EXHIBIT 10.2
EXECUTION
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CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of April 13, 2000, by and between ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇, INC., a Massachusetts corporation (the "Borrower") and CITIZENS BANK OF
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MASSACHUSETTS, a Massachusetts savings bank (the "Lender").
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In consideration of the mutual covenants contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
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All capitalized terms not defined herein but defined in Appendix A attached
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hereto shall have the meanings given to such terms in Appendix A attached
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hereto. All terms defined in this Agreement shall also have such defined
meanings when used in the other Financing Documents or any certificate or other
document made or delivered pursuant hereto or thereto, unless otherwise
specified herein or therein.
All references in this Agreement to Sections, Subsections, Exhibits,
Schedules and Appendices refer to the Sections, Subsections, Exhibits, Schedules
and Appendices of this Agreement unless otherwise indicated. All Exhibits,
Schedules and Appendices attached to this Agreement are incorporated herein and
made a part hereof.
SECTION 2. THE LOANS.
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2.1 General.
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(a) Subject to the terms and conditions hereof, the Lender agrees to
make revolving credit loans (hereinafter referred to collectively as the
"Loans" and each singly as a "Loan") to the Borrower from time to time
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during the Revolving Credit Period in the aggregate principal amount of up
to Five Million and 00/100 Dollars ($5,000,000.00) (the "Maximum Amount").
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During the Revolving Credit Period, the Borrower may from time to time
borrow, repay and reborrow Loans, all in accordance with the terms and
conditions hereof.
(b) On the Closing Date, the Borrower shall execute and deliver to
the Lender a certain Revolving Credit Note of the Borrower, dated as of the
Closing Date, from the Borrower, evidencing the Loans, substantially in the
form of Exhibit A attached hereto (the "Note").
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2.2 Borrowing Base. Notwithstanding any provision contained in any of
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the Financing Documents to the contrary, the aggregate principal amount of the
Loans outstanding, from time to time, shall never exceed the lesser of either
(hereinafter referred to as the "Borrowing Base"):
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(a) the Maximum Amount; or
(b) Fifty Percent (50%) of the Eligible Inventory, valued at the
lower of cost or market value.
Descriptions or determinations by the Lender regarding Eligible Inventory
are intended solely for credit management for the Loans. Such descriptions and
determinations are not intended and shall not be construed as any determination
of actual value of any Collateral nor shall the same affect the security
interests granted to the Lender under the Security Documents. The Borrower
shall be responsible for all credit risks concerning all Inventory of the
Borrower. Determinations and descriptions of eligibility shall not alter in any
way the status of Collateral as security for the Obligations.
2.3 Procedure for Borrowing. When making a request for any Loan, the
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Borrower shall deliver to the Lender an irrevocable notice thereof (which notice
must be received by the Lender prior to 12:00 Noon, Boston, Massachusetts time
one Business Day prior to the requested Borrowing Date), specifying (i) the
amount to be borrowed and (ii) the requested Borrowing Date. Each borrowing
hereunder shall be in an amount equal to Fifty Thousand and 00/100 Dollars
($50,000.00) or a whole multiple of Fifty Thousand and 00/100 Dollars
($50,000.00) in excess thereof (except with respect to any Loan made to pay
interest hereunder). Such borrowing will then be made available to the Borrower
by the Lender crediting the Borrower's loan account with the Lender with the
amount so borrowed on such Borrowing Date.
2.4 Use of Proceeds. The proceeds of the Loans shall be used by the
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Borrower solely to finance the general working capital requirements of the
Borrower.
2.5 Interest Rate. Each Loan shall bear interest at a rate per annum
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equal to the Prime Rate.
2.6 Payment of Loans. On the Maturity Date (or such earlier date on which
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the Loans become due and payable pursuant to subsection 7.1), the entire
outstanding balance of the Loans (including without limitation, all unpaid
principal, all accrued but unpaid interest and all unpaid fees, charges, costs
and expenses) shall be immediately due and payable IN FULL. Until the Maturity
Date (or such earlier date on which the Loans become due and payable pursuant to
subsection 7.1), interest on the outstanding principal balance of the Loans
shall be due and payable monthly, in arrears, on the last day of each calendar
month, commencing with the first calendar month ending after the Closing Date;
provided, however, any such interest accruing at the Late Rate shall be due and
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payable on demand.
2.7 Method of Payment. All payments (including prepayments) to be made by
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the Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without set off or counterclaim and shall be made prior
to 12:00 Noon, Boston, Massachusetts time, on the due date thereof to the
Lender, at the Lender's office specified in subsection 9.4 (or such other place
as the Lender may specify in writing from time to time), in Dollars and in
immediately available funds. Payments received by the Lender after such time
shall be deemed to have been received on the next Business Day. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. The Borrower hereby authorizes the
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Lender to charge or debit any deposit account of the Borrower with the Lender to
affect any payment due hereunder.
2.8 Prepayments. The Borrower may at any time and from time to time
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prepay the Loans, in whole or in part, without premium or penalty. All amounts
received for the prepayment of Loans shall be applied to the Obligations as
follows, so long as no Event of Default has occurred and is continuing: first,
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to any fees, charges, costs and expenses then owed by the Borrower to the
Lender, second, to any accrued and unpaid interest under the Loans; and third,
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to the unpaid principal balance of the Loans. Upon the occurrence and during the
continuation of any Event of Default, all amounts received for the prepayment of
Loans shall be applied to the Obligations in such manner as the Lender may
reasonably determine.
2.9 Late Rate; Late Charge.
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(a) Notwithstanding any provision contained in this Agreement or any
other Financing Document to the contrary, if all or a portion of (i) the
principal amount of any Loan, (ii) any interest payable thereon or (iii)
any fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise, but taking
into account any applicable grace period under subsection 7.1(a)), such
overdue amount shall bear interest at a rate per annum (hereinafter
referred to as the "Late Rate") which is equal to the rate that would
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otherwise be applicable to a Loan under this Agreement, plus Two and 00/100
Percent (2.00%), from the date of such non-payment until such amount is
paid in full (after as well as before judgment).
(b) The Borrower agrees to pay, on demand and in addition to all
other amounts payable under this Agreement and the other Financing
Documents, a late charge on any payment that is more than ten (10) calendar
days late, which late charge shall be equal to the greater of either (i)
Thirty Five and 00/100 Dollars ($35.00) or (ii) Five and 00/100 Percent
(5.00%) of such late payment. The assessment or collection of late charges
is not intended and shall not be construed to permit payment of any amount
payable under this Agreement or any of the other Financing Documents beyond
the applicable due date thereof. The time period which is allowed before
the assessment of late charges is not intended and shall not be construed
as a grace or cure period with respect to payment or performance of any
obligation under this Agreement or any of the other Financing Documents.
(c) Notwithstanding any provision contained in this Agreement or any
other Financing Document to the contrary, in no event shall the amount paid
or agreed to be paid by the Borrower (or any other Person) as interest or
as a premium on the Loans or any other Obligations exceed the highest
lawful rate permissible under any law applicable thereto.
2.10 Computation of Interest and Fees. Interest and all fees payable
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hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due. Any change in the interest rate on
a Loan resulting from a change in the Prime Rate shall become effective as of
the opening of business on the day on which such change becomes effective.
Interest under the Loans shall accrue on each day or part thereof (including any
day
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which is not a Business Day) that any principal is outstanding thereunder.
Each determination of an interest rate by the Lender pursuant to any provision
of this Agreement shall be conclusive and binding on the Borrower in the absence
of manifest error.
2.11 Loan Statements. All advances by the Lender to or for the benefit of
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the Borrower pursuant to this Agreement shall be charged to the loan account or
accounts opened in the Borrower's name on the Lender's books. The Lender will
periodically render to the Borrower statements of such loan account or accounts,
which shall, to the extent permitted by applicable law, constitute prima facie
evidence of the existence and amounts of the outstanding Loans; provided,
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however, the failure of the Lender to render any such statement to the Borrower,
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or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) all of the Loans, in accordance
with the terms and conditions of this Agreement and the other Financing
Documents.
SECTION 3. CONDITIONS PRECEDENT.
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3.1 Conditions to Effectiveness and Initial Extensions of Credit. The
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effectiveness of this Agreement and the agreement of the Lender to make the
initial Extension of Credit requested to be made by it is subject to the
satisfaction, immediately prior to or concurrently with the making of such
Extension of Credit on the Closing Date, of the following conditions precedent:
(a) Financing Documents. The Lender shall have received the
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following Financing Documents, each as duly executed by the parties
thereto, with their signatures properly witnessed and notarized thereon
where indicated: (i) this Agreement; (ii) the Note conforming to the
requirements hereof; (iii) the Subsidiary Guaranty; (iv) the Security
Agreements and (v) the Collateral Assignment of Lease.
(b) Actions to Perfect Liens. The Lender shall have received
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evidence in form and substance reasonably satisfactory to it that all
filings, recordings and registrations, including, without limitation, the
filing of duly executed financing statements on form UCC-1, necessary or,
in the opinion of the Lender, desirable to perfect the Liens created by the
Security Documents shall have been completed (or, to the extent that any
such filings, recordings, registrations and other actions shall not have
been completed, arrangements satisfactory to the Lender for the completion
thereof shall have been made).
(c) Pledged Stock; Stock Powers. The Lender shall have received the
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original certificates representing the shares of Capital Stock pledged
pursuant to the Borrower Security Agreement, together with an undated stock
power for each such certificate executed in blank by a duly authorized
officer of the Borrower.
(d) Lien Searches. The Lender shall have received the results of a
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recent search by a Person reasonably satisfactory to the Lender, of the
UCC, judgment and tax lien filings which may have been filed with respect
to personal property of the Borrower and each of its Subsidiaries in the
jurisdictions set forth in Appendix B, and the results of such search shall
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be satisfactory to the Lender.
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(e) UCC-3 Termination Statements. The Lender shall have received
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UCC-3 termination statements and any other instrument necessary to
terminate the Liens granted by the Borrower to any Person (other than
Permitted Liens) (or, to the extent that any such UCC-3 termination
statements or any other instrument shall not have been obtained and filed,
arrangements satisfactory to the Lender for the obtaining and filing
thereof shall have been made).
(f) Corporate Proceedings of the Borrower. The Lender shall have
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received a copy of the resolutions, in form and substance satisfactory to
the Lender, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and the other
Financing Documents to which it is a party, (ii) the Extensions of Credit
contemplated hereunder and (iii) the granting by it of the Liens created
pursuant to the Security Documents to which Borrower is a party, all as
certified by the Clerk or an Assistant Clerk of the Borrower as of the
Closing Date, which certificate shall be in form and substance reasonably
satisfactory to the Lender and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(g) Borrower Incumbency Certificate. The Lender shall have received
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a certificate of the Borrower, dated as of the Closing Date, as to the
incumbency and signature of the officers of the Borrower executing any
Financing Document reasonably satisfactory in form and substance to the
Lender, executed by the President or any Vice President and the Clerk or an
Assistant Clerk of the Borrower.
(h) Corporate Proceedings of Subsidiaries. The Lender shall have
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received a copy of the resolutions, in form and substance reasonably
satisfactory to the Lender, of the Board of Directors of each Subsidiary of
the Borrower authorizing (i) the execution, delivery and performance of the
Financing Documents to which it is a party and (ii) the granting by it of
the Liens created pursuant to the Security Documents to which it is a
party, all as certified by the Clerk or an Assistant Clerk of each such
Subsidiary as of the Closing Date, which certificate shall be in form and
substance reasonably satisfactory to the Lender and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(i) Subsidiary Incumbency Certificate. The Lender shall have
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received a certificate of each Subsidiary of the Borrower, dated as of the
Closing Date, as to the incumbency and signature of the officers of each
such Subsidiary executing any Financing Document, reasonably satisfactory
in form and substance to the Lender, executed by the President or any Vice
President and the Secretary of each such Subsidiary.
(j) Corporate Documents. The Lender shall have received true and
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complete copies of the Articles (or Certificate) of Organization (or
Incorporation) and By-Laws of each of the Borrower and its Subsidiaries, as
certified as of the Closing Date as complete and correct copies thereof by
the Clerk (or Secretary) or an Assistant Clerk (or Assistant Secretary) of
the Borrower or such Subsidiary, whichever is applicable.
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(k) Legal Existence, Good Standing, Tax Good Standing and Foreign
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Qualification Certificates. The Lender shall have received certificates of
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legal existence, good standing, tax good standing and foreign qualification
for each of the Borrower and its Subsidiaries, all of recent date issued by
the appropriate Governmental Authorities.
(l) Insurance. The Lender shall have received evidence in form and
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substance satisfactory to it that all of the requirements regarding the
maintenance of insurance contained in this Agreement and the Security
Documents shall have been satisfied.
(m) Landlord's Consent and Subordination Agreements. The Lender
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shall have received a landlord's consent and subordination agreements from
each landlord of the Borrower (other than the Borrower's landlord for the
real estate located in Canton, Massachusetts) and each Subsidiary, together
with a true, correct and complete copy of the Borrower's and each such
Subsidiary's real estate lease with such landlord. Each such landlord's
consent and subordination agreement must be in form and substance
acceptable to the Lender.
(n) Borrowing Base Certificate; Inventory Report. The Lender shall
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have received (i) a Borrowing Base Certificate; and (ii) a report
summarizing all Inventory, in such form and with such detail or information
as the Lender may reasonably request, all as completed and signed by a
Responsible Officer of the Borrower.
(o) Legal Opinion. The Lender shall have received an executed
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legal opinion of Ropes & ▇▇▇▇, counsel to the Borrower, covering such
matters related to the transactions contemplated by this Agreement and the
other Financing Documents as the Lender may reasonably request. Such legal
opinion shall be in a form and substance reasonably acceptable to the
Lender and its counsel.
(p) Fees and Expenses The Lender shall have received reimbursement
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or payment of (i) all legal fees incurred by the Lender in connection with
the transactions contemplated herein, and (ii) all other out-of-pocket
costs and expenses incurred by the Lender in connection with the
transactions contemplated herein.
3.2 Conditions to Each Extension of Credit. The agreement of the Lender
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to make any Extension of Credit requested to be made by it on any date
(including, without limitation, its initial Extension of Credit), is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
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warranties made by the Borrower and the other Loan Parties in or pursuant
to the Financing Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date, except
to the extent such representations and warranties expressly relate to an
earlier date in which case such representations and warranties shall be
true and correct in all material respects as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred
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and be continuing on such date or after giving effect to the Extension of
Credit requested to be made on such date.
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(c) Borrowing Requests. The Lender shall have received a request
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for such Loan if and as required by this Agreement.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
clauses (a) and (b) of this subsection have been satisfied.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
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To induce the Lender to enter into this Agreement and to make the Loans,
the Borrower hereby represents and warrants to the Lender that, except as
otherwise described in the Master Disclosure Schedule attached hereto:
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4.1 Financial Condition. The Borrower has furnished to the Lender the
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Borrower's financial statements for the years ended as of December 31, 1998 and
December 31, 1999 (collectively, the "Initial Financial Statements"). The
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Initial Financial Statements were prepared in accordance with GAAP, consistently
maintained and applied throughout the periods covered thereby (except as may be
noted therein) and fairly present in all material respects the financial
condition of the Borrower on the respective dates thereof and the results of the
Borrower's operations for the respective periods covered thereby.
4.2 No Change. Since December 31, 1999, (a) there has been no development
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or event which has had or could reasonably be expected to have a Material
Adverse Effect, (b) there has been no sale, transfer or other disposition by the
Borrower of any material part of its business or property and no purchase or
other acquisition of any business or property (including any Capital Stock of
the Borrower) material in relation to the financial condition of the Borrower on
December 31, 1999, and (c) no dividends or other distributions have been
declared, paid or made upon the Capital Stock of the Borrower (other than those
dividends and distributions permitted pursuant to subsection 6.10(a)) nor has
any of the Capital Stock of the Borrower been redeemed, retired, purchased or
otherwise acquired for value by the Borrower.
4.3 Existence; Compliance with Law. Each of the Borrower and its
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Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the power and
authority to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified or licensed to do business as a foreign company and in good standing
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except where
the failure to be so qualified and/or in good standing, in the aggregate could
not reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.4 Power; Authorization; Enforceable Obligations. Each of the Borrower
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and its Subsidiaries has the power and authority, and the legal right, to make,
deliver and perform the Financing Documents to which it is a party and, in the
case of the Borrower, to borrow hereunder. Each of the Borrower and its
Subsidiaries has taken all necessary action to authorize
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the Loans on the terms and conditions of this Agreement and the Note and to
authorize the execution, delivery and performance by it of the Financing
Documents to which it is a party. Except as otherwise set forth in the Master
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Disclosure Schedule, no consent or authorization of, filing with, notice to or
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other act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by the Borrower or any of its Subsidiaries in
connection with the Loans hereunder or with the execution, delivery or
performance by the Borrower or any of its Subsidiaries or the validity or
enforceability with respect to or against the Borrower or any of its
Subsidiaries, as the case may be, of the Financing Documents to which the
Borrower or such Subsidiary, as the case may be, is a party (other than the
filings of Uniform Commercial Code financing statements in order to perfect the
security interest that can be perfected by such filings). Each of the Financing
Documents, when executed and delivered, will constitute a legal, valid and
binding obligation of each of the Borrower and its Subsidiaries, as the case may
be, enforceable against each of them, as the case may be, to the extent that
each of them is a party thereto, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 No Legal Bar. The execution, delivery and performance of the
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Financing Documents, the Loans hereunder and the use of the proceeds thereof by
the Borrower will not violate any Requirement of Law or Contractual Obligation
of the Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation other
than as contemplated in or permitted by the Financing Documents.
4.6 No Material Litigation. No litigation, investigation or proceeding of
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or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues which has
a reasonable possibility of an adverse determination, and if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
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default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing hereunder.
4.8 Ownership of Property; Liens. Each of the Borrower and its
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Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all of its real property except for such matters as do
not materially adversely affect the use of the property in the conduct of the
business as currently conducted, and good title to, or a valid leasehold
interest in, all its other material property, and none of such property is
subject to any Lien (other than Permitted Liens). Set forth on the Master
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Disclosure Schedule is a true and complete list of all of real property owned or
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leased by the Borrower and its Subsidiaries as of the Closing Date and all Liens
granted by the Borrower and its Subsidiaries in respect of any real property
owned or leased by it as of the Closing Date.
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4.9 Intellectual Property. (a) Each of the Borrower and its Subsidiaries
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owns, or is licensed to use, all material patents, trademarks (registered or
unregistered), trade names, service marks, assumed names and copyrights (such
items, together with all applications therefor and all other material
intellectual property and proprietary rights, whether or not subject to
statutory registration or protection, of the Borrower and any of its
Subsidiaries that are used in or necessary for the conduct of the business of
the Borrower and its Subsidiaries being collectively referred to herein as the
"Intellectual Property") necessary for the conduct of its business except for
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those the failure to own or license which could not reasonably be expected to
have a Material Adverse Effect and (b) no claim of which the Borrower has been
given notice has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower know of
any valid basis for any such claim, except for such claims that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.10 No Burdensome Restrictions. No Requirement of Law or Contractual
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Obligation applicable to the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.11 Taxes. The Borrower and its Subsidiaries have filed or caused to be
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filed all tax returns which, to the knowledge of the Borrower and its
Subsidiaries, are required to be filed and have paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
property in respect of such periods and all other material taxes imposed on it
or any of its property by any Governmental Authority (other than any taxes the
amount or validity of which are being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower and its Subsidiaries and other than any
taxes which in the aggregate would not reasonably be expected to have a Material
Adverse Effect) in respect of such periods.
4.12 Federal Regulations. No part of the proceeds of any Loans will be used
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for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulations G, U or X of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect. If requested by the Lender, the Borrower will furnish to the Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 referred to in said Regulation U.
4.13 ERISA. The Borrower and each Commonly Controlled Entity is in
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compliance in all material respects with ERISA and the provisions of the Tax
Code applicable to any Plans. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Tax Code or
Section 302 of ERISA) has occurred with respect to any Plan. Neither the
Borrower nor any Commonly Controlled Entity has incurred any liability to the
PBGC over and above premiums which are required by law and which would
constitute a Material Adverse Effect. Neither the Borrower nor any Commonly
Controlled Entity has terminated any Plan in a manner which could result in the
imposition of a Lien on the property of any Borrower or its Subsidiaries.
4.14 Investment Company Act; Other Regulations. Neither the Borrower nor
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any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of
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1940, as amended. The Borrower is not subject to regulation under any Federal or
State statute or regulation which limits its ability to incur Indebtedness as
contemplated herein.
4.15 Subsidiaries. Set forth on the Master Disclosure Schedule is a true
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and complete list of all of the Subsidiaries of the Borrower as of the Closing
Date.
4.16 Environmental Matters. Except to the extent that the inaccuracy of
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any of the following (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, and to the knowledge of any Responsible Officer of the
Borrower:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries do not contain any Hazardous Materials
in amounts or concentrations which (i) constitute a violation of, or (ii)
could give rise to any liability under, any Environmental Law or could
interfere with the continued operation of the facilities and properties
owned, leased or operated by the Borrower or any of its Subsidiaries or
could reasonably be expected to impair the fair saleable value thereof.
(b) The Borrower and its Subsidiaries, together with all of the
facilities and properties owned, leased or operated by the Borrower or its
Subsidiaries, are in compliance, and to the knowledge of the Borrower and
its Subsidiaries have in the last three years been in compliance with all
applicable Environmental Laws and applicable Environmental Permits, and the
Borrower and its Subsidiaries reasonably believe that they will be able to
comply with all applicable Environmental Laws in the future and renew or
obtain all Environmental Permits necessary for their operations in the
future.
(c) Neither the Borrower nor any of its Subsidiaries has received any
written notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the facilities and properties
owned, leased or operated by the Borrower or any of its Subsidiaries or the
business of the Borrower and its Subsidiaries, nor to the knowledge of the
Borrower or any of its Subsidiaries is such notice being threatened.
(d) Hazardous Materials have not been transported, disposed of,
emitted, discharged, or otherwise released or threatened to be released,
nor has their disposal been arranged for, by the Borrower or any of its
Subsidiaries in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, any applicable
Environmental Law; nor have any Hazardous Materials been generated,
treated, stored, emitted, discharged or otherwise released or threatened to
be released or disposed of at, on or under any of the facilities and
properties owned, leased or operated by the Borrower or any of its
Subsidiaries in violation of, or in a manner that could reasonably be
expected to give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened, under any Environmental Law to which the Borrower or any
Subsidiary is or to the knowledge of the Borrower or any of its
Subsidiaries will be named as a party, nor are there any
-10-
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Borrower or any of its
Subsidiaries, or any of the facilities and properties owned, leased or
operated by the Borrower or any of its Subsidiaries.
4.17 Solvency. As of the Closing Date, after giving effect to the
---------
transactions contemplated to occur on the Closing Date, each of the Borrower and
its Subsidiaries is Solvent.
4.18 Year 2000 Problem. The Borrower and its Subsidiaries have reviewed
-----------------
the areas within their businesses and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the "Year 2000 Problem" (i.e. the risk that computer applications
used by the Borrower or any of its Subsidiaries may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999). Based upon such review, the Borrower
reasonably believes that the "Year 2000 Problem" will not have any Materially
Adverse Effect.
4.19 Ownership of Borrower. The classes of Capital Stock, the number of
---------------------
authorized shares of Capital Stock, the number of outstanding shares of Capital
Stock and the par values or other designations of the Capital Stock or other
equity interests of the Borrower are correctly set forth in the Master
------
Disclosure Schedule. All of the outstanding shares of Capital Stock or other
-------------------
equity interests of the Borrower are duly and validly issued, fully paid and
nonassessable, and none of such issued and outstanding shares of Capital Stock
or equity interests has been issued in violation of, or subject to, any
preemptive or subscription rights. Except as set forth in the Master Disclosure
-----------------
Schedule, there are no: (a) outstanding shares of Capital Stock or other equity
--------
interests or other securities convertible into or exchangeable for Capital Stock
or other beneficial interests of the Borrower, or (b) outstanding rights of
subscription, warrants, calls, options, contracts or other agreements of any
kind, issued, made or granted to or with any Person under which the Borrower may
be obligated to issue, sell, purchase, retire or redeem or otherwise acquire or
dispose of any shares of Capital Stock or other equity interest or beneficial
interests of the Borrower.
SECTION 5. AFFIRMATIVE COVENANTS.
----------------------
The Borrower hereby covenants and agrees that, so long as any Loan is
outstanding, or the Lender has any obligation to make any Loans, that:
5.1 Financial Statements. The Borrower shall furnish to the Lender the
--------------------
following financial statements:
(a) As soon as available, but in any event within one hundred twenty
(120) days after the end of each fiscal year of the Borrower, a copy of the
audited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such fiscal year and the related audited
consolidated statements of income and retained earnings and of cash flows
for such fiscal year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or
like qualification or exception, or a qualification arising out of the
scope of the audit, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or such other independent
certified public accountants reasonably
-11-
satisfactory to the Lender (it being understood that the requirements of
the provisions of this clause (a) for any fiscal year may be satisfied by
delivery of a copy of the Borrower's annual report on Form 10-K for such
fiscal year);
(b) So long as the total unpaid principal amount of the Loans is less
than or equal to Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00), then as soon as available, but in any event not later than
thirty (30) days after the end of each fiscal quarter of each fiscal year
of the Borrower (other than that the fourth fiscal quarter of each such
fiscal year), commencing with the fiscal quarter ending as of June 30,
2000, a management-prepared consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at the end of such quarter and the related
management-prepared consolidated statements of income and retained earnings
and of cash flows of the Borrower and its consolidated Subsidiaries for
such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer of the Borrower as being
fairly stated in all material respects (subject to normal year-end audit
adjustments) (it being understood that the requirements of the provisions
of this clause (b) for any quarterly period may be satisfied by delivery of
a copy of Borrower's quarterly report on Form 10-Q for such quarterly
period); and
(c) So long as the total unpaid principal amount of the Loans is
greater than Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00), then as soon as available, but in any event not later than
thirty (30) days after the end of each month of each fiscal year of the
Borrower (other than the twelfth month of each such fiscal year),
commencing with the month ending as of April 30, 2000, a management-
prepared consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such month and the related management-
prepared consolidated statements of income and retained earnings and of
cash flows of the Borrower and its consolidated Subsidiaries for such month
and the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer of the Borrower as being fairly stated
in all material respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or Responsible Officer, as the
case may be, and disclosed therein).
5.2 Certificates; Other Information. The Borrower shall furnish to the
-------------------------------
Lender the following certificates and other information:
(a) concurrently with the delivery of the financial statements
referred to in subsection 5.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default, except as specified in such
certificate;
-12-
(b) concurrently with the delivery of the financial statements
referred to in subsections 5.1(a), 5.1(b) and 5.1(c), a Compliance
Certificate, in the form attached hereto as Appendix C and incorporated
----------
herein by reference ("Compliance Certificate"), as completed and signed by
----------------------
a Responsible Officer of the Borrower;
(c) Not later than thirty (30) days after the last day of:
(i) each calendar month so long as the total unpaid principal
amount of the Loans is greater than Two Million Five Hundred Thousand
and 00/100 Dollars ($2,500,000.00), or
(ii) each calendar quarter so long as the total unpaid principal
amount of the Loans is less than or equal to Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00), whichever is applicable,
a Borrowing Base Certificate, in the form attached hereto as Appendix D and
incorporated herein by reference ("Borrowing Base Certificate") as
completed and signed by a Responsible Officer of the Borrower;
(d) not later than thirty (30) days after the close of each calendar
month, a report summarizing all Inventory, all as completed and signed by a
Responsible Officer of the Borrower, and in such form and with such detail
or information as the Lender may reasonably request, from time to time;
(e) not later than one hundred twenty (120) days after the beginning
of each fiscal year of the Borrower, a copy of the projections by the
Borrower of the operating budget and cash flow budget of the Borrower and
its Subsidiaries for such fiscal year, such projections to be accompanied
by a certificate of a Responsible Officer of the Borrower to the effect
that such projections have been prepared using assumptions believed in good
faith by management of the Borrower to be reasonable at the time made and
that such Responsible Officer has no reason to believe that such
projections are incorrect or misleading in any material respect; and
(f) within fifteen (15) calendar days after the same are sent, copies
of all other financial statements and reports which the Borrower sends to
the holders of any class of its debt securities or public equity securities
and within fifteen (15) calendar days after the same are filed, copies of
all other financial statements and reports which the Borrower may make to,
or file with, the SEC or any successor or analogous Governmental Authority.
The Borrower shall, and shall cause each of its Subsidiaries to, furnish to
the Lender promptly, such additional financial and other information within the
possession of the Borrower or any of its Subsidiaries as the Lender may from
time to time reasonably request.
5.3 Payment of Obligations. The Borrower shall, and shall cause each of
----------------------
its Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all of the material
obligations of the Borrower or such Subsidiary, whichever is applicable, except
as contemplated by this Agreement or where the
-13-
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Borrower or any of its
Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence. The Borrower shall,
-------------------------------------------------
and shall cause each of its Subsidiaries to: (a) continue to engage in business
of the same general type as now conducted by Borrower and each of its
Subsidiaries; (b) preserve, renew and keep in full force and effect its
existence and take all reasonable action to maintain in all material respects
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business except as otherwise permitted pursuant to subsection
6.7; and (c) comply in all material respects with all Contractual Obligations
and Requirements of Law, except where (i) any such Contractual Obligation is
being contested in good faith, a bona fide dispute exists with respect to any
such Contractual Obligation or failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect, and (ii)
any such Requirement of Law is being contested in good faith and the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.5 Maintenance of Property; Insurance. The Borrower shall, and shall
----------------------------------
cause each of its Subsidiaries to: (a) keep all property material to the conduct
of its business in good working order and condition; (b) maintain insurance with
financially sound and reputable insurance companies on such of its property and
in at least such amounts and against at least such risks as are usually insured
against in the same general area by companies of a similar size engaged in the
same or a similar business; and (c) furnish to the Lender, upon written request,
full information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. The Borrower
------------------------------------------------------
shall, and shall cause each of its Subsidiaries to: (a) keep proper financial
records in conformity with GAAP and all Requirements of Law; (b) permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time, upon reasonable notice, and as often as may reasonably be desired; and (c)
permit, upon reasonable notice during normal business hours, representatives of
the Lender to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified public
accountants.
5.7 Notices. The Borrower shall, and shall cause each of its Subsidiaries
-------
to, give prompt notice to the Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured, or resolved or if adversely determined, as
the case may be, could reasonably be expected to have a Material Adverse
Effect;
-14-
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is not covered by insurance or in
which injunctive or similar relief is sought which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect;
(d) the following events, as soon as possible and in any event within
thirty (30) days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a Plan,
the creation of any Lien in favor of the PBGC or a Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity with respect to the
withdrawal from, or the termination, reorganization or insolvency of, any
Plan; and
(e) any development or event which could reasonably be expected to
have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
5.8 Environmental Laws. The Borrower shall, and shall cause each of its
------------------
Subsidiaries to:
(a) comply with, and use reasonable efforts to ensure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply with and maintain, and use reasonable efforts to
ensure that all tenants and subtenants, if any, obtain and comply with and
maintain, any and all Environmental Permits required by applicable
Environmental Laws; and
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws,
except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect.
5.9 Maintenance of Liens of the Security Documents. The Borrower shall,
----------------------------------------------
and shall cause each of its Subsidiaries to, promptly, upon the reasonable
request of the Lender, at the sole cost and expense of the Borrower and its
Subsidiaries, execute, acknowledge and deliver, or cause the execution,
acknowledgement and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents or otherwise reasonably deemed by the Lender necessary or
desirable for the continued validity, perfection and priority of the Liens on
the Collateral covered thereby.
5.10 Pledge of After Acquired Property. If at any time following the
---------------------------------
Closing Date, the Borrower or any of its Subsidiaries shall acquire property of
any nature whatsoever having a value in excess of One Hundred Thousand and
00/100 Dollars ($100,000.00) which is intended
-15-
by the terms of the applicable Security Document to be, but is not, subject to
the Liens created by the Security Documents, the Borrower shall, or shall cause
the relevant Subsidiaries to, as soon as possible and in no event later than
thirty (30) days after the relevant acquisition date and, to the extent
permitted by applicable law, grant to the Lender a first priority (subject to
Permitted Liens) Lien on such property as collateral security for the
Obligations pursuant to documentation reasonably satisfactory in form and
substance to the Lender. The Borrower, at its sole expense, shall execute,
acknowledge and deliver, or cause the execution, acknowledgement and delivery
of, and thereafter register, file or record in an appropriate governmental
office, any document or instrument (including legal opinions, title insurance,
consents and corporate documents) and take all such actions reasonably deemed by
the Lender to be necessary or desirable to ensure the creation, priority and
perfection of such Lien.
5.11 New Subsidiaries. The Borrower shall cause, at its sole cost and
----------------
expense, each new Subsidiary of the Borrower created or acquired on or after the
date hereof, promptly upon such creation or acquisition, to execute and deliver
to the Lender the following agreements and documents, which agreements and
documents shall be in form and substance reasonably satisfactory to the Lender:
(a) a joinder and assumption agreement, pursuant to which, such new Subsidiary
shall be become a party to the Subsidiary Guaranty as a guarantor thereunder and
the Subsidiary Security Agreement and as a debtor thereunder; (b) any and all
UCC financing statements which the Lender deems necessary and appropriate in
order to perfect its first priority perfected security interests in all of the
assets of such Subsidiary; and (c) such other agreements, documents, financing
statements, instruments, opinions and certificates and completion of such other
matters, as the Lender may reasonably deem necessary or appropriate.
Promptly upon the creation or acquisition of any Subsidiary created or
acquired after the date hereof, the Borrower shall cause, at its sole cost and
expense, all of the issued and outstanding shares of Capital Stock, membership
interests and other equity interests of each such Subsidiary to be pledged to
the Lender so that the Lender has a first priority perfected security interest
in all such shares, membership interests and other equity interests. Such
pledge shall be pursuant to a pledge agreement in a form and substance
reasonably satisfactory to the Lender.
5.12 Depository Accounts. The Borrower shall maintain the Lender as its
-------------------
bank for its primary depository accounts.
SECTION 6. NEGATIVE COVENANTS.
-------------------
The Borrower hereby covenants and agrees that, so long as any Loan is
outstanding, or the Lender has any obligation to make any Loans, that:
6.1 Financial Covenants.
-------------------
(a) Consolidated Debt Service Ratio. On the last day of each fiscal
------------------------------
quarter of the Borrower, commencing with the fiscal quarter ending June 30,
2000, the Borrower shall not permit, and shall cause each of its
Subsidiaries not to permit, the Consolidated Debt Service Ratio to be less
than 1.25 to 1.00 for the period of four (4) consecutive fiscal quarters
ending on such date.
-16-
(b) Consolidated Leverage Ratio. On the last day of each fiscal quarter
---------------------------
of the Borrower, commencing with the fiscal quarter ending June 30, 2000,
the Borrower shall not permit, and shall cause each of its Subsidiaries not
to permit, the Consolidated Leverage Ratio to be greater than 1.00 to 1.00
on such date.
Notwithstanding any provision contained in this Agreement to the contrary
herein, for purposes of making all calculations in connection with the covenants
contained in this subsection 6.1, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP consistently applied as in effect on the date of this
Agreement. In the event of any material difference at any time between GAAP in
effect on the date of this Agreement and GAAP from time to time in effect, the
Compliance Certificate required pursuant to subsection 5.2(b) shall include a
reconciliation of the calculations required thereby with the financial
statements being delivered with such Compliance Certificate.
6.2 Limitation on Changes in Fiscal Year. The Borrower shall not, and
------------------------------------
shall not permit any of its Subsidiaries to, change the fiscal year of the
Borrower or any of its Subsidiaries.
6.3 Limitation on Indebtedness. The Borrower shall not, and shall cause
--------------------------
each of its Subsidiaries not to, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness to the Lender arising under any of the Financing
Documents;
(b) Purchase Money Indebtedness of the Borrower or any of its
Subsidiaries not to exceed the aggregate sum of One Hundred Thousand and
00/100 Dollars ($100,000.00);
(c) Indebtedness with respect to Capitalized Lease Obligations of the
Borrower or any of its Subsidiaries not to exceed the aggregate sum of One
Hundred Thousand and 00/100 Dollars ($100,000.00);
(d) current liabilities which are incurred in the ordinary course of
business and which are not incurred through (i) the borrowing of money or
(ii) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;
(e) Indebtedness with respect to taxes, assessments, governmental
charges or levies which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Subsidiaries, a the case may
be, in conformity with GAAP; and
(f) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary
to the Borrower or any other Subsidiary, so long as such Indebtedness (i)
is subordinated in right of payment to all Obligations; and (ii) has terms
and conditions as the Lender may reasonably require.
6.4 Limitation on Contingent Liabilities. The Borrower shall not, and
------------------------------------
shall not permit any of its Subsidiaries to, assume, guarantee, endorse or
otherwise become directly or
-17-
contingently liable (including without limitation, liable by way of agreement,
contingent or otherwise to purchase or provide funds for payment, to supply
funds to or otherwise invest in any debtor or otherwise to assure any creditor
against any loss) in connection with any Indebtedness of any other Person,
except for: (a) liabilities to the Lender arising under any of the Financing
Documents; and (b) guarantees made in the ordinary course of the business by the
Borrower of obligations of any Subsidiary, which obligations are otherwise
permitted under this Agreement.
6.5 Limitation on Liens. The Borrower shall not, and shall not permit any
-------------------
of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, except for the following (hereinafter referred to collectively as
"Permitted Liens"):
---------------
(a) Liens created pursuant to the Security Documents;
(b) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(c) statutory landlords' liens and carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business for sums which are not overdue for a period of
more than sixty (60) days or which are being contested in good faith by
appropriate proceedings;
(d) judgment Liens created by or resulting from any litigation or
legal proceeding if released or bonded within thirty (30) days of the date
of creation thereof, unless such litigation or legal proceeding could
reasonably be expected to have a Material Adverse Effect;
(e) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) Liens consisting of easements, zoning restrictions, flowage
rights, rights-of-way, covenants, conditions, restrictions, reservations,
licenses, agreements and other similar matters, which, in the aggregate,
are not substantial in amount and which do not in any case materially
detract from the use of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or such
Subsidiary;
(h) Liens to secure Indebtedness for Purchase Money Indebtedness to
the extent that such Indebtedness is permitted under subsection 6.3(b);
provided, however, that (i) each such Lien is given only to secure the
-----------------
purchase price of the property which is the subject of such Purchase Money
Indebtedness, does not extend to any other property and is given at the
time of acquisition of the property; and (ii) the Purchase Money
-18-
Indebtedness secured thereby does not exceed the lesser of the cost of such
property or its fair market value at the time of acquisition;
(i) Liens in favor of lessors under Capitalized Leases to the extent
that the Capitalized Lease Obligations thereunder is Indebtedness permitted
under subsection 6.3(c); provided, however, that each such Lien extends
-------- -------
only to the property which is subject of such Capitalized Lease, is given
only to secure the Capitalized Lease Obligations under such Capitalized
Lease, and is given at the commencement date of such Capitalized Lease; and
(j) Liens in existence on the date hereof listed on the Master
------
Disclosure Schedule; provided, however, that no such Lien encumbers any
------------------- -----------------
additional property after the Closing Date and that the amount of
Indebtedness secured thereby shall not subsequently be increased.
6.6 Limitation on Negative Pledges. The Borrower shall not, and shall not
------------------------------
permit any of its Subsidiaries to, enter into with any Person any agreement
(other than this Agreement and the other Financing Documents) which prohibits or
limits the ability of the Borrower or any of its Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, or which prohibits or limits loans or
dividends by any of the Subsidiaries to the Borrower.
6.7 Limitation on Fundamental Changes. The Borrower shall not, and shall
---------------------------------
not permit any of its Subsidiaries to, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other wholly owned Subsidiary of the
Borrower; and
(c) pursuant to any sale of assets expressly permitted by subsection
6.8.
6.8 Limitation on Sale of Assets. The Borrower shall not, and shall not
-----------------------------
permit any of its Subsidiaries to, convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary's Capital Stock to any Person (other than the Borrower or any wholly
owned Subsidiary, and subject to the provisions of the Security Documents),
except:
-19-
(a) the conveyance, sale, lease, assignment, transfer or other
disposition of Obsolete Property or surplus property in the ordinary course
of business;
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount for fair value, without recourse and
consistent with sound business practices of accounts receivable arising in
the ordinary course of business in connection with the compromise or
collection thereof;
(d) the license of Intellectual Property in the ordinary course of
business;
(e) leases or subleases of property not materially interfering with
the ordinary course of conduct of the business of the Borrower and its
Subsidiaries;
(f) the sale or transfer of property and assets to the extent and as
permitted by subsection 6.7(b); and
6.9 Limitation on Sales and Leasebacks. The Borrower shall not, and shall
-----------------------------------
not permit any of its Subsidiaries to, enter into any arrangement with any
Person providing for the leasing by the Borrower or any Subsidiary of real or
personal property which has been or is to be sold or transferred by the Borrower
or such Subsidiary to such Person or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary.
6.10 Restricted Payments. The Borrower shall not, and shall not permit any
-------------------
of its Subsidiaries to, declare or pay any dividend on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any shares
of any class of Capital Stock of the Borrower or any of its Subsidiaries or any
warrants or options to purchase any such shares of Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any of its Subsidiaries (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions and distributions
being herein called "Restricted Payments"), except that,
-------------------
(a) so long as no Event of Default, or event which with the passage
of time, the giving of notice, or both, would constitute an Event of
Default, has occurred or is continuing, any Subsidiary may declare and pay
dividends to the Borrower or any other Subsidiary, to the extent and as
provided under the Security Documents;
(b) In addition to the stock options granted by the Borrower to
certain of its officers, directors and employees as of the date hereof, the
Borrower shall be permitted to grant, from time to time, to its officers,
directors and employees stock options to purchase up to Five Percent (5%)
of the shares of Capital Stock of the Borrower which, after such issuance,
would be outstanding on a fully-diluted and fully-converted basis, so long
as no Event of Default, or event which with the passage of time, the giving
of notice, or both, would constitute an Event of Default, has occurred or
is continuing; and
-20-
(c) the Borrower may repurchase, redeem or otherwise acquire or
retire for value any shares of Capital Stock held by officers, directors
and employees of the Borrower pursuant to any employee equity subscription
agreement, stock option agreement or stock ownership arrangement; provided
that (i) the aggregate price paid for all such repurchased, redeemed,
acquired or retired shares of Capital Stock shall not exceed One Hundred
Thousand and 00/100 Dollars ($100,000.00) in any twelve-month period plus
the aggregate cash proceeds received by the Borrower during such twelve-
month period from any reissuance of shares of Capital Stock to employees of
the Borrower; and (ii) no Event of Default shall have then occurred and be
continuing or would result therefrom, provided that this clause (ii) shall
not prohibit any transaction under this subsection clause (d) of this
subsection within sixty (60) days of the date of declaration or the making
of any binding commitment in respect of any such transaction if at said
date of declaration or commitment no Event of Default shall have then
occurred and be continuing or would result therefrom.
6.11 Limitation on Investments, Loans and Advances. The Borrower shall
----------------------------------------------
not, and shall not permit any of its Subsidiaries to, make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of, or any assets constituting a business
unit of, or make any other investment in, any Person (an "Investment"), except:
----------
(a) investments in Cash Equivalents;
(b) securities held by the Borrower or any of its Subsidiaries prior
to the Closing Date and listed on the Master Disclosure Schedule;
--------------------------
(c) Investments by the Borrower in any Subsidiary and Investments by
any such Subsidiary in the Borrower or in any other Subsidiary; and
(d) extensions of trade credit and endorsements of negotiable
instruments and other negotiable documents in the ordinary course of
business.
6.12 Limitation on Transactions with Affiliates. The Borrower shall not,
-------------------------------------------
and shall not permit any of its Subsidiaries to, enter into any transaction
(including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service) with any Affiliate unless such
transaction is (a) otherwise permitted under this Agreement; (b) in the ordinary
course of the Borrower's or such Subsidiary's business; and (c) upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate; provided, however, that the foregoing
-----------------
restriction shall not prohibit (i) any employment agreement entered into by the
Borrower or any of its Subsidiaries in the ordinary course of business; (ii) any
issuance of securities in connection with employment arrangements, stock options
and stock ownership plans of the Borrower entered into in the ordinary course of
business; (iii) transactions between the Borrower and its Subsidiaries; and (iv)
the transactions contemplated by the agreements listed on the Master Disclosure
-----------------
Schedule.
--------
-21-
6.13 Limitation on Lines of Business. The Borrower shall not, and shall
--------------------------------
not permit any of its Subsidiaries to, enter into any business, either directly
or through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or which are
reasonably related thereto.
SECTION 7. EVENTS OF DEFAULT.
------------------
7.1 Events of Default; Acceleration. If any of the following events
-------------------------------
shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when
due in accordance with the terms of this Agreement and the other Financing
Documents; or the Borrower shall fail to pay any interest on any Loan, or
any other amount payable hereunder, within five (5) days after any such
interest or other amount becomes due in accordance with the terms of this
Agreement and the other Financing Documents; or
(b) any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Financing Document
or which is contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with this
Agreement or any such other Financing Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
or
(c) the failure by the Borrower or any other Loan Party to
punctually perform, observe, comply with or satisfy any covenant, agreement
or condition contained in (i) subsections 5.1 to 5.3 (inclusive), 5.5 to
5.7 (inclusive), 5.10, 5.11 and 6.1 to 6.12 (inclusive) of this Agreement
or (ii) subsections 4.1, 5.6(a)-(d), 5.7(d) and 5.8 of each of the Security
Agreements; or
(d) the Borrower or any Subsidiary shall default in the observance
or performance of any other agreement contained in this Agreement or any
other Financing Document (other than as provided in paragraphs (a) through
(c) of this Section), and such default shall continue unremedied for a
period of thirty (30) days after the earlier of (i) the date on which a
Responsible Officer of the Borrower first learns of such default or (ii)
the date on which written notice thereof shall have been given to the
Borrower by the Lender; or
(e) the Borrower or any Subsidiary shall fail to pay when due
(after any applicable period of grace) any Indebtedness of the Borrower or
such Subsidiary (other than Indebtedness comprising of the Obligations),
which together with all such other due but unpaid Indebtedness, exceeds the
sum of Two Hundred Thousand and 00/100 Dollars ($200,000.00), or shall fail
(after any applicable period of grace) to observe or perform any term,
covenant or agreement evidencing or securing such Indebtedness, which, if
uncured or unwaived, permits the acceleration of such Indebtedness, or any
default or event of default shall have been declared under any agreement
relating to such Indebtedness; or
(f) the Borrower or any other Loan Party shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or
-22-
similar official of itself or of all or a substantial part of its property,
(ii) be generally not paying its debts as such debts become due, (iii) make
a general assignment for the benefit of its creditors, (iv) commence a
voluntary case under the United States Bankruptcy Code, as amended from
time to time, (v) take any action or commence any case or proceeding under
any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, or any other law providing for the
relief of debtors, (vi) fail to contest in a timely or appropriate manner,
or acquiesce in writing to, any petition filed against it in an involuntary
case under the United States Bankruptcy Code, as amended from time to time
or other law, (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing, or (viii)
take any corporate action for the purpose of effecting any of the
foregoing; or
(g) a proceeding or case shall be commenced against the Borrower or
any other Loan Party, without the application or consent of the Borrower or
such Loan Party, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part
of its assets, or (iii) similar relief in respect of it, under any law
relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts or any other law providing for the
relief of debtors, and such proceeding or case shall continue undismissed,
or unstayed and in effect, for a period of sixty (60) days; or an order for
relief shall be entered in an involuntary case under the United States
Bankruptcy Code, as amended from time to time, against the Borrower or any
other Loan Party; or action under the laws of the jurisdiction of
incorporation or organization of the Borrower or any other Loan Party
similar to any of the foregoing shall be taken with respect to the Borrower
or any other Loan Party and shall continue unstayed and in effect for a
period of sixty (60) days; or
(h) (i) the Borrower or any Commonly Controlled Entity shall fail to
pay when due any amount that it shall have become liable to pay to the PBGC
or to a Plan under Title IV of ERISA, unless (A) such liability is being
contested in good faith by appropriate proceedings, the Borrower or such
Commonly Controlled Entity, as the case may be, has established and is
maintaining adequate reserves in accordance with GAAP and no lien shall
have been filed to secure such liability or (B) which would not have a
Material Adverse Effect; (ii) the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans; or (iii) a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating
that any such Plan or Plans must be terminated; or
(i) one or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving individually a liability of
One Hundred Thousand and 00/100 Dollars ($100,000.00) (not paid or fully
covered by insurance) or in the aggregate a liability (not paid or fully
covered by insurance) of Two Hundred Thousand and 00/100 Dollars
($200,000.00) or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within thirty
(30) days from the entry thereof; or
-23-
(j) service of any process upon the Lender, seeking to attach by
Lien, levy, mesne, trustee or other process, any funds of the Borrower or
any of its Subsidiaries on deposit with, or in possession or control of the
Lender; or
(k) if any of the Financing Documents (including the Subsidiary
Guaranty) (or any provision contained therein) shall be cancelled,
terminated, revoked, curtailed or rescinded otherwise than in accordance
with the terms thereof or with the express prior written agreement, consent
or approval of the Lender, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke, curtail or rescind any of the Financing
Documents shall be commenced by or on behalf of the Borrower or any of its
officers, director or stockholders, or any Governmental Authority of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any of the Financing
Documents (including the Subsidiary Guaranty) (or any provision contained
therein) is illegal, invalid or unenforceable in accordance with the terms
thereof; or
(l) any of the Security Documents shall, at any time after their
execution and delivery for any reason, cease to create a valid and
perfected first priority security interest in and to all of the Collateral
pledged or granted thereunder; or
(m) a material portion of the property of the Borrower and its
Subsidiaries (whether or not Collateral) is damaged by fire or other
casualty, or otherwise lost or stolen, the restoration or replacement cost
of which property exceeds, in the aggregate, the amount of insurance
proceeds readily available for such restoration or replacement, and such
loss would have a Material Adverse Effect; or
(n) there shall have occurred a Change of Control;
then, and in any such event, so long as the same may be continuing, the Lender
may, by notice in writing to the Borrower, declare all amounts owing with
respect to this Agreement, the Notes and the other Financing Documents to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the event of any Event
of Default specified in subsection 7.1(f) or subsection 7.1(g), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from the Lender.
7.2 Termination of Commitment. If any one or more of the Events of
-------------------------
Default specified in subsection 7.1(f) or subsection 7.1(g) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and the Lender
shall be relieved of all further obligations to make Loans to the Borrower. If
any other Event of Default shall have occurred and be continuing, the Lender
may, by notice to the Borrower, terminate the unused portion of the credit
hereunder, and upon such notice being given such unused portion of the credit
hereunder shall terminate immediately and the Lender shall be relieved of all
further obligations to make Loans. No termination of the credit hereunder shall
relieve the Borrower of any of the Obligations.
-24-
SECTION 8. RIGHTS AND REMEDIES.
--------------------
8.1 Rights and Remedies. In case any one or more of the Events of
-------------------
Default shall have occurred and be continuing, and whether or not the Lender
shall have accelerated the maturity of the Loans pursuant to subsection 7.1, the
Lender, if owed any amount with respect to the Loans may proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan documents or any instrument
pursuant to which the Obligations to the Lender are evidenced, including as
permitted by applicable law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Lender.
8.2 Setoff. Regardless of the adequacy of any of the Collateral, upon
------
the occurrence and during the continuance of any Event of Default, any deposits
or other sums credited by or due from the Lender to the Borrower and any
securities or other property of the Borrower in the possession of the Lender may
be applied to or set off by the Lender against the payment of Obligations and
any and all other liabilities, direct, or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, of the Borrower to the
Lender.
8.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder or under the other Financing Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
8.4 Distribution of Collateral Proceeds. In the event that, following
-----------------------------------
the occurrence or during the continuance of any Event of Default, the Lender
receives any monies in connection with the enforcement of any of the Security
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows: (a)
first, to the Obligations in such order or preference as the Lender may
-----
determine; (b) second, upon payment and satisfaction in full or other provisions
------
for payment in full satisfactory to the Lender of all of the Obligations, to the
payment of any obligations required to be paid pursuant to (S)9-504(l)(c) of the
UCC; and (c) third, the excess, if any, shall be returned to the Borrower or to
-----
such other Persons as are entitled thereto.
SECTION 9. MISCELLANEOUS.
--------------
9.1 Survival of Covenants. Except for those which by their terms
---------------------
survive termination of the Financing Documents, all agreements, representations,
covenants and warranties made by the Borrower and any Loan Party in the
Financing Documents shall remain in full force and effect until all Obligations
to the Lender have been paid in full and satisfied, notwithstanding the fact
that Loans may, from time to time, be in a zero or credit position.
-25-
9.2 Prior Discussions; Amendments in Writing; Counterparts. The Financing
------------------------------------------------------
Documents incorporate all discussions and negotiations among the Lender, the
Borrower and the other Loan Parties and either express or implied, concerning
the Obligations, notwithstanding any custom, usage or oral agreement or
understanding to the contrary. This Agreement may be amended or modified only in
writing signed by the parties hereto, and in the case of the Lender signed by a
duly authorized officer thereof. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but such counterparts
together shall constitute one and the same instrument. Any proof of this
Agreement shall require production of only one such counterpart.
9.3 Severability. Any provision of this Agreement which is prohibited or
-------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.4 Notices. All notices, requests and demands to or upon the respective
-------
parties hereto to be effective shall be in writing (including by facsimile
transmission), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given when delivered by hand, or when sent by facsimile
transmission or by telex, answer back received, or on the first Business Day
after delivery to any overnight delivery service, freight prepaid, or three (3)
Business Days after being sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed as follows in the case of the
Borrower, any Subsidiary and the Lender, or to such other address as may be
hereafter notified by the respective parties hereto:
(a) If to the Borrower
or any Subsidiary, then: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Lender, then: Citizens Bank of Massachusetts
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Banking
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Peabody & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier No: 617-951-2125
provided that any notice, request or demand to or upon the Lender pursuant to
subsection 2.3, 2.7 or 2.8 shall not be effective until received.
9.5 Expenses. The Borrower agrees to pay (a) the reasonable costs of
--------
producing and reproducing this Agreement, the other Financing Documents and the
other agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other than
taxes based upon the Lender's net income) on or with respect to the transactions
contemplated by this Agreement (the Borrower hereby agreeing to indemnify the
Lender with respect thereto), (c) the reasonable fees, expenses and
disbursements of counsel to the Lender incurred in connection with the
preparation, negotiation, administration or interpretation of the Financing
Documents and other instruments mentioned herein, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the fees, expenses and
disbursements of the Lender incurred by the Lender in connection with the
preparation, negotiation, administration or interpretation of the Financing
Documents and other instruments mentioned herein, including all title insurance
premiums and surveyor, engineering and appraisal charges, (e) all reasonable
out-of-pocket expenses (including without limitation reasonable attorneys' fees
and costs, which attorneys may be employees of the Lender, and reasonable
consulting, accounting, appraisal, investment banking and similar professional
fees and charges) incurred by the Lender in connection with (i) the enforcement
of or preservation of rights under any of the Financing Documents against the
Borrower or the administration thereof after the occurrence of a Default or
Event of Default (including engineering appraiser and investment banking
charges) and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to the Lender's relationship with the
Borrower and (f) all reasonable fees, expenses and disbursements of the Lender
incurred in connection with UCC searches, UCC filings or mortgage recordings.
The covenants contained in this subsection shall survive payment or satisfaction
in full of all other Obligations.
9.6 Indemnification. The Borrower agrees to indemnify and hold harmless
---------------
the Lender from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Agreement
or any of the other Financing Documents or the transactions contemplated hereby
including, without limitation, (a) any actual or proposed use by the Borrower of
the proceeds of any of the Loans, (b) any actual or alleged infringement of any
patent, copyright, trademark, service ▇▇▇▇ or similar right of the Borrower or
any other Loan Party comprised in the Collateral, (c) all liabilities,
obligations, claims, damages, costs, losses and expenses (including court costs
and attorney's reasonable fees and expenses) that the Lender may sustain or
incur by reason of, relating to or arising out of the preparation of this
Agreement, the defending or protecting of any Collateral or the priority of the
Lender's interest therein, or in collecting or enforcing the Obligations, or in
enforcing any of the Lender's rights or remedies, or in the prosecution or
defense of any action or proceeding concerning any matter growing out of or
connected with this Agreement, any of the other Financing Documents, the
Obligations, the Collateral, or on account of the Lender's relationship with the
Borrower or any other Loan Party (except for such claims which have been
determined by a court of competent jurisdiction to have
-27-
arisen out of the Lender's actual bad faith, willful misconduct or gross
negligence) or (d) with respect to the Borrower or any other Loan Party and
their respective properties and assets, the violation of any Environmental Law,
the presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any hazardous
Substances (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of internal counsel incurred in connection with any such investigation,
litigation or other proceeding. In litigation, or the preparation therefor, the
Lender shall be entitled to select its own counsel and, in addition to the
foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the obligations of the
Borrower under this subsection are unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment in satisfaction of
such obligations which is permissible under applicable law. The covenants
contained in this subsection shall survive payment or satisfaction in full of
all other Obligations.
9.7 Acknowledgements. The Borrower hereby acknowledges that (a) the
-----------------
Borrower has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Financing Documents; (b) the Lender has no
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Financing Documents, and the
relationship of the Lender, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and (c)
no joint venture is created hereby or by the other Financing Documents or
otherwise exists by virtue of the transactions contemplated hereby between the
Borrower and the Lender.
9.8 Successors and Assigns; Assignments and Participation.
-----------------------------------------------------
(a) Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the Borrower, the Lender and their respective
successors and assigns, except that the Borrower may not assign or transfer
any of its rights or obligations under this Agreement.
(b) Assignments. The Lender shall have the unrestricted right at
-----------
any time or from time to time, and without the Borrower's consent, to
assign all or any portion of its rights and obligations hereunder to one or
more banks or other financial institutions (each, an "Assignee"), and the
--------
Borrower agrees that it shall execute, or cause to be executed, such
documents, including without limitation, amendments to this Agreement and
to any other documents, instruments and agreements executed in connection
herewith as the Lender shall deem necessary to effect the foregoing. In
addition, at the request of the Lender and any such Assignee, the Borrower
shall issue one or more new promissory notes, as applicable, to any such
Assignee and, if bank has retained any of its rights and obligations
hereunder following such assignment, to the Lender, which new promissory
notes shall be issued in replacement of, but not in discharge of, the
liability evidenced by the promissory note held by the Lender prior to such
assignment and shall reflect the amount of the respective commitments and
loans held by such Assignee and the Lender after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by the
-28-
Lender in connection with such assignment, and the payment by the Assignee
of the purchase price agreed to by the Lender and such Assignee, such
Assignee shall be a party to this Agreement and shall have all of the
rights and obligations of the Lender hereunder (and under all of the other
Financing Documents) to the extent that such rights and obligations have
been assigned by the Lender pursuant to the assignment documentation
between the Lender and such Assignee, and the Lender shall be released from
its obligations hereunder and thereunder to a corresponding extent. In
addition to the foregoing assignments permitted under this subsection, the
Lender may at any time pledge all or any portion of its rights under this
Agreement and the other Financing Documents to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors and
any Operating Circular issued by the Federal Reserve Bank. No such
assignment shall release the Lender from its obligations under this
Agreement and the other Financing Documents.
(c) Participation. The Lender shall have the unrestricted right at
-------------
any time and from time to time, and without the consent of or notice to the
Borrower, to grant to one or more banks or other financial institutions
(each, a "Participant") participating interests in the Lender's obligation
-----------
to lend hereunder and/or any or all of the loans held by the Lender
hereunder. In the event of any such grant by the Lender of a participating
interest to a Participant, whether or not upon notice to the Borrower, the
Lender shall remain responsible for the performance of its obligations
hereunder and the Borrower shall continue to deal solely and directly with
the Lender in connection with the Lender's rights and obligations
hereunder. The Lender may furnish any information concerning the Borrower
in its possession from time to time to prospective Participants, provided
that the Lender shall require any such prospective Participant to agree in
writing to maintain the confidentiality of such information.
9.9 Loss, Theft, Destruction or Mutilation of any Note. Upon receipt of
--------------------------------------------------
an affidavit of an officer of the Lender as to the loss, theft, destruction or
mutilation of any Note or any other Financing Document which is not of public
record, and, in the case of any such loss, theft, destruction or mutilation,
upon cancellation of such Note or other Financing Document, the Borrower will
issue, in lieu thereof, a replacement note or other Financing Document in the
same principal amount thereof and otherwise of like tenor.
9.10 Waiver of Jury Trial. THE BORROWER AND THE LENDER HEREBY WAIVE THEIR
---------------------
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER FINANCING DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
9.11 Governing Law; Jurisdiction. This Agreement and the other Financing
---------------------------
Documents are executed and delivered under seal and shall be construed in
accordance with and governed by the laws of The Commonwealth of Massachusetts,
without giving effect to the conflict of law provisions thereof. The Borrower
submits itself to the non-exclusive jurisdiction
-29-
of the Courts of The Commonwealth of Massachusetts for all purposes with respect
to the Financing Documents and the Borrower's relationship with the Lender.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
-30-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered under seal by their proper and duly authorized
officers as of the day and year first above written.
WITNESS: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- -------------------------------
Name: Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Its duly authorized officer:
WITNESS: CITIZENS BANK OF MASSACHUSETTS
[Signature appears here] By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- -------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
-31-
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April 12, 2000
--
Then personally appeared the above-named ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President of
--------------- ---------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., and acknowledged the foregoing instrument to be his/her
free act and deed and the free act and deed of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., before
me.
/s/ ▇▇▇▇▇▇ ▇. Read
--------------------------------------
Notary Public
My commission expires: 12/1/00
[AFFIX NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April 12, 2000
--
Then personally appeared the above-named ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Senior Vice
President of Citizens Bank of Massachusetts, and acknowledged the foregoing
instrument to be his free act and deed and the free act and deed of Citizens
Bank of Massachusetts, before me.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Notary Public
My commission expires: 8/24/00
[AFFIX NOTARIAL SEAL]
-32-
________________________________________________________________________________
CREDIT AGREEMENT
(the "Agreement")
---------
by and between
CITIZENS BANK OF MASSACHUSETTS
(the "Lender")
------
and
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
(the "Borrower")
--------
______________________________________________________________________________
Appendix A
----------
1. Definitions. As used in the Agreement, the following terms shall have
-----------
the following meanings:
"Affiliate": as to any Person, any other Person (other than a
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or
---------
otherwise modified from time to time.
"Asset Sale": as to any Person, any voluntary or involuntary sale or
----------
other disposition subsequent to the Closing Date of any assets or property
of such Person.
"Board of Governors": the Board of Governors of the Federal Reserve
------------------
System and any Governmental Authority which succeeds to the powers and
functions thereof.
"Borrower": as defined in the preamble to this Agreement.
--------
"Borrower Security Agreement - All Assets": the Borrower Security
----------------------------------------
Agreement - All Assets to be executed and delivered by the Borrower,
substantially in the form of Exhibit B, as the same may be amended,
---------
supplemented or otherwise modified from time to time.
"Borrowing Base": as defined in subsection 2.2.
--------------
"Borrowing Date": any Business Day specified in a notice pursuant to
--------------
subsection 2.3 as a date on which the Borrower requests the Lender to make
Loans hereunder.
"Business Day": any day excluding Saturday, Sunday and any day which
------------
is a legal holiday under the laws of The Commonwealth of Massachusetts, or
is a day on which banking institutions located in The Commonwealth of
Massachusetts are required or authorized by any Requirement of Law to be
closed.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Capitalized Lease": any lease of property, real or personal, the
-----------------
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Capitalized Lease Obligations": as to any Person, the obligations of
-----------------------------
such Person to pay rent or other amounts under any Capitalized Leases; the
amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.
"Cash Dividends": for any period, the cash dividends paid by the
--------------
Borrower or any of its Subsidiaries during such period with respect to
their Capital Stock.
"Cash Equivalents": (a) securities issued or directly and fully
----------------
guaranteed or insured by the United States Government, or any agency or
instrumentality thereof, having maturities of not more than one year from
the date of acquisition, (b) marketable general obligations issued by any
state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition
thereof, having a credit rating of "A" or better from either Standard &
Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.; (c) certificates
of deposit, time deposits, eurodollar time deposits, overnight bank
deposits or bankers' acceptances having maturities of not more than one
year from the date of acquisition thereof of the Lender, or of any domestic
commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least A or the equivalent thereof by Standard &
Poor's Ratings Group, or A or the equivalent thereof by ▇▇▇▇▇'▇ Investors
Service, Inc., and having capital and surplus in excess of Five Hundred
Million and 00/100 Dollars ($500,000,000.00), (d) repurchase obligations
with a term of not more than seven days for underlying securities of the
types described in clauses (a), (b) and (c) entered into with any bank
meeting the qualifications specified in clause (c) above, (e) commercial
paper rated at the time of acquisition thereof at least A-2 or the
equivalent thereof by Standard & Poor's Ratings Group or P-2 or the
equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency, if both of the
two named rating agencies cease publishing ratings of investments, and in
either case maturing within two hundred
-2-
seventy (270) days after the date of acquisition thereof and (f) other
investment instruments approved in writing by the Lender and offered by the
Lender or by any financial institution which has a combined capital and
surplus of not less than One Hundred Million and 00/100 Dollars
($100,000,000.00).
"Change of Control": the majority of the Board of Directors of the
-----------------
Borrower ceases to consist of those individuals who are Incumbent
Directors.
"Closing Date": the date on which the conditions precedent set forth
------------
in subsection 3.1 shall be satisfied or waived (but in no event later than
April 7, 2000).
"Collateral": all assets of the Loan Parties, now owned or hereinafter
----------
acquired, upon which a Lien is purported to be created by any Security
Document.
"Collateral Assignment of Lease": the Collateral Assignment of Lease
------------------------------
to be executed and delivered by the Borrower, substantially in the form of
Exhibit C, as the same may be amended, modified, substituted, extended or
---------
restated, from time to time.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414(b) or (c) of the
Tax Code or, solely for purposes of determining liability under Section 412
of the Tax Code, which is treated as a single employer under Section
414(b), (c), (m) or (o) of the Tax Code.
"Compliance Certificate": as defined in subsection 5.2(b).
----------------------
"Cash Taxes": for any period, the aggregate cash amount of state and
----------
federal income taxes paid by the Borrower and its Subsidiaries during such
period.
"Consolidated Debt": at any date of determination, all Indebtedness of
-----------------
the Borrower and its Subsidiaries (including without limitation, all of the
Obligations) at such date of determination as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Debt Service Ratio": for any period, the ratio of:
-------------------------------
(a) the sum of the Consolidated EBITDA for such period, minus
-----
any Cash Taxes paid during such period, minus any payments made by the
-----
Borrower or any Subsidiary during such period for Capital Expenditures
that are not financed, minus any Cash Dividends paid during such
-----
period, all as determined on a consolidated basis in accordance with
GAAP, to
(b) the sum of all mandatory payments made by the Borrower or
any of its Subsidiaries on any long term debt (including without
limitation, any Capitalized Leases) during such period, plus the
----
Consolidated Interest Expense for such period, all as determined on a
consolidated basis in accordance with GAAP.
-3-
"Consolidated EBITDA": for any period, the Consolidated Net Income for
-------------------
such period, plus, to the extent deducted in determining such Consolidated
Net Income, (i) Consolidated Interest Expense, (ii) depreciation, (iii)
depletion, (iv) amortization, (v) all Federal, state, local and foreign
income taxes, (vi) all other non-cash expenses, and (vii) with respect to
the Borrower's fiscal quarter ended December 31, 1999, Nine Hundred Thirty
Thousand and 00/100 Dollars ($930,000.00) in connection with non-recurring
charges related to advertising the Borrower's ▇▇▇▇▇▇▇▇.▇▇▇, minus, to the
------------
extent added in determining such Consolidated Net Income, any non-cash
income or non-cash gains, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense": for any period, the net interest
-----------------------------
expense of Borrower and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Leverage Ratio": at any date of determination, the ratio
---------------------------
of (a) the unpaid Consolidated Debt as of such date to (b) the Consolidated
Tangible Net Worth as of such date.
"Consolidated Net Income": for any period, the net income of the
-----------------------
Borrower and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, but excluding from the
determination of Consolidated Net Income (without duplication): (a) any
extraordinary or non-recurring gains or losses (including, with respect to
the Borrower's fiscal quarters ended September 30, 1999 and December 31,
1999, merger related expenses of Six Hundred Ninety Six Thousand Six
Hundred Sixty Four and 00/100 Dollars ($696,664.00) and One Hundred Twenty
Four Thousand One Hundred Seventy Four and 00/100 Dollars ($124,174.00),
respectively) or gains or losses from Asset Sales, (b) effects of
discontinued operations, (c) the income (or loss) of any Person in which
any other Person (other than the Borrower or any of its Subsidiaries) has a
joint interest, except to the extent of the amount of dividends or other
distributions actually paid in cash to the Borrower or any of its
Subsidiaries by such Person during such period and (e) the income (or loss)
of any Person accrued prior to the date it becomes a Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of its
Subsidiaries or the date such Person's assets are acquired by the Borrower
or any of its Subsidiaries.
"Consolidated Tangible Net Worth": at any date of determination, the
-------------------------------
sum of the aggregate tangible assets of the Borrower and its Subsidiaries
after having excluded (a) the book value of all Intangible Assets of the
Borrower and its Subsidiaries and (b) all liabilities of the Borrower and
its Subsidiaries (including all deferred income taxes), all as determined
on a consolidated basis in accordance with GAAP consistently applied.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any material agreement, instrument or
other undertaking to which such Person is a party or by which it or any of
its property is bound.
-4-
"Default": any of the events specified in subsection 7.1, whether or
-------
not any requirement contained therein for the giving of notice, the lapse
of time or both, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Eligible Inventory": all Inventory other than Inventory: (i) held on
------------------
consignment, or not otherwise owned by the Borrower or any of its
Subsidiaries, or of a type no longer sold by the Borrower or any of its
Subsidiaries; (ii) which has been returned by a customer or is damaged or
subject to any legal encumbrance other than a Permitted Lien; (iii) which
is not in the possession of the Borrower or any of its Subsidiaries (unless
the Lender receives a waiver from the party in possession of such inventory
in form and substance satisfactory to the Lender), (iv) which is held by
the Borrower or any of its Subsidiaries on leased property, unless the
Lender receives a waiver or subordination agreement from the lessor of such
leased property and, if any, sublessor thereof in form and substance
satisfactory to the Lender, (v) located or otherwise kept in the State of
Michigan (unless the Lender receives written evidence in form and substance
satisfactory to the Lender that the Lender has a first priority perfected
security interest in such Inventory pursuant to the Security Documents),
(vi) as to which the Lender does not have a first priority perfected
security interest pursuant to the Security Documents, (vii) which has been
shipped to a customer of the Borrower or any of its Subsidiaries, as the
case may be, regardless of whether such shipment is on a consignment basis,
(viii) which is not located within the United States of America, or (ix)
which the Lender reasonably deems to be obsolete or not marketable.
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"Environmental Permits": all permits, licenses, registrations,
---------------------
notifications, exemptions, and other authorizations required under
Environmental Laws.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Event of Default": any of the events specified in subsection 7.1,
----------------
provided, however, that any requirement contained therein for the giving of
-----------------
notice, the lapse of time or both, has been satisfied.
"Extension of Credit": the making of any Loan by the Lender.
-------------------
"Financing Documents": this Agreement, any Notes, the Security
-------------------
Documents, the Subsidiary Guaranty, the subordination agreements, and any
and all other agreements, guaranties, instruments, documents, certificates,
financing statements, powers of attorney, consents and filings, whether
heretofore, now, or hereafter executed by or on behalf of the Borrower or
any of its Subsidiaries or any other Person and delivered to the Lender in
-5-
connection with the Loans, all as may be amended, modified, supplemented,
restated or extended from time to time.
"GAAP": generally accepted accounting principles in the United States
----
of America in effect from time to time (subject to the provisions of the
last paragraph of subsection 6.1).
"Governmental Authority": any nation or government, any state or other
----------------------
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Materials": any petroleum (including crude oil or any
-------------------
fraction thereof) or petroleum products, polychlorinated biphenyls, urea-
formaldehyde insulation, asbestos and asbestos-containing materials,
pollutants, contaminants, and all other materials and substances including
but not limited to radioactive materials regulated pursuant to any
Environmental Laws or that could result in liability under any
Environmental Law.
"Incumbent Directors": the members of the Board of Directors of the
-------------------
Borrower on the date of this Agreement; provided, however, that any Person
-----------------
becoming a director of the Borrower subsequent to such date whose election
or nomination for election was supported by of least two-thirds of the
directors who then comprised the Incumbent Directors shall be considered to
be an Incumbent Director.
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument,
(c) all obligations of such Person under Capitalized Leases, (d) all
obligations of such Person in respect of acceptances issued or created for
the account of such Person and (e) all indebtedness of others of the types
described in (a) through (d) above secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise
become liable for the payment thereof (the amount of such indebtedness with
respect to such Person being deemed to be the lesser of the value of such
property or the amount of indebtedness of others so secured).
"Initial Financial Statements": as defined in subsection 4.1.
----------------------------
"Intangible Assets": any and all goodwill, organizational expense,
-----------------
licenses, patents, trademarks, tradenames, copyrights, capitalized research
and development expenses, deferred charges, and all other intangible
assets.
"Intellectual Property": as defined in subsection 4.9.
---------------------
"Inventory": all "inventory" (as that term is defined in the UCC) of
---------
the Borrower and its Subsidiaries, and to the extent not included in such
definition, shall also mean and include all raw materials and other
materials and supplies, work-in-process and
-6-
finished goods of the Borrower and its Subsidiaries and any products made
or processed therefrom and all substances, if any, commingled therewith or
added thereto.
"Investment": as defined in subsection 6.11.
----------
"Late Rate": as defined in subsection 2.9.
---------
"Lender": as defined in the preamble to this Agreement.
------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Capitalized Lease having substantially the same economic effect as
any of the foregoing).
"Loan": As defined in subsection 2.1(a).
----
"Loan Parties": the Borrower or any Subsidiary which is now or
------------
hereafter becomes a party to any Financing Document.
"Material Adverse Effect" or "Material Adverse Change": a material
----------------------- -----------------------
adverse effect or change on (a) the business, operations, property or
condition (financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole or (b) the validity or enforceability of this Agreement or
any of the other Financing Documents or the rights or remedies of the
Lender hereunder or thereunder.
"Maturity Date": the date of the second anniversary of the Closing
-------------
Date.
"Maximum Amount": as defined in subsection 2.1(a).
--------------
"Note": as defined in subsection 2.1(b).
----
"Obligations": all Indebtedness, obligations and liabilities of the
-----------
Borrower or any and all of its Subsidiaries to the Lender, individually or
collectively, now existing or hereafter arising, direct or indirect, joint
or several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law
or otherwise, arising or incurred under this Agreement or any of the other
Financing Documents or in respect of any of the Loans or the Note, or
other instruments at any time evidencing any thereof.
"Obsolete Property": any property of the Borrower or any of its
-----------------
Subsidiaries which is obsolete, outdated or worn out or the useful life of
which has ended, in each case in the good faith determination of the
Borrower or any applicable Subsidiary.
"Participant": as defined in subsection 9.8(c)
-----------
-7-
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA and any Governmental Authority which
succeeds to the powers and functions thereof.
"Permitted Liens": as defined in subsection 6.5.
---------------
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, limited liability company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Prime Rate": for any day, a rate equal to the variable rate of
----------
interest per annum, most recently announced by the Lender at its
headquarters in Boston, Massachusetts, as its "base rate," with the
understanding that the Lender's "base rate" is one of its interest rates
and serves as a basis upon which effective rates of interest are calculated
for loans making reference thereto and may not be the lowest of the
Lender's interest rates. Any change in the Prime Rate shall be effective
as of the effective date stated in the announcement by the Lender of such
change.
"Purchase Money Indebtedness": any Indebtedness incurred by the
---------------------------
Borrower or any of its Subsidiaries, whichever is applicable, in connection
with the acquisition by the Borrower or any of its Subsidiaries, whichever
is applicable, of any real or personal property.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Requirement of Law": as to any Person, the Certificate (or Articles)
------------------
of Incorporation (or Organization) and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of
its property or to which such Person or any of its property is subject.
"Responsible Officer": as to any Person, the chief executive officer
-------------------
and the president of such Person or, with respect to financial matters, the
chief financial officer of such Person or, in either case, such other
executive officers as may be designated from time to time by such Person in
writing to the Lender.
"Restricted Payments": as defined in subsection 6.10.
-------------------
-8-
"Revolving Credit Period": the period from and after the Closing Date
-----------------------
to and including the Maturity Date or any earlier date on which the
obligation of the Lender to make Loans shall terminate, as provided herein.
"SEC": the United States Securities and Exchange Commission or any
---
other federal governmental agency which may hereafter perform its
functions.
"Security Agreements": collectively, the Borrower Security Agreement
-------------------
and the Subsidiary Security Agreement.
"Security Documents": collectively, the Security Agreements, the
------------------
Collateral Assignment of Lease and all other security agreements, pledge
agreements, financing statements, assignments, mortgages, agreements,
documents and instruments now or hereafter delivered to the Lender granting
a Lien on any asset or assets of any Person to secure the Obligations or to
secure any guarantee of any such Obligations and, including, without
limitation, any such document delivered pursuant to subsections 5.10 and
5.11.
"Solvent": when used with respect to any Person, means that, as of any
-------
date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount that
will be required to pay all "liabilities of such Person, contingent or
otherwise", as of such date (as such quoted terms are determined in
accordance with applicable federal and state laws governing determinations
of the insolvency of debtors) as such debts become absolute and matured,
(b) such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (c) such Person
will be able to pay its debts as they mature, taking into account the
timing of and amounts of cash to be received by such Person and the timing
of and amounts of cash to be payable on or in respect of indebtedness of
such Person; in each case after giving effect to (A) as of the Closing Date
the making of the extensions of credit to be made on the Closing Date and
to the application of the proceeds of such extensions of credit and (B) on
any date after the Closing Date, the making of any extension of credit to
be made on such date, and to the application of the proceeds of such
extension of credit. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal equitable, secured or unsecured or (y) right to an equitable remedy
for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
"Subsidiary": as to any Person, a corporation, partnership or other
----------
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a
-9-
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guaranty": the Subsidiary Guaranty to be executed and
-------------------
delivered by each Subsidiary, substantially in the form of Exhibit D, as
---------
the same may be amended, supplemented or otherwise modified from time to
time.
"Subsidiary Security Agreement": the Subsidiary Security Agreement-All
-----------------------------
Assets to be executed and delivered by each Subsidiary in favor of the
Lender, substantially in the form of Exhibit E, as the same may be amended,
---------
supplemented or otherwise modified from time to time.
"Tax Code": the Internal Revenue Code of 1986, as amended from time to
--------
time.
"UCC": the Uniform Commercial Code as from time to time in effect in
---
The Commonwealth of Massachusetts.
2. Use of Terms. The use of the singular of terms which are defined in
------------
the plural shall mean and refer to any one of them; and pronouns used herein
shall be deemed to include the singular and the plural and all genders. The use
of the connective "or" is not intended to be exclusive; the term "may not" is
intended to be prohibitive and not permissive; use of "includes" and "including"
is intended to be interpreted as expansive and amplifying and not as limiting in
any way.
The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. All references in this Agreement to
Articles, Sections, Exhibits, Schedules and Appendices refer to Articles,
Sections, Exhibits, Schedules and Appendices of this Agreement unless otherwise
indicated. All Exhibits, Schedules and Appendices attached to this Agreement
are incorporated herein and made a part hereof.
-10-
________________________________________________________________________________
CREDIT AGREEMENT
(the "Agreement")
---------
by and between
CITIZENS BANK OF MASSACHUSETTS
(the "Lender")
------
and
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
(the "Borrower")
--------
________________________________________________________________________________
LIEN SEARCHES
Appendix B
----------
(s) Massachusetts Secretary of State
(t) Clerk's Office for the Town of Canton, MA
(u) Clerk's Office for the City of Boston, MA
(v) Norfolk County Registry of Deeds
(w) Suffolk County Registry of Deeds
(x) Arizona Secretary of State
(y) Maricopa County Recorder, AZ
(z) California Secretary of State
(aa) Sonoma County Recorder, CA
(bb) Colorado Secretary of State
(cc) Denver County Recorder, CO
(dd) Connecticut Secretary of State
(ee) Clerk's Office for the Town of ▇▇▇▇▇▇, CT
(ff) Florida Department of State
(gg) Hillsborough County Circuit Court, FL
(hh) Illinois Secretary of State
(ii) Lake County Recorder, IL
(jj) Michigan Secretary of State
(kk) Washtenaw County Register of Deeds, MI
(ll) Minnesota Secretary of State
(mm) Hennepin County Recorder, MN
(nn) New Jersey Department of the Treasury/Commercial
Recording Division
(oo) Middlesex County Clerk, NJ
(pp) New York Department of State
(qq) ▇▇▇▇▇▇ County Clerk, NY
(rr) North Carolina Secretary of State
(ss) Guilford County Register of Deeds, NC
(tt) Ohio Secretary of State
(uu) ▇▇▇▇▇▇▇▇▇▇ County Recorder, OH
(vv) Texas Secretary of State
(ww) Fort Bend County Clerk, TX
(xx) Virginia State Corporation Commission
(yy) Fairfax County Clerk of the Circuit Court, VA
(zz) Loudon County Circuit Court, VA
(aaa) Washington State Department of Licensing
(bbb) King County Recorder, WA
-2-
Appendix C
----------
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
Reference is hereby made to a certain Credit Agreement, dated as of April
__, 2000 (as the same may be amended, modified, supplemented, extended or
restated, from time to time, the "Credit Agreement") by and between ▇▇▇▇▇▇▇▇▇ &
----------------
▇▇▇▇, INC., a Massachusetts corporation (the "Borrower") and CITIZENS BANK OF
--------
MASSACHUSETTS, a Massachusetts savings bank (the "Lender"). All capitalized
------
terms not defined herein but defined in the Credit Agreement shall have the
meanings given to such terms in the Credit Agreement.
The undersigned hereby certifies that he or she is a Responsible Officer of
the Borrower and as such, is authorized, for and on behalf of the Borrower, to
execute and deliver this Compliance Certificate to the Lender in accordance with
the provisions of the Credit Agreement. Pursuant to the provisions of
subsection 5.2(b) of the Credit Agreement, the undersigned hereby certifies to
the Lender as follows:
1. Each of the representations and warranties made by the Borrower
and its Subsidiaries in or pursuant to the Financing Documents are true and
correct in all material respects on and as of the date hereof, as if made
on and as of the date hereof, except (a) to the extent such representations
and warranties expressly relate to an earlier date in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date, and (b) as follows:
[Describe divergences, if any]
2. Since the end of the last fiscal quarter of the Borrower, no
Material Adverse Change has occurred except:
[Describe, if any]
3. Except as set forth in the certificates attached hereto and
except as heretofore disclosed to the Lender in previous Compliance
Certificates, there has been no change (i) in the Certificate of
Incorporation or By-laws of the Borrower, or (ii) in the incumbency of the
officers of the Borrower whose signatures have heretofore been certified to
the Lender.
4. The financial statements submitted herewith (if any) are in
compliance with the applicable provisions of subsections 5.1 and 5.2 of the
Credit Agreement.
5. The undersigned has reviewed or caused to be reviewed all of the
Financing Documents, and based upon such review and to the knowledge of the
undersigned, no Default or Event of Default has occurred and is continuing
as of the date hereof (or if applicable, will occur after giving effect to
the making of the Loans requested to be made on the date hereof), except as
follows:
[Describe Defaults or Events of Default]
6. Attached hereto as Appendix A are calculations demonstrating
----------
that, based upon the financial statements of the Borrower and its
Subsidiaries submitted herewith (if any), the Borrower and its Subsidiaries
were in compliance as of the date of such financial statements with all
financial covenants set forth in subsection 6.1 of the Credit Agreement to
be measured as of such date, except as noted on Appendix A attached hereto.
----------
7. Any changes in the chief executive office and chief place of
business of the Borrower or any of its Subsidiaries which have occurred
and/or any additional locations at which any of the Inventory or equipment
are kept, notice of which has not yet been provided to the Lender, in
accordance with the provisions of the Security Documents, are set forth
below:
[Describe]
EXECUTED under seal as of this ________ day of __________________, ______.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
By:______________________________
Name:
Title:
Its duly authorized officer
-2-
Appendix D
----------
[FORM OF BORROWING BASE CERTIFICATE]
BORROWING BASE CERTIFICATE
Reference is hereby made to a certain Credit Agreement, dated as of April
__, 2000 (as the same may be amended, modified, supplemented, extended or
restated, from time to time, the "Credit Agreement") by and between ▇▇▇▇▇▇▇▇▇ &
----------------
▇▇▇▇, INC., a Massachusetts corporation (the "Borrower") and CITIZENS BANK OF
--------
MASSACHUSETTS, a Massachusetts savings bank (the "Lender"). All capitalized
------
terms not defined herein but defined in the Credit Agreement shall have the
meanings given to such terms in the Credit Agreement.
The undersigned hereby certifies that he or she is a Responsible Officer of
the Borrower and as such, is authorized, for and on behalf of the Borrower, to
execute and deliver this Borrowing Base Certificate to the Lender in accordance
with the provisions of the Credit Agreement. Pursuant to the provisions of
subsection 5.2(c)(i) of the Credit Agreement, the undersigned hereby certifies
to the Lender that the following is a fair, accurate and complete report of the
Revolving Credit Borrowing Base as of ______________ (the "Relevant Date"):
-------------
1. Eligible Inventory:
------------------
(a) Total Inventory, per the attached schedule $______________
as of the Relevant Date
(b) Inventory that is not Eligible Inventory per $______________
the attached schedule
(c) Total Eligible Inventory $______________
(Line 1(a) minus Line 1(b))
2. Borrowing Base - Availability:
-----------------------------
(a) 50% of all Eligible Inventory (i.e. Line 1(c) $______________
(b) Maximum Amount $5,000,000.00
(c) Lesser of either Line 3(a) or 3(b) $______________
(d) Principal balance of Loans $______________
as of the Relevant Date
(e) Balance available for borrowing as of the
Relevant Date (Line 3(c) minus Line 3(d)) $______________
EXECUTED under seal as of this ________ day of __________________, ____.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
By:_______________________________
Name:
Title:
Its duly authorized officer
2
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$5,000,000.00 April 13, 2000
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC., a
Massachusetts corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO
--------
PAY TO THE ORDER OF CITIZENS BANK OF MASSACHUSETTS, a Massachusetts savings bank
(the "Lender") at the office of the Lender, located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
------
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or such other place as the holder hereof may specify in
writing), on the Maturity Date (as defined in that certain Credit Agreement,
dated of even date herewith (as the same may be amended, modified, substituted,
extended or restated, from time to time, the "Credit Agreement"), by and between
----------------
the Borrower and the Lender) or such earlier date as may be provided in the
Credit Agreement, the lesser of either the principal amount of FIVE MILLION AND
00/100 DOLLARS ($5,000,000.00) or the aggregate unpaid principal amount of all
Loans advanced by the Lender to the Borrower pursuant to Section 2 of the Credit
Agreement. The Borrower further agrees to pay interest on the unpaid principal
balance of the Loans from time to time outstanding from the Closing Date until
paid, at the rates and at the times provided in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement, and the holder
hereof is entitled to, and shall have, all of the benefits of the Credit
Agreement, and all other agreements, instruments, guarantees and other documents
executed and delivered in connection therewith and herewith. All capitalized
terms not defined herein but defined in the Credit Agreement shall have the
meanings given to such terms in the Credit Agreement.
This Note is secured as provided in the Security Documents. Reference
is hereby made to the Security Documents for a description of the properties and
assets in which a security interest has been granted, the nature and extent of
the security, the terms and conditions upon which the security interests were
granted and the rights of the holder of this Note in respect thereof.
Upon the occurrence and during the continuance of any one or more of
the Events of Default, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
This Note shall be binding upon the Borrower and its successors and
assigns, and shall inure to the benefit of the Lender and its successors,
assigns, endorsees and transferees.
-1-
THE BORROWER AND THE LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
NOTE, ANY OF THE OTHER FINANCING DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
This Note and the other Financing Documents are executed and delivered
under seal and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts, without giving effect to the conflict of law
provisions thereof. The Borrower submits itself to the non-exclusive
jurisdiction of the Courts of The Commonwealth of Massachusetts for all purposes
with respect to the Financing Documents and the Borrower's relationship with the
Lender.
IN WITNESS WHEREOF, the undersigned has executed this Note under its
seal as of the date first written above.
WITNESS: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
_____________________________ By:___________________________
Name: Name:
Title:
Its duly authorized officer
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named _________________ as
_____________ of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., and acknowledged the foregoing
instrument to be his/her free act and deed and the free act and deed of
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., before me.
___________________________
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
-2-
EXHIBIT B
FORM OF BORROWER SECURITY AGREEMENT - ALL ASSETS
This BORROWER SECURITY AGREEMENT - ALL ASSETS (this "Agreement") is made as
---------
of April 13, 2000, by and between ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC., a Massachusetts
corporation (the "Borrower") and CITIZENS BANK OF MASSACHUSETTS, a Massachusetts
--------
savings bank (the "Lender").
------
All capitalized terms not defined herein but defined in the Credit
Agreement, dated of even date herewith (as the same may be amended, modified,
supplemented, extended or restated, from time to time, the "Credit Agreement")
----------------
by and between the Borrower and the Lender, shall have the meanings given to
such terms in the Credit Agreement.
Preliminary Statements:
-----------------------
WHEREAS, the Borrower has requested that the Lender enter into the Credit
Agreement and make certain Extensions of Credit to or for the benefit of the
Borrower, as provided for therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and to the obligation of the Lender to make such Extensions of Credit
that the Borrower enter into this Agreement;
NOW, THEREFORE, in order to induce the Lender to enter into the Credit
Agreement and to make such Extensions of Credit to or for the benefit of the
Borrower, and in consideration thereof and in consideration of the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower hereby
agrees with the Lender as follows:
SECTION 1. DEFINITIONS; USE OF TERMS.
--------------------------
1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings given to such terms in the Uniform Commercial Code in
effect in The Commonwealth of Massachusetts on the date hereof: "Chattel Paper,"
-------------
"Deposit Accounts," "Documents," "Farm Products," "Fixtures," "Goods" and
---------------- --------- ------------- -------- -----
"Instruments." The following terms shall have the meanings given to such terms
-----------
as set forth below:
"Accounts": all "accounts" as that term is defined in the UCC,
--------
and to the extent not included in such definition, shall also mean and
include all accounts receivable, book debts, notes, drafts and other forms
of obligations or indebtedness now owned or hereafter received or acquired
by or belonging or owing to the Borrower whether arising out of personal
property owned or leased by it, Goods sold by it or services rendered by it
or from any other transaction, whether or not the same involves the lease
of personal property, sale of Goods or performance of services by the
Borrower (including, without limitation, any such obligation or
indebtedness which would be characterized as an account, general intangible
or chattel paper under the Uniform Commercial Code in effect in any
jurisdiction) and all of the Borrower's rights in, to and under all
purchase
orders now owned or hereafter received or acquired by it for Goods or
services, and all of the Borrower's rights to any Goods represented by any
of the foregoing (including returned or repossessed Goods and unpaid
seller's rights) and all moneys due or to become due to the Borrower under
all contracts for the sale of Goods and/or the performance of services by
it (whether or not yet earned by performance), in each case whether now in
existence or hereafter arising or acquired including, without limitation,
the right to receive the proceeds of said purchase orders and contracts and
all collateral security and guarantees of any kind given by any Person with
respect to any of the foregoing.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership or membership interests in a Person (other
than a corporation) and any and all warrants or options to purchase any of
the foregoing.
"Contract": with respect to an Account, any agreement relating to the
--------
terms of payment or the terms of performance thereof, including, without
limitation, (a) all rights of the Borrower to receive moneys due and to
become due to it thereunder or in connection therewith, (b) all rights of
the Borrower to damages arising out of, or for, breach or default in
respect thereof and (c) all rights of the Borrower to perform and to
exercise all remedies thereunder.
"Copyright Licenses": any written agreement naming the Borrower as
------------------
licensor or licensee, granting any right under any Copyright (including,
without limitation, the grant of rights to manufacture, distribute, exploit
and sell materials derived from any Copyright).
"Copyrights": (a) all copyrights arising under the laws of the United
----------
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the Copyright Office, and (ii) the right to obtain all
renewals thereof.
"Copyright Office": the United States Copyright Office or any other
----------------
federal governmental agency which may hereafter perform its functions.
"Domestic Subsidiary": any Subsidiary that is organized under the laws
-------------------
of any jurisdiction within the United States.
"Equipment": all "equipment" as that term is defined in the UCC, and
---------
to the extent not included in such definition, shall also mean and include
all machinery, furniture and motor vehicles.
"Foreign Subsidiary": any Subsidiary that is organized under the laws
------------------
of any jurisdiction outside the United States.
-2-
"General Intangibles": all "general intangibles" as that term is
-------------------
defined in the UCC, and to the extent not included in such definition,
shall also mean and include any franchise agreements or rights in favor of
or granted by the Borrower to know-how, trade secrets, product or service
development ideas and designs, advertising commercials, renderings,
strategies and plans, blueprints, architectural drawings, site location,
personnel and franchisee information, proprietary information, computer and
software technology and programs, contracts with distributors, and any
similar items, all interest rate, foreign currency or similar agreements
and general intangibles attributable to the Capital Stock of each
Subsidiary.
"Inventory": all "inventory" as that term is defined in the UCC, and
---------
to the extent not included in such definition, shall also mean and include
all raw materials and other materials and supplies, work-in-process and
finished goods and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto.
"Intellectual Property": all rights, title, interests, priorities and
---------------------
privileges relating to any and all intellectual property, whether arising
under federal, state or foreign laws or otherwise (including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to ▇▇▇
at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom).
"Investment Property": all "investment property", as that term is
-------------------
defined in the UCC, and to the extent not included in such definition,
shall also mean and include all stock (including, without limitation, all
Pledged Stock), bonds, debentures, securities, treasury bills, certificates
of deposit, mutual or money market fund shares, bills, notes (including,
without limitation, all Pledged Notes), evidences of indebtedness or other
obligations issued by any Person (including, without limitation, federal
government of the United States or any agency thereof), whether in
registered, bearer or other form, and whether certificated or
uncertificated, in book-entry or other form.
"Issuers": (a) the Persons identified Section 4 of the Master
------- ------
Disclosure Schedule attached hereto as the issuers of the Pledged Stock,
-------------------
(b) any other Subsidiaries of the Borrower created or acquired after the
date hereof the equity of which is required to be pledged by this Agreement
or subsection 7.11 of the Credit Agreement, (c) the Persons identified in
Section 4 of the Master Disclosure Schedule attached hereto as the issuers
--------------------------
of the Pledged Notes and (d) any other issuer of any Investment Property.
"License": any Copyright License, Patent License or Trademark License.
-------
"Master Disclosure Schedule": the Master Disclosure Schedule attached
--------------------------
hereto and incorporated herein by reference.
"Patent License": all agreements, whether written or oral, providing
--------------
for the grant by the Borrower of any right to manufacture, use or sell any
invention covered by a Patent.
-3-
"Patents": (a) all letters patent of the United States or any other
-------
country and all reissues and extensions thereof and (b) all applications
for letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof.
"PTO": the United States Patent and Trademark Office or any other
---
federal governmental agency which may hereafter perform its functions.
"Pledged Notes": all promissory notes listed in Section 3 of the
-------------
Master Disclosure Schedule attached hereto, and, if requested by the
--------------------------
Lender, any other promissory note issued to or held by the Borrower (other
than promissory notes issued in connection with extensions of trade credit
by the Borrower in the ordinary course of business).
"Pledged Stock": the shares of Capital Stock listed in Section 4 of
-------------
the Master Disclosure Schedule attached hereto, together with all stock
--------------------------
certificates, options or rights of any nature whatsoever that may be issued
or granted by any Issuer to the Borrower and that are required by this
Agreement or the Credit Agreement to be pledged hereunder while this
Agreement is in effect.
"Proceeds": all "proceeds," as that term is defined in the UCC, and to
--------
the extent not included in such definition, shall also mean and include (a)
any and all proceeds of any insurance, indemnity, warranty, guaranty or
letter of credit payable to the Borrower, from time to time with respect to
any of the Collateral, (b) all payments (in any form whatsoever) paid or
payable to the Borrower from time to time in connection with any taking of
all or any part of the Collateral by any Governmental Authority or any
Person acting under color of Governmental Authority, (c) all judgments in
favor of the Borrower in respect of the Collateral, (d) all dividends or
other income from the Investment Property, collections thereon or
distributions or payments with respect thereto and (e) all other amounts
from time to time paid or payable or received or receivable under or in
connection with any of the Collateral.
"Securities Act": the Securities Act of 1933, as amended from time to
--------------
time.
"Trademark License": any agreement, written or oral, providing for the
-----------------
grant by or to the Borrower of any right to use any Trademark.
"Trademarks": (a) all trademarks, trade names, corporate names,
----------
company names, business names, fictitious business names, trade dress,
trade styles, service marks, designs, logos and other source or business
identifiers, and the goodwill of the business associated therewith,
including customer lists, license rights, advertising materials and all
other business assets which uniquely reflect the goodwill of the business,
now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether
in the PTO or in any similar office or agency of the United States, or any
State thereof, or any other country, and (b) all renewals thereof.
"UCC": the Uniform Commercial Code as from time to time in
---
effect in The Commonwealth of Massachusetts; provided, however, that if
------------------
by reason of mandatory
-4-
provisions of law, the perfection or the effect of perfection or non-
perfection of the security interest in any Collateral or the availability
of any remedy hereunder is governed by the Uniform Commercial Code as in
effect on or after the date hereof in any other jurisdiction, then the term
"UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection or availability of
such remedy.
1.2 Use of Terms; Exhibits. The use of the singular of terms which are
----------------------
defined in the plural shall mean and refer to any one of them; and pronouns used
herein shall be deemed to include the singular and the plural and all genders.
The use of the connective "or" is not intended to be exclusive; the term "may
not" is intended to be prohibitive and not permissive; use of "includes" and
"including" is intended to be interpreted as expansive and amplifying and not as
limiting in any way. All exhibits to this Agreement are incorporated herein.
SECTION 2. GRANT OF SECURITY INTEREST.
---------------------------
As security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations, the Borrower hereby grants and otherwise pledges to the Lender a
continuing security interest in all of the present and future rights, title and
interests of the Borrower in and to the following property, and each item
thereof, all whether now or hereafter existing, or owned or acquired by the
Borrower, or now or hereafter arising or due or to become due, wherever such
property may be located, together with all substitutions for, replacements of,
additions to, accessions to, and products, Proceeds and records of any and all
of the following (collectively, the "Collateral"):
----------
(a) all Accounts;
(b) all Inventory;
(c) all Equipment;
(d) all Fixtures;
(e) all Farm Products;
(f) all Contracts;
(g) all Chattel Paper;
(h) all Documents;
(i) all Instruments;
(j) all Investment Property;
(k) all Deposit Accounts;
(l) all General Intangibles;
-5-
(m) all Intellectual Property; and
(n) all other items of tangible and intangible personal property of
any and every kind and description which are not otherwise described herein;
provided, however, the term "Collateral" shall not include (i) any Inventory
-----------------
consisting of alcoholic beverages which are located or otherwise kept in the
State of Michigan, to the extent and only to the extent that the grant of a
security interest therein is prohibited by the laws of the State of Michigan;
and (ii) any license, contract or agreement which contains a provision that (A)
prohibits the grant of a security interest therein; or (B) provides a default
may or shall occur thereunder as a result of the grant of a security interest
therein, unless any required consents shall have been obtained.
SECTION 3. GENERAL REPRESENTATIONS AND WARRANTIES.
---------------------------------------
The Borrower hereby represents and warrants as follows:
3.1 Power and Authority. The Borrower has the power and authority and
-------------------
the legal right to execute and deliver, to perform its obligations under, and to
grant the Lien on the Collateral pursuant to, this Agreement and has taken all
necessary actions to authorize its execution, delivery and performance of, and
grant of the Lien on the Collateral pursuant to, this Agreement.
3.2 Master Disclosure Schedule. All of the information contained in the
--------------------------
Master Disclosure Schedule attached hereto is true, correct and complete.
--------------------------
3.3 Name; Chief Executive Office.
----------------------------
(a) The name of the Borrower set forth in the first paragraph of
this Agreement is the true, correct and complete legal name of the
Borrower, and the Borrower has not done business under, or used, any other
name, except as otherwise described in Section 1.2 of the Master Disclosure
-----------------
Schedule attached hereto.
--------
(b) The chief executive office and principal place of business of
the Borrower is located at the address listed in Section 2.1 of the Master
------
Disclosure Schedule attached hereto.
-------------------
(c) All of the Inventory and Equipment of the Borrower (other than
mobile vehicles) is kept at the locations listed in Section 2.2 of the
Master Disclosure Schedule attached hereto.
--------------------------
3.4 Title; No Other Liens. Except for (a) the Lien granted to the Lender
---------------------
pursuant to this Agreement and (b) the Permitted Liens, the Borrower owns each
item of the Collateral free and clear of any and all Liens or claims of others.
No security agreement, financing statement or other public notice with respect
to all or any part of the Collateral is on file or of record in any public
office, except such as may have been filed in favor of the Lender, pursuant to
this Agreement or as may be permitted pursuant to the Credit Agreement.
-6-
3.5 Perfected First Priority Liens. Upon the completion of filing of
------------------------------
financing statements at (a) the Massachusetts Secretary of State, (b) the
Clerk's Office of the Town of Canton, Massachusetts, (c) the Clerk's Office of
the City of Boston, Massachusetts, (d) Arizona Secretary of State, (e) Maricopa
County Recorder, Arizona, (f) California Secretary of State, (g) Sonoma County
Recorder, California, (h) Colorado Secretary of State, (i) Connecticut Secretary
of State, (j) Florida Secretary of State, (k) Illinois Secretary of State, (l)
Lake County Recorder, Illinois, (m) Michigan Secretary of State, (n) Washtenaw
County Register of Deeds, Michigan, (o) Minnesota Secretary of State, (p)
Hennepin County Recorder, Minnesota (q) New Jersey Department of the
Treasury/Commercial Recording Division, (r) Middlesex County Court Clerk, New
Jersey, (s) New York Secretary of State, (t) ▇▇▇▇▇▇ County Clerk, New York, (u)
North Carolina Secretary of State (v) Guilford County Register of Deeds, North
Carolina (w) Ohio Secretary of State, (x) ▇▇▇▇▇▇▇▇▇▇ County Recorder, Ohio, (y)
Texas Secretary of State, (z) Fort Bend County Clerk, Texas, (aa) Virginia State
Corporation Commission, (bb) Fairfax County Clerk of the Circuit Court,
Virginia, and (cc) Washington State Department of Licensing, the Liens granted
by the Borrower pursuant to this Agreement will constitute perfected Liens on
the Collateral in which a security interest may be perfected by the filing of
financing statements pursuant to Article 9 of the Uniform Commercial Code as in
effect in each relevant jurisdiction in favor of the Lender, which are prior to
all other Liens on such Collateral created by the Borrower and in existence on
the date hereof (except the Permitted Liens) and which are enforceable as such
against all creditors of and purchasers from the Borrower, except in each case
as enforceability is affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether involved in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
3.6 Accounts. No amount payable to the Borrower under or in connection
--------
with any Account, Contract or License in excess of One Hundred Thousand and
00/100 Dollars ($100,000) is evidenced by any Instrument or Chattel Paper which
has not been delivered to the Lender. The amount represented by the Borrower to
the Lender from time to time as owing by each account debtor or by all account
debtors in respect of the Accounts will at such time be the correct amount
actually owing by such account debtor or debtors thereunder in all material
respects, subject to adjustments in the ordinary course of business.
3.7 Investment Property.
-------------------
(a) The shares of Pledged Stock listed on Section 4 of the
Master Disclosure Schedule attached hereto constitute all of the
--------------------------
issued and outstanding shares or interests of all classes of the
Capital Stock of each Domestic Subsidiary owned by the Borrower and
65% of the total outstanding Capital Stock of each Foreign Subsidiary
owned by the Borrower. All of the shares of the Pledged Stock have
been duly and validly issued and are fully paid and nonassessable.
(b) To the best knowledge of the Borrower, each of the Pledged
Notes pledged by the Borrower hereunder constitutes a valid and
legally enforceable obligation of the other obligor in respect thereof
or parties thereto, enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
-7-
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
(c) The Borrower is the record and beneficial owner of, and has
good and marketable title to, the Investment Property pledged by it
hereunder, free of any and all Liens or options in favor of, or claims
of, any other Person, except for the Lien created by this Agreement
and Permitted Liens.
3.8 Intellectual Property.
---------------------
(a) Set forth in Section 5 of the Master Disclosure Schedule
--------------------------
attached hereto is a true, correct and complete list of all registered
Copyrights and Copyright Licenses owned by the Borrower in its own
name as of the date hereof. Set forth in Section 6 of the Master
------
Disclosure Schedule attached hereto is a true, correct and complete
-------------------
list of all Patents and Patent Licenses owned by the Borrower in its
own name as of the date hereof. Set forth in Section 7 of the Master
------
Disclosure Schedule attached hereto is a true, correct and complete
-------------------
list of all registered Trademarks and Trademark Licenses owned by the
Borrower in its own name as of the date hereof. Except as set forth in
the Master Disclosure Schedule attached hereto, none of the
--------------------------
Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which the Borrower is the licensor or
franchisor.
(b) Except as set forth in Sections 5, 6 or 7 of the Master
------
Disclosure Schedule attached hereto, the Borrower owns, or is licensed
-------------------
to use, all Intellectual Property necessary for the conduct of its
business as currently conducted. No material claim has been asserted
and is pending by any Person challenging or questioning the use by the
Borrower of any of its Intellectual Property or the validity or
effectiveness of any of its Intellectual Property, nor does the
Borrower know of any valid basis for any such claim. The use by the
Borrower of the Intellectual Property does not infringe the rights of
any Person in any material respect. No holding, decision or judgment
has been rendered by any Governmental Authority which would limit,
cancel or question the validity of, or the Borrower's rights in, any
Intellectual Property in any respect that could reasonably be expected
to have a Material Adverse Effect.
SECTION 4. GENERAL COVENANTS.
------------------
The Borrower hereby covenants and agrees as follows:
4.1 Changes in Name and Locations. The Borrower will not (i) change
-----------------------------
its name, identity, organizational structure, jurisdiction of organization,
chief executive office or place where its business records are kept, (ii)
move any tangible Collateral to a location other than those set forth in
the Master Disclosure Schedule attached hereto, or (iii) merge into or
--------------------------
consolidate with any other entity, unless in each case it shall have given
the Lender at least thirty (30) days prior written notice thereof and all
filings and other actions to maintain the perfection of the security
interest granted hereby shall have been made.
4.2 Maintenance of Records. The Borrower will keep and maintain at
----------------------
its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a
-8-
record of all payments received and all credits granted with respect to the
Accounts, Contracts and Licenses. The Borrower will, upon request of the Lender,
▇▇▇▇ its books and records pertaining to the Collateral to evidence this
Agreement and the security interests granted hereby.
4.3 Right of Inspection. Except as otherwise provided in the Credit
-------------------
Agreement, the Lender shall at all reasonable times have full and free access
during normal business hours and upon reasonable prior notice to all the books,
correspondence and records of the Borrower, and the Lender and its
representatives may, at such times, examine the same, take extracts therefrom
and make photocopies thereof, and the Borrower agrees to render to the Lender,
at the Borrower's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Except as otherwise provided in the
Credit Agreement, and upon reasonable prior notice to the Borrower, the Lender
and its representatives shall have the right, during normal business hours to
enter into and upon any premises where any of the Inventory or Equipment is
located for the purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
4.4 Payment of Taxes and Other Amounts. The Borrower will pay promptly
----------------------------------
when due all taxes, assessments and governmental charges or levies imposed upon
the Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral which have a reasonable
likelihood of adverse determination, except that no such charge need be paid if
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) such proceedings do not involve any material danger
of the sale, forfeiture or loss of any material portion of the Collateral or any
interest therein and (c) such charge is adequately reserved against on the
Borrower's books in accordance with GAAP or if the failure to pay such charge
would not reasonably be expected to have a Material Adverse Effect.
4.5 Maintenance and Use of Properties. The Borrower will safeguard,
---------------------------------
protect and preserve the Collateral for the benefit of the Lender, will keep the
Collateral free from any Lien (other than the Permitted Liens and Liens in favor
of the Lender), will keep all tangible property constituting part of the
Collateral in good working order and repair, will preserve all beneficial
contract rights, will take commercially reasonable steps to collect all
Accounts, and will not waste or destroy the Collateral or any part thereof; and
the Borrower will otherwise preserve, maintain and protect its rights and keep
its properties and assets in good repair, working order and condition, and
capable of identification, and make (or cause to be made) all needful and proper
repairs or renewals, additions and improvements thereto and replacements
thereof, and shall use its assets only in the ordinary course of business and in
compliance with all applicable law.
4.6 Notices and Reports Pertaining to Collateral. The Borrower will (a)
--------------------------------------------
promptly notify the Lender of any Lien (except for Liens in favor of the Lender
and Permitted Liens) asserted against the Collateral and of any information
received by the Borrower relating to the Collateral (including the Accounts, the
account debtors or other persons obligated in connection therewith) that may in
any way materially adversely affect the value of the Collateral or the rights
and remedies of the Lender with respect thereto; (b) promptly notify the Lender
when it obtains knowledge of actual or threatened bankruptcy or other insolvency
proceeding of any material account debtor or issuer of Securities; (c) deliver
to the Lender, as the Lender may from
-9-
time to time request, delivery receipts, customers' purchase orders, shipping
instructions, bills of lading and any other evidence of shipping arrangements;
(d) notify the Lender of any return or adjustment, rejection, repossession, or
loss or damage of or to merchandise represented by Accounts or constituting
Inventory if material in amount and of any credit, adjustment or dispute arising
in connection with the goods or services represented by Accounts or constituting
Inventory if material in amount; and (e) notify the Lender of the occurrence of
any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or, with respect to any material
portion of the Collateral, on the Liens created hereunder.
The Borrower authorizes the Lender to destroy all invoices, delivery
receipts, reports and other types of documents (other than documents
constituting Collateral) and records submitted to the Lender in connection with
the transactions contemplated herein at any time subsequent to twelve (12)
months from the time such items are delivered to the Lender.
4.7 Liens on Collateral. The Borrower will defend the Collateral
-------------------
against, and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the Liens created hereby and the
Permitted Liens, and will defend the right, title and interest of the Lender in
and to any of the Collateral against the claims and demands of all Persons
whomsoever.
4.8 Maintenance of Insurance.
------------------------
(a) The Borrower will maintain insurance, at all times, with
financially sound and reputable companies as are reasonably satisfactory to
the Lender, in such amounts and against such risks as are customarily
insured against by businesses of a similar size operating in a similar line
of business in a similar area, and consistent with sound business practice,
in no event less than the lesser of (i) the full insurable replacement cost
value of all of the Borrower's tangible personal property (and, in any
case, the amount necessary to avoid any coinsurance or contributions by the
Borrower) or (ii) the total aggregate outstanding principal indebtedness
owing by the Borrower to the Lender, including casualty insurance covering
the Collateral and other property of the Borrower against the hazards of
fire, flood, sprinkler leakage, burglary, theft, pilferage, loss in
transit, those hazards covered by extended coverage, and such other
coverages as the Lender may reasonably require, all such insurance to be in
such form, for such periods and with such companies as shall be reasonably
acceptable to the Lender; provided, however, with respect to any
-------- -------
Collateral and other property of the Borrower located in the States of
Florida and New Jersey only, the Borrower shall not be required hereunder
to obtain insurance covering against the hazards of flood with respect to
such Collateral and other property. All premiums thereon shall be paid by
the Borrower and if the Borrower fails to do so, the Lender may at its
option (but without obligation) procure such insurance and charge the cost
to the Borrower's account, provided, however, that any such payment by the
Lender shall not constitute satisfaction of the Borrower's obligations with
respect to payment hereunder, or a waiver by the Lender of any Event of
Default with respect to such non-payment.
-10-
(b) All such insurance policies shall provide, in form and
substance satisfactory to the Lender, that: (i) any loss thereunder shall
be payable to the Lender as loss payee (first to the Lender and then to the
Borrower, as their interests may appear); (ii) any such payment to the
Lender shall be made by an instrument to the Lender alone and not to the
Borrower and the Lender jointly; and (iii) no cancellation or modification
of such policy shall be effective without at least thirty (30) days prior
written notice to the Lender. If any insurance losses are paid by check,
draft or other instrument payable to the Borrower and the Lender jointly,
the Lender may endorse the Borrower's name thereon and do such other things
as the Lender may deem advisable to reduce the same to cash. All loss
recoveries received by the Lender upon any such insurance shall be applied
to the Obligations, whether or not matured, in such order as the Lender in
its sole discretion may determine. Any surplus shall be paid by the Lender
to the Borrower or applied as may be otherwise required by law.
(c) Certificates of insurance of, and upon request, the original
policies of, all such casualty insurance policies and endorsements thereto,
shall be delivered to the Lender; and, upon request, satisfactory evidence
of general liability, products liability, workers' compensation and other
insurance coverage, in form and substance satisfactory to the Lender, shall
be furnished to the Lender, in each case within three (3) business days of
each Lender's request therefor. The Borrower shall advise the Lender of
each claim made by the Borrower under any policy of insurance which covers
the Collateral, and upon the occurrence and during the continuance of any
Event of Default, will permit the Lender, to the exclusion of the Borrower,
at the Lender's option in each instance, to conduct the adjustment of each
such claim.
4.9 Maintenance of Perfected Liens; Further Documentation. At any time
-----------------------------------------------------
and from time to time, upon the written request of the Lender, and at the sole
expense of the Borrower, the Borrower will promptly and duly execute and deliver
such further instruments and documents and take such further action as the
Lender may reasonably request for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted
(including, without limitation, (a) executing and filing any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby; (b) in the case of
Intellectual Property, executing and filing with the PTO, the Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, such short forms of Security Agreements, each in form and
substance satisfactory to the Lender, as the Lender may request; and (c) in the
case of Investment Property, and any other relevant Collateral, taken action
necessary to enable the Lender to obtain "control" (within the meaning of the
applicable Uniform Commercial Code) with respect thereto). The Borrower also
hereby authorizes the Lender to file (after written notice to the Borrower) any
such financing or continuation statement without the signature of the Borrower
to the extent permitted by applicable law, provided that any failure to give any
such notice shall not affect the validity or effectiveness of any such filing. A
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement for filing in any jurisdiction.
4.10 Costs and Expenses. Except as otherwise provided in the Credit
------------------
Agreement, the Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Agreement, the other Financing Documents and the other
-11-
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other than
taxes based upon the Lender's net income) on or with respect to the transactions
contemplated by this Agreement (the Borrower hereby agreeing to indemnify the
Lender with respect thereto), (c) the reasonable fees, expenses and
disbursements of counsel to the Lender incurred in connection with the
preparation, administration or interpretation of the Financing Documents and
other instruments mentioned herein, and amendments, modifications, approvals,
consents or waivers hereto or hereunder, (d) the fees, expenses and
disbursements of the Lender incurred by the Lender in connection with the
preparation, administration or interpretation of the Financing Documents and
other instruments mentioned herein, (e) all reasonable out-of-pocket expenses
(including without limitation reasonable attorneys' fees and costs, which
attorneys may be employees of the Lender, and reasonable consulting, accounting,
appraisal, and similar professional fees and charges) incurred by the Lender in
connection with (i) the enforcement of or preservation of rights under any of
the Financing Documents against the Borrower or the administration thereof after
the occurrence and during the continuance of a Default or Event of Default and
(ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to the Lender's relationship with the Borrower and
(f) all reasonable fees, expenses and disbursements of the Lender incurred in
connection with UCC searches, UCC filings or mortgage recordings. The covenants
contained in this subsection shall survive payment or satisfaction in full of
all other Obligations.
SECTION 5. SPECIFIC COVENANTS REGARDING CERTAIN COLLATERAL.
------------------------------------------------
The Borrower hereby covenants and agrees as follows:
5.1 Accounts.
--------
(a) Collections on Accounts and Proceeds. The Borrower shall enforce,
------------------------------------
compromise and collect amounts owing on its Accounts; provided, however,
-------- -------
the right of the Borrower hereunder to enforce, compromise and collect
amounts owing on such Accounts may at the option of the Lender be
terminated upon the occurrence and during the continuance of any Event of
Default. If any Accounts of the Borrower are at any time evidenced by
promissory notes, trade acceptances or other Instruments for the payment of
money, the Borrower will promptly deliver the same to the Lender
appropriately endorsed to the Lender's order and, regardless of dishonor,
protest, notice of protest and all other notices with respect thereto.
After an Event of Default has occurred and is continuing and the
Borrower has received notice thereof from the Lender, any Proceeds
collected by the Borrower (whether consisting of checks, notes, drafts,
bills of exchange, money orders, commercial paper of any kind whatsoever,
or other documents, received in payment of any Account or in payment for
any Inventory or otherwise), shall be promptly turned over by the Borrower
to the Lender, in precisely the form received, except for its endorsement
when required, and until so turned over, shall be deemed to be held in
trust by the Borrower for and as the Lender's property, and shall be held
separately from the Borrower's other funds.
-12-
(b) Limitations on Discounts and Compromises of Accounts. Other than
----------------------------------------------------
in the ordinary course of business as generally conducted by the Borrower
over a period of time, the Borrower will not compromise, compound or settle
the Accounts for less than the full amount thereof, or release, wholly or
partially, any Person liable for the payment thereof, except in each case
as permitted under the Credit Agreement.
(c) Notice to Account Debtors. At any time after the occurrence and
-------------------------
during the continuance of an Event of Default, the Borrower shall, at the
request of the Lender, notify its account debtors, and the Lender itself
may notify such account debtors directly, of the security interest of the
Lender in any Account and that payment thereof is to be made directly to
the Lender. At any time after the occurrence and during the continuance of
an Event of Default, the Lender may communicate with account debtors to
verify with them to its satisfaction the existence, amount and terms of any
Accounts.
(d) Information on Accounts. The Borrower shall furnish to the Lender
-----------------------
from time to time, and upon request, a list and description of all Accounts
created or acquired by the Borrower, together with copies of shipping or
delivery receipts for all goods and services sold or otherwise provided,
and any other information or documents which the Lender reasonably may
request from to time related to the Borrower's Accounts.
5.2 Inventory.
---------
(a) Pricing, Credit Terms and Accounts. So long as no Event of
----------------------------------
Default has occurred and is continuing, the Borrower may sell items of
Inventory: (a) for cash in amounts not less than the Borrower's published,
usual or customary prices, less only usual and customary discounts for
volume sales or prompt payment; or (b) on credit terms usual and customary
in the business conducted by the Borrower, at prices which conform to the
above terms, and under such circumstances as give rise to Accounts subject
to this Agreement.
(b) Notice to Landlords, Warehousemen and Agents. If any Inventory
--------------------------------------------
is in the possession or control of any landlords, warehousemen or agents,
the Borrower shall notify them of the Lender's security interest therein,
and upon the occurrence and during the continuance of any Event of Default,
and at the Lender's request, instruct them to hold the same for the
Lender's account and subject to the Lender's instructions. The Lender shall
enjoy all of the rights and remedies of a secured party in the Inventory
and shall be subrogated to all guaranties and security now or which may in
the future be held by the Borrower. The Lender shall not be liable in any
manner for exercising or refusing or failing to exercise any such rights.
5.3 Contracts with Governmental Authorities. The Borrower shall, to the
---------------------------------------
extent practicable, provide reasonable advance notice to the Lender (i) prior to
or, if such advance notice is not practicable, shall provide notice to the
Lender promptly after, entering into a Contract with a Governmental Authority
and (ii) prior to or, if such advance notice is not practicable, shall provide
notice to the Lender promptly after, the sale of goods to a Governmental
Authority resulting in the creation of an Account if such contract or Account,
in the aggregate together with all such contracts then in effect (including any
such contract entered
-13-
into prior to the Closing Date) and/or Accounts then outstanding (including any
such Accounts arising prior to the Closing Date), but without duplication,
exceed Five and 00/100 Percent (5.00%) of net sales of the Borrower and its
Subsidiaries for the most recently completed fiscal year, and shall, at the
request of the Lender, provide any notices and make any filings required under
the Federal Assignment of Claims Act in order to grant, maintain and/or perfect
the security interest of all such contracts and Accounts granted pursuant to
this Agreement.
5.4 Chattel Paper. Unless an Event of Default shall have occurred and
-------------
be continuing, the Borrower shall be entitled to retain possession of all
Collateral consisting of Chattel Paper, and shall hold all such Chattel Paper in
trust for the Lender. If an Event of Default shall have occurred and be
continuing, upon the request of the Lender, such Chattel Paper shall be
immediately delivered to the Lender, to be held as Collateral pursuant to this
Agreement. The Borrower shall not permit any other Person (other than a
Borrower) to possess any such Collateral at any time.
5.5 Equipment - Certificates of Title. The Borrower shall deliver to
---------------------------------
the Lender, upon request, the originals of all certificates of title pertaining
to any Equipment for which such certificates are or should be issued under
applicable law, together with a duly completed and executed application to add
the Lender as a lienholder on each such certificate. The Borrower covenants and
agrees that it will promptly deliver to the Lender, upon request, all
certificates of title relating to any Equipment hereafter acquired, together
with duly completed and executed applications to add as the Lender as a
lienholder therewith (in form and content satisfactory for filing with the
appropriate office), and that the Borrower shall not seek to obtain any
certificate of title for any Equipment currently lacking such a certificate, and
it shall not attempt to recertify or obtain a new certificate for any Equipment
currently evidenced by a certificate of title (whether in The Commonwealth of
Massachusetts or any other jurisdiction) without first notifying the Lender, and
only if the original of such certificate of title is or will be delivered to the
Lender upon issuance thereof and does or will properly name the Lender as first
lienholder thereon (subject only to any Permitted Liens), in each case duly
perfecting the Lender's security interest granted under this Agreement.
5.6 Investment Property.
-------------------
(a) If the Borrower shall become entitled to receive or shall receive any
stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in respect
of the Capital Stock of any Issuer or any other Investment Property,
whether in addition to, in substitution of, as a conversion of, or in
exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, the Borrower shall accept the same as the agent of the Lender,
hold the same in trust for the Lender and promptly deliver (or cause to be
delivered) the same to the Lender in the exact form received, duly indorsed
by the Borrower to the Lender, if required, together with an undated stock
power covering such certificate duly executed in blank by the Borrower and
with, if the Lender so requests, signature guaranteed, to be held by the
Lender, subject to the terms hereof, as additional collateral security for
the Obligations.
-14-
(b) Without the prior written consent of the Lender, the Borrower
will not (i) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Investment Property or Proceeds
thereof (except pursuant to a transaction expressly permitted by the Credit
Agreement) or (ii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for the Lien
provided for by this Agreement and Permitted Liens.
(c) Unless an Event of Default shall have occurred and be continuing,
the Borrower shall be permitted to receive all cash dividends paid by the
relevant Issuer to the extent permitted in the Credit Agreement in respect
of the Pledged Stock, and all payments made in respect of the Pledged
Notes, and to exercise all voting and corporate rights with respect to the
Investment Property; provided, however, that the Borrower agrees that it
-------- -------
shall not vote in any way that would be inconsistent with or result in any
violation of any provision of the Credit Agreement, the Note, the Security
Documents or any of the other Financing Documents.
(d) If an Event of Default shall occur and be continuing, then (i)
the Lender shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Investment Property and
make application thereof to the Obligations in such order as the Lender may
determine, and (ii) any or all of the Investment Property may be registered
in the name of the Lender or its nominee, and, subject to the terms of this
Agreement, the Lender or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such Investment Property
at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (B) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of
the Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
any Issuer, or upon the exercise by the Borrower or the Lender of any
right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of the
Investment Property with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Lender may determine), all without liability except to account for property
actually received by it, and except for its gross negligence or willful
misconduct, but the Lender shall have no duty to the Borrower to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
(e) The Borrower hereby authorizes and instructs each Issuer of any
Investment Property pledged by the Borrower hereunder to comply with any
instruction received by it from the Lender in writing that (i) states that
an Event of Default has occurred and is continuing and (ii) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from the Borrower, and the Borrower agrees that each Issuer
shall be fully protected in so complying, to the extent such instruction is
in compliance with applicable law.
-15-
(f) The rights of the Lender hereunder shall not be conditioned or
contingent upon the pursuit by the Lender of any right or remedy against
any other Person which may be or become liable in respect of all or any
part of the Obligations or against any collateral security thereof,
guarantee therefor or right of offset with respect thereto. The Lender
shall not be liable for any failure to demand, collect or realize upon all
or any part of the Collateral or for any delay in doing so, nor shall the
Lender be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrower or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof. The Lender agrees to release promptly to the Borrower any
dividends, cash, securities, instruments and other property paid, payable
or otherwise distributed in respect of the Collateral which it may receive
under subsection 5.6(d) hereof if, prior to the occurrence of an
acceleration of any of the Obligations, all Defaults and Events of Default
have been waived or are no longer continuing.
5.7 Patents and Trademarks.
----------------------
(a) The Borrower (either itself or through licensees) will, except
with respect to any Trademark that the Borrower shall reasonably determine
is of immaterial economic value to it, (i) continue to use each Trademark
on each and every trademark class of goods applicable to its current line
as reflected in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force free from any claim of abandonment
for non-use, (ii) maintain as in the past the quality of products and
services offered under such Trademark, (iii) use reasonable efforts to
employ such Trademark with the appropriate notice of registration, (iv) not
adopt or use any ▇▇▇▇ which is confusingly similar or a colorable imitation
of such Trademark unless within thirty (30) days after such use or
adoption, the Lender shall obtain a perfected security interest in such
▇▇▇▇ pursuant to this Agreement and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby
any Trademark may become invalidated.
(b) The Borrower will not, except with respect to any Patent that the
Borrower shall reasonably determine is of immaterial economic value to it,
do any act, or omit to do any act, whereby any Patent may become abandoned
or dedicated.
(c) The Borrower will notify the Lender promptly if it knows that any
material registered application relating to any Patent, or any application
or registration relating to any Trademark, may become abandoned or
dedicated, or of any adverse determination or material development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in the PTO or any court or
tribunal in any country) regarding the Borrower's ownership of any Patent
or Trademark or its right to register the same or to keep and maintain the
same.
(d) Whenever the Borrower, either by itself or through any agent,
employee, licensee or designee, shall file an application for any Patent or
for the registration of any Trademark with the PTO or any similar office or
agency in any other country or any political subdivision thereof, the
Borrower shall report such filing to the Lender within five (5) Business
Days after the last day of the fiscal quarter in which such filing occurs.
-16-
Upon request of the Lender, the Borrower shall execute and deliver any and
all agreements, instruments, documents, and papers as the Lender may
request to evidence the Lender's security interest in any Patent or
Trademark and the goodwill and general intangibles of the Borrower relating
thereto or represented thereby, and the Borrower hereby appoints and
constitutes the Lender its attorney-in-fact to execute and file all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed. Such power being coupled with an interest and is
irrevocable until the Obligations are paid in full and the Lender has no
further obligation to extend any credit or lend any sums to the Borrower
under the Financing Documents.
(e) The Borrower, except with respect to any Patent or Trademark that
the Borrower shall reasonably determine is of immaterial economic value to
it and except with respect to any Trademark that is not registrable, will
take all reasonable and necessary steps, including, without limitation, in
any proceeding before the PTO, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration or Patent) and to
maintain each Patent and each registration of Trademarks, including,
without limitation, filing of applications for renewal, affidavits of use
and affidavits of incontestability when appropriate and paying necessary
and appropriate maintenance fees.
(f) In the event that any Patent or material registered Trademark
included in the Collateral is infringed, misappropriated or diluted by a
third party, in a manner which could reasonably be expected to have a
material adverse effect on the business, assets or financial condition of
the Borrower, the Borrower shall promptly notify the Lender after it learns
thereof and shall, unless the Borrower shall reasonably determine that such
Patent or Trademark is of immaterial economic value to the Borrower, take
such actions as the Borrower shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark (including but not
limited to taking action to promptly ▇▇▇ for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate and to recover any
and all damages for such infringement, misappropriation or dilution).
5.8 Copyrights. The Borrower (a) will employ the Copyright for each
----------
material published work with such notice of copyright as may be required by law
to secure copyright protection and (b) will not do any act or knowingly omit to
do any act whereby any material Copyright may become invalidated and (i) will
not do any act, or omit to do any act, whereby any material Copyright may become
injected into the public domain; (ii) shall notify the Lender promptly if it
knows, or has reason to know, that any material Copyright may become injected
into the public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any other country)
regarding the Borrower's ownership of any such Copyright or its validity; (iii)
will take all necessary steps as it shall deem appropriate under the
circumstances in its reasonable discretion, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of each material Copyright owned by the Borrower (including,
without limitation, filing of applications for renewal, where necessary); and
(iv) will promptly notify the Lender of any material infringement of any
material Copyright of the Borrower of which it becomes aware and will take such
actions as it shall reasonably deem
-17-
appropriate under the circumstances to protect such Copyright, including, where
appropriate, the bringing of suit for infringement, seeking injunctive relief
and seeking to recover any and all damages for such infringement.
Whenever the Borrower, either by itself or through any agent, employee,
licensee or designee, shall file an application for any Copyright or for the
registration of any Copyright with the Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, the Borrower
shall report such filing to the Lender within five (5) Business Days after the
last day of the fiscal quarter in which such filing occurs. Upon request of the
Lender, the Borrower shall execute and deliver any and all agreements,
instruments, documents, and papers as the Lender may request to evidence the
Lender's security interest in any Copyright, and the Borrower hereby appoints
and constitutes the Lender its attorney-in-fact to execute and file all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed. Such power being coupled with an interest and is
irrevocable until the Obligations are paid in full and the Lender has no further
obligation to extend any credit or lend any sums to the Borrower under the
Financing Documents.
SECTION 6. POWER OF ATTORNEY.
------------------
6.1 Appointment and Powers. The Borrower hereby irrevocably constitutes
----------------------
and appoints the Lender as the Borrower's true and lawful attorney, coupled with
an interest, with full power of substitution (in each case at the sole risk,
cost and expense of the Borrower but for the benefit of the Lender) to do the
following:
(a) at any time or times (whether or not an Event of Default has
occurred) and (i) to supplement and amend from time to time Sections 5, 6,
and 7 of the Master Disclosure Schedule attached hereto to include any new
--------------------------
or additional registered Trademarks, Patents, registered Copyrights and
Licenses of the Borrower, (ii) to file and record without the Borrower's
signature, or to sign the Borrower's name to and file and record, financing
statements and any other instruments (including applications to name the
Lender as lienholder on any motor vehicle or other certificates of title),
and (iii) to take such other actions as the Lender may deem necessary in
order to perfect or maintain the perfection or priority of the Lender's
security interest in the Collateral or any portion thereof; and
(b) in addition to the actions described above, at any time or
times after an Event of Default has occurred and is continuing, (i) to
protect the Lender's security interest in the Collateral or any portion
thereof; (ii) to receive and open the Borrower's mail, remove therefrom and
hold or apply any Collateral and dispose of such mail or turn over such
mail (other than such Collateral) to the Borrower or any trustee in
bankruptcy, receiver, assignee for benefit of creditors or other legal
representatives to whom the Lender determines to be the appropriate
recipient thereof; (iii) to endorse the name of the Borrower in favor of
the Lender upon any and all checks, drafts, notes, money orders,
acceptances and other items, Instruments and forms of payment, and to sign
and endorse the name of the Borrower on, and receive as secured party, any
of the Collateral; (iv) to sign the Borrower's name to any invoices,
schedules, freight or express receipts, bills of lading, and other
Documents or writings of a similar or different nature, relating to the
-18-
Collateral; (v) to sign the name of the Borrower on any schedules and
assignments of Accounts, and on notices of assignment, financing statements
and other public records relating to the Collateral, and on any notice to
the Borrower's account debtors for verification of the Accounts; (vi) to
prosecute, defend, compromise or release any action relating to the
Collateral; (vii) to notify the post office authorities to change the
address for delivery of the Borrower's mail to an address designated by the
Lender, and to sign change of address forms therefor; (viii) to sign the
Borrower's name in proofs of claim in bankruptcies of account debtors,
notices of lien, claims of mechanics liens, or assignments or releases of
any Liens securing the Accounts; (ix) to take any such actions as may be
necessary to obtain payment of any letter of credit of which the Borrower
is a beneficiary; (x) to repair, manufacture, assemble, complete, package,
deliver, alter or supply goods, if any, necessary to fulfill in whole or in
part the purchase order of any customer of the Borrower; (xi) to notify any
Persons of the rights and interests of the Lender, of the applicable Events
of Default and of any matter relating to Collateral; (xii) to take any and
all other actions (including, without limitation, the right to ▇▇▇ in the
name of the Borrower or the Lender to collect upon any and all Collateral
and to settle, adjust or compromise any and all claims with respect to
Collateral including insurance claims) as the Lender shall deem necessary
or expedient to convert the Collateral into cash; and (xiii) otherwise to
exercise any rights or remedies of the Lender hereunder or under any of the
Financing Documents, or otherwise under agreement or applicable law,
including the UCC.
6.2 Ratification and Indemnification Under Power of Attorney. In
--------------------------------------------------------
connection with all powers of attorney set forth in this Agreement, the Lender
shall have full power to exercise such powers as fully and effectually as the
Borrower might or could do; the Borrower agrees that the Lender shall not be
obligated to exercise any of the powers authorized herein, and shall be free to
exercise or refrain from exercising any of such powers at any time or times in
its absolute discretion, and, if the Lender elects to exercise any of such
powers, it shall not be accountable for more than it actually receives as a
result of such exercise of power, and shall not be responsible to the Borrower
except for the Lender's gross negligence, actual bad faith or willful
misconduct; and all powers conferred upon the Lender by this Agreement, being
coupled with an interest, shall be irrevocable until such time as all
Obligations have been paid (without being subject to or susceptible of recovery
by any Person) or performed and the Lender's agreement, if any, to make advances
has terminated.
6.3 Performance By Lender of Borrower's Obligations. If the Borrower
-----------------------------------------------
fails to perform or comply with any of its agreements contained herein and the
Lender, as provided for by the terms of this Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with any agreement, the
expense of the Lender incurred in connection with such performance or
compliance, together with interest thereon at the Late Rate, shall be payable by
the Borrower to the Lender on demand and shall constitute Obligations secured
hereby.
SECTION 7. EVENTS OF DEFAULT.
------------------
Upon the occurrence and during the continuance of any one or more Events of
Default, any and all Obligations shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.
-19-
SECTION 8. REMEDIES.
---------
8.1 General Remedies. In addition to and without in any way limiting
----------------
any other rights and remedies available to the Lender under this Agreement prior
to an Event of Default, or any other rights and remedies available to the Lender
(whether prior to or after an Event of Default) under any of the other Financing
Documents or under applicable law or in equity, upon and at any time or times
after the occurrence and during the continuance of any Event of Default:
(a) the Lender may declare and cause all or any portion of the
Obligations to be immediately due and payable;
(b) the Lender may decline to honor the credit of the Borrower
or may refuse to make further advances to the Borrower;
(c) the Lender may collect the Accounts with or without taking
possession of the Collateral;
(d) the Lender shall be entitled to immediate possession of the
Collateral or any portion or portions thereof and may enter upon the
Borrower's premises to take possession thereof; may require the Borrower to
assemble the Collateral and make it available to the Lender at a place to
be designated by the Lender which is reasonably convenient to both parties;
or may require the Borrower to deliver all Records relating to the
Collateral to the Lender;
(e) the Lender may enter upon, occupy, and use any premises
owned or occupied by the Borrower (or by any agent of the Borrower at which
Collateral is located), and may exclude the Borrower from such premises or
portion thereof as may have been so entered upon, occupied, or used by the
Lender; the Lender shall not be required to remove any of the Collateral
from any such premises upon the Lender's taking possession thereof, and may
render any Collateral unusable to the Borrower; and in no event shall the
Lender be liable to the Borrower for use or occupancy by the Lender of any
premises pursuant to this Agreement except for claims arising out of the
Lender's gross negligence, actual bad faith or willful misconduct, nor for
any charge (such as wages for the Borrower's employees and utilities)
incurred in connection with the Lender's exercise of the Lender's rights
and remedies;
(f) the Lender may take such steps as it deems necessary to
protect the Lender's interest in, and to preserve the Collateral, and the
Borrower agrees to cooperate fully with all of the Lender's efforts and to
take such actions as the Lender shall direct, all to preserve the
Collateral;
(g) the Lender shall have the rights and remedies of a secured
party under the UCC and other applicable laws, the choice and manner of
exercise of any right or remedy being in the Lender's sole discretion; and,
pursuant thereto, the Lender shall have the right to foreclose the security
interest granted in any Collateral by any available judicial procedure and
to take possession of and sell any or all of the Collateral with or without
judicial process; the Lender may lease or otherwise dispose of the
Collateral, or may sell the Collateral, or any part thereof, at public or
private sales, at any time or place
-20-
(including the Borrower's premises), in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or future delivery, as
the Lender may elect, and, except as to that part of the Collateral which
is perishable or threatens to decline speedily in value, or is of the type
customarily sold on a recognized market, the Lender shall give the Borrower
reasonable notification of such sale or sales, it being agreed that, in all
events, reasonable notification means written notice mailed to the Borrower
at least ten (10) days prior to each such public sale or at least ten (10)
days prior to the date after which any such private sales or other intended
dispositions may be made; at any public sale the Lender may (but shall have
no obligation to) bid for and become the purchaser of any Collateral; the
Borrower hereby waives any and all rights it may have to judicial hearing
in advance of the enforcement of any of the Lender's rights hereunder,
including the Lender's right to take immediate possession of the
Collateral; and the Lender may do any of the foregoing or otherwise deal
with the Collateral in its then condition, or following such preparation as
the Lender deems advisable, with or without taking possession thereof;
(h) the Lender shall have the right to apply to the Obligations any
deposits or other sums at any time credited by or due from the Lender to
the Borrower; and
(i) the Lender may treat any or all of the Financing Documents as
being in default and may exercise any rights and remedies thereunder as it
shall deem appropriate.
8.2 Pledged Stock. The Borrower recognizes that the Lender may be unable
-------------
to effect a public sale of the Pledged Stock by reason of certain prohibitions
contained in the federal and state securities laws, and other applicable laws,
but may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers. The Borrower agrees that any such private sales
may be at prices and other terms less favorable to the seller than if sold at
public sales and that such private sales shall not by reason thereof be deemed
to have been made in a commercially unreasonable manner. The Lender shall be
under no obligation to delay a sale of any of the Pledged Stock for the period
of time necessary to permit the Issuer of such securities to register such
securities for public sale under the Securities Act, or such other applicable
laws, even if the Issuer would agree to do so. Subject to the foregoing, the
Lender agrees that any sale of the Pledged Stock shall be made in a commercially
reasonable manner, and the Borrower agrees to use the Borrower's best efforts to
cause the Issuer or Issuers of the Pledged Stock contemplated to be sold, to
execute and deliver, and cause the directors and officers of such Issuer to
execute and deliver, all such instruments and documents, and to do or cause to
be done all such other acts and things as may be necessary or, in the reasonable
opinion of the Lender, advisable to exempt such Pledged Stock from registration
under the provisions of the Securities Act, and to make all amendments to such
instruments and documents which, in the opinion of the Lender, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto. The Borrower further agrees to use the Borrower's best efforts to cause
such Issuer or Issuers to comply with the provisions of the securities or "Blue
Sky" laws of any jurisdiction which the Lender shall designate.
The Borrower further agrees to do or cause to be done all such other acts
and things as may be reasonably necessary to make any sales of any portion or
all of the Pledged Stock
-21-
pursuant to this Section 8 valid and binding and in compliance with all
Requirements of Law. The Borrower also agrees that a breach of any of the
covenants contained in this subsection 8.2 will cause irreparable injury to the
Lender, that the Lender has no adequate remedy at law in respect of such breach
and, as a consequence, agrees that each and every covenant contained in this
subsection 8.2 shall be specifically enforceable against the Borrower, and the
Borrower hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants.
8.3 License. With respect to the Lender's exercise of rights and remedies
-------
hereunder including in connection with any completion of the sale or other
disposition of any of the Collateral, the Borrower hereby grants to the Lender a
nonexclusive irrevocable license to use, apply, and affix any trademark, trade
name, logo, or the like in which the Borrower now or hereafter has rights.
8.4 No Duty of Preservation; Joint Property. The Lender may at all times
---------------------------------------
proceed directly against the Borrower, or against any other Person responsible
for any Obligations, to enforce the payment of the Obligations, and the Lender
shall not be required to take any action of any kind to preserve, collect upon
or protect the rights of the Lender or of any other Person in any Collateral,
except as specifically required by the UCC. Without limiting the generality of
the foregoing, the Lender shall not be required to take any action to preserve
rights against prior parties in the cases of Instruments or Chattel Paper, and
the Lender may co-mingle any items of Collateral with other property and shall
not be required to keep any Collateral identifiable. In the event any
Collateral, including any Deposit Account, is held in joint or common names, the
Lender may deal with such Collateral or any Deposit Account, for all purposes
hereunder and under any or all of the Financing Documents, as if belonging to
any one, and no more than one, of such joint or common owners.
8.5 Remedies Not Exclusive. The enumeration of rights and remedies in
----------------------
the Financing Documents is not intended to be exclusive, and they shall be in
addition to and not by way of limitation of such others as the Lender may have
under the UCC, other applicable law, and any and all other Documents,
Instruments, agreements or other writings between or among the Borrower, the
Lender or other Persons. The Lender shall, in its sole discretion, determine its
choice of rights and remedies and the order in which they shall be exercised,
and which Collateral, if any, is to be proceeded against and in which order. The
exercise of any right or remedy against the Borrower, any other Person or any or
all Collateral shall not preclude the exercise of others or the exercise thereof
against the Borrower, any other Persons or any other Collateral, all of which
shall be cumulative. No act, failure or delay by the Lender shall constitute a
waiver of any of its rights and remedies. No single or partial waiver by the
Lender of any provision of the Financing Documents, or of any breach or default
thereunder, or of any right or remedy which the Lender may have shall operate as
a waiver of any other provision, breach, default, right or remedy or of the same
one on a future occasion.
8.6 Deficiency. The Borrower shall remain liable for any deficiency if
----------
the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Obligations and the reasonable fees and disbursements
of any attorneys employed by the Lender to collect such deficiency.
-22-
8.7 Requirement of Law. Notwithstanding any provision contained in this
------------------
Agreement to the contrary, the exercise of remedies or any power of attorney
granted hereunder with respect to Collateral is subject to any applicable
Requirement of Law of any Governmental Authority. No action will be taken by the
Lender hereunder if such action will result in a violation of any applicable
Requirement of Law of any Government Authority by the Borrower.
SECTION 9. MISCELLANEOUS.
--------------
9.1 Survival of Covenants; Binding Effect. All agreements,
-------------------------------------
representations, covenants and warranties made by the Borrower in this
Agreement, the other Financing Documents, or in any certificate or other
document delivered to the Lender in connection herewith shall survive the
termination of this Agreement and survive the execution and delivery of this
Agreement, and shall remain in full force and effect until all Obligations to
the Lender have been paid in full and satisfied, and the security interest, Lien
and rights granted to the Lender in any Collateral and its rights and remedies
hereunder and under the other Financing Documents shall continue in full force
and effect, notwithstanding the fact that Loans may, from time to time, be in a
zero or credit position, until all Obligations have been satisfied. All the
terms and provisions of this Agreement and the other Financing Documents shall
be binding upon, inure to the benefit of and be enforceable by and against the
parties hereto and their respective successors and assigns.
9.2 Prior Discussions; Amendments in Writing; Counterparts; Filing As
-----------------------------------------------------------------
Financing Statement. This Agreement and all other Financing Documents
-------------------
incorporate all discussions and negotiations between the Borrower and the
Lender, either express or implied, concerning the matters included herein and
therein, any custom, usage or other writing to the contrary notwithstanding. No
such discussions or negotiations shall limit, modify, or otherwise affect the
provisions of the Financing Documents. This Agreement may be amended or modified
only in writing signed by the parties hereto, and in the case of the Lender
signed by a duly authorized officer thereof. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but such
counterparts together shall constitute one and the same instrument. Any proof of
this Agreement shall require production of only one such counterpart. A carbon,
photographic or other reproduction of this Agreement or of any financing
statement executed to perfect the security interest created herein may be filed
as a financing statement under the UCC (or under the Uniform Commercial Code in
effect in any jurisdiction outside Massachusetts).
9.3 General Indemnification. The Borrower shall, and does hereby,
-----------------------
indemnify and save the Lender harmless from (and agrees to defend the Lender
from) any and all liabilities, damages, costs, losses and expenses (including
court costs and attorney's reasonable fees and expenses) that the Lender may
sustain or incur by reason of, relating to or arising out of the preparation of
this Agreement, the defending or protecting of any Collateral or the priority of
the Lender's interest therein, or in collecting or enforcing the Obligations, or
in enforcing any of the Lender's rights or remedies, or in the prosecution or
defense of any action or proceeding concerning any matter growing out of or
connected with this Agreement, any of the other Financing Documents, the
Obligations, the Collateral, or on account of the Lender's relationship with the
Borrower, or any other Person responsible for any of the Obligations (each of
which may be defended, compromised, settled or pursued by the Lender with
counsel of the Lender's
-23-
selection, at the expense of the Borrower) except for such claims which have
been determined by a court of competent jurisdiction to have arisen out of the
Lender's actual bad faith, willful misconduct or gross negligence. The within
indemnification shall survive termination of this Agreement. The Borrower's
obligations under this subsection constitute part of the Obligations secured by
the security interest created by this Agreement.
9.4 Destruction of Documents; Receipt of Copy. This Agreement and all
-----------------------------------------
other Financing Documents may be reproduced by the Lender by any photographic,
photostatic, microfilm, or similar process, and the Lender may destroy the
original from which any document was so reproduced. Any such reproduction shall
be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of business).
The Borrower acknowledges receipt of a true, correct and complete copy or
counterpart of this Agreement.
9.5 Notices. All notices required or permitted hereunder shall be in
-------
writing and delivered in accordance with the provisions of the Credit Agreement.
9.6 Application of Proceeds. Subject to the provisions of the Credit
-----------------------
Agreement, upon the occurrence and during the continuance of any Event of
Default, the Lender shall apply (or change any application previously made of)
the proceeds of any collection, sale or other disposition of the Collateral, or
of any other payments received hereunder, toward the Obligations in such order
and manner as the Lender, in its sole discretion, shall determine, any statute
(the application of which may be waived or modified by agreement), customs or
practices to the contrary notwithstanding. The Borrower shall remain liable to
the Lender for any deficiency remaining following such application.
9.7 Severability. If any provision of this Agreement or any of the
------------
other Financing Documents, or any portion of such provision, or the application
thereof to any Person or circumstance, shall to any extent be prohibited or held
invalid or unenforceable, the remainder of this Agreement and the other
Financing Documents or the remainder of such provision and the application
thereof to other Persons or circumstances (other than those as to which it is
prohibited or held invalid or unenforceable) shall not be affected thereby, and
each term and provision hereof and of the other Financing Documents shall be
valid and enforced to the fullest extent permitted by law. To the extent
permitted by law, the parties hereto waive any provision of law which renders
any such provision or the application thereof to any Person or circumstance
prohibited, invalid or unenforceable in any respect.
9.8 Headings. Headings appearing in this Agreement are intended for
--------
convenience only and do not constitute, and shall not be interpreted to be, a
part of this Agreement.
9.9 Waiver of Jury Trial. THE BORROWER AND THE LENDER HEREBY WAIVE
--------------------
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER FINANCING DOCUMENTS OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS.
-24-
9.10 Governing Law; Jurisdiction. This Agreement and the other Financing
---------------------------
Documents are executed and delivered under seal and shall be construed in
accordance with and governed by the laws of The Commonwealth of Massachusetts,
without giving effect to the conflict of law provisions thereof. The Borrower
submits itself to the non-exclusive jurisdiction of the courts of The
Commonwealth of Massachusetts for all purposes with respect to the Financing
Documents and the Borrower's relationship with the Lender.
-25-
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered under their seals as of the date first above
written.
WITNESS: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
_________________________________ By:____________________________________
Name: Name:
Title:
Its duly authorized officer
WITNESS: CITIZENS BANK OF MASSACHUSETTS
_________________________________ By:____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Senior Vice President
-26-
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named __________ as __________of
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., and acknowledged the foregoing instrument to be
his/her free act and deed and the free act and deed of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.,
before me.
___________________________
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Senior Vice
President of Citizens Bank of Massachusetts, and acknowledged the foregoing
instrument to be his free act and deed and the free act and deed of Citizens
Bank of Massachusetts, before me.
__________________________
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
-27-
EXHIBIT C
FORM OF
COLLATERAL ASSIGNMENT OF LEASE
(for ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ 02021)
This COLLATERAL ASSIGNMENT OF LEASE (the "Assignment") is made as of
----------
April 13, 2000, by ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC., a Massachusetts corporation (the
"Borrower") in favor of CITIZENS BANK OF MASSACHUSETTS, a Massachusetts savings
--------
bank (the "Lender").
------
All capitalized terms not defined herein but defined in that certain
Credit Agreement, dated of even date herewith (as the same may be amended,
modified, supplemented, extended or restated, from time to time, the "Credit
------
Agreement") by and between the Borrower and the Lender, shall have the meanings
---------
given to such terms in the Credit Agreement.
Preliminary Statements:
----------------------
WHEREAS, the Borrower has requested that the Lender enter into the
Credit Agreement and make certain Extensions of Credit to or for the benefit of
the Borrower, as provided for therein; and
WHEREAS, the Borrower is currently a party to that certain
Commercial/Industrial Standard Lease dated as of July 21, 1995 (as the same may
be amended, modified, supplemented, extended or restated, from time to time, the
"Lease"), by and between The ▇▇▇▇▇▇▇▇ Company (the "Landlord") and the Borrower,
----- --------
which relates to certain premises, which are located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, and which are more particularly described therein (the
"Leased Premises"), a true, correct and complete copy of which Lease has been
---------------
delivered to the Lender contemporaneously with the execution of this Assignment;
and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and to the obligation of the Lender to make such Extensions of Credit
that the Borrower enter into this Assignment;
NOW, THEREFORE, in order to induce the Lender to enter into the Credit
Agreement and to make such Extensions of Credit to or for the benefit of the
Borrower, and in consideration thereof and in consideration of the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower hereby
agrees with the Lender as follows:
1. Collateral Assignment.
---------------------
(a) To secure the full, prompt and faithful payment and
performance of all of the Obligations, the Borrower hereby grants a
security interest in, and hereby collaterally assigns, transfers,
conveys and sets over to the Lender all of the Borrower's rights, title
and interests in, to and under the Lease relating to the Leased
Premises, together with all rights, powers, privileges, options and
other benefits of the Borrower as the tenant under the Lease. The
Borrower irrevocably appoints the Lender its true and lawful attorney-
in-
fact, at the option of the Lender at any time after the occurrence and
during the continuance of an Event of Default, to take possession and
control of the Leased Premises, pursuant to the Borrower's rights as
tenant under the Lease.
(b) Upon the occurrence and during the continuance of any
Event of Default, the Lender may, at any time without notice, either in
person, by agent or by a court-appointed receiver, regardless of the
adequacy of the Lender's security, enter upon and take possession and
control of the Leased Premises, or any part thereof, to perform all
acts necessary and appropriate to operate and maintain the Leased
Premises, including, but not limited to, execute, cancel or modify the
Lease, make repairs to the Leased Premises, execute or terminate
contracts providing for the management or maintenance of the Leased
Premises, all on such terms as are deemed best to protect the security
of this Assignment.
(c) To the extent provided under the Credit Agreement, the
Lender or the receiver shall have access to the books and records used
by the Borrower in the operation and maintenance of the Leased
Premises. The Lender shall not be liable to the Borrower, anyone
claiming under or through the Borrower or anyone having an interest in
the Leased Premises by reason of anything done or left undone by the
Lender hereunder.
(d) Any entering upon and taking possession and control of
the Leased Premises by the Lender as provided herein shall not waive
any Event of Default or invalidate any other right or remedy by the
Lender. The Borrower hereby represents and agrees that it is and will
be the sole tenant of the Leased Premises.
2. No Assumption of Lease Obligations. Notwithstanding the
----------------------------------
Assignment set forth in Section 1 above, the Lender does not and shall not be
deemed to have accepted, assumed or undertaken any or all obligations of the
Borrower under or pursuant to the Lease, and hereby affirmatively disclaims,
repudiates and refuses any such obligations. The Assignment provided for herein
is made for the benefit and protection of the Lender and shall not be construed
in any way to impose any obligation or duty upon the Lender to any third party
with respect to the Lease or the Leased Premises.
3. Covenants and Agreements. The Borrower hereby covenants and
------------------------
agrees with the Lender as follows:
(a) If the Lease provides for a security deposit paid by
the Borrower, this Assignment shall transfer to the Lender all of the
Borrower's right, title and interest in and to such security deposit to
secure the Obligations; provided, however, that, the Borrower shall
-------- -------
have the right to such security deposits so long as no Event of Default
shall have occurred and be continuing;
(b) The Borrower shall not terminate the Lease or grant
concessions or modify or amend the Lease in any material manner which
is or could reasonably be expected to be adverse to the Lender, in the
reasonable judgment of the Lender, without the prior consent of the
Lender;
-2-
(c) The Borrower shall pay all rent to the Landlord on the
date when such rent is due and owing under the terms of the Lease,
subject to applicable grace periods contained therein, if any;
(d) Except with the prior written consent of the Lender,
the Borrower shall not permit a subordination of the Lease to any
mortgage, deed of trust or other encumbrance, or any other lease, now
or hereafter affecting the Leased Premises or any part thereof, or
permit conversion of the Lease to a sublease; provided however that no
consent of the Lender shall be required in the event of a subordination
of the Lease to any mortgage affecting the Leased Premises so long as,
contemporaneously with such subordination, the holder of any such
mortgage has entered into an agreement with the Borrower and the Lender
which provides that the Lease and this Assignment shall be recognized
by such holder and that the rights of the tenant under the Lease,
whether such tenant shall be the Borrower, the Lender or the assignee
of either of them, shall remain in full force and effect during the
term of the Lease, notwithstanding any default in the payment or
performance of such mortgage and notwithstanding any foreclosure
proceeding with respect thereto provided that all of the terms,
covenants and conditions of the Lease shall have been performed;
(e) The Borrower shall not, without the Lender's prior
consent, enter into a new Lease except in the ordinary course of
business upon then prevailing market terms and conditions.
(f) The Borrower shall faithfully perform and discharge all
obligations of the tenant under the Lease, and shall give prompt
written notice to the Lender of any notice of any defaults committed by
the Borrower thereunder. The Borrower shall appear in and defend, at no
cost to the Lender, any action or proceeding arising under or in any
manner connected with the Lease. If requested by the Lender, the
Borrower shall enforce the Lease and all remedies available to the
Borrower against the Landlord thereunder;
(g) Nothing herein shall be construed to constitute the
Lender as a "mortgagee in possession" in the absence of its taking of
actual possession of the Leased Premises pursuant to the powers granted
herein, or to impose any liability or obligation on the Lender under or
with respect to the Lease.
Prior to the Lender taking actual possession of the Leased Premises,
the Borrower shall indemnify and hold the Lender harmless from and against any
and all liabilities, losses and damages (including reasonable attorneys' fees
and costs) that the Lender may incur under the Lease or by reason of this
Assignment, and of and from any and all claims and demands whatsoever that may
be asserted against the Lender by reason of any alleged obligations to be
performed or discharged by the Lender under the Lease or this Assignment, except
for such liabilities, losses and damages that have been determined by a court of
competent jurisdiction to have arisen out of the Lender's actual bad faith,
willful misconduct or gross negligence.
-3-
4. Event of Default. Upon the occurrence and during the continuance
----------------
of any one or more Events of Default, any and all Obligations shall become, or
may be declared to be, immediately due and payable, all as provided in the
Credit Agreement.
5. Additional Rights and Remedies to the Lender. If an Event of
--------------------------------------------
Default occurs and shall be continuing, the Lender shall have all of the rights
and remedies provided for herein, all of which are cumulative, in addition to
all other rights and remedies provided under the Financing Documents, or under
any other agreement between the Borrower and the Lender, or otherwise available
at law or in equity or by statute, and the Lender shall have the right to assign
the Lender's rights hereunder. Any subsequent assignee shall have all the rights
and powers herein provided to the Lender.
6. Additional Security. The Lender may take or release other
-------------------
security for the Obligations, may release any party primarily or secondarily
liable therefor and may apply any other security held by it to the satisfaction
of Obligations, without prejudice to any of its rights under this Assignment.
7. Absolute Assignment; Release. This Assignment is an absolute and
----------------------------
unconditional assignment of rights only, and not a delegation of duties. The
assignment contained herein and all rights herein assigned to the Lender shall
cease and terminate as to the Lease upon either (a) the satisfaction of all
Obligations, or (b) the termination of the Lease. It is expressly understood
that no judgment or decree that may be entered on any debt secured or intended
to be secured by this Assignment shall operate to abrogate or lessen the effect
of this Assignment, but that the same shall continue in full force and effect as
herein provided. The provisions of this Assignment shall also remain in full
force and effect during the pendency of any proceedings for the foreclosure
and/or sale of the Leased Premises, or any part thereof, both before and after
sale, until the issuance of a deed pursuant to a decree of foreclosure and/or
sale, unless all Obligations are fully satisfied.
8. Miscellaneous.
-------------
8.1 Further Assurances. The Borrower hereby agrees that it
------------------
shall, whenever and as often as it shall be requested to do so by the
Lender, execute, acknowledge and deliver, or cause to be executed,
acknowledged, and delivered, any and all such further conveyances,
approvals, consents, memoranda of the subject matter hereof, duplicate
originals hereof, and any and all other documents and to do any and all
other acts as may be necessary or appropriate to carry out the terms of
this Assignment. This Assignment or a memorandum hereof may be recorded
by the Lender at any time.
8.2 Effect on Rights Under Other Documents. Nothing contained in
--------------------------------------
this Assignment and no act done or omitted by the Lender pursuant to
the powers and rights granted it hereunder shall prejudice or be deemed
to be a waiver by the Lender of its rights and remedies under the
Financing Documents. The right of the Lender to collect the Obligations
and to enforce any other security therefor held by it may be exercised
by the Lender either prior to, simultaneously with, or subsequent to
any action taken by it hereunder.
-4-
8.3 No Waiver. A waiver by the Lender of any of its rights
---------
hereunder or under the Lease or of a breach of any of the covenants and
agreements contained herein to be performed by the Borrower shall not
be construed as a waiver of such rights in any succeeding instance or
of any succeeding breach of the same or other covenants, agreements,
restrictions or conditions.
8.4 Survival of Covenants; Binding Effect. All agreements,
-------------------------------------
representations, covenants and warranties made by the Borrower in this
Assignment, the other Financing Documents, or in any certificate or
other document delivered to the Lender in connection herewith shall
survive the termination of this Assignment and survive the execution
and delivery of this Assignment, and shall remain in full force and
effect until all Obligations to the Lender have been paid in full and
satisfied, and the security interest, Lien and rights granted to the
Lender hereunder shall continue in full force and effect,
notwithstanding the fact that Loans may, from time to time, be in a
zero or credit position, until all Obligations have been satisfied. All
the terms and provisions of this Assignment and the other Financing
Documents shall be binding upon, inure to the benefit of and be
enforceable by and against the parties hereto and their respective
successors and assigns.
8.5 Prior Discussions; Amendments in Writing. This Assignment
----------------------------------------
and all other Financing Documents incorporate all discussions and
negotiations between the Borrower and the Lender, either express or
implied, concerning the matters included herein and therein, any
custom, usage or other writing to the contrary notwithstanding. No such
discussions or negotiations shall limit, modify, or otherwise affect
the provisions of the Financing Documents. This Assignment may be
amended or modified only in writing signed by the parties hereto, and
in the case of the Lender signed by a duly authorized officer thereof.
8.6 Notices. All notices required or permitted hereunder shall
-------
be in writing and delivered in accordance with the provisions of the
Credit Agreement.
8.7 Severability. If any provision of this Assignment or any of
------------
the other Financing Documents, or any portion of such provision, or the
application thereof to any Person or circumstance, shall to any extent
be prohibited or held invalid or unenforceable, the remainder of this
Agreement and the other Financing Documents or the remainder of such
provision and the application thereof to other Persons or circumstances
(other than those as to which it is prohibited or held invalid or
unenforceable) shall not be affected thereby, and each term and
provision hereof and of the other Financing Documents shall be valid
and enforced to the fullest extent permitted by law. To the extent
permitted by law, the parties hereto waive any provision of law which
renders any such provision or the application thereof to any Person or
circumstance prohibited, invalid or unenforceable in any respect.
8.8 Headings. Headings appearing in this Assignment are intended
--------
for convenience only and do not constitute, and shall not be
interpreted to be, a part of this Assignment.
-5-
8.9 Waiver of Jury Trial. THE BORROWER AND THE LENDER HEREBY
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS ASSIGNMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS.
8.10 Governing Law; Jurisdiction. This Assignment is executed and
---------------------------
delivered in The Commonwealth of Massachusetts, and for all purposes
shall be construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts, without giving effect to the conflict of
law provisions thereof. The Borrower submits itself to the non-
exclusive jurisdiction of the courts of The Commonwealth of
Massachusetts for all purposes with respect to the Financing Documents
and the Borrower's relationship with the Lender.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
-6-
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed and delivered under its seal as of the date first above written.
WITNESS: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC.
______________________________ By:_________________________________
Name: Name:
Title:
Its duly authorized officer
COMMONWEALTH OF MASSACHUSETTS
___________ County, ss. April __, 2000
Then personally appeared the above-named _________________, as
________________ of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., and acknowledged the foregoing
instrument to be his/her free act and deed, and the free act and deed of
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., before me.
______________________________
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
-7-
ACKNOWLEDGMENT AND CONSENT
OF LANDLORD
Citizens Bank of Massachusetts
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------------------
Gentlemen:
Reference is hereby made to the following:
(a) a certain Commercial/Industrial Standard Lease, dated as
of July 21, 1995, (as the same may be amended, modified, supplemented,
extended or restated, from time to time, the "Lease"), by and between
-----
The ▇▇▇▇▇▇▇▇ Company (the "Landlord") and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., a
--------
Massachusetts corporation ("Tenant"), which relates to certain premises
------
which are located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, and
which are more particularly described therein (the "Leased Premises");
---------------
and
(b) a certain Credit Agreement, dated as of April 13, 2000 (as
the same may be amended, modified, supplemented, extended or restated,
from time to time, the "Credit Agreement") by and between the Borrower
----------------
and Citizens Bank of Massachusetts a Massachusetts savings bank (the
"Lender").
------
In consideration of the Leased Premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Landlord hereby agrees with the Lender as follows:
1. The Landlord hereby consents to and approves of the
execution and delivery by the Borrower of a certain Collateral
Assignment of Lease, dated as of April 13, 2000 (the "Collateral
----------
Assignment of Lease"), from the Borrower in favor of the Lender,
-------------------
pursuant to which, among other things, the Borrower has collaterally
assigned the Lease to the Lender as security for the prompt and
complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of all of the indebtedness,
liabilities and obligations of the Borrower to the Lender under the
Credit Agreement and the other Financing Documents (as defined in the
Credit Agreement), whether now existing or hereafter arising.
2. The Landlord agrees that, upon the occurrence of a default
under the Lease, the Landlord will send to the Lender written notice of
such default (hereinafter referred to as a "Default Notice"),
--------------
specifying the action to be taken to cure such default at the same time
such notice is sent to the Borrower. The Landlord shall give such
Default Notice to the Lender at Citizens Bank of Massachusetts, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
-▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Banking, or as such other
address as the Lender shall designate to the Landlord in writing.
3. The Landlord agrees that it will accept the cure by the
Lender of the default specified in a Default Notice and such default
will be deemed cured: (a) with respect to a default involving the
payment of a sum of money only, if the Lender, at its option, will pay
or cause to be paid such sum within thirty (30) days after receipt of
the Default Notice relating thereto, or (b) with respect to any non-
monetary default, if the Lender, as its option, will cure or cause to
be cured such default within thirty (30) days after receipt of the
Default Notice relating thereto; provided, however, that if such
-----------------
default is of a nature that is not susceptible to cure within such
thirty (30) day period, the Landlord shall not exercise its rights and
remedies under the Lease if the Lender shall, prior to the expiration
of such thirty (30) day period, commence or cause to be commenced the
cure thereof and diligently prosecutes such cure to completion. The
foregoing shall not be deemed to be an agreement by, or impose an
obligation on, the Lender, to act to cure any such default, but the
Lender, at its option and in its sole discretion, may cure any such
default.
4. The Landlord acknowledges that this letter serves as a
notification of the Lender's interest in the Lease and the leasehold
estate created thereby as may be prescribed by the Lease. In the event
that the Lender shall exercise its remedies pursuant to the Collateral
Assignment of Lease, the Landlord recognizes the Lender as the tenant
under the Lease and consents to the further assignment of the Lease by
the Lender to a third-party, notwithstanding any prohibition against or
condition on such further assignment in the Lease; provided, however,
-----------------
that such third party may use the Leased Premises only for (a) the same
or a similar business to that conducted by the Borrower on the Leased
Premises at the time of such assignment or (b) without limitation of
the use permitted pursuant to clause (a), general office facilities.
5. The Landlord hereby consents to the grant by the Tenant
to the Lender of a lien on and security interest in all of the personal
property of the Borrower located on the Leased Premises (the "Personal
--------
Property"), as security for the prompt and complete payment and
--------
performance when due (whether at the stated maturity, by acceleration
or otherwise) of all of the indebtedness, liabilities and obligations
of the Borrower to the Lender under the Credit Agreement and the other
Financing Documents, whether now existing or hereafter arising. Until
such time as all such indebtedness, liabilities and obligations of the
Borrower to the Lender are paid in full and the Lender has no further
obligation to make any loans to the Borrowers, the Landlord hereby
subordinates any lien upon, or security interest in, the Personal
Property that the Landlord may now or hereafter hold, whether by virtue
of the Lease, by operation of law or otherwise, to any lien or security
interest of the Lender in the Personal Property, whether now existing
or hereafter arising.
6. The Landlord hereby agrees that the Lender may, in
connection with the exercise of any of its remedies under the
Collateral Assignment of Lease or other Financing Documents relating to
the Personal Property, enter upon and remain in the
-2-
Leased Premises or permit the Lender's agents to do so on the Lender's
behalf, in order to implement such exercise of remedies (including,
without limitation, the removal of the Personal Property or the sale or
liquidation of the Personal Property at the Leased Premises in
connection with the foreclosure or other similar action), without
liability to the Landlord; provided, however, that the Lender or its
-----------------
agents may enter upon and remain in the Leased Premises, subject to the
following conditions: (a) the Lender restores any walls, windows,
doors, partitions, roofs, floors or other parts of the Leased Premises
damaged by it in the course of removal to their condition at the time
of the Lender's entry into possession, (b) the Lender pays the Landlord
rent at the same rate as the Borrower for the period of its occupancy,
such rent to be paid in arrears on the thirtieth (30th) day after the
Lender's entry into possession, and (c) the Lender completes such
removal and liquidation within ninety (90) days of the Lender's entry
into possession. The Landlord agrees that, upon the Lender taking
possession of the Leased Premises, the Lender's only obligation shall
be the payment of the aforementioned sums and no amount that may be due
to the Lender from the Borrower shall in any way be chargeable to the
Lender or against the collateral of the Lender.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
-3-
IN WITNESS WHEREOF, the undersigned have executed this instrument under
their seals effective as of April 13, 2000.
WITNESS: THE ▇▇▇▇▇▇▇▇ COMPANY
_________________________________ By: ______________________________
Name: Name:
Title:
Its duly authorized officer
WITNESS: CITIZENS BANK OF MASSACHUSETTS
_________________________________ By: ______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Senior Vice President
-4-
COMMONWEALTH OF MASSACHUSETTS
___________ County, ss. April __, 2000
Then personally appeared the above-named ________________, as
_________________ of ______________________________, and acknowledged the
foregoing instrument to be his/her free act and deed, and the free act and deed
of ______________________________, before me.
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Senior
Vice President of Citizens Bank of Massachusetts, and acknowledged the foregoing
instrument to be his free act and deed, and the free act and deed of Citizens
Bank of Massachusetts, before me.
______________________________
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
-5-
EXHIBIT D
FORM OF SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY (the "Guaranty") is made as of April 13, 2000
--------
by each of the SUBSIDIARIES of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, INC., a Massachusetts
corporation (the "Borrower") which are signatories hereto (said Subsidiaries,
--------
together with any and all other Subsidiaries of the Borrower which in accordance
with the provisions of subsection 17.9 below, may hereafter become parties to
this Guaranty, are hereinafter sometimes referred to collectively as the
"Subsidiary Guarantors" and each singly as a "Subsidiary Guarantor"), in favor
--------------------- --------------------
of CITIZENS BANK OF MASSACHUSETTS, a Massachusetts savings bank (the "Lender").
------
All of the obligations and liabilities of the Subsidiary Guarantor under this
Guaranty are joint and several.
All capitalized terms not defined herein but defined in that certain
Credit Agreement, dated of even date herewith (as the same may be hereafter
amended, modified, substituted, extended, restated or supplemented, from time to
time, the "Credit Agreement"), by and between the Borrower and the Lender, shall
----------------
have the meanings given to such terms in the Credit Agreement.
Preliminary Statements:
-----------------------
WHEREAS, the Borrower has requested that the Lender enter into the
Credit Agreement and to make certain Extensions of Credit to or for the benefit
of the Borrower, as provided for therein; and
WHEREAS, each of the Subsidiary Guarantors is a Subsidiary of the
Borrower; and
WHEREAS, the Borrower and the Subsidiary Guarantors are engaged in
related or complimentary businesses, and each Subsidiary Guarantor will derive
substantial direct and indirect benefit from the Lender making such Extensions
of Credit to the Borrower; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and to the obligation of the Lender to make such Extensions of Credit
that the Subsidiary Guarantors enter into this Guaranty;
NOW, THEREFORE, in order to induce the Lender to enter into the Credit
Agreement and to make such Extensions of Credit to or for the benefit of the
Borrower, and in consideration thereof and in consideration of the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Subsidiary
Guarantors hereby agree with the Lender as follows:
1. Definitions. As used in this Guaranty, the following terms shall
-----------
have the meanings given to such terms as set forth below:
"Obligations": any and all Indebtedness, obligations and
-----------
liabilities of the Borrower to the Lender, of every kind, nature and
description, and however arising, whether or not the same are: now
existing or hereafter arising or acquired; created by
contract or by operation of law; matured or unmatured; absolute or
contingent; liquidated or unliquidated; primary or secondary; of
payment or of performance; presently contemplated by the parties; joint
or several; or direct or indirect (including, without limitation, all
principal, interest, fees and other sums now or hereafter owed by the
Borrower to the Lender under the Credit Agreement, any Note and the
other Financing Documents).
"Other Obligor": with respect to any Subsidiary Guarantor, any
-------------
other Person now or hereafter liable for any of the Obligations,
whether as co-makers, endorsers, guarantors, sureties, indemnitors or
otherwise (including without limitation, the Borrower or any other
Subsidiary Guarantor hereunder).
2. Guaranty of Payment and Performance. Each Subsidiary Guarantor
-----------------------------------
hereby jointly and severally with all Other Obligors irrevocably and
unconditionally guarantees to the Lender the prompt and complete payment and
performance by the Borrower when due (whether at maturity, by acceleration or
otherwise) of the Obligations.
3. Guaranteed Amount. This Guaranty is absolutely unlimited in
----------------- ----------------------------------------
amount; provided, however, notwithstanding any provision contained in this
------
Guaranty or in any of the other Financing Documents to the contrary, the maximum
liability of each Subsidiary Guarantor hereunder and under the other Financing
Documents to which such Subsidiary Guarantor is a party shall in no event exceed
an amount equal to the largest amount that would not render its obligations
hereunder and thereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of the United States Bankruptcy Code, as amended
from time to time or any applicable provisions of comparable state law relating
to the insolvency of debtors. Each Subsidiary Guarantor agrees that the
Obligations may at any time and from time to time exceed the amount of the
liability of such Subsidiary Guarantor hereunder without impairing this Guaranty
or affecting the rights and remedies of the Lender hereunder.
4. Duration of Guaranty. This Guaranty shall remain in full force
--------------------
and effect and be binding in accordance with and to the extent of its terms upon
each Subsidiary Guarantor and the successors and assigns thereof, and shall
inure to the benefit of the Lender, and its successors, endorsees, transferees
and assigns, until all of the Obligations have been paid in full and the
obligation of the Lender to make Extension(s) of Credit to the Borrower is
terminated in writing. Each Subsidiary Guarantor shall, to the fullest extend
permitted by applicable law, continue to remain obligated under this Guaranty
notwithstanding that any demand for payment of any of the Obligations made by
the Lender may be rescinded by the Lender and any or all of the Obligations are
thereafter continued.
5. Unconditional Nature of Guaranty. This Guaranty is an
--------------------------------
unconditional, absolute and continuing guaranty of the full and punctual payment
and performance of the Obligations, and not of their collectability only. If the
Borrower defaults in the payment or performance of any of the Obligations, the
obligations of each Subsidiary Guarantor hereunder shall become, upon notice
from the Lender, immediately due and payable. When pursuing its rights and
remedies hereunder against any Subsidiary Guarantor, the Lender may, but shall
be under no obligation to, pursue such rights and remedies as it may have
against the Borrower, any Other Obligor or any other Person or against any
collateral securing the Obligations or any right of
-2-
offset with respect thereto, and any failure by the Lender to pursue such other
rights or remedies or to collect any payments from the Borrower, any Other
Obligor or any such other Person or to realize upon any such collateral or to
exercise any such right of offset, or any release of the Borrower, any Other
Obligor or any such other Person or any such collateral or right of offset,
shall not relieve such Subsidiary Guarantor of any liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Lender against such Subsidiary Guarantor.
6. Payments. Payments by each Subsidiary Guarantor hereunder may be
--------
required by the Lender on any number of occasions. All payments hereunder shall
be in Dollars and made to the Lender, at the Lender's head office at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
7. Lender's Freedom to Act. The obligations of each Subsidiary
-----------------------
Guarantor under this Guaranty shall remain in full force and effect without
regard to, and shall not be released, altered, exhausted, discharged or in any
way affected by, any circumstance or condition (whether or not such Subsidiary
Guarantor shall have any knowledge or notice thereof), including without
limitation, (a) any invalidity or unenforceability, in whole or in part, of the
Credit Agreement, any Note or any other Financing Document, or any obligation,
duty or agreement of the Borrower or any Other Obligor thereunder or in respect
thereof, or any provision of any applicable law or regulation purporting to
prohibit the payment or performance by the Borrower or any Other Obligor of any
Obligations, (b) any failure on the part of the Borrower or any Other Obligor
for any reason to perform or comply with any term of the Credit Agreement, any
Note or any other Financing Document or any other agreement, (c) any amendment,
modification or restatement of, or supplement to, the Credit Agreement, any Note
or any other Financing Document (including without limitation, any of the
foregoing which has the effect of increasing the amount of the Obligations), or
any obligation, duty or agreement of the Borrower or any Other Obligor
thereunder or in respect thereof, (d) any waiver, consent, extension, renewal,
indulgence, settlement, compromise or other action or inaction under or in
respect of the Credit Agreement, any Note or any other Financing Document, or
any exercise or nonexercise of any right, remedy, power or privilege under or in
respect of any such instrument (whether by operation of law or otherwise), (e)
any assignment or transfer in whole or in part of any of the Obligations in
accordance with the Credit Agreement, (f) any furnishing or acceptance of any
direct or indirect security or guaranty, or any release of or non-perfection or
invalidity of any direct or indirect security or guaranty, for any of the
Obligations, (g) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to the
Borrower or any Other Obligor or any of their respective properties or creditors
or any resulting release or discharge of any Obligations, (h) the voluntary or
involuntary sale or other disposition of the Borrower or any Other Obligor, or
all or substantially all the assets of the Borrower or any Other Obligor, or (i)
any other circumstance whatsoever which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Obligations
or of such Subsidiary Guarantor under this Guaranty.
8. Waivers. Each Subsidiary Guarantor acknowledges and agrees that
-------
the Obligations will be paid and performed strictly in accordance with their
respective terms regardless of any Requirement of Law now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Lender with
respect thereto. Except to the extent expressly required herein or in any other
Financing Document, and to the extent permitted by law, each
-3-
Subsidiary Guarantor waives (a) all presentments, demands, protests and notices
of any kind related to the Obligations or the Credit Agreement, any Note or any
other Financing Document (including without limitation, (i) any notices of the
existence or creation of any new or additional indebtedness constituting
Obligations or of any action or non-action on the part of the Borrower, the
Lender or any other Person; and (ii) any notices of any indulgence, extensions
or renewals granted to the Borrower or any Other Obligor with respect to
Obligations); (b) any requirement of diligence or promptness in the enforcement
of rights under the Credit Agreement, any Note or any other Financing Document,
or any other agreement or instrument directly or indirectly relating thereto or
to the Obligations; (c) any right to require the Lender, as a condition of
enforcement of this Guaranty, to proceed against the Borrower or any Other
Obligor or to proceed against or exhaust any security held by the Lender at any
time or to pursue any other right or remedy in the Lender's power before
proceeding against such Subsidiary Guarantor; (d) any duty on the part of the
Lender to disclose to such Subsidiary Guarantor any facts the Lender may now or
hereafter know about the Borrower or any Other Obligor in respect of
Obligations; (e) all suretyship and equitable defenses which may, at any time,
be available to or asserted by such Subsidiary Guarantor against the Lender; (f)
any other defenses, set-offs or counterclaims which may, at any time, be
available to or asserted by such Subsidiary Guarantor against the Lender; and
(g) all exemptions which may, at any time, be available to or asserted by such
Subsidiary Guarantor against the Lender. Each Subsidiary Guarantor acknowledges
and agrees that each of the waivers set forth herein on the part of such
Subsidiary Guarantor is made with such Subsidiary Guarantor's full knowledge of
the significance and consequences thereof and that under the circumstances the
waivers are reasonable. If any such waiver is determined to be contrary to any
applicable law or public policy, such waiver shall be effective only to the
extent permitted by such law or public policy.
9. Subsidiary Guarantor as Principal. If for any reason, the
---------------------------------
Borrower or any Other Obligor has no legal existence or is under no legal
obligation to perform any of the Obligations, or if any of the Obligations
becomes unrecoverable from the Borrower or any Other Obligor by operation of law
or for any other reason, this Guaranty shall nevertheless remain in full force
and effect and shall be binding upon each Subsidiary Guarantor to the same
extent as if each such Subsidiary Guarantor at all times had been the principal
obligor on all of the Obligations.
10. Limitation on Subrogation and Contribution. Until the Obligations
------------------------------------------
have been paid in full and the obligation of the Lender to make Extension(s) of
Credit to the Borrower is terminated in writing, each Subsidiary Guarantor
irrevocably and unconditionally waives any and all rights to which it may be
entitled, by operation of law or otherwise, (a) to be subrogated, with respect
to any payment made by such Subsidiary Guarantor hereunder, to the rights of the
Lender against the Borrower, or otherwise to be reimbursed, indemnified or
exonerated by the Borrower in respect thereof or (b) to receive any payment, in
the nature of contribution or for any other reason, from any Other Obligor with
respect to any payment made by such Subsidiary Guarantor hereunder.
11. Subordination. Each Subsidiary Guarantor hereby irrevocably
-------------
agrees that any and all claims which such Subsidiary Guarantor may now or
hereafter have against the Borrower or any Other Obligor (including, without
limitation, the benefit of any setoff or counterclaim or proof against dividend,
composition or payment by the Borrower or such other Subsidiary Guarantor) shall
be subject and subordinate to the prior payment in full of all of the
Obligations;
-4-
provided, however, the Borrower may make and such Subsidiary Guarantor may
receive payments or distributions to the extent and as provided in the Credit
Agreement so long as no Event of Default has occurred and is continuing. Upon
the occurrence and during the continuance of any Event of Default, each
Subsidiary Guarantor shall not claim from the Borrower or any Other Obligor any
sums which may be owing to such Subsidiary Guarantor, or have the benefit of any
setoff or counterclaim or proof against dividend, composition or payment by the
Borrower or such Other Obligor until all Obligations shall have been paid in
full and the obligation of the Lender to make Extension(s) of Credit to the
Borrower has been terminated. If any payment or distribution or security or the
benefit of proceeds thereof shall be received by any Subsidiary Guarantor upon
or with respect to amounts due to such Subsidiary Guarantor from the Borrower or
any Other Obligor after an Event of Default has occurred and is continuing and
prior to the payment in full of all Obligations, such Subsidiary Guarantor will
forthwith deliver the same to the Lender in precisely the form received (except
for endorsement or assignment where necessary), for application in or towards
repayment of the Obligations and, until so delivered, the same shall be held in
trust as property of the Lender. In the event of the failure of any Subsidiary
Guarantor to make any such endorsement or assignment, the Lender is hereby
irrevocably authorized to make the same on behalf of such Subsidiary Guarantor.
12. Security; Setoff. Each Subsidiary Guarantor grants to the Lender as
----------------
security for the full and punctual payment and performance of such Subsidiary
Guarantor's obligations hereunder, a continuing lien on and security interest in
all securities or other property belonging to such Subsidiary Guarantor now or
hereafter held by the Lender and in all deposits (general or special, time or
demand, provisional or final) and other sums credited by or due from the Lender
to such Subsidiary Guarantor or subject to withdrawal by such Subsidiary
Guarantor; and regardless of the adequacy of any collateral or other means of
obtaining repayment of the Obligations, the Lender is hereby authorized at any
time and from time to time after the occurrence and during the continuance of
any Event of Default, without notice to such Subsidiary Guarantor (any such
notice being expressly waived by such Subsidiary Guarantor) and to the fullest
extent permitted by law, to set off and apply such deposits and other sums
against the obligations of such Subsidiary Guarantor under this Guaranty,
whether or not the Lender shall have made any demand under this Guaranty and
although such obligations may be contingent or unmatured.
13. Costs of Collection. Each Subsidiary Guarantor agrees to pay or
-------------------
otherwise reimburse the Lender, upon demand, for any and all reasonable fees,
costs and expenses (including, without limitation, all reasonable legal fees,
costs and expenses) which are paid or incurred by the Lender from time to time
in connection with enforcing, or obtaining advice of counsel in respect of, any
rights with respect to, or the collection of, any or all of the Obligations
and/or enforcing any rights with respect to, or collecting against, such
Subsidiary Guarantor under this Guaranty, together with interest thereon (from
the applicable dates when due until paid in full) at the Late Rate.
14. Reinstatement. This Guaranty shall continue to be effective, or be
-------------
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Other Obligor or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
-5-
similar officer for, the Borrower or any Other Obligor or any substantial part
of its property, or otherwise, all as though such payments had not been made.
15. Representations and Warranties. Each Subsidiary Guarantor hereby
------------------------------
represents and warrants that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
power and authority and the legal right to own and operate its property, to
lease the property it operates and to conduct the business in which it is
currently engaged;
(b) it has the power and authority and the legal right to execute and
deliver, and to perform its obligations under, this Guaranty and the other
Financing Documents to which it is a party, and has taken all necessary action
to authorize its execution, delivery and performance of this Guaranty and the
other Financing Documents to which it is a party;
(c) this Guaranty and each of the other Financing Documents to which it
is a party constitutes a legal, valid and binding obligation of such Subsidiary
Guarantor enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors' rights generally, general
equitable principles and an implied covenant of good faith and fair dealing;
(d) the execution, delivery and performance by such Subsidiary
Guarantor of this Guaranty or any of the other Financing Documents to which it
is a party will not violate any provision of any Requirement of Law applicable
to such Subsidiary Guarantor or Contractual Obligation of such Subsidiary
Guarantor which could reasonably be expected to have a Material Adverse Effect
on such Subsidiary Guarantor and will not result in, or require the creation or
imposition of, any Lien on any of the properties or revenues of such Subsidiary
Guarantor pursuant to any such Requirement of Law or Contractual Obligation of
such Subsidiary Guarantor;
(e) no consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder or creditor of such
Subsidiary Guarantor) is required in connection with the execution, delivery or
performance by such Subsidiary Guarantor or the validity or enforceability of
this Guaranty or any of the other Financing Documents to which it is a party;
and
(f) no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the best knowledge of
such Subsidiary Guarantor, threatened by or against such Subsidiary Guarantor or
against any of its properties or revenues (i) with respect to this Guaranty or
any of the other Financing Documents to which it is a party or any of the
transactions contemplated hereby or thereby, or (ii) which could reasonably be
expected to have a Material Adverse Effect on such Subsidiary Guarantor; and
-6-
(g) the representations and warranties contained in Section 6 of the
Credit Agreement are true and correct in all material respects to the extent
such representations and warranties apply to such Subsidiary Guarantor.
Each Subsidiary Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by such Subsidiary Guarantor on the
date of each Extension of Credit to the Borrower under the Credit Agreement on
and as of the date of such Extension of Credit as though made hereunder on and
as of such date.
16. Covenants. Each Subsidiary Guarantor hereby covenants and agrees with the
---------
Lender that, from and after the date of this Guaranty until the Obligations are
paid and performed in full and the obligation of the Lender to make Extension(s)
of Credit to the Borrower has been terminated that such Subsidiary Guarantor
will comply promptly and punctually with all of the provisions of Sections 6 and
7 of the Credit Agreement to the extent such provisions apply to such Subsidiary
Guarantor.
17. Miscellaneous.
-------------
17.1 Amendments in Writing; No Waiver; Cumulative Remedies. None of the
---------------------
terms or provisions of this Guaranty may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by each Subsidiary
Guarantor and the Lender, provided that any provision of this Guaranty may be
waived by facsimile transmission by the Lender. No failure to exercise and no
delay in exercising, on the part of the Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
17.2 Severability. Any provision of this Guaranty which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or enforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17.3 Integration. This Guaranty represents the agreement of each Subsidiary
-----------
Guarantor with respect to the subject matter hereof and there are no promises,
undertakings, representations or warranties by any Subsidiary Guarantor or the
Lender relative to the subject matter hereof not expressly set forth or referred
to herein.
17.4 Notices. All notices, requests and demands to or upon the respective
-------
parties hereto shall be in writing and delivered in accordance with the
provisions of the Credit Agreement.
17.5 Headings. The section headings used in this Guaranty are for
--------
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
-7-
17.6 Counterparts. This Guaranty may be executed by one or more of the
------------
Subsidiary Guarantors on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the counterparts of
this Guaranty signed by all of the Subsidiary Guarantors shall be lodged with
the Lender.
17.7 Successors and Assigns. This Guaranty shall be binding upon the
----------------------
successors and assigns of each Subsidiary Guarantor and shall inure to the
benefit of the Lender and its successors and assigns, provided that no
Subsidiary Guarantor may assign any of its rights or obligations under this
Guaranty without the consent of the Lender.
17.8 Joint and Several Liability. All of the obligations and liabilities
---------------------------
of the Subsidiary Guarantors under this Agreement are joint and several.
17.9 Additional Subsidiary Guarantors. Each Subsidiary of the Borrower
--------------------------------
that is required to become a party to this Guaranty pursuant to subsection 5.11
of the Credit Agreement shall become a Subsidiary Guarantor for all purposes of
this Guaranty by execution and delivery of a Joinder and Assumption Agreement,
substantially in a form and substance reasonably acceptable to the Lender.
17.10 WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR AND THE LENDER
--------------------
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY, ANY OF THE OTHER FINANCING
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.
17.11 Governing Law; Jurisdiction. This Guaranty and the other Financing
---------------------------
Documents are executed and delivered under seal and shall be construed in
accordance with and governed by the laws of The Commonwealth of Massachusetts,
without giving effect to the conflict of law provisions thereof. Each Subsidiary
Guarantor submits itself to the non-exclusive jurisdiction of the Courts of The
Commonwealth of Massachusetts for all purposes with respect to the Financing
Documents and such Subsidiary Guarantor's relationship with the Lender.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
-8-
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be
duly executed and delivered by its duly authorized officer under its seal as of
the day and year first above written.
WITNESS: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ OF TEXAS, INC.
_________________________________ By:______________________________
Name: Name:
Title:
Its duly authorized officer
WITNESS: CITIZENS BANK OF MASSACHUSETTS
_________________________________ By:____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Senior Vice President
-9-
STATE OF TEXAS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named ____________________ as
_______________ of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ of Texas, Inc., and acknowledged the
foregoing instrument to be his/her free act and deed and the free act and deed
of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ of Texas, Inc., before me.
------------------------------
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Senior Vice
President of Citizens Bank of Massachusetts, and acknowledged the foregoing
instrument to be his free act and deed and the free act and deed of Citizens
Bank of Massachusetts, before me.
-----------------------------
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
-10-
EXHIBIT E
FORM OF SUBSIDIARY SECURITY AGREEMENT - ALL ASSETS
This SUBSIDIARY SECURITY AGREEMENT - ALL ASSETS (this "AGREEMENT") is made
as of April 13, 2000 by and among (a) all of the SUBSIDIARIES of ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇, INC., a Massachusetts corporation (the "BORROWER") which are signatories
hereto (said Subsidiaries, together with any and all other Subsidiaries of the
Borrower which in accordance with the provisions of subsection 9.10 below, may
hereafter become parties to this Agreement, are hereinafter sometimes referred
to collectively as the "SUBSIDIARY GUARANTORS" and each singly as a "SUBSIDIARY
GUARANTOR") and (b) CITIZENS BANK OF MASSACHUSETTS, a Massachusetts savings bank
(the "LENDER").
All capitalized terms not defined herein but defined in the Credit
Agreement, dated of even date herewith (as the same may be amended, modified,
supplemented, extended or restated, from time to time, the "CREDIT AGREEMENT")
by and between the Borrower and the Lender, shall have the meanings given to
such terms in the Credit Agreement.
Preliminary Statements:
-----------------------
WHEREAS, the Borrower has requested that the Lender enter into the Credit
Agreement and make certain Extensions of Credit to or for the benefit of the
Borrower, as provided for therein; and
WHEREAS, each Subsidiary Guarantor is a Subsidiary of the Borrower; and
WHEREAS, the Borrower and the Subsidiary Guarantors are engaged in related
or complimentary businesses, and the Subsidiary Guarantors will derive
substantial direct and indirect benefit from the Lender making such Extensions
of Credit to the Borrower; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and to the obligation of the Lender to make such Extensions of Credit
that the Subsidiary Guarantors enter into this Agreement;
NOW, THEREFORE, in order to induce the Lender to enter into the Credit
Agreement and to make such Extensions of Credit to or for the benefit of the
Borrower, and in consideration thereof and in consideration of the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Subsidiary
Guarantors hereby agree with the Lender as follows:
1. DEFINITIONS; USE OF TERMS.
-------------------------
1.1 Definitions. As used in this Agreement, the following terms shall have the
meanings given to such terms in the Uniform Commercial Code in effect in The
Commonwealth of Massachusetts on the date hereof: "CHATTEL PAPER," "DEPOSIT
ACCOUNTS," "DOCUMENTS," "FARM PRODUCTS," "FIXTURES," "GOODS" and "INSTRUMENTS."
The following terms shall have the meanings given to such terms as set forth
below:
"ACCOUNTS": all "accounts" as that term is defined in the UCC, and
to the extent not included in such definition, shall also mean and include
all accounts receivable, book debts, notes, drafts and other forms of
obligations or indebtedness now owned or hereafter received or acquired by
or belonging or owing to any Subsidiary Guarantor whether arising out of
personal property owned or leased by it, Goods sold by it or services
rendered by it or from any other transaction, whether or not the same
involves the lease of personal property, sale of Goods or performance of
services by such Subsidiary Guarantor (including, without limitation, any
such obligation or indebtedness which would be characterized as an account,
general intangible or chattel paper under the Uniform Commercial Code in
effect in any jurisdiction) and all of the rights of each such Subsidiary
Guarantor in, to and under all purchase orders now owned or hereafter
received or acquired by it for Goods or services, and all of the rights of
each such Subsidiary Guarantor to any Goods represented by any of the
foregoing (including returned or repossessed Goods and unpaid seller's
rights) and all moneys due or to become due to any Subsidiary Guarantor
under all contracts for the sale of Goods and/or the performance of
services by it (whether or not yet earned by performance), in each case
whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase
orders and contracts and all collateral security and guarantees of any kind
given by any Person with respect to any of the foregoing.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership or membership interests in a Person (other
than a corporation) and any and all warrants or options to purchase any of
the foregoing.
"CONTRACT": with respect to an Account, any agreement relating to the
terms of payment or the terms of performance thereof, including, without
limitation, (a) all rights of each Subsidiary Guarantor to receive moneys
due and to become due to it thereunder or in connection therewith, (b) all
rights of each Subsidiary Guarantor to damages arising out of, or for,
breach or default in respect thereof and (c) all rights of each Subsidiary
Guarantor to perform and to exercise all remedies thereunder.
"COPYRIGHT LICENSES": any written agreement naming any Subsidiary
Guarantor as licensor or licensee, granting any right under any Copyright
(including, without limitation, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright).
"COPYRIGHTS": (a) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the Copyright Office, and (ii) the right to obtain all
renewals thereof.
"COPYRIGHT OFFICE": the United States Copyright Office or any other
federal governmental agency which may hereafter perform its functions.
"DOMESTIC SUBSIDIARY": any Subsidiary that is organized under the
laws of any jurisdiction within the United States.
"EQUIPMENT": all "equipment" as that term is defined in the UCC, and
to the extent not included in such definition, shall also mean and include
all machinery, furniture and motor vehicles.
"FOREIGN SUBSIDIARY": any Subsidiary that is organized under the laws
of any jurisdiction outside the United States.
"GENERAL INTANGIBLES": all "general intangibles" as that term is
defined in the UCC, and to the extent not included in such definition,
shall also mean and include any franchise agreements or rights in favor of
or granted by any Subsidiary Guarantor to know-how, trade secrets, product
or service development ideas and designs, advertising commercials,
renderings, strategies and plans, blueprints, architectural drawings, site
location, personnel and franchisee information, proprietary information,
computer and software technology and programs, contracts with distributors,
and any similar items, all interest rate, foreign currency or similar
agreements and general intangibles attributable to the Capital Stock of
each Subsidiary.
"INVENTORY": all "inventory" as that term is defined in the UCC, and
to the extent not included in such definition, shall also mean and include
all raw materials and other materials and supplies, work-in-process and
finished goods and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto.
"INTELLECTUAL PROPERTY": all rights, title, interests, priorities and
privileges relating to any and all intellectual property, whether arising
under federal, state or foreign laws or otherwise (including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to ▇▇▇
at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom).
"INVESTMENT PROPERTY": all "investment property", as that term is
defined in the UCC, and to the extent not included in such definition,
shall also mean and include all stock (including, without limitation, all
Pledged Stock), bonds, debentures, securities, treasury bills, certificates
of deposit, mutual or money market fund shares, bills, notes (including,
without limitation, all Pledged Notes), evidences of indebtedness or other
obligations issued by any Person (including, without limitation, federal
government of the United States or any agency thereof), whether in
registered, bearer or other form, and whether certificated or
uncertificated, in book-entry or other form.
"ISSUERS": (a) the Persons identified Section 4 of the Master
Disclosure Schedule attached hereto as the issuers of the Pledged Stock,
(b) any other Subsidiaries of any Subsidiary Guarantor created or acquired
after the date hereof the equity of which is required to be pledged by this
Agreement or subsection 7.11 of the Credit Agreement, (c)
the Persons identified in Section 4 of the Master Disclosure Schedule
attached hereto as the issuers of the Pledged Notes and (d) any other
issuer of any Investment Property.
"LICENSE": any Copyright License, Patent License or Trademark
License.
"MASTER DISCLOSURE SCHEDULE": the Master Disclosure Schedule attached
hereto and incorporated herein by reference.
"PATENT LICENSE": all agreements, whether written or oral, providing
for the grant by any Subsidiary Guarantor of any right to manufacture, use
or sell any invention covered by a Patent.
"PATENTS": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof and (b) all applications
for letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof.
"PTO": the United States Patent and Trademark Office or any other
federal governmental agency which may hereafter perform its functions.
"PLEDGED NOTES": all promissory notes listed in Section 3 of the
Master Disclosure Schedule attached hereto, and, if requested by the
Lender, any other promissory note issued to or held by any Subsidiary
Guarantor (other than promissory notes issued in connection with extensions
of trade credit by any Subsidiary Guarantor in the ordinary course of
business).
"PLEDGED STOCK": the shares of Capital Stock listed in Section 4 of
the Master Disclosure Schedule attached hereto, together with all stock
certificates, options or rights of any nature whatsoever that may be issued
or granted by any Issuer to any Subsidiary Guarantor and that are required
by this Agreement or the Credit Agreement to be pledged hereunder while
this Agreement is in effect.
"PROCEEDS": all "proceeds," as that term is defined in the UCC, and
to the extent not included in such definition, shall also mean and include
(a) any and all proceeds of any insurance, indemnity, warranty, guaranty or
letter of credit payable to any Subsidiary Guarantor, from time to time
with respect to any of the Collateral, (b) all payments (in any form
whatsoever) paid or payable to any Subsidiary Guarantor from time to time
in connection with any taking of all or any part of the Collateral by any
Governmental Authority or any Person acting under color of Governmental
Authority, (c) all judgments in favor of any Subsidiary Guarantor in
respect of the Collateral, (d) all dividends or other income from the
Investment Property, collections thereon or distributions or payments with
respect thereto and (e) all other amounts from time to time paid or payable
or received or receivable under or in connection with any of the
Collateral.
"SECURED OBLIGATIONS": all indebtedness, obligations and liabilities
of the Subsidiary Guarantors to the Lender under the Subsidiary Guaranty,
this Agreement and all of the other Financing Documents to which any
Subsidiary Guarantor is a party, whether or not the same are now existing
or hereafter arising, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured; provided, however, notwithstanding any
provision contained in this Agreement or in any of the other Financing
Documents to the contrary, the maximum amount of obligations secured by
this Agreement with respect to any specific Subsidiary Guarantor shall in
no event exceed an amount equal to the largest amount that would not render
the obligations of such Subsidiary Guarantor hereunder and under the other
Financing Documents to which it is a party subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of the United States
Bankruptcy Code, as amended from time to time or any applicable provisions
of comparable state law relating to the insolvency of debtors.
"SECURITIES ACT": the Securities Act of 1933, as amended from time to
time.
"SUBSIDIARY GUARANTY": the Subsidiary Guaranty, dated of even date
herewith, from the Subsidiary Guarantors in favor of the Lender, as the
same may be amended, modified, supplemented, reaffirmed, extended or
restated, from time to time.
"TRADEMARK LICENSE": any agreement, written or oral, providing for
the grant by or to any Subsidiary Guarantor of any right to use any
Trademark.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress,
trade styles, service marks, designs, logos and other source or business
identifiers, and the goodwill of the business associated therewith,
including customer lists, license rights, advertising materials and all
other business assets which uniquely reflect the goodwill of the business,
now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether
in the PTO or in any similar office or agency of the United States, or any
State thereof, or any other country, and (b) all renewals thereof.
"UCC": the Uniform Commercial Code as from time to time in effect in
The Commonwealth of Massachusetts; provided, however, that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial
Code as in effect on or after the date hereof in any other jurisdiction,
then the term "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to
such perfection or effect of perfection or non-perfection or availability
of such remedy.
1.2 Use of Terms; Exhibits. The use of the singular of terms which are defined
in the plural shall mean and refer to any one of them; and pronouns used herein
shall be deemed to include the singular and the plural and all genders. The use
of the connective "or" is not intended to be exclusive; the term "may not" is
intended to be prohibitive and not permissive; use of "includes" and "including"
is intended to be interpreted as expansive and amplifying and not as limiting in
any way. All exhibits to this Agreement are incorporated herein.
2. GRANT OF SECURITY INTEREST.
--------------------------
As security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the Secured
Obligations, each Subsidiary Guarantor hereby grants and otherwise pledges to
the Lender a continuing security interest in all of the present and future
rights, title and interests of each such Subsidiary Guarantor in and to the
following property, and each item thereof, all whether now or hereafter
existing, or owned or acquired by each such Subsidiary Guarantor, or now or
hereafter arising or due or to become due, wherever such property may be
located, together with all substitutions for, replacements of, additions to,
accessions to, and products, Proceeds and records of any and all of the
following (collectively, the "COLLATERAL"):
(a) all Accounts;
(b) all Inventory;
(c) all Equipment;
(d) all Fixtures;
(e) all Farm Products;
(f) all Contracts;
(g) all Chattel Paper;
(h) all Documents;
(i) all Instruments;
(j) all Investment Property;
(k) all Deposit Accounts;
(l) all General Intangibles;
(m) all Intellectual Property; and
(n) all other items of tangible and intangible personal property
of any and every kind and description which are not otherwise described
herein;
provided, however, the term "Collateral" shall not include any license,
contract, agreement which contains a provision that (A) prohibits the grant of a
security interest therein; or (B) provides a default may or shall occur
thereunder as a result of the grant of a security interest therein, unless any
required consents shall have been obtained.
3. GENERAL REPRESENTATIONS AND WARRANTIES.
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Each Subsidiary Guarantor hereby represents and warrants as follows:
3.1 Power and Authority. Each Subsidiary Guarantor has the power and authority
and the legal right to execute and deliver, to perform its obligations under,
and to grant the Lien on the Collateral pursuant to, this Agreement and has
taken all necessary actions to authorize its execution, delivery and performance
of, and grant of the Lien on the Collateral pursuant to, this Agreement.
3.2 Master Disclosure Schedule. All of the information contained in the Master
Disclosure Schedule attached hereto is true, correct and complete.
3.3 Name; Chief Executive Office.
(a) The name of each Subsidiary Guarantor set forth in the first paragraph of
this Agreement is the true, correct and complete legal name of such
Subsidiary Guarantor, and each such Subsidiary Guarantor has not done
business under, or used, any other name, except as otherwise described in
Section 1.2 of the Master Disclosure Schedule attached hereto.
(b) The chief executive office and principal place of business of each
Subsidiary Guarantor is located at the address listed in Section 2.1 of the
Master Disclosure Schedule attached hereto.
(c) All of the Inventory and Equipment of each Subsidiary Guarantor (other than
mobile vehicles) is kept at the locations listed in Section 2.2 of the
Master Disclosure Schedule attached hereto.
3.4 Title; No Other Liens. Except for (a) the Lien granted to the Lender
pursuant to this Agreement and (b) the Permitted Liens, each Subsidiary
Guarantor owns each item of the Collateral free and clear of any and all Liens
or claims of others. No security agreement, financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as may have been filed in favor of the Lender,
pursuant to this Agreement or as may be permitted pursuant to the Credit
Agreement.
3.5 Perfected First Priority Liens. Upon the completion of filing of financing
statements with respect to the Subsidiary Guarantor, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ of Texas,
Inc., at the Texas Secretary of State and Fort Bend County Clerk's Office,
Texas, the Liens granted by such Subsidiary Guarantor pursuant to this Agreement
will constitute perfected Liens on the Collateral in which a security interest
may be perfected by the filing of financing statements pursuant to Article 9 of
the Uniform Commercial Code as in effect in each relevant jurisdiction in favor
of the Lender, which are prior to all other Liens on such Collateral created by
such Subsidiary Guarantor and in existence on the date hereof (except the
Permitted Liens) and which are enforceable as such against all creditors of and
purchasers from such Subsidiary Guarantor, except in each case as enforceability
is affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether involved in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
3.6 Accounts. No amount payable to the Subsidiary Guarantors under or in
connection with any Account, Contract or License in excess of One Hundred
Thousand and
00/100 Dollars ($100,000.00) is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Lender. The amount represented by each
Subsidiary Guarantor to the Lender from time to time as owing by each account
debtor or by all account debtors in respect of the Accounts of such Subsidiary
Guarantor will at such time be the correct amount actually owing by such account
debtor or debtors thereunder in all material respects, subject to adjustments in
the ordinary course of business.
3.7 Investment Property.
(a) The shares of Pledged Stock pledged by each Subsidiary Guarantor hereunder
and listed on the Master Disclosure Schedule attached hereto constitute all
of the issued and outstanding shares or interests of all classes of the
Capital Stock of each Domestic Subsidiary owned by each such Subsidiary
Guarantor and 65% of the total outstanding Capital Stock of each Foreign
Subsidiary owned by each such Subsidiary Guarantor. All of the shares of
the Pledged Stock have been duly and validly issued and are fully paid and
nonassessable.
(b) To the best knowledge of each Subsidiary Guarantor, each of the Pledged
Notes pledged by each such Subsidiary Guarantor hereunder constitutes a
valid and legally enforceable obligation of the other obligor in respect
thereof or parties thereto, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
(c) Each Subsidiary Guarantor is the record and beneficial owner of, and has
good and marketable title to, the Investment Property pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of,
any other Person, except for the Lien created by this Agreement and
Permitted Liens.
3.8 Intellectual Property.
(a) Set forth in Section 5 of the Master Disclosure Schedule attached hereto is
a true, correct and complete list of all registered Copyrights and
Copyright Licenses owned by each Subsidiary Guarantor in its own name as of
the date hereof. Set forth in Section 6 of the Master Disclosure Schedule
attached hereto is a true, correct and complete list of all Patents and
Patent Licenses owned by each Subsidiary Guarantor in its own name as of
the date hereof. Set forth in Section 7 of the Master Disclosure Schedule
attached hereto is a true, correct and complete list of all registered
Trademarks and Trademark Licenses owned by each Subsidiary Guarantor in its
own name as of the date hereof. Except as set forth in the Master
Disclosure Schedule attached hereto, none of the Intellectual Property is
the subject of any licensing or franchise agreement pursuant to which any
Subsidiary Guarantor is the licensor or franchisor.
(b) Except as set forth in Sections 5, 6 or 7 of the Master Disclosure Schedule
attached hereto, each Subsidiary Guarantor owns, or is licensed to use, all
Intellectual Property necessary for the conduct of its business as
currently conducted. No material claim has been asserted and is pending by
any Person challenging or questioning the use
by any Subsidiary Guarantor of any of its Intellectual Property or the
validity or effectiveness of any of its Intellectual Property, nor does any
Subsidiary Guarantor know of any valid basis for any such claim. The use by
any Subsidiary Guarantor of the Intellectual Property does not infringe the
rights of any Person in any material respect. No holding, decision or
judgment has been rendered by any Governmental Authority which would limit,
cancel or question the validity of, or any Subsidiary Guarantor's rights
in, any Intellectual Property in any respect that could reasonably be
expected to have a Material Adverse Effect.
4. GENERAL COVENANTS.
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Each Subsidiary Guarantor hereby covenants and agrees as follows:
4.1 Changes in Name and Locations. No Subsidiary Guarantor will (i) change
its name, identity, organizational structure, jurisdiction of organization,
chief executive office or place where its business records are kept, (ii) move
any tangible Collateral to a location other than those set forth in the Master
Disclosure Schedule attached hereto, or (iii) merge into or consolidate with any
other entity, unless in each case it shall have given the Lender at least thirty
(30) days prior written notice thereof and all filings and other actions to
maintain the perfection of the security interest granted hereby shall have been
made.
4.2 Maintenance of Records. Each Subsidiary Guarantor will keep and maintain
at its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts, Contracts and Licenses. Each Subsidiary
Guarantor will, upon request of the Lender, ▇▇▇▇ its books and records
pertaining to the Collateral to evidence this Agreement and the security
interests granted hereby.
4.3 Right of Inspection. Except as otherwise provided in the Credit Agreement,
the Lender shall at all reasonable times have full and free access during normal
business hours and upon reasonable prior notice to all the books, correspondence
and records of each Subsidiary Guarantor, and the Lender and its representatives
may, at such times, examine the same, take extracts therefrom and make
photocopies thereof, and each Subsidiary Guarantor agrees to render to the
Lender, at the sole cost and expense of the Subsidiary Guarantors, such clerical
and other assistance as may be reasonably requested with regard thereto. Except
as otherwise provided in the Credit Agreement, and upon reasonable prior notice
to the Subsidiary Guarantors, the Lender and its representatives shall have the
right, during normal business hours to enter into and upon any premises where
any of the Inventory or Equipment is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein.
4.4 Payment of Taxes and Other Amounts. Each Subsidiary Guarantor will pay
promptly when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral which have a
reasonable likelihood of adverse determination, except that no such charge need
be paid if (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) such proceedings do not involve any material
danger of the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein and (c) such charge is adequately reserved against on such Subsidiary
Guarantor's books in accordance with GAAP or if the failure to pay such charge
would not reasonably be expected to have a Material Adverse Effect.
4.5 Maintenance and Use of Properties. Each Subsidiary Guarantor will
safeguard, protect and preserve the Collateral for the benefit of the Lender,
will keep the Collateral free from any Lien (other than the Permitted Liens and
Liens in favor of the Lender), will keep all tangible property constituting part
of the Collateral in good working order and repair, will preserve all beneficial
contract rights, will take commercially reasonable steps to collect all
Accounts, and will not waste or destroy the Collateral or any part thereof; and
each such Subsidiary Guarantor will otherwise preserve, maintain and protect its
rights and keep its properties and assets in good repair, working order and
condition, and capable of identification, and make (or cause to be made) all
needful and proper repairs or renewals, additions and improvements thereto and
replacements thereof, and shall use its assets only in the ordinary course of
business and in compliance with all applicable law.
4.6 Notices and Reports Pertaining to Collateral. Each Subsidiary Guarantor
will (a) promptly notify the Lender of any Lien (except for Liens in favor of
the Lender and Permitted Liens) asserted against the Collateral and of any
information received by such Subsidiary Guarantor relating to the Collateral
(including the Accounts, the account debtors or other persons obligated in
connection therewith) that may in any way materially adversely affect the value
of the Collateral or the rights and remedies of the Lender with respect thereto;
(b) promptly notify the Lender when it obtains knowledge of actual or threatened
bankruptcy or other insolvency proceeding of any material account debtor or
issuer of Securities; (c) deliver to the Lender, as the Lender may from time to
time request, delivery receipts, customers' purchase orders, shipping
instructions, bills of lading and any other evidence of shipping arrangements;
(d) notify the Lender of any return or adjustment, rejection, repossession, or
loss or damage of or to merchandise represented by Accounts or constituting
Inventory if material in amount and of any credit, adjustment or dispute arising
in connection with the goods or services represented by Accounts or constituting
Inventory if material in amount; and (e) notify the Lender of the occurrence of
any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or, with respect to any material
portion of the Collateral, on the Liens created hereunder.
Each Subsidiary Guarantor authorizes the Lender to destroy all invoices,
delivery receipts, reports and other types of documents (other than documents
constituting Collateral) and records submitted to the Lender in connection with
the transactions contemplated herein at any time subsequent to twelve (12)
months from the time such items are delivered to the Lender.
4.7 Liens on Collateral. Each Subsidiary Guarantor will defend the Collateral
against, and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the Liens created hereby and the
Permitted Liens, and will defend the right, title and interest of the Lender in
and to any of the Collateral against the claims and demands of all Persons
whomsoever.
4.8 Maintenance of Insurance.
(a) Each Subsidiary Guarantor will maintain insurance, at all times, with
financially sound and reputable companies as are reasonably satisfactory to
the Lender, in such amounts and against such risks as are customarily
insured against by businesses of a similar size operating in a similar line
of business in a similar area, and consistent with sound business practice,
in no event less than the lesser of (i) the full insurable replacement cost
value of all of such Subsidiary Guarantor's tangible personal property
(and, in any case, the amount necessary to avoid any coinsurance or
contributions by such Subsidiary Guarantor) or (ii) the total aggregate
outstanding principal indebtedness owing by the Subsidiary Guarantors to
the Lender, including casualty insurance covering the Collateral and other
property of the Subsidiary Guarantors against the hazards of fire, flood,
sprinkler leakage, burglary, theft, pilferage, loss in transit, those
hazards covered by extended coverage, and such other coverages as the
Lender may reasonably require, all such insurance to be in such form, for
such periods and with such companies as shall be reasonably acceptable to
the Lender. All premiums thereon shall be paid by the Subsidiary
Guarantors and if any Subsidiary Guarantors fail to do so, the Lender may
at its option (but without obligation) procure such insurance and charge
the cost to the account of any Subsidiary Guarantor, provided, however,
that any such payment by the Lender shall not constitute satisfaction of
any Subsidiary Guarantor's obligations with respect to payment hereunder,
or a waiver by the Lender of any Event of Default with respect to such non-
payment.
(b) All such insurance policies shall provide, in form and substance
satisfactory to the Lender, that: (i) any loss thereunder shall be payable
to the Lender as loss payee (first to the Lender and then to the Subsidiary
Guarantors, as their interests may appear); (ii) any such payment to the
Lender shall be made by an instrument to the Lender alone and not to any of
the Subsidiary Guarantors and the Lender jointly; and (iii) no cancellation
or modification of such policy shall be effective without at least thirty
(30) days prior written notice to the Lender. If any insurance losses are
paid by check, draft or other instrument payable to any of the Subsidiary
Guarantors and the Lender jointly, the Lender may endorse such Subsidiary
Guarantor's name thereon and do such other things as the Lender may deem
advisable to reduce the same to cash. All loss recoveries received by the
Lender upon any such insurance shall be applied to the Secured Obligations,
whether or not matured, in such order as the Lender in its sole discretion
may determine. Any surplus shall be paid by the Lender to the Subsidiary
Guarantors or applied as may be otherwise required by law.
(c) Certificates of insurance of, and upon request, the original policies of,
all such casualty insurance policies and endorsements thereto, shall be
delivered to the Lender; and, upon request, satisfactory evidence of
general liability, products liability, workers' compensation and other
insurance coverage, in form and substance satisfactory to the Lender, shall
be furnished to the Lender, in each case within three (3) business days of
each Lender's request therefor. Each Subsidiary Guarantor shall advise the
Lender of each claim made by such Subsidiary Guarantor under any policy of
insurance which covers the Collateral, and upon the occurrence and during
the continuance of any
Event of Default, will permit the Lender, to the exclusion of any
Subsidiary Guarantor, at the Lender's option in each instance, to conduct
the adjustment of each such claim.
4.9 Maintenance of Perfected Liens; Further Documentation. At any time and
from time to time, upon the written request of the Lender, and at the sole
expense of the Subsidiary Guarantors, each Subsidiary Guarantor will promptly
and duly execute and deliver such further instruments and documents and take
such further action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted (including, without limitation, (a) executing and
filing any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created hereby; (b)
in the case of Intellectual Property, executing and filing with the PTO, the
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such short forms of Security Agreements, each in
form and substance satisfactory to the Lender, as the Lender may request; and
(c) in the case of Investment Property, and any other relevant Collateral, taken
action necessary to enable the Lender to obtain "control" (within the meaning of
the applicable Uniform Commercial Code) with respect thereto). Each Subsidiary
Guarantor also hereby authorizes the Lender to file (after written notice to the
Subsidiary Guarantors) any such financing or continuation statement without the
signature of any Subsidiary Guarantor to the extent permitted by applicable law,
provided that any failure to give any such notice shall not affect the validity
or effectiveness of any such filing. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
4.10 Costs and Expenses. Except as otherwise provided in the Credit Agreement,
each Subsidiary Guarantor agrees to pay (a) the reasonable costs of producing
and reproducing this Agreement, the other Financing Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other than
taxes based upon the Lender's net income) on or with respect to the transactions
contemplated by this Agreement (each Subsidiary Guarantor hereby agreeing to
indemnify the Lender with respect thereto), (c) the reasonable fees, expenses
and disbursements of counsel to the Lender incurred in connection with the
preparation, administration or interpretation of the Financing Documents and
other instruments mentioned herein, and amendments, modifications, approvals,
consents or waivers hereto or hereunder, (d) the fees, expenses and
disbursements of the Lender incurred by the Lender in connection with the
preparation, administration or interpretation of the Financing Documents and
other instruments mentioned herein, (e) all reasonable out-of-pocket expenses
(including without limitation reasonable attorneys' fees and costs, which
attorneys may be employees of the Lender, and reasonable consulting, accounting,
appraisal, and similar professional fees and charges) incurred by the Lender in
connection with (i) the enforcement of or preservation of rights under any of
the Financing Documents against any Subsidiary Guarantor or the administration
thereof after the occurrence and during the continuance of a Default or Event of
Default, and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to the Lender's relationship with any
Subsidiary Guarantor and (f) all reasonable fees, expenses and disbursements of
the Lender incurred in connection with UCC searches, UCC filings or mortgage
recordings. The covenants contained in this subsection shall survive payment or
satisfaction in full of all other Secured Obligations.
5. SPECIFIC COVENANTS REGARDING CERTAIN COLLATERAL.
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Each Subsidiary Guarantor hereby covenants and agrees as follows:
5.1 Accounts.
(a) Collections on Accounts and Proceeds. Each Subsidiary Guarantor shall
enforce, compromise and collect amounts owing on its Accounts; provided,
however, the right of any Subsidiary Guarantor hereunder to enforce,
compromise and collect amounts owing on such Accounts may at the option of
the Lender be terminated upon the occurrence and during the continuance of
any Event of Default. If any Accounts of any Subsidiary Guarantor are at
any time evidenced by promissory notes, trade acceptances or other
Instruments for the payment of money, such Subsidiary Guarantor will
promptly deliver the same to the Lender appropriately endorsed to the
Lender's order and, regardless of dishonor, protest, notice of protest and
all other notices with respect thereto.
After an Event of Default has occurred and is continuing and any
Subsidiary Guarantor has received notice thereof from the Lender, any
Proceeds collected by any Subsidiary Guarantor (whether consisting of
checks, notes, drafts, bills of exchange, money orders, commercial paper of
any kind whatsoever, or other documents, received in payment of any Account
or in payment for any Inventory or otherwise), shall be promptly turned
over by such Subsidiary Guarantor to the Lender, in precisely the form
received, except for its endorsement when required, and until so turned
over, shall be deemed to be held in trust by such Subsidiary Guarantor for
and as the Lender's property, and shall be held separately from such
Subsidiary Guarantor's other funds.
(b) Limitations on Discounts and Compromises of Accounts. Other than in the
ordinary course of business as generally conducted by any applicable
Subsidiary Guarantor over a period of time, such Subsidiary Guarantor will
not compromise, compound or settle the Accounts for less than the full
amount thereof, or release, wholly or partially, any Person liable for the
payment thereof, except in each case as permitted under the Credit
Agreement.
(c) Notice to Account Debtors. At any time after the occurrence and during the
continuance of an Event of Default, each Subsidiary Guarantor shall, at the
request of the Lender, notify its account debtors, and the Lender itself
may notify such account debtors directly, of the security interest of the
Lender in any Account and that payment thereof is to be made directly to
the Lender. At any time after the occurrence and during the continuance of
an Event of Default, the Lender may communicate with account debtors to
verify with them to its satisfaction the existence, amount and terms of any
Accounts.
(d) Information on Accounts. Each Subsidiary Guarantor shall furnish to the
Lender from time to time, and upon request, a list and description of all
Accounts created or acquired by such Subsidiary Guarantor, together with
copies of shipping or delivery receipts for all goods and services sold or
otherwise provided, and any other information
or documents which the Lender reasonably may request from to time related
to such Subsidiary Guarantor's Accounts.
5.2 Inventory.
(a) Pricing, Credit Terms and Accounts. So long as no Event of Default has
occurred and is continuing, each Subsidiary Guarantor may sell items of
Inventory: (a) for cash in amounts not less than such Subsidiary
Guarantor's published, usual or customary prices, less only usual and
customary discounts for volume sales or prompt payment; or (b) on credit
terms usual and customary in the business conducted by such Subsidiary
Guarantor, at prices which conform to the above terms, and under such
circumstances as give rise to Accounts subject to this Agreement.
(b) Notice to Landlords, Warehousemen and Agents. If any Inventory is in the
possession or control of any landlords, warehousemen or agents, each
Subsidiary Guarantor shall notify them of the Lender's security interest
therein, and upon the occurrence and during the continuance of any Event of
Default, and at the Lender's request, instruct them to hold the same for
the Lender's account and subject to the Lender's instructions. The Lender
shall enjoy all of the rights and remedies of a secured party in the
Inventory and shall be subrogated to all guaranties and security now or
which may in the future be held by any Subsidiary Guarantor. The Lender
shall not be liable in any manner for exercising or refusing or failing to
exercise any such rights.
5.3 Contracts with Governmental Authorities. Each Subsidiary Guarantor shall,
to the extent practicable, provide reasonable advance notice to the Lender (i)
prior to or, if such advance notice is not practicable, shall provide notice to
the Lender promptly after, entering into a Contract with a Governmental
Authority and (ii) prior to or, if such advance notice is not practicable, shall
provide notice to the Lender promptly after, the sale of goods to a Governmental
Authority resulting in the creation of an Account if such contract or Account,
in the aggregate together with all such contracts then in effect (including any
such contract entered into prior to the Closing Date) and/or Accounts then
outstanding (including any such Accounts arising prior to the Closing Date), but
without duplication, exceed Five and 00/100 Percent (5.00%) of net sales of such
Subsidiary Guarantor and its Subsidiaries for the most recently completed fiscal
year, and shall, at the request of the Lender, provide any notices and make any
filings required under the Federal Assignment of Claims Act in order to grant,
maintain and/or perfect the security interest of all such contracts and Accounts
granted pursuant to this Agreement.
5.4 Chattel Paper. Unless an Event of Default shall have occurred and be
continuing, each Subsidiary Guarantor shall be entitled to retain possession of
all Collateral consisting of Chattel Paper, and shall hold all such Chattel
Paper in trust for the Lender. If an Event of Default shall have occurred and
be continuing, upon the request of the Lender, such Chattel Paper shall be
immediately delivered to the Lender, to be held as Collateral pursuant to this
Agreement. Each Subsidiary Guarantor shall not permit any other Person (other
than any Subsidiary Guarantor) to possess any such Collateral at any time.
5.5 Equipment - Certificates of Title. Each Subsidiary Guarantor shall deliver
to the Lender, upon request, the originals of all certificates of title
pertaining to any Equipment for which such certificates are or should be issued
under applicable law, together with a duly completed and executed application to
add the Lender as a lienholder on each such certificate. Each Subsidiary
Guarantor covenants and agrees that it will promptly deliver to the Lender, upon
request, all certificates of title relating to any Equipment hereafter acquired,
together with duly completed and executed applications to add as the Lender as a
lienholder therewith (in form and content satisfactory for filing with the
appropriate office), and that such Subsidiary Guarantor shall not seek to obtain
any certificate of title for any Equipment currently lacking such a certificate,
and it shall not attempt to recertify or obtain a new certificate for any
Equipment currently evidenced by a certificate of title (whether in The
Commonwealth of Massachusetts or any other jurisdiction) without first notifying
the Lender, and only if the original of such certificate of title is or will be
delivered to the Lender upon issuance thereof and does or will properly name the
Lender as first lienholder thereon (subject only to any Permitted Liens), in
each case duly perfecting the Lender's security interest granted under this
Agreement.
5.6 Investment Property.
(a) If any Subsidiary Guarantor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights
in respect of the Capital Stock of any Issuer or any other Investment
Property, whether in addition to, in substitution of, as a conversion of,
or in exchange for, any shares of the Pledged Stock, or otherwise in
respect thereof, such Subsidiary Guarantor shall accept the same as the
agent of the Lender, hold the same in trust for the Lender and promptly
deliver (or cause to be delivered) the same to the Lender in the exact form
received, duly indorsed by such Subsidiary Guarantor to the Lender, if
required, together with an undated stock power covering such certificate
duly executed in blank by such Subsidiary Guarantor and with, if the Lender
so requests, signature guaranteed, to be held by the Lender, subject to the
terms hereof, as additional collateral security for the Secured
Obligations.
(b) Without the prior written consent of the Lender, each Subsidiary Guarantor
will not (i) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Investment Property or Proceeds
thereof (except pursuant to a transaction expressly permitted by the Credit
Agreement) or (ii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for the Lien
provided for by this Agreement and Permitted Liens.
(c) Unless an Event of Default shall have occurred and be continuing, each
Subsidiary Guarantor shall be permitted to receive all cash dividends paid
by the relevant Issuer to the extent permitted in the Credit Agreement in
respect of the Pledged Stock, and all payments made in respect of the
Pledged Notes, and to exercise all voting and corporate rights with respect
to the Investment Property; provided, however, that such Subsidiary
Guarantor agrees that it shall not vote in any way that would be
inconsistent
with or result in any violation of any provision of the Credit Agreement,
the Note, the Security Documents or any of the other Financing Documents.
(d) If an Event of Default shall occur and be continuing, (i) the Lender shall
have the right to receive any and all cash dividends, payments or other
Proceeds paid in respect of the Investment Property and make application
thereof to the Secured Obligations in such order as the Lender may
determine, and (ii) any or all of the Investment Property may be registered
in the name of the Lender or its nominee, and, subject to the terms of this
Agreement, the Lender or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such Investment Property
at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (B) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of
the Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
any Issuer, or upon the exercise by any Subsidiary Guarantor or the Lender
of any right, privilege or option pertaining to such Investment Property,
and in connection therewith, the right to deposit and deliver any and all
of the Investment Property with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Lender may determine), all without liability except to account for property
actually received by it, and except for its gross negligence or willful
misconduct, but the Lender shall have no duty to any Subsidiary Guarantor
to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(e) Each Subsidiary Guarantor hereby authorizes and instructs each Issuer of
any Investment Property pledged by such Subsidiary Guarantor hereunder to
comply with any instruction received by it from the Lender in writing that
(i) states that an Event of Default has occurred and is continuing and (ii)
is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from such Subsidiary Guarantor, and each such
Subsidiary Guarantor agrees that each Issuer shall be fully protected in so
complying, to the extent such instruction is in compliance with applicable
law.
(f) The rights of the Lender hereunder shall not be conditioned or contingent
upon the pursuit by the Lender of any right or remedy against any other
Person which may be or become liable in respect of all or any part of the
Secured Obligations or against any collateral security thereof, guarantee
therefor or right of offset with respect thereto. The Lender shall not be
liable for any failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so, nor shall the Lender be
under any obligation to sell or otherwise dispose of any Collateral upon
the request of any Subsidiary Guarantor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
The Lender agrees to release promptly to any Subsidiary Guarantor any
dividends, cash, securities, instruments and other property paid, payable
or otherwise distributed in respect of the Collateral which it may receive
under subsection 5.6(d) hereof if, prior to the occurrence of an
acceleration of any of the
Secured Obligations, all Defaults and Events of Default have been waived or
are no longer continuing.
5.7 Patents and Trademarks.
(a) Each Subsidiary Guarantor (either itself or through licensees) will, except
with respect to any Trademark that such Subsidiary Guarantor shall
reasonably determine is of immaterial economic value to it, (i) continue to
use each Trademark on each and every trademark class of goods applicable to
its current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any claim
of abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) use reasonable
efforts to employ such Trademark with the appropriate notice of
registration, (iv) not adopt or use any ▇▇▇▇ which is confusingly similar
or a colorable imitation of such Trademark unless within thirty (30) days
after such use or adoption, the Lender shall obtain a perfected security
interest in such ▇▇▇▇ pursuant to this Agreement and (v) not (and not
permit any licensee or sublicensee thereof to) do any act or knowingly omit
to do any act whereby any Trademark may become invalidated.
(b) Each Subsidiary Guarantor will not, except with respect to any Patent that
such Subsidiary Guarantor shall reasonably determine is of immaterial
economic value to it, do any act, or omit to do any act, whereby any Patent
may become abandoned or dedicated.
(c) Each Subsidiary Guarantor will notify the Lender promptly if it knows that
any material registered application relating to any Patent, or any
application or registration relating to any Trademark, may become abandoned
or dedicated, or of any adverse determination or material development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in the PTO or any court or
tribunal in any country) regarding such Subsidiary Guarantor's ownership of
any Patent or Trademark or its right to register the same or to keep and
maintain the same.
(d) Whenever any Subsidiary Guarantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for any Patent or
for the registration of any Trademark with the PTO or any similar office or
agency in any other country or any political subdivision thereof, such
Subsidiary Guarantor shall report such filing to the Lender within five (5)
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Lender, such Subsidiary Guarantor shall
execute and deliver any and all agreements, instruments, documents, and
papers as the Lender may request to evidence the Lender's security interest
in any Patent or Trademark and the goodwill and general intangibles of such
Subsidiary Guarantor relating thereto or represented thereby, and each
Subsidiary Guarantor hereby appoints and constitutes the Lender its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed.
Such power being coupled with an interest and is irrevocable until the
Secured Obligations are paid in
full and the Lender has no further obligation to extend any credit or lend
any sums to any Subsidiary Guarantor under the Financing Documents.
(e) Each Subsidiary Guarantor, except with respect to any Patent or Trademark
that such Subsidiary Guarantor shall reasonably determine is of immaterial
economic value to it and except with respect to any Trademark that is not
registrable, will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the PTO, or any similar office
or agency in any other country or any political subdivision thereof, to
maintain and pursue each application (and to obtain the relevant
registration or Patent) and to maintain each Patent and each registration
of Trademarks, including, without limitation, filing of applications for
renewal, affidavits of use and affidavits of incontestability when
appropriate and paying necessary and appropriate maintenance fees.
(f) In the event that any Patent or material registered Trademark included in
the Collateral is infringed, misappropriated or diluted by a third party in
a manner which could reasonably be expected to have a material adverse
effect on the business, assets or financial condition of the Subsidiary
Guarantors, each Subsidiary Guarantor shall promptly notify the Lender
after it learns thereof and shall, unless the Subsidiary Guarantors shall
reasonably determine that such Patent or Trademark is of immaterial
economic value to the Subsidiary Guarantors, take such actions as the
Subsidiary Guarantors shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark (including but not
limited to taking action to promptly ▇▇▇ for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate and to recover any
and all damages for such infringement, misappropriation or dilution).
5.8 Copyrights. Each Subsidiary Guarantor (a) will employ the Copyright for
each material published work with such notice of copyright as may be required by
law to secure copyright protection and (b) will not do any act or knowingly omit
to do any act whereby any material Copyright may become invalidated and (i) will
not do any act, or omit to do any act, whereby any material Copyright may become
injected into the public domain; (ii) shall notify the Lender promptly if it
knows, or has reason to know, that any material Copyright may become injected
into the public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any other country)
regarding such Subsidiary Guarantor's ownership of any such Copyright or its
validity; (iii) will take all necessary steps as it shall deem appropriate under
the circumstances in its reasonable discretion, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of each material Copyright owned by such Subsidiary Guarantor
(including, without limitation, filing of applications for renewal, where
necessary); and (iv) will promptly notify the Lender of any material
infringement of any material Copyright of such Subsidiary Guarantor of which it
becomes aware and will take such actions as it shall reasonably deem appropriate
under the circumstances to protect such Copyright, including, where appropriate,
the bringing of suit for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement.
Whenever any Subsidiary Guarantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for any Copyright or
for the registration of any Copyright with the Copyright Office or any similar
office or agency in any other country or any political subdivision thereof, such
Subsidiary Guarantor shall report such filing to the Lender within five (5)
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Lender, such Subsidiary Guarantor shall execute and
deliver any and all agreements, instruments, documents, and papers as the Lender
may request to evidence the Lender's security interest in any Copyright, and
each Subsidiary Guarantor hereby appoints and constitutes the Lender its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed. Such
power being coupled with an interest and is irrevocable until the Secured
Obligations are paid in full and the Lender has no further obligation to extend
any credit or lend any sums to any Subsidiary Guarantor under the Financing
Documents.
6. POWER OF ATTORNEY.
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6.1 Appointment and Powers. Each Subsidiary Guarantor hereby irrevocably
constitutes and appoints the Lender as such Subsidiary Guarantor's true and
lawful attorney, coupled with an interest, with full power of substitution (in
each case at the sole risk, cost and expense of the Subsidiary Guarantors but
for the benefit of the Lender) to do the following:
(a) at any time or times (whether or not an Event of Default has occurred), (i)
to supplement and amend from time to time Sections 5, 6, and 7 of the
Master Disclosure Schedule attached hereto to include any new or additional
registered Trademarks, Patents, registered Copyrights and Licenses of any
Subsidiary Guarantor, (ii) to file and record without any Subsidiary
Guarantor's signature, or to sign any Subsidiary Guarantor's name to and
file and record, financing statements and any other instruments (including
applications to name the Lender as lienholder on any motor vehicle or other
certificates of title), and (iii) to take such other actions as the Lender
may deem necessary in order to perfect or maintain the perfection or
priority of the Lender's security interest in the Collateral or any portion
thereof; and
(b) in addition to the actions described above, at any time or times after an
Event of Default has occurred and is continuing, (i) to protect the
Lender's security interest in the Collateral or any portion thereof; (ii)
to receive and open any Subsidiary Guarantor's mail, remove therefrom and
hold or apply any Collateral and dispose of such mail or turn over such
mail (other than such Collateral) to any Subsidiary Guarantor or any
trustee in bankruptcy, receiver, assignee for benefit of creditors or other
legal representatives to whom the Lender determines to be the appropriate
recipient thereof; (iii) to endorse the name of any Subsidiary Guarantor in
favor of the Lender upon any and all checks, drafts, notes, money orders,
acceptances and other items, Instruments and forms of payment, and to sign
and endorse the name of any Subsidiary Guarantor on, and receive as secured
party, any of the Collateral; (iv) to sign any Subsidiary Guarantor's name
to any invoices, schedules, freight or express receipts, bills of lading,
and other Documents or writings of a similar or different nature, relating
to the Collateral; (v) to sign the name of any Subsidiary Guarantor on any
schedules and assignments of Accounts, and on notices of assignment,
financing statements and other public records
relating to the Collateral, and on any notice to any Subsidiary Guarantor's
account debtors for verification of the Accounts; (vi) to prosecute,
defend, compromise or release any action relating to the Collateral; (vii)
to notify the post office authorities to change the address for delivery of
any Subsidiary Guarantor's mail to an address designated by the Lender, and
to sign change of address forms therefor; (viii) to sign any Subsidiary
Guarantor's name in proofs of claim in bankruptcies of account debtors,
notices of lien, claims of mechanics liens, or assignments or releases of
any Liens securing the Accounts; (ix) to take any such actions as may be
necessary to obtain payment of any letter of credit of which any Subsidiary
Guarantor is a beneficiary; (x) to repair, manufacture, assemble, complete,
package, deliver, alter or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any customer of any Subsidiary
Guarantor; (xi) to notify any Persons of the rights and interests of the
Lender, of the applicable Events of Default and of any matter relating to
Collateral; (xii) to take any and all other actions (including, without
limitation, the right to ▇▇▇ in the name of any Subsidiary Guarantor or the
Lender to collect upon any and all Collateral and to settle, adjust or
compromise any and all claims with respect to Collateral including
insurance claims) as the Lender shall deem necessary or expedient to
convert the Collateral into cash; and (xiii) otherwise to exercise any
rights or remedies of the Lender hereunder or under any of the Financing
Documents, or otherwise under agreement or applicable law, including the
UCC.
6.2 Ratification and Indemnification Under Power of Attorney. In connection
with all powers of attorney set forth in this Agreement, the Lender shall have
full power to exercise such powers as fully and effectually as any Subsidiary
Guarantor might or could do; each Subsidiary Guarantor agrees that the Lender
shall not be obligated to exercise any of the powers authorized herein, and
shall be free to exercise or refrain from exercising any of such powers at any
time or times in its absolute discretion, and, if the Lender elects to exercise
any of such powers, it shall not be accountable for more than it actually
receives as a result of such exercise of power, and shall not be responsible to
any Subsidiary Guarantor except for the Lender's gross negligence, actual bad
faith or willful misconduct; and all powers conferred upon the Lender by this
Agreement, being coupled with an interest, shall be irrevocable until such time
as all Secured Obligations have been paid (without being subject to or
susceptible of recovery by any Person) or performed and the Lender's agreement,
if any, to make advances has terminated.
6.3 Performance By Lender of Secured Obligations. If any Subsidiary Guarantor
fails to perform or comply with any of its agreements contained herein and the
Lender, as provided for by the terms of this Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with any agreement, the
expense of the Lender incurred in connection with such performance or
compliance, together with interest thereon at the Late Rate, shall be payable by
such Subsidiary Guarantor to the Lender on demand and shall constitute Secured
Obligations secured hereby.
7. EVENTS OF DEFAULT.
-----------------
Upon the occurrence and during the continuance of any one or more Events of
Default, any and all Secured Obligations shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.
8. REMEDIES.
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8.1 General Remedies. In addition to and without in any way limiting any other
rights and remedies available to the Lender under this Agreement prior to an
Event of Default, or any other rights and remedies available to the Lender
(whether prior to or after an Event of Default) under any of the other Financing
Documents or under applicable law or in equity, upon and at any time or times
after the occurrence and during the continuance of any Event of Default:
(a) the Lender may declare and cause all or any portion of the Secured
Obligations to be immediately due and payable;
(b) the Lender may decline to honor the credit of any Subsidiary Guarantor or
may refuse to make further advances to any Subsidiary Guarantor;
(c) the Lender may collect the Accounts with or without taking possession of
the Collateral;
(d) the Lender shall be entitled to immediate possession of the Collateral or
any portion or portions thereof and may enter upon any Subsidiary
Guarantor's premises to take possession thereof; may require any Subsidiary
Guarantor to assemble the Collateral and make it available to the Lender at
a place to be designated by the Lender which is reasonably convenient to
both parties; or may require any Subsidiary Guarantor to deliver all
Records relating to the Collateral to the Lender;
(e) the Lender may enter upon, occupy, and use any premises owned or occupied
by any Subsidiary Guarantor (or by any agent of such Subsidiary Guarantor
at which Collateral is located), and may exclude any Subsidiary Guarantor
from such premises or portion thereof as may have been so entered upon,
occupied, or used by the Lender; the Lender shall not be required to remove
any of the Collateral from any such premises upon the Lender's taking
possession thereof, and may render any Collateral unusable to any
Subsidiary Guarantor; and in no event shall the Lender be liable to any
Subsidiary Guarantor for use or occupancy by the Lender of any premises
pursuant to this Agreement except for claims arising out of the Lender's
gross negligence, actual bad faith or willful misconduct, nor for any
charge (such as wages for any Subsidiary Guarantor's employees and
utilities) incurred in connection with the Lender's exercise of the
Lender's rights and remedies;
(f) the Lender may take such steps as it deems necessary to protect the
Lender's interest in, and to preserve the Collateral, and each Subsidiary
Guarantor agrees to cooperate fully with all of the Lender's efforts and to
take such actions as the Lender shall direct, all to preserve the
Collateral;
(g) the Lender shall have the rights and remedies of a secured party under the
UCC and other applicable laws, the choice and manner of exercise of any
right or remedy being in the Lender's sole discretion; and, pursuant
thereto, the Lender shall have the right to foreclose the security interest
granted in any Collateral by any available judicial procedure and to take
possession of and sell any or all of the Collateral with or without
judicial process; the Lender may lease or otherwise dispose of the
Collateral, or may sell
the Collateral, or any part thereof, at public or private sales, at any
time or place (including any Subsidiary Guarantor's premises), in one or
more sales, at such price or prices, and upon such terms, either for cash,
credit or future delivery, as the Lender may elect, and, except as to that
part of the Collateral which is perishable or threatens to decline speedily
in value, or is of the type customarily sold on a recognized market, the
Lender shall give the Subsidiary Guarantors reasonable notification of such
sale or sales, it being agreed that, in all events, reasonable notification
means written notice mailed to the Subsidiary Guarantors at least ten (10)
days prior to each such public sale or at least ten (10) days prior to the
date after which any such private sales or other intended dispositions may
be made; at any public sale the Lender may (but shall have no obligation
to) bid for and become the purchaser of any Collateral; each Subsidiary
Guarantor hereby waives any and all rights it may have to judicial hearing
in advance of the enforcement of any of the Lender's rights hereunder,
including the Lender's right to take immediate possession of the
Collateral; and the Lender may do any of the foregoing or otherwise deal
with the Collateral in its then condition, or following such preparation as
the Lender deems advisable, with or without taking possession thereof;
(h) the Lender shall have the right to apply to the Secured Obligations any
deposits or other sums at any time credited by or due from the Lender to
any Subsidiary Guarantor; and
(i) the Lender may treat any or all of the Financing Documents as being in
default and may exercise any rights and remedies thereunder as it shall
deem appropriate.
8.2 Pledged Stock. Each Subsidiary Guarantor recognizes that the Lender may be
unable to effect a public sale of the Pledged Stock by reason of certain
prohibitions contained in the federal and state securities laws, and other
applicable laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers. Each Subsidiary Guarantor agrees
that any such private sales may be at prices and other terms less favorable to
the seller than if sold at public sales and that such private sales shall not by
reason thereof be deemed to have been made in a commercially unreasonable
manner. The Lender shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer of such
securities to register such securities for public sale under the Securities Act,
or such other applicable laws, even if the Issuer would agree to do so. Subject
to the foregoing, the Lender agrees that any sale of the Pledged Stock shall be
made in a commercially reasonable manner, and each Subsidiary Guarantor agrees
to use such Subsidiary Guarantor's best efforts to cause the Issuer or Issuers
of the Pledged Stock contemplated to be sold, to execute and deliver, and cause
the directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and to do or cause to be done all such other acts and
things as may be necessary or, in the reasonable opinion of the Lender,
advisable to exempt such Pledged Stock from registration under the provisions of
the Securities Act, and to make all amendments to such instruments and documents
which, in the opinion of the Lender, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Each
Subsidiary Guarantor further agrees to use such Subsidiary Guarantor's best
efforts to cause such Issuer or Issuers to comply with the provisions of the
securities or "Blue Sky" laws of any jurisdiction which the Lender shall
designate.
Each Subsidiary Guarantor further agrees to do or cause to be done all such
other acts and things as may be reasonably necessary to make any sales of any
portion or all of the Pledged Stock pursuant to this Section 8 valid and binding
and in compliance with all Requirements of Law. Each Subsidiary Guarantor also
agrees that a breach of any of the covenants contained in this subsection 8.2
will cause irreparable injury to the Lender, that the Lender has no adequate
remedy at law in respect of such breach and, as a consequence, agrees that each
and every covenant contained in this subsection 8.2 shall be specifically
enforceable against any Subsidiary Guarantor, and each Subsidiary Guarantor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants.
8.3 License. With respect to the Lender's exercise of rights and remedies
hereunder including in connection with any completion of the sale or other
disposition of any of the Collateral, each Subsidiary Guarantor hereby grants to
the Lender a nonexclusive irrevocable license to use, apply, and affix any
trademark, trade name, logo, or the like in which any Subsidiary Guarantor now
or hereafter has rights.
8.4 No Duty of Preservation; Joint Property. The Lender may at all times
proceed directly against any Subsidiary Guarantor, or against any other Person
responsible for any Secured Obligations, to enforce the payment of the Secured
Obligations, and the Lender shall not be required to take any action of any kind
to preserve, collect upon or protect the rights of the Lender or of any other
Person in any Collateral, except as specifically required by the UCC. Without
limiting the generality of the foregoing, the Lender shall not be required to
take any action to preserve rights against prior parties in the cases of
Instruments or Chattel Paper, and the Lender may co-mingle any items of
Collateral with other property and shall not be required to keep any Collateral
identifiable. In the event any Collateral, including any Deposit Account, is
held in joint or common names, the Lender may deal with such Collateral or any
Deposit Account, for all purposes hereunder and under any or all of the
Financing Documents, as if belonging to any one, and no more than one, of such
joint or common owners.
8.5 Remedies Not Exclusive. The enumeration of rights and remedies in the
Financing Documents is not intended to be exclusive, and they shall be in
addition to and not by way of limitation of such others as the Lender may have
under the UCC, other applicable law, and any and all other Documents,
Instruments, agreements or other writings between or among any Subsidiary
Guarantor, the Lender or other Persons. The Lender shall, in its sole
discretion, determine its choice of rights and remedies and the order in which
they shall be exercised, and which Collateral, if any, is to be proceeded
against and in which order. The exercise of any right or remedy against any
Subsidiary Guarantor, any other Person or any or all Collateral shall not
preclude the exercise of others or the exercise thereof against any Subsidiary
Guarantor, any other Persons or any other Collateral, all of which shall be
cumulative. No act, failure or delay by the Lender shall constitute a waiver of
any of its rights and remedies. No single or partial waiver by the Lender of
any provision of the Financing Documents, or of any breach or default
thereunder, or of any right or remedy which the Lender may have shall operate as
a waiver of any other provision, breach, default, right or remedy or of the same
one on a future occasion.
8.6 Deficiency. Each Subsidiary Guarantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured
Obligations and the reasonable fees and disbursements of any attorneys employed
by the Lender to collect such deficiency.
8.7 Requirement of Law. Notwithstanding any provision contained in this
Agreement to the contrary, the exercise of remedies or any power of attorney
granted hereunder with respect to Collateral is subject to any applicable
Requirement of Law of any Governmental Authority. No action will be taken by
the Lender hereunder if such action will result in a violation of any applicable
Requirement of Law of any Government Authority by any Subsidiary Guarantor.
9. MISCELLANEOUS.
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9.1 Survival of Covenants; Binding Effect. All agreements, representations,
covenants and warranties made by each Subsidiary Guarantor in this Agreement,
the other Financing Documents, or in any certificate or other document delivered
to the Lender in connection herewith shall survive the termination of this
Agreement and survive the execution and delivery of this Agreement, and shall
remain in full force and effect until all Secured Obligations to the Lender have
been paid in full and satisfied, and the security interest, Lien and rights
granted to the Lender in any Collateral and its rights and remedies hereunder
and under the other Financing Documents shall continue in full force and effect,
notwithstanding the fact that Loans may, from time to time, be in a zero or
credit position, until all Secured Obligations have been satisfied. All the
terms and provisions of this Agreement and the other Financing Documents shall
be binding upon, inure to the benefit of and be enforceable by and against the
parties hereto and their respective successors and assigns.
9.2 Prior Discussions; Amendments in Writing; Counterparts; Filing As Financing
Statement. This Agreement and all other Financing Documents incorporate all
discussions and negotiations between any Subsidiary Guarantor and the Lender,
either express or implied, concerning the matters included herein and therein,
any custom, usage or other writing to the contrary notwithstanding. No such
discussions or negotiations shall limit, modify, or otherwise affect the
provisions of the Financing Documents. This Agreement may be amended or
modified only in writing signed by the parties hereto, and in the case of the
Lender signed by a duly authorized officer thereof. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but such counterparts together shall constitute one and the same
instrument. Any proof of this Agreement shall require production of only one
such counterpart. A carbon, photographic or other reproduction of this
Agreement or of any financing statement executed to perfect the security
interest created herein may be filed as a financing statement under the UCC (or
under the Uniform Commercial Code in effect in any jurisdiction outside
Massachusetts).
9.3 General Indemnification. Each Subsidiary Guarantor shall, and does
hereby, indemnify and save the Lender harmless from (and agrees to defend the
Lender from) any and all liabilities, damages, costs, losses and expenses
(including court costs and attorney's reasonable fees and expenses) that the
Lender may sustain or incur by reason of, relating to or arising out of the
preparation of this Agreement, the defending or protecting of any Collateral or
the priority of the Lender's interest therein, or in collecting or enforcing the
Secured Obligations, or in enforcing any of the Lender's rights or remedies, or
in the prosecution or defense of any action or proceeding concerning any matter
growing out of or connected with this Agreement, any of
the other Financing Documents, the Secured Obligations, the Collateral, or on
account of the Lender's relationship with any Subsidiary Guarantor, or any other
Person responsible for any of the Secured Obligations (each of which may be
defended, compromised, settled or pursued by the Lender with counsel of the
Lender's selection, at the expense of the Subsidiary Guarantors) except for such
claims which have been determined by a court of competent jurisdiction to have
arisen out of the Lender's actual bad faith, willful misconduct or gross
negligence. The within indemnification shall survive termination of this
Agreement. Each Subsidiary Guarantor's obligations under this subsection
constitute part of the Secured Obligations secured by the security interest
created by this Agreement.
9.4 Destruction of Documents; Receipt of Copy. This Agreement and all other
Financing Documents may be reproduced by the Lender by any photographic,
photostatic, microfilm, or similar process, and the Lender may destroy the
original from which any document was so reproduced. Any such reproduction shall
be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of business).
Each Subsidiary Guarantor acknowledges receipt of a true, correct and complete
copy or counterpart of this Agreement.
9.5 Notices. All notices required or permitted hereunder shall be in writing
and delivered in accordance with the provisions of the Credit Agreement.
9.6 Application of Proceeds. Subject to the provisions of the Credit
Agreement, upon the occurrence and during the continuance of any Event of
Default, the Lender shall apply (or change any application previously made of)
the proceeds of any collection, sale or other disposition of the Collateral, or
of any other payments received hereunder, toward the Secured Obligations in such
order and manner as the Lender, in its sole discretion, shall determine, any
statute (the application of which may be waived or modified by agreement),
customs or practices to the contrary notwithstanding. Each Subsidiary Guarantor
shall remain liable to the Lender for any deficiency remaining following such
application.
9.7 Severability. If any provision of this Agreement or any of the other
Financing Documents, or any portion of such provision, or the application
thereof to any Person or circumstance, shall to any extent be prohibited or held
invalid or unenforceable, the remainder of this Agreement and the other
Financing Documents or the remainder of such provision and the application
thereof to other Persons or circumstances (other than those as to which it is
prohibited or held invalid or unenforceable) shall not be affected thereby, and
each term and provision hereof and of the other Financing Documents shall be
valid and enforced to the fullest extent permitted by law. To the extent
permitted by law, the parties hereto waive any provision of law which renders
any such provision or the application thereof to any Person or circumstance
prohibited, invalid or unenforceable in any respect.
9.8 Headings. Headings appearing in this Agreement are intended for
convenience only and do not constitute, and shall not be interpreted to be, a
part of this Agreement.
9.9 Joint and Several Liability. All of the obligations and liabilities of the
Subsidiary Guarantors under this Agreement are joint and several.
9.10 Additional Subsidiary Guarantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to subsection 5.11 of the
Credit Agreement shall become a Subsidiary Guarantor for all purposes of this
Agreement by execution and delivery of a Joinder and Assumption Agreement,
substantially in a form and substance reasonably acceptable to the Lender.
9.11 WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR AND THE LENDER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER FINANCING
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.
9.12 Governing Law; Jurisdiction. This Agreement and the other Financing
Documents are executed and delivered under seal and shall be construed in
accordance with and governed by the laws of The Commonwealth of Massachusetts,
without giving effect to the conflict of law provisions thereof. Each
Subsidiary Guarantor submits itself to the non-exclusive jurisdiction of the
courts of The Commonwealth of Massachusetts for all purposes with respect to the
Financing Documents and such Subsidiary Guarantor's relationship with the
Lender.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered under their seals as of the date first above written.
WITNESS: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ OF TEXAS, INC.
_________________________________ By:_______________________________
Name: Name:
Title:
Its duly authorized officer
WITNESS: CITIZENS BANK OF MASSACHUSETTS
_________________________________ By:____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Senior Vice President
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named ____________________ as
_______________ of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ of Texas, Inc., and acknowledged the
foregoing instrument to be his/her free act and deed and the free act and deed
of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ of Texas, Inc., before me.
------------------------------
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS
Suffolk County, ss. April __, 2000
Then personally appeared the above-named ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Senior Vice
President of Citizens Bank of Massachusetts, and acknowledged the foregoing
instrument to be his free act and deed and the free act and deed of Citizens
Bank of Massachusetts, before me.
----------------------------
Notary Public
My commission expires:
[AFFIX NOTARIAL SEAL]
