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EXHIBIT 10.3
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AMENDED AND RESTATED LOAN AGREEMENT
Dated as of November 18, 1994
BETWEEN
XXXXXXX RIVER ASSOCIATES INCORPORATED
AND
THE FIRST NATIONAL BANK OF BOSTON
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made as of November 18, 1994,
between Xxxxxxx River Associates Incorporated, a Massachusetts corporation (the
"Borrower") having its principal place of business and chief executive office at
Xxxx Xxxxxxx Tower, 200 Clarendon Street, T-33, Xxxxxx, Xxxxxxxxxxxxx 00000, and
THE FIRST NATIONAL BANK OF BOSTON (the "Lender"), a national banking association
with its head office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Borrower and the Lender are parties to a Loan and Security
Agreement dated June 30, 1994 (the "Bridge Loan Agreement");
WHEREAS, the Borrower has requested that the Bridge Loan Agreement be
amended and restated in the form of two separate agreements, one of which shall
be this Amended and Restated Loan Agreement and one of which shall be that
certain Amended and Restated Security Agreement (the "Amended and Restated
Security Agreement") between the Borrower and the Lender executed on the date
hereof; and
WHEREAS, the Lender is willing to amend and restate the Bridge Loan
Agreement upon the terms and subject to the conditions set forth herein and in
the Amended and Restated Security Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree that the Bridge Loan Agreement shall be
amended and restated to read in its entirety as set forth herein and in the
Amended and Restated Security Agreement:
SECTION 1. DEFINITIONS.
1.1 DEFINITIONS. As used herein, the following terms shall have the
following meanings:
"Accounts Receivable" means all of the Borrower's rights to payment for
goods sold or leased or for services rendered, all sums of money or other
proceeds due or becoming due thereon, all instruments pertaining thereto, all
guarantees and security therefor, and all goods or services giving rise thereto
and the rights pertaining to such goods and services, including the rights of
stoppage in transit and all related insurance; whether any of the foregoing be
now existing or hereafter arising, now or hereafter received by or owing or
belonging to the Borrower.
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"Accountants" means independent certified public accountants employed by
the Borrower and reasonably acceptable to the Lender. The Lender hereby
acknowledges that the Accountants may include Parent, XxXxxxxxxx & Xxxxxx, CPA
and Ernst & Young.
"Adjusted Net Income" means an amount equal to the Net Income of the
Borrower for the applicable period minus all Tax Distribution Amounts accrued in
such period.
"Affiliate" means, with reference to any Person, (including an individual,
a corporation, a partnership, a trust or a governmental agency or
instrumentality), (i) any director or officer of that Person, (ii) any other
Person controlling, controlled by or under direct or indirect common control of
that Person, (iii) any other Person directly or indirectly holding 5% or more of
any class of the capital stock or other equity interests (including options,
warrants, convertible securities and similar rights) of that Person and (iv) any
other Person 5% or more of any class of whose capital stock or other equity
interests (including options, warrants, convertible securities and similar
rights) is held directly or indirectly by that Person. For purposes of Section
5. l(vi) hereof, "Affiliate" means (i) any member of a controlled group of
corporations which includes the Borrower, (ii) any trade or business, whether or
not incorporated, under common control with the Borrower, (iii) any member of an
affiliated service group which includes the Borrower, and (iv) any member of a
group treated as a single employer by regulation.
"Agreement" means this Amended and Restated Loan Agreement, including the
Exhibits hereto, as originally executed, or if this Agreement is amended, varied
or supplemented from time to time, as so amended, varied or supplemented.
"Amended and Restated Security Agreement" shall have the meaning set forth
in the Preamble.
"Average Unused Commitment" for any period of time means the daily average
difference between the Maximum Amount applicable to such period and the sum of
the principal amount of Revolving Loans actually outstanding hereunder during
such period.
"Base Rate" means the rate of interest announced from time to time by the
Lender at its head office in Boston, Massachusetts as its "base rate."
"Borrowing Base" means an amount equal to the lesser of (i) the sum of (a)
70% of the unpaid face amount of all Eligible Accounts, plus (b) 50% of the face
amount of all Eligible Unbilled Accounts (PROVIDED that for purposes of this
clause (b), the amount determined by applying such percentage shall not exceed
$500,000), and (ii) the sum of (a) 50% of the face amount of all Accounts
Receivable, plus (b) 50% of the face amount of all Eligible Unbilled Accounts.
"Bridge Loan Documents" means, collectively, (i) the Bridge Loan Agreement,
and (ii) all other agreements, instruments, contracts and documents contemplated
thereby and all schedules, exhibits and annexes thereto.
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"Business Day" means any day on which the head office of the Lender is open
for transactions of all of its normal and customary business.
"Capital Expenditures" means the amount of any expenditure for fixed
assets, computer software, leasehold improvements, capital leases under GAAP,
installment purchases of machinery and equipment, acquisitions of real estate,
expenditures in any construction in progress account of the Borrower and other
similar expenditures which are required to be capitalized on a balance sheet
pursuant to GAAP.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any and all real and personal property of the Borrower,
whether tangible or intangible, in which the Lender now has, is granted by this
Agreement, the Amended and Restated Security Agreement or otherwise, or
hereafter acquires a security interest or any other lien, including, without
limitation, by way of mortgage or assignment, to secure the Obligations.
"Credit Note" shall have the meaning set forth in Section 2.1.1.
"Default" means an event or condition that, but for the requirement that
time elapse or notice be given, or both, would constitute an Event of Default.
"Deferred Rent" means, at any time of determination, that portion of rental
expense payable by the Borrower that is deferred and normally recorded as a
liability on the balance sheet of the Borrower.
"EBIT" means, for any period, an amount equal to Net Income for such period
plus the following, to the extent deducted in computing such Net Income: (i)
Interest Charges, (ii) Taxes, and (iii) all extraordinary items.
"Eligible Account" means an Account Receivable which:
(a) is not unpaid more than 90 days after invoice date;
(b) arose in the ordinary course of the Borrower's business as a
result of services which have been performed for or the sale of goods which have
been shipped to the account debtor;
(c) is the legal, valid and binding obligation of the account debtor
thereunder, is assignable, is owned by the Borrower free and clear of all
Encumbrances (except in favor of the Lender) and is not evidenced by a
promissory note or other instrument;
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(d) has not been reduced and, to the best knowledge of the Borrower,
is not subject to reduction, as against the Borrower, its agents or the Lender,
by any offset, counterclaim, adjustment, credit, allowance or other defense, and
as to which there is no (and no basis for any) return, rejection, loss or damage
of or to the goods giving rise thereto, or any request for credit or
adjustments;
(e) is not difficult to collect or uncollectible for any reason,
including, without limitation, any bankruptcy, insolvency or other financial
difficulty of the account debtor, or any impediment to the assertion of a claim
or commencement of an action against the account debtor, all as determined by
the Lender in its reasonable discretion;
(f) is not owing from any Affiliate or supplier to the Borrower; and
(g) is not owing from an account debtor (i) not located in the United
States, Canada or Puerto Rico, unless such account debtor has been approved in
writing by the Lender in its sole discretion, PROVIDED that the Lender
acknowledges that it has approved Pemex Corporation, a Mexican corporation as an
account debtor, or (ii) who has accounts payable owing to the Borrower of which
25% or more of such accounts payable are not Eligible Accounts.
"Eligible Unbilled Account" means an Account Receivable which:
(a) represents the Borrower's right to payment for services which have
been performed for or the sale of goods which have been shipped to the account
debtor and for which the Borrower will render, in the ordinary course of
business consistent with past practices, but has not yet rendered, an invoice to
such account debtor; and
(b) is not an Eligible Account, but which would qualify as an Eligible
Account under the definition thereof if the Borrower had rendered an invoice for
such Account Receivable in the ordinary course of business consistent with past
practices.
"Encumbrances" shall have the meaning set forth in Section 5.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder.
"Event of Default" shall have the meaning set forth in Section 6.1.
"GAAP" means generally accepted accounting principles consistently applied.
"Indebtedness" with respect to any Person means and includes, without
duplication, (i) all items which, in accordance with GAAP, would be included as
a liability on the balance sheet of such Person, (ii) the face amount of all
banker's acceptances and of all letters of credit issued by any bank for the
account of such Person and all drafts drawn thereunder, (iii) the total amount
of all indebtedness secured by any Encumbrance to which any property or asset of
such Person is
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subject, whether or not the indebtedness secured thereby shall have been
assumed, and (iv) the total amount of all indebtedness and obligations of others
(including any letters of credit and bankers' acceptances) which such Person has
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), discounted with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire,
including, without limitation, any agreement (a) to advance or supply funds to
such other Person to maintain working capital, equity capital, net worth or
solvency, or (b) otherwise to assure or hold harmless such other Person against
loss in respect of its obligations.
"Initial Financial Statement" shall have the meaning set forth in Section
3.5.
"Insolvent" or "Insolvency" means that there shall have occurred one or
more of the following events with respect to a Person: death; dissolution;
liquidation; termination of existence; "insolvent" or "insolvency" within the
meaning of the United States Bankruptcy Code or other applicable statute; such
Person's inability to pay its debts as they come due or failure to have adequate
capital to conduct its business; such Person's failure to have assets having a
fair saleable value (net of any cost to dispose of such assets) in excess of the
amount required to pay the probable liability on its then existing debts
(including unmatured, unliquidated and contingent debts); appointment of a
receiver for any part of the property of, execution of a trust mortgage or an
assignment for the benefit of creditors by, or the filing of a petition in
bankruptcy or the commencement of any proceedings under any bankruptcy or
insolvency laws or any laws relating to the relief of debtors, readjustment of
indebtedness or reorganization of debtors by or against such Person, or the
offering of a plan to creditors for such Person for composition or extension,
except for an involuntary proceeding commenced against such Person which is
dismissed within 60 days after the commencement thereof without the entry of an
order for relief or the appointment of a trustee.
"Interest Charges" means, for any period, without duplication, all interest
and all amortization of debt discount and expense on any particular Indebtedness
for which such calculations are being made, all as determined in accordance with
GAAP. Computations of Interest Charges on a PRO FORMA basis for Indebtedness
having a variable interest rate shall be calculated at the rate in effect on the
date of any determination.
"Inventory" means all of Borrower's goods, merchandise and other personal
property, now owned or hereafter acquired by the Borrower, which are held for
sale or lease or are furnished or to be furnished under contracts of service, or
are finished goods, work in process, raw materials, materials used or consumed
or to be used or consumed in the Borrower's business.
"Leases" means any agreement, whether written or oral, granting a Person
the right to occupy space in a structure or real estate for any period of time
or any capital lease or other lease of or agreement to use personal property.
"Leverage Ratio" means, at any time of determination, the ratio of (i)
Total Liabilities minus Deferred Taxes and Deferred Rent, to (ii) Tangible Net
Worth at such time.
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"Loan Documents" means, collectively, this Agreement (including, without
limitation, the agreements and other instruments listed or described in the
Closing Checklist attached hereto as EXHIBIT F), the Credit Note, the Amended
and Restated Security Agreement and any and all other agreements, instruments or
documents referred to herein or therein and/or delivered in connection herewith
to which the Borrower is a party or any other agreements, instruments or
documents which shall from time to time be identified by the Lender and the
Borrower as "Loan Documents" for purposes of this Agreement, and all schedules,
exhibits and annexes thereto.
"Maturity Date" means June 30, 1996, PROVIDED, HOWEVER, that the Maturity
Date shall be automatically extended for one or more additional one year periods
unless and until, sixty (60) days prior to the current Maturity Date, the Lender
shall have notified the Borrower in writing or the Borrower shall have notified
the Lender in writing of the intention of such party to terminate this Agreement
as of such current Maturity Date.
"Maximum Amount" shall be $2,000,000.
"Net Income" means the gross revenues of the Borrower for the period in
question, less all expenses and other proper charges (including taxes on income
and bonuses accrued to employees), all determined in accordance with GAAP but in
any event, excluding from Net Income (without duplication): (i) any gain or
loss, amortization or deduction arising from any write-up of assets, except to
the extent inclusion thereof shall be approved in writing by the Lender; (ii)
earnings of any Subsidiary accrued prior to the date it became a Subsidiary;
(iii) the net earnings of any business entity (other than a Subsidiary) in which
the Borrower or any of its Subsidiaries has an ownership interest, except to the
extent such net earnings shall have actually been received by the Borrower or
such Subsidiaries in the form of cash distributions; (iv) any gains or losses on
the sale or other disposition of investments or fixed or capital assets; (v) the
proceeds of any life insurance policy; (vi) any deferred or other credit
representing any excess of the equity of any Subsidiary at the date of
acquisition thereof over the amount invested in such Subsidiary; and (vii) any
reversal of any contingency reserve, except to the extent that provision for
such contingency reserve shall be made from income arising during such period.
"Notice of Default" means (i) receipt by the Borrower from the Lender of
written notice of a default or other condition specified in Section 6.1, or (ii)
the Borrower's actual knowledge of the existence of a default or other condition
specified in Section 6.1.
"Obligations" means any and all obligations of the Borrower to the Lender
of every kind and description, direct or indirect, absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising,
regardless of how they arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument, and includes
obligations to perform acts and to refrain from acting as well as obligations to
pay money.
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"Operating Cash Flow" means, for any fiscal period, an amount equal to: (i)
EBIT, plus (ii) the aggregate amount of depreciation, amortization and other
non-cash charges taken in accordance with GAAP during such period, minus (iii)
Tax Distribution Amounts actually paid by the Borrower during such period, minus
(iv) Capital Expenditures made by the Borrower during such period.
"Participant" shall have the meaning set forth in Section 7.
"Person" means any individual, corporation, partnership, trust and
governmental agency and instrumentality.
"Plans" shall mean, collectively, each "employee pension benefit plan" and
each "employee welfare benefit Plan" (each as defined in ERISA) maintained by
the Borrower.
"Quarter" or "Quarterly" means each fiscal quarter of the Borrower.
"Restricted Payments" means (i) any cash or property dividend, distribution
or payment, direct or indirect, to any Person who now or in the future may hold
an equity interest in the Borrower, whether evidenced by a security or not,
other than regular compensation paid to employees of the Borrower in the
ordinary course of business and consistent with past practices; and (ii) any
payment on account of the purchase, redemption, retirement or other acquisition
for value, direct or indirect, of any partnership interests in the Borrower, or
of any warrants, rights or options to acquire any such, or any other payment or
distribution, direct or indirect, made in respect thereof.
"Revolving Loan" shall have the meaning set forth in Section 2.1.1.
"Revolving Loan Account" means the account on the books of the Lender in
which will be recorded Revolving Loans made by the Lender to the Borrower
pursuant to this Agreement, payments made on such Revolving Loans and other
appropriate debits and credits as provided by this Agreement.
"Security Documents" means, collectively, (i) the Loan Documents and (ii)
all other agreements, instruments or contracts by which any of the Obligations
shall be evidenced or under or in respect of which the Lender or any of its
agents or representatives shall have, at such time, any rights or interests as
security for the payment or performance of all or any part of the Obligations.
"Subsidiary" means, with reference to any Person, any corporation,
association, joint stock company, business trust or other similar organization
of whose total capital stock or voting stock such Person directly or indirectly
owns or controls more than 50% thereof or any partnership or other entity in
which such Person directly or indirectly has more than a 50% interest or which
is controlled directly or indirectly by such Person, but in any event including
all of such entities which would be deemed a subsidiary of the Borrower in
accordance with GAAP.
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"Tangible Net Worth" means the amount which is equal to the net worth of
the Borrower computed in accordance with GAAP (including, without limitation,
Accounts Receivable of the Borrower) and with inventory and cost of goods sold
determined on a "first in, first out" basis, and minus (i) the book value, net
of applicable reserves, of all intangible assets of the Borrower including,
without limitation, goodwill, trademarks, trade names, copyrights, patents and
any similar rights, and unamortized debt discount and expense, but not including
the unamortized balance of computer software used by the Borrower in the conduct
of its business, (ii) intercompany accounts with Affiliates (including
receivables due from Affiliates), (iii) to the extent not otherwise approved in
advance by Lender, any write up in the book value of any asset of the Borrower
resulting from revaluation thereof after the date of the Initial Financial
Statement, and (iv) the value in excess of the cost thereof, if any,
attributable to any notes or subscriptions receivable due from stockholders in
respect of capital stock.
"Tax Distribution Amount" means, for any period, an amount equal to the
maximum amount sufficient to cover payment of the Taxes attributable to the
ownership of capital stock of the Borrower based upon the highest federal, state
and local income tax rates that could be applicable to any holder of such
capital stock, and taking into consideration the deduction of any income tax in
computing another income tax that could be applicable to any holder of such
capital stock, as determined through the end of the period in question.
"Taxes" means all taxes on income imposed by any governmental authority,
including but not limited to any federal, state, local or foreign government or
political subdivision thereof.
"Total Debt Service" means, for any period, the sum of (i) Interest Charges
for such period, plus (ii) the aggregate amount of all regularly scheduled
principal payments made or coming due during such period in respect of the
Revolving Loans or any other Indebtedness for capital lease or borrowed money
(to the extent the Lender from time to time permits such Indebtedness to be
incurred or maintained).
"Total Liabilities" means, at any date as of which the amount thereof shall
be determined, all obligations of the Borrower that should, as determined in
accordance with GAAP, be classified as liabilities on the balance sheet of the
Borrower.
SECTION 2. REVOLVING LOANS.
2.1 REVOLVING LOANS.
2.1.1 Upon the terms and subject to the conditions of this Agreement,
and in reliance upon the representations, warranties and covenants of the
Borrower made herein, the Lender agrees to make loans ("Revolving Loans") to the
Borrower at the Borrower's request from time to time, from and after the date
hereof and prior to the Maturity Date, PROVIDED that the principal amount of
Revolving Loans outstanding at any time, shall not exceed the lesser of (i) the
Maximum Amount and (ii) the Borrowing Base at such time, and PROVIDED, FURTHER,
that at
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the time the Borrower requests a Revolving Loan and after giving effect to the
making thereof there has not occurred and is not continuing any Default or Event
of Default. The Borrower agrees that it shall be an Event of Default if at any
time the debit balance of the Revolving Loan Account at any time shall exceed
the lesser of (i) the Maximum Amount and (ii) the Borrowing Base at such time,
unless the Borrower shall, upon notice of such excess from the Lender, promptly
pay cash to the Lender to be credited to the Revolving Loan Account in such
amount as shall be necessary to eliminate the excess. All requests for Revolving
Loans shall be in such form and shall be made in such manner as shall be agreed
between the Borrower and the Lender. The Revolving Loans shall be evidenced by a
Revolving Credit Note (the "Credit Note") in the form of EXHIBIT A hereto.
2.1.2 The Borrower may prepay outstanding Revolving Loans and the
Credit Note in whole or in part at any time without premium or penalty. Amounts
so paid in respect of the Revolving Loans and the Credit Note and other amounts
may be borrowed and reborrowed from time to time as provided in Section 2.1.1.
The Borrower promises to pay on the Maturity Date, and there shall become
absolutely due and payable on the Maturity' Date, all outstanding Revolving
Loans and the Credit Note, together with all unpaid interest thereon and all
fees and other amounts due hereunder.
2.2 INTEREST AND FEES.
2.2.1 Revolving Loans shall bear interest at a rate per annum equal to
the Base Rate in effect from time to time; PROVIDED THAT the balance of
Revolving Loans that remains outstanding after the Maturity Date, or, if
earlier, the date on which the Lender accelerates the Obligations in accordance
with Section 6.2, shall bear interest, to the extent permitted by law,
compounded monthly at an interest rate equal to 4% above the Base Rate in effect
on the Maturity Date or the date of such acceleration, until the Obligations are
paid in full. Interest on Revolving Loans (not at the time overdue) shall be
payable monthly in arrears on the fifteenth Business Day of each month. Any
change in the Base Rate shall result in a change on the same day in the rate of
interest to accrue from and after such day on the unpaid balance of principal of
the Revolving Loans.
2.2.2 The Borrower shall pay to the Lender a commitment fee, payable
quarterly in arrears on the first Business Day of each Quarter, equal to 1/2%
per annum of the Average Unused Commitment during the preceding Quarter.
2.2.3 The Borrower shall pay to the Lender any and all reasonable
charges customarily made by the Lender against borrowers, PROVIDED, HOWEVER,
that for any individual charge in excess of $1,500, the Borrower shall have the
right to approve such charge in advance, which approval shall be made promptly
and shall not be unreasonably withheld.
2.2.4 The Borrower authorizes the Lender to charge to the Revolving
Loan Account or to any deposit account which the Borrower may maintain with the
Lender the interest, fees, charges, taxes and expenses provided for in this
Agreement or any other document executed or
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delivered in connection herewith, with advice thereof thereafter sent to the
Borrower's chief financial officer in accordance with the Lender's customary
practice.
2.2.5 If, after the date hereof, the Lender shall have determined that
the adoption of any applicable law, rule, regulation, guideline, directive or
request (whether or not having the force of law) regarding capital requirements
for banks or bank holding companies, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender with any of the foregoing imposes or
increases a requirement by the Lender to allocate capital resources to the
Lender's commitment to make Revolving Loans hereunder which has or would have
the effect of reducing the return on the Lender's capital to a level below that
which the Lender could have achieved (taking into consideration the Lender's
then existing policies with respect to capital adequacy and assuming full
utilization of the Lender's capital) but for such adoption, change or compliance
by any amount deemed by the Lender to be material, then: (i) the Lender shall
promptly after its determination of such occurrence give notice thereof to the
Borrower; and (ii) to the extent that the costs of such increased capital
requirements are not reflected in the Base Rate, the Borrower and the Lender
shall thereafter attempt to negotiate in good faith, within 30 days following
the date the Borrower receives such notice, an adjustment payable hereunder that
will adequately compensate the Lender in light of the circumstances. If the
Lender and the Borrower are unable to agree to such adjustment within 30 days
following the date upon which the Borrower receives such notice, then commencing
on the date on which the Borrower receives such notice (but no earlier than the
effective date of any such increased capital requirement), the fees payable
hereunder shall increase by an amount that will, in the Lender's reasonable
determination, provide adequate compensation. The provisions of this Section
2.2.5 shall be applied to the Borrower so as not to discriminate against the
Borrower vis-a-vis other customers of the Lender.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
3.1 ORGANIZATION AND QUALIFICATION. (i) The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts; (ii) the Borrower has all requisite corporate
power and authority to own its property and conduct its business as now
conducted and as presently contemplated; and (iii) the Borrower is duly
qualified and in good standing in each jurisdiction (which jurisdictions are
listed on EXHIBIT B hereto) where the nature of its properties or its business
(present or proposed) requires such qualification, except where the failure to
so qualify is not likely to have a material adverse effect on the condition
(financial or otherwise), properties, business or prospects of the Borrower.
Since the date of this Agreement, the Borrower has continued to engage in
substantially the same business as that in which it was then engaged and is
engaged in no unrelated business.
3.2 CORPORATE AUTHORITY; VALID OBLIGATIONS; APPROVALS. The execution,
delivery and performance of the Loan Documents and the transactions and other
documents contemplated
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hereby and thereby are within the Borrower's corporate authority have been
authorized by all necessary corporate proceedings on the part of the Borrower,
and do not and will not contravene any provision of law applicable to the
Borrower or the Borrower's charter document or by-laws, or contravene any
provisions of, or constitute a Default or Event of Default hereunder or a
default under any other agreement, instrument, judgment, order, decree, permit,
license or undertaking binding upon or applicable to the Borrower or any of its
properties, or result in the creation, other than in favor of the Lender, of any
mortgage, pledge, security interest, lien, encumbrance or charge upon any of the
properties or assets of the Borrower, except as set forth on EXHIBIT B hereto.
The Loan Documents have been duly executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower enforceable
in accordance with their terms. The execution, delivery and performance of the
Loan Documents and the transactions and other documents contemplated hereby and
thereby do not require any approval or consent of, or filing or registration
with, any Person, except as set forth on Exhibit B hereto, all of which
approvals, consents, filings or registrations have been obtained or made by the
Borrower prior to the date hereof and remain in full force and effect.
3.3 TITLE TO PROPERTIES; ABSENCE OF LIENS. The Borrower has good and
marketable title to all of its properties, assets and rights of every name and
nature now purported to be owned by it, which properties, assets and rights
include all those necessary to permit the Borrower to conduct its business as
such business was conducted on the date of the Initial Financial Statement, free
from all liens, charges and encumbrances whatsoever except for insubstantial and
immaterial defects in title and liens, charges or encumbrances permitted under
Section 5.6.
3.4 COMPLIANCE. The Borrower and each Plan, where applicable, (i) has all
necessary permits, approvals, authorizations, consents, licenses, franchises,
registrations and other rights and privileges (including, without limitation,
patents, trademarks, trade names and copyrights) necessary to allow it to own
and operate its business without any violation of law or the rights of others,
(ii) is duly authorized, qualified and licensed under and in compliance with all
applicable laws, regulations, authorizations and orders of public authorities
(including, without limitation, laws relating to hazardous materials, hazardous
waste, oil and protection of the environment and laws relating to the funding of
any Plan and to employee benefit plans generally), and (iii) has performed all
obligations required to be performed by it under, and is not in default under or
in violation of, its charter or bylaws or any agreement, lease, mortgage, note,
bond, indenture, license or other instrument or undertaking to which it is a
party or by which any of it or any of its properties are bound, except for any
such violations or failures to comply under clauses (i) through (iii) above
which, individually or in the aggregate, would not have a material adverse
effect on the business, condition (financial or otherwise), results of
operations or assets of the Borrower, and the Borrower has not received any
notice of any material violation, potential violation, failure to comply or
default in respect of any of the foregoing (including, without limitation, any
notice by any governmental authority or third party with respect to the
generation, storage or disposal or release or threat of release of hazardous
substances, hazardous materials or oil, or with respect to any violation of any
federal, state or local environmental, health or safety statute or regulation).
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3.5 FINANCIAL STATEMENTS. The Borrower has furnished to the Lender the
audited balance sheet of the Borrower as of November 30, 1993 and the related
statements of income and retained earnings and cash flows for the year then
ended, which were prepared in accordance with GAAP, certified by the Accountants
and fairly present the financial position of the Borrower, as at the close of
business on such date and the results of its operations for the year then ended.
The Borrower has also furnished to the Lender the unaudited balance sheet and
statement of income of the Borrower as at September 2, 1994 and for the 10
periods then ended (the "Financial Statement"), which was prepared in accordance
with GAAP and fairly presents the financial position of the Borrower as at the
close of business on such date and the results for its operations for the nine
months then ended, subject to normal year-end audit adjustments and the addition
of footnotes. At the date hereof, the Borrower has no material Indebtedness or
other liabilities, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, that are not set forth in the Financial Statement
or referred to in Section 5.9. To the best of the Borrower's knowledge, there
have been no materially adverse changes, individually or in the aggregate, in
the assets, liabilities, financial condition or business of the Borrower, except
as set forth in EXHIBIT B hereto (except as discussed in 5.9 herein).
3.6 EVENTS OF DEFAULT; SOLVENCY. As of the date of this Agreement, no
Default or Event of Default exists and the Borrower is not, and immediately
after giving effect to the consummation of the Revolving Loans will not be,
Insolvent.
3.7 TAXES. The Borrower has filed all federal, state and other tax returns
required to be filed for all Taxes, and has paid (or has established adequate
reserves in accordance with GAAP for the payment of) all Taxes, assessments and
other such governmental charges due from it. The Borrower has not executed any
waiver that would have the effect of extending the applicable statute of
limitations in respect of any Tax.
3.8 LABOR RELATIONS; LITIGATION. The Borrower is not engaged in any unfair
labor practice (as defined in the National Labor Relations Act) and, except as
set forth on EXHIBIT B attached hereto, there is no litigation, proceeding,
governmental investigation (administrative or judicial) or labor dispute,
pending or, to the best knowledge of the Borrower, threatened against the
Borrower, which, if decided adversely to the Borrower, could have a material
adverse effect on the business, properties or condition (whether financial or
otherwise) of the Borrower or on the ability of the Borrower to perform its
obligations under the Security Documents or under any other agreement or
document contemplated hereby or thereby, nor is any substantial basis for any
such litigation or labor dispute known to exist.
3.9 RESTRICTIONS ON THE BORROWER. The Borrower is not party to or bound by
any contract, agreement or instrument, nor subject to any restriction which, to
the best of the Borrower's knowledge, will, under current or foreseeable
conditions, materially and adversely affect its business, property, assets,
operations or condition, financial or otherwise. Neither the
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Borrower's charter nor the Borrower's bylaws contains any restriction or other
provision which will, under current or foreseeable conditions, materially and
adversely affect the Borrower's business, property, assets, operations or
condition, financial or otherwise.
3.10 CONTRACTS WITH AFFILIATES, ETC. Except as disclosed on EXHIBIT B
hereto, the Borrower is not a party to or otherwise bound by any agreements,
instruments or contracts (whether written or oral) with any Affiliate, except
for any such agreement, instrument or contract (i) that is in the ordinary
course of business and on an arm's-length basis, and (ii) as would not
materially and adversely affect the condition (financial or otherwise),
properties, business or results of operations of the Borrower. The Borrower is
not a party to or otherwise bound by any agreements, instruments or contracts
with any Affiliate with respect to Indebtedness for borrowed money.
3.11 CONDUCT OF BUSINESS. The Borrower and each of its Subsidiaries shall
duly observe and comply in all material respects with all applicable laws,
regulations, decrees, orders, judgments and requirements of any governmental
authorities, including those relative to its corporate existence, rights and
franchises, to the conduct of its business and to its property and assets
(including without limitation all environmental laws and ERISA), and shall
maintain and keep in full force and effect and comply with all licenses and
permits necessary in any material respect to the proper conduct of its business.
SECTION 4. CONDITIONS OF LOANS.
4.1 CONDITIONS TO INITIAL REVOLVING LOAN. The obligation of the Lender to
make the initial Revolving Loan is subject to the fulfillment to the
satisfaction of the Lender on the date hereof of the following conditions
precedent:
4.1.1 Receipt by the Lender of all of the agreements, documents,
instruments, certificates and opinions listed or described on the Closing
Checklist attached hereto as EXHIBIT F, in form and substance satisfactory to
the Lender, and duly executed and delivered by the parties thereto, along with
such additional instruments, certificates, opinions and other documents as the
Lender shall reasonably request.
4.1.2 The representations and warranties contained herein shall be
true and accurate on and as of the date hereof, the Borrower shall have
performed and complied with all covenants and conditions required herein to be
performed or complied with by it prior to the making of such Revolving Loan, and
no Default shall be continuing or result from the Revolving Loans to be made on
the date hereof or the transactions contemplated hereby.
4.1.3 That certain Loan Agreement dated as of June 30, 1994 between
the Lender and Xxxxxxx River Associates, L.P. be, and it hereby is, terminated
and shall be of no further force and effect.
4.2 CONDITIONS TO ALL REVOLVING LOANS. The obligation of the Lender to make
any Revolving Loan is subject to (i) the representations and warranties
contained herein and in the
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other Security Documents being true and correct in all material respects at the
time of each such Revolving Loan (except for representations and warranties
limited as to time or with respect to a specific event or except to the extent
any condition or event (individually or in the aggregate) is expressly permitted
under Section 5) with and without giving effect to the Revolving Loans to be
made at such time and the application of the proceeds thereof (and the Borrower
represents and warrants that they are so true and correct at such time); (ii)
there being no Default or Event of Default that is continuing or that results
from such Revolving Loan; and (iii) there being no material adverse change in
the condition (financial or otherwise), business or properties of the Borrower
since the date of this Agreement.
SECTION 5. COVENANTS.
During the term of this Agreement and so long as any Indebtedness of the
Borrower in respect of any Revolving Loan remains outstanding:
5.1 FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS. The Borrower
shall furnish to the Lender:
(i) as soon as available to the Borrower, but in any event within 90
days after each fiscal year-end, the balance sheet of the Borrower as at
the end of, and related statements of income, retained earnings and cash
flow for, such year prepared in accordance with GAAP and certified by the
Accountants that such statements present fairly the financial position of
the Borrower; and concurrently with such financial statements, a written
statement by the Accountants that, in the making of the audit necessary for
their report and opinion upon such financial statements, they have obtained
no knowledge of any Default or Event of Default, or, if in the opinion of
the Accountants such Default or Event of Default exists, they shall
disclose in such written statement the nature and status thereof;
(ii) as soon as available to the Borrower, but in any event within 45
days after the end of each Quarter of each fiscal year of the Borrower, the
balance sheet of the Borrower as at the end of, and related statements of
income, retained earnings and cash flow for, the portion of the year then
ended and for the Quarter then ended, prepared in accordance with GAAP
applied in a manner consistent with the audited financial statements
required by clause (i) above (subject to normal year-end audit adjustments,
and excluding footnotes required by GAAP) and certified pursuant to the
report to be delivered to the Lender under clause (iv) of this Section 5.1;
(iii) promptly as they become available, a copy of each report
(including any so-called management letters) submitted to the Borrower by
the Accountants in connection with each annual audit of the books of the
Borrower by such Accountants or in connection with any interim audit
thereof pertaining to any phase of the business of the Borrower;
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(iv) concurrently with each delivery of financial statements pursuant
to clause (i) and clause (ii) of this Section 5.1, a chief financial
officer's report in substantially the form of EXHIBIT C hereto;
(v) within fifteen (15) Business Days after the close of each fiscal
month of the Borrower, a Borrowing Base and Compliance Certificate in
substantially the form of EXHIBIT D hereto, PROVIDED that if there are no
Revolving Loans outstanding, the Borrower may deliver such Certificate
quarterly, and PROVIDED, FURTHER, that such Certificate must, in any event,
be delivered prior to any Revolving Loan being made by the Lender to the
Borrower;
(vi) promptly after obtaining knowledge of the existence thereof,
notice of (a) the occurrence of any event which constitutes a Default or
Event of Default, (b) the occurrence of any condition or event with respect
to the Borrower or any Affiliate of the Borrower which could reasonably be
expected to constitute a material adverse change in or to have a material
adverse effect on the business, properties or condition (financial or
otherwise) of the Borrower, (c) any litigation or any investigative
proceedings of a governmental agency or authority commenced or threatened
against the Borrower, any Affiliate of the Borrower or any Plan which could
reasonably be expected to have a material adverse effect on the business,
properties or condition (financial or otherwise) of the Borrower, or the
issuance of any judgment, award, decree, order or other determination in or
relating to any such litigation or proceedings that is materially adverse
to the Borrower, (d) the occurrence of a reportable event (as defined in
ERISA), (e) any communications to, or receipt of communications from, the
Pension Benefit Guaranty Corporation, the Internal Revenue Service or the
Department of Labor by the Borrower or any Affiliate relating to any Plan
that contain any information, or notice of any event or occurrence (or lack
thereof), that could reasonably be expected to have a material adverse
effect on the business, properties or condition (financial or otherwise) of
the Borrower, along with copies of all such communications, (f) the
adoption by the Borrower of any Plan subject to ERISA or the substantial
modification of any such Plan, and any option plan or executive
compensation or incentive plan (whether or not subject to ERISA), along
with the vesting and funding schedules and other principal provisions
thereof, and (g) any communications given or received by the Borrower in
any way relating to compliance with, any violation or potential violation
of, or any potential liability under, any environmental law or regulation
(including those relating to pollution control, hazardous materials and
hazardous wastes) that could reasonably be expected to have a material
adverse effect on the business, properties or condition (financial or
otherwise) of the Borrower, along with copies of all such communications;
and
(vii) from time to time, such other financial data and information
about the Borrower as the Lender may reasonably request.
5.2 CONDUCT OF BUSINESS. The Borrower will maintain its corporate
existence, continue to have a fiscal year ending on the last Saturday of
November in each year (unless the Lender
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any change thereof) and remain or engage in substantially the same business as
that in which it is now engaged, and will duly observe and comply with all
applicable laws and all requirements of any governmental authorities relative to
it, its assets or to the conduct of its business, including all laws relating to
the protection of the environment, pollution control, hazardous materials and
hazardous waste (except where the failure to observe and comply with such laws
or requirements would not materially and adversely affect the condition
(financial or otherwise), properties, business, or results of operations of the
Borrower or the ability of the Borrower to perform its obligations to the
Lender), and will maintain and keep in full force and effect all licenses and
permits necessary to the proper conduct of its business.
5.3 MAINTENANCE AND INSURANCE. The Borrower will maintain and keep its
properties in good repair, working order and condition, and will comply with the
provisions of all material Leases to which it is a party or under which it
occupies property so as to prevent any material loss or forfeiture thereof or
thereunder. The Borrower at all times will maintain insurance with such
insurance companies as the Lender shall reasonably approve, in such amounts
against such hazards (including business interruption) and liabilities and for
such purposes as is customary in the industry for companies of established
reputation engaged in the same or similar businesses and owning or operating
similar properties, including, without limitation, insurance on the Collateral
satisfactory to the Lender which includes business interruption insurance. The
Borrower shall notify the Lender in writing at least 30 days prior to any
proposed cancellation of any of its insurance policies. If the Borrower fails to
provide such insurance, after notice to the Borrower the Lender, in its sole
discretion, may provide such insurance and charge the cost (plus applicable
interest) to the Revolving Loan Account or to the Borrower's deposit accounts
with the Lender. Upon request of the Lender from time to time, the Borrower
shall furnish to the Lender certificates or other evidence satisfactory to the
Lender of compliance with the foregoing insurance provisions. The Lender shall
not, by the fact of approving, disapproving, or accepting any such insurance,
incur any liability for the form or legal sufficiency of insurance contracts,
solvency of insurance companies or payment of lawsuits, and the Borrower hereby
expressly assumes full responsibility therefor and liability, if any,
thereunder.
5.4 TAXES. The Borrower will pay or cause to be paid all Taxes, assessments
or governmental charges on or against it or its properties prior to such Taxes
becoming delinquent, except for any Tax, assessment or charge which is being
contested in good faith by proper legal proceedings which serve as a matter of
law to stay the foreclosure of any lien for such tax, assessment or charge and
with respect to which adequate reserves have been established and are being
maintained in accordance with GAAP. Upon request by the Lender, the Borrower
will, within 5 days after the accrual in accordance with applicable laws of the
Borrower's obligation to make deposits for FICA and withholding taxes, furnish
to the Lender evidence satisfactory to the Lender that such deposits have been
made as and when required.
5.5 LIMITATION OF INDEBTEDNESS. Except with the prior written consent of
the Lender, the Borrower will not create, incur, assume or suffer to exist, or
in any manner become or be liable directly or indirectly with respect to, any
Indebtedness except: (i) the Obligations; (ii) Indebtedness existing on the date
of this Agreement solely to the extent described on EXHIBIT B
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hereto; (iii) Indebtedness for Taxes, assessments or other governmental charges,
subject, however, to the limitations set forth in Section 5.4, (iv) Indebtedness
on open account for the purchase price of services, materials and supplies
incurred by the 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 and as to which adequate reserves
required by GAAP have been established and are being maintained; (v)
Indebtedness incurred as a result of borrowing against officers' life insurance
policies owned by the Borrower; (vi) Indebtedness incurred as a result of the
Borrower's guaranties of loans to employees in an aggregate amount not to exceed
$100,000 at any time outstanding; (vii) purchase money Indebtedness for the
purchase price of capital assets (including, without limitation, Indebtedness in
respect of capitalized equipment leases) owed to equipment vendors and/or
lessors for equipment purchased or leased by the Borrower in the ordinary course
for use in its business in an aggregate amount not to exceed $100,000 at any
time outstanding; (viii) Indebtedness that would constitute a Restricted
Payment, to the extent such Restricted Payment would otherwise be permitted to
be made on the date such Indebtedness is incurred; and (ix) Indebtedness in
respect of accrued pension liabilities, accrued vacation liabilities and accrued
bonuses incurred in the ordinary course of business consistent with past
practices, PROVIDED that with respect to such pension liabilities, they are
incurred under a Plan, or an option plan or executive compensation or incentive
plan as such Plan or plan is in effect on the date hereof, and they are not
incurred as a result of any fine or penalty of any nature.
5.6 RESTRICTIONS ON LIENS. The Borrower will not create, incur, assume or
suffer to exist any mortgage, pledge, security interest, lien or other charge or
encumbrance, including the lien or retained security title of a conditional
vendor, ("Encumbrances") upon or with respect to any property or assets, real or
personal, of the Borrower (including, without limitation, the Borrower's right,
title and interest in the real estate located at 000 Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx), or assign or otherwise convey any right to receive income,
except: (i) Encumbrances existing on the date of this Agreement to the extent
set forth on EXHIBIT B hereto; (ii) Encumbrances in favor of the Lender; (iii)
liens for taxes, fees, assessments and other governmental charges to the extent
that payment of the same is not required in accordance with the provisions of
Section 5.4; (iv) liens incurred or deposits made in the ordinary course of the
Borrower's business in connection with workers' compensation, unemployment
insurance, social security and other similar laws, or liens of mechanics,
laborers, materialmen, carriers and warehousemen arising by operation of law to
secure payment for labor, materials, supplies or services incurred in the
ordinary course of Borrower's business, but only if the payment thereof is not
at the time required and such liens do not, individually or in the aggregate,
materially detract from the value or limit the use of any property subject
thereto; (v) liens not exceeding $25,000 in value in the aggregate arising from
attachments, pending litigation or judgments which are being contested in good
faith by proper legal proceedings and with respect to which adequate reserves
have been established and are being maintained in accordance with GAAP; (vi)
landlords' and lessors' liens arising pursuant to applicable state or local law
in respect of rent not in default, to the extent such liens do not extend to or
cover any of the Borrower's Accounts
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Receivable; (vii) Encumbrances consisting of easements, rights of way, zoning
restrictions on the use of real property and similar encumbrances and minor
irregularities in title, but only if such Encumbrances do not, individually or
in the aggregate, materially detract from the value or limit the use of any
property subject thereto; (viii) good faith deposits made in the ordinary course
of business and consistent with past practices in connection with tenders,
contracts or leases to which the Borrower is a party, or deposits to secure, or
in lieu of, surety, penalty or appeal bonds, performance bonds and other similar
obligations; (ix) liens securing Indebtedness for the purchase price of capital
assets (including capitalized equipment leases) to the extent such Indebtedness
is permitted by Section 5.5(vii), PROVIDED that (1) each such lien is given
solely to secure the purchase price of such property, does not extend to any
other property of the Borrower and is given at the time of acquisition of the
property, and (2) the Indebtedness secured thereby does not exceed the lesser of
the cost of such property or its fair market value at the time of acquisition;
and (x) liens under any specific lease or license of intellectual property
(including computer software), PROVIDED that each such lien is given solely to
secure payments due from the Borrower under such lease or license and does not
extend to any other property of the Borrower.
5.7 MERGERS, ACQUISITIONS AND PURCHASES AND SALES OF ASSETS; CAPITAL
STRUCTURE. The Borrower will not (i) consolidate or merge with or into any other
corporation or other entity, (ii) acquire the assets or stock of any entity,
other than acquisitions in any fiscal year of the Borrower not in excess of
$250,000 in the aggregate, or (iii) sell, lease, transfer or otherwise dispose
of or discount any portion of its assets (including, without limitation, any
note, instrument or account), other than the sale of finished goods and the
disposition of scrap, waste and obsolete items in the ordinary course of
business. The Borrower will not change its equity structure other than as
permitted by its charter and bylaws, or as otherwise consented to in writing by
the Lender prior to the occurrence thereof.
5.8 INVESTMENTS AND LOANS. The Borrower will not make or have outstanding
at any time any investments in or loans to any other Person, whether by way of
advance, guaranty, extension of credit, capital contribution, purchase of
stocks, notes, bonds or other securities or evidences of Indebtedness, or
acquisition of limited or general partnership interests or interests in any
limited liability company, other than: (i) in direct obligations of the United
States of America, maturing within one year of their issuance; (ii) in time
certificates of deposit or repurchase agreements, maturing within one year of
their issuance, from banks in the United States having capital, surplus and
undivided profits in excess of $200,000,000; (iii) in short-term commercial
paper carrying the highest rating by Moody's or Standard and Poor's rating
services and issued by corporations headquartered in the United States, in
currency of the United States; (iv) in shares of money-market mutual funds
having assets in excess of $100,000,000 and substantially all of the assets of
which consist of investments referred to in clauses (i) through (iii),
inclusive, above; (v) advances to employees for business related expenses to be
incurred in the ordinary course of business, relocation advances and other loans
in an amount not to exceed $50,000 for any one transaction or $250,000 in the
aggregate outstanding at any one time for all employees, (vi) certificates of
deposit that are insured by the Federal Deposit Insurance Corporation, and
(viii) any securities issued by the Lender.
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5.9 RESTRICTED PAYMENTS. The Borrower shall not, directly or indirectly
(through any Affiliate or otherwise), declare, pay or make any Restricted
Payment, unless no Default or Event of Default is continuing or would occur by
reason of the taking of such action. Notwithstanding the foregoing:
(i) the Borrower may distribute to its stockholders an amount not in
excess of the Tax Distribution Amount for the portion of the fiscal year
through the end of the applicable fiscal Quarter MINUS the aggregate amount
of any such distributions therefor made in respect of such fiscal year,
which such Tax Distribution Amount shall be certified by the President,
Treasurer or Chief Financial Officer of the Borrower in the certificate
required under Section 5.1(v) and in the written statement required of the
Accountants under Section 5.1(i); and
(ii) the Borrower may make payments to Xxxxxx Xxxxx not to exceed
$3,000,000 in the aggregate for the purpose of redeeming stock of the
Borrower owned by Xx. Xxxxx, provided that at the time of any such
payments, and after giving effect thereto (a) there exists no Default or
Event of Default and (b) the Board of Directors of the Borrower has
consented to the making of such payments.
5.10 ERISA COMPLIANCE. None of the Borrower, any Plan and any fiduciary
thereof shall (i) engage in any "prohibited transaction" or incur, whether or
not waived, any "accumulated funding deficiency" (both as defined in ERISA and
the Code), (ii) fail to satisfy any additional funding requirements set forth in
Section 412 of the Code and Section 302 of ERISA, or (iii) terminate or withdraw
from participation in any Plan in a manner which could result in the imposition
of a lien on any property of, or impose a substantial withdrawal liability on,
the Borrower. The Borrower and each Plan shall comply in all material respects
with ERISA.
5.11 INSPECTION BY THE LENDER; BOOKS AND RECORDS. The Borrower will permit
the Lender or its designees, at any reasonable time and from time to time, to
visit and inspect the properties of the Borrower, to examine and make copies of
the books and records of the Borrower and to discuss the affairs, finances and
accounts of the Borrower with appropriate officers. The Borrower will keep
adequate books and records of account in which true and complete entries will be
made reflecting all of its business and financial transactions, and such entries
will be made in accordance with GAAP and applicable law.
5.12 USE OF PROCEEDS. The Borrower will use the proceeds of the Revolving
Loans solely for its working capital needs. No portion of any Revolving Loans
shall be used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations G, U or X of the Board of
Governors of the Federal Reserve System.
5.13 TRANSACTIONS WITH AFFILIATES. The Borrower will not, directly or
indirectly, enter into any transaction with any Affiliate except 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.
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5.14 TANGIBLE NET WORTH. The Borrower will maintain a Tangible Net Worth of
not less than (i) $2,000,000 at all times during its fiscal year ending November
25, 1995, and (ii) the sum of (a) $2,000,000, plus (b) on a cumulative basis, an
amount equal to 75% of Adjusted Net Income earned by the Borrower in each of its
Quarters (commencing with the Quarter ending February 17, 1996) at all times
thereafter.
5.15 LEVERAGE RATIO. The Borrower will not at any time cause or permit the
Leverage Ratio to exceed the following ratios during the following fiscal
periods:
PERIOD RATIO
------ -----
From the beginning of the first 2.00 to l
Quarter to the end of the third Quarter
in each fiscal year of the Borrower
For the fourth Quarter of each
fiscal year of the Borrower 2.25 to 1
5.16 DEBT SERVICE COVERAGE RATIO. The Borrower shall not cause or permit
the ratio of Operating Cash Flow to Total Debt Service, tested Quarterly, to be
less than the following ratios for the following fiscal periods:
PERIOD RATIO
------ -----
For the fourth Quarter of 1.50 to 1
the fiscal year of the Borrower
ending November 26, 1994
For all Quarters commencing 2.00 to 1
with the first Quarter of
the Borrower's fiscal
year 1995 and thereafter
5.17 PROFITABILITY. The Borrower shall not permit Net Income for any two
consecutive Quarters to be less than $1 during its fiscal year ending November
26, 1994.
5.18 SUBSIDIARIES. The Borrower shall give the Lender written notice of the
formation after the date hereof of any Subsidiary, and agrees that it shall
cause any such Subsidiary to engage in the business of conducting branches or
divisions of the business now conducted by the Borrower.
5.19 ASSIGNMENT OF GOVERNMENTAL RECEIVABLES. The Borrower will execute all
documents or instruments reasonably requested by the Lender or required in order
to perfect the Lender's security interest in Accounts Receivable owing or to be
owing from the United States of America
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or any department, agency or instrumentality thereof(the "Federal Government")
pursuant to any agreement or contract with the Federal Government which,
individually, is anticipated to generate in excess of $150,000 in Accounts
Receivable of the Borrower.
SECTION 6. EVENTS OF DEFAULT; ACCELERATION.
6.1 The following shall constitute events of default (individually, an
"Event of Default"):
(a) default in the payment, when due or payable, of any Obligation for the
payment of money and such default continues for 3 Business Days following a
Notice of Default; or
(b) default in the performance or observance of or compliance with (i) any
of the provisions of Sections 2 (other than the payment of principal and
interest), 5.l(vi), 5.5 through 5.9, inclusive, 5.12 through 5.17, inclusive,
5.18 and 5.19 of this Agreement and such default continues for 3 Business Days
following a Notice of Default, or (ii) any term or condition of the Credit Note
(other than the payment of principal and interest) and such default continues
for 3 Business Days following a Notice of Default, or (iii) any other covenant
or condition of this Agreement, any other Security Document or any other
Obligation not listed previously in this Section, and such default continues for
10 Business Days following a Notice of Default; or
(c) any representation, warranty or statement at any time made by or on
behalf of the Borrower in any Security Document or otherwise shall prove to have
been false in any material respect upon the date when made or deemed to have
been made; or
(d) the occurrence of any default under any agreement, note or other
instrument evidencing or relating to any obligation with an aggregate
outstanding principal amount in excess of $25,000 of the Borrower to any other
Person for the payment of money and such default continues for 10 Business Days
following a Notice of Default; or
(e) issuance of an injunction which might have a material adverse effect on
the condition (financial or otherwise), properties, business or results of
operations of the Borrower, or attachment which in the aggregate exceeds $25,000
in value, against the Borrower, any property of the Borrower or any endorser,
guarantor or surety for any Obligation which is not dismissed or bonded, to the
satisfaction of the Lender, within 30 days after its issuance;
(f) calling of a meeting of creditors, formation or appointment of a
committee of creditors or liquidating agents or offering of a composition or
extension to creditors by, for or with the consent or acquiescence of any of the
Borrower or any endorser, guarantor or surety for any Obligation;
(g) Insolvency of the Borrower or any endorser, guarantor or surety for any
Obligation;
(h) any money judgment or judgments aggregating in excess of $25,000 are
entered against the Borrower or any endorser, guarantor or surety for any
Obligation (except to the extent fully
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covered by insurance and the insurance carrier has not reserved the right to
disallow such claim), and shall continue unsatisfied or unstayed and in effect
for a period of 30 days; or
(i) any Security Document, or any covenant, agreement or obligation
contained therein or evidenced thereby, shall cease in any material respect to
be legal, valid, binding or enforceable in accordance with its terms, or shall
be cancelled, terminated, revoked or rescinded; or
(j) any action at law, suit in equity or other legal proceeding to cancel,
revoke or rescind any Security Document shall be commenced by or on behalf of
the Borrower or any other Person bound thereby, or by any court or any other
governmental or regulatory authority or agency of competent jurisdiction; or any
court or any other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or shall issue a judgment, order,
decree or ruling to the effect that, any one or more of the Security Documents,
or any one or more of the obligations of the Borrower or any other Person under
any one or more of the Security Documents, are illegal, invalid or unenforceable
in any material respect in accordance with the terms thereof; or
(k) Xxxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxx and Xxxxx Xxxxxx shall reduce
their collective ownership interest by more than ten percent (10%), in the
aggregate, of their aggregate equity ownership interests in the Borrower on the
date hereof.
(1) any two of Xxxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxx and Xxxxx Xxxxxx,
shall for any reason cease to be actively involved in strategic planning and
decision-making for the Borrower, unless the Lender has determined in its sole
discretion that the occurrence of such event will not have a material adverse
effect on the business, properties or condition (financial or otherwise) of the
Borrower.
6.2 If an Event of Default shall occur and be continuing, the Lender may,
at its option, (i) declare any or all of the Obligations of the Borrower to the
Lender to be immediately due and payable without further notice or demand,
whereupon the same shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower, (ii) limit, suspend or terminate the Borrower's right to borrow
hereunder, and (iii) exercise any rights and remedies under the Security
Documents and law, PROVIDED that in the event of any Event of Default specified
in Sections 6.l(f) or 6.l(g), all Obligations shall become immediately due and
payable automatically and without any requirement of notice from the Lender or
action by the Lender.
SECTION 7. SET OFF. Any deposits or other sums at any time credited by or
due from the Lender to the Borrower may, without notice (any such notice being
expressly waived hereby) and to the fullest extent permitted by law and without
regard to any source of payment whatsoever, at any time during the continuance
of an Event of Default, be applied to or set off against Obligations on which
the Borrower is primarily liable and may at or after the maturity thereof be
applied to or set off against Obligations on which the Borrower is secondarily
liable.
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SECTION 8. GENERAL.
8.1 WRITTEN NOTICES. Any notices, expressly required by this Agreement to
be in writing, to any party hereto shall be deemed to have been given when
delivered by hand, when sent by telecopier, when delivered to any overnight
delivery service freight pre-paid or 3 days after deposit in the mails, postage
prepaid, and addressed to such party at its address given at the beginning of
this Agreement or at any other address specified in writing. Written notices to
the Borrower shall be sent to the attention of Xxxx X. Xxxxxxx, President, and
Xxxxx X. Xxxxxx, Vice President Finance & Administration, with a copy to Xxxxx
X. Xxxxxxx, Esq., Xxxxx, Xxxx & Xxxxx, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, and written notices to the Lender shall be sent to the
attention of Xxxxx X. Xxxxx, Assisant Vice President with a copy to Xxxxxx X.
Xxxxxx, Esq., Goulston & Storrs, P.C., 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000-0000. Any notice, unless otherwise specified, may be given
orally or in writing.
8.2 NO WAIVERS. No failure or delay by the Lender in exercising any right,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies otherwise provided by law.
8.3 FURTHER ASSURANCES. The Borrower shall do, make, execute and deliver
all such additional and further acts, things, assurances, and instruments as the
Lender may reasonably require more completely to vest in and assure to the
Lender its rights hereunder, under the Credit Note and under the other Security
Documents, in the Collateral and to carry into effect the provisions and intent
of this Agreement, the Credit Note and the other Security Documents.
8.4 GOVERNING LAW. This Agreement and the Credit Note shall be deemed to be
contracts made under seal and shall be construed in accordance with and governed
by the laws of the Commonwealth of Massachusetts (without regard to conflicts of
laws rules). Any legal action or proceeding arising out of or relating to this
Agreement or any Obligation may be instituted in the courts of the Commonwealth
of Massachusetts or of the United States of America for the District of
Massachusetts, and the Borrower hereby irrevocably submits to the jurisdiction
of each such court in any such action or proceeding; PROVIDED, HOWEVER, that the
foregoing shall not limit the Lender's rights to bring any legal action or
proceeding in any other appropriate jurisdiction.
8.5 EXPENSES. TAXES AND INDEMNIFICATION.
(a) The Borrower will pay and indemnify and hold the Lender harmless
against all taxes (other than taxes on the income or assets of the Lender),
charges and expenses of every kind or description, including without limitation
attorneys' fees and expenses and the costs and expenses of field audits and
commercial finance exams, reasonably incurred or expended by the Lender in
connection with or in any way related to the Lender's relationship with the
Borrower, whether hereunder or otherwise, including, without limitation, those
incurred or expended in connection
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with the preparation, execution, delivery, interpretation or amendment of this
Agreement, the other Security Documents and any related agreement, instrument or
document, the making of the Revolving Loans, the supervision, protection and
collection of and realization upon any Collateral, and the protection or
enforcement of the Lender's rights hereunder and under the other Security
Documents.
(b) The Borrower shall absolutely and unconditionally indemnify and hold
the Lender harmless against any and all claims, demands, suits, actions, causes
of action, damages, losses, settlement payments, obligations, costs, expenses
and all other liabilities whatsoever which shall at any time or times be
incurred or sustained by the Lender, its directors, officers, employees,
subsidiaries, affiliates or agents (except any of the foregoing incurred or
sustained as a result of the gross negligence or willful misconduct of the
Lender or any such Person) on account of, or in relation to, or in any way in
connection with, this Agreement, the other Security Documents and the other
documents executed or delivered in connection herewith, and the arrangements or
transactions contemplated therein, whether or not all or any of the transactions
contemplated by, associated with or ancillary to this Agreement or any of such
documents are ultimately consummated.
8.6 AMENDMENTS, WAIVERS, ETC. This Agreement, the Credit Note, the other
Security Documents and any provision hereof or thereof may be waived, discharged
or terminated only by an instrument in writing signed by the Lender and may be
amended only by an instrument in writing signed by the Borrower and the Lender.
8.7 BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns. The Lender may sell, assign or otherwise transfer all or
any portion of its right, title and interest in, and its obligations under, this
Agreement, the Revolving Loans made and to be made hereunder, or grant
participations in its right, title and interest herein and therein. The Borrower
may not assign or transfer its rights or obligations hereunder.
8.8 COMPUTATION OF INTEREST AND FEES, ETC. Interest, fees and charges shall
be computed daily on the basis of a year of 360 days and paid for the actual
number of days for which due. If the due date for any payment of principal is
extended by operation of law, interest shall be payable for such extended time.
If any payment required by this Agreement becomes due on a day on which banks in
Boston, Massachusetts are required or permitted by law or an appropriate
authority to remain closed, such payment may be made on the next succeeding day
on which such banks are open, and such extension shall be included in computing
interest in connection with such payment. All payments required of the Borrower
hereunder or under the Credit Note shall be made in lawful money of the United
States of America in federal or other funds immediately available to the
recipient thereof at the prescribed place of payment.
8.9 ENTIRE AGREEMENT; MISCELLANEOUS. This Agreement, including the exhibits
hereto, and the other Security Documents set forth the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements,
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promises, covenants, arrangements, communications, representations, warranties,
whether oral or written, by any officer, employee or representative of any party
hereto. The captions for the sections of this Agreement are for ease of
reference only and are not an integral part of this Agreement. This Agreement
may be signed in any number of counterparts with the same effect as if the
signatures hereto and thereto were upon the same instrument. The provisions of
this Agreement are severable, and if any of these provisions shall be held by
any court of competent jurisdiction to be unenforceable, such holding shall not
affect or impair any other provision hereof.
8.10 WAIVER OF JURY TRIAL. THE BORROWER HEREBY IRREVOCABLY WAIVES TRIAL BY
JURY IN ANY JURISDICTION AND IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH,
OR ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS, OR ANY INSTRUMENT OR DOCUMENT
DELIVERED PURSUANT HERETO OR THERETO, OR ANY CLAIM OR DISPUTE HOWSOEVER ARISING,
BETWEEN THE BORROWER AND THE LENDER. THIS WAIVER SHALL BE EFFECTIVE FOR EACH
DOCUMENT EXECUTED BY THE BORROWER OR THE LENDER AND DELIVERED TO THE LENDER OR
THE BORROWER, AS THE CASE MAY BE, WHETHER OR NOT SUCH DOCUMENT SHALL CONTAIN A
WAIVER OF JURY TRIAL. THE BORROWER FURTHER ACKNOWLEDGES THAT ALL DOCUMENTS
DELIVERED BY THE LENDER OR THE BORROWER ARE SUBJECT TO THIS WAIVER OF JURY
TRIAL AS TO ANY ACTION THAT MAY BE BROUGHT AS TO ANY OF SUCH DOCUMENTS, AND
CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
WITNESS the execution hereof under seal on the day and year first above
written.
XXXXXXX RIVER ASSOCIATES INCORPORATED
By: /s/ Xxxx X. Xxxxxxx
--------------------------
Title: President
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ illegible
----------------------------
Title: Director
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For purposes of Section 4.1.3 only:
XXXXXXX RIVER ASSOCIATES L.P.
By: XXXXXXX RIVER ASSOCIATES
INCORPORATED, its general partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Title: President
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AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AGREEMENT
This Amendment No. 1 is made as of April , 1995, by and between Xxxxxxx
River Associates Incorporated and The First National Bank of Boston.
WHEREAS, the parties hereto are parties to a certain Amended and Restated
Loan Agreement dated as of November 18, 1994 (the "Loan Agreement"). Terms
defined in the Loan Agreement and not otherwise defined herein shall have the
same respective meanings herein as therein.
WHEREAS, the parties wish to amend the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender agree
as follows:
Section 1. AMENDMENT TO LOAN AGREEMENT.
1.1 Clause (g) of the definition of "Eligible Account" contained in
Section 1.1 of the Loan Agreement is hereby amended to read in its entirety as
follows:
"(g) is not owing from an account debtor (i) not located in the United
States, Canada or Puerto Rico, unless such account debtor has been approved in
writing by the Lender in its sole discretion, PROVIDED that the Lender
acknowledges that it has approved Pemex Corporation, a Mexican corporation, as
an account debtor, or (ii) who has accounts payable owing to the Borrower of
which 50% or more of such accounts payable are not Eligible Accounts."
Section 2. GENERAL.
2.1 The Loan Agreement is hereby ratified and confirmed and shall continue
in full force and effect as amended hereby.
2.2 The Borrower hereby represents and warrants that there is no Default
or Event of Default outstanding or continuing under the Loan Agreement.
2.3 This Amendment No. 1 has been duly authorized by all necessary
corporate proceedings, has been duly executed and delivered to you by the
Borrower and is in full force and effect as of the date hereof, and the
agreements and obligations of the Borrower contained herein constitute legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with the terms of this Amendment No. 1.
29
2.4 This Amendment No. 1 may be signed in any number of counterparts with
the same effect as if the signatures hereto and thereto were upon the same
instrument.
WITNESS the execution of this Amendment No. 1 under seal as of the day
first above written.
XXXXXXX RIVER ASSOCIATES INCORPORATED
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Title: Vice President
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[BANK OF BOSTON LOGO]
June 30, 1996
Xxxxxxx River Associates Incorporated
Xxxx Xxxxxxx Tower
000 Xxxxxxxxx Xxxxxx, X-00
Xxxxxx, XX 00000
Attention: Mr. Xxxxx Xxxxxxx
Re: Xxxxxxx River Associates Incorporated Financing Arrangement
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated Loan
Agreement (the "Loan Agreement") dated November 18, 1994 between Xxxxxxx River
Associates Incorporated (the "Borrower") and The First National Bank of Boston
(the "Lender"), as amended by Amendment No. 1 dated April 20, 1995 (the
"Amendment").
You have requested, and the Bank hereby agrees, that the reference to
"90 days" in section 5.l(i) on page 14 of the Loan Agreement be deleted and
that "120 days" be inserted in its place. It is understood and agreed that,
except as expressly provided in this letter of agreement, all of the terms,
conditions and provisions of the Loan Agreement and Amendment remain unaltered.
Please acknowledge your agreement with the foregoing by countersigning this
letter of agreement in the space provided below.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Title: Vice President and Director
By: /s/ Xxxxx X. Xxxx
----------------------------------
Title: Loan Officer
XXXXXXX RIVER ASSOCIATES INCORPORATED
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Title: Vice President and Treasurer
00
[XXXX XX XXXXXX LOGO]
January 5, 1996
Xxxxxxx River Associates Incorporated
Xxxx Xxxxxxx Tower
200 Clarendon Street, T-33
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Controller
Re: LETTER OF CREDIT FACILITY
Ladies and Gentlemen:
We refer to the Amended and Restated Loan Agreement (the "Agreement") dated
as of November 18, 1994 between Xxxxxxx River Associates Incorporated ("CRA")
and The First National Bank of Boston. Capitalized terms used but not defined
herein shall have the meaning ascribed to such terms in the Agreement. You have
requested the Bank to provide a discretionary letter of credit facility under
the Agreement in an aggregate maximum amount of $200,000 and the Bank is willing
to do so, but only on the terms and conditions set forth herein.
Subject at all times to the terms and conditions of the Agreement, the Bank
will issue, in its sole discretion, standby letters of credit ("Letters of
Credit") upon the application and for the account of CRA, PROVIDED that the
aggregate maximum amount available to be drawn under all outstanding Letters of
Credit (without regard to whether or not the conditions to drawing could then be
met) PLUS the aggregate amount of all unreimbursed draws under such outstanding
Letters of Credit shall not at any time exceed $200,000, and PROVIDED, FURTHER
that at the time CRA requests the issuance of any Letter of Credit, there is not
continuing any Default or Event of Default. In order to evidence each Letter of
Credit, CRA will enter into with the Bank such agreements and execute such
instruments and documents as the Bank requires, including, but not limited to, a
letter of credit application and agreement on the Bank's customary form.
Immediately upon the issuance of a Letter of Credit by the Bank, the
Maximum Amount shall be automatically reduced by the face amount of such Letter
of Credit until such Letter of Credit is terminated.
All of the obligations of payment and performance of CRA under or in respect
of the Letters of Credit shall constitute Obligations under the Agreement and
shall be secured by the Collateral. Any and all amounts drawn under the Letters
of Credit will be Obligations which are immediately due and payable by CRA to
the Bank, and if not so paid, it shall constitute an immediate Event of Default
under the Agreement.
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CRA shall pay to the Bank a $400 fee in connection with the issuance of
each Letter of Credit, along with such other fees and charges as are customarily
charged by the Bank with respect to standby letters of credit.
If you are in agreement with the foregoing, please countersign this letter
below where indicated and return an original to us.
Sincerely,
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ illegible
----------------------------------
Title: Vice President
XXXXXXX RIVER ASSOCIATES INCORPORATED
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Title:
Hereunto Duly Authorized
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