LOAN AGREEMENT
FLEET NATIONAL BANK, a Bank of America Company
$5,000,000 REVOLVING CREDIT FACILITY
and
$20,000,000 ACQUISITION REVOLVING CREDIT FACILITY
PROVIDED TO
NATIONAL DENTEX CORPORATION
June 30, 2004
Table of Contents
Page
1. The Credit Facility; Advances. ................................. 1
(a) The Credit Facility......................................... 1
(b) Advances.................................................... 1
2. Interest; Payments; Fees; Borrowing. ........................... 2
(a) Interest.................................................... 2
(b) Payments.................................................... 2
(c) Additional Payments......................................... 3
(d) Notice of Borrowing......................................... 4
(e) Special Provisions Governing Loans.......................... 4
(f) Increased Capital Costs..................................... 9
(g) Taxes....................................................... 9
3. Letters of Credit. ............................................. 10
(a) Issuance.................................................... 10
(b) Notice of Proposed Issuance................................. 10
(c) Conditions to Issuance...................................... 10
(d) Expiry Dates................................................ 11
(e) Drawings.................................................... 11
(f) Reimbursement by the Borrower............................... 11
(g) Exculpatory Provisions...................................... 11
(h) Indemnification by Borrower................................. 12
4. Definitions..................................................... 12
5. Representations and Warranties.................................. 19
(a) Organization................................................ 19
(b) Authority................................................... 19
(c) Approvals; Compliance with Statutes, Etc.................... 20
(d) Valid Obligations........................................... 20
(e) Assets...................................................... 21
(f) Agreements.................................................. 21
(g) Insurance................................................... 21
(h) Litigation and Other Proceedings............................ 21
(i) Labor Matters............................................... 21
(j) ERISA....................................................... 21
(k) Financial Statements........................................ 22
(l) Projections................................................. 22
(m) Taxes....................................................... 22
(n) Investments................................................. 23
(o) Investment Company.......................................... 23
(p) Equity Structure............................................ 23
-i-
(q) Indebtedness for Money Borrowed............................. 23
(r) Patents, Copyrights and Trademarks.......................... 23
(s) Representations Accurate.................................... 23
6. Covenants....................................................... 24
(a) Payments.................................................... 24
(b) Intentionally omitted....................................... 24
(c) Financial Report. The Borrower will furnish to the Bank:.... 24
(d) Other Financial Reports..................................... 25
(e) Maintain Rights............................................. 25
(f) No Transfers................................................ 26
(g) No Mergers.................................................. 26
(h) Payment of Taxes............................................ 27
(i) Guaranties.................................................. 27
(j) Agreements.................................................. 27
(k) Investments................................................. 27
(l) Property.................................................... 28
(m) Books and Records........................................... 28
(n) Notices..................................................... 28
(o) Liens....................................................... 29
(p) Modifications............................................... 30
(q) Additional Indebtedness..................................... 30
(r) Payments to Affiliated Persons.............................. 30
(s) Consolidated Total Liabilities to Consolidated Tangible Net
Worth Ratio................................................. 31
(t) Fixed Charge Coverage Ratio................................. 31
7. Conditions of Closing........................................... 32
(a) Line of Credit Notes........................................ 32
(b) Warranties and Covenants.................................... 32
(c) Closing Certificate......................................... 32
(d) Financial Statements........................................ 32
(e) Annual Report............................................... 32
(f) No Adverse Change........................................... 32
(g) Closing Fees and Legal Expenses............................. 33
(h) Legal Opinions.............................................. 33
(i) Projections................................................. 33
(p) Other Documents............................................. 34
8. Conditions of Making Subsequent Advances........................ 34
(a) Representations and Warranties.............................. 34
(b) Performance................................................. 34
(c) Acquisitions................................................ 34
9. Events of Default............................................... 36
(a) Representations and Warranties.............................. 36
(b) Covenants................................................... 36
-ii-
(c) Acceleration................................................ 36
(d) Loan Documents.............................................. 36
(e) Voluntary Bankruptcy........................................ 36
(f) Involuntary Bankruptcy...................................... 36
(g) Seizure of Assets........................................... 37
(h) Judgments................................................... 37
(i) Liens....................................................... 37
(j) Casualty Loss............................................... 37
(k) Qualified Audit Report...................................... 37
(l) Change of Control........................................... 37
10. Remedies. ..................................................... 38
11. Intentionally reserved. ....................................... 39
12. Miscellaneous. ................................................ 39
(a) Waivers. .................................................. 39
(b) Delays. ................................................... 39
(c) Notices. .................................................. 39
(d) Set-Off. .................................................. 40
(e) Jurisdiction; Waiver of Jury Trial. ....................... 40
(f) Usury. .................................................... 40
(g) Execution. ................................................ 41
(h) Governing Law. ............................................ 41
(i) Fees; Indemnification. .................................... 41
(j) Binding Nature. ........................................... 41
(k) Assignment; Participations; Pledge to Federal Reserve. .... 42
(l) Under Seal. ............................................... 43
(m) Use of Proceeds. .......................................... 43
(n) Confidentiality. .......................................... 43
-iii-
Exhibits
--------
Exhibit A First Line of Credit Note
Exhibit B Second Line of Credit Note
Exhibit C Compliance Certificate
Exhibit D Form of Joinder Agreement
-iv-
Schedules
---------
Schedule 5(a) Jurisdictions of Business Qualification of the Borrower
Schedule 5(b) Authority
Schedule 5(c) Approvals
Schedule 5(e) Assets and Properties; Liens
Schedule 5(g) Insurance
Schedule 5(h) Litigation and Other Proceedings
Schedule 5(i) Labor Matters
Schedule 5(n) Investments
Schedule 5(p) Equity Structure of Borrower
Schedule 5(q) Indebtedness for Money Borrowed
Schedule 5(r) Patents and Trademarks
Schedule 6(v) Bank Accounts
-v-
FLEET NATIONAL BANK
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
June 30, 2004
Xxxxx X. Xxxxx, President and
Chief Executive Officer
National Dentex Corporation
000 Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Re: Loan Agreement
Dear Xx. Xxxxx:
This Loan Agreement (the "Agreement") is made as of June 30, 2004, by
and between National Dentex Corporation, a Massachusetts corporation (the
"Borrower"), and Fleet National Bank, a Bank of America company, organized and
existing under the laws of the United States (the "Bank").
The Credit Facility; Advances.
The Credit Facility. The Credit Facility shall consist of the
following:
(i) a revolving line of credit (the "First Line of Credit") in an amount
equal to $5,000,000, available until the day prior to, and due and payable on,
the Termination Date (as hereinafter defined); the First Line of Credit shall
include a sublimit for the issuance, on the terms and conditions set forth in
this Agreement, of letters of credit for the Borrower's account, provided that
the Bank's LC Exposure (as hereinafter defined) at any time shall not exceed
$1,500,000. Advances under the First Line of Credit may be used by the Borrower
for its general corporate purposes, to refinance existing indebtedness and for
the issuance of Letters of Credit.
(ii) a revolving line of credit (the "Second Line of Credit") in an amount
equal to $20,000,000, available until the day prior to, and due and payable on,
the Termination Date. (The First Line of Credit and the Second Line of Credit
may collectively hereinafter be referred to as the "Lines of Credit.") Advances
under the Second Line of Credit may be used by the Borrower solely to fund
acquisitions by the Borrower in accordance with Section 8 and the other terms
and conditions hereof.
(b) Advances.
After the Closing, advances under the Lines of Credit may be made, from
time to time, until the day prior to the Termination Date, in such amounts as
the Borrower may request; provided that in the case of the First Line of Credit
the aggregate principal amount of all advances at any time outstanding under the
First Line of Credit (after giving effect to all amounts requested) plus the
aggregate LC Exposure at such time, shall not exceed $5,000,000; and in the case
of the Second Line of Credit, the aggregate principal amount of all advances at
any time outstanding under the Second Line of Credit (after giving effect to all
amounts requested) shall not exceed $20,000,000, provided that any such advances
under the Second Line of Credit are subject to the provisions set forth in
Section 8(c) and 6(k) hereof; and provided, further, that at the time the
Borrower requests an advance under the Lines of Credit and after giving effect
to the making thereof, no Default or Event of Default has occurred and is
continuing. Subject to the terms of this Agreement, advances under the First
Line of Credit, once repaid, may be reborrowed; advances under the Second Line
of Credit, once repaid, may be reborrowed, subject to the provisions set forth
in Section 8(c) and 6(k) hereof. If at any time the outstanding principal amount
of the advances under a Line of Credit exceeds the amount determined by
reference to the limits set forth in the first sentence of this Section 1(b),
the Borrower shall promptly pay an amount equal to such excess to the Bank.
(2) Interest; Payments; Fees; Borrowing.
(a) Interest. Each advance, from time to time, under either Line of Credit
shall bear interest either (i) at an annual rate equal to the Prime Rate (as
hereinafter defined) plus the Applicable Margin with respect thereto as in
effect from time to time (in which case such advance shall be designated as a
"Prime Rate loan"), (ii) at the option of the Borrower, at the LIBOR Lending
Rate for the applicable Interest Period plus the Applicable Margin with respect
thereto as in effect from time to time (in which case such advance shall be
designated as a "LIBOR Rate loan"), or (iii) at the option of the Borrower, at
the Cost of Funds Rate for the applicable Interest Period plus the Applicable
Margin with respect thereto as in effect from time to time (in which case such
advance shall be designated as a "Cost of Funds Rate loan"). If any such
interest rate is unlawful, then the rate shall be the highest rate permitted
under applicable law. Any amounts overdue under this Agreement shall bear
interest at the annual rate (the "Post-Default Rate") of 2% above the Prime
Rate, or, if such rate is unlawful, the highest rate permitted under applicable
law. Interest shall be payable (i) in the case of Prime Rate loans, in arrears
on the first (1st) Business Day of each month, (ii) in the case of LIBOR Rate
loans and Cost of Funds Rate loans, on the Interest Payment Dates applicable
thereto and (iii) in the case of any advance, when such advance shall be due
(whether at maturity, by reason of prepayment or acceleration or otherwise) or
converted, but only to the extent then accrued on the amount so due or
converted. Interest at the Post-Default Rate shall be payable on demand. Each
change in the rate of interest payable on the Prime Rate loans shall take effect
simultaneously with the corresponding change in the Prime Rate.
(b) Payments. All payments received by the Bank from the Borrower, except
for the payments referred to in Subsection (c) below, shall be applied first to
expenses due hereunder, then to accrued interest and then to principal. Upon the
occurrence of an Event of Default hereunder, however, payments may be applied in
such manner as the Bank may, in its sole discretion, determine. All computations
of interest shall be made on the basis of a 360-day year. Advances under the
Lines of Credit shall be evidenced by this Agreement, the records of the Bank
and, with respect to the First Line of Credit, a promissory note in the form of
Exhibit A hereto (the "First Line of Credit Note") and, with respect to the
Second Line of Credit, a promissory note in the form of Exhibit B hereto (the
"Second Line of Credit Note"), each due on the Termination Date (references in
this Agreement to the term "Line of Credit Note" shall, except where the context
does not otherwise permit, be deemed to apply to both the First Line of Credit
Note and the Second Line of Credit Notes). The LC Reimbursement Obligations
shall be evidenced by this Agreement, the records of the Bank and the Letters of
Credit. The records of the Bank shall be prima facie evidence of the advances
hereunder and the LC Reimbursement Obligations and, in each case, of accrued
interest thereon and of all payments made in respect thereof.
All payments due to the Bank hereunder or under the Line of Credit Notes
shall be made in U.S. Dollars in immediately available funds at Fleet National
Bank, 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 or at such other address as the Bank
may designate by notice the Borrower. A payment to the Bank shall not be deemed
to have been made on any day unless such payment shall have been received by the
Bank, at such address, in U.S. Dollars in immediately available funds, no later
than 12:00 noon (Boston time) on such day.
If any payment under this Agreement becomes due and payable on a day that
is not a Business Day and this Agreement does not otherwise provide for such
contingency, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to any payment of principal, interest thereon
shall be payable at the then applicable rate during any such extension.
(c) Additional Payments. In addition to the amounts specified above, the
Borrower shall pay to the Bank the following in connection with the Credit
Facility:
(i) an unused facility fee equal to 1/8 of 1% per annum of the average
unborrowed portion of the First Line of Credit (giving effect, without
duplication, to the Bank's LC Exposure thereunder), such average to be computed
for the three-month period preceding each Payment Date on which such unused
facility fee is payable (or such longer or shorter period as has elapsed from
the Closing Date to the first of such Payment Dates), payable quarterly in
arrears on the last Payment Dates specified herein, commencing on the first such
date following the Closing Date and on each Payment Date thereafter through the
Termination Date (with the last such fee payable on the Termination Date);
(ii) a facility fee of $10,000.00 per annum for the Second Line of Credit,
payable annually in advance, commencing on the Closing Date and on each
anniversary thereof;
(iii) a Letter of Credit issuance fee equal to 1% of the original face
amount of each Letter of Credit issued hereunder, payable at the time of
issuance of such Letter of Credit; and
(iv) an audit fee of $1,000 for each field audit of the Borrower's books
and records performed by the Bank, up to a maximum of $1,000 in audit fees for
each 12-month period.
(d) Notice of Borrowing. Whenever the Borrower elects to obtain a LIBOR
Rate loan or Cost of Funds Rate loan hereunder, it may request that the Bank
provide quotes as of any specified date as to the LIBOR Lending Rate or Cost of
Funds Rate loan for any or all Interest Periods, and the Bank shall promptly
provide such quotes. The Borrower shall give the Bank prior telecopied or
telephone notice, on a Business Day, (i) not later than 10:00 a.m. (Boston time)
on the day of any advance with respect to a Prime Rate loan and (ii) not later
than 10:00 a.m. (Boston time) at least two (2) Business Days prior to the day of
any advance with respect to a LIBOR Rate loan or Cost of Funds Rate loan. Each
such notice shall be irrevocable once given and shall specify the principal
amount of the advance to be made, the date of the advance (which shall be a
Business Day), whether each advance is to be maintained as a Prime Rate loan,
Cost of Funds Rate loan or a LIBOR Rate loan, and in the case of a LIBOR Rate
loan or Cost of Funds Rate loan, the Interest Period applicable thereto. If such
notice is given by telephone, it shall be immediately confirmed in writing. In
the event that the Borrower at any time fails in such notice to specify any of
the information required by this subsection to be given with respect to a LIBOR
Rate loan or Cost of Funds Rate loan, then the Borrower shall be deemed to have
requested that the Bank make a Prime Rate loan. All advances hereunder shall be
disbursed by the Bank not later than 12:00 noon (Boston time) on the requested
date therefor, in U.S. Dollars in immediately available funds, by credit to the
Borrower's operating account with the Bank.
(e) Special Provisions Governing Loans. Notwithstanding any other
provisions of this Agreement to the contrary, the following provisions shall
govern with respect to any LIBOR Rate loans or Cost of Funds Rate loans (as
applicable):
(i) Repayment, Continuation and Conversion. Each LIBOR Rate loan or Cost of
Funds Rate loan shall mature and become payable in full on the last day of the
Interest Period relating thereto. Upon maturity, a LIBOR Rate loan or Cost of
Funds Rate loan may be continued for an additional Interest Period or may be
converted to a Prime Rate loan as provided in clause (ii) below.
(ii) Continuation and Conversion Elections. Subject to the provisions
hereof, the Borrower shall have the option (A) to convert at any time one or
more integral multiples of $500,000 of its outstanding Prime Rate loans under
the First Line of Credit into one or more LIBOR Rate loans or Cost of Funds Rate
loans, (B) to convert at any time one or more integral multiples of $1,000,0000
of its outstanding Prime Rate loans under the Second Line of Credit into one or
more LIBOR Rate loans or Cost of Funds Rate loans, (C) effective on and as of
the expiration date of the Interest Period of a LIBOR Rate loan or Cost of Funds
Rate loan, to continue such loan LIBOR Rate loan or Cost of Funds Rate loan,
respectively, as such, with an equivalent or different Interest Period, or (D)
effective on and as of the expiration date of the Interest Period of a LIBOR
Rate loan or Cost of Funds Rate loan, to convert such loan to a Prime Rate loan;
provided, however, that (x) a LIBOR Rate loan or Cost of Funds Rate loans may
only be continued pursuant to clause (C) above if the outstanding principal
amount of such loan equals or exceeds $500,000 in the case a LIBOR Rate loan or
Cost of Funds Rate loan advanced under the First Line of Credit, or $1,000,000
in the case of a LIBOR Rate loan or Cost of Funds Rate loans advanced under the
Second Line of Credit; (y) no portion of the outstanding principal amount of any
advance may be converted to, or continued as, a LIBOR Rate loan or Cost of Funds
Rate loan when any Default or Event of Default has occurred and is continuing;
and (z) no portion of the outstanding principal amount of any LIBOR Rate loan or
Cost of Funds Rate loan may be converted to a LIBOR Rate loan or Cost of Funds
Rate loan, respectively, of a different duration if such LIBOR Rate loan or Cost
of Funds Rate loan relates to any Hedging Obligations unless the maturity of the
relevant Hedging Obligations has been appropriately adjusted in a manner
satisfactory to the Bank. The Borrower shall deliver a notice of
conversion/continuation to the Bank, on a Business Day, no later than 10:00 a.m.
(Boston time) at least two (2) Business Days in advance of the proposed
conversion/continuation date for a LIBOR Rate loan or a Cost of Funds Rate loan.
A notice of conversion/continuation shall, in the case of a conversion to, or
continuation of, a LIBOR Rate loan or a Cost of Funds Rate loan, be irrevocable
and shall be given by the Borrower to specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) whether the
loan to be converted/continued is a First or Second Line of Credit loan, (iii)
the amount of the First or Second Line of Credit loan to be converted/continued,
(iv) (A) whether the First or Second Line of Credit loan to be
converted/continued is a Prime Rate loan, Cost of Funds Rate loan or a LIBOR
Rate loan, and (B) whether the First or Second Line of Credit loan into which
such First or Second Line of Credit loan is converted/continued is to be a Prime
Rate loan, Cost of Funds Rate loan or a LIBOR Rate loan, and (v) in the case of
a conversion to, or a continuation of, a LIBOR Rate loan or Cost of Funds Rate
loan, the requested Interest Period. In lieu of delivering the above-described
notice, the Borrower may give the Bank telephonic notice by the required time of
any proposed conversion/continuation; provided that such notice shall be
immediately confirmed in writing. If the Borrower fails to give such notice with
respect to a LIBOR Rate loan or Cost of Funds Rate loan at least two (2)
Business Days before the last day of the then current Interest Period with
respect thereto, the Borrower shall be deemed to have delivered to the Bank a
notice to convert such loan into a Prime Rate loan and such loan shall, on such
last day, automatically convert into a Prime Rate loan. Any notice of
conversion/continuation given pursuant to this subsection shall be irrevocable
on and after the date of delivery thereof to the Bank, and the Borrower shall be
bound to convert or continue in accordance therewith.
(iii) Determination and Notice of LIBOR Lending Rate or Cost of Funds Rate.
Promptly after receipt of notice from the Borrower that it wishes to elect a
LIBOR Rate loan or Cost of Funds Rate loan, the Bank shall determine (which
determination shall, absent manifest error, be final, conclusive and binding
upon all parties) the applicable LIBOR Lending Rate or Cost of Funds Rate, as
applicable, which rate shall apply to the LIBOR Rate loans or Cost of Funds Rate
loans, as applicable, for which an interest rate is then being determined for
the applicable Interest Period, and shall promptly give notice thereof (in
writing or by telephone and confirmed in writing) to the Borrower.
(iv) Basis for Determining Interest Rate Inadequate. If the Bank shall have
determined that:
(A) U.S. Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the Bank in the London interbank market,
(B) by reason of circumstances affecting the Bank in the London interbank
market, adequate means do not exist for ascertaining the LIBOR Lending Rate
applicable hereunder to LIBOR Rate loans of any duration, or
(C) the LIBOR Lending Rate no longer adequately reflects the Bank's cost of
funding LIBOR Rate loans of any duration,
then, upon notice from the Bank to the Borrower and until the Bank shall notify
the Borrower that the circumstances causing such suspension no longer exist, (1)
the obligations of the Bank under this Agreement to make or continue any loans
as, or to convert any loans into, LIBOR Rate loans of such duration shall
forthwith be suspended and (2) each affected outstanding LIBOR Rate loan shall
be converted into a Prime Rate loan on the last day of the then current Interest
Period applicable thereto.
(v) LIBOR Rate Lending Unlawful. If the Bank shall determine (which
determination shall, upon notice thereof to the Borrower, be conclusive and
binding on the Borrower, absent manifest error) that the introduction of or any
change in or in the interpretation of any law, rule, regulation or guideline
(whether or not having the force of law) makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for the Bank to
make, continue or maintain any LIBOR Rate loan as, or to convert any loan into,
a LIBOR Rate loan of a certain duration, the obligations of the Bank to make,
continue, maintain or convert into any such LIBOR Rate loans shall, upon such
determination, forthwith be suspended until the Bank shall notify the Borrower
that the circumstances causing such suspension no longer exist, and all LIBOR
Rate loans of such type shall automatically convert into Prime Rate loans on the
last day of the then current Interest Periods applicable thereto or sooner, if
required by such law or assertion.
(vi) Voluntary Prepayment of LIBOR Rate loans. LIBOR Rate loans in
connection with which the Borrower has entered into Hedging Obligations with the
Bank may not be prepaid; other LIBOR Rate loans may be prepaid only upon the
terms and conditions set forth herein. The Borrower shall give the Bank, no
later than 10:00 a.m. (Boston time), at least four (4) Business Days' notice of
any proposed prepayment of any LIBOR Rate loans, specifying the proposed date of
payment of such LIBOR Rate loans, and the principal amount to be paid. Each
partial prepayment of the principal amount of LIBOR Rate loans shall be in an
integral multiple of (x) $500,000 in the case of LIBOR Rate loans advanced under
the First Line of Credit and (y) $1,000,000 in the case of LIBOR Rate loans
advanced under the Second Line of Credit, and accompanied by the payment of all
charges outstanding on such LIBOR Rate loans and of all accrued interest on the
principal repaid to the date of payment.
Borrower acknowledges that prepayment or acceleration of a LIBOR Rate
loan during an Interest Period shall result in the Bank incurring additional
costs, expenses and/or liabilities and that it is extremely difficult and
impractical to ascertain the extent of such costs, expenses and/or liabilities.
Therefore, all full or partial prepayments of LIBOR Rate loans shall be
accompanied by, and the Borrower hereby promises to pay, on each date a LIBOR
Rate loan is prepaid or the date all sums payable hereunder become due and
payable, by acceleration or otherwise, in addition to all other sums then owing,
an amount (the "LIBOR Prepayment Fee") determined by the Bank pursuant to the
following formula:
(1) the then current rate for U.S.
Treasury securities (bills on a
discounted basis shall be converted
to a bond equivalent) with a
maturity date closest to the end of
the Interest Period as to which
prepayment is made, subtracted from
(2) the LIBOR Lending Rate applicable to
the LIBOR Rate loan being prepaid,
plus 1.5%.
If the result of this calculation is zero or a negative
number, then there shall be no LIBOR Prepayment Fee. If the
result of this calculation is a positive number, then the
resulting percentage shall be multiplied by:
(3) the amount of the LIBOR Rate loan being
prepaid.
The resulting amount shall be divided by:
(4) 360
and multiplied by:
(5) the number of days remaining in the
Interest Period as to which the
prepayment is being made.
Said amount shall be reduced to present value calculated by
using the referenced U.S. Treasury securities rate and the
number of days remaining on the Interest Period for the LIBOR
Rate loan being prepaid.
The resulting amount of these calculations shall be the LIBOR
Prepayment Fee.
(vii) Indemnities. In addition to the LIBOR Prepayment Fee, the Borrower
agrees to reimburse the Bank (without duplication) for any increase in the cost
to the Bank, or reduction in the amount of any sum receivable by the Bank, in
respect, or as a result of:
(A) any conversion or repayment or prepayment of the principal amount of
any LIBOR Rate loan on a date other than the scheduled last day of the Interest
Period applicable thereto, whether pursuant to Section 2(e)(vi) or otherwise;
(B) any loan not being made as a LIBOR Rate loan in accordance with the
borrowing request therefor;
(C) any LIBOR Rate loan not being continued as, or converted into, a LIBOR
Rate loan in accordance with the continuation/conversion notice therefor; or
(D) any costs associated with marking to market any Hedging Obligations
that (in the reasonable determination of the Bank) are required to be terminated
as a result of any conversion, repayment or prepayment of the principal amount
of any LIBOR Rate loan on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 2(e)(vi) or
otherwise.
The Bank shall promptly notify the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the additional amount required fully to compensate the Bank
for such increased cost or reduced amount. Such additional amounts shall be
payable by the Borrower to the Bank within five (5) days of its receipt of such
notice, and such notice shall, in the absence of manifest error, be conclusive
and binding on the Borrower. The Borrower understands, agrees and acknowledges
the following: (i) the Bank does not have any obligation to purchase, sell
and/or match funds in connection with the use of the LIBOR Rate as a basis for
calculating the rate of interest on a LIBOR Rate loan; (ii) the LIBOR Rate may
be used merely as a reference in determining such rate; and (iii) the Borrower
has accepted the LIBOR Rate as a reasonable and fair basis for calculating such
rate, the LIBOR Prepayment Fee, and other funding losses incurred by the Bank.
Borrower further agrees to pay the LIBOR Prepayment Fee and other funding
losses, if any, whether or not the Bank elects to purchase, sell and/or match
funds.
(viii) Increased Costs. If on or after the date hereof the adoption of any
applicable law, rule or regulation or guideline (whether or not having the force
of law), 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 Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency:
(A) shall subject the Bank to any tax, duty or other charge with respect to
its LIBOR Rate loans or Letters of Credit issued by it or its obligation to make
LIBOR Rate loans or issue Letters of Credit, or shall change the basis of
taxation of payments to the Bank of the principal of or interest on its LIBOR
Rate loans or any other amounts due under this Agreement in respect of its LIBOR
Rate loans or the Letters of Credit or its obligation to make LIBOR Rate loans
or issue Letters of Credit (except for the introduction of, or change in the
rate of, tax on the overall net income of the Bank or franchise taxes, imposed
by the jurisdiction (or any political subdivision or taxing authority thereof)
under the laws of which the Bank is organized or in which the Bank's principal
executive office is located); or
(B) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any such requirement imposed
by the Board of Governors of the Federal Reserve System of the United States)
against assets of, deposits with or for the account of, or credit extended by,
the Bank or shall impose on the Bank or on the London interbank market any other
condition affecting its LIBOR Rate loans or Letters or Credit issued by it or
its obligation to make LIBOR Rate loans or issue Letters of Credit;
and the result of any of the foregoing is to increase the cost to the Bank of
making or maintaining any LIBOR Rate loan or issuing any Letter of Credit, or to
reduce the amount of any sum received or receivable by the Bank under this
Agreement with respect thereto, by an amount deemed by the Bank to be material,
then, within 15 days after demand by the Bank, the Borrower shall pay to the
Bank such additional amount or amounts as will compensate the Bank for such
increased cost or reduction. A statement of the Bank as to any such additional
amount or amounts (including calculations thereof in reasonable detail) shall,
in the absence of manifest error, be conclusive and binding on the Borrower. In
determining such amount, the Bank may use any method of averaging and
attribution that it (in its sole and absolute discretion) shall deem applicable.
(f) Increased Capital Costs. If any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority affects or would affect the amount of capital required or
expected to be maintained by the Bank, or person controlling the Bank, and the
Bank determines (in its sole and absolute discretion) that the rate of return on
its or such controlling person's capital as a consequence of its commitments or
the loans made or Letters of Credit issued by the Bank is reduced to a level
below that which the Bank or such controlling person could have achieved but for
the occurrence of any such circumstance, then, in any such case upon notice from
time to time by the Bank to the Borrower, the Borrower shall immediately pay
directly to the Bank additional amounts sufficient to compensate the Bank or
such controlling person for such reduction in rate of return. A statement of the
Bank as to any such additional amount or amounts (including calculations thereof
in reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower. In determining such amount, the Bank may use any method
of averaging and attribution that it (in its reasonable discretion) shall deem
applicable.
(g) Taxes. All payments by the Borrower of principal of, and interest on,
the loans and all other amounts payable hereunder shall be made free and clear
of and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding franchise
taxes and taxes imposed on or measured by the Bank's net income or receipts
(such non-excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the Borrower hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrower will:
(i) pay directly to the relevant authority the full amount required to be
so withheld or deducted;
(ii) promptly forward to the Bank an official receipt or other
documentation satisfactory to the Bank evidencing such payment to such
authority; and
(iii) pay to the Bank such additional amount or amounts as are necessary to
ensure that the net amount actually received by the Bank will equal the full
amount the Bank would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Bank with respect
to any payment received by the Bank hereunder, the Bank may pay such Taxes and
the Borrower will promptly pay such additional amount (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
the Bank after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount the Bank would have received had such Taxes not
been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Bank the required receipts or other required
documentary evidence, the Borrower shall indemnify the Bank for any incremental
Taxes, interest or penalties that may become payable by the Bank as a result of
any such failure.
3. Letters of Credit.
(a) Issuance. The Bank agrees, on the terms and conditions set forth in
this Agreement, to issue standby letters of credit hereunder (each a "Letter of
Credit") at the request of the Borrower from time to time prior to the date that
is 30 days before the Termination Date; provided that, immediately after each
such Letter of Credit is issued, (i) the LC Exposure shall not exceed
$1,500,000, and (ii) the sum of the outstanding principal amount of all First
Line of Credit loans plus the LC Exposure shall not exceed $5,000,000.
(b) Notice of Proposed Issuance. With respect to each Letter of Credit, the
Borrower shall give the Bank at least two (2) Business Days' prior notice (i)
specifying the date such Letter of Credit is to be issued and (ii) describing
the proposed terms of such Letter of Credit and the nature of the transactions
to be supported thereby.
(c) Conditions to Issuance. The Bank shall not issue any Letter of Credit
unless:
(i) such Letter of Credit shall be reasonably satisfactory in form and
substance to the Bank,
(ii) the Borrower shall have executed and delivered such other instruments
and agreements relating to such Letter of Credit as the Bank shall have
reasonably requested, and
(iii) the conditions specified in Sections 7 and 8 shall have been
satisfied at or prior to the time such Letter of Credit is to be issued.
(d) Expiry Dates. No Letter of Credit shall have an expiry date later than
the fifth (5th) Business Day before the Termination Date. Subject to the
preceding sentence, each Letter of Credit issued hereunder shall expire on or
before the anniversary of the date of such issuance; provided that the expiry
date of any Letter of Credit may be extended from time to time at the Borrower's
request and with the Bank's consent for a period not exceeding one year.
(e) Drawings. If the Bank receives a demand for payment under any Letter of
Credit issued by it and determines that such demand should be honored, the Bank
shall (i) make such payment in accordance with the terms of such Letter of
Credit and (ii) reasonably promptly notify the Borrower as to the amount paid by
the Bank as a result of such demand and the date of such payment (an "LC Payment
Date").
(f) Reimbursement by the Borrower. If any amount is drawn under any Letter
of Credit, the Borrower irrevocably and unconditionally agrees to reimburse the
Bank for such amount together with any and all reasonable charges and expenses
which the Bank may pay or incur relative to such drawing. Such reimbursement
shall be due and payable on the relevant LC Payment Date or the date on which
the Bank notifies the Borrower of such drawing, whichever is later; provided
that, if such notice is given after 12:00 noon (Boston time) on the later of
such dates, such reimbursement shall be due and payable on the next following
Business Day (the date on which it is due and payable being an "LC Reimbursement
Due Date").
In addition, the Borrower agrees to pay, on the applicable LC Reimbursement
Due Date, interest on each amount drawn under a Letter of Credit, for each day
from and including the date such amount is drawn to but excluding such LC
Reimbursement Due Date, at a rate per annum equal to the Applicable Margin with
respect to the LIBOR Rate loans as in effect on such day. The Borrower also
agrees to pay, on demand, interest on any overdue amount (including any overdue
interest) payable under this subsection (f), for each day from and including the
date when such amount becomes due to but excluding the date such amount is paid
in full, at a rate per annum equal to the sum of the Prime Rate for such day
plus 2.0% (or, if such rate is unlawful, the highest rate permitted under
applicable law).
(g) Exculpatory Provisions. The obligations of the Borrower under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Bank, any beneficiary of any Letter of
Credit or any other person. The Borrower assumes all risks of the acts or
omissions of any beneficiary of any Letter of Credit with respect to the use of
such Letter of Credit by such beneficiary. Neither the Bank nor any of its
officers, directors, employees and agents shall be responsible for, and the
obligations of the Borrower to reimburse the Bank for drawings pursuant to this
Section 3 (other than obligations resulting solely from the gross negligence or
willful misconduct of the Bank) shall not be excused or affected by, among other
things, (i) the use which may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (ii) the
validity, sufficiency or genuineness of documents presented under any Letter of
Credit or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by the Bank against presentation of documents to it which do not
comply with the terms of the relevant Letter of Credit; or (iv) any dispute
between or among the Borrower, any beneficiary of any Letter of Credit or any
other person or any claims or defenses whatsoever of the Borrower or any other
person against any beneficiary of any Letter of Credit. The Bank shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit. Any action taken or omitted by the Bank in connection with
any Letter of Credit and the related drafts and documents, if done without
willful misconduct or gross negligence, shall be binding on the Borrower and
shall not place the Bank under any liability to the Borrower.
(h) Indemnification by Borrower. The Borrower agrees to indemnify and hold
harmless the Bank from and against any and all claims, damages, losses,
liabilities, costs or expenses (including, without limitation, the reasonable
fees and disbursements of counsel) which the Bank may reasonably incur (or which
may be claimed against the Bank by any person whatsoever) by reason of or in
connection with any execution and delivery or transfer of, or payment or failure
to pay under, any Letter of Credit or any actual or proposed use of any Letter
of Credit; provided that the Borrower shall not be required to indemnify the
Bank for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (i) the willful misconduct or gross
negligence of the Bank in determining whether a request presented under any
Letter of Credit issued by it complied with the terms of such Letter of Credit
or (ii) the Bank's failure to pay under any Letter of Credit issued by it after
the presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit. Nothing in this subsection is intended to
limit the obligations of the Borrower under any other provision of this Section
3.
4. Definitions. All defined terms used in this Agreement which are not
otherwise defined herein shall have the respective meanings assigned to them in
the Loan Documents. For purposes of this Agreement and of the Loan Documents,
the following additional definitions shall apply:
(a) The term "Affiliated Person" shall mean any person or entity
controlling, controlled by or under common control with the Borrower.
(b) The term "Anti-Terrorism Order" shall mean Executive Order No. 13,224
66 Fed Reg. 49,079 (2001) issued by the President of the United States of
America (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism).
(c) The term "Applicable Margin" shall mean, for any Type of Loans, the
percentage determined in accordance with the following table:
---------------------------- -------------------------- -------------------------- --------------------------
Ratio of Consolidated Prime Rate Loans LIBOR Rate Loans Cost of Funds Rate Loans
Total Liabilities to
Consolidated Tangible Net
Worth
---------------------------- -------------------------- -------------------------- --------------------------
Greater than 1.00:1.00 0% 1.50% 1.50%
---------------------------- -------------------------- -------------------------- --------------------------
Less than or equal to 0% 1.00% 1.00%
1.00:1.00 but greater than
0.50:1.00
---------------------------- -------------------------- -------------------------- --------------------------
Less than or equal to 0% 0.75% 0.75%
0.50:1.00
---------------------------- -------------------------- -------------------------- --------------------------
From the Closing Date through the date on which the Compliance Certificate for
the fiscal quarter of the Borrower ending June 30, 2004, is required to be
delivered pursuant to Section 6(d) hereof, the Applicable Margin shall be equal
to 0% for Prime Rate Loans, and 0.75% for LIBOR Rate Loans and Cost of Funds
Rate Loans. Thereafter, for purposes of determining the Applicable Margin, the
Ratio of Consolidated Total Liabilities to Consolidated Tangible Net Worth will
be tested quarterly, commencing with the fiscal quarter of the Borrower ending
June 30, 2004, based on the Compliance Certificate required to be delivered
pursuant to Section 6(d) with respect to such fiscal quarter. For purposes of
determining the Applicable Margin, any interest rate change shall be effective
on the first (1st) Business Day of the fiscal month following delivery of the
Compliance Certificate required to be delivered pursuant to Section 6(d) is
delivered to the Bank, together with a notice to the Bank (which shall be
verified by the Bank) specifying any change in the Applicable Margin, and if the
Borrower has failed to deliver the Compliance Certificate required to be
delivered pursuant to Section 6(d), the Applicable Margin that would otherwise
be in effect shall automatically be increased to the highest margin until such
Compliance Certificate is delivered.
(d) The term "Business Day" shall mean:
(i) any day which is neither a Saturday or Sunday nor a legal holiday on
which commercial banks are authorized or required to be closed in Boston,
Massachusetts;
(ii) when such term is used to describe a day on which a borrowing,
payment, prepaying, or repaying is to be made in respect of any LIBOR Rate loan,
any day which is: (i) neither a Saturday or Sunday nor a legal holiday on which
commercial banks are authorized or required to be closed in New York City; and
(ii) a London Banking Day; and
when such term is used to describe a day on which an interest rate
determination is to be made in respect of any LIBOR Rate loan, any day which is
a London Banking Day.
(e) The term "Capital Expenditure" shall mean any payment made or required
to be made, directly or indirectly, by the Borrower or any of its subsidiaries
for the purpose of acquiring or constructing fixed assets, real property or
equipment which, in accordance with GAAP, would be added as a debit to the fixed
asset account of the Borrower or any of its subsidiaries, including, without
limitation, amounts paid or payable under any conditional sale or other title
retention agreement or under any lease or other periodic payment agreement which
is of such a nature that payment obligations of the Borrower thereunder would be
required by GAAP to be capitalized and shown as liabilities on the consolidated
balance sheet of the Borrower and its subsidiaries.
(f) The term "Closing" shall mean a closing at which the Credit Facility is
to be entered into as reflected herein.
(g) The term "Closing Date" shall mean June 30, 2004.
(h) The term "Consolidated Adjusted EBITDA" for any fiscal period shall
mean an amount equal to Consolidated EBITDA for such fiscal period minus the sum
of any amounts attributable to any of the following for such fiscal period: (i)
income tax expense, (ii) Capital Expenditures funded internally by the Borrower
and its subsidiaries, (iii) cash dividends or distributions in respect of the
Borrower's capital stock, (iv) payments by the Borrower in respect of any
repurchase, redemption, conversion or other retirement of any of the Borrower's
capital stock, and (v) payments due by Borrower in respect of the deferred
purchase price of assets pursuant to acquisitions permitted by Sections 8(c) and
6(k) hereunder, all as determined in accordance with GAAP to the extent
applicable.
(i) The term "Consolidated EBITDA" for any fiscal period shall mean an
amount equal to Consolidated Net Income for such fiscal period, plus, to the
extent deducted in determining Consolidated Net Income for such fiscal period,
interest expense, income tax expense, depreciation expense and amortization
expense incurred by the Borrower and its subsidiaries, on a consolidated basis,
for such fiscal period, all as determined in accordance with GAAP. For purposes
of determining Consolidated EBITDA for a division or separate operation, there
shall be taken into account all income and expenses properly allocable to such
division or operation, including corporate overhead, administrative costs, taxes
and interest.
(j) The term "Consolidated Net Income" for any fiscal period shall mean the
net income or net loss, after deduction of or credit for applicable income
taxes, of the Borrower and its subsidiaries, as such net income or net loss
would be set forth on a consolidated income statement for such fiscal period
prepared in accordance with GAAP; provided that there shall be excluded any
items of gain which (i) are not ordinary by GAAP definition or (ii) are not a
result of ordinary operations, as determined in the Bank's sole discretion.
(k) The term "Consolidated Tangible Net Worth" on any date shall mean, for
the Borrower and its subsidiaries on a consolidated basis, Shareholders' Equity
on such date minus the sum of any amounts attributable to any of the following:
(i) goodwill, (ii) intangible items, including, but not limited to, unamortized
debt discount and expense, future income tax benefits, patents, trade and
service marks and names, copyrights and other intellectual property, and
organizational or research and development expenses except prepaid expenses,
(iii) reserves not already deducted from assets in determining Shareholders'
Equity, (iv) any equity investments in persons that are not subsidiaries of the
Borrower and (v) any write-up in the book value of assets resulting from any
revaluation thereof subsequent to December 31, 2003, all as determined in
accordance with GAAP.
(l) The term "Consolidated Total Liabilities" shall mean all liabilities of
the Borrower and its subsidiaries determined on a consolidated basis in
accordance with GAAP and classified as such on the consolidated balance sheet of
the Borrower and its subsidiaries and all other Indebtedness of the Borrower and
its subsidiaries, whether or not so classified.
(m) The term "Cost of Funds Rate" means the per annum rate of interest
which Bank is required to pay, or is offering to pay, for wholesale liabilities
of like tenor, adjusted for reserve requirements and such other requirements as
may be imposed by federal, state or local government and regulatory agencies, as
determined by Bank.
(n) The term "Default" shall mean any condition or event that, with the
giving of notice or lapse of time, or both, would, unless cured or waived,
become an Event of Default.
(o) The term "Fixed Charge Coverage Ratio" shall mean as of the end of any
fiscal quarter of the Borrower the ratio of (x) Consolidated Adjusted EBITDA for
the period of four consecutive fiscal quarters ending with such fiscal quarter,
determined in accordance with GAAP, to (y) the sum of (A) the aggregate amount
of principal payments of Indebtedness of the Borrower or any of its subsidiaries
scheduled to have been made during such period plus (B) the aggregate amount of
interest expense of the Borrower or any of its subsidiaries for such period.
(p) The term "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
(q) The term "Hedging Obligation" shall mean all liabilities of the
Borrower to the Bank under interest rate swap agreements or any other agreements
or arrangements designed to protect the Borrower against fluctuations in
interest rates or currency exchange rates.
(r) The term "Indebtedness" shall mean, with respect to any person, (i) all
indebtedness or other obligations of such person for borrowed money or for the
deferred purchase price of property or services, (ii) all indebtedness or other
obligations of any other person for borrowed money or for the deferred purchase
price of property or services in respect of which such person is liable,
contingently or otherwise, to pay or advance money or property as guarantor,
endorser or otherwise (except as endorser for collection in the ordinary course
of business), or which such person has agreed to purchase or otherwise acquire,
and (iii) all lease obligations of such person which are required, in accordance
with GAAP, to be capitalized on the books of the lessee.
(s) The term "Indebtedness for Money Borrowed" on any date shall mean (x)
all outstanding Indebtedness of the Borrower or any of its subsidiaries, current
or funded, secured or unsecured, incurred in connection with borrowings or the
making available of credit or funds, (y) all Indebtedness of the Borrower or any
of its subsidiaries issued, incurred or assumed in respect of the purchase price
of property, except for trade accounts payable incurred in the ordinary course
of the Borrower's business consistent with the policies of the Borrower on which
interest is not being accrued and which are payable within 90 days of the
statement date of such trade accounts payable, and which have not been
outstanding longer than 90 days from the statement date of such trade accounts
payable, and (z) all capitalized lease obligations (as defined by GAAP) of the
Borrower or any of its subsidiaries.
(t) The term "Insolvent" shall mean, with respect to any person, when any
of the following events shall have occurred in respect of such person: death,
dissolution, termination of existence, business failure, insolvency, appointment
of a receiver for any part of the property of, an assignment for the benefit of
creditors by, or a commencement of any proceedings under any bankruptcy or
insolvency law or any law relating to the relief of debtors, readjustment of
indebtedness, reorganization, composition or extension by or against, such
person.
(u) The term "Interest Period" shall mean, with respect to any (1) LIBOR
Rate loan:
(i) initially, the period beginning on (and including) the date on which
such LIBOR Rate loan is made or continued as, or converted into, a LIBOR Rate
loan pursuant to Section 2(d) or Section 2(e)(ii) and ending on (but excluding)
the day which numerically corresponds to such date 30, 60, 90, or 180 days
thereafter, in each case as the Borrower may select in its notice pursuant to
Section 2(d) or Section 2(e)(ii); and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Rate loan and ending 30, 60,
90, or 180 days thereafter, as selected by the Borrower by irrevocable notice to
the Bank not less than two (2) Business Days prior to the last day of the then
current Interest Period with respect thereto;
provided, however, that:
(A) the Borrower shall not be permitted to select Interest Periods to be in
effect at any one time which have expiration dates occurring on more than five
(5) different dates;
(B) Interest Periods commencing on the same date for LIBOR Rate loans
comprising part of the same advance under this Agreement shall be of the same
duration;
(C) Interest Periods for LIBOR Rate loans in connection with which Borrower
has entered into a Hedging Obligation with the Bank shall be of the same
duration as the relevant periods set under such Hedging Obligation;
(D) if such Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next following Business Day
unless such day falls in the next calendar month, in which case such Interest
Period shall end on the first preceding Business Day;
(E) no Interest Period may end later than the Termination Date; and
(F) no Interest Period may be selected when a Default or an Event of
Default has occurred and is continuing;
(2) with respect to any Cost of Funds Rate loan:
(i) initially, the period beginning on (and including) the date on which
such Cost of Funds Rate loan is made or continued as, or converted into, a Cost
of Funds Rate loan pursuant to Section 2(d) or Section 2(e)(ii) and ending on
(but excluding) the day that is seven (7), 14 or 30 days thereafter (or, if such
day is not a Business Day, such Interest Period shall end on the next following
Business Day unless such day falls in the next calendar month, in which case
such Interest Period shall end on the first preceding Business Day), in each
case as the Borrower may select in its notice pursuant to Section 2(d) or
Section 2(e)(ii); and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Cost of Funds Rate loan and ending
seven (7), 14 or 30 days thereafter, as selected by the Borrower by irrevocable
notice to the Bank not less than two (2) Business Days prior to the last day of
the then current Interest Period with respect thereto.
(v) The term "Interest Payment Date" shall mean, with respect to (1) any
LIBOR Rate loan having an Interest Period of 90 days or less, the last Business
Day of such Interest Period, and as to any LIBOR Rate loan having an Interest
Period longer than 90 days, each Business Day which is 90 days, or a whole
multiple thereof, after the first day of such Interest Period and the last day
of such Interest Period, and (2) any Cost of Funds Rate loan, the last Business
Day of the Interest Period applicable thereto.
(w) The term "LC Exposure" shall mean, at any time, the sum, without
duplication, of (i) the aggregate amount that is (or may thereafter become)
available for drawing under all Letters of Credit outstanding at such time plus
(ii) the aggregate unpaid amount of all LC Reimbursement Obligations at such
time.
(x) The term "LC Reimbursement Obligations" shall mean, at any time, all
obligations of the Borrower to reimburse the Bank for amounts paid by the Bank
in respect of drawings under Letters of Credit.
(y) The term "Letter of Credit" shall have the meaning set forth in Section
3(a) hereof.
(z) The term "LIBOR Rate" shall mean, with respect to any Interest Period
for any LIBOR Rate loan, the offered rate for deposits of U.S. Dollars in an
amount approximately equal to the amount of the requested LIBOR Rate loan for a
term coextensive with the designated Interest Period which the British Bankers'
Association fixes as its LIBOR rate and which appears on the Telerate Page 3750
as of 11:00 a.m. London time on the day which is two (2) London Banking Days
prior to the beginning of such Interest Period.
(aa) The term "LIBOR Lending Rate" means, with respect to any LIBOR Rate
loan to be made, continued or maintained as, or converted into, a LIBOR Rate
loan for any Interest Period, a rate per annum for such Interest Period
determined pursuant to the following formula:
LIBOR Lending Rate = LIBOR Rate
-----------------------------------------
(1.00 - LIBOR Reserve Percentage)
(bb) The term "LIBOR Reserve Percentage" shall mean, with respect to any
day of any Interest Period for LIBOR Rate loans, the maximum aggregate (without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements) under any regulations of the Board of Governors
of the Federal Reserve System (the "Board") or other governmental authority
having jurisdiction with respect thereto as issued from time to time and then
applicable to assets or liabilities consisting of "Eurocurrency Liabilities," as
currently defined in Regulation D of the Board, having a term approximately
equal or comparable to such Interest Period.
(cc) The term "Loan Documents" shall mean (i) this Agreement, including the
Exhibits and Schedules attached hereto, and the Line of Credit Notes, (ii) any
agreement or agreements between the Borrower and the Bank which give rise to any
Hedging Obligations and (iii) all other agreements, documents and instruments
relating to, arising out of, or in any way connected with any of the foregoing
referred to in clauses (i) and (ii) above.
(dd) The term "London Banking Day" shall mean a day on which dealings in
U.S. Dollar deposits are transacted in the London interbank market.
(ee) The term "Patriot Act" shall mean Public Law 107-56 of the United
States of America, United and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of
2001.
(ff) The term "Payment Date" shall mean the last Business Day of each
April, July, October and January from and after the Closing Date.
(gg) The term "Prime Rate" shall mean the rate of interest quoted by the
Bank from time to time in Boston as its "Prime Rate," which is not necessarily
the Bank's lowest rate of interest.
(hh) The term "Shareholders' Equity" on any date shall mean stockholders'
equity determined in accordance with GAAP.
(ii) The term "Termination Date" shall mean June 30, 2007.
5. Representations and Warranties. The Borrower represents and warrants as
follows (with the following representations and warranties being deemed to apply
to each subsidiary of the Borrower on the same basis as which such
representations and warranties expressly apply to the Borrower):
(a) Organization. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization; is duly qualified to do business and in good standing in each
jurisdiction in the United States of America where such qualification is
required, except those jurisdictions where the failure to so qualify will not
have a material adverse effect on the Borrower's business, prospects or
financial condition (a list of the jurisdictions where the Borrower is so
qualified being set forth on Schedule 5(a) hereto); and has all requisite
corporate power and authority to conduct its business as presently being
conducted and as proposed to be conducted after the Closing and to own its
properties now and after the Closing; and the Borrower has all requisite
corporate power and authority to execute and deliver, and to perform all of its
obligations under, this Agreement and the other Loan Documents.
(b) Authority. The execution, delivery and performance by the Borrower of
this Agreement and the other Loan Documents to which it is a party have been
duly authorized by all necessary corporate action and do not contravene any
provision of the Borrower's charter or by-laws; do not require any consents or
approvals which have not been obtained (a list of any required consents and
approvals is set forth on Schedule 5(b) hereto); do not violate any provision of
any law, rule or regulation (including without limitation Regulations T, U and X
of the Board of Governors of the Federal Reserve System) or any determination or
award; do not and will not result in a breach or constitute a default under any
agreement to which the Borrower is a party or by which its properties are bound,
including, without limitation, any indenture, loan or credit agreement, lease,
debt instrument or mortgage; or result in or require the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest or other charge
or encumbrance of any nature upon or with respect to any of the Borrower's
properties; and the Borrower is not in material default under any law, rule or
regulation, order, writ, judgment, injunction, decree, determination, award,
indenture, loan or credit agreement, lease, debt instrument or mortgage referred
to above or will not be in any such material default by virtue of the
transactions to be entered into at the Closing.
(c) Approvals; Compliance with Statutes, Etc.. (i) No authorization,
consent, approval, license or exemption of, or filing a registration with, any
court or governmental department or commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for the valid
execution, delivery or performance by the Borrower of this Agreement and the
other Loan Documents to which it is a party, other than filings which have
already been made and approvals which have already been received, a list of
which is set forth on Schedule 5(c) hereto. The Borrower is the lawful holder of
all licenses, permits, certificates and governmental authorizations required for
the conduct of its business, except where the failure to hold any such licenses,
permits, certificates or authorizations, individually or in the aggregate, would
not have a material adverse effect on the business, prospects, property or
financial condition of the Borrower and its subsidiaries as a whole. No such
material license, permit, certificate or other governmental authorization has
been revoked, cancelled, rescinded, modified, denied or lost and not reissued or
reinstated, and the Borrower has no reason to believe that any such material
license, permit, certificate or other governmental authorization will be
revoked, cancelled, rescinded, modified or lost.
(ii) The Borrower and its subsidiaries is in compliance with all applicable
laws, statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property, except
for such non-compliances as could not reasonably be expected to have a material
adverse effect. Without limitation of the foregoing, the Borrower and each of
its subsidiaries is in compliance with, and neither the entering into of the
Loan Documents or the use of the proceeds of the loans will violate: any law,
rule or regulation relating to anti-terrorism or money laundering, including the
Anti-Terrorism Order, the Patriot Act, the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
(d) Valid Obligations. This Agreement and the other Loan Documents to which
the Borrower is a party have been duly executed and delivered by the Borrower
and constitute legal, valid and binding obligations of the Borrower, enforceable
in accordance with their respective terms.
(e) Assets. Except as noted on Schedule 5(e), the Borrower has good and
clear marketable, record and insurable title to all of its assets and
properties, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, charge, easement, restriction or encroachment.
(f) Agreements. The Borrower is not in default under or with respect to any
contractual obligation in any respect which could reasonably be expected to be
materially adverse to the business, operations, property or financial condition
of the Borrower and its subsidiaries as a whole, or which could materially
adversely affect the ability of the Borrower to perform its obligations under
this Agreement or any of the other Loan Documents.
(g) Insurance. Attached hereto as Schedule 5(g) is a complete and accurate
list of all insurance policies of the Borrower covering its properties and
assets as of the date hereof. The Borrower has previously delivered or, at the
request of the Bank, shall deliver on the Closing Date complete and accurate
copies of all insurance policies listed on Schedule 5(g). Upon issuance of any
insurance policy listed on Schedule 5(g) as applied for, the Borrower shall
deliver, at the request of the Bank, a complete and accurate copy of such policy
to the Bank; provided, however, that any policy so listed shall be delivered to
the Bank within 60 days following the Closing Date. Except policies listed as
applied for, all insurance policies listed on Schedule 5(g) are in full force
and effect, with the premiums due thereon paid, and the Borrower is not in
default with respect to any such policy. In addition, all such policies satisfy
the requirements set forth in Section 6(l) hereof.
(h) Litigation and Other Proceedings. Except as set forth on Schedule 5(h)
hereto, there are no actions, suits or proceedings pending or threatened against
the Borrower before any court or any governmental department, commission, board,
bureau, agency or instrumentality, and none of the actions, suits or proceedings
listed on Schedule 5(h) could reasonably be expected to be materially adverse,
either individually or in the aggregate, to the business, properties, financial
condition or prospects of the Borrower and its subsidiaries as a whole.
(i) Labor Matters. Except as set forth on Schedule 5(i) hereto, the
Borrower is not a party to any collective bargaining or similar agreement and
has complied in all material respects with all applicable state and federal laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours and other laws related to employment of employees of
the Borrower or its agents, and there are no arrears in the payment of wages,
withholding or social security taxes, unemployment insurance premiums or other
similar obligations of the Borrower other than in the ordinary course of
business.
(j) ERISA. No "prohibited transaction" or "accumulated funding deficiency"
or "reportable event" has occurred with respect to any "single employer plan" of
the Borrower that could subject the Borrower to a tax, penalty or liability in
an amount in excess of $300,000 per such occurrence. None of the Borrower, any
predecessor to the Borrower or any "commonly controlled entity" has ever been
included in a "multiemployer plan" as to which the Borrower or any "commonly
controlled entity" would have liability if the Borrower or any "commonly
controlled entity" were to withdraw therefrom (as each of the quoted terms is
defined or used in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Internal Revenue Code of 1986, as amended (the
"Code")).
(k) Financial Statements. The Borrower has delivered to the Bank (i)
consolidated financial statements of the Borrower and its consolidated
subsidiaries, including consolidated balance sheets, statements of income and
retained earnings and statements of changes in financial position (collectively,
the " 2003 Financial Statements") for and as of the end of the fiscal year ended
December 31, 2003, and (ii) unaudited consolidated balance sheets and statements
of income of the Borrower and its consolidated subsidiaries for and as of the
end of the fiscal quarter ended March 31, 2004 (collectively, together with the
2003 Financial Statements, the "Financial Statements"). The 2003 Financial
Statements have been audited by PriceWaterhouseCooper, certified public
accountants. The Financial Statements present fairly in all material respects
the consolidated financial condition and performance and results of operation of
the Borrower and its consolidated subsidiaries for and as of the end of the
periods presented, in accordance with GAAP consistently applied (subject, in the
case of the unaudited Financial Statements, to normal year-end audit adjustments
and the omission of footnotes). Since December 31, 2003, (i) the physical assets
and properties owned or leased by the Borrower and its subsidiaries have not
suffered any material destruction or damage, regardless of whether or not any
such loss was insured, (ii) neither the Borrower nor any of its subsidiaries has
incurred any Indebtedness or liabilities, fixed, contingent or otherwise, other
than in the ordinary course of business, and (iii) there has not been a material
adverse change in the business or operations of the Borrower and its
subsidiaries taken as a whole.
(l) Projections . The Borrower has delivered to the Bank certain unaudited
projections of the Borrower and its subsidiaries, including projected balance
sheets, projected results of operations, including projected profit and loss
statements, and projected cash flow statements, each as of the end of each
fiscal year through December 31, 2009. The projections have been prepared in
accordance with GAAP consistently applied with those used in the preparation of
the Financial Statements (subject to the addition of notes and, in the case of
interim projections, to recurring year-end adjustments). The financial
projections have been prepared using assumptions which the Borrower believes in
good faith to be reasonable, having a reasonable factual basis; and such
financial projections represent the good faith judgment of the management of the
Borrower as to the future financial results and condition of the Borrower and
its subsidiaries.
(m) Taxes. The Borrower has filed all federal and state tax returns which
are required to be filed and has paid all taxes shown on such returns and on all
assessments received by it, to the extent that such taxes have become due. All
of such tax returns are accurate and complete. All other taxes and assessments
of any nature with respect to which the Borrower is obligated and which have
become due are being paid or adequate accruals have been set up therefor.
(n) Investments. Except as set forth on Schedule 5(n), and except for
subsidiaries of the Borrower acquired by the Borrower pursuant to acquisitions
that either (i) are funded by one or more advances under the Second Line of
Credit pursuant to Section 8 hereof or (ii) are permitted under Section 6(k)
hereof, the Borrower does not own any securities or other equity or debt
interests in any corporation, partnership or other business entity. All of the
Affiliated Persons of the Borrower are set forth on Schedule 5(n).
(o) Investment Company. The Borrower is not an "investment company" or a
company "controlled" by an "investment company" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended).
(p) Equity Structure. The equity structure of the Borrower and each of its
subsidiaries, including each class of its capital stock and other securities, is
set forth on Schedule 5(p). Each of the Borrower's subsidiaries is wholly-owned,
directly or indirectly through one or more subsidiaries, by the Borrower.
(q) Indebtedness for Money Borrowed. Attached as Schedule 5(q) hereto is a
list of all Indebtedness for Money Borrowed of the Borrower and its
subsidiaries, indicating, as applicable, the original principal amount of each
borrowing or debt, the current amount due thereon, the terms and schedule for
payments in respect thereof, and the security, if any, given therefor or in
connection therewith. Other than as set forth on Schedule 5(q) hereto, none of
such Indebtedness for Money Borrowed is secured by any lien, encumbrance,
mortgage, pledge, or security interest given by the Borrower or any of its
subsidiaries.
(r) Patents, Copyrights and Trademarks. Except as set forth on Schedule
5(r), the Borrower does not own any trademarks, copyrights or patents which are
material in the ordinary course of business as the Borrower's business is
currently conducted or as such business is contemplated to be conducted in the
future.
(s) Representations Accurate. No representation or warranty made by the
Borrower herein, in any other Loan Document or in any other certificate
furnished from time to time in connection herewith or therewith contains or will
contain any misrepresentation of a material fact or omits or will omit to state
any material fact necessary to make the statements herein or therein (taken as a
whole in conjunction with all such documents) not misleading when made. There is
no condition specific to the business of the Borrower which materially adversely
affects, or which would in the future materially adversely affect, the business,
operations, property or financial condition of the Borrower and its subsidiaries
as a whole.
6. Covenants. The Borrower incorporates herein all of the affirmative and
negative covenants contained in the other Loan Documents. In addition, the
Borrower represents, warrants, covenants and agrees as follows (and shall cause
each of its subsidiaries to comply with the following representations,
warranties, covenants and agreements on the same basis as which such
representations, warranties, covenants and agreements expressly apply to the
Borrower):
(a) Payments. The Borrower shall duly and punctually make the payments
required under this Agreement and the Line of Credit Notes and shall perform and
observe all of its other obligations under the Loan Documents.
(b) Intentionally omitted.
(c) Financial Report. The Borrower will furnish to the Bank:
(i) as soon as available, but in any event within 120 days after the end of
each fiscal year of the Borrower, a copy of the audited consolidated balance
sheet of the Borrower and its consolidated subsidiaries as at the end of such
fiscal year and the related audited consolidated statements of income,
stockholders' equity and changes in financial position for such fiscal year, in
each case setting forth in comparative form the figures for the previous year,
reported on without a "going concern" or like qualification or exception or
qualification as to the scope of the audit, by independent certified public
accountants of nationally recognized standing, together with any letter from the
Borrower's management prepared in connection with the Borrower's annual audit
report;
(ii) as soon as available, but in any event within 60 days after the end of
each fiscal quarter end in each fiscal year of the Borrower, copies of the
unaudited consolidated balance sheets of the Borrower and its consolidated
subsidiaries as at the end of such quarterly period, together with the related
unaudited consolidated statements of income for such quarterly period and for
the portion of the fiscal year of the Borrower through such quarterly period, in
each case certified by the Chief Financial Officer of the Borrower as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries, in conformity with
GAAP (subject to normal year-end audit adjustments and to the fact that such
financial statements may be condensed and may not include footnotes); all such
financial statements to be complete and correct in all material respects and
prepared in reasonable detail and in conformity with GAAP applied consistently
throughout the periods reflected therein; and
(iii) as soon as available, but in any event not less than 14 days prior to
the end of each fiscal year of the Borrower, a projected balance sheet,
projected cash flow statement (including proposed Capital Expenditures) and
projected profit and loss statement of the Borrower and its consolidated
subsidiaries for the forthcoming fiscal year, in all cases setting forth such
financial information on a fiscal quarter by fiscal quarter basis for such
forthcoming fiscal year; provided that, in the event Borrower shall begin, after
the Closing Date, to prepare such projections for a period greater than the
forthcoming fiscal year, the Borrower shall furnish the same to Bank pursuant to
the terms of this Section 6(c)(iii). Other Financial Reports. The Borrower will
also furnish to the Bank:
(d) concurrently with the delivery of each set of the financial statements
referred to in paragraphs (i) and (ii) of Section 6(c), a certificate of the
President and Chief Financial Officer of the Borrower in the form of Exhibit C
attached hereto (a "Compliance Certificate") (i) stating that, to the best of
such person's knowledge, during the period covered by such set of financial
statements, the Borrower has observed or performed in all respects all of its
covenants and other agreements and satisfied in all material respects every
condition contained in this Agreement and the other Loan Documents to be
observed, performed or satisfied by it, and that, to the best of such person's
knowledge, no Default or Event of Default exists (except as specified in such
certificate), (ii) showing in detail the calculations supporting such statement
in respect of the covenants set forth in Sections 6(s) through 6(u) hereof and
(iii) stating that such financial statements present fairly in all material
respects the financial condition and results of operations of the Borrower and
its consolidated subsidiaries, in conformity with GAAP (subject, with respect to
quarterly financial statements, to normal year-end audit adjustments and to the
fact that such financial statements may be condensed and may not include
footnotes);
(i) promptly after the same are sent and received, copies of all financial
statements, reports and notices which the Borrower sends to holders of all
classes of capital stock of the Borrower or which the Borrower receives from
such holders;
(ii) promptly, such additional financial and other information as the Bank
may from time to time reasonably request; and
(iii) as soon as available, a copy of each other report submitted to the
Borrower by its certified public accountants in connection with any annual,
interim or special audit made by them of the books of the Borrower.
(e) Maintain Rights. The Borrower shall:
(i) keep in full force and effect its corporate existence and all material
rights, licenses, leases and franchises reasonably necessary to the conduct of
its business;
(ii) duly observe and conform to all applicable material requirements of
all governmental authorities in any way relating to it or the conduct of its
business, all applicable material laws and regulations wherever its business is
conducted, and all applicable decrees, orders and judgments;
(iii) perform or comply with the terms and conditions of each material
contract, agreement or obligation to which it is a party, and the provisions of
its charter documents;
(iv) keep true records and books of account;
(v) not engage in any business other than the dental laboratory business in
which it is now engaged and businesses reasonably related thereto;
(vi) not establish any subsidiaries, other than pursuant to acquisitions
that either (i) are funded by one or more advances under the Second Line of
Credit pursuant to Section 8 hereof, or (ii) are permitted under Section 6(k)
hereunder. All subsidiaries established or acquired by the Borrower or any of
its subsidiaries shall be wholly-owned, either directly or indirectly through
one or more other subsidiaries, by the Borrower. If such subsidiaries are not
consolidated or merged with the Borrower within 45 days of their acquisition or
establishment, then any such subsidiaries shall become a borrower or guarantor
hereunder, at the Bank's sole discretion. Upon forming or acquiring any
subsidiary, at the Bank's discretion such subsidiary and the Borrower shall
execute and deliver to the Bank (a) a joinder agreement substantially in the
form of Exhibit D attached hereto and the documents referred to therein and (b)
such other documents reasonably requested by the Bank consistent with the terms
of this Agreement which provide that such subsidiary shall become bound by all
of the terms, covenants and agreements contained in the Loan Documents. Upon
satisfaction of the conditions set forth in this Section 6(e), each newly-formed
or acquired subsidiary shall become a Borrower or guarantor hereunder and under
the other Loan Documents to the same extent as if such subsidiary had been a
party hereto and thereto on the Closing Date; and
(vii) maintain its chief executive office at 000 Xxxxxx Xxxx Xxxx Xxxxxxx,
XX 00000, or at such other place in the United States of America as the Borrower
shall designate upon written notice to the Bank, where notices, presentations
and demands to or upon the Borrower in respect of the Loan Documents may be
given or made.
(f) No Transfers. The Borrower shall not sell, lease, transfer or otherwise
dispose of any assets necessary for the effective or efficient operation or
proper maintenance of its business, except for (i) sales of obsolete equipment
in the ordinary course of business, and (ii) sales of equipment in the ordinary
course of business not to exceed $25,000 in any fiscal year.
(g) No Mergers. The Borrower will not enter into any transaction of merger
or consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any material
part of its business, property or tangible or intangible assets, whether now
owned or hereafter acquired, or acquire, by purchase or otherwise, all or
substantially all of the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any person or entity other than
pursuant to (i) acquisitions that either (A) are funded by one or more advances
under a Line of Credit pursuant to Section 8 hereof, or (B) are permitted under
Section 6(k) hereunder or (ii) so long as no Default has occurred and is
continuing both before and after giving effect thereto, mergers between any
subsidiary of the Borrower with and into the Borrower or any other subsidiary of
the Borrower, provided that if the Borrower is a constituent party to any such
merger it shall be the surviving corporation of such merger.
(h) Payment of Taxes. The Borrower will promptly pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profit or upon any property, real, personal or mixed, belonging to
it; provided, however, that the Borrower shall not be required to pay any such
tax, assessment, charge or levy if the same shall not at the time be due and
payable or can be paid thereafter without penalty or if the validity thereof
shall currently be contested in good faith by appropriate proceedings and if the
Borrower shall have made adequate provision on its books for the payment of such
tax, assessment, charge or levy; and provided further, that such tax or other
sum shall be paid before it gives rise to a lien against the property of the
Borrower.
(i) Guaranties. The Borrower shall not become or be liable in respect of
any guaranty, except for guaranties in conjunction with an acquisition that
either (i) is funded by an advance under a Line of Credit pursuant to Section 8
hereof or (ii) is permitted under Section 6(k) hereunder, and endorsements by
the Borrower in the ordinary course of business of negotiable instruments for
deposit or collection.
(j) Agreements. The Borrower shall not enter into any agreement of any
nature whatsoever, including without limitation any agreement which constitutes
or effects a material modification of any agreement to which the Borrower is a
party as of the date hereof, other than in the ordinary course of its business;
provided, that, any such agreement which is entered into with an Affiliated
Person (i) shall be subject to the restriction on compensation set forth in
Section 6(r) below, (ii) shall be on an arms-length basis, and (iii) shall be on
terms and conditions no more favorable than the Borrower could obtain from an
unrelated third party.
(k) Investments. The Borrower shall not make or permit to exist any
investments, directly or indirectly (in the form of any acquisition of assets
other than in the ordinary course of business or other than an acquisition of
the assets of an entity engaged in a dental laboratory business; or in the form
of any acquisition of stock, securities, indebtedness or obligation of, or any
loan, advance, capital contribution or transfer of property to, or any guarantee
or other commitment on behalf of, any person, other than pursuant to an
acquisition of the stock or business of an entity engaged in a dental laboratory
business; or otherwise), other than in (i) United States Treasury securities,
(ii) readily marketable direct obligations of the United States of America or
any agency thereof, backed by the full faith and credit of the United States,
(iii) certificates of deposit, time deposits or banker's acceptances with a
limit of $5,000,000 per institution issued by any of the top 50 financial
institutions in the United States of America or its territories, each having
total assets and surplus of at least $4,000,000,000, (iv) commercial paper rated
A1/P1 or better by Standard & Poor's Corporation/Xxxxx'x Investors Service,
Inc., (v) repurchase agreements made against securities which meet the
qualifications stated herein, (vi) tax-exempt securities, including without
limitation, municipal bonds or notes, rated A or better by Xxxxx'x Investors
Service, Inc, or (vii) acquisitions in accordance with the requirements of
Section 8(c) hereof.
(l) Property. The Borrower will keep all of its property reasonably
necessary for the continued operation of its business in good working order and
condition, reasonable wear and tear and, subject to Section 9 hereof, damage by
fire and other casualty excepted, and maintain with financially sound and
reputable insurance companies insurance thereon in at least such amounts and
with such deductibles and against at least such risks (including hazard) as are
usually insured against in the same general area by companies engaged in the
same or similar businesses; and the Borrower will furnish to the Bank, upon its
written request, full information with respect to any insurance carried.
(m) Books and Records. The Borrower will (i) keep proper books of record
and account in which full, true and correct entries in conformity with GAAP and
all requirements of law shall be made of all dealings and transactions in
relation to its business and activities, and (ii) permit representatives of the
Bank to visit and inspect any of its properties and to examine and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired, and to discuss the business, operations,
properties and financial condition of the Borrower with its officers and
employees and with its independent certified public accountants.
(n) Notices. The Borrower will give notice to the Bank, within five (5)
days of knowledge thereof, of:
(i) the occurrence of any Default or Event of Default under this Agreement;
(ii) any default or event of default under any other contractual obligation
of the Borrower which, if not paid or remedied by the Borrower or waived by the
obligee thereon, could result in liability to the Borrower in excess of $300,000
in any single instance or $650,000 in the aggregate;
(iii) any litigation, investigation or proceeding of which the Borrower has
knowledge which may exist at any time between the Borrower and any governmental
authority which may have a material adverse effect on the business, operations,
property or financial condition of the Borrower, any litigation or proceeding
affecting the Borrower which may have a material adverse effect upon the
Borrower, or any material adverse development in previously disclosed
litigation;
(iv) the following events, as soon as possible and in any event within 15
days after the Borrower knows thereof: (x) the occurrence of any "reportable
event" with respect to any "single employer plan" which in the reasonable
judgment of the Borrower could be expected to have a material adverse affect on
the Borrower or its business, (y) the institution of proceedings or the taking
or expected taking of any other action by the Borrower or any "commonly
controlled entity" to terminate any "single employer plan" with respect to which
there exists any vested unfunded pension liabilities at the time of such
termination, or (z) the "reorganization" or "insolvency" of any "multiemployer
plan" which may reasonably be expected to have a material adverse affect on the
business, operations, property or financial condition of the Borrower (as each
of the quoted terms is defined or used in ERISA or the Code);
(v) a material adverse change in the business, operations, property or
financial condition of the Borrower and its subsidiaries as a whole; and
(vi) the revocation, expiration or loss of any license, permit or other
governmental authorization of the Borrower material to the conduct of the
business of the Borrower and its subsidiaries as a whole;
each notice pursuant to paragraphs (i) through (vi) of this Section 6(n) to be
accompanied by a statement of the President of the Borrower setting forth
details of the occurrence referred to therein and stating what action, if any,
the Borrower proposes to take with respect thereto.
(o) Liens. The Borrower will not create, incur, assume or suffer to exist
any lien, mortgage or other encumbrance upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for:
(i) carriers', warehousemen's, mechanics', materialmen's, repairmen's, or
other like liens arising in the ordinary course of business in respect of
obligations not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(ii) easements, rights-of-way, restrictions, license rights, leases and
other similar encumbrances incurred in the ordinary course of business which do
not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the Borrower;
(iii) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under self-insurance arrangements;
(iv) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(v) liens existing on the assets or properties of the Borrower and
identified on Schedule 5(e) attached hereto;
(vi) purchase money liens securing additional Indebtedness permitted under
Section 6(q) hereof;
(vii) liens securing the Borrower's obligations under operating leases; and
(viii) liens upon assets acquired after the Closing Date in connection with
any acquisition permitted under the terms of Sections 6(k) and 8(c) hereof
provided that such liens shall not secure Indebtedness in an aggregate amount in
excess of $300,000.
In addition, the Borrower shall not, nor shall the Borrower permit any
subsidiary to, enter into or permit to exist any arrangement or agreement which
directly or indirectly prohibits the Borrower or any such subsidiary from
creating or incurring any lien or encumbrance in favor of the Bank under the
Loan Documents.
(p) Modifications. The Borrower will not permit the modification or waiver
of or any change in any provisions of any agreement relating to Indebtedness of
the Borrower if such modification, waiver or change could have a material
adverse effect on the ability of the Borrower to perform its obligations under
this Agreement or the other Loan Documents (such effect to be determined by the
Bank in its sole discretion).
(q) Additional Indebtedness. The Borrower shall not create, incur, assume,
agree to purchase or repurchase or provide funds in respect of or otherwise
become or be or remain liable with respect to any Indebtedness of any type
whatsoever owed to any person, except (i) with respect to any Indebtedness
incurred pursuant to the terms of this Agreement (including in conjunction with
an acquisition that is either funded by an advance under a Line of Credit
pursuant to Section 8 hereof or permitted under Section 6(k) hereof) or
outstanding on the date hereof and listed on Schedule 5(q) hereto; (ii)
obligations to make payments of money pursuant to so-called "earn-out"
agreements or other similar arrangements providing for the payment by the
Borrower of contingent consideration in connection with the acquisition of one
or more businesses; (iii) trade indebtedness incurred in the ordinary course of
the Borrower's business; and (iv) Indebtedness in respect of Capital
Expenditures not exceeding $300,000 in the aggregate during any 12-month period.
(r) Payments to Affiliated Persons. The Borrower shall not make any
payment, compensation or distribution, directly or indirectly, whether in cash
or in property and whether in respect of stock ownership or employment,
management, consulting or other services or for any other reason whatsoever, to
any Affiliated Person, except that (i) the Borrower may (A) pay compensation in
the form of salary, fringe benefits and reimbursement for reasonable business
expenses to Affiliated Persons who are directors or officers of the Borrower in
the ordinary course of business and in a manner consistent with past practice,
(B) pay bonuses to such Affiliated Persons and (C) repurchase shares of the
Borrower's capital stock from such Affiliated Persons and (ii) any subsidiary of
the Borrower may pay dividends and make distributions to the Borrower; provided
that immediately prior to and after giving effect to any such bonus payment or
stock repurchase there exists no Default or Event of Default hereunder, and the
Bank receives a certificate to such effect signed by the President or Chief
Financial Officer of the Borrower.
(s) Consolidated Total Liabilities to Consolidated Tangible Net Worth
Ratio. The Borrower shall not permit the ratio of Consolidated Total Liabilities
to Consolidated Tangible Net Worth as of the end of any fiscal quarter to be
greater than 1.5:1.
(t) Fixed Charge Coverage Ratio. The Borrower shall not permit the Fixed
Charge Coverage Ratio as of the end of any fiscal quarter to be less than 1.5:1.
(u) Minimum Consolidated EBITDA. The Borrower shall not permit Consolidated
EBITDA to be less than (i) $3,510,500 for the fiscal quarter ending June 30,
2004, (ii) $2,758,000 for the fiscal quarter ending September 30, 2004, (iii)
$3,385,000 for the fiscal quarter ending December 31, 2004, (iv) $3,176,000 for
the fiscal quarter ending March 31, 2005, (v) $ 3,866,000 for the fiscal quarter
ending June 30, 2005, (vi) $3,038,000 for the fiscal quarter ending September
30, 2005, (vii) $3,728,000 for the fiscal quarter ending December 31, 2005,
(viii) $3,533,000 for the fiscal quarter ending March 31, 2006, (ix) $ 4,300,000
for the fiscal quarter ending June 30, 2006, (x) $3,379,000 for the fiscal
quarter ending September 30, 2006, (xi) $4,146,000 for the fiscal quarter ending
December 31, 2006, (xii) $3,968,000 for the fiscal quarter ending March 31,
2007, and (xiii) $4,831,000 for the fiscal quarter ending June 30, 2007.
(v) Bank Accounts. (i) No later than 30 days from the Closing Date, the
Borrower shall establish its primary operating account with Fleet National Bank,
and (ii) at all times after such date, the Borrower shall maintain its primary
operating account with Fleet National Bank. As of the Closing Date, the Borrower
and its subsidiaries do not maintain any bank accounts other than as set forth
on Schedule 6(v). For the avoidance of any doubt, it is hereby acknowledged that
for the purposes of this Section 6(v), "establish its primary operating account"
means that the Borrower shall maintain all of its cash management activities
with Fleet National Bank by transferring all of the bank accounts maintained
with Citizens Bank and marked "Corporate" on the attached Schedule 6(v) to Fleet
National Bank, and that with respect to bank accounts established after the
Closing Date, Borrower shall use best efforts to establish such bank accounts
with Fleet National Bank or Bank of America, N.A.
(w) Further Assurances. At any time and from time to time the Borrower
shall, and shall cause each of its subsidiaries to, execute and deliver such
further instruments and take such further action as may reasonably be requested
by the Bank to effect the purposes of this Agreement and the other Loan
Documents. Without limitation of the foregoing, upon receipt of an affidavit of
an officer of the Bank as to the loss, theft, destruction or mutilation of any
Note, and, in the case of any such loss, theft, destruction or mutilation, upon
cancellation of such Note, the Borrower will issue, in lieu thereof, a
replacement Note in the same principal amount thereof and otherwise of like
tenor.
(x) Post-closing Lien Searches. No later than 30 days from the Closing
Date, Borrower shall deliver to Bank the results of UCC lien searches in the
following jurisdictions : Texas, New Hampshire, Delaware, and Louisiana (which
jurisdictions represent in the aggregate 40% of the total revenues and assets of
the Borrower), indicating no liens, mortgages or other encumbrances on any of
the Borrower's property, assets or revenues, other than liens permitted under
Section 6(o) hereof, and otherwise in form and substance satisfactory to the
Bank.
7. Conditions of Closing. The obligation of the Bank to make initial
advances under a Line of Credit or to issue any Letter of Credit is subject to
the satisfaction of all of the following conditions on or prior to the Closing:
(a) Line of Credit Notes. The Bank shall have received the Line of Credit
Notes, duly executed and delivered by the Borrower, each in form satisfactory to
the Bank and its special counsel.
(b) Warranties and Covenants. All warranties and representations of the
Borrower and its subsidiaries in this Agreement and the other Loan Documents
shall be true on the date of the Closing as if then given, each of the Borrower
and its subsidiaries shall have performed or observed all of the terms,
covenants, conditions and obligations under this Agreement and the other Loan
Documents which are required to be performed or observed by it on or prior to
such date, and on such date there shall exist no Default or Event of Default
hereunder.
(c) Closing Certificate. The Bank shall have received a certificate, dated
as of the Closing and executed by the President and the Chief Financial Officer
of the Borrower, in form and content satisfactory to the Bank, stating the
substance of the foregoing clause (b).
(d) Financial Statements. The Bank shall have received copies of (1) the
2003 Financial Statements, together with the management letter for the fiscal
year ending December 31, 2003, and (2) the unaudited consolidated balance sheets
of the Borrower and its consolidated subsidiaries as of March 31, 2004, together
with the related unaudited consolidated statements of income for such period and
for the portion of the fiscal year of the Borrower through such period,
certified by the Chief Financial Officer of the Borrower as presenting fairly in
all material respects the financial condition and results of operations of the
Borrower and its consolidated subsidiaries, in conformity with GAAP (subject to
normal year-end audit adjustments and to the fact that such financial statements
may be condensed and may not include footnotes), and Bank shall be satisfied
with the foregoing. There shall have been no material misstatements in, or
omissions from, such financial statements and any other documentation furnished
to the Bank.
(e) Annual Report. The Bank shall have received copies of the Borrower's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004.
(f) No Adverse Change. There shall have occurred no material adverse change
in (1) the business, prospects, operations, properties or condition (financial
or otherwise) of the Borrower or any subsidiary taken as a whole since the date
of March 31, 2004 financial statements, or (2) the ability of the Borrower or
any of its subsidiaries to perform their obligations under the Loan Documents.
(g) Closing Fees and Legal Expenses. At the Closing, the Borrower shall
have paid to the Bank (i) the annual $10,000 facility fee referenced in Section
2(c)(ii) hereof, and (ii) all costs and expenses (including legal fees) referred
to in Section 12(h).
(h) Legal Opinions. All legal matters incident to this Agreement shall be
satisfactory to Goulston & Storrs, special counsel to the Bank, and the Bank
shall have received at the Closing the legal opinion of Xxxxxxxxx Xxxxxxxxxx &
Xxxx LLP, counsel to the Borrower, such opinion in form and substance
satisfactory to the Bank and its special counsel.
(i) Projections. The Bank shall have received copies of the Borrower's base
line fiscal quarter by fiscal quarter projections for fiscal year 2004,
including profit and loss, balance sheet, cash flow and schedules reflecting
branch profit and losses.
(j) Approval. All necessary consents, approvals and/or waivers in
connection with the consummation of the transactions contemplated by the Loan
Documents shall have been obtained by the Borrower and copies thereof shall have
been delivered to the Bank.
(k) Legality of Transactions. No change in applicable law or regulation
shall have occurred as a consequence of which it shall have become and continue
to be unlawful (i) for the Bank to perform any of its respective agreements or
obligations under any of the Loan Documents, or (ii) for the Borrower or any
subsidiary to perform any of its agreements or obligations under any of the Loan
Documents.
(l) Proof of Corporate Action; Good Standing. The Bank shall have received
from the Borrower and any subsidiaries a certificate, certified by a duly
authorized officer of such Borrower or subsidiary to be true and complete on the
Closing Date, (i) attaching a copy of records of all corporate action taken by
Borrower or such subsidiary to authorize (a) its execution and delivery of each
of the Loan Documents to which it is or is to become a party, (b) its
performance of all of its agreements and obligations under each of such
documents, and (c) any borrowings and other transactions contemplated by this
Agreement, (ii) certifying as to its charter or other organizational documents
and its by-laws, and (iii) giving the name and bearing a specimen signature of
each individual who shall be authorized to sign, in the name and on behalf of
the Borrower, each of the Loan Documents to which it is or is to become a party,
to make application for the Loans and Letters of Credit, and to give notices and
to take other action on its behalf under the Loan Documents.
(m) Organizational and Capital Structure. The organizational and capital
structure of the Borrower and any subsidiaries shall be reasonably satisfactory
to the Bank.
(n) Payoff and Release Letters. The Bank shall have received a payoff and
release letter (and related UCC-3 financing statements or other discharges, if
applicable) in form and substance satisfactory to the Bank from Citizens Bank,
and arrangements satisfactory to the Bank shall have been made by the Borrower
with respect thereto.
(o) Lien Searches. The Bank shall have received from the Borrower the
results of lien searches (UCC, state tax, federal tax, judgment, litigation and
bankruptcy) in the Commonwealth of Massachusetts from a service company
reasonably satisfactory to the Bank, indicating no liens, mortgages or other
encumbrances on any of the Borrower's property, assets or revenues, other than
liens permitted under Section 6(o) hereof, and otherwise in form and substance
satisfactory to the Bank.
(p) Other Documents. The Bank shall have received all other documents and
assurances which it requires or which it may reasonably request in connection
with the transactions contemplated by this Agreement, and such documents shall
be certified, when appropriate, by the proper authorities or corporate officers.
All such documents and all proceedings to be taken in connection with such
transactions shall be satisfactory in form and substance to the Bank and its
special counsel.
8. Conditions of Making Subsequent Advances. The obligation of the Bank to
make any advance under a Line of Credit or to issue any Letter of Credit is
subject to the satisfaction of the following conditions precedent on or before
the date of each such subsequent advance or issuance of a Letter of Credit (the
"Borrowing Date"):
(a) Representations and Warranties. The representations and warranties
contained in Section 5 hereof and otherwise made by the Borrower and its
subsidiaries in the Loan Documents shall have been correct as of the date on
which made and shall also be correct at and as of such Borrowing Date with the
same effect as if made at and as of such time, except as may have been disclosed
to the Bank by the Borrower and to which the Bank has consented and to the
extent that the facts upon which such representations and warranties are based
may in the ordinary course be changed by the transactions permitted or
contemplated hereby.
(b) Performance. The Borrower and its subsidiaries shall have performed and
complied with all terms, conditions, covenants and obligations under this
Agreement and the other Loan Documents required to be performed or complied with
by it prior to or on such Borrowing Date, and on such Borrowing Date there shall
exist no Default or Event of Default hereunder.
Each request by the Borrower for an advance under a Line of Credit shall
constitute certification by the Borrower that the conditions specified in
Sections 8(a) and 8(b) will be duly satisfied on the date of such advance.
(c) Acquisitions. If the Borrower desires to make a drawing under the
Second Line of Credit, the proceeds of which may only be used to fund an
acquisition by the Borrower, then the obligation of the Bank to make any such
advance is subject to the satisfaction of the following conditions precedent on
or before the Borrowing Date for such advance:
(i) The entity whose business, assets or stock is to be acquired by the
Borrower with funds from the requested advance must be primarily engaged in the
dental laboratory business or a business closely related thereto;
(ii) the Borrower shall have provided the Bank with a projected
consolidated pro forma balance sheet, a projected consolidated pro forma cash
flow statement (including proposed Capital Expenditures) and a projected
consolidated pro forma profit and loss statement of the Borrower and its
subsidiaries for the period ending on the last day of the first full fiscal year
following the date of the requested advance, in all cases setting forth such
financial information on a fiscal quarter by fiscal quarter basis for such
period and giving effect to such acquisition;
(iii) The Borrower shall have provided the Bank with (1) historical
financial statements of the entity whose business, assets or stock is to be
acquired, as may be requested by Bank, and (2) evidence satisfactory to the Bank
in its sole discretion that the entity whose business, assets or stock is to be
acquired by the Borrower with funds from the requested advance has historically
generated recast positive cash flow; for purposes of this provision, positive
cash flow that is "recast" shall be determined by calculating the acquired
entity's net income by adjusting the amount of depreciation and amortization
incurred, any other non-cash charges, non-recurring expenses, or excessive
salaries incurred, and the manufacturing costs to the level that the acquired
entity would have incurred had it been operated by the Borrower during such
period;
(iv) immediately prior to, and after giving effect to, such acquisition, no
Default or Event of Default shall exist, and the Borrower shall have provided
the Bank with evidence satisfactory to the Bank demonstrating the Borrower's
compliance with all of its covenants and agreements under this Agreement
(including, but not limited to, its financial covenants set forth in Sections
6(s) through (u), as evidenced by Borrower's Compliance Certificate) both prior
to such acquisition and on a pro forma basis after giving effect to such
acquisition;
(v) upon consummation of such acquisition, any corporation or business
entity acquired which remains a separate legal entity from the Borrower shall be
a party to such of the Loan Documents as is required by the Bank, as more fully
described in Section 6(e)(vi) hereof; and
(vi) the Borrower shall have obtained the prior written consent (such
consent not to be unreasonably withheld) of the Bank for (1) any single
acquisition with a purchase price, whether payable in cash or other
consideration, that exceeds $4,000,000, and (2) in any event, at such time as
the aggregate purchase price for acquisitions after the Closing exceeds
$10,000,000, for any single acquisition with a purchase price, whether payable
in cash or other consideration, that exceeds $2,000,000. Bank shall respond to
Borrower's request for consent within five (5) Business Days of Borrower's
providing Bank with the information and documents in accordance with this
Section 8(c).
9. Events of Default. Each of the following shall constitute an event of
default (an "Event of Default") under this Agreement, the Line of Credit Notes
and the other Loan Documents:
(a) Representations and Warranties. Any representation or warranty made by
the Borrower or any of its subsidiaries in this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect when made,
or any information furnished in writing, whether in this Agreement or any other
Loan Document, shall prove to be untrue in any material respect on the date on
which it is or was given.
(b) Covenants. The Borrower or any of its subsidiaries shall fail to
perform or observe any covenant or condition contained or referred to in this
Agreement or any Line of Credit Note, including without limitation the failure
to make any payment of principal or interest on a Line of Credit Note or other
amounts when due or any payment of any fee hereunder; provided, however, that
failure to make any payment of interest on a Line of Credit Note shall not
constitute an Event of Default under this Agreement until such failure shall
have continued for five (5) days after the same became due and payable; provided
further that any failure to perform under Sections 6(b), (c), (d), (l) and (m)
hereof shall not constitute an Event of Default under this Agreement until such
failure shall have continued uncured for 10 days.
(c) Acceleration. Any event occurs which permits the acceleration of the
maturity of any Indebtedness of the Borrower or any of its subsidiaries in
excess of $300,000 under any mortgage, deed of trust, security or loan
agreement, indenture, note or other undertaking; or any demand for payment is
made with respect to any Indebtedness of the Borrower or any of its
subsidiaries.
(d) Loan Documents. Any default or event of default shall occur under any
of the Loan Documents (other than a default or event of default that is
elsewhere specifically dealt with in this Section 9).
(e) Voluntary Bankruptcy. The Borrower or any of its subsidiaries shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(f) Involuntary Bankruptcy. An involuntary case or other proceeding shall
be commenced against the Borrower or any of its subsidiaries seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against the Borrower
or any of its subsidiaries under the federal bankruptcy laws as now or hereafter
in effect;
(g) Seizure of Assets. There shall occur any seizure, vesting or
intervention by or under the authority of a governmental unit by which the
Borrower's management is displaced or its authority in the conduct of its
business is materially curtailed.
(h) Judgments. Any judgment, order or writ in excess of $300,000 is
rendered or entered against the Borrower or any of its subsidiaries and not
paid, satisfied or otherwise discharged within 60 days of the date such
judgment, order or writ becomes final and non-appealable.
(i) Liens. A notice of lien, levy or assessment is filed or recorded with
respect to any material part of the assets of the Borrower and its subsidiaries
taken as a whole by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipality or other
governmental agency, or any taxes or debts owing at any time hereafter to any
one of them become a lien upon a material part of the assets of the Borrower and
its subsidiaries taken as a whole.
(j) Casualty Loss. There shall occur any material casualty loss with
respect to a material part of the Borrower's or any subsidiary's assets.
(k) Qualified Audit Report. Any audit report required pursuant to Section 6
is not an unqualified audit report, unless the reason for qualification is not
material, as determined in the Bank's sole and absolute discretion.
(l) Change of Control. (i) Any person or group of persons acting together
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall have acquired at any time after the date hereof beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of more than thirty percent (30%) of the
common stock or other capital securities of the Borrower outstanding at such
time and (ii) and such person or group of persons (including any designees or
appointees of such person or group or person) shall hold or control (whether by
acting as a Director, by any voting agreement or arrangement or otherwise)
one-third (1/3) or more of the votes eligible to be cast by Directors at any
duly called meeting of the Board of Directors of the Borrower.
(m) ERISA. The occurrence of any of the following: (a) Any "prohibited
transaction" or "accumulated funding deficiency" shall have occurred with
respect to any "single employer plan" of the Borrower to the extent such
occurrence would cause liability to the Borrower or any of its subsidiaries in
an amount in excess of $300,000 per occurrence; (b) any "reportable event" shall
have occurred with respect to any "single employer plan" of the Borrower which
in the reasonable judgment of the Borrower could be expected to have a material
adverse effect on the Borrower or its business; (c) any of the Borrower, any
predecessor to the Borrower or any "commonly controlled entity" shall have been
included in a "multiemployer plan" as to which the Borrower or any "commonly
controlled entity" has liability because the Borrower or any "commonly
controlled entity" withdrew therefrom to the extent such occurrence would cause
liability to the Borrower or any of its subsidiaries in an amount in excess of
$300,000 per occurrence; (d) the institution of proceedings or the taking of any
other action by the Borrower or any "commonly controlled entity" to terminate
any "single employer plan" with respect to which there exists any vested
unfunded pension liabilities at the time of such termination to the extent such
occurrence would cause liability to the Borrower or any of its subsidiaries in
an amount in excess of $300,000 per occurrence; or (e) the "reorganization" or
"insolvency" of any "multiemployer plan" which may reasonably be expected to
have a material adverse effect on the business, operations, property or
financial conditions of the Borrower (as each of the quoted terms is defined or
used in ERISA or the Code).
10. Remedies.
(a) Upon the occurrence and during the continuation of an Event of Default
under this Agreement, the Bank may exercise any one or more of the following
rights and remedies (all of which shall be cumulative):
(i) declare all or any part of the loans or other amounts outstanding
hereunder or under the Line of Credit Notes and the other Loan Documents,
together with all accrued interest thereon and all fees and expenses related
thereto, to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, without presentment, demand, protest or other notice
of any kind, all of which are expressly waived by the Borrower;
(ii) terminate the Lines of Credit, the Bank's obligations to issue Letters
of Credit hereunder, and any other financial accommodations or commitments of
the Bank provided for by this Agreement or the other Loan Documents;
(iii) not extend the expiry date of any outstanding Letter of Credit;
(iv) proceed with every remedy that is provided for herein or in the other
Loan Documents, or that the Bank may have under applicable law;
provided that, if any Event of Default specified in clause (e) or (f) of Section
9 occurs, then without any notice to the Borrower or any other act by the Bank,
the Lines of Credit, the Bank's obligations to issue Letters of Credit
hereunder, and any other financial accommodations or commitments provided for in
this Agreement or the other Loan Documents shall thereupon terminate and all
loans and other amounts outstanding hereunder or under the Line of Credit Notes
or the other Loan Documents, together with all accrued interest thereon and all
fees and expenses related thereto shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Borrower.
(b) Without limitation of any other right or remedy of the Bank, (i) if an
Event of Default shall have occurred and the Bank shall have demanded or
accelerated the loans outstanding under the Credit Facility or (ii) if this
Agreement and/or the Credit Facility described herein shall have expired or
shall have been earlier terminated by either the Bank or the Borrower for any
reason, the Borrower shall, promptly after it receives a request from the Bank,
deposit with the Bank in cash a sum equal to the total of all then undrawn
amounts under all outstanding Letters of Credit issued by the Bank for the
account of the Borrower, such cash deposit to serve as cash collateral for the
Borrower's reimbursement obligations in respect of such undrawn amounts under
such Letters of Credit; provided that, if any Event of Default specified in
clause (e) or (f) of Section 9 occurs, the Borrower shall deposit such amount
with the Bank forthwith without any notice or demand or any other act by the
Bank.
11. Intentionally reserved.
12. Miscellaneous.
(a) Waivers. This Agreement and the other Loan Documents may not be
changed, waived, discharged or terminated orally or in writing, except that any
term of this Agreement or any other Loan Document may be amended and the
performance or observance by the Borrower of any term of this Agreement or any
other Loan Document may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the prior
written consent of the Bank.
(b) Delays. No delay on the part of the Bank in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any partial
exercise or waiver of any privilege or right hereunder preclude any further
exercise of such privilege or right or the exercise of any other right, power or
privilege. The rights and remedies expressed in this Agreement and in the other
Loan Documents are cumulative and not exclusive of any right or remedy which the
Bank may otherwise have. To the extent the Bank holds any collateral as security
for payment or any of the other obligations hereunder, the Bank may release or
surrender, exchange or substitute any real estate or personal property, or both,
or other collateral security now or hereafter held as security for the payment
of the Line of Credit Notes or any other obligations of the Borrower to the Bank
under this Agreement or the other Loan Documents or however arising. Bank may
extend the time for payment or otherwise modify the terms of payment of any part
or the whole of the Line of Credit Notes.
(c) Notices. Any notices, consents or other communications to be given
under this Agreement or under the other Loan Documents shall be in writing and
shall be deemed given when mailed to the respective parties by overnight courier
or by registered mail addressed as set forth on the first page of this
Agreement, with all such notices, consents and other communications to the Bank
to be sent to the attention of Xxxxx X. Xxxxx, or to such other addresses as
either party may from time to time designate for that purpose. A copy of each
notice to the Bank shall also by sent to the Bank's special counsel, Goulston &
Storrs, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000-0000, Attention: Xxxxxx
X. Xxxxxx, Esquire. A copy of each notice to the Borrower shall also be sent to
the Borrower's counsel, Xxxxxxxxx Xxxxxxxxxx & Xxxx LLP, 800 Boylston Street,
Prudential Tower, Boston, Massachusetts 02199-8004, Attention: Xxxxxx X. Xxxxxx,
P.C. Section headings and defined terms in this Agreement and the other Loan
Documents are included for convenience only and are not intended to modify or
define any term or provision of any such instrument.
(d) Set-Off. Regardless of the adequacy of any collateral, any deposits,
balances or other sums credited by or due from the Bank to the Borrower or any
of its subsidiaries may, at any time or from time to time, without notice to the
Borrower or any of its subsidiaries or compliance with any other condition
precedent now or hereafter imposed by statute, rule of law or otherwise (all of
which are hereby expressly waived), be set off, appropriated and applied by the
Bank against any or all such obligations in such manner as the Bank in its sole
discretion may determine.
(e) Jurisdiction; Waiver of Jury Trial. The Borrower, for itself and its
subsidiaries, irrevocably submits to the jurisdiction of the courts of the
Commonwealth of Massachusetts and the United States District Court for the
District of Massachusetts for the purpose of any suit, action or other
proceeding brought by the Bank arising out of or relating to this Agreement or
any other Loan Document, and the Borrower, for itself and its subsidiaries,
waives and agrees not to assert by way of motion, as a defense or otherwise in
any such suit, action or proceeding, any claim that the Borrower or any of its
subsidiaries is not personally subject to the jurisdiction of the courts of the
Commonwealth of Massachusetts or the United States District Court for the
District of Massachusetts or that the property of the Borrower or any of its
subsidiaries is exempt or immune from execution or attachment, either prior to
judgment or in aid of execution, that the suit, action or proceeding is brought
in an inconvenient forum or that the venue of the suit, action or proceeding is
improper, or that this Agreement or any other Loan Document or the subject
matter hereof or thereof may not be enforced in or by such court. EACH OF THE
BORROWER AND THE BANK HEREBY MUTUALLY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EACH PARTY
HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO EXECUTE THIS AGREEMENT AND MAKE
THE LOANS AND EXTEND CREDIT TO BORROWER.
(f) Usury. All agreements between Borrower and Bank are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term "applicable law" shall mean the
law in effect as of the date hereof; provided, however, that in the event there
is a change in the law which results in a higher permissible rate of interest,
then the Line of Credit Notes shall be governed by such new law as of its
effective date. In this regard, it is expressly agreed that it is the intent of
Borrower and Bank in the execution, delivery and acceptance of the Line of
Credit Notes to contract in strict compliance with the laws of the Commonwealth
of Massachusetts from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision hereof or of any of the
Loan Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from any circumstances whatsoever Bank should
ever receive as interest an amount which would exceed the highest lawful rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal balance evidenced hereby and not to the payment of interest.
This provision shall control every other provision of all agreements between
Borrower and Bank.
(g) Execution. This Agreement may be signed in any number of counterparts,
which together will be one and the same instrument. This Agreement shall become
effective whenever each party shall have signed at least one such counterpart.
(h) Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts and for all purposes shall be construed in
accordance with the laws of such Commonwealth.
(i) Fees; Indemnification. Whether or not any funds are disbursed
hereunder, the Borrower shall pay all of the Bank's reasonable costs and
expenses in connection with the preparation, execution, delivery, review,
administration and enforcement of this Agreement and the other Loan Documents,
including reasonable legal fees and disbursements; provided that the legal fees
of the Bank's special counsel in connection with the preparation, execution and
delivery of this Agreement shall not exceed $10,000. The Borrower hereby agrees
to indemnify and hold harmless the Bank from and against any and all claims,
damages, losses, liabilities, costs or expenses (including, without limitation,
the reasonable fees and disbursements of counsel) which the Bank may reasonably
incur (or which may be claimed against the Bank by any person whatsoever) by
reason of, in connection with or in any way related to this Agreement and the
other Loan Documents or any of the transactions contemplated hereby or thereby;
provided that the Borrower shall not be required to indemnify the Bank for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent caused by gross negligence or willful misconduct of the Bank.
(j) Binding Nature. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns;
provided that the rights and obligations under this Agreement and under any of
the other Loan Documents may not be assigned by the Borrower without the written
consent of the Bank.
(k) Assignment; Participations; Pledge to Federal Reserve. (i) Bank shall
have the unrestricted right at any time or from time to time, and without
Borrower's consent, to assign all or any portion of its rights and obligations
hereunder to one or more banks or other financial institutions (each, an
"Assignee"), after giving at least 15 Business Days prior written notice of such
assignment to the Borrower, and Borrower agrees that it shall execute, or cause
to be executed, such documents, including without limitation, amendments to this
Agreement and to any other documents, instruments and agreements executed in
connection herewith as Bank shall deem necessary to effect the foregoing. In
addition, at the request of Bank and any such Assignee, Borrower shall issue one
or more new promissory notes, as applicable, to any such Assignee and, if Bank
has retained any of its rights and obligations hereunder following such
assignment, to Bank, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by Bank prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and Bank after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by Bank in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by Bank and such Assignee, such Assignee shall be a party to
this Agreement and shall have all of the rights and obligations of Bank
hereunder (and under any and all other guaranties, documents, instruments and
agreements executed in connection herewith) to the extent that such rights and
obligations have been assigned by Bank pursuant to the assignment documentation
between Bank and such Assignee, and Bank shall be released from its obligations
hereunder and thereunder to a corresponding extent.
(ii) Bank shall have the unrestricted right at any time and from time to
time, and without the consent of Borrower, after giving at least 15 Business
Days prior written notice of such grant to the Borrower, to grant to one or more
banks or other financial institutions (each, a "Participant") participating
interests in Bank's obligation to lend hereunder and/or any or all of the loans
held by Bank hereunder. In the event of any such grant by Bank of a
participating interest to a Participant, Bank shall remain responsible for the
performance of its obligations hereunder and Borrower shall continue to deal
solely and directly with Bank in connection with Bank's rights and obligations
hereunder.
(iii) Bank may furnish any information concerning Borrower in its
possession from time to time to prospective Assignees or Participants, provided
that Bank shall require any such prospective Assignee or Participant to agree in
writing to maintain the confidentiality of such information.
(iv) Notwithstanding any of the foregoing, Bank may at any time pledge or
assign all or any portion of its rights under the Loan Documents including any
portion of the Line of Credit Notes to any of the twelve (12) Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or assignment or enforcement thereof shall release Bank from
its obligations under any of the Loan Documents.
(l) Under Seal. This Agreement shall be deemed to be an instrument under
seal and shall continue in full force and effect so long as any indebtedness of
the Borrower to the Bank remains unpaid.
(m) Use of Proceeds. The proceeds of the loans shall be used by the
Borrower (i) for working capital purposes of the Borrower, (ii) to refinance
existing Indebtedness of the Borrower and (iii) in the case of the Second Line
of Credit, to fund acquisitions by the Borrower, to the extent permitted herein.
No portion of the proceeds of any loans shall be used, and no portion of any
Letter of Credit is to be obtained, in whole or in part, for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms are
used in Regulations U, T or X of the Board of Governors of the Federal Reserve
System.
(n) Confidentiality. Notwithstanding any confidentiality provisions
contained herein, and in accordance with Section 1.6011-4(b)(3)(iii) of the
Treasury Regulations, each party to this Agreement (and each employee,
representative, or other agent of each party) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to such party
relating to such tax treatment and tax structure; provided, however, that,
pursuant to Section 1.6011-4(b)(3)(ii) of the Treasury Regulations, such
disclosure shall not be permitted to the extent, but only to the extent, such
disclosure would reasonably be considered to result in noncompliance with the
securities laws of any applicable jurisdiction. For the avoidance of doubt, the
parties acknowledge and agree that the tax treatment and tax structure of any
transaction does not include the name of any party to a transaction or any
sensitive business information (including, without limitation, specific
information about any party's intellectual property or other proprietary assets)
unless such information may be related or relevant to the purported or claimed
federal income tax treatment of the transaction.
If you agree with the terms of this Agreement, including the Exhibits
attached hereto and the other documents referred to herein, please sign below
where indicated in your capacity as President and Chief Executive Officer of the
Borrower.
FLEET NATIONAL BANK
By: /s/ XXXXX X. XXXXX
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: SVP.
Accepted and agreed to:
NATIONAL DENTEX CORPORATION
By: /s/ XXXXXXX X. XXXXXX, XX.
------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Treasurer, Vice President and Chief Financial Officer
