Exhibit 10.51
REVOLVING CREDIT AGREEMENT
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Dated as of April 22, 1998
between
LIFELINE SYSTEMS, INC.
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
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Section 1. Definitions......................................................................... 1
1.1 Certain Definitions.......................................................... 1
1.2 Accounting Terms............................................................. 10
1.3 Rules of Interpretation...................................................... 10
Section 2. Loans............................................................................... 11
2.1 Revolving Credit Loans....................................................... 11
2.3 Conversion of Loans to a Different Type...................................... 11
2.4 Notes........................................................................ 12
2.5 Maturity..................................................................... 12
2.6 Termination or Reduction of Commitments...................................... 12
Section 3. Notice and Manner of Borrowing or Conversions of Loans.............................. 13
Section 4. Interest Rates; Fees; Payments...................................................... 14
4.1 Interest Rates............................................................... 14
4.2 Facility Fee................................................................. 15
4.3 Minimum and Maximum Amounts.................................................. 16
4.4 Computations................................................................. 16
4.5 Manner and Place of Payment.................................................. 16
4.6 Indemnity.................................................................... 17
4.7 Changed Circumstances; Illegality............................................ 17
4.8 Increased Costs.............................................................. 18
4.9 Capital Requirements......................................................... 19
4.10 Payments Due on Saturdays, Sundays and Holidays.............................. 19
4.11 Prepayments.................................................................. 20
Section 5. Conditions Precedent................................................................ 20
5.1 Conditions to Initial Loans.................................................. 20
5.2 Conditions Precedent to all Loans............................................ 22
Section 6. Representations and Warranties...................................................... 23
6.1 Corporate Status............................................................. 23
6.2 No Violation................................................................. 23
6.3 Corporate Power and Authority................................................ 24
6.4 Enforceability............................................................... 24
6.5 Consents or Approvals........................................................ 24
6.6 Financial Statements......................................................... 24
6.7 No Material Change........................................................... 25
6.8 Litigation................................................................... 25
6.9 Compliance with Other Instruments; Compliance with Law....................... 25
6.10 Subsidiaries................................................................. 25
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6.11 Investment Company Status; Limits on Ability to Incur
Indebtedness................................................................................. 25
6.12 Title to Property............................................................................ 26
6.13 ERISA........................................................................................ 26
6.14 Taxes........................................................................................ 26
6.15 Environmental Matters........................................................................ 27
6.16 Intellectual Property........................................................................ 27
6.17 Disclosure................................................................................... 27
6.18 Defaults..................................................................................... 28
Section 7. Affirmative Covenants.................................................................................. 28
7.1 Use of Proceeds.............................................................................. 28
7.2 Conduct of Business; Maintenance of Existence................................................ 28
7.3 Compliance with Laws......................................................................... 28
7.4 Insurance.................................................................................... 28
7.5 Financial Statements, Etc.................................................................... 29
7.6 Notice of Default............................................................................ 30
7.7 Environmental Matters........................................................................ 30
7.8 Taxes and Other Liens........................................................................ 31
7.9 ERISA Information............................................................................ 31
7.10 Inspection................................................................................... 31
7.11 Further Assurances........................................................................... 31
Section 8. Negative Convenants.................................................................................... 32
8.1 Transactions with Affiliates................................................................. 32
8.2 Consolidation, Merger or Acquisition......................................................... 32
8.3 Disposition of Assets........................................................................ 33
8.4 Indebtedness................................................................................. 33
8.5 Guarantees................................................................................... 34
8.6 Liens........................................................................................ 34
8.7 Restricted Payments.......................................................................... 35
8.8 Investments.................................................................................. 35
8.9 Sale and Leaseback........................................................................... 36
8.10 ERISA........................................................................................ 36
8.11 Fiscal Year.................................................................................. 37
Section 9. Financial Covenants.................................................................................... 37
9.1 Net Income................................................................................... 37
9.2 Current Ratio................................................................................ 37
9.3 Leverage Ratio............................................................................... 37
Section 10. Events of Default...................................................................................... 37
10.1 Events of Default............................................................................ 37
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10.2 Remedies Upon an Event of Default.............................. 39
Section 11. General.................................................................. 40
11.1 Amendments, Etc................................................ 40
11.2 Notices, Etc................................................... 40
11.3 No Waiver; Remedies............................................ 40
11.4 Right of Set-off............................................... 40
11.5 Expenses; Indemnification...................................... 41
11.6 Successors and Assigns......................................... 42
11.7 Severability................................................... 42
11.8 Confidentiality................................................ 42
11.9 Governing Law.................................................. 43
11.10 Waiver of Jury Trial........................................... 43
11.11 Venue, Consent to Service of Process........................... 43
11.12 Headings....................................................... 44
11.13 Counterparts................................................... 44
EXHIBITS
A-1 - Revolving Credit Note
A-2 - Convertible Revolving Credit Note
B - Notice of Borrowing or Conversion
C - Compliance Certificate
SCHEDULES
A Disclosure Schedule
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REVOLVING CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 22, 1998 by and among LIFELINE
SYSTEMS, INC., a Massachusetts corporation (the "Borrower"), having its
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principal place of business and chief executive office at 000 Xxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company with its head office at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (the "Bank").
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WHEREAS, the Borrower has requested the Bank to extend credit to the
Borrower in the form of loans and the Bank is willing to extend such credit upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
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1.1 Certain Definitions. The following terms are used herein
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with the meanings assigned to them below:
"Accountants" shall mean Coopers and Xxxxxxx L.L.P, or another accounting
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firm of national reputation or other certified public accountants selected by
the Borrower and approved by the Bank.
"Adjusted Current Assets" shall mean, as of any applicable date, Current
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Assets minus (i) the aggregate amount of any and all Prepaids and (ii) the
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aggregate amount of any Deferred Income Taxes.
"Affected Loans" shall have the meaning set forth in Section 4.8.
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"Affiliate" shall mean, with respect to any specified Person (the
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"specified person"), any Person directly or indirectly controlling, controlled
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by or under direct or indirect common control with, the specified person and,
without limiting the generality of the foregoing, includes (i) any director or
officer of the specified person or any Affiliate of the specified person, (ii)
any such director's or officer's parent, spouse, child or child's spouse (a
"relative"), (iii) any group acting in concert, of one or more such directors,
officers, relatives or any combination thereof (a "group"), (iv) any Person
controlled by any such director, officer, relative or group in which any such
director, officer, relative or group beneficially owns or holds 5% or more of
any class of voting securities or a 5% or greater equity or profits interest and
(v) any Person or group which beneficially owns or holds 5% or more of any class
of voting securities or a 5% or greater equity or profits interest in the
specified person. For the purposes of this definition, the term "control" when
used with respect to any specified person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such specified person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Revolving Credit Agreement.
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"Applicable Margin" shall mean as of any date, with respect to Loans which
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are Fixed Rate Loans or LIBOR Rate Loans, the applicable percentage set forth
below opposite the applicable Leverage Ratio in effect at such date, provided
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however that during the period from the Closing Date through and including the
date on which quarterly financial statements are delivered for the fiscal
quarter ending March 31, 1998, the Applicable Margin for Fixed Rate Loans and
LIBOR Rate Loans shall be 0.75%.
Fixed Rate or LIBOR
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Leverage Ratio Rate Loans
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greater than or equal to 1.00:1.00 1.25%
less than 1.00:1.00 and greater than or
equal to 0.75:1.00 1.00%
less than 0.75:1.00 0.75%
"Banking Day" shall mean any day, excluding Saturday and Sunday and
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excluding any other day which in The Commonwealth of Massachusetts is a legal
holiday or a day on which banking institutions are authorized by law to close.
"Borrower" shall mean Lifeline Systems, Inc., a Massachusetts corporation.
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"Borrower Property" shall mean any real property owned, occupied, or
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operated by the Borrower or any of its Subsidiaries.
"Closing Date" shall mean the first date on which the conditions set forth
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in Section 5.1 have been satisfied or waived and any Loans are to be made
hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
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successor statute.
"Commitments" shall mean the Revolving Credit Commitment and the
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Convertible Revolving Credit Commitment.
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"Contractual Obligation" shall mean, as to any Person, any provision of any
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security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Controlled Group" shall mean all members of a controlled group of the
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corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Convertible Revolving Credit Availability Expiration Date" shall have the
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meaning set forth in Section 2.2.
"Convertible Revolving Credit Commitment" shall have the meaning set forth
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in Section 2.2.
"Convertible Revolving Credit Loan" shall have the meaning set forth in
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Section 2.2.
"Convertible Revolving Credit Maturity Date" shall mean June 30, 2004.
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"Convertible Revolving Credit Note" shall have the meaning set forth in
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Section 2.4.
"Current Assets" shall mean, as of any application date, all amounts that
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should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of the Borrower and any Subsidiaries at such date.
"Current Liabilities" shall mean, as of any applicable date, all amounts
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that should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of the Borrower and any Subsidiaries, at such date.
"Default" shall mean any condition or event that constitutes an Event of
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Default or that with the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Deferred Income Taxes" shall mean liabilities of the Borrower and its
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Subsidiaries in respect of taxes that have been deferred in accordance with
GAAP.
"Environmental Laws" shall mean all federal, state, local and foreign laws,
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and all regulations, notices or demand letters issued, promulgated or entered
thereunder, relating to pollution or protection of the environment and to
occupational health and safety, including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or Hazardous Substances into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
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disposal, transport or handling of pollutants, contaminants, chemicals or
Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended, or any successor statues.
"Event of Default" shall have the meaning set forth in Section 10.1.
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"Fixed Rate" shall mean with respect to any Fixed Rate Loan for any
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Interest Period, the interest rate per annum equal to the rate per annum quoted
by the Bank from time to time to its commercial customers generally as its "cost
of funds" rate.
"Fixed Rate Loan" shall mean at any time any Loan bearing interest at a
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rate determined with reference to the Fixed Rate.
"GAAP" shall mean accounting principles generally accepted in the United
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States applied on a consistent basis.
"Governmental Approval" shall mean any authorization, consent, order,
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approval, license, lease, ruling, permit, tariff, rate, certification,
validation, exemption, filing or registration by or with, or notice to, any
Governmental Authority.
"Governmental Authority" shall mean any federal, state, municipal or other
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governmental department, commission, board, bureau, agency, court, tribunal or
other instrumentality, domestic or foreign, and any arbitrator.
"Guarantee" by any Person shall mean any obligation, contingent or
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otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise of
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation (whether arising by virtue
of partnership arrangements, by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term Guarantee shall
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not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" shall mean all hazardous and toxic substances,
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wastes or materials, hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), flammable explosives, urea formaldehyde insulation,
radioactive materials, biological substances, PCBs, pesticides and any other
kind and/or type of
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pollutants, or contaminates and/or any other similar substances or materials
which, because of toxic, flammable, explosive, corrosive, reactive, radioactive
or other properties that may be hazardous to human health or the environment,
are included under or regulated by any Environmental Laws.
"Indebtedness" of any Person at any date shall mean, (a) all indebtedness
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of such Person for borrowed money or for the deferred purchase price of property
or services (excluding current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices, but including
any class of capital stock of such Person with fixed payment obligations or with
redemption at the option of the holder) or which is evidenced by a note, bond,
debenture or similar instrument, (b) all obligations of such Person under leases
that should be treated as capitalized leases in accordance with GAAP, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and all reimbursement obligations (contingent or
otherwise) of such Person in respect of any letters of credit issued for the
account of such Person to the extent not secured by cash and without duplication
of any underlying Indebtedness, (d) all liabilities 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, and (e) without duplication,
all Guaranties.
"Initial Financial Statements" shall have the meaning set forth in Section
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6.6.
"Initial Financial Statements Date" shall mean December 31, 1997.
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"Intellectual Property" shall have the meaning specified in Section 6.16.
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"Interest Period" shall mean (i) with respect to each LIBOR Rate Loan, the
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period commencing on the date of the making or continuation of or conversion to
such LIBOR Rate Loan and ending ninety (90), one hundred twenty (120) or three
hundred sixty (360) days thereafter, as the Borrower may elect in the applicable
Notice of Borrowing or Conversion; and (ii) with respect to each Fixed Rate
Loan, the period commencing on the date of the making or continuation of or
conversion to such Fixed Rate Loan and ending one (1), two (2), three (3), four
(4) or five (5) years thereafter, as the Borrower may elect in the applicable
Notice of Borrowing or Conversion; provided that:
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(i) any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at
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the end of such Interest Period) shall, subject to clause (iii) below, end
on the last Business Day of a calendar month;
(iii) any Interest Period that would otherwise end after the
Convertible Revolving Credit Maturity Date or the Revolving Credit Maturity
Date, as the case may be, shall end on the applicable maturity date; and
(iv) notwithstanding clause (iii) above, no Interest Period shall
have a duration of less than one month, and if any Interest Period
applicable to a Loan would be for a shorter period, such Interest Period
shall not be available hereunder.
"Intangibles" shall mean all "general intangibles" (as defined in the
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Uniform Commercial Code) now owned or hereafter acquired by the Debtor,
including, without limitation, all (a) obligations or indebtedness owing to
(other than Accounts) from whatever source arising, (b) patent licenses,
patents, trademark licenses, trademark, rights in intellectual property,
goodwill, trade names, service marks, trade secrets, copyrights, permits and
licenses, (c) inventions, processes, production methods, proprietary
information, know-how and trade secrets used or useful in the business of the
Debtor, (d) licenses or user or other agreements granted to the Debtor with
respect to any of the items described in clause (b) or (c) above, (e)
information, customer lists, identification of suppliers, data, plans,
blueprints, specifications, designs, drawings, recorded knowledge, surveys, test
reports, manuals, materials standards, catalogs, computer and automatic
machinery software and programs and the like pertaining to the business of the
Debtor, (f) sales data, and other information relating to sales or service of
products now or hereafter manufactured, (g) accounting information and all media
in which or on which any of the information or knowledge or data or records may
be recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data, (h) causes of action,
claims and warranties now or hereafter owned or acquired by the Debtor in
respect of any of the items listed above and (i) tax refunds to which the Debtor
is entitled.
"Investments" shall mean, with respect to any Person (the "Investor"), any
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investment by the Investor in any other Person, whether by means of share
purchase, capital contribution, purchase or other acquisition of a partnership
or joint venture interest, loan, deposit or otherwise, and the making of any
commitment or acquisition of any option to make an Investment.
"Leverage Ratio" shall mean as of the end of any fiscal quarter of the
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Borrower the ratio of Total Liabilities to Tangible Net Worth as of the end of
such fiscal quarter.
"LIBOR Rate Loan" shall mean any Loan bearing interest at a rate determined
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with reference to the LIBOR Rate.
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"LIBOR Rate" shall mean, with respect to any LIBOR Loan for any Interest
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Period, the rate of interest determined by the Lender to be the prevailing rate
per annum at which deposits in U.S. Dollars are offered to the Lender by
first-class banks in the interbank LIBOR market in which it regularly
participates on or about 10:00 a.m. (Boston time) two Banking Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the LIBOR Loan to which such Interest Period is to apply for
a period of time approximately equal to such Interest Period.
"LIBOR Reserve Percentage" shall mean for any Interest Period, the
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aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, established by the
Board of Governors of the Federal Reserve System and any other banking
authority, domestic or foreign, to which the Bank is subject with respect to
"Eurocurrency Liabilities" (as defined in regulations issued from time to time
by such Board of Governors). The LIBOR Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any such reserve
percentage.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
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arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any lease
that should be capitalized in accordance with GAAP, and the filing of a
financial statement under the UCC or comparable law of any jurisdiction),
together with any renewal or extension thereof.
"Loans" shall mean the Revolving Credit Loans and the Convertible Revolving
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Credit Loans.
"Loan Documents" shall mean, collectively, this Agreement, the Notes and
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all other agreements and instruments that are from time to time executed in
connection with this Agreement, as each of such agreements and instruments may
be amended, modified or supplemented from time to time.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
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business, operations, properties or condition (financial or otherwise) of the
Borrower or any of its Subsidiaries, (b) the ability of the Borrower to perform
its obligations under this Agreement, the Notes or any of the other Loan
Documents or (c) the validity or enforceability of this Agreement, the Notes or
any of the other Loan Documents.
"Maximum Rate" shall have the meaning set forth in Section 4.1(d).
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"Multiemployer Plan" shall mean at any time an employee pension benefit
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plan within the meaning of Section 4001(a)(3) of ERISA to which the Borrower or
any member of the Controlled Group is then making or accruing an obligation to
make contributions or has within
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the preceding five plan years made contributions, including for these purposes
any Person which ceased to be a member of the Controlled Group during such five
year period.
"Net Income" or "Net Loss" for any period in respect of which the amount
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thereof shall be determined, shall mean the aggregate of the consolidated net
income (or net loss) before taxes for such period of the Borrower, determined in
accordance with GAAP.
"Notes" shall mean the Revolving Credit Note and the Convertible Revolving
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Credit Note.
"Notice of Borrowing or Conversion" shall mean the notice, substantially in
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the form of Exhibit B hereto, to be given by the Borrower to the Bank to request
a Revolving Credit Loan or a Convertible Revolving Credit Loan or to convert an
outstanding Loan of one Type into a Loan of another Type, in accordance with
Section 3.
"Obligations" shall mean all obligations of the Borrower to the Bank of
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every kind and nature under or in connection with this Revolving Credit
Agreement, the Notes or the other Loan Documents whether such obligations are
now existing or hereafter incurred or created, joint or several, direct or
indirect, absolute or contingent, due or to become due, matured or unmatured,
liquidated or unliquidated, arising by contract, operation of law or otherwise,
including, without limitation, (a) all principal of an interest (including,
without limitation, any interest which accrued after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Borrower) on any advance or Loan to the Borrower under, or
the Notes issued by the Borrower pursuant to, this Agreement; (b) all other
amounts (including, without limitation, any fees or expenses) payable by the
Borrower under the Loan Documents; and (c) any renewals, refinancings or
extensions of any of the foregoing.
"Office of the Bank" shall mean the banking office of the Bank located at
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000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000 or such other location of which the Bank
shall notify the Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
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succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall have the meaning set forth in Section 8.6.
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"Person" shall mean and include any individual, firm, corporation, trust or
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other unincorporated organization or association or other enterprise or any
government or political subdivision, agency, department or instrumentality
thereof.
"Plan" means any employee pension benefit plan which is covered by Title IV
----
of ERISA or subject to the minimum funding standards under Section 412 of the
Code and is either (a) maintained by the Borrower or any member of the
Controlled Group for employees
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of the Borrower or any member of the Controlled Group or (b) maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which the Borrower or any member of
the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions.
"Post-Default Rate" shall mean with respect to any Loan, the rate of
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interest per annum equal to 3% above the interest rate otherwise applicable to
such Loan at the applicable time.
"Prepaids" shall mean prepaid expenses of the Borrower and its Subsidiaries
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as determined in accordance with GAAP.
"Prime Rate" shall mean the per annum rate of interest from time to time
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announced and made effective by the Bank as its Prime Rate (which rate may or
may not be the lowest rate available from the Bank at any given time).
"Prime Rate Loan" shall mean at any time the principal amount of the Loans
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which bears interest at a rate based on the Prime Rate.
"Prohibited Transaction" means any "prohibited transaction" as defined in
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ERISA or the Code.
"Purchase Money Indebtedness" means Indebtedness incurred to finance the
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acquisition of assets or the cost of improvements on real property or
leaseholds, in each case in an amount not in excess of the purchase or
acquisition cost of said assets or the cost of said improvements on the date of
the acquisition of said assets or contract for said improvements.
"Responsible Officer" shall mean the Chief Executive Officer, the President
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or the Chief Financial Officer of the Company.
"Restricted Payment" shall mean (a) any dividend or other distribution,
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whether in cash or property in respect of any shares of capital stock of the
Borrower or (b) any purchase, redemption, retirement or acquisition for value of
(i) any shares of the capital stock of the Borrower or any of its Subsidiaries
or (ii) any option, warrant, convertible security or other right to acquire
shares of the capital stock of the Borrower.
"Revolving Credit Commitment" shall have the meaning specified in Section
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2.1.
"Revolving Credit Loans" shall have the meaning set forth in Section 2.1.
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"Revolving Credit Maturity Date" shall mean June 30, 1999.
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"Revolving Credit Note" shall have the meaning set forth in Section 2.4.
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"SEC" means the Securities and Exchange Commission.
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"Stated Rate" shall have the meaning set forth in Section 4.1(d).
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"Subsidiary" shall mean, with respect to any Person, any corporation or
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other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"Tangible Net Worth" shall mean, at any date as of which the amount thereof
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is to be determined, all assets that should, in accordance with GAAP, be
classified as assets on the consolidated balance sheet of the Borrower, minus
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(i) Total Liabilities at such date and (ii) all Intangibles.
"Total Liabilities" shall mean, at any time, the consolidated liabilities
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of the Borrower and its Subsidiaries at such time and (without duplication) any
Guaranties of the Borrower and its Subsidiaries, determined in accordance with
GAAP.
"Type" shall mean a Prime Rate Loan, a Fixed Rate Loan or a LIBOR Rate
----
Loan.
"Wholly-owned Subsidiary" shall mean, as to any Person, a Subsidiary of
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such Person all of whose outstanding shares of capital stock (except directors'
qualifying shares) are owned directly or indirectly by such Person.
1.2 Accounting Terms. Unless otherwise specified herein, all
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accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
delivered hereunder shall be prepared, in accordance with GAAP; provided that if
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any change in GAAP in itself materially affects the calculation of any financial
covenant in this Agreement, the Borrower may by notice to the Bank, or the Bank
may by notice to the Borrower, require that such covenant thereafter be
calculated in accordance with GAAP as in effect, and applied by the Borrower,
immediately before such change in GAAP occurs. If such notice is given, the
compliance certificates delivered pursuant to Section 7.5(c) after such change
occurs shall be accompanied by reconciliations of the difference between the
calculation set forth therein and a calculation made in accordance with GAAP as
in effect from time to time after such change occurs.
1.3 Rules of Interpretation.
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(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented and in effect from
time to time in accordance with its terms and the terms of this Agreement.
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(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any Person includes its permitted successors and
permitted assigns.
(d) The words "include", "includes" and "including" are not limiting.
(e) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
(f) All terms not specifically defined herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in the Commonwealth
of Massachusetts, shall have the meanings assigned to them in such Code.
Section 2. Loans.
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2.1 Revolving Credit Loans. Upon the terms and subject to
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conditions set forth herein, and in reliance upon the representations,
warranties and covenants of the Borrower herein, the Bank agrees to make loans
(each a "Revolving Credit Loan" and collectively the "Revolving Credit Loans")
--------------------- ----------------------
to the Borrower for the account of the Borrower at the Borrower's request from
time to time from and after the Closing Date and prior to the Revolving Credit
Maturity Date in an aggregate principal amount not to exceed at any one time
outstanding the sum of Five Million Dollars ($5,000,000) (the "Revolving Credit
----------------
Commitment"), as the same may be reduced or terminated pursuant to the
----------
provisions hereof; provided that the sum of all outstanding Revolving Credit
--------
Loans shall not at any time exceed the Revolving Credit Commitment. Within the
foregoing limits and subject to the terms and conditions hereof, the Borrower
may borrow, repay and reborrow Revolving Credit Loans at any time or from time
to time until the Revolving Credit Maturity Date.
2.2 Convertible Revolving Credit Loans. Upon the terms and subject
----------------------------------
to conditions set forth herein, and in reliance upon the representations,
warranties and covenants of the Borrower herein, the Bank agrees to make loans
(each a "Convertible Revolving Credit Loan" and collectively the "Convertible
--------------------------------- -----------
Revolving Credit Loans") to the Borrower for the account of the Borrower at the
----------------------
Borrower's request from time to time from and after October 1, 1998 and prior to
June 30, 1999 (the "Convertible Revolving Credit Availability Expiration Date")
---------------------------------------------------------
in an aggregate principal amount not to exceed at any one time outstanding the
sum of Five Million Dollars ($5,000,000) (the "Convertible Revolving Credit
----------------------------
Commitment"), as the same may be reduced or terminated pursuant to the
----------
provisions hereof; provided that the sum of all outstanding Convertible
--------
Revolving Credit Loans shall not at any time exceed the Convertible Revolving
Credit Commitment; provided further that, it shall be a condition to the making
----------------
of any Convertible Revolving Credit Loans that no Event of Default shall have
occurred prior to October 1, 1998; and provided further, that any unpaid
----------------
principal balance of
-11-
Convertible Revolving Credit Loans outstanding as of the Convertible Revolving
Credit Availability Expiration Date will be payable in sixty (60) equal monthly
installments of principal plus accrued interest thereon, beginning on the first
date of each month following the Convertible Revolving Credit Availability
Expiration Date. Within the foregoing limits and subject to the terms and
conditions hereof, the Borrower may borrow, repay and reborrow Convertible
Revolving Credit Loans at any time or from time to time until the Convertible
Revolving Credit Availability Expiration Date.
2.3 Conversion of Loans to a Different Type. Upon the terms and
---------------------------------------
subject to the conditions of this Agreement, the Borrower may convert all or any
part of any outstanding Loan of one Type into a Loan of a different Type on any
Banking Day (which in the case of a conversion of a LIBOR Rate Loan or a Fixed
Rate Loan shall, subject to the provisions of Sections 4.6 and 4.11 be the last
day of the Interest Period applicable to such Loan). The Borrower shall give
the Bank prior notice of each such conversion (which notice shall be effective
upon receipt) in accordance with Section 3.
2.4 Notes. The Revolving Credit Loans shall be evidenced by the
-----
promissory note of the Borrower in the form attached hereto as Exhibit A-1,
----------
dated the date hereof (the "Revolving Credit Note") and shall be payable with
---------------------
interest in accordance with Section 4 below. The Convertible Revolving Credit
Loans shall be evidenced by the promissory note of the Borrower in the form
attached hereto as Exhibit A-2, dated the date hereof (the "Convertible
----------- -----------
Revolving Credit Note") and shall be payable with interest in accordance with
---------------------
Section 4 below.
2.5 Maturity. On the Revolving Credit Maturity Date, all Revolving
--------
Credit Loans shall mature and the Borrower shall pay in full the unpaid
principal balance of all Revolving Credit Loans, together with all unpaid
interest thereon and all fees and other amounts due with respect thereto. On
the Convertible Revolving Credit Maturity Date, all Convertible Revolving Credit
Loans shall mature and the Borrower shall pay in full the unpaid principal
balance of all Convertible Revolving Credit Loans, together with all unpaid
interest thereon and all fees and other amounts due with respect thereto.
2.6 Termination or Reduction of Commitments.
---------------------------------------
(a) The Revolving Credit Commitment shall terminate on the Revolving
Credit Maturity Date. Subject to the provisions hereof, the Borrower,
upon three (3) Banking Days' prior written notice to the Bank and the
repayment in full of the outstanding principal balance of the Revolving
Credit Loans (and accrued interest thereon) and the payment in full of any
expenses or other fees associated with the Revolving Credit Commitment owed
by the Borrower to the Bank under or pursuant to this Agreement, may elect
at any time to terminate in full the Revolving Credit Commitment
permanently. No such termination may be reinstated. The Borrower may also,
upon three (3) Banking Days' prior written notice to the Bank, permanently
-12-
reduce the Revolving Credit Commitment in integral multiples of $500,000.
No such reduction may be reinstated.
(b) The Convertible Revolving Credit Commitment shall terminate on the
Convertible Revolving Credit Maturity Date. Subject to the provisions
hereof, the Borrower, upon three (3) Banking Days' prior written notice to
the Bank and the repayment in full of the outstanding principal balance of
the Convertible Revolving Credit Loans (and accrued interest thereon) and
the payment in full of any expenses or other fees associated with the
Convertible Revolving Credit Commitment owed by the Borrower to the Bank
under or pursuant to this Agreement, may elect at any time to terminate in
full the Convertible Revolving Credit Commitment permanently. No such
termination may be reinstated. The Borrower may also, upon three (3)
Banking Days' prior written notice to the Bank, permanently reduce the
Convertible Revolving Credit Commitment in integral multiples of $500,000.
No such reduction may be reinstated.
Section 3. Notice and Manner of Borrowing or Conversions of Loans.
------------------------------------------------------
(a) Whenever the Borrower desires to obtain a Loan or to convert an
outstanding Loan from one Type to another Type, the Borrower shall give the
Bank a written Notice of Borrowing or Conversion (or a telephonic notice
promptly confirmed by a written Notice of Borrowing or Conversion), which
Notice shall be irrevocable and which must be received no later than 12:00
p.m. Boston time on the date (i) which is the same Banking Day on which the
requested Loan is to be made or continued as or converted to a Prime Rate
Loan, and (ii) which is three Banking Days before the day on which the
request Loan is to be made or continued as or converted to a LIBOR Rate
Loan or a Fixed Rate Loan. Such Notice of Borrowing or Conversion shall
specify (i) whether such Loan is to be a Revolving Credit Loan or a
Convertible Revolving Credit Loan; (ii) the effective date and amount of
each Loan or portion thereof requested to be made, continued or converted,
subject to the terms and conditions hereof, (iii) the interest rate option
requested to be applicable thereto, and (iv) subject to the provisions of
the definition of the term "Interest Period", the duration of the
applicable Interest Period, if any (which, in the case of a LIBOR Rate Loan
or a Fixed Rate Loan shall be identical to the Interest Period for which
the Bank has quoted a LIBOR Rate or a Fixed Rate, as the case may be, in
accordance with subsection (b) below). If such Notice fails to specify the
interest rate option to be applicable to the requested Loan, then the
Borrower shall be deemed to have requested a Prime Rate Loan. If the
written confirmation of any telephonic notification differs in any material
respect from the action taken by the Bank, the records of the Bank shall
control absent manifest error.
(b) Upon request of the Borrower received by the Bank no later than
11:00 a.m., Boston time, on the date on which the Borrower must submit its
Notice of Borrowing or Conversion with respect to a Loan which is requested
to be a LIBOR Rate Loan or a Fixed Rate Loan pursuant to subsection (a)
above, the Bank shall, on or
-13-
before 11:30 a.m. Boston time on such Banking Day, quote a LIBOR Rate or a
Fixed Rate, as the case may be, unless the Bank notifies the Borrower that
the Bank is not making LIBOR Rate Loans or Fixed Rate Loans available at
such time to its commercial customers and therefore declines to quote the
requested rate.
(c) Subject to the provisions of the definition of the term "Interest
Period" herein, the duration of each Interest Period shall be as specified
in the applicable Notice of Borrowing or Conversion. If the Bank receives a
Notice of Borrowing or Conversion after the time specified in subsection
(a) above, such Notice shall not be effective. If the Bank does not receive
an effective Notice of Borrowing or Conversion with respect to an
outstanding LIBOR Rate Loan or Fixed Rate Loan requesting the continuation
or conversion of such outstanding Loan, or if, when such Notice must be
given prior to the end of the Interest Period applicable to such
outstanding Loan, the Borrower shall fail to satisfy any of the conditions
hereof, the Borrower shall be deemed to have elected to convert such
outstanding Loan in whole into a Prime Rate Loan on the last day of the
then current Interest Period with respect thereto.
Section 4. Interest Rates; Fees; Payments.
-------------------------------
4.1 Interest Rates.
--------------
(a) The Borrower agrees to pay interest on the unpaid principal
amount of each Loan for each day from and including the date such Loan is
made to but excluding the date the principal of such Loan is paid in full
at the following rates per annum:
(i) for Prime Rate Loans, at a rate per annum equal to
the Prime Rate;
(ii) for LIBOR Rate Loans, at a rate per annum equal to
the LIBOR Rate plus the Applicable Margin;
(iii) for Fixed Rate Loans, at a rate per annum equal to
the Fixed Rate plus the Applicable Margin.
The Applicable Margin and the Leverage Ratio shall be determined
as of the end of each fiscal quarter of the Borrower based upon the
quarterly financial statements to be delivered pursuant to Section 7.5 and
any change in the Applicable Margin shall not be effective until the
delivery of such financial statements, provided, however, if the Borrower
-----------------
has failed to deliver such financial statements as required by Section 7.5,
the Leverage Ratio shall be deemed to be greater than 1.00:1.00 for
purposes of determining the Applicable Margin, until such time as the
Borrower delivers such financial statements reflecting a different Leverage
Ratio.
-14-
(b) Notwithstanding the foregoing, if an Event of Default shall occur,
then at the option of the Bank, the unpaid balance of Loans shall bear interest,
at a rate per annum equal to the Post-Default Rate, until such Event Default is
cured or waived, and any other amount payable hereunder which is not paid in
full when due shall bear interest, at a rate per annum equal to the Post-Default
Rate, until the sooner to occur of (i) the date upon which all Obligations to
the Bank have been paid in full and the Commitments have been terminated, or
(ii) the date upon which such Event of Default is cured or waived.
(c) Accrued interest on each Prime Rate Loan shall be payable monthly
in arrears on the first day of each month. Accrued interest on each LIBOR Rate
Loan and Fixed Rate Loan shall be payable at the end of the Interest Period
therefor, or if such Interest Period is longer than ninety (90) days, at
intervals of ninety (90) days in arrears on the first day of the succeeding
ninety (90) day period, and interest on all Loans shall be payable in any event
upon the payment, prepayment or conversion thereof, but only on the principal so
paid or prepaid or converted; provided that interest payable pursuant to Section
--------
4.1(b) during the pendency of an Event of Default shall be payable from time to
time on demand of the Bank; and provided further that the Convertible Revolving
----------------
Credit Loan shall also be subject to the terms and conditions contained in
Section 2.2 of this Agreement. Promptly after the determination of any interest
rate provided for herein or any change in such rate permitted hereunder, the
Bank shall notify the Borrower thereof.
(d) So long as the Bank shall be required under regulations of the
Board of Governors of the Federal Reserve System (or any other banking
authority, domestic or foreign, to which the Bank is subject) to maintain
reserves with respect to liabilities or assets consisting of or including
"Eurocurrency Liabilities" (as defined in regulations issued from time to time
by such Board of Governors), the Borrower shall pay to the Bank additional
interest on the unpaid principal amount of each LIBOR Loan made by the Bank from
the date of such Loan until such principal amount is paid in full, at an
interest rate per annum equal at all times to the remainder (rounded upwards, if
necessary, to the next higher 1/100 of 1%) obtained by subtracting (i) the LIBOR
Rate for the Interest Period for such LIBOR Loan from (ii) the rate obtained by
dividing such LIBOR Rate by a percentage equal to 100% minus the LIBOR Reserve
Percentage of the Bank for such Interest Period. The Bank shall determine such
additional interest and notify the Borrower, and such additional interest shall
be payable on each date on which interest is payable on such LIBOR Loan.
(e) Notwithstanding the foregoing provisions of this Section 4.1, if
at any time the rate of interest set forth in subparagraph (a) above (the
"Stated Rate") exceeds the maximum non-usurious interest rate permissible for
-----------
the Bank to charge commercial borrowers under applicable law (the "Maximum
-------
Rate"), the rate of interest charged on the Loans by the Bank hereunder shall be
----
limited to the Maximum Rate. In the event
-15-
the Bank ever receives, collects or applies as interest any sum in excess
of the Maximum Rate, such excess amount shall be applied to the reduction
of the principal balance of the Loans or to other amounts (other than
interest) payable hereunder, and if no such principal is then outstanding,
such excess or part thereof remaining shall be paid to the Borrower.
4.2 Facility Fee.
------------
(a) The Borrower shall pay to the Bank a facility fee, computed on a
daily basis and payable quarterly in arrears on the first Banking Day of
each quarter and on the Revolving Credit Maturity Date, in an amount equal
to one-quarter of one percent (.25%) per annum of (x) the excess of (i) the
Revolving Credit Commitment on each day during such just completed calendar
quarter over (ii) the outstanding principal balance of all Revolving Credit
Loans on each day during such just completed calendar quarter.
(b) From and after October 1, 1998 to June 30, 1999, the Borrower
shall pay to the Bank a facility fee, computed on a daily basis and payable
quarterly in arrears on the first Banking Day of each quarter and on the
Convertible Revolving Credit Maturity Date, in an amount equal to one-
quarter of one percent (.25%) per annum of (x) the excess of (i) the
Convertible Revolving Credit Commitment on each day during such just
completed calendar quarter over (ii) the outstanding principal balance of
all Convertible Revolving Credit Loans on each day during such just
completed calendar quarter.
4.3 Minimum and Maximum Amounts. Each borrowing, conversion and
---------------------------
prepayment of principal of Revolving Credit Loans of Convertible Revolving
Credit Loans which are LIBOR Rate Loans of Fixed Rate Loans shall be in an
aggregate principal amount equal to $500,000 or a larger multiple of $100,000
or, if less, the aggregate outstanding balance of the LIBOR Rate or Fixed Rate
Loan to be rolled over, (conversions or prepayments of Revolving Credit Loans or
Convertible Revolving Credit Loans of different Types or, in the case of LIBOR
Rate Loans or Fixed Rate Loans, having different Interest Periods, at the same
time hereunder shall be deemed separate conversions and prepayments for
purposes of the foregoing, one for each Type or Interest Period); provided that
--------
any conversion, payment or prepayment in full of the Loans may be in the
aggregate outstanding principal amount thereof; and provided further that at no
--------
time shall there be greater than five (5) LIBOR Rate Loans or Fixed Rate Loans
outstanding.
4.4 Computations. All interest and fees shall be computed daily on
------------
the basis of a year of 360 days and actual days elapsed (including the first day
but excluding the last day) occurring in the period for which payable.
-16-
4.5 Manner and Place of Payment. All payments under this Agreement
---------------------------
shall be made not later than 2:00 p.m. (Boston Time) on the date when due and
shall be made in immediately available funds at the Office of the Bank or by the
Borrower's check drawn on the depositary accounts(s) maintained by the Borrower
with the Bank payable to the Bank or its order. All payments by the Borrower
hereunder and under any of the other Loan Documents shall be made without
set-off or counterclaim and free and clear of and without deduction for any
taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such deduction
or withholding. If any such obligation is imposed upon the Borrower with respect
to any amount payable by its hereunder or under any of the other Loan Documents,
the Borrower will pay to the Bank such additional amount in U.S. Dollars as
shall be necessary to enable the Bank to receive the same net amount which the
Bank would have received on such due date had no such obligation been imposed
upon the Borrower. The Borrower will deliver promptly to the Bank certificates
or other valid vouchers or other evidence of payment reasonably satisfactory to
the Bank for all taxes (other than taxes based on the Bank's income) or other
charges deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document. The Bank may, and the Borrower
hereby authorizes the Bank to, debit the amount of any payment not made by such
time to the demand deposit accounts of the Borrower with the Bank.
4.6 Indemnity. If the Borrower for any reason (including, without
---------
limitation, pursuant to Sections 4.7, 4.8, 4.11 and 10.2 hereof) makes any
payment of principal with respect to any LIBOR Loan or a Fixed Rate Loan on any
day other than the last day of an Interest Period applicable to such LIBOR Loan
or Fixed Rate Loan, or fails to borrow or continue or convert to a LIBOR Loan or
a Fixed Rate Loan after giving a Notice of Borrowing or Conversion thereof
pursuant to Section 3, or fails to prepay a LIBOR Loan or a Fixed Rate Loan
after having given notice thereof, the Borrower shall pay to the Bank any amount
required to compensate the Bank for any additional losses, costs or expenses
which it reasonably incurs as a result of such payment or failure, including,
without limitation, any loss (including loss of anticipated profits), costs or
expense incurred by reason of the liquidation or re-employment of deposits or
other funds required by the Bank to fund or maintain such LIBOR Loan or Fixed
Rate Loan. The Borrower shall pay such amount upon presentation by the Bank of a
statement setting forth the amount and the Bank's calculation thereof pursuant
hereto, which statement shall be deemed true and correct absent manifest error.
4.7 Changes Circumstances; Illegality.
---------------------------------
(a) Notwithstanding any other provision of this Agreement, in the
event that:
(i) on any date on which the LIBOR Rate would otherwise be
set the Bank shall have determined in good faith (which
determination
-17-
shall be final and conclusive) that adequate and fair means
do not exist for ascertaining the LIBOR rate, or
(ii) at any time the Bank shall have determined in good faith
(which determination shall be final and conclusive) that:
(A) the making or continuation of or conversion of any Loan to, a
LIBOR Loan has been made impracticable or unlawful by (1) the occurrence of
a contingency that materially and adversely affects the interbank LIBOR
market or (2) compliance by the Bank in good faith with any applicable law
or governmental regulation, guideline or order or interpretation or change
thereof by any governmental authority charged with the interpretation or
administration thereof or with any request or directive of any such
governmental authority (whether or not having the force of law); or
(B) the LIBOR Rate shall no longer represent the effective cost to
the Bank for U.S. dollar deposits in the interbank market for deposits in
which it regularly participates;
then, and in any such event, the Bank shall forthwith so notify the Borrower
thereof. Until the Bank notifies the Borrower that the circumstances giving rise
to such notice no longer apply, the obligation of the Bank to allow selection by
the Borrower of the Type of Loan affected by the contingencies described in this
Section (herein called "Affected Loans") shall be suspended. If at the time the
--------------
Bank so notifies the Borrower, the Borrower has previously given the Bank a
Notice of Borrowing or Conversion with respect to one or more Affected Loans but
such Loans have not yet gone into effect, such notification shall be deemed to
be a request for Prime Rate Loans.
(b) In the event of a determination of illegality pursuant to
subsection (a) above, the Borrower shall, with respect to the outstanding
Affected Loans, pay all interest thereon and any amounts required to be
paid pursuant to Section 4.7, on such date as shall be specified in such
notice (which shall not be earlier than the date such notice is given) and,
subject to the conditions of this Agreement, convert such Affected Loans
into Prime Rate Loans.
4.8 Increased Costs. In case any change in law, regulation, treaty or
---------------
official directive or the interpretation or application thereof by any court or
by any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law) adopted or
issued after the date hereof:
(i) subjects the Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder
by the Borrower or otherwise with respect to the
transactions
-18-
contemplated hereby (except for taxes on the
overall net income of the Bank imposed by the
United States of America or any political
subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar
requirement against assets held by, or deposits in
or for the account of, or loans by, the Bank
(other than as provided in Section 4.1(d) and
other than such requirements as are already
included in the determination of the LIBOR Rate),
or
(iii) imposes upon the Bank any other condition with
respect to its obligations or performance under
this Agreement,
and the result of any of the foregoing, in the Bank's reasonable judgement, is
to increase the cost to the Bank, reduce the income receivable by the Bank or
impose any expense upon the Bank with respect to any Loans or its obligations
under this Agreement, the Bank shall notify the Borrower thereof. The Borrower
agrees to pay to the Bank the amount of such increase in cost, reduction in
income or additional expense as and when such cost, reduction or expense is
incurred or determined, upon presentation by the Bank of a statement in the
amount and setting forth in reasonable detail the Bank's calculation thereof and
the assumptions upon which such calculation was based, which statement shall be
deemed true and correct absent manifest error. In determining such amount, the
Bank may use any reasonable averaging and attribution methods. Notwithstanding
the foregoing, the Bank may not charge the Borrower for any costs, reductions or
expenses described above that have been incurred earlier than ninety (90) days
prior to the date the Bank notifies the Borrower of such costs, reductions or
expenses.
4.9 Capital Requirements. If after the date hereof the Bank
--------------------
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (ii) compliance by the
Bank or its parent bank holding company with any guideline, request or directive
of any such entity adopted or issued after the date hereof regarding capital
adequacy (whether or not having the force of law) has, in the Bank's reasonable
judgment, the effect of reducing the return on the Bank's or such holding
company's capital as a consequence of the Bank's Commitments to make Loans
hereunder to a level below that which the Bank or such holding company could
have achieved but for such adoption, change or compliance (taking into
consideration the Bank's or such holding company's current policies with respect
to capital adequacy) by any amount reasonably deemed by the Bank to be material,
then the Bank shall notify the Borrower thereof. The Borrower agrees to pay to
the Bank the amount of such reduction of return on capital as and when such
reduction is determined, payable within 90 days after presentation by the Bank
of a statement in the amount and setting forth in reasonable detail the Bank's
calculation thereof and the assumptions upon which such calculation was
-19-
based (which statement shall be deemed true and correct absent manifest error)
unless within such 90 day period the Borrower shall have prepaid in full all
Obligations, in which event no amount shall be payable to the Bank under this
Section 4.9. In determining such amount, the Bank may use any reasonable
averaging and attribution methods. Notwithstanding the foregoing, the Bank may
not charge the Borrower for any reductions described above that have been
incurred earlier than ninety (90) days prior to the date the Bank notifies the
Borrower of such reductions.
4.10 Payments Due on Saturdays, Sundays and Holidays. Whenever any
-----------------------------------------------
payment to be made hereunder or under the Notes shall be due on a day which is
not a Banking Day, such payment may be made on the next succeeding Banking Day
(subject to the definition of the term "Interest Period"), and such extension of
time shall be included in computing any interest or fees due.
4.11 Prepayments.
-----------
(a) Subject to the provisions of Section 2.6, Section 3 and Section
4.6, the Borrower shall have the right to prepay the Loans in whole or in
part and to convert Loans of one Type into another Type, without premium or
penalty, at any time and from time to time, provided that (i) at the time
--------
of any such prepayment, the Borrower shall pay all interest accrued on the
amount prepaid; (ii) the Borrower shall give the Bank three (3) Banking
Days notice of prepayment of any Fixed Rate Loan or LIBOR Rate Loan, (iii)
LIBOR Rate Loans and Fixed Rate Loans may be converted into Prime Rate
Loans only on the last day of an Interest Period thereof; and (iv) the Bank
shall be paid, at the time of any prepayment of a LIBOR Rate Loan or Fixed
Rate Loan that is being prepaid on other than the last day of an Interest
Period therefor, the amount provided for in Section 4.6.
(b) if at any time the outstanding principal balance of the
Revolving Credit Loans exceeds the Revolving Credit Commitment, or the
Convertible Revolving Credit Loans exceeds the Convertible Revolving Credit
Commitment the Borrower shall immediately pay the amount of any such excess
to the Bank for application to the Revolving Credit Loans or Convertible
Revolving Credit Loans, as the case may be.
Section 5. Conditions Precedent.
--------------------
5.1 Conditions to Initial Loans. The obligation of the Bank to
---------------------------
make the initial Revolving Credit Loan and initial Convertible Revolving Credit
Loan is subject to the satisfaction of the following conditions precedent on or
prior to the Closing Date.
(a) This Agreement and the Notes. This Agreement, the borrowings
----------------------------
hereunder, the Notes and all transactions contemplated by this Agreement
shall have been duly authorized by the Borrower. The Borrower shall have
duly executed and
-20-
delivered to the Bank this Agreement and the Notes to the Bank in form and
substance satisfactory to the Bank and its counsel.
(b) No Default. On the date hereof and on the Date of making each Loan,
----------
no Default or Event of Default shall have occurred and be continuing.
(c) Correctness of Representations. On the Closing Date and on the date
------------------------------
of each Extension of Credit, all representations and warranties made by the
Borrower in Section 6 below or otherwise in writing in connection herewith or
otherwise shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date of such Loan, except that representations and warranties expressly
limited to a certain date shall be true and correct in all material respects as
of that date and subject to changes arising from transactions expressly
permitted hereunder.
(d) Performance of Covenants. The Borrower shall have performed,
------------------------
satisfied or complied with all covenants and conditions to be performed,
satisfied or complied with by the Borrower hereunder and under the other Loan
Documents on or prior to the Closing Date.
(e) Opinion of Counsel for the Borrower. On the Closing Date, the Bank
-----------------------------------
shall have received the favorable opinion of counsel to the Borrower, in form
and substance reasonably satisfactory to the Bank and its counsel.
(f) Approvals. On the Closing Date and on the date of each Loan, all
---------
necessary consents, approvals, licenses, permissions, registrations or
validations of any Governmental Authority or any other Person required for the
execution, delivery, performance or carrying out of the provisions of this
Agreement and the Notes, or for the validity or enforceability of the
obligations incurred thereunder, shall have been obtained and shall be in full
force and effect and copies thereof certified by a duly authorized officer of
the Borrower to such effect shall have been delivered to the Bank.
(g) Supporting Documents. On or before the Closing Date, there shall have
--------------------
been delivered to the Bank the following supporting documents:
(i) legal existence and corporate good standing certificates with
respect to the Borrower dated as of a recent date issued by the
appropriate Secretary of State or other official;
(ii) certificates dated as of a recent date with respect to the due
qualification of the Borrower to do business in each jurisdiction
where the failure to be so qualified would have a Material
-21-
Adverse Effect, issued by the Secretary of State of each such
jurisdiction;
(iii) copy of the corporate charter of the Borrower certified by the
appropriate Secretary of State or other official, as of a
recent date, including all amendments thereto;
(iv) a certificate of the Secretary or Assistant Secretary of the
Borrower certifying as to the applicable (a) By-Laws, as in
effect on the date hereof, including all amendments thereto;
(b) the incumbency and signatures of the Responsible Officers
of such Person who have executed any documents in connection
with the transactions contemplated by this Agreement; and (c)
the resolutions of the Board of Directors of such Person
authorizing the execution, delivery and performance of Loan
Documents to which such Person is a party and identifying the
Responsible Officers authorized to execute and deliver and
take all other actions contemplated by this Agreement; and
(v) all other information and documents which the Bank or its
counsel may reasonably request in connection with the
transactions contemplated by this Agreement.
(h) Compliance Certificate. The Borrower shall have furnished to the Bank
----------------------
a Compliance Certificate in the form of attached Exhibit C appropriately
---------
completed and signed by a Responsible Officer of the Borrower with respect to
the fiscal quarter ending December 31, 1997, which shall reflect compliance by
the Borrower with the requirements of this Credit Agreement as of the date
hereof.
(i) Litigation. No litigation, arbitration, proceeding or investigation
----------
shall be pending or, to the knowledge of the Borrower, threatened against the
Borrowers or any Subsidiaries thereof which, in the sole judgement of the Bank,
might have a Material Adverse Effect.
(j) Termination of Existing Credit Facility. The Bank shall have received
---------------------------------------
reasonable evidence that the Borrower's existing credit facility with
BankBoston, N.A. has been terminated.
(k) Legal Matters. All documents and legal matters incident to the
-------------
transactions contemplated by this Agreement shall be reasonably satisfactory to
Xxxxxxxx & Worcester LLP, special counsel for the Bank.
-22-
(l) Financial Statements. Prior to the Closing Date, the Bank shall
--------------------
have received complete and correct copies of the audited consolidated
balance sheet of the Borrower as of December 31, 1997, and the related
audited consolidated statements of income and of cash flows for the twelve-
month period ended on such date, examined by the Accountants.
5.2 Conditions Precedent to all Loans. The obligation of the Bank to
---------------------------------
make any Revolving Credit Loan or any Convertible Revolving Credit Loan,
including the initial Revolving Credit Loans, or continue or convert Loans to
Loans of another Type, is further subject to the following conditions:
(a) timely receipt by the Bank of a Notice of Borrowing or Conversion
with respect to any Loan;
(b) the outstanding Revolving Credit Loans and Convertible Revolving
Credit Loans do not and, after giving effect to any requested Loan, will
not exceed the limitations set forth in Sections 2.1 and 2.2 hereof;
(c) the representations and warranties contained in Section 6 shall
be true and accurate in all material respects on and as of the date of such
Notice of Borrowing or Conversion and on the effective date of the making,
continuation or conversion of each Loan as though made at and as of each
such date (except to the extent that such representations and warranties
expressly relate to an earlier date or have become inaccurate due to
transactions expressly permitted hereunder);
(d) no Default or Event of Default shall have occurred and be
continuing at the time of and immediately after the making of such
requested Loan;
(e) the resolutions referred to in Section 5.1(g)(iv)(c) shall remain
in full force and effect; and
(f) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Bank, would
make it illegal or against the policy of any governmental agency or
authority for the Bank to make Loans hereunder.
The making, continuation or conversion of each Loan shall be deemed to be a
representation and warranty by the Borrower on the date of the making,
continuation or conversion of such Loan as to the accuracy of the facts
referred to in subsection (c) of this Section 5.2 and of the satisfaction of all
of the conditions set forth in this Section 5.2.
Section 6. Representations and Warranties.
-----------------------------
-23-
In order to induce the Bank to enter into this Agreement and to make the
contemplated Extensions of Credit, the Borrower hereby represents and warrants
as follows and the following representations and warranties shall survive the
execution and delivery of this Agreement and the Notes:
6.1 Corporate Status.
----------------
The Borrower is a duly organized and validly existing corporation in good
standing under the laws of its jurisdiction of incorporation as set forth on
Schedule A hereto and is duly qualified or licensed as a foreign corporation in
----------
good standing in each jurisdiction in which the failure to do so would have a
Material Adverse Effect.
6.2 No Violation. Neither the execution, delivery or performance of
------------
this Agreement or any other Loan Document, nor the consummation of the
contemplated transactions will contravene any law, statute, rule or regulation
to which the Borrower is subject or any judgment, decree, franchise, order or
permit applicable to the Borrower, or will conflict or be inconsistent with or
will result in any breach of, or constitute a default under, or result in or
require the creation or imposition of any Lien upon any of the property or
assets of the Borrower having an aggregate book value of $100,000 or more
pursuant to, any Contractual Obligation of the Borrower, or violate any
provision of the corporate charter by-laws of the Borrower.
6.3 Corporate Power and Authority. The Borrower has all requisite
-----------------------------
corporate power to own its property and conduct its business as currently
conducted. The execution, delivery and performance of this Agreement and the
other Loan Documents are within the corporate powers of the Borrower and have
been duly authorized by all necessary corporate action.
6.4 Enforceability. This Agreement and each other Loan Document
--------------
constitutes valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and subject to general principles of
equity, whether applied in a court of equity or at law.
6.5 Consents or Approvals. No order, permission, consent, approval,
---------------------
license, authorization, registration or validation of, or filing with, or
exemption by, any Governmental Authority or any other Person is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or any other Loan Document by the Borrower, or the
taking of any action contemplated hereby or thereby.
6.6 Financial Statements.
--------------------
-24-
(a) The Borrower has furnished the Bank with complete and correct
copies of (a) its audited consolidated balance sheet as of the Initial
Financial Statements Date, its related consolidated statements of income
and of cash flows for the twelve-month period ended on such date, audited
and certified by the Accountants (the "Initial Financial Statements").
----------------------------
Such Initial Financial Statements (including the related schedules and
notes) fairly present the consolidated financial condition of the Borrower
as of the Initial Financial Statements Date, and the consolidated results
of its operations and its consolidated cash flows for the twelve month
period ended on such date.
(b) All the above-referenced financial statements (including the
related schedules and notes) have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by
the Accountants and disclosed therein).
(c) At the date hereof, the Borrower does not have any Indebtedness
or other material liabilities, debts or obligations, whether accrued,
absolute, contingent or otherwise, and whether due or to become due,
including, but not limited to, liabilities or obligations on account of
taxes or other governmental charges, that are not set forth in the
financial statements referred to in subparagraph (a) above or on Schedule A
----------
hereto.
(d) The Borrower has and, after giving effect to the Loans, will
have, assets (both tangible and intangible) having a fair saleable value
in excess of the amount required to pay the probable liability on its then-
existing debts (whether matured or unmatured, liquidated or unliquidated,
fixed or contingent); the Borrower has and will have access to adequate
capital for the conduct of its business and the discharge of its debts
incurred in connection therewith as such debts mature; the Borrower was not
insolvent immediately prior to the making of the Loans and immediately
after giving effect thereto, the Borrower will not be insolvent.
6.7 No Material Change. Except as set forth in Schedule A, since the
------------------ ----------
Initial Financial Statements Date, there have been no changes in the assets,
liabilities, financial condition or business of the Borrower other than changes
in the ordinary course of business which will not have a Material Adverse
Effect.
6.8 Litigation. There are no actions, suits or proceedings pending
----------
or to Borrower's knowledge, threatened against or affecting the Borrower of any
of its Subsidiaries which in any one case or in the aggregate, if determined
adversely to the interests of such party, could reasonably be anticipated to
have a Material Adverse Effect.
6.9 Compliance with Other Instruments; Compliance with Law. The
------------------------------------------------------
Borrower is not in default under any Contractual Obligation (including any
Contractual Obligation relating to any Indebtedness of the Borrower) where such
default could reasonably
-25-
be anticipated to have a Material Adverse Effect. The Borrower is not in default
and or in violation of any applicable statute, rule, writ, injunction, decree,
order or regulation of any Governmental Authority having jurisdiction over the
Borrower which default or violation could reasonably be anticipated to have a
Material Adverse Effect.
6.10 Subsidiaries. The Borrower does not have any Subsidiaries except as
------------
set forth on attached Schedule A.
----------
6.11 Investment Company Status; Limits on Ability to Incur Indebtedness.
------------------------------------------------------------------
The Borrower is not an "investment company" or a company "controlled by" an
investment company within the meaning of the Investment Company Xxx 0000, as
amended. The Borrower is not subject to regulation under any Federal or State
statute or regulation which limits its ability to incur Indebtedness. No portion
of any Loan shall be used for purchasing or carrying, any "margin security" or
"margin stock" as such terms are used in Regulations G, U or X of the Board of
Governor's of the Federal Reserve System.
6.12 Title to Property. The Borrower has good and marketable title to all
-----------------
of its properties and assets as of the Initial Financial Statements Date, except
such as have been disposed of since that date in the ordinary course of business
and none of such properties or assets is subject to any Lien except for (a)
Permitted Liens, of (b) a defect in title or other claim other than defects and
claims that, in the aggregate, would have no Material Adverse Effect. The
Borrower enjoys peaceful and undisturbed possession under all leases necessary
in any material respect for the operation of its properties and assets and no
material default exists under such leases (after taking into account applicable
cure periods under said leases). To Borrower's knowledge, all such leases are
valid and subsisting and are in full force and effect.
6.13 ERISA. Each Borrower and each of its Affiliates are in compliance in
-----
all material respects with ERISA and the provisions of the Code applicable to
the Plans; no Borrower nor any Affiliate of a Borrower has engaged in a
Prohibited Transaction which would subject any Borrower, any Affiliate of a
Borrower or any Plan to a material tax or penalty imposed on a Prohibited
Transaction; no Plan has incurred any "accumulated funding deficiency" (as
defined in ERISA); except as set forth in the Initial Financial Statements, the
aggregate fair market value of all assets of the Plans which are single-employer
plans is at least equal to the aggregate present value of all accrued benefits
under such Plans, both as determined in the most recent actuarial reports for
such Plans using the actuarial assumptions used for funding purposes therein; no
Borrower nor any Affiliate of a Borrower has incurred any liability to the PBGC
over and above premiums required by law; and no Borrower nor any Affiliate of a
Borrower has terminated any Plan in a manner which could result in the
imposition of a Lien on the property of any Borrower or any Affiliate of a
Borrower.
6.14 Taxes. All tax returns of the Borrower required to be filed have been
-----
timely filed, all material taxes, fees and other governmental charges (other
than those being contested in good faith by appropriate proceedings diligently
conducted and with respect to
-26-
which adequate reserves have been established and, in the case of ad valorem
-- -------
taxes or betterment assessments, no proceedings to foreclose any lien with
respect thereto have been commenced and, in all other cases, no notice of lien
has been filed or, to Borrower's knowledge; other action taken to perfect or
enforce such lien) shown thereon which are payable have been paid. The charges
and reserves on the books of the Borrower for all income and other taxes are
adequate, and the Borrower knows of no additional assessment or any basis
therefor. Except as disclosed in Schedule A, the Federal income tax returns of
the Borrower have not been audited within the last three years, all prior audits
have been closed, and there are no unpaid assessments, penalties or other
charges arising from such prior audits.
6.15 Environmental Matters.
---------------------
(a) The Borrower has obtained all Governmental Approvals that are
required for the operation of its business under any Environmental Law,
except where the failure to so obtain a Governmental Approvals would not
have a Material Adverse Effect.
(b) The Borrower is in compliance with all terms and conditions of
all required Governmental Approvals and is also in compliance with all
terms and conditions of all applicable Environmental Laws, noncompliance
with which would have a Material Adverse Effect.
(c) To Borrower's knowledge, there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the
knowledge of the Borrower threatened against the Borrower relating in any
way to the Environmental Laws, and there is, no Lien of any private entity
or Governmental Authority against any property of the Borrower relating in
any way to the Environmental Laws which is reasonably likely to result in a
Material Adverse Effect.
(d) There has been no claim, complaint, notice, or request for
information received by the Borrower with respect to any site listed on the
National Priority List promulgated pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA") 42 USC
------
(S)(S) 9601 et seq or any state list of sites requiring investigation or
-- ---
cleanup with respect to contamination by Hazardous Substances.
(e) To the best of the Borrower's knowledge, there has been no
release or threat of release of any Hazardous Substance at any Borrower
Property which would likely result in liability being imposed upon the
Borrower, which liability would have a Material Adverse Effect.
6.16 Intellectual Property. The Borrower owns or licenses such
---------------------
copyrights, patents, trademarks and similar rights ("Intellectual Property") as
---------------------
are necessary for the conduct
-27-
of its business as now conducted, without any known conflict with the rights of
others which would have a Material Adverse Effect. Following the occurrence and
during the continuance of an Event of Default, the Borrower shall, upon the
request of the Bank, make reasonably diligent efforts to prepare and deliver to
the Bank a reasonably detailed listing of all of such Intellectual Property,
provided that nothing herein shall require the registration of any such
Intellectual Property.
6.17 Disclosure. No representation or warranty made by the
----------
Borrower in this Agreement or any other Loan Document and no document or
information furnished to the Bank by or on behalf of or at the request of the
Borrower in connection with any of the transactions contemplated by this
Agreement and the other Loan Documents contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which they are made except as may hereafter occur as a result of transactions
expressly permitted hereunder.
6.18 Defaults. As of the date of this Agreement, no Default or
--------
Event of Default exists.
Section 7. Affirmative Covenants.
---------------------
The Borrower covenants and agrees that for as long as this Agreement is in
effect and until the Notes, together with all interest thereon and all other
Obligations of the Borrower to the Bank are paid or satisfied in full:
7.1 Use of Proceeds. The proceeds of the Loans shall be used
---------------
by the Borrower solely for the purposes of supporting expansion investments and
working capital needs. Without limiting the foregoing, no part of the proceeds
of any Loan will be used for the purpose of purchasing or carrying any "margin
security" as such term is defined in Regulation U of the Board of Governors of
the Federal Reserve System.
7.2 Conduct of Business; Maintenance of Existence. The
---------------------------------------------
Borrower will continue to engage in the business in which it is engaged and
maintain its existence and comply with all applicable statues, rules and
regulations and remain duly qualified as a foreign corporation, licensed and in
good standing in each jurisdiction where such qualification or licensing is
required by the nature of its business, the character and location of its
property, business, or the ownership or leasing of its property, except where
such noncompliance or failure to so qualify would not have a Material Adverse
Effect, and the Borrower will maintain its properties in good operating
condition, and continue to conduct its business as presently conducted.
7.3 Compliance with Laws. The Borrower will comply with all
--------------------
applicable laws, ordinances, rules, regulations and requirements of Governmental
Authorities, except
-28-
where the necessity of compliance therewith is being contested in good faith by
appropriate proceedings and except where the failure so to comply would not have
a Material Adverse Effect.
7.4 Insurance. The Borrower will maintain insurance with financially
---------
sound and reputable insurance companies in such amounts and against such risks
as determined by the Borrower's senior management from time to time to be
appropriate based upon the exercise of their reasonable business judgement,
provided that in any event the Borrower shall maintain or cause to be maintained
(a) insurance against casualty, loss or damage covering all property and
improvements of the Borrower in amounts and in respect of perils usually carried
by owners of similar businesses and properties in the same general areas in
which the Borrower operates, including, but not limited to, federally required
flood insurance; (b) comprehensive general liability insurance against claims
for bodily injury, death or property damage; and (c) workers' compensation
insurance to the extent required by applicable law.
7.5 Financial Statements, Etc. The Borrower will furnish to the Bank:
-------------------------
(a) within forty-six (46) days after the end of each of the first
three fiscal quarters of each fiscal year, the unaudited consolidated
balance sheet and income statement and statement of cash flows of the
Borrower and any Subsidiaries as at and for the period ended on the last
day of such fiscal quarter;
(b) within ninety-one (91) days after the last of each fiscal year of
the Borrower, the audited consolidated balance sheet and income statement
and statement of cash flows of the Borrower and any Subsidiaries as at and
for the fiscal year then ended, certified by the Accountants (the substance
of such report to be reasonably satisfactory to the Bank) and a certificate
of a Responsible Officer of the Borrower to the effect that such financial
statements fairly present the consolidated financial condition of the
Borrower and any Subsidiaries as of the end of such fiscal year and the
consolidated results of their operations for such fiscal year, in each case
in accordance with GAAP;
(c) within forty-six (46) days after the last of each fiscal quarter
of the Borrower (except in the case of the fourth quarter, in which case
such certificate will be furnished within ninety-one (91) days of the end
of such quarter), a Compliance Certificate signed by a Responsible Officer
of the Borrower in the form attached to this Agreement as Exhibit C,
---------
appropriately completed which report shall note any change in the Leverage
Ratio which would warrant an adjustment to the Applicable Margin.
(d) within ninety-one (91) days after the last day of each fiscal
year of the Borrower, an annual business plan for the next fiscal year
complied by the management of the Borrower; including, without limitation,
projections of the anticipated income
-29-
and cash flow of the Borrower for such fiscal year and a statement of the
assumptions on which such plan was prepared;
(e) copies of any management letter provided by the Accountants to
the Borrower;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports, proxy
statements and other materials;
(g) promptly upon the filing thereof by the Borrower with the SEC
(and in any event within five (5) days of such filing), copies of any
registration statements and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents if such forms no longer exist);
(h) promptly upon becoming aware of any litigation or other
proceeding against the Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect, notice thereof;
and
(i) promptly following the request of the Bank, such further
information concerning the business, affairs and financial condition or
operations of the Borrower and any Subsidiaries as the Bank may reasonably
request.
7.6 Notice of Default. As soon as practicable, and in any event,
-----------------
within three (3) Banking Days of becoming aware of the existence of any
condition or event which constitutes an Event of Default, the Borrower will
provide the Bank with written notice specifying the nature and period of
existence thereof and what action the Borrower is taking or proposes to take
with respect thereto.
7.7 Environmental Matters.
---------------------
(a) The Borrower shall comply with all terms and conditions of all
applicable Governmental Approvals and all applicable Environmental Laws,
except where failure to comply would not have a Material Adverse Effect.
(b) The Borrower shall promptly notify the Bank should the Borrower
become aware of:
(i) any spill, release, or threat of release of any Hazardous
Substance at or from any Borrower Property or by any Person
for whose conduct the Borrower is responsible, to the extent
the Borrower is required by Environmental Laws to report
such to any Governmental Authority;
-30-
(ii) any action or notice with respect to a civil,
criminal or administrative action, suit, demand,
claim, hearing, notice of violation,
investigation, proceeding, notice or demand
letter pending or threatened against the
Borrower relating in any way to the
Environmental Laws, or any Lien of any
Governmental Authority or any other Person
against any Borrower Property relating in any
way to the Environmental Laws;
(iii) any claim made or threatened by any Person
against the Borrower or any property of the
Borrower relating to any material damage,
contribution, cost recovery compensation, loss
or injury resulting from any Hazardous Substance
pertaining to such property or the business or
operations of the Borrower; and
(iv) any occurrence or condition on any real property
adjoining any Borrower Property known to the
officers or supervisory personnel of the
Borrower or other employees having
responsibility for the compliance by the
Borrower with Environmental Laws, without any
independent investigation, which does cause, or
could cause, such Borrower Property, or any part
thereof, to contain Hazardous Substances in
material violation of any Environmental Laws, or
which does cause, or could cause, such Borrower
Property to be subject to any material
restrictions on the ownership, occupancy,
transferability or use thereof by the Borrower.
7.8 Taxes and Other Liens. The Borrower will pay when due
---------------------
all taxes, assessments, governmental charges or levies, or claims for labor,
supplies, rent and other obligations made against it which, if unpaid, might
become a Lien against the Borrower on its property, except liabilities being
contested in good faith and by proper proceedings, as to which adequate reserves
are maintained on the books of the Borrower in accordance with GAAP.
7.9 ERISA Information. If and when the Borrower or any
-----------------
member of the Controlled Group (a) gives or is required to give notice to the
PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable event, (b)
receives notice of complete or partial withdrawal liability under Title IV of
ERISA or (c) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate or appoint a trustee to administer the Plan, the Borrower shall in
each such instance promptly furnish to the Bank a copy of any such notice.
-31-
7.10 Inspection. The Borrower will permit a representative of the
----------
Bank (including any field examiner or auditor retained by the Bank) to inspect
and make copies of the Borrower's books and records, and to discuss its affairs,
finances and accounts with its officers and accountants, at such reasonable
times and places and as often as the Bank may reasonably request, provided that,
so long as no Event of Default has occurred and is continuing, upon two (2)
Banking Days prior notice from the Bank and not more frequently than twice in
any twelve-month period.
7.11 Further Assurances. The Borrower will execute and deliver to
------------------
the Bank any writings and do all things necessary, effectual or reasonably
requested by the Bank to carry into effect the provisions and intent of this
Agreement or any other Loan Document.
Section 8. Negative Covenants.
------------------
The Borrower covenants and agrees that for so long as this Agreement is in
effect and until the Notes, together with all interest thereon and all other
Obligations of the Borrower to the Bank are paid or satisfied in full, without
the prior written consent of the Bank:
8.1 Transactions with Affiliates. The Borrower will not, and will
----------------------------
not permit any of their Subsidiaries to, directly or indirectly, enter into any
transaction with any Affiliate (including without limitation any purchase, sale
or lease) except (i) transactions in the ordinary course of business on terms
that are no less favorable to the Borrower than those which might be obtained at
the time in a comparable arm's-length transaction with any Person who is not an
Affiliate and (ii) employment contracts and incentive plans with senior
management of Borrower entered into in the ordinary course of business and
consistent with prudent business practices. Notwithstanding the foregoing, the
Borrower will not, and will not permit any Subsidiary to, directly or
indirectly, pay any management, consulting, overhead, indemnity, guarantee or
other similar fee or charge to any Affiliate.
8.2 Consolidation Merger or Acquisition. Except for a "Permitted
-----------------------------------
Acquisition" as defined below, the Borrower shall not merge or consolidate with
or into any other Person, or make any acquisition of the business or a
substantial portion of the assets of any other Person except: (i) any Subsidiary
of the Borrower may merge into the Borrower or any Wholly-owned Subsidiary of
the Borrower; (ii) Investments to the extent permitted by Section 8.8 hereof.
For purposes hereof a "Permitted Acquisition" is an acquisition which
satisfies the following requirements:
(a) if it involves a merger or consolidation, the Borrower shall
be the surviving party;
-32-
(b) at the time of such acquisition no Default or Event of Default
shall have occurred and be continuing;
(c) no Default or Event of Default or violation of any covenant under
this Agreement shall arise or be reasonably anticipated to arise as a
result of such acquisition, which the Borrower shall confirm by furnishing
to the Bank at least ten (10) days prior to the closing date for such
acquisition pro forma financial statements reasonably satisfactory to the
--- -----
Agent giving effect to such acquisition; and
(d) the target of such acquisition must be engaged in a line of
business similar to the then current businesses of the Borrower or its
Subsidiaries.
Notwithstanding anything to the contrary herein, the prior written consent
of the Bank shall be required for (a) any individual acquisition involving cash
consideration (including assumption of indebtedness) in excess of $2,000,000 and
(b) any acquisition during any fiscal year of the Borrower to the extent that
the aggregate cash consideration (including assumption of indebtedness) for
acquisitions made during such year (giving effect to the proposed acquisition)
exceeds $5,000,000.
8.3 Disposition of Assets. The Borrower shall not convey, sell,
---------------------
lease, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, accounts receivable and leasehold assets),
whether now owned or hereafter acquired, except for (i) obsolete, worn out or
surplus property disposed of in the ordinary course of business (with standard
discounts); (ii) the sale or lease of inventory in the ordinary course of
business; and (iii) property, business or assets having an aggregate value of
less than $300,000 in any fiscal year. In addition, the Borrower may upon thirty
(30) days notice to the Bank, transfer certain assets (but in no event existing
Accounts) to existing or newly formed Subsidiaries for tax planning or other
business purposes, provided, however, any such transfer shall be subject to the
written consent by the Bank which shall not be unreasonably withheld or delayed,
provided, however, the Bank may require as condition to such consent that such
Subsidiary become a Borrower hereunder or a guarantor of the Obligations of the
Borrower.
8.4 Indebtedness. The Borrower shall not create, incur, assume or
------------
suffer to exist any Indebtedness, except:
(a) Indebtedness payable to the Bank;
(b) existing Indebtedness, including the Indebtedness listed on
Schedule A hereto and renewals and refinancings thereof, but not any
----------
increase in the principal amounts thereof; and
-33-
(c) Indebtedness for taxes, assessments or governmental charges to
the extent that payment therefor shall at the time not be required to be
made in accordance with Section 7.8;
(d) current liabilities on open account for the purchase price of
services, materials and supplies incurred by any Borrower in the ordinary
course of business (not as a result of borrowing), so long as all of such
open account Indebtedness shall be promptly paid and discharged when due or
in conformity with customary trade terms and practices, except for any such
open account Indebtedness which is being contested in good faith by the
Borrower, as to which adequate reserves required by GAAP have been
established and are being maintained and as to which no Lien has been
placed on any property of the Borrower or any of its Subsidiaries;
(e) Guarantees permitted under Section 8.5 hereof; and
(f) Purchase Money Indebtedness and capital lease obligations of the
Borrower and its Subsidiaries in an aggregate amount not to exceed
$1,000,000 at any one time outstanding; provided that, after giving effect
--------
to the incurrence of such Purchase Money Indebtedness and capital lease
obligations and to the receipt and application of the proceeds thereof, no
Event of Default shall have occurred and be continuing.
8.5 Guarantees. Neither the Borrower nor any of its Subsidiaries
----------
shall create, incur, assume, guarantee or be or remain liable with respect to
any Guarantees other than (i) Guarantees existing on the date of this Agreement
and disclosed on Schedule A hereto, (ii) Guarantees resulting from the
----------
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business and (iii) Guarantees in connection with the Purchase Money
Indebtedness or capital lease obligations permitted under Section 8.4(f).
8.6 Liens. The Borrower shall not create, incur, assume or suffer to
-----
exist any Lien on any of its properties or assets, except the following
(collectively, "Permitted Liens"):
---------------
(a) Liens for taxes, fees, assessments and other governmental charges
not delinquent or being contested in good faith and by proper proceedings,
as to which adequate reserves are maintained on the books of the Borrower
in accordance with GAAP;
(b) carriers', warehousemen's, landlords', mechanics', materialmen's
or similar liens imposed by law incurred in the ordinary course of
business in respect of obligations not overdue, or being contested in good
faith and by proper proceedings and as to which adequate reserves with
respect thereto are maintained on the books of the Borrower in accordance
with GAAP;
-34-
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other types of social security legislation;
(d) security deposits made to secure the performance of leases,
licenses, contracts and statutory obligations incurred in the ordinary
course of business;
(e) Liens in favor of the Bank;
(f) existing Liens, if any, listed on Schedule A hereto; provided
---------- --------
that no such Lien is spread to cover any additional property after the
date hereof, and that the principal amount of the Indebtedness secured
thereby is not increased;
(g) Liens securing Indebtedness permitted under Section 8.4(f),
provided that (I) each such Lien is given solely to secure the purchase
price of such property, does not extend to any other property and is given
at the time of acquisition of the property, and (II) the Indebtedness
secured thereby does not exceed the lesser of the cost of such property and
its fair market value at the time of acquisition; and
(h) Liens consisting of easements, rights-of-way, zoning restrictions
and other similar Liens affecting real property which do not materially
interfere with the Borrower's intended use thereof or with the ordinary
conduct of the Borrower's business.
8.7 Restricted Payments. The Borrower shall not declare, make or pay
-------------------
any Restricted Payment other than;
(i) dividends payable solely in common stock of the Borrower
to its stockholders;
(ii) dividends paid by any Subsidiary of the Borrower to the
Borrower or any of its Wholly-Owned Subsidiaries; and
(iii) as long as no Event of Default has occurred and is
continuing or could reasonably be expected to arise
therefrom, the repurchase of up to 39,300 shares of the
Borrower's common stock at a price not in excess of their
value as of a recent trading date pursuant to a repurchase
program previously approved by the Borrower's Board of
Directors.
8.8 Investments. The Borrower shall not make, maintain or acquire
-----------
any Investment in any Person other than:
-35-
(a) marketable obligations issued or guaranteed by the United States of
America having a maturity of one year or less from the date of purchase;
(b) certificates of deposit, eurodollar time deposits, commercial paper or
any other obligations of the Bank or of any other bank or trust company
organized or licensed to conduct a banking business under the laws of the United
States or any State thereof and which has (or which is a Subsidiary of a bank
holding company which has) publicly traded debt securities rated A or higher by
Standard & Poor's Corporation or A-2 or higher by Xxxxx'x Investors Service,
Inc.);
(c) commercial paper with maturities of not more than 90 days having the
highest rating then given by Xxxxx'x Investors Services, Inc. or Standard &
Poor's Corporation;
(d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in subparagraph (a) above entered
into with the Bank or any of the banks referred to in subparagraph (b) above;
(e) shares in money market mutual funds substantially all the assets of
which are comprised of securities and other obligations of the types described
in subparagraphs (a) through (d) above;
(f) (i) depository accounts at the Bank; and (ii) depository accounts
maintained at other banks;
(g) stock or obligations issued to the Borrower or any Subsidiary thereof
in settlement of claims against others by reason of an event of bankruptcy or a
composition or the readjustment of debt or a reorganization of any debtor of the
Borrower or such Subsidiary;
(h) currently existing Investments set forth on Schedule A;
----------
(i) loans to employees of the Borrower in an aggregate amount not to
exceed at any time $250,000 in any individual case or $500,000 in the aggregate;
(j) transfers of certain assets to Subsidiaries to the extent permitted
under the last sentence of Section 8.3; and
(k) investments in accordance with the Borrower's investment policy as
approved by the Board of Directors of the Borrower, a copy of which has been
previously furnished to the Bank.
-36-
8.9 Sale and Leaseback. The Borrower shall not enter into any
------------------
arrangement, directly or indirectly, whereby it shall sell or transfer any
property owned by it in order to lease such property or lease other property
that the Borrower intends to use for substantially the same purpose as the
property being sold or transferred (a "Sale and Leaseback Transaction")
provided, however, as long as no Event of Default has occurred and is continuing
or could reasonably be expected to arise therefrom, the Borrower may enter into
a Sale and Leaseback Transaction as long as the aggregate sale price of property
sold in such transactions does not exceed $500,000.
8.10 ERISA. The Borrower will not permit any Plan maintained by the
-----
Borrower or by any member of the Controlled Group to: (a) engage in any
Prohibited Transaction; (b) fail to report to the Bank a "reportable event"
(ERISA (S)4043) within 30 days after its occurrence or as to any reportable
event as to which the 30-day notice period requirement of Section 4043(b) of
Title IV of ERISA has been waived by the PBGC, within 30 days of such time as
the Borrower is requested to notify the PBGC of such reportable event; (c) incur
any "accumulated funding deficiency" (ERISA (S)302); (d) terminate its existence
at any time in a manner which could result in the imposition of a Lien on the
property of the Borrower or any Subsidiary thereof; or (e) fail to report to the
Bank any "complete withdrawal" or "partial withdrawal" by the Borrower or an
affiliate from a "multiemployer plan" (ERISA (S)(S)4203,4205, and 4001,
respectively). The quoted terms are defined in the respective sections of ERISA
cited above.
8.11 Fiscal Year. The Borrower shall not change its fiscal year
-----------
without the prior written consent of the Bank.
Section 9. Financial Covenants.
-------------------
The Borrower covenants and agrees that so long as this Agreement is in
effect and until the Notes, together with all interest thereon and all other
Obligations of the Borrower to the Bank are paid or satisfied in full:
9.1 Net Income. The Borrower will not permit Net Income as of the
----------
end of any fiscal quarter to be less than the respective amounts set forth
below: (i) for the fiscal quarter ending March 31, 1998, Seven Hundred Fifty
Thousand Dollars ($750,000); and (ii) for each fiscal quarter ending thereafter,
One Million Dollars ($1,000,000).
9.2 Current Ratio. The Borrower will not permit the ratio of its
-------------
Adjusted Current Assets to its Current Liabilities to be less than (i) 1.00 to
1.00 as of the end of any fiscal quarter, commencing with the quarter ending
March 31, 1998, through the quarter ending December 31, 1998; (ii) 1.50 to 1.00
as of the end of any fiscal quarter, commencing with the quarter ending March
31, 1999 and for each quarter ending thereafter.
-37-
9.3 Leverage Ratio. The Borrower will not permit its Leverage
--------------
Ratio to be less than 1.00 to 1.00 as of the end of any fiscal quarter,
commencing with the quarter ending March 31, 1998 and for each quarter ending
thereafter.
Section 10. Events of Default.
-----------------
10.1 Events of Default. The occurrence of any of the following
-----------------
events shall be an "Event of Default" hereunder:
----------------
(a) The Borrower shall default (i) in the due and punctual
payment of principal of any Loan; or (ii) in the payment of interest on any
Loan or in the payment of any other amount due under any Loan Document and
such Default shall continue for more than five (5) Banking Days after such
payment was due; or
(b) Any representation, warranty or statement of the Borrower
made herein or in any other Loan Document, or in any certificate or
statement furnished pursuant to or in connection herewith or therewith,
shall prove to be incorrect, misleading or incomplete in any material
respect on the date as of which made or deemed made except as a result of
transactions expressly permitted hereunder; or
(c) The Borrower shall default in the performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to Sections 7.1, 7.2, 7.6, 8 and 9 hereof; or
(d) The Borrower shall default in the performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to any of the provisions of this Agreement or any other Loan
Document (other than those referred to in paragraphs (a) through (c) above)
and such default shall continue unremedied for a period of thirty (30) days
(or in case of defaults under Sections 7.5 and 7.10, ten (10) days) after
the occurrence of such Default; or
(e) Any obligation of the Borrower in respect of any
Indebtedness (other than the Notes) in excess of $250,000 or any Guarantee
in excess of $250,000 shall be declared to be or shall become due and
payable prior to the stated maturity thereof, or such Indebtedness or
Guarantee shall not be paid as and when the same becomes due and payable,
or there shall occur and be continuing unremedied beyond the applicable
cure and/or grace period any default under any instrument, agreement or
evidence of indebtedness relating to any such Indebtedness the effect of
which is to permit the holder or holders of such instrument, agreement or
evidence of indebtedness, or a trustee, agent or other representative on
behalf of such holder or holders, to cause such Indebtedness to become due
prior to its stated maturity; or
-38-
(f) The Borrower shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code, or (vi) take any corporate action
for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of the Borrower in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower or of all or any substantial
part of its assets, or (iii) similar relief in respect of the Borrower under any
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 days; or an order for relief against the Borrower shall be entered in an
involuntary case under the Bankruptcy Code; or
(h) A judgment or judgments for the payment of money in excess of $250,000
(net of insurance proceeds) in the aggregate shall be rendered against the
Borrower and any such judgment or judgments shall not have been vacated,
discharged, stayed or bonded pending appeal within thirty(30) days from the
entry thereof; or
(i) The Borrower or any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $250,000 which it is
obligated to pay to the PBGC or to a Plan under Title IV of ERISA; or a notice
of intent to terminate a Plan or Plans having aggregate Unfunded Liabilities in
excess of $250,000 shall be filed under Title IV of ERISA by the Borrower or any
member of the Controlled Group, any plan administrator or any combination of the
foregoing; or 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 a proceeding shall be instituted by a fiduciary of any such Plan or
Plans against the Borrower or any member of the Controlled Group to enforce
Sections 515 or 4219(c)(5) of ERISA; or 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 there shall occur a complete or partial
withdrawal form, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which could cause the
Borrower or one or more members of the Controlled Group to incur a current
payment obligation in excess of $250,000; or
-39-
(j) The Borrower shall default in the performance or observance
of any material term, covenant or agreement on their part to be
performed or observed pursuant to any of the provisions of any
agreement with the Bank or any instrument delivered in favor of the
Bank (other than, in either case, a Loan Document), and such default
shall continue unremedied beyond the grace and/or cure period (in any)
provided for therein.
10.2 Remedies Upon an Event of Default. If any Event of Default
---------------------------------
shall have occurred and be continuing, the Bank may by notice (a) declare the
Commitments terminated (whereupon the Commitments shall be terminated) and/or
(b) declare the principal amount then outstanding of, and the accrued interest
on, the Loans and facility fees and all other amounts payable hereunder and
under the Notes to be forthwith due and payable, whereupon such amounts shall be
and become immediately due and payable, without further notice, including,
without limitation, notice of intent to accelerate, presentment, demand, protest
or other formalities of any kind, all of which are hereby expressly waived by
the Borrower; provided that in the case of the occurrence of an Event of Default
--------
with respect to the Borrower referred to in clauses (f) and (g) of Section 10.1,
the Commitments shall be automatically terminated and the principal amount then
outstanding of and the accrued interest on the Loans and commitment fees and all
other amounts payable hereunder and under the Notes shall be and become
automatically and immediately due and payable, without notice (including,
without limitation, notice of intent to accelerate), presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Borrower.
Section 11. General.
-------
11.1 Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement, the Notes or any other Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Bank and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
11.2 Notices, Etc. All notices and other communications provided
------------
for hereunder shall be in writing and shall be delivered by hand, by a
nationally recognized commercial overnight delivery service, by first class
certified or registered mail, postage prepaid or by telecopy, delivered,
addressed or transmitted, if to the Borrower, at its address set forth at the
beginning of this Agreement, Attention: Xxxxxx X. Xxxxxx, Chief Financial
Officer, Telecopy No. 000-000-0000, with a copy to Xxxx and Xxxx LLP, 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 Attention: Xxxxxxx X. Xxxxx, Esq., Telecopy
No. 617-526-5000, and if to the Bank, at its address set forth in the beginning
of this Agreement, Attention: Xxxxxxxxx Xxxxxxx, Vice President, Telecopy No.
(000) 000-0000, with a copy to Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx Esq., Telecopy No.
(000) 000-0000; or, as to each party, at such other address as shall
-40-
be designated by such party in a written notice to the other party. All such
notices and communications shall be deemed effective, (a) in the case of hand
deliveries, when delivered; (b) in the case of an overnight delivery service, on
the next Banking Day after being placed in the possession of such delivery
service, with delivery charges prepaid; (c) in the case of mail, five days after
deposit in the postal system, first class certified or registered mail, postage
prepaid; and (d) in the case of telecopy notices, when electronic indication of
receipt is received, except that notices to the Bank pursuant to the provisions
of Section 2.4 shall not be effective until received by the Bank.
11.3 No Waiver; Remedies. No failure on the part of the Bank to
-------------------
exercise, and no delay in exercising, any right hereunder or under the Notes
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder or under the Notes preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
11.4 Right of Set-off.
----------------
(a) Upon the occurrence and during the continuance of any Event
of Default, the Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Bank to or
for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement
and the Notes, irrespective of whether or not the Bank shall have made any
demand hereunder and although such obligations may be contingent or
unmatured.
(b) The Bank agrees promptly to notify the Borrower after any
such set-off and application, provided that the failure to give such notice
--------
shall not affect the validity of such set-off and application. The rights
of the Bank under this Section 11.4 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Bank may have.
11.5 Expenses; Indemnification.
-------------------------
(a) The Borrower shall pay on demand (i) the reasonable fees and
disbursements of counsel to the Bank in connection with the preparation of
this Agreement and the preparation or review of each agreement, opinion,
certificate and other document referred to in or delivered pursuant hereto;
(ii) all reasonable out-of-pocket costs and expenses of the Bank in
connection with the administration of this Agreement and the other Loan
Documents, and any waiver or amendment of any provision hereof or thereof,
including without limitation, the reasonable fees and disbursements of
counsel for the Bank; and (iii) if any Event of Default occurs and is
continuing, all reasonable costs and expenses incurred by the Bank,
including the
-41-
reasonable fees and disbursements of counsel to the Bank, and of any
appraisers, environmental engineers or consultants, or investment banking
firms retained by the Bank in connection with such Event of Default or
collection, bankruptcy, insolvency and other enforcement proceedings
related thereto. The Borrower agrees to pay, indemnify and hold the Bank
harmless from, any and all recording and filing fees, and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise or other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of or the
consummation or administration of any of the transactions contemplated by,
or any amendment, supplement or modification of, or any waiver or consent
under or in respect of, this Agreement or the other Loan Documents, or any
documents delivered pursuant hereto or thereto.
(b) The Borrower agrees to indemnify the Bank and its officers and
directors and hold the Bank and its officers and directors harmless from
and against any and all liabilities, losses, damages, reasonable costs and
expenses of any kind (including, without limitation, the reasonable fees
and disbursements of counsel for the Bank in connection with any
investigative, administrative or judicial proceeding initiated by a third
party, whether or not the Bank shall be designated a party thereto) which
may be incurred by the Bank, relating to or arising out of this Agreement
or any other Loan Document, or the existence of any Hazardous Substance on,
in, or under any Borrower Property, or any violation of any applicable
Environmental Laws for which the Borrower has any liability or which occurs
upon any Borrower Property, or the imposition of any Lien under any
Environmental Laws, provided that the Bank shall not have the right to be
--------
indemnified hereunder for its own bad faith, gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(c) The agreements in this Section 11.5 shall survive the repayment
of the Notes, and all other amounts payable under this Agreement and the
other Loan Documents.
11.6 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns except that the Borrower may not assign their rights or obligations
hereunder or under the Notes without the prior written consent of the Bank. The
Bank may assign a portion of its rights and obligations under this Agreement and
the Notes (or grant a participation therein) to any other bank or financial
institution with assets in excess of $500,000,000, provided, however, that the
--------
Bank shall at all times remain the agent bank with respect to this Credit
Agreement. The Borrower agrees that each assignee shall be entitled to the
benefits of Sections 4.6 through 4.11 with respect to its assigned interest,
provided that no assignee shall be entitled to receive any greater amount
--------
pursuant to such Sections than the Bank would have been entitled to receive in
respect of the amount of the assigned interest transferred by it to such
assignee had no such transfer occurred. The Bank may furnish any information
concerning the Borrower in
-42-
the possession of the Bank from time to time to assignees and participants
(including prospective assignees and participants).
11.7 Severability. Any provision of this Agreement which is
------------
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
11.8 Confidentiality. The Bank will endeavor in good faith to
---------------
maintain the confidentiality of any non-public information relating to the
Borrower which has been identified in writing as confidential on the information
itself or otherwise (the "Confidential Information") and, except as provided
below, will exercise the same degree of care that the Bank exercises with
respect to its own proprietary information to prevent the unauthorized
disclosure of the Confidential Information to third parties. Confidential
Information shall not include information that either: (a) is in the public
domain through no fault of the Bank; or (b) is disclosed to the Bank by a third
party, provided the Bank does not have actual knowledge that such third party is
prohibited from disclosing such information. The terms of this Section shall not
apply to disclosure of Confidential Information by the Bank that is, in the good
faith opinion of the Bank, compelled by laws, regulations, rules, orders or
legal process or proceedings or is disclosed to: (a) any party, including a
prospective participant, who has signed a confidentiality agreement containing
terms substantially similar to those contained herein; (b) legal counsel,
examiners, auditors and directors of the Bank and examiners, auditors and
investigators having regulatory authority over the Bank; or (c) any party in
connection with the exercise of remedies by the Bank after default in the
performance of the Borrower's obligations to the Bank.
11.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REGARD TO CONFLICTS OF LAWS RULES).
11.10 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER AGREE THAT
--------------------
NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT
OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR
THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
BANK AND THE BORROWER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS,
NEITHER THE BANK NOR THE BORROWER HAS AGREED WITH OR REPRESENTED
-43-
TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
11.11 VENUE; CONSENT TO SERVICE OF PROCESS. THE BORROWER ACCEPTS FOR
------------------------------------
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT, THE NOTES, ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED
BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN WHICH SHALL HAVE
BEEN SERVED WITH PROCESS IN THE MANNER HEREINAFTER PROVIDED, SUBJECT TO EXERCISE
AND EXHAUSTION OF ALL RIGHTS OF APPEAL AND TO THE EXTENT THAT IT MAY LAWFULLY DO
SO, WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING ANY CLAIMS THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCOVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY SUCH ACTION, SUIT
OR PROCEEDING IN THE MANNER PROVIDED BY CHAPTER 223A OF THE GENERAL LAWS OF
MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS RULES OF CIVIL PROCEDURE OR RULE 4 OF
THE FEDERAL RULES OF CIVIL PROCEDURE.
11.12 Headings. Section headings in this Agreement are included
--------
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
11.13 Counterparts. This Agreement may be signed in one or more
------------
counterparts each of which shall constitute an original and all of which taken
together shall constitute one and the same instrument.
[REMINDER OF PAGE INTENTIONALLY LEFT BLANK]
-44-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
LIFELINE SYSTEMS, INC.
By:
__________________________
Xxxxxx X. Xxxxxx
Vice President of Finance and
Chief Financial Officer
STATE STREET BANK AND TRUST
COMPANY
By:
__________________________
Xxxxxxxxx X. Xxxxxxx
Vice President
-45-
Exhibit A-1
-----------
REVOLVING CREDIT NOTE
$5,000,000 April 22, 1998
For value received, the undersigned corporation (hereafter referred to as
the "Borrower") promises to pay to STATE STREET BANK AND TRUST COMPANY, 225
--------
Franklin Street, Boston, Massachusetts 02110-2804 (the "Bank"), or to its order,
----
the lesser of Five Million Dollars ($5,000,000) or the outstanding principal
amount of Revolving Credit Loans (as defined in the Credit Agreement referred to
below) advanced by the Bank to the Borrower pursuant to the Credit Agreement, on
the Revolving Credit Maturity Date, together with interest on the principal
amount hereof from time to time outstanding at the rates and at the times
provided in the Credit Agreement.
This promissory note evidences borrowings of Revolving Credit Loans under,
is subject to the terms and conditions of and has been issued by the Borrower
pursuant to that certain Credit Agreement of even date herewith by and between
the Borrower and the Bank (as the same may be further amended, modified or
supplemented from time to time, the "Credit Agreement"), and is subject to
------ ---------
optional and mandatory prepayment as provided therein, and is entitled to the
benefits thereof and of the other Loan Documents referred to therein.
All capitalized terms used in this Note and not otherwise defined herein
shall have the same meanings herein as in the Credit Agreement.
Upon the occurrence and during the continuance of any Event of Default, at
the option of the Bank, the principal amount then outstanding of and the accrued
interest on the advances under this Note and all other amounts payable under
this Note shall become immediately due and payable, in the manner and with the
effect provided in the Credit Agreement.
The Bank shall keep a record of the amount, the Type and the date of the
making of each Revolving Credit Loan pursuant to the Credit Agreement and each
payment of principal with respect thereto by maintaining a computerized or other
record of such information, which computerized or other record, and the
printouts thereof, shall constitute prima facie evidence of the accuracy of the
----- -----
information so maintained.
The undersigned agrees to pay all reasonable costs and expenses of the Bank
(including, without limitation, the reasonable fees and expenses of attorneys)
in connection with the enforcement of this Note and the other Loan Documents and
the preservation of its rights hereunder and thereunder.
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waive of such right or of any other right of the
Bank, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other
right on any future occasion. The Borrower and every endorser or guarantor of
this Note regardless of the time, order or place of signing waives presentment,
demand, protest and notices of every kind and assents to any one or more
extensions or postponements of the time of payment or any other indulgences, to
any substitutions, exchanges or releases of collateral for this Note, and to the
additions or releases of any other parties or persons primarily or secondarily
liable.
THE BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY NOW OR HEREAFTER HAVE
TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES OUT OF OR BY
REASON OF THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
BY ITS EXECUTION AND DELIVERY OF THIS NOTE, THE BORROWER ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS NOTE,
ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ADDITION TO ANY OTHER COURT IN WHICH SUCH ACTION, SUIT
OR PROCEEDING MAY BE BROUGHT, IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL
JUDGMENT RENDERED BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN
WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS IN THE MANNER HEREINAFTER PROVIDED,
SUBJECT TO EXERCISE AND EXHAUSTION OF ALL RIGHTS OF APPEAL AND TO THE EXTENT
THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION,
AS A DEFENSE OR OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING ANY CLAIMS THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT ITS PROPERTY
IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY SUCH ACTION, SUIT
OR PROCEEDING IN THE MANNER PROVIDED BY CHAPTER 223A OF THE GENERAL LAWS OF
MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS RULES OF CIVIL PROCEDURE OR RULE 4 OF
THE FEDERAL RULES OF CIVIL PROCEDURE.
ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (WITHOUT REGARD TO CONFLICTS OF LAWS RULES) AND
THIS NOTE SHALL BE DEEMED TO BE UNDER SEAL.
LIFELINE SYSTEMS, INC.
By:_________________________
Name:
Title:
Exhibit A-2
-----------
CONVERTIBLE REVOLVING LOAN NOTE
$5,000,000 April 22, 1998
For value received, the undersigned corporation (hereafter referred to as
the "Borrower") promises to pay to STATE STREET BANK AND TRUST COMPANY, 225
--------
Franklin Street, Boston, Massachusetts 02110-2804 (the "Bank"), or to its order,
----
the lesser of Five Million Dollars ($5,000,000) or the outstanding principal
amount of Convertible Revolving Credits Loans (as defined in the Credit
Agreement referred to below) advanced by the Bank to the Borrower pursuant to
the Credit Agreement, payable at the times and in accordance with the
requirements of the Credit Agreement, together with interest on the principal
amount hereof from time to time outstanding at the rates and at the times
provided in the Credit Agreement.
This promissory note evidences borrowings of the Convertible Revolving Loan
under, is subject to the terms and conditions of and has been issued by the
Borrower pursuant to that certain Credit Agreement, of even date herewith, by
and between the Borrower and the Bank (as the same may be further amended,
modified or supplemented from time to time, the "Credit Agreement"), and is
----------------
subject to optional and mandatory prepayment as provided therein, and is
entitled to the benefits thereof and of the other Loan Documents referred to
therein.
All capitalized terms used in this Note and not otherwise defined herein
shall have the same meanings herein as in the Credit Agreement.
Upon the occurrence and during the continuance of any Event of Default, at
the option of the Bank, the principle amount then outstanding of and the accrued
interest on the advances under this Note and all other amounts payable under
this Note shall become immediately due and payable, in the manner and with the
effect provided in the Credit Agreement.
The Bank shall keep a record of the amount, the Type and the date of the
making of each Convertible Revolving Loan pursuant to the Credit Agreement and
each payment of principal with respect thereto by maintaining a computerized or
other record of such information, which computerized or other record, and the
printouts thereof, shall constitute prima facie evidence of the accuracy of the
----- -----
information so maintained.
The undersigned agrees to pay all reasonable costs and expenses of the Bank
(including, without limitation, the reasonable fees and expenses of attorneys)
in connection with the enforcement of this Note and the other Loan Documents and
the preservation of its rights hereunder and thereunder.
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Bank, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or waiver of the same
or any other right on any future occasion. The Borrower and every endorser or
guarantor of this Note regardless of the time, order or place of signing
waives presentment, demand, protest and notices of every kind and assents to
any one or more extensions or postponements of the time of payment or any other
indulgences, to any substitutions, exchanges or releases of collateral for this
Note, and to the additions or releases of any other parties or persons primarily
or secondarily liable.
THE BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY NOW OR HEREAFTER HAVE
TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES OUT OF OR BY
REASON OF THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
BY ITS EXECUTION AND DELIVERY OF THIS NOTE, THE BORROWER ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS NOTE,
ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ADDITION TO ANY OTHER COURT IN WHICH SUCH ACTION, SUIT
OR PROCEEDING MAY BE BROUGHT, IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL
JUDGMENT RENDERED BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN
WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS IN THE MANNER HEREINAFTER PROVIDED,
SUBJECT TO EXERCISE AND EXHAUSTION OF ALL RIGHTS OF APPEAL AND TO THE EXTENT
THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION,
AS A DEFENSE OR OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING ANY CLAIMS THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT ITS PROPERTY
IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND AGREES THAT PROCESS MAY BE SERVED UPON IT IN ANY SUCH ACTION, SUIT
OR PROCEEDING IN THE MANNER PROVIDED BY THE CHAPTER 223A OF THE GENERAL LAWS OF
MASSACHUSETTS, RULE 4 OF THE MASSACHUSETTS RULES OF CIVIL PROCEDURE OR RULE 4
OF THE FEDERAL RULES OF CIVIL PROCEDURE.
ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (WITHOUT REGARD TO CONFLICTS OF LAWS RULES) AND
THIS NOTE SHALL BE DEEMED TO BE UNDER SEAL.
LIFELINE SYSTEMS, INC.
By:_________________________
Name:
Title:
Exhibit B
---------
State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Credit Agreement dated as of April , 1998 (the "Agreement")
-----------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 3 of the Agreement, the undersigned hereby confirms its
request made on ____________, ___ for [(a Revolving Credit Loan/Convertible
Revolving Credit Loan)* in the amount of $____________ to be advanced on ______,
___. Said Loan shall be a [Prime Rate] [Fixed Rate] [LIBOR Rate] Loan.]**
[The Interest Period applicable to said Loan will be [_____ days,]*** [____
years]****
[Said Loan represents a conversion of the [Prime Rate] [Fixed Rate] [LIBOR
Rate] Loan in the same amount made on __________, ___]*****
All of the conditions set forth in Section 5 of the Agreement have been
satisfied with respect to the Loan requested hereby; the representations and
warranties contained or referred to in Section 6 of the Agreement are true and
accurate on and as of the effective date of the Loan as though made at and as of
such date (except to the extent that such representations and warranties
expressly relate to an earlier date); and no Default or Event of Default has
occurred and is continuing or will result from the Loan.
LIFELINE SYSTEMS, INC.
By: _____________________
Title:
Date: __________________
________________________
* Indicate whether Loan is to be a Revolving Credit Loan or Convertible
Revolving Credit Loan.
** Indicate Type of Loan.
*** Indicate days duration of Interest Period for LIBOR Rate Loan.
**** Indicate years duration of Interest Period for Fixed Rate Loan.
***** To be inserted in any request for a conversion.
Exhibit C
---------
COMPLIANCE CERTIFICATE
----------------------
TO: State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
The undersigned Responsible Officer of Lifeline Systems, Inc., a Delaware
corporation (the "Borrower") hereby certifies with respect to the Credit
--------
Agreement dated as of April __,1998 between State Street Bank and Trust Company
(the "Bank") and the Borrower, as amended through the date hereof (the "Credit
---- ------
Agreement"), that (a) the Borrower has been in complete compliance for the
---------
period from _/_/__ to _/_/__ (the "Applicable Initial Financial Statements
---------------------------------------
Date") with the covenants of the Borrower contained therein, as demonstrated
----
below, and (b) no Default or Event of Default has occurred and is continuing as
of the date hereof, except, in either case, as noted below. All capitalized
terms used herein and not otherwise defined shall have the meanings prescribed
therefor in the Credit Agreement.
COVENANT REQUIRED ACTUAL AS OF
______ __, 19__
Financial Statements Quarterly for the first three
quarters of each fiscal year,
w/in 46 days; and annually w/in
[91] days
All documents filed with Within 5 days after filing
SEC
Current Ratio (quarterly) Quarter __.__:1
Ending Ratio ($__________to
------ -----
$___________)
3/31/98 1.00:1.00
through
12/31/99
3/31/99 and 1.50:1.00
each fiscal
quarter
thereafter
Leverage Ratio (Total Quarter ___.___:1.00
Liabilities to Tangible Net Ending Ratio ($____to $____)
------ -----
Worth)(quarterly)
3/31/98 and 1.00:1.00
each fiscal
quarter
thereafter
Net Income (quarterly Quarter Net $_______________
Xxxxxxx X.Xxxxx, Esq. Ending Income
------ ------
3/31/98 $750,000
6/30/98 $1,000,000
and each
fiscal
quarter
thereafter
Comments Regarding Exceptions:
Attached hereto are financial statements as of and for the fiscal [quarter]
[year] ended on the applicable initial financial statements date, which have
been certified by the [undersigned] [Accountants] as required by the Credit
Agreement.
[_] The Leverage Ratio has changed so as to warrant an adjustment in the
Applicable Margin from __% to __%. (check if applicable)
Submitted by:
_____________________
Name:________________
Title:_______________
Date:________________
Schedule A
----------
Disclosure Schedule
-------------------
[To be completed by the Company]
