiaries which, if determined adversely
to the Borrower and its Subsidiaries on a consolidated basis, could have a
material adverse effect on the financial condition, properties or operations of
the Borrower and its Subsidiaries on a consolidated basis;
(i) as soon as possible and in any event within five days
after the occurrence of each Default or Event of Default a written notice
setting forth the details of
32
such Default or Event of Default and the action which is proposed to be taken by
the Borrower with respect thereto;
(j) as soon as possible, and in any event within ten days
after the Borrower knows or has reason to know that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan have
occurred or exist, a statement signed by a senior financial officer of the
Borrower setting forth details respecting such event or condition and the
action, if any, which the Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any reportable event, as defined in section 4043(b)
of ERISA, with respect to a Plan, as to which PBGC has not by regulation waived
the requirement of section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event (provided that a failure to meet the minimum
funding standard of section 412 of the Code or section 302 of ERISA including,
without limitation, the failure to make on or before its due date a required
installment under section 412(m) of the Code or section 302(e) of ERISA, shall
be a reportable event regardless of the issuance of any waivers in accordance
with section 412(d) of the Code) and any request for a waiver under section
412(d) of the Code for any Plan;
(ii) the distribution under section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by the Borrower or an
ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under
section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Borrower or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Borrower or any ERISA Affiliate that results in
liability under section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or the receipt
of the Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that
it is in reorganization or insolvency pursuant to section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
section 515 of ERISA, which proceeding is not dismissed within 30 days;
33
(vi) the adoption of an amendment to any Plan that
pursuant to section 401(a)(29) of the Code or section 307 of ERISA would result
in the loss of tax-exempt status of the trust of which such Plan is a part if
the Borrower or an ERISA Affiliate fails to timely provide security to the Plan
in accordance with the provisions of said Sections;
(vii) any event or circumstance exists which may
reasonably be expected to constitute grounds for the Borrower or any ERISA
Affiliate to incur liability under Title IV of ERISA or under sections
412(c)(11) or 412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more
Plans increase after the date of this Agreement in an amount which is material
in relation to the financial condition of the Borrower and its Subsidiaries, on
a consolidated basis; provided, however, that such increase shall not be deemed
to be material so long as it does not exceed during any consecutive 2-year
period $200,000;
(k) promptly after the request of the Bank, copies of each
annual report filed pursuant to section 104 of ERISA with respect to each Plan
(including, to the extent required by section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in section 103) and each
annual report filed with respect to each Plan under section 4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall be furnished only if they are available to the Borrower or an ERISA
Affiliate;
(l) promptly after the furnishing thereof, copies of any
statement or report furnished to any other party pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Bank pursuant to any other clause of this Section 6.8;
(m) promptly after the sending or filing thereof, copies of
all proxy statements, financial statements and management reports which the
Borrower or any of its Subsidiaries sends to its stockholders (provided that any
management reports shall only be forwarded to the Bank upon the Bank's request),
and copies of all regular, periodic and special reports, and all registration
statements which the Borrower or any of its Subsidiary files with the Securities
and Exchange Commission or any governmental authority which may be substituted
therefor, or with any national securities exchange;
(n) as soon as available, and in any event within 15 days of
the end of each fiscal quarter, an aging schedule with respect to Receivables of
the Borrower with names of all account debtors, as of the end of such calendar
quarter and certified by the President or Chief Financial Officer of the
Borrower;
34
(o) a monthly Borrowing Base Certificate certified by an
officer of the Borrower, within 15 days of the end of each month;
(p) promptly after the commencement thereof or promptly after
the Borrower knows of the commencement or threat thereof, notice of any
Forfeiture Proceeding; and
(q) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its Subsidiaries
as the Bank may from time to time reasonably request.
Section 6.9. Operating Accounts. Maintain, and cause each of their
respective Subsidiaries to maintain, where practicable, all United States
operating accounts at the Bank, and maintain a majority of its overall banking
relationship with the Bank, including depository accounts, cash management and
other non-credit business.
ARTICLE 7. NEGATIVE COVENANTS
So long as the Note shall remain unpaid or the Bank shall have the
Commitment under this Agreement, the Borrower shall not:
Section 7.1. Debt. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist any
Debt, except:
(a) Debt of the Borrower under this Agreement or the Note;
(b) Debt described in Schedule 5.10, including renewals,
extensions or refinancings thereof, provided that the principal amount thereof
does not increase;
(c) Debt of the Borrower or any of its Subsidiaries secured by
purchase money Liens permitted by Section 7.3;
(d) Intercompany indebtedness between the Borrower and FAvS
(more particularly described in the Subordination Agreement) in an amount not to
exceed $1,000,000, which indebtedness is incurred by the Borrower in the
ordinary course of business in connection with cash management activities of the
Borrower; and
(e) Debt (other than Debt permitted under (a) through (d)
above) of the Borrower in an aggregate amount not to exceed $500,000.
Section 7.2. Guaranties, Etc. Assume, guaranty, endorse or otherwise
be or become directly or contingently responsible or liable, or permit any of
their respective Subsidiaries to assume, guarantee, endorse or otherwise be or
become directly or indirectly responsible or liable (including, but not limited
to, an agreement to purchase any
35
obligation, stock, assets, goods or services or to supply or advance any funds,
assets, goods or services, or an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth or otherwise to assure the
creditors of any Person against loss) for the obligations of any Person, except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business.
Section 7.3. Liens. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens for taxes or assessments or other government charges
or levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(b) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established;
(c) Liens under workers' compensation, unemployment insurance,
social security or similar legislation (other than ERISA);
(d) Liens, deposits or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(e) judgment and other similar Liens arising in connection
with court proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(f) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(g) Liens securing obligations of such a Subsidiary to the
Borrower or another such Subsidiary;
36
(h) Liens set forth on Schedule 7.3, provided the Debt secured
by such Liens is permitted by Section 7.1;
(i) purchase money Liens on any property hereafter acquired or
the assumption of any Lien on property existing at the time of such acquisition,
or a Lien incurred in connection with any conditional sale or other title
retention agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is
acquired by the Borrower or any such Subsidiary in the ordinary course of its
business and the Lien on any such property is created contemporaneously with
such acquisition;
(ii) the obligation secured by any Lien so created,
assumed or existing shall not exceed 80 percent of the lesser of cost or fair
market value as of the time of acquisition of the property covered thereby to
the Borrower or any such Subsidiary acquiring the same, unless otherwise
approved by the Bank;
(iii) each such Lien shall attach only to the property
so acquired and fixed improvements thereon; and
(iv) the obligations secured by such Lien are permitted
by the provisions of Section 7.1(e).
Section 7.4. Leases. Create, incur, assume or suffer to exist, or
permit their respective Subsidiaries to create, incur, assume or suffer to
exist, any obligation as lessee for the rental or hire of any real or personal
property, except: (a) leases existing on the date of this Agreement and any
extensions or renewals thereof; and (b) leases (other than Capital Leases) which
do not in the aggregate require the Borrower and their respective Subsidiaries
on a consolidated basis to make payments (including taxes, insurance,
maintenance and similar expense which the Borrower or any Subsidiary is required
to pay under the terms of any lease) in any fiscal year of the Borrower in
excess of $250,000.
Section 7.5. Investments. Make, or permit any of its Subsidiaries to
make, any loan or advance to any Person or purchase or otherwise acquire, or
permit any such Subsidiary to purchase or otherwise acquire, any capital stock,
assets, obligations or other securities of, make any capital contribution to, or
otherwise invest in, or acquire any interest in, any Person, except: (a) direct
obligations of the United States of America or any agency thereof with
maturities of one year or less from the date of acquisition; (b) commercial
paper of a domestic issuer rated at least "A-1" by Standard & Poor's Corporation
or "P-1" by Xxxxx'x Investors Service, Inc.; (c) certificates of deposit or
other investments with maturities of one year or less from the date of
acquisition issued by any commercial bank operating within the United States of
America having capital and surplus in excess of $500,000,000; and (d) for stock,
obligations or securities received in
37
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any such Subsidiary. Notwithstanding the foregoing, the Borrower may
enter into intercompany loan transactions with FAvS in amounts not to exceed
$1,000,000, so long as such transactions are entered into in the ordinary course
of business in connection with cash management activities of the Borrower .
Section 7.6. Dividends. Declare or pay any dividends, purchase,
redeem, retire or otherwise acquire for value any of its capital stock now or
hereafter outstanding, or make any distribution of assets to its stockholders as
such whether in cash, assets or in obligations of the Borrower, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or otherwise in
respect of any shares of its capital stock or permit any of its Subsidiaries to
purchase or otherwise acquire for value any stock of the Borrower or another
such Subsidiary, except that: (a) the Borrower may declare and deliver dividends
and make distributions payable solely in common stock of the Borrower; (b) the
Borrower may purchase or otherwise acquire shares of its capital stock by
exchange for or out of the proceeds received from a substantially concurrent
issue of new shares of its capital stock; and (c) the Borrower may declare or
pay dividends with respect to the Borrower's Series A Convertible Preferred
Stock and have the ability to buy back such Series A Convertible Preferred
Stock, provided that the Borrower is in full compliance with the covenants set
forth in Article 8 herein and no Event of Default has occurred hereunder.
Section 7.7. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of its Subsidiaries to sell, lease, assign,
transfer or otherwise dispose of, any of its now owned or hereafter acquired
assets (including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests); except: (a) for inventory
disposed of in the ordinary course of business; (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
and (c) that any such Subsidiary may sell, lease, assign or otherwise transfer
its assets to the Borrower.
Section 7.8. Stock of Subsidiaries, Etc. Sell or otherwise dispose
of any shares of capital stock of any of its Subsidiaries or permit any such
Subsidiary to issue any additional shares of its capital stock, except
directors' qualifying shares, or form any Subsidiaries, unless such Subsidiary
enters into a guarantee of the Loans on terms acceptable to the Bank and enters
into a security agreement acceptable to the Bank, and provides a fair value
balance sheet of such Subsidiary to the Bank.
Section 7.9. Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate or permit any of
their respective Subsidiaries to enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or
38
the rendering of any service, with any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of the Borrower or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than it would obtain in a comparable arms'
length transaction with a Person not an Affiliate, and except as set forth on
Schedule 7.9.
Section 7.10. Mergers, Etc. Merge or consolidate with, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), or permit any of its Subsidiaries to do so except that any such
Subsidiary may merge into or transfer assets to the Borrower.
ARTICLE 8. FINANCIAL COVENANTS
So long as the Note shall remain unpaid or the Bank shall have the
Commitment under this Agreement:
Section 8.1. Minimum Tangible Capital Base. The Borrower, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, commencing April 30, 1998, a Tangible Capital Base of not less
than $8,500,000, and such minimum dollar amount shall increase from year to year
by the sum of 50% of the Borrower's Net Income for each previous fiscal year
(with no reduction for losses) commencing with the annual Net Income determined
as of January 31, 1999.
Section 8.2. Maximum Leverage Ratio. The Borrower, on a consolidated
basis, shall maintain at all times, as measured at the end of each fiscal
quarter, commencing April 30, 1998, a ratio of Total Funded Debt to Tangible
Capital Base of not greater than 2.00 to 1.0.
Section 8.3. Minimum Interest Coverage Ratio. The Borrower, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, commencing April 30, 1998 for the twelve month period then ended
(a rolling twelve month calculation measured as of the end of each successive
quarter), an Interest Coverage Ratio of not less than 2.00 to 1.0.
Section 8.4. Minimum Current Ratio. The Borrower, on a consolidated
basis, shall maintain at all times, as measured at the end of each fiscal
quarter, commencing April 30, 1998, a ratio of Current Assets to Current
Liabilities of 1.50 to 1.0.
ARTICLE 9. EVENTS OF DEFAULT
Section 9.1. Events of Default. Any of the following events shall be
an "Event of Default":
39
(a) the Borrower shall: (i) fail to pay the principal of the
Note as and when due and payable; or (ii) fail to pay interest on the Note or
any fee or other amount due hereunder as and when due and payable;
(b) any representation or warranty made or deemed made by the
Borrower in this Agreement or in any other Facility Document or which is
contained in any certificate, document, opinion, financial or other statement
furnished at any time under or in connection with any Facility Document shall
prove to have been incorrect in any material respect on or as of the date made
or deemed made;
(c) the Borrower shall: (i) fail to perform or observe any
term, covenant or agreement contained in Section 2.3 or Articles 7 or 8; or (ii)
fail to perform or observe any term, covenant or agreement on its part to be
performed or observed (other than the obligations specifically referred to
elsewhere in this Section 9.1) in any Facility Document and such failure shall
continue for 20 consecutive days;
(d) the Borrower, or any of its Subsidiaries: (i) shall
generally not, or be unable to, or shall admit in writing its inability to, pay
its debts as such debts become due; or (ii) shall make an assignment for the
benefit of creditors, petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets; or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 30 days or more; or shall be the subject of any
proceeding under which its assets may be subject to seizure, forfeiture or
divestiture (other than a proceeding in respect of a Lien permitted under
Section 7.3(b)); or (v) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of 30 days or more;
(e) one or more judgments, decrees or orders for the payment
of money in excess of $100,000 in the aggregate shall be rendered against the
Borrower, or any of its Subsidiaries and such judgments, decrees or orders shall
continue unsatisfied and in effect for a period of 30 consecutive days without
being vacated, discharged, satisfied or stayed or bonded pending appeal;
(f) any event or condition shall occur or exist with respect
to any Plan or Multiemployer Plan concerning which the Borrower is under an
obligation to furnish a report to the Bank in accordance with Section 6.8(h)
hereof and as a result of such
40
event or condition, together with all other such events or conditions, the
Borrower or any ERISA Affiliate has incurred or in the opinion of the Bank is
reasonably likely to incur a liability to a Plan, a Multiemployer Plan, the PBGC
or a section 4042 Trustee (or any combination of the foregoing) which is
material in relation to the financial position of the Borrower and its
Subsidiaries, on a consolidated basis; provided, however, that any such amount
shall not be deemed to be material so long as all such amounts do not exceed in
the aggregate during any consecutive 2-year period $200,000;
(g) the Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material (as
specified in Section 9.1(g) hereof);
(h) any Forfeiture Proceeding, having a material adverse
effect on the condition (financial or otherwise), business, operations or
prospects of the Borrower and its Subsidiaries, on a consolidated basis, shall
have been commenced or the Borrower shall have given the Bank written notice of
the commencement of any Forfeiture Proceeding;
(i) there shall be (x) any material adverse change in the
condition (financial or otherwise), business, management, operations,
properties, prospects of the Borrower and its Subsidiaries on a consolidated
basis or (y) any Change of Control of the Borrower and its respective
Subsidiaries since the Closing Date;
(j) the Security Agreement shall at any time after its
execution and delivery and for any reason cease: (A) to create a valid and
perfected first priority security interest in and to the property purported to
be subject to such agreement; or (B) to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by the party thereto, or such party shall deny it has further
liability or obligation thereunder or such party shall fail to perform any of
its obligations thereunder; or
(k) there shall exist any default and acceleration under that
certain credit agreement between FCC and National Airmotive Corporation.
Section 9.2. Remedies. If any Event of Default shall occur and be
continuing, the Bank may, by notice to the Borrower, (a) declare the Commitments
to be terminated, whereupon the same shall forthwith terminate, and (b) declare
the outstanding principal of the Note, all interest thereon and all other
amounts payable under this Agreement and the Note or any one of them to be
forthwith due and payable, whereupon the Note, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided that, in the case of an Event of Default
referred to in Section 9.1(d) or Section 9.1(h) above, the Commitment shall be
immediately terminated, and the Note, all interest thereon and all other amounts
payable
41
under this Agreement shall be immediately due and payable without notice,
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
ARTICLE 10. MISCELLANEOUS
Section 10.1. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower and the Bank,
and any provision of this Agreement may be waived by the Borrower and the Bank.
No failure on the part of the Bank to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 10.2. Usury. All agreements between the Borrower and the
Bank are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of maturity of the indebtedness evidenced by
the Note or otherwise, shall the amount paid or agreed to be paid to the Bank
for the use or the forbearance of the indebtedness evidenced by the Note exceed
the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof provided,
however that in the event there is a change in the law which results in a higher
permissible rate of interest, then the Note shall be governed by such new law as
of its effective date. In this regard, it is expressly agreed that it is the
intent of the Borrower and the Bank in the execution, delivery and acceptance of
the Note to contract in strict compliance with the laws of the State of
Connecticut from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the Facility
Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from circumstances whatsoever the Bank should
ever receive as interest an amount which would exceed the highest lawful rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal balance evidenced hereby and not to the payment of interest.
This provision shall control every other provision of all agreements between the
Borrower and the Bank.
Section 10.3. Expenses. The Borrower shall reimburse the Bank on
demand for all reasonable costs, expenses and charges (including, without
limitation, courier expenses, reasonable fees and charges of external legal
counsel for the Bank) incurred by the Bank in connection with the preparation,
negotiation, execution, delivery, filing, recording, performance,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Note or any
Facility Document. The Borrower agrees to indemnify the Bank and its directors,
42
officers, employees and agents from, and hold each of them harmless against, any
and all losses, liabilities, claims, damages or expenses incurred by any of them
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to any actual or proposed use by the Borrower or any of
its Subsidiaries of the proceeds of the Loans, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
Section 10.4. Survival. The obligations of the Borrower under
Section 10.3 shall survive the repayment of the Loans and the termination of the
Commitment.
Section 10.5. Assignment; Participations. This Agreement shall be
binding upon, and shall inure to the benefit of, the Borrower, the Bank and
their respective successors and assigns, except that the Borrower may not assign
or transfer its rights or obligations hereunder. With the consent of the
Borrower, which consent shall not be unreasonably withheld, the Bank may assign,
or sell participations in, all or any part of any Loan to another bank or other
entity, in which event (a) in the case of an assignment, upon notice thereof by
the Bank to the Borrower, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, benefits and
obligations as it would have if it were the Bank hereunder; and (b) in the case
of a participation, the participant shall have no rights under the Facility
Documents. The agreement executed by the Bank in favor of the participant shall
not give the participant the right to require the Bank to take or omit to take
any action hereunder except action directly relating to (i) the extension of a
payment date with respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (ii) the reduction
of the principal amount outstanding hereunder or (iii) the reduction of the rate
of interest payable on such amount or any amount of fees payable hereunder to a
rate or amount, as the case may be, below that which the participant is entitled
to receive under its agreement with the Bank. The Bank may furnish any
information concerning the Borrower in the possession of the Bank from time to
time to assignees and participants (including prospective assignees and
participants); provided that the Bank shall require any such prospective
assignee or such participant (prospective or otherwise) to agree in writing to
maintain the confidentiality of such information. The Bank shall have the right
at any time to pledge all or any portion of its rights under the Loans or this
Agreement or the Note to any of the twelve (12) Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or enforcement thereof shall release the Bank from its obligations under
any of the Facility Documents.
Section 10.6. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be delivered in person or
sent by overnight courier, facsimile,
43
ordinary mail, cable or telex addressed to such party at its "Address for
Notices" on the signature page of this Agreement. Notices shall be effective:
(a) on the day on which delivered to such party in person, (b) on the first
Banking Day after the day on which sent to such party by overnight courier, (c)
if given by mail, 48 hours after deposit in the mails with first-class postage
prepaid, addressed as aforesaid, and (d) if given by facsimile, cable or telex,
when the facsimile, cable or telex is transmitted to the facsimile, cable or
telex number as aforesaid; provided that notices to the Bank shall be effective
upon receipt.
Section 10.7. Setoff. The Borrower hereby grants to the Bank, a
lien, security interest and right of setoff as security for all liabilities and
obligations to the Bank, whether now existing or hereafter in the possession,
custody, safekeeping or control of the Bank or any entity under the control of
Fleet Financial Group, Inc., or in transit to any of them. At any time, without
demand or notice, the Bank may set off the same or any part thereof and apply
the same to any liability or obligation of the Borrower even though unmatured
and regardless of the adequacy of any other collateral securing the Loans. ANY
AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT
OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
SECTION 10.8. JURISDICTION; IMMUNITIES. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY CONNECTICUT STATE OR UNITED
STATES FEDERAL COURT SITTING IN CONNECTICUT OVER ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTE, AND THE BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CONNECTICUT STATE OR FEDERAL
COURT. THE BORROWER IRREVOCABLY CONSENT TO THE SERVICE OF ANY AND ALL PROCESS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO THE
BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 10.6. THE BORROWER 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. THE BORROWER FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH
STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF
FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING
BROUGHT AGAINST THE BANK SHALL BE BROUGHT ONLY IN CONNECTICUT STATE OR UNITED
STATES FEDERAL COURT SITTING IN CONNECTICUT.
44
(a) Nothing in this Section 10.8 shall affect the right of the
Bank to serve legal process in any other manner permitted by law or affect the
right of the Bank to bring any action or proceeding against the Borrower or its
property in the courts of any other jurisdictions.
(b) To the extent that the Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether from service or notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its property,
the Borrower hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the Note.
Section 10.9. Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 10.10. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 10.11. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
Section 10.12. Integration. The Facility Documents set forth the
entire agreement between the parties hereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
SECTION 10.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CONNECTICUT.
Section 10.14. Confidentiality. The Bank agrees (on behalf of itself
and each of its affiliates, directors, officers, employees and representatives)
to use reasonable precautions to keep confidential, in accordance with safe and
sound banking practices, any nonpublic information supplied to it by the
Borrower pursuant to this Agreement which is identified by the Borrower as being
confidential at the time the same is delivered to the Bank, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for the Bank, (iii) to bank examiners, auditors or accountants, (iv) in
connection with any
45
litigation to which the Bank is a party or (v) to any assignee or participant
(or prospective assignee or participant) so long as such assignee or participant
(or prospective assignee or participant) agrees to maintain the confidentiality
of such information; and provided finally that in no event shall the Bank be
obligated or required to return any materials furnished by the Borrower.
Section 10.15. Treatment of Certain Information. The Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by the Bank or by one or more of its subsidiaries
or affiliates and (b) acknowledges that information delivered to the Bank by the
Borrower may be provided to each such subsidiary and affiliate.
SECTION 10.16. COMMERCIAL WAIVER. THE BORROWER ACKNOWLEDGES THAT THE
LOANS EVIDENCED BY THE NOTE ARE FOR COMMERCIAL PURPOSES AND WAIVES ANY RIGHT TO
NOTICE AND HEARING UNDER SECTIONS 52-278a THROUGH 52-278n OF THE CONNECTICUT
GENERAL STATUTES AS NOW OR HEREAFTER AMENDED AND AUTHORIZES THE ATTORNEY OF THE
BANK, OR ANY SUCCESSOR THERETO, TO ISSUE A WRIT OF PREJUDGMENT REMEDY WITHOUT
COURT ORDER. FURTHER, THE BORROWER HEREBY WAIVES, TO THE EXTENT PERMITTED BY
LAW, THE BENEFITS OF ALL VALUATION, APPRAISEMENTS, HOMESTEAD, EXEMPTION, STAY,
REDEMPTION AND MORATORIUM LAWS NOW IN FORCE OR WHICH MAY HEREAFTER BECOME LAWS.
THE BORROWER ACKNOWLEDGES THAT IT MAKES THESE WAIVERS AND THE WAIVERS CONTAINED
IN SECTION 10.8 KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF
THE RAMIFICATIONS OF THESE WAIVERS WITH ITS ATTORNEYS.
SECTION 10.17. WAIVER OF JURY TRIAL BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE BORROWER AND THE BANK WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
BORROWER AND THE BANK DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE BORROWER AND THE BANK HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS AGREEMENT OR ANY OF THE OTHER
FACILITY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
46
Section 10.18. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or Event of Default if such action
is taken or condition exists.
Section 10.19. Time of the Essence. Time and punctuality shall be of
the essence with respect to this instrument, but no delay or failure of the Bank
to enforce any of the provisions herein contained and no conduct or statement of
the Bank shall waive or affect any of the Bank's rights hereunder.
Section 10.20. Reference to and Effect on the Facility Documents.
(a) Upon the effectiveness of this Agreement, on and after the
date hereof each reference in the Facility Documents to the Credit Agreement or
the Note, shall mean and be a reference to this Credit Agreement as amended and
restated hereby or the Note as amended and restated in connection with the
execution and delivery of this Agreement.
(b) The execution, delivery and effectiveness of this
Agreement shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Bank under any of the Facility Documents, nor
constitute a waiver of any provision of any of the Facility Documents.
Section 10.21. Replacement Promissory Note. Upon receipt of an
affidavit of an officer of the Bank as to the loss, theft, destruction or
mutilation of any Note or any other security document which is not of public
record, and, in the case of any such loss, theft, destruction or mutilation,
upon surrender and cancellation of such Note or other security document,
Borrower will issue, in lieu thereof, a replacement Note or other security
document in the same principal amount thereof and otherwise of like tenor.
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
AIRCRAFT PARTS INTERNATIONAL XXXXX, INC.
By___________________________________
Xxxx X. Xxxxxxxxx
Title: Vice President and
Secretary
Address for Notices to Borrower:
0000 Xxxxxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Vice President and Chief
Operating Officer
with a copy to:
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
FLEET NATIONAL BANK
By_____________________________________
Xxxx X. Xxxxxxx
Senior Vice President
Address for Notices and Lending Office:
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Senior Vice President
Facsimile No.: (000) 000-0000
48
EXHIBITS
Exhibit A - Note
Exhibit B - Subordination Agreement
Exhibit C - Security Agreement
Exhibit D - Opinion of Counsel for Borrower
Exhibit E - Notice of Borrowing
SCHEDULES
Schedule 5.5(b) - Financial Statements
Schedule 5.9 - Subsidiaries of Borrower
Schedule 5.10 - Credit Arrangements
Schedule 5.12 - Hazardous Materials
Schedule 7.3 - Liens
Schedule 7.9 - Transactions with Affiliates Outside the Ordinary
Course of Business
EXHIBIT A
PROMISSORY NOTE
$10,000,000 Stamford, Connecticut
April 23, 1998
For value received, AIRCRAFT PARTS INTERNATIONAL XXXXX, INC. (the
"Borrower"), hereby promises to pay to the order of FLEET NATIONAL BANK, (the
"Bank") at the office of the Bank at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, for the account of the appropriate Lending Office of the Bank, the
principal sum of TEN MILLION DOLLARS ($10,000,000) or, if less, the amount of
Loans made by the Bank to the Borrower pursuant to the Credit Agreement referred
to below, in lawful money of the United States of America and in immediately
available funds, on the date(s) and in the manner provided in said Credit
Agreement. The Borrower also promises to pay interest on the unpaid principal
balance hereof, for the period such balance is outstanding, at said principal
office for the account of said Lending Office, in like money, at the rates of
interest as provided in the Credit Agreement referred to below, on the date(s)
and in the manner provided in said Credit Agreement.
The date and amount of each Loan made by the Bank to the Borrower
under the Credit Agreement referred to below, and each payment of principal
thereof, shall be recorded by the Bank on its books and, prior to any transfer
of this Note (or, at the discretion of the Bank, at any other time), endorsed by
the Bank on the schedule attached hereto or any continuation thereof.
This is the Note referred to in that certain Credit Agreement (as
amended from time to time the "Credit Agreement") dated of even date herewith
among the Borrower and the Bank and evidences the Loans made by the Bank
thereunder. All terms not defined herein shall have the meanings given to them
in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity
of this Note upon the occurrence of certain Events of Default and for
prepayments on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of Connecticut.
THE BORROWER AND THE BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A
2
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS NOTE AND MAKE THE
LOANS.
AIRCRAFT PARTS INTERNATIONAL XXXXX, INC.
By_____________________________________
Xxxx X. Xxxxxxxxx
Title: Vice President and
Secretary
Amount Amount of Balance Notation
Date of Loan Payment Outstanding By
---- ------- ------- ----------- --
EXHIBIT E
NOTICE OF BORROWING
[DATE]
Fleet National Bank
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Ladies and Gentlemen:
The undersigned, a duly authorized officer of Aircraft Parts
International Xxxxx, Inc. refers to the Credit Agreement dated as of April __,
1998 between Aircraft Parts International Xxxxx, Inc. and Fleet National Bank
(as amended, modified or supplemented from time to time the "Credit Agreement")
and hereby gives you notice pursuant to Section 4.2 of the Credit Agreement that
the undersigned hereby requests a Loan, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by the Credit Agreement. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement.
(i) The Banking Day of the Proposed Borrowing is
_______________.
(ii) The aggregate amount of the Proposed Borrowing is U.S.
$______________.
(iii) The interest rate for the Proposed Borrowing is (check
one):
_____ Prime Rate
_____ LIBO Rate (Complete Section 1 below)
_____ Cost of Funds Rate
1. (LIBOR Loans Only) The initial Interest Period for the Proposed
Borrowing is (check one):
_____ one (1) month
_____ two (2) months
_____ three (3) months
In accordance with Section 4.2 of the Credit Agreement, the
undersigned hereby certifies that all representations and warranties of the
Borrower contained in each
2
Facility Document, including Article 5 of the Credit Agreement and Article 2 of
the Security Agreement, are true and correct on the date hereof, and unless we
otherwise notify you in writing, you may rely on the fact that such statements
are true and correct on the day of the Proposed Borrowing before and after
giving effect to such Proposed Borrowing and the application of the proceeds
thereof, as though made on and as of such date. The undersigned also certifies
that there has been no material adverse change in the business, management
operations, properties, prospects or condition (financial or otherwise) of the
Borrower since the Closing Date.
The undersigned further certifies and warrants that no Default or
Event of Default is existing as of the date of this Certificate and, unless we
notify you in writing, as of the day of the Proposed Borrowing.
Very truly yours,
AIRCRAFT PARTS INTERNATIONAL XXXXX, INC.
By _____________________________________
Name:
Title:
