EXHIBIT 10.13
REVOLVING AND TERM LOAN AGREEMENT dated November 7, 1997 (this
"Agreement") by and between CTC COMMUNICATIONS CORP., a Massachusetts
corporation (the "Borrower") and FLEET NATIONAL BANK (the "Bank").
WHEREAS, the Borrower has requested that the Bank make available to it
(i) a secured line of credit for revolving borrowings and standby letters of
credit up to $15,000,000 (the "Line of Credit") and (ii) a secured line of
credit for term borrowings up to $10,000,000 (the "Term Loan Facility"), and
the Borrower and the Bank desire to enter into this Agreement in order to
provide for such a line of credit upon the terms and conditions set forth
herein.
The Borrower and the Bank hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement or
in any Officers' Certificate or opinion delivered in connection
with this Agreement, the following terms shall have the meanings
set out respectively after each:
"Acquisition/WC Loan Sublimit" - Five Million Dollars
($5,000,000).
"Acquisition/WC Loans" " As defined in Section 2.02(b).
"Acquisition" " The purchase or acquisition of all,
substantially all or any significant part of a business, line of
business, division, assets, capital stock or other equity interest
of another Person, whether by purchase, investment, agreement to
acquire, merger, consolidation or other transaction or series of
transactions.
"Affiliate" - Any Person (including without limitation the
Borrower and any Subsidiary) which, directly or indirectly,
controls or is controlled by or is under common control with the
Borrower; any general partner of or other Person owning of record
or beneficially, directly or indirectly, 10% or more of any class
of equity stock or other equity interest having general voting
power (under ordinary circumstances) of any of the foregoing; any
member of the immediate family of any of the foregoing; and any
Person of which any of the foregoing is a general partner or owns
of record or beneficially, directly or indirectly, 10% or more of
any class of equity stock or other equity interest having general
voting power (under ordinary circumstances). "Control" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of any Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Banking Day" - Any day on which commercial banks in Boston,
Massachusetts and New York, New York settle payments.
"Borrowing Base" " The sum of (a) seventy five percent (75%)
of the Borrower"s Confirmed Eligible Agency Accounts and (b)
seventy five percent (75%) of the Borrower"s Eligible Accounts
(other than Confirmed Eligible Agency Accounts).
"Borrowing Base Certificate" - As defined in Section
6.03(d).
"Capital Expenditures" - All acquisitions of machinery,
equipment, land, leaseholds, buildings, improvements and all other
expenditures considered to be for fixed assets under GAAP,
consistently applied. Where an asset is acquired under a Capital
Lease, the amount required to be capitalized shall be considered a
Capital Expenditure during the first year of the lease.
"Capital Lease" - Any lease which, in accordance with GAAP,
should be capitalized on the lessee"s balance sheet or for which
the amount of the asset and liability thereunder as if so
capitalized should be disclosed in a note to such balance sheet.
"Code" - As defined in Section 5.01(l).
"Collateral" " As defined in the Security Agreement.
"Confirmed Eligible Agency Accounts" - Accounts receivable
arising from the Borrower"s services as an independent agent of
Xxxx Atlantic or another RBOC which, but for the last sentence of
the definition of Eligible Accounts, would be included as Eligible
Accounts, and which have been confirmed to the Borrower by the
account debtor in accordance with customary business practices and
have not been outstanding more than 90 days from the confirmation
date thereof (it being acknowledged by the Borrower that a
reinvoiced account to the same account debtor shall be deemed to
be outstanding from the original confirmation date).
Notwithstanding the foregoing, if fifty percent (50%) or more of
the accounts receivable owed by any account debtor and its
Affiliates are more than 90 days past the confirmation dates
therefor, then none of the accounts receivable owed by such
account debtor and its Affiliates shall constitute Confirmed
Eligible Agency Accounts until such time as all accounts
receivable owed by such account debtor and its Affiliates (as a
result of actual payment) are less than 90 days past the
confirmation dates therefor.
"Consolidated" and "Consolidating" - When used with
reference to any term defined herein mean that term as applied to
the accounts of the relevant Person and its Subsidiaries, at any
time when such Person has any Subsidiaries, consolidated in
accordance with GAAP.
"Cost of Funds Interest Period" - With respect to a Term
Loan for which the Borrower has made a Cost of Funds rate election
under Section 2.06, the period beginning on the effective date of
such election and ending on the Term Loan Maturity Date of such
Term Loan.
"Cost of Funds Rate" - For any Cost of Funds Interest
Period, the interest rate per annum (fixed for the duration of
such period, subject to adjustment as provided in Section 3.06)
equal to the sum of (a) the applicable Margin plus (b) the per
annum rate of interest which the Bank is required to pay or is
offering to pay, for wholesale liabilities, for a period
comparable to the Cost of Funds Interest Period in question,
adjusted for reserve requirements under Regulation D of the Board
of Governors of the Federal Reserve System and such other
requirements as may be imposed by federal, state or local
government and regulatory agencies, as determined by the Bank.
"Cost of Funds Rate Advance" - A Loan, or a portion of the
outstanding Loans, which bears interest at a Cost of Funds Rate
pursuant to the Borrower"s timely election under Section 2.06.
"Debt Service Coverage Ratio" - For any period, (a) the
aggregate of (i) EBITDA less (ii) unfinanced Cap X less (iii)
dividends paid less (iv) cash taxes paid, divided by (b) the sum
of (i) interest expense and (ii) CMLTD; that is,
EBITDA - Unfinanced Cap X - Dividends - Cash Taxes Paid
Interest Expense + CMLTD
For purposes of this definition, "unfinanced Cap X" means Capital
Expenditures less long-term Indebtedness incurred to finance the
same plus any prepayments of such Indebtedness; "dividends" means
dividends or distributions of cash or property paid or made with
respect to capital stock (other than dividends paid solely in
shares of stock) and sums paid to purchase, redeem, retire or
otherwise acquire for value capital stock (or rights, options or
warrants to purchase stock); and "CMLTD" means the aggregate
amount paid in respect of long-term Indebtedness; the Debt Service
Coverage Ratio and its components all being determined for the
applicable period in accordance with GAAP with respect to the
Borrower and its Subsidiaries on a Consolidated basis.
"EBITDA" " For any period, the Borrower"s earnings before
interest, taxes, depreciation and amortization, determined in
accordance with GAAP.
"Eligible Accounts" - The gross amount, as reflected on the
Borrower"s books in accordance with GAAP, of outstanding accounts
receivable of the Borrower with respect to amounts due in the
ordinary course of the Borrower"s business from account debtors
whose principal place of business is within the United States of
America, which are not more than 90 days past due under the
original terms of sale or service, as to which the Bank has a
valid and perfected first priority security interest under all
applicable law and as to which the Borrower has furnished
reasonably detailed information to the Bank in a Borrowing Base
Certificate, determined after deducting from the aggregate amount
thereof (i) all payments, adjustments and credits of all kinds
against such accounts receivable; (ii) all amounts due thereon
considered by and in the reasonable discretion of the Bank to be
uncollectible by reason of return, rejection, repossession, loss
or damage of or to the goods or services giving rise thereto,
merchandise or service related or other disputes, insolvency of
the account debtor (however evidenced), or any other reason; (iii)
accounts receivable arising out of transactions with Affiliates of
the Borrower; (iv) accounts receivable with respect to which there
shall exist any deposits, liens (including liens securing any
bonds), payables, discounts, retentions, aged credit balances or
other similar offsets or reductions; and (v) accounts receivable
arising from contracts with the United States or any department,
agency or instrumentality thereof (unless the same have been
assigned to the Bank and notice thereof has been given to the
federal authorities under the Assignment of Claims Act); all as
determined by the Bank in its reasonable discretion.
Notwithstanding the foregoing, if fifty percent (50%) or more of
the accounts receivable owed by any account debtor and its
Affiliates are more than 90 days past the due dates thereof, then
none of the accounts receivable owed by such account debtor and
its Affiliates shall constitute Eligible Accounts until such time
as all accounts receivable owed by such account debtor and its
Affiliates (as a result of actual payment) are less than 90 days
past the due dates thereof. Notwithstanding the foregoing,
accounts receivable arising from the Borrower"s services as an
independent agent of Xxxx Atlantic or another RBOC shall not be
included in Eligible Accounts.
"Equipment" " Telephone switching equipment;
telecommunications, computer or other equipment; or other fixed
assets. For purposes of determining the purchase price of
Equipment, there shall be excluded freight, shipping, insurance,
taxes, installation and other "soft"costs.
"Equipment Loans" As defined in Section 2.02(b).
"ERISA" - As defined in Section 5.01(l).
"Eurodollar Banking Day" - A Banking Day on which commercial
banks in London, England, settle payments.
"Eurodollar Interest Period" - (a) With respect to each
Eurodollar Rate Advance that is a Revolving Loan or a portion of
the outstanding Revolving Loans, each successive period of one
(1), two (2), three (3), six (6), nine (9) or twelve (12) months,
and (b) with respect to each Eurodollar Rate Advance that is a
Term Loan, each successive period of one (1), two (2) or three (3)
months, at the Borrower"s election as provided in Section 2.05,
beginning, in the case of the first such Interest Period, on the
effective date of the Borrower"s timely Eurodollar Rate election,
and in the case of each successive Interest Period, on the last
day of the preceding Interest Period; provided that the number of
days in each Interest Period and the day on which it ends shall be
determined by the Bank in accordance with its general practice for
similar loans and no Interest Period shall be chosen which, in the
case of Revolving Loans, would end after the Expiration Date, or,
in the case of a Term Loan, would end after the next succeeding
principal payment date or the Term Loan Maturity Date for such
Term Loan.
"Eurodollar Rate" - For any Eurodollar Interest Period, the
interest rate per annum (fixed for the duration of such period,
subject to adjustment as provided in Section 3.06) equal to the
sum of (a) the applicable Margin plus (b) LIBOR for such
Eurodollar Interest Period. As used herein, "LIBOR" shall mean,
as applicable to any Eurodollar Interest Period, the rate per
annum (rounded upward, if necessary, to the nearest 1/32 of one
percent) as determined on the basis of the offered rates for
deposits in U.S. dollars, for a period of time comparable to such
Eurodollar Interest Period, which appears on the Telerate page
3750 as of 11:00 a.m. London time on the day that is two (2)
Eurodollar Banking Days preceding the first day of such Eurodollar
Interest Period; provided that if the rate described above does
not appear on the Telerate System on any applicable interest
determination date, LIBOR shall be the rate (rounded upwards as
described above, if necessary), for deposits in dollars for a
period substantially equal to such Eurodollar Interest Period on
the Reuters Page "LIBO" (or such other page as may replace the
LIBO Page on that service, for the purpose of displaying such
rates), as of 11:00 a.m. (London Time), on the day that is two (2)
Eurodollar Banking Days prior to the beginning of such interest
period.
If both the Telerate and Reuters system are unavailable,
then LIBOR for such Eurodollar Interest Period will be determined
on the basis of the offered rates for deposits in U.S. dollars for
a period of time comparable to such Eurodollar Interest Period
which are offered by four major banks in the London interbank
market at approximately 11:00 a.m. London time on the day that is
two (2) Eurodollar Banking Days preceding the first day of such
Eurodollar Interest Period as selected by the Bank. The principal
London office of each of the four major London banks will be
requested to provide a quotation of its US. dollar deposit offered
rate. If at least two such quotations are provided, LIBOR for
such Eurodollar Interest Period will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as
requested, LIBOR for such Eurodollar Interest Period will be
determined on the basis of the rates quoted for loans in U.S.
dollars to leading European banks for a period of time comparable
to such Eurodollar Interest Period offered by major banks in New
York City at approximately 11:00 a.m. New York City time, on the
day that is two Eurodollar Banking days preceding the first day of
such Eurodollar Interest Period. In the event that Bank is unable
to obtain any such quotation as provided above, it will be deemed
that LIBOR cannot be determined
In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect to
Eurodollar deposits of the Bank then for any period during which
such Reserve Percentage shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to 1 minus the
Reserve Percentage.
"Eurodollar Rate Advance" - A Loan, or a portion of the
outstanding Loans, which bears interest at a Eurodollar Rate
pursuant to the Borrower"s timely election under Section 2.05.
"Event of Default" - As defined in Section 7.01.
"Exchange Act" - The Securities Exchange Act of 1934, as
from time to time in effect.
"Expiration Date" - September 1, 2000, subject to extension
in the Bank"s sole discretion.
"Financial Letter of Credit" " A Letter of Credit issued for
the purpose of guarantying or securing payment or repayment of a
financial obligation, as determined by the Bank in its reasonable
discretion.
"Funded Debt" " Indebtedness of the Borrower for borrowed
money.
"Funded Debt/EBITDA Ratio" " For any period, the ratio of
(a) the Borrower"s Consolidated Funded Debt as of the last day of
such period to (b) the Borrower"s Consolidated EBITDA for such
period.
"GAAP" " United States generally accepted accounting
principles, consistently applied.
"Indebtedness" - As applied to any Person, (i) all items
(except items of capital or surplus or of retained earnings) which
in accordance with GAAP would be included as liabilities upon such
Person"s balance sheet at the date as of which Indebtedness is to
be determined, including any Capital Lease, (ii) all indebtedness
secured by any mortgage, pledge, lien or conditional sale or other
title retention agreement to which any property or asset owned or
held by such Person is subject, whether or not the indebtedness
secured thereby shall have been assumed, and (iii) all
indebtedness of others which such Person has directly or
indirectly guarantied, endorsed (other than for collection or
deposit in the ordinary course of business), discounted or sold
with recourse or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire, or in respect of which such
person has agreed to supply or advance funds (whether by way of
loan, stock purchase, capital contributions or otherwise) or
otherwise to become directly or indirectly liable.
"LC Agreement" - As defined in Section 2.01(b).
"Letter of Credit" - Any standby letter of credit issued by
the Bank for the account of the Borrower.
"Letter of Credit Fee" " With respect to Performance Letters
of Credit, 1.25% per annum; and with respect to Financial Letters
of Credit, at any time, the rate per annum equal to the Revolving
Loan Margin then applicable to Eurodollar Rate Advances determined
from time to time as provided in the definition of "Margin" less
twenty-five basis points (0.25%).
"Lien" - Any mortgage, pledge, assignment, lien, charge,
encumbrance or security interest of any kind whatsoever, or the
interest of a vendor or lessor under a conditional sale, title
retention or capital lease agreement.
"Line of Credit" " As defined in the Recital.
"Line of Credit Amount" - Fifteen Million Dollars
($15,000,000).
"Line of Credit Fee" - As defined in Section 2.08.
"Line of Credit Fee Rate" - For each fiscal quarter of the
Borrower, the percentage rate corresponding to both the Funded
Debt/EBITDA Ratio and the Senior Debt/TCB Ratio for the second
preceding fiscal quarter of the Borrower, as set forth below:
Senior Debt/TCB Ratio
<=0.50:1-0.99:1 1.00:1-1.99:1 2.00:1-2.74:1 >=2.75:1
Funded <=0.50:1-0.99:1 0.20% 0.25% 0.30% 0.35%
Debt/ 1.00:1-1.99:1 0.25% 0.30% 0.35% 0.40%
EBITDA 2.00:1-2.74:1 0.30% 0.35% 0.40% 0.45%
Ratio >=2.75:1 0.35% 0.40% 0.45% 0.50%
Changes in the Line of Credit Fee Rate shall take effect on the first
day of a quarter, based on the relevant ratios for the second preceding
quarter (e.g. a change on April 1 shall be based on the ratios for the
quarter ended on the preceding December 31), as reflected in the Borrower"s
financial statements for such second preceding quarter. No reduction in the
Line of Credit Fee Rate shall be effective if there has occurred and is
continuing any event which constitutes, or which, with notice or lapse of
time, or both, would constitute, an Event of Default.
"Line of Credit Note" - The $15,000,000 Secured Revolving Note of the
Borrower in the form attached hereto as Exhibit A.
"Loan" - Any obligation of the Borrower to the Bank hereunder
(including, without limitation, the Revolving Loans, the Term Loan and any
obligation to reimburse the Bank in connection with a drawing under a Letter
of Credit issued by the Bank for the account of the Borrower).
"Margin" - The Revolving Loan Margin or the Term Loan Margin.
"Net Income (or Net Loss)" - The net income (or net loss) of a Person
for any fiscal period in question, determined in accordance with GAAP.
"Notes" - The Line of Credit Note and the Term Note or Notes.
"Officer"s Certificate" - As defined in Section 4.02(e).
"PBGC" - As defined in Section 5.01(l).
"Performance Letter of Credit" - A Letter of Credit issued for the
purpose of guarantying or securing performance of a non-financial
contractual obligation, as determined by the Bank in its reasonable
discretion.
"Person" - An individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Prime Rate" - The variable per annum rate of interest so designated
from time to time by the Bank as its prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
being charged to any customer.
"Principal Office" - The principal banking office of the Bank
designated from time to time for purposes of this Agreement, now located at
Xxx Xxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000.
"RBOC" - A Regional Xxxx Operating Company.
"Revolving Loans" - The Loans made by the Bank pursuant to Section
2.01.
"Revolving Loan Margin" - For each fiscal quarter of the Borrower, the
percentage rate corresponding to both the Funded Debt/EBITDA Ratio and the
Senior Debt/TCB Ratio for the second preceding fiscal quarter of the
Borrower, as set forth below:
Senior Debt/TCB Ratio
<=0.50:1-0.99:1 1.00:1-1.99:1 2.00:1-2.74:1 >=2.75:1
<=0.50:1-0.99:1 L+1.50% L+1.65% L+1.85% L+2.25%
Funded P+0% P+0% P+0% P+0
Debt/ 1.00:1-1.99:1 L+1.65% L+1.85% L+2.00% L+2.50%
EBITDA P+0% P+0% P+0% P+0
Ratio 2.00:1-2.74:1 L+1.85% L+2.00% L+2.50% L+2.75%
P+0% P+0% P+0% P+0.25%
>=2.75:1 L+2.25% L+2.50% L+2.75% L+3.00%
P+0% P+0% P+0.25% P+0.50%
In the foregoing table, "L" refers to the "LIBOR Rate" referred to in
the definition of Eurodollar Rate and "P" refers to the Prime Rate. Changes
in the Revolving Loan Margin shall take effect on the first day of a
quarter, based on the relevant ratios for the second preceding quarter (e.g.
a change on April 1 shall be based on the ratios for the quarter ended on
the preceding December 31), as reflected in the Borrower"s financial
statements for such second preceding quarter. No reduction in the Revolving
Loan Margin shall be effective if there has occurred and is continuing any
event which constitutes, or which, with notice or lapse of time, or both,
would constitute, an Event of Default.
"SEC" - The United States Securities and Exchange Commission.
"Security Agreement" " The Security Agreement dated today"s date
between the Borrower and the Bank.
"Senior Debt" - Indebtedness of the Borrower for borrowed money which
is not Subordinated Debt.
"Senior Debt/TCB Ratio" " As of the last day of any fiscal quarter of
the Borrower, the ratio of (a) the Borrower"s Consolidated Senior Debt
outstanding to (b) its Consolidated Tangible Capital Base.
"Subordinated Debt" - Indebtedness of the Borrower which is expressly
subordinated to all Indebtedness of the Borrower to the Bank pursuant to a
written subordination agreement satisfactory in form and substance to the
Bank.
"Subsidiary" - Any corporation or other Person of which the Borrower
or any of its Subsidiaries, directly or indirectly, owns, or has the right
to control or direct the voting of, fifty (50%) percent or more of the
outstanding capital stock or other ownership interest having general voting
power (under ordinary circumstances).
"Tangible Capital Base" " With respect to the Borrower, as of any day,
the sum of (a) its Consolidated Tangible Net Worth plus (b) its Subordinated
Debt outstanding.
"Tangible Net Worth" - An amount equal to the total assets of any
Person (excluding the total intangible assets of such Person) minus the
total liabilities of such Person. Total intangible assets shall be deemed
to include, but shall not be limited to, goodwill, write-up in book value of
assets, the excess of cost over book value of acquired businesses accounted
for by the purchase method, formulae, trademarks, trade names, patents,
patent rights and deferred expenses (including, but not limited to,
unamortized debt discount and expense, organizational expense and packaging
and product development and design expense).
"Term Loan Facility" " As defined in the Recital.
"Term Loan Facility Amount" " Ten Million Dollars ($10,000,000).
"Term Loan Facility Fee" - As defined in Section 2.09.
"Term Loan Facility Fee Rate" - For each fiscal quarter of the
Borrower, the percentage rate corresponding to both the Funded Debt/EBITDA
Ratio and the Senior Debt/TCB Ratio for the second preceding fiscal quarter
of the Borrower, as set forth below:
Senior Debt/TCB Ratio
<=0.50:1-0.99:1 1.00:1-1.99:1 2.00:1-2.74:1 >=2.75:1
Funded <=0.50:1-0.99:1 0.25% 0.35% 0.40% 0.45%
Debt/ 1.00:1-1.99:1 0.35% 0.40% 0.45% 0.50%
EBITDA 2.00:1-2.74:1 0.40% 0.45% 0.50% 0.55%
Ratio >=2.75:1 0.45% 0.50% 0.55% 0.60%
Changes in the Term Loan Facility Fee Rate shall take effect on the
first day of a quarter, based on the relevant ratios for the second
preceding quarter (e.g. a change on April 1 shall be based on the ratios for
the quarter ended on the preceding December 31), as reflected in the
Borrower"s financial statements for such second preceding quarter. No
reduction in the Term Loan Facility Fee Rate shall be effective if there has
occurred and is continuing any event which constitutes, or which, with
notice or lapse of time, or both, would constitute, an Event of Default.
"Term Loan Margin" - For each fiscal quarter of the Borrower, the
percentage rate corresponding to both the Funded Debt/EBITDA Ratio and the
Senior Debt/TCB Ratio for the second preceding fiscal quarter of the
Borrower, as set forth below:
Senior Debt/TCB Ratio
<=0.50:1-0.99:1 1.00:1-1.99:1 2.00:1-2.74:1 >=2.75:1
<=0.50:1-0.99:1 LC+1.75% LC+1.85% LC+2.10% LC+2.50%
Funded P+0% P+0% P+0% P+0
Debt/ 1.00:1-1.99:1 LC+1.85% LC+2.10% LC+2.25% LC+2.75%
EBITDA P+0% P+0% P+0% P+0.25%
Ratio 2.00:1-2.74:1 LC+2.10% LC+2.25% LC+2.75% LC+3.00%
P+0% P+0% P+0.25% P+0.50%
>=2.75:1 LC+2.50% LC+2.75% L+3.00% L+3.25%
P+0% P+0.25% P+0.50% P+1.00%
In the foregoing table, "L" refers to the "LIBOR Rate" referred to in
the definition of Eurodollar Rate, "C" refers to the "cost of funds"
component of the Cost of Funds Rate and "P" refers to the Prime Rate.
Changes in the Term Loan Margin shall take effect on the first day of a
quarter, based on the relevant ratios for the second preceding quarter (e.g.
a change on April 1 shall be based on the ratios for the quarter ended on
the preceding December 31), as reflected in the Borrower"s financial
statements for such second preceding quarter. No reduction in the Term Loan
Margin shall be effective if there has occurred and is continuing any event
which constitutes, or which, with notice or lapse of time, or both, would
constitute, an Event of Default.
"Term Loan Maturity Date" " With respect to each Term Loan, the
maturity date designated for such Term Loan by the Borrower in accordance
with Section 2.02(a), which shall be a date not more than five (5) years
after the date such Term Loan is made.
"Term Loans" " As defined in Section 2.02(a).
"Term Note" - A Secured Term Note of the Borrower in the form attached
hereto as Exhibit B.
Section 1.02. Use of Defined Terms. Any defined term used in the
plural preceded by the definite article shall be taken to encompass all
members of the relevant class. Any defined term used in the singular
preceded by "any" shall be taken to indicate any number of the members of
the relevant class.
Section 1.03. Accounting Terms. All accounting terms (including
without limitation those employed with express reference to financial
statements of or provided by any Person) not specifically defined herein
shall be construed in accordance with GAAP.
ARTICLE II
AMOUNTS AND TERMS OF THE REVOLVING LOANS,
LETTERS OF CREDIT AND TERM LOANS
Section 2.01. Revolving Loans and Letters of Credit. (a)
Subject to the terms and conditions set forth in this Agreement,
the Bank will make loans ("Revolving Loans") to the Borrower at
the Principal Office of the Bank in an aggregate principal amount
at any time outstanding not exceeding the lesser of (i) the
Borrowing Base or (ii) the Line of Credit Amount (less the
aggregate amount then available to be drawn under outstanding
Letters of Credit) on any Banking Day prior to the first to occur
of (i) the Expiration Date or (ii) the earlier termination
pursuant to Section 7.02(b) of the Line of Credit, in such amounts
as the Borrower may request in accordance with Section 2.03.
Revolving Loans shall be evidenced by and payable in accordance
with the terms of the Line of Credit Note. Principal of Revolving
Loans that is prepaid may be reborrowed.
(b) Subject to the terms and conditions set forth in this
Agreement, the Bank will issue Letters of Credit for the account
of the Borrower in such aggregate stated amounts not exceeding the
lesser of (i) the Borrowing Base or (ii) the Line of Credit Amount
(less outstanding Revolving Loans) as the Borrower shall request
on reasonable prior notice, in favor of a supplier or other
beneficiary to which the Borrower has actual or contingent
obligations incurred in the ordinary course of business. The
Borrower agrees to complete appropriately, execute and deliver in
connection with each Letter of Credit the Bank"s then standard
form of standby letter of credit application and agreement (each
an "LC Agreement"). The expiration date and other material terms
and provisions of each SBLC shall be subject to the advance
approval of the Bank. The Borrower agrees to pay the Bank"s fees
applicable to issuance, amendment and transfer of Letters of
Credit and drawings thereunder, and agrees to pay the Bank the
applicable Letter of Credit Fee, calculated on the basis of actual
days elapsed and a 360-day year and payable in accordance with the
Bank"s then standard practices, with respect to the aggregate
amount available to be drawn under outstanding Letters of Credit
from the date of issuance to and including the expiration dates
thereof. Any sum not reimbursed by the Borrower in accordance
with the relevant LC Agreement shall be payable ON DEMAND, shall
constitute a "Loan" for purposes of this Agreement and shall bear
interest which shall accrue, be calculated and be payable (in the
absence of demand) as provided in the Line of Credit Note. All
obligations of the Borrower in respect of Letters of Credit, LC
Agreements and related Loans shall be secured by and entitled to
the benefits of the Collateral and the Security Agreement. In the
event that all Loans have been repaid and the Line of Credit or
Term Loan Facility shall no longer be in effect, the Bank may
require that the Borrower maintain cash collateral in an amount
and form satisfactory to the Bank in respect of the amount then
available to be drawn under any Letter of Credit outstanding
thereafter.
(c) In the event that outstanding Revolving Loans and the
aggregate amount then available to be drawn under outstanding
Letters of Credit exceed the lesser of (i) the Borrowing Base or
(ii) the Line of Credit Amount, the Borrower shall immediately
repay Revolving Loans in an amount sufficient to eliminate such
excess.
Section 2.02. Term Loans. (a) Subject to the terms and
conditions set forth in this Agreement, the Bank will make loans
("Term Loans") to the Borrower at the Principal Office of the Bank
in an aggregate principal amount at any time outstanding not
exceeding the Term Loan Facility Amount (less the aggregate
principal amount of all Term Loans then outstanding), on any
Banking Day prior to the first to occur of (i) the Expiration Date
or (ii) the earlier termination pursuant to Section 7.02(b) of the
Term Loan Facility, in such amounts as the Borrower may request in
accordance with Section 2.03. Each Term Loan shall be evidenced
by and payable in accordance with the terms of the Term Note
evidencing such Term Loan. Principal of Term Loans that is repaid
or prepaid may be reborrowed.
(b) Term Loans shall be made to (i) finance or refinance
purchases by the Borrower of Equipment ("Equipment Loans") or (ii)
finance establishment of new business locations, Acquisitions or
permanent working capital ("Acquisition/WC Loans"); provided that
(x) no Equipment Loan shall be made in a principal amount
exceeding seventy-five percent (75%) of the purchase price of the
relevant Equipment, as evidenced by copies of purchase orders,
invoices or other documents submitted to the Bank in connection
with the request for the Equipment Loan, and (y) without the prior
written consent of the Bank, the aggregate Acquisition/WC Loans
outstanding at any time shall not exceed the Acquisition/WC Loan
Sublimit.
Section 2.03. Requests for Revolving and Term Loans. The
Borrower will give the Bank written notice of each requested
Revolving Loan or Term Loan, specifying the type, amount and date
of each such Loan requested, and, in the case of each Term Loan,
the Term Loan Maturity Date therefor. Any Loan request received
after 11:00 a.m. Boston time on the Banking Day on which the Loan
is requested to be made shall be deemed received on the next
succeeding Banking Day. Requests for Eurodollar Rate Advances and
Cost of Funds Rate Advences are subject to the additional
requirements as to timing set forth in Sections 2.05 and 2.06,
respectively. Requests for Equipment Loans shall be accompanied
by the documents referred to in Section 2.02(b).
Section 2.04. Revolving and Term Loan Interest Payments.
The Borrower will pay interest on the principal amount of the
Revolving Loans and the Term Loans outstanding from time to time,
from the date of each Loan until payment thereof in full and the
termination of this Agreement, such interest to be payable in
arrears as provided in this Section, Sections 2.05, 2.06 and 3.06,
and on the date of payment in full of the Revolving Loans and each
Term Loan. Except (i) in the case of Revolving Loans, when
constituting Eurodollar Rate Advances pursuant to the Borrower"s
timely election under Section 2.05, or (ii) in the case of Term
Loans, when constituting Eurodollar Rate Advances pursuant to the
Borrower"s timely election under Section 2.05 or Cost of Funds
Rate Advances pursuant to the Borrower"s timely election under
Section 2.06, all Revolving Loans and Term Loans shall bear
interest at a fluctuating rate per annum equal to the Prime Rate
plus the applicable Margin, with a change in each such rate of
interest to become effective on the same day on which any change
in the Prime Rate is effective. Interest based on the Prime Rate
shall be calculated on the basis of actual days elapsed and a 360-
day year and shall be payable monthly on the first day of each
calendar month. At the Bank"s option, to the extent permitted by
applicable law, overdue principal of the Revolving Loans and the
Term Loans and overdue interest thereon shall bear interest at a
rate which at all times shall be four percent (4%) plus the
interest rate otherwise then in effect hereunder, compounded
monthly at the Bank"s option and payable on demand.
Section 2.05. Eurodollar Rate Option. Subject to the terms
and conditions set forth in this Agreement, (i) any Revolving Loan
or Term Loan and (ii) any portion of the outstanding Revolving
Loans, in any case in an amount equal to $100,000 or a greater
integral multiple of $100,000, may be made or maintained subject
to a Eurodollar Rate election as below provided:
(a) A Eurodollar Rate election shall be made in
writing (or, if by telephone, confirmed in writing on the same
day) by 11:00 a.m. Boston time two (2) Eurodollar Banking Days
before the commencement of the relevant Eurodollar Interest
Period, specifying the amount of the Eurodollar Rate Advance and
the Interest Period therefor; provided that in the case of a
Revolving Loan or a portion of the outstanding Revolving Loans no
such election shall be effective if it would cause there to be
outstanding more than five (5) Eurodollar Rate Advances with
respect to Revolving Loans. In the absence of a timely Eurodollar
Rate election with respect thereto, or, in the case of the Term
Loans, a timely Cost of Funds Rate election, all Revolving Loans
and Term Loans shall bear interest as provided in Section 2.04.
(b) Interest on each Eurodollar Rate Advance shall be
due and payable in arrears monthly on or about the same day of
each calendar month numerically corresponding to the first day of
the current Eurodollar Interest Period with respect thereto (e.g.
for a Eurodollar Interest Period beginning November 15, interest
payments will fall on or about the 15th day of each succeeding
month), on the last day of such Eurodollar Interest Period and on
the date of payment of the relevant Note in full, at the
applicable Eurodollar Rate (computed on the basis of a 360-day
year for the actual number of days elapsed, including the first
day of each Interest Period but excluding the last day).
(c) In the event that the Bank is unable to determine
the Eurodollar Rate for any Eurodollar Interest Period due to
circumstances affecting the relevant interbank Eurodollar market
or otherwise, or if the Bank determines that the Eurodollar Rate
(less the applicable Margin) will not adequately and fairly
reflect the Bank"s cost of making or maintaining Eurodollar Rate
Advances, or if it shall become unlawful for the Bank to make or
maintain Eurodollar Rate Advances, then the Bank may suspend the
Borrower"s right to make Eurodollar Rate elections and all Loans
shall bear interest as provided in Section 2.04 or Section 2.06
until the Bank notifies the Borrower that such circumstances no
longer exist. The Bank"s written notice setting forth its
determination as to the foregoing shall, if made on a reasonable
basis, be conclusive absent manifest error.
Section 2.06. Cost of Funds Rate Option. Subject to the
terms and conditions set forth in this Agreement, any Term Loan
(in whole but not in part) may be made or maintained subject to a
Cost of Funds Rate election as below provided:
(a) A Cost of Funds Rate election shall be made in
writing (or, if by telephone, confirmed in writing) at least one
(1) Banking Day before the beginning of any Cost of Funds Interest
Period, specifying the Term Loan to be made or maintained as a
Cost of Funds Rate Advance and the first day of the Cost of Funds
Interest Period therefor. In the absence of a timely Cost of
Funds Rate or Eurodollar Rate election with respect thereto, each
Term Loan shall bear interest as provided in Section 2.04. Upon
the Borrower"s request, the Bank will quote a proposed Cost of
Funds Rate and will specify the time within which the Borrower may
elect to accept such offer by making a Cost of Funds Rate election
as provided above. Any Cost of Funds Rate shall be offered and
determined by the Bank in its discretion and the Bank shall not be
deemed to make any representation or warranty with respect
thereto, the Borrower"s sole remedy, should it be dissatisfied
with such rate, being to decline to make a Cost of Funds Rate
election based thereon.
(b) Interest on all Cost of Funds Rate Advances
shall be due and payable monthly in arrears on or about the same
day of each calendar month numerically corresponding to the date
such Term Loan is made (e.g. for a Term Loan made on November 15,
interest payments will fall on or about the 15th day of each
succeeding month) and on the date of payment of the relevant Term
Note in full, at the applicable Cost of Funds Rate (computed on
the basis of a 360-day year for the actual number of days
elapsed).
(c) In the event that the Bank determines that
appropriate recognized sources of funding are not available to it
for a proposed Cost of Funds Interest Period or Cost of Funds Rate
Advance or that the "cost of funds" component of the Cost of Funds
Rate is unreasonably high, then the Bank may suspend the
Borrower"s ability to make Cost of Funds Rate elections and any
affected Term Loan shall bear interest as provided in Section 2.04
or Section 2.05 until the Bank notifies the Borrower that such
circumstances no longer exist. The Bank"s written notice setting
forth its determination as to the foregoing shall, if made on a
reasonable basis, be conclusive absent manifest error.
Section 2.07. Notations Reflecting Loans. The Borrower
hereby irrevocably authorizes the Bank to make or cause to be made
on the books of the Bank, at or following the time of making each
Loan and of receiving any payment of principal, an appropriate
notation reflecting such transaction and the then aggregate unpaid
principal balance of the Loans. The amount so noted, and other
regular entries by the Bank on its books with respect to interest
and other charges, shall, absent manifest error, constitute
presumptive evidence as to the amount owed by the Borrower with
respect to principal of the Loans and with respect to interest and
other charges.
Section 2.08. Line of Credit Fee. The Borrower shall pay
the Bank a fee (the "Line of Credit Fee") for the period
commencing on the date hereof to and including the Expiration
Date, or the earlier date of the termination of the Line of Credit
hereunder, at the applicable Line of Credit Fee Rate per annum
(computed on the basis of the actual number of days elapsed over a
360-day year) with respect to the Line of Credit Amount less (i)
the average daily outstanding Revolving Loans and (ii) the average
daily aggregate amount available to be drawn under outstanding
Letters of Credit. The Line of Credit Fee shall be payable in
arrears on the first day of each calendar quarter commencing
January 1, 1998.
Section 2.09. Term Loan Facility Fee. The Borrower shall
pay the Bank a fee (the "Term Loan Facility Fee") for the period
commencing on the date hereof to and including the Expiration
Date, or the earlier date of the termination of the Term Loan
Facility hereunder, at the applicable Term Loan Facility Fee Rate
per annum (computed on the basis of the actual number of days
elapsed over a 360-day year) with respect to the Term Loan
Facility Amount less the average daily outstanding Term Loans.
The Term Loan Facility Fee shall be payable in arrears on the
first day of each calendar quarter commencing January 1, 1998.
Section 2.10. Security. As security for Loans hereunder
and the Notes, the Borrower has granted to the Bank a continuing
security interest in and lien upon all its tangible and intangible
personal property and fixtures, including without limitation its
accounts receivable, inventory, equipment, general intangibles and
other Collateral pursuant to the Security Agreement.
ARTICLE III
LOAN PROCEEDS AND PAYMENTS
Section 3.01. Disbursement and Use of Loan Proceeds. The
proceeds of each Revolving Loan or Term Loan shall be disbursed by
credit to the Borrower"s principal operating deposit with the Bank
unless otherwise requested in writing by the Borrower. The
proceeds of each Revolving Loan will be used by the Borrower
solely for working capital purposes and the proceeds of each Term
Loan will be used by the Borrower solely for the purposes provided
in Section 2.02(b), as more particularly described to the Bank in
connection with the relevant borrowing request or otherwise.
Section 3.02. Payments. All payments of interest,
principal and any other sum payable hereunder and/or the Notes
shall be made to the Bank at its Principal Office, in lawful
currency of the United States of America in immediately available
funds. All payments received by the Bank after 2:00 p.m. on any
day shall be deemed received as of the next succeeding Banking
Day. All monies received by the Bank hereunder shall be applied
first to fees, charges, costs and expenses payable to the Bank
under this Agreement, next to interest then accrued on account of
the Loans and only thereafter to principal of the Loans.
Section 3.03. Payment on Non-Banking Days. Whenever any
payment to be made to the Bank hereunder or under the Note shall
be stated to be due on a day which is not a Banking Day (or, in
the case of any payment with respect to a Eurodollar Rate Advance,
a Eurodollar Banking Day), such payment shall be made on the next
succeeding Banking Day (or Eurodollar Banking Day), and interest
payable on each such date shall include the amount thereof which
shall accrue during the period of such extension of time.
Section 3.04. Net Payments. All payments by the Borrower
hereunder and/or in respect of the Notes shall be made without
deduction, set-off or counterclaim, notwithstanding any claim
which the Borrower may now or at any time hereafter have against
the Bank.
Section 3.05. Charges Against Accounts. The Bank may
charge any deposit account of the Borrower at the Bank with the
amount of all payments of interest, principal, fees and other sums
due, from time to time, under this Agreement and/or the Notes, and
will thereafter notify the Borrower of the amount so charged. The
failure of the Bank to charge any account or to give any such
notice shall not affect the obligation of the Borrower to pay
interest, principal or other sums as provided herein or in the
Notes. For purposes of this Section 3.05, the term "Bank" shall
include any affiliate of the Bank so long as the Borrower
maintains deposits with any such bank.
Section 3.06. Prepayment. The Borrower may repay Revolving
Loans (in whole or in part) and Term Loans (in whole but not in
part) that bear interest based on the Prime Rate at any time;
provided that there shall also be paid therewith all interest
accrued with respect thereto. Principal prepaid with respect to
Revolving Loans, and principal repaid or prepaid with respect to
Term Loans, may, subject to the terms and conditions set forth in
this Agreement, be reborrowed. If any Revolving Loan or portion
of the Revolving Loans bears interest at a Eurodollar Rate or if
anyTerm Loan bears interest at a Eurodollar Rate or a Cost of
Funds Rate, and the Bank in its sole discretion should determine
that current market conditions can accommodate a prepayment
request, the Borrower shall have the right at any time and from
time to time to prepay the same in whole (but not in part);
provided that there shall also be paid therewith all interest
accrued with respect thereto and the Borrower shall pay to the
Bank a yield maintenance fee in an amount computed as follows:
The current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a
maturity date closest to the last day of the current Eurodollar
Interest Period with respect thereto or the Term Loan Maturity
Date of such Term Loan, as the case may be, shall be subtracted
from the "cost of funds" component of the Eurodollar Rate or Cost
of Funds Rate in effect at the time of prepayment. If the result
is zero or a negative number, there shall be no yield maintenance
fee. If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount shall be divided by
360 and multiplied by the number of days remaining until the
relevant Eurodollar Interest Period expiration or Term Loan
Maturity Date. Said amount shall be reduced to present value
calculated by using the number of days remaining until the
Eurodollar Interest Period expiration or Term Loan Maturity Date
and using the above-referenced United States Treasury security
rate and the number of days remaining until the Eurodollar
Interest Period expiration or Term Loan Maturity Date. The
resulting amount shall be the yield maintenance fee due to the
Bank upon prepayment of a Revolving Loan or portion of the
Revolving Loans when bearing interest at a Eurodollar Rate or Term
Loan when bearing interest at a Eurodollar Rate or Cost of Funds
Rate.
If by reason of an Event of Default the Bank elects to
declare the Loans to be immediately due and payable, then any
yield maintenance fee with respect to any Loan shall become due
and payable in the same manner as though the Borrower had
exercised such right of prepayment.
Section 3.07. Changed Circumstances; Increased Costs. The
Borrower acknowledges that the Bank has offered to the Borrower
loan pricing reflected in this Agreement and the Notes taking into
account existing costs of compliance with certain U.S.
governmental regulatory requirements, notably FDIC deposit
insurance assessments applicable to Bank deposits, reserves that
are required to be maintained by the Bank under Federal Reserve
Board regulations and regulators" requirements applicable to the
Bank and its parent holding company with respect to capital
adequacy. The Borrower agrees that if any change in the
applicable Federal regulations or in the interpretation thereof by
the relevant agencies, or compliance with any guideline or request
of any such agency (whether or not having the force of law),
increases the Bank"s costs in respect of loans or lines of credit
such as provided for herein (or reduces the rate of return on
capital of the Bank or its holding company), the Bank may at its
option adjust the loan pricing reflected in this Agreement and the
Notes, including without limitation any Cost of Funds Rate or
Eurodollar Rate then in effect, to compensate therefor, in which
event the Bank shall provide written notice to the Borrower
setting forth in reasonable detail the basis for and calculation
of such increased cost or reduced rate of return (but failure to
provide such notice shall not affect the parties" rights and
obligations). The Bank"s written notice setting forth its
determination as to the foregoing shall, if made on a reasonable
basis, be conclusive absent manifest error.
Section 3.08. Interest Rate Reduction in Certain
Circumstances. All agreements between the Borrower, any guarantor
of the Borrower"s obligations and the Bank are hereby expressly
limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced
hereby or by the Notes or otherwise, shall the amount paid or
agreed to be paid to the Bank for the use or the forbearance of
such indebtedness 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 that in the event there
is a change in the law which permits a higher permissible rate of
interest, then this Agreement and the 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 the Borrower and the
Bank in the execution, delivery and acceptance of this Agreement
and the 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 the Notes or any other document executed in
connection herewith at the time performance of such provision
shall be due, shall involve transcending the limit of such
validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such
validity, and if under or from circumstances whatsoever the Bank
should ever receive as interest any amount which would exceed the
highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest. This
provision shall control every other provision of all agreements
between the Borrower, any guarantor of the Borrower"s obligations
and the Bank.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. Conditions Precedent to Initial Loan. Prior to the
initial Loan hereunder, the Borrower shall deliver to the Bank
duly executed copies of this Agreement, the Line of Credit Note
and the documents enumerated below in this Section 4.01, all of
which, as well as all legal matters incident to the transactions
contemplated hereby, shall be satisfactory in form and substance
to the Bank and its counsel:
(a) Certified copies of all documents evidencing necessary
approvals, if any, with respect to this Agreement, the Notes and
the Security Agreement, including, without limitation, any
required approvals of governmental authorities and other Persons.
(b) A certificate, signed by the Clerk of the Borrower,
setting forth the names of the officers of the Borrower authorized
to sign this Agreement, the Notes and any and all certificates,
notices and reports referred to herein; such certificate shall
contain the true signatures of such officers and shall state that
the Bank may conclusively rely on the statements made therein
until the Bank shall receive a further certificate of the Clerk of
the Borrower canceling or amending the prior certificate and
submitting signatures of the officers named in such further
certificate.
(c) A favorable written opinion of counsel to the Borrower
as to such matters as the Bank may reasonably request.
(d) A copy of the Articles of Organization of the Borrower
and all amendments thereto, certified by the Secretary of State of
the Commonwealth of Massachusetts, a copy of the By-Laws of the
Borrower, as amended to date, as certified by the Borrower"s
Clerk, and certificates of the appropriate agencies in all other
jurisdictions in which the Borrower is required to qualify to do
business, attesting to its qualification and good standing
(including tax good standing) in each such jurisdiction.
(e) If the initial Loan is not made upon execution of this
Agreement, an Officer"s Certificate pursuant to Section 4.02(e)
dated the date of such initial Loan.
(f) Such UCC-1 financing statements pursuant to the
Security Agreement for filing with such public offices as the Bank
may request.
(g) The policies or certificates of the insurance required
by this Agreement and the Security Agreement.
(h) Such other documents, instruments, records, consents,
certificates, opinions, assurances and authorizations shall be set
forth on the closing agenda prepared by the Bank or as the Bank
shall otherwise reasonably require.
Section 4.02. Conditions Precedent to All Loans. The
making of any Revolving Loan (including the initial Revolving
Loan) or Term Loan are subject to the further conditions precedent
that on the date on which each such Loan is made:
(a) The representations and warranties of the Borrower
made in this Agreement and the Security Agreement shall continue
to be correct as of the date of such Loan, except to the extent
that the same relate expressly to an earlier date.
(b) The covenants and agreements of the Borrower contained
herein and in the Security Agreement shall have been complied with
on and as of the date of such Loan.
(c) No event which constitutes, or which, with notice or
lapse of time, or both, would constitute, an Event of Default
shall have occurred and be continuing.
(d) No material adverse change shall have occurred in the
financial condition of the Borrower from that disclosed in the
most recent financial statements furnished to the Bank pursuant to
Section 5.01(j) and/or Section 6.03.
(e) If requested by the Bank, there shall have been
delivered to the Bank a certificate of an authorized officer of
the Borrower (an "Officer"s Certificate") affirming compliance
with the foregoing conditions of this Section 4.02 as of such
date.
(f) There shall have been delivered to the Bank a written
notice of borrowing pursuant to Section 2.03.
(g) In the case of each Term Loan, there shall have been
delivered to the Bank (i) the documents provided for in Section
2.02 and (ii) the relevant Term Note, duly completed and executed
on behalf of the Borrower.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties. As an
inducement to the Bank to execute this Agreement and to make any
Loan hereunder to the Borrower, the Borrower hereby represents and
warrants to the Bank that:
(a) Organization. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts and has the legal power and
authority to enter into and perform this Agreement, to execute and
deliver the Notes and the Security Agreement and to enter into and
perform all obligations required of the Borrower by all other
instruments and other documents referred to herein to which it is
a party, and to fulfill its obligations set forth herein and
therein and to carry out the transactions contemplated hereby and
thereby. The Borrower has all requisite corporate power to own
and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(b) Subsidiaries. Schedule 5.01(b) hereto correctly sets
forth as to each Subsidiary its name, the jurisdiction of its
incorporation and the percentage of its outstanding capital stock
owned by the Borrower or any Subsidiary. Each Subsidiary is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has
all requisite corporate power to own and operate its properties
and to carry on its business as now conducted and as proposed to
be conducted. All of the outstanding capital stock of each
Subsidiary is validly issued, fully-paid and nonassessable, and is
owned as set forth on Schedule 5.01(b) free and clear of any
pledge, security interest, option or other encumbrance.
(c) Qualification. The Borrower and each Subsidiary is
duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction where such qualification is
necessary in order to carry out its business as now conducted and
as proposed to be conducted.
(d) Due Authorization, etc. The execution, delivery and
performance of this Agreement, the Note, the Security Agreement
and the other documents required to be executed by the Borrower
pursuant hereto have been duly authorized by all necessary
corporate action, will not require the consent of any third party,
and will not conflict with, violate the provisions of, or cause a
default or constitute an event which, with the passage of time or
giving of notice or both, could constitute an event of default on
the part of the Borrower under any contract, agreement, law, rule,
order, ordinance, franchise, instrument or other document or under
any provision of the Articles of Organization or By-Laws of the
Borrower, or result in the imposition of any Lien on any property
or assets of the Borrower other than in favor of the Bank. This
Agreement and the other documents delivered to the Bank by the
Borrower pursuant hereto (including, without limitation, the Notes
and the Security Agreement) are the legal, valid and binding
obligations of the Borrower, enforceable in accordance with their
respective terms.
(e) Litigation. There are no actions, suits, proceedings
or investigations pending or, to the knowledge of the Borrower,
threatened, anticipated or contemplated (nor, to the knowledge of
the Borrower, any basis therefor) against or affecting the
Borrower or, to the knowledge of the Borrower, any officer of the
Borrower before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
which could prevent or hinder the consummation of the transactions
contemplated hereby or call into question the validity of this
Agreement, the Notes, the Security Agreement or any other
instrument provided for or contemplated by this Agreement or any
action taken or to be taken in connection with the transactions
contemplated hereby or thereby or which in any single case or in
the aggregate might result in any material adverse change in the
business, prospects, condition, affairs or operation of the
Borrower or any material impairment of the right or ability of the
Borrower to carry on its operations as now conducted or proposed
to be conducted.
(f) No Violation. The Borrower is not in violation of
(i) any term of its Articles of Organization or By-Laws, as now in
effect, (ii) any term of any mortgage, indenture or judgment,
decree or order, any other instrument, contract or agreement
binding on the Borrower or its property or (iii) to the knowledge
of the Borrower, any term of any statute, ordinance,
administrative determination, or governmental rule or regulation
applicable to it.
(g) Taxes. The Borrower has filed proper and, to the best
of its knowledge, accurate federal, foreign, state and local tax
returns, reports and estimates for all years and periods for which
any such returns, reports or estimates were required to be filed
and has paid all taxes, assessments, impositions, fees and other
governmental charges required to be paid in respect of the periods
covered by any such returns, reports or estimates. There are in
effect no waivers of applicable statutes of limitations for
federal, state or local taxes for any period. The Borrower is not
delinquent in the payment of any tax, assessment or governmental
charge and has not requested any extension of time within which to
file any tax return, which return has not since been filed, and no
deficiencies for any tax, assessment or governmental charge have
been asserted or assessed, and the Borrower knows of no material
liability or basis therefor. Any reserves for taxes on the books
of the Borrower and its Subsidiaries are adequate in the opinion
of the Borrower.
(h) Legal Compliance. The Borrower is, to the best of its
knowledge, in compliance with all requirements of law, federal,
state and local, and all requirements of all governmental bodies
or agencies having jurisdiction over it, the conduct of its
business, the use of its properties and assets, and all premises
occupied by it, and, without limiting the foregoing, the Borrower
has all the required franchises, licenses, permits, certificates
and authorizations needed for the conduct of its business and the
use of its properties and all premises occupied by it, as now
conducted, owned and used or as proposed to be conducted, owned
and used. The Borrower has not received any notice, not
heretofore complied with, from any federal, state or local
authority or any insurance or inspection body that any of its
properties, facilities, equipment or business procedures or
practices fails to comply with any applicable law, ordinance,
regulation, building or zoning law or any other requirement of any
such authority or body. No authorization, consent, approval,
license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary to
the valid execution or delivery of, or for the performance by the
Borrower of any its obligations under, this Agreement, the Notes,
the Security Agreement or any other instrument provided for or
contemplated by this Agreement.
(i) Regulation U; Borrower"s Business. The Borrower is
not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System); neither the Borrower nor any Subsidiary owns or has any
present intention of acquiring any margin stock; and no part of
the proceeds of the Notes (including without limitation
Acquisition/WC Loans) will be used, directly or indirectly, to
purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock or in
any other manner which would involve a violation of Regulation U,
Regulation T, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System or the SEC. The Borrower
is engaged solely in the businesses described in its filings with
the SEC from time to time under the Exchange Act..
(j) Title to Assets. The Borrower holds of record and has
marketable title in fee to such of its fixed assets as are real
property, and good and merchantable title to all of its other
assets now carried on its books, including those reflected in the
balance sheets of the Borrower referred to in Section 5.01(j)
below or acquired since the date of such balance sheets, free of
any Lien, except as permitted under Section 6.02(b).
(k) Financial Statements. The Borrower"s Consolidated
financial statements for its fiscal year ended March 31, 1997, and
its interim Consolidated financial statements for the fiscal period
ended September 30, 1997, heretofore delivered to the Bank, are
accurate and complete, fairly present the financial condition of
the Borrower and its Subsidiaries as at the respective dates
thereof and for the periods covered thereby (subject, in the case
of such interim statements, to normal year-end adjustments and
inclusion of notes and schedules), and were prepared in accordance
with GAAP consistently applied throughout such fiscal periods. The
Borrower and its Subsidiaries have no material liability,
contingent or otherwise, that is not disclosed or reflected in such
financial statements or any notes thereto and which, in accordance
with GAAP, is required to be disclosed or reflected therein and
could materially adversely affect the financial condition of the
Borrower. Since the date of the financial statements most recently
delivered pursuant to this Agreement (including those referred to
above): there has been no material adverse change in the business,
assets or condition, financial or otherwise, of the Borrower or of
any of its Subsidiaries; neither the business, condition or
operations of the Borrower or any such Subsidiary nor any of their
respective properties or assets have been materially adversely
affected as the result of any legislative or regulatory change
known to the Borrower, any revocation or change in any franchise,
license or right to do business, or any other event or occurrence,
whether or not insured against; neither the Borrower nor any such
Subsidiary has experienced any material controversy or problem with
its customers or suppliers or with its employees or with any labor
organization; and neither the Borrower nor any such Subsidiary has
entered into any material transaction other than in the ordinary
course of its business.
(l) ERISA. The Borrower has no accumulated funding
deficiency within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"); nor does it have any
liability to the Pension Benefit Guaranty Corporation ("PBGC")
established under ERISA (or any successor thereto) in connection
with any employee benefit plan or multiemployer plan (or other
class of benefit which the PBGC has elected to insure); there have
been no "reportable events" or "prohibited transactions" with
respect to any such plan, as those terms are defined in Section
4043 of ERISA and Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), respectively; and each such plan
has been administered in material compliance with the applicable
provisions of ERISA and the Code. The Borrower has no pension,
profit-sharing, stock option, insurance or similar plan providing
for deferred compensation or other benefits to any director,
officer or employee except as set forth on Schedule 5.01(l)
hereto.
(m) Head Office. The chief executive office and principal
place of business of the Borrower is located at 000 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000. Schedule 5.01(m) sets forth a list of all of
the facilities and locations of the Borrower and its Subsidiaries.
(n) Contracts. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement, the terms of
which now has or, as far as can be foreseen, may have a material
adverse effect on the financial condition, business or properties
of the Borrower or any of its Subsidiaries. There exist no
defaults by any party under any contract or agreement between
either Borrower and any other Person which, singly or in the
aggregate, if not promptly cured, may have a material adverse
effect on the financial condition, business or properties of the
Borrower or any of its Subsidiaries.
(o) Statements Not Misleading. Neither this Agreement and
the Security Agreement, nor the financial statements referred to
herein, nor any certificate delivered pursuant to this Agreement,
nor any other agreement, document, certificate or written
statement furnished to the Bank or to the Bank"s counsel by or on
behalf of the Borrower in connection with the transactions
contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order
to make the statements contained herein or therein not misleading.
There is no fact within the knowledge of the Borrower"s executive
officers which has not been disclosed herein or in writing to the
Bank and which materially adversely affects, or in the future in
its opinion may, insofar as the Borrower can no foresee,
materially adversely affect the business, properties, assets or
condition, financial or other, of the Borrower or any of its
Subsidiaries.
ARTICLE VI
COVENANTS OF THE BORROWER
Section 6.01. Affirmative Covenants Other Than Reporting
Requirements. Without limiting any other covenants and provisions
hereof, the Borrower covenants and agree that, so long as any Loan
or Letter of Credit is outstanding or this Agreement remains in
effect:
(a) Payments. The Borrower will pay the principal of and
interest on the Notes at the times and place and in the manner
provided in the Notes and herein, and promptly pay when due any
and all other amounts owing to the Bank.
(b) Taxes, etc. The Borrower will pay and discharge, and
cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or
them, or upon its or their income or profits, or upon any
properties belonging to it or them, prior to the date on which
penalties or interest would attach thereto, and all lawful claims
which, if unpaid, might become a Lien upon any properties of the
Borrower or any of its Subsidiaries; provided that neither the
Borrower nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings which serve as a
matter of law to stay the enforcement of any remedy of the taxing
authority or claimant and as to which the Borrower or the
Subsidiary concerned shall have set aside on its books adequate
reserves. The Borrower will pay, and will cause each of its
Subsidiaries to pay, in a timely manner, all lease obligations,
all trade debt, purchase money obligations, equipment lease
obligations and all of its other Indebtedness; provided that
neither the Borrower nor any of its Subsidiaries shall be required
to pay any such obligation or indebtedness which is being
contested in good faith and as to which the Borrower or the
Subsidiary concerned shall have set aside on its books adequate
reserves. The Borrower will fully, faithfully and punctually
perform and observe all covenants and agreements under any leases
of real estate, agreements relating to purchase money debt,
equipment leases and other material contracts. The Borrower will
fully, faithfully and punctually perform and observe all covenants
and agreements under notes and other agreements evidencing or
relating to Subordinated Debt; provided that to the extent that
such agreements conflict with the provisions of agreements in
favor of the Bank relating to subordination thereof to the
Borrower"s obligations to the Bank, the Borrower will perform and
observe the latter.
(c) Insurance. The Borrower will maintain, and cause each
of its Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations satisfactory to the
Bank in such amounts and covering such risks as shall be
satisfactory to the Bank from time to time, but in any event in
amounts sufficient to prevent the Borrower and its Subsidiaries
from becoming a co-insurer. The Borrower shall keep its real
property and all inventory, equipment, furnishings and other
tangible personal property owned by the Borrower and kept or used
therein fully insured against fire, lightning and extended
coverage perils and against such other risks as the Bank may from
time to time require, in an amount equal to the aggregate full
insurable value thereof. In addition, the Borrower shall procure
and maintain liability insurance (including product liability
insurance) with a minimum limit not less than $1,000,000, shall
maintain umbrella coverage in an amount not less than $5,000,000
and shall maintain business interruption insurance in amounts from
time to time satisfactory to the Bank. The Borrower shall also
procure and maintain workmen"s compensation insurance, employer
liability and other insurance as required by law. The Borrower
will also maintain comprehensive automobile liability insurance
covering all motor vehicles used by it, with combined limits of
not less than $1,000,000 for bodily injury and $500,000 for
property damage. The Borrower shall in addition comply with the
requirements of the Security Agreement with respect to insurance.
(d) Existence, etc. The Borrower will preserve and
maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate or other existence (except that any
Subsidiary may merge with or into the Borrower or another
Subsidiary), rights, franchises and privileges and remain in good
standing in Massachusetts and each other jurisdiction in which
such qualification is necessary in view of its business and
operations or the ownership of its properties.
(e) Compliance with Laws. The Borrower will comply, and
cause each of its Subsidiaries to comply, with the requirements of
all applicable laws, rules, regulations and the orders of any
court or other tribunal or governmental or administrative
authority or agency applicable to it or its business, property or
assets.
(f) Inspections. The Borrower will permit representatives
of the Bank at any reasonable time during normal business hours to
visit the offices and facilities of the Borrower or any of its
Subsidiaries and/or to discuss with any of its or their officers,
directors, managers, partners, or independent accountants such
company"s affairs, finances and accounts and/or to examine and make
copies of and take abstracts from the records and books of account
of the Borrower and any of its Subsidiaries. The Borrower will
permit representatives of the Bank to conduct from time to time a
field examination or audit with respect to the Collateral, in
connection with which the Borrower agrees to pay the Bank"s
standard fees plus expenses; provided that unless there has
occurred and is continuing an Event of Default, the Borrower shall
not be required to pay such fees and expenses for more than two (2)
field examinations or audits per calendar year.
(g) Books and Records. The Borrower will keep, and cause
each of its Subsidiaries to keep, proper and complete records and
books of account in which complete entries will be made in
accordance with generally accepted accounting principles
consistently applied reflecting all financial transactions of the
Borrower and its Subsidiaries.
(h) Repairs. The Borrower will maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of
its facilities and property necessary or useful in the proper
conduct of its business in good working order and condition,
making all necessary repairs thereto and replacements thereof. In
the event of damage to or destruction of any facility owned or
leased by the Borrower, the Borrower shall use its best efforts to
repair, replace, restore and reconstruct the same to substantially
its condition immediately prior to such damage or destruction.
(i) Business. The Borrower will conduct, and cause each
of its Subsidiaries to continue to conduct, in the ordinary
course, the same business in which it is, or they are, presently
engaged; provided that the foregoing shall not be deemed to limit
or restrict (i) the Borrower"s phasing out of its activities as an
independent sales agent for Xxxx Atlantic or any other RBOC or
(ii) its commencement of activities as a reseller of local
telecommunications services provided by RBOCs or as a provider of
local and other telecommunications services.
(j) Bank Account. The Borrower will maintain the Bank as
its principal bank of deposit and account.
(k) Financial Systems Review. Within ninety (90) days
after the date hereof, the Borrower will cause its financial,
accounting and billing systems, procedures, controls and staffing
to be reviewed by an independent accounting or consulting firm
satisfactory to the Bank. Such review shall address in particular
the adequacy of such systems, procedures, controls and staffing
from the standpoint of the Borrower"s anticipated activities as a
reseller of local telecommunications services provided by RBOCs.
Section 6.02. Negative Covenants. Without limiting any
other covenants and provisions hereof, the Borrower covenants and
agrees, that, so long as any Loan or Letter of Credit is
outstanding or this Agreement remains in effect:
(a) Indebtedness. The Borrower will not create, incur,
assume or suffer to exist, or permit any of its Subsidiaries to
create, incur, assume or suffer to exist, any Indebtedness, except
for:
(i) the Notes and other Indebtedness to the Bank,
whether arising hereunder or otherwise;
(ii) Indebtedness of the Borrower and its
Subsidiaries for taxes, assessments and governmental charges
or levies, to the extent payment thereof shall not at the
time be required under Section 6.01(b) above;
(iii) unsecured current liabilities of the Borrower
(other than for money borrowed or for the deferred purchase
of property) incurred upon customary terms in the ordinary
course of business;
(iv) Indebtedness of any Subsidiary to the Borrower;
(v) Indebtedness which is secured as permitted by
clause (vi) of Subsection (b) below;
(vi) Guaranties permitted under Subsection (c) below;
(vii) Subordinated Debt incurred with the prior
written consent of the Bank; or
(viii) Indebtedness of the Borrower or any
Subsidiary under any operating leases of property used by a
Borrower or such Subsidiary (as lessee) in the ordinary
course of business.
(b) Liens. The Borrower will not create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create,
incur, assume or suffer to exist, any Lien upon or with respect to
any of its property or assets, now owned or hereafter acquired, or
assign or otherwise convey, or permit any of its Subsidiaries to
assign or otherwise convey, any right to receive income, except
that the foregoing restrictions shall not apply to:
(i) Subject to Section 6.01(b), liens for taxes,
assessments or governmental charges or levies on property of
the Borrower or any of its Subsidiaries if the same shall not
at the time be delinquent or thereafter can be paid without
interest or penalty;
(ii) Liens imposed by law, such as carriers",
warehousemen"s and mechanics" liens and other similar liens
arising in the ordinary course of business for sums not yet
due;
(iii) Liens incurred or arising in connection with
workmen"s compensation laws, unemployment insurance, social
security, retirement benefits or similar legislation;
(iv) Liens in favor of the Bank;
(v) Liens on property of Subsidiaries in favor of
the Borrower;
(vi) Liens on (including Capital Leases of) tangible
personal property (other than raw materials, work-in-process
or finished goods inventory) hereafter acquired by the
Borrower or any of its Subsidiaries created contemporaneously
with such acquisition to secure the payment of the cost
thereof, provided that (i) the principal amount of
Indebtedness secured by any such Lien shall not exceed the
lesser of the cost or fair market value (determined as of the
event giving rise to such Lien) of such property and any such
Lien shall attach only to the property so acquired and (ii)
the aggregate principal amount of Indebtedness secured by all
such Liens or Capital Leases shall at no time exceed $200,000
unless the Borrower shall have requested the Bank to match
the substantive financial terms offered by the relevant
vendor, lender or lessor and the Bank shall have failed to do
so within thirty (30) days after receipt of such request;
(vii) judgment liens not constituting an Event of
Default under Section 7.01(h); and
(viii) easements, restrictions, rights of way and
other similar encumbrances which do not interfere in any
material respect with the course of business of the Borrower
or any of its Subsidiaries or the use of the property
encumbered.
(c) Guaranties. The Borrower will not assume, guaranty,
endorse or otherwise become directly or contingently liable, or
permit any of its Subsidiaries to assume, guaranty, endorse or
otherwise become directly or contingently liable (including,
without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in any debtor or otherwise to assure
any creditor against loss) in connection with any Indebtedness of
any other Person, except guaranties in favor of the Bank or by
endorsement or similar transactions in the ordinary course of
business.
(d) Mergers, etc. The Borrower will not permit any of its
Subsidiaries to: liquidate or dissolve; merge or consolidate with
any other Person (except that (i) the Borrower or any Subsidiary
may enter or make any Acquisition not prohibited under paragraph
(p) below and (ii) any Subsidiary may merge with or into the
Borrower or another Subsidiary); sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of
transactions) any item or items material to its business (whether
now owned or hereafter acquired) included in the assets of the
Borrower or any of its Subsidiaries, except for sale of inventory
in the ordinary course of business; or turn over the management
of, or enter into a management contract with respect to, its
properties, assets, rights or licenses.
(e) Sale of Rights; Waiver of Claims. The Borrower will
not, nor permit any of its Subsidiaries to: (i) sell, assign,
discount or dispose in any way of any accounts receivable or
contract rights with respect to its customers, account debtors or
any other Persons, with or without recourse, (ii) waive any
material debt or claim except in the ordinary course of its
business or (iii) amend any material contract to which it is a
party in any manner that would be economically adverse to the
Borrower.
(f) Investments. The Borrower will not make, nor permit
any of its Subsidiaries to make, any loan or advance to any Person
(including without limitation a Subsidiary) or purchase or
otherwise acquire, or permit any of its Subsidiaries to purchase
or otherwise acquire, the capital stock, assets comprising the
business of, or obligations of, or any interest in, any Person
(including without limitation a Subsidiary), except investments by
the Borrower or any Subsidiary in:
(i) evidences of indebtedness issued or guaranteed
by the United States of America which have a maturity of not
more than one year from the date of acquisition;
(ii) certificates of deposit, interest bearing
accounts, notes, acceptances and repurchase agreements having
a maturity of not more than one year from the date of
acquisition issued by (X) the Bank or (Y) any other domestic
commercial bank having capital, surplus and undivided profits
of at least $100,000,000;
(iii) open market commercial paper bearing the highest
rating of Standard & Poor"s Corporation or Xxxxx"s Investor
Services, Inc.;
(iv) accounts in any "money market" mutual fund
having total assets in excess of $100,000,000 that has at
least 85% of its assets invested in investments of the types
described in clauses (i)-(iii) above;
(vi) (a) an existing advance to an officer of the
Borrower and (b) advances to employees for travel and other
reimbursable expenses in the ordinary course of business; or
(vii) Acquisitions not prohibited under paragraph (p)
below.
(g) New Plans. The Borrower will not establish or permit
any of its Subsidiaries to establish any new pension or defined
benefit plan for employees subject to ERISA, which plan provides
any benefits based on past service without the advance consent of
the Bank (which shall not be withheld unreasonably) to the amount
of the aggregate past service liability thereby created.
(h) Head Office. The Borrower will not move its chief
executive office from 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
until after at least ten (10) days" prior written notice to the
Bank.
(i) Sale-and-Leaseback. The Borrower will not enter into
any sale-and-leaseback transaction.
(j) Subsidiaries. The Borrower will not organize or form,
or permit any of its Subsidiaries to organize or form, any new
Subsidiaries, or become a member of any partnership or joint
venture, or enter into any business, line of business or venture
(other than the business it presently engages in).
(k) Write-up of Assets. The Borrower will not write up
(by creating an appraisal surplus or otherwise) the value of any
assets of the Borrower or any of its Subsidiaries above their cost
to the Borrower or such Subsidiary, as the case may be, less the
depreciation regularly allowable thereon.
(l) Subsidiaries. The Borrower will not permit any of its
Subsidiaries to suffer or permit any circumstance to exist in
which any Subsidiary is not wholly-owned, directly or indirectly,
by the Borrower.
(m) Transactions with Affiliates. The Borrower will not,
nor cause or permit any of its Subsidiaries to, enter into any
transaction, including, without limitation, the purchase, sale or
exchange of any property, or the rendering of any service, with
any present or former Affiliate, except in the ordinary course of
and pursuant to the reasonable requirements of its business and
upon fair and reasonable terms no less favorable to it than would
be obtained in a comparable arms length transaction with any
Person not an Affiliate.
(n) Hazardous Materials. Except as provided below, the
Borrower will not dispose of or suffer or permit to exist any
hazardous material or oil on any site or vessel owned, occupied or
operated by the Borrower, nor shall the Borrower store on any site
or vessel owned, occupied or operated by the Borrower, or
transport or arrange the transport of, any hazardous material or
oil (the terms hazardous material, oil, site and vessel
respectively being used herein with the meanings given those terms
in Mass. Gen. Laws Ch. 21E). The Borrower shall provide the Bank
with written notice of (i) (except as provided below) the intended
storage or transport of any hazardous material or oil by the
Borrower, (ii) any potential or known release or threat of release
of any hazardous material or oil at or from any site or vessel
owned, occupied or operated by the Borrower, and (iii) any
incurrence of any expense or loss by any governmental authority in
connection with the assessment, containment or removal of any
hazardous material or oil for which expense or loss a Borrower may
be liable. Notwithstanding the foregoing, the Borrower may use,
store and transport, and need not notify the Bank of the use,
storage or transportation of, (x) oil in reasonable quantities, as
fuel for heating of its facilities or for vehicles or machinery
used in the ordinary course of its business and (y) hazardous
materials that are raw materials, solvents or other materials used
in the ordinary course of the Borrower"s business described in
Section 5.01(g), in reasonable quantities, as long as in any case
the Borrower has obtained and maintains in effect any necessary
governmental permits, licenses and approvals, complies with all
requirements of applicable federal, state and local law relating
to such use, storage or transportation, follows the protective and
safety procedures that a prudent business man conducting a
business the same or similar to that of the Borrower would follow,
and disposes of such materials (not consumed in the ordinary
course) only through licensed providers of hazardous waste removal
services. For purposes of this paragraph (o), "Borrower" shall
mean and include each Subsidiary.
(o) Fiscal Year. The Borrower will not, without the prior
written consent of the Bank, which shall not be withheld
unreasonably, change its fiscal year-end.
(p) Additional Negative Pledges. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any agreement, arrangement or understanding, either oral or in
writing, with any Person other than the Bank which restricts or prohibits the
Borrower or such Subsidiary from creating, incurring, assuming or suffering
to exist any mortgage, lien, charge or encumbrance on, or security interest in,
or pledge of, or conditional sale or other title retention agreement (including
any Capital Lease) with respect to, any of its property or assets now owned or
hereafter acquired.
(q) Acquisitions. Without the prior written consent of the Bank, the
Borrower will not enter into or make any Acquisition (i) outside the
Borrower"s then-current line(s) of business, except if the assets or Person
acquired relate directly to such line(s) of business, or (ii) of any capital
stock of any Person that is registered or required to be registered under
Section 12(b) or (g) of the Exchange Act. Further, the Borrower will not make
any Acquisition unless the following conditions are met: the board of
directors (or equivalent body) of the relevant Person has recommended that its
equity holders approve the Acquisition; in the case of a merger, the Borrower or
a Subsidiary shall be the surviving Person; there shall have occurred no event
which constitutes, or which, with notice or lapse of time, or both, would
constitute, an Event of Default; and after giving effect to such Acquisition the
Borrower shall on a pro forma basis be in compliance with the financial
covenants set forth in paragraphs (r) through (u) below.
(r) Senior Debt to Tangible Capital Base Ratio. The Borrower will
not permit its Senior Debt/TCB Ratio to be more than (i) 3.00:1 as of the last
day of any fiscal quarter ending on or after March 31, 1998 and on or before
December 31, 1998; (ii) 2.85:1 as of the last day of any fiscal quarter ending
on or after March 31, 1999 and on or before December 31, 1999; or (iii)
2.65:1 as of the last day of any fiscal quarter thereafter.
(s) Funded Debt to EBITDA Ratio. The Borrower will not permit
its Funded Debt/EBITDA Ratio to be more than (i) 2.85:1 for any rolling
four-quarter period ending on the last day of any fiscal quarter ending on or
after March 31, 1999 and on or before December 31, 1999 or (ii) 2.65:1 for
any rolling four-quarter period ending on the last day of any fiscal quarter
thereafter.
(t) Debt Service Coverage. The Borrower will not permit its Debt
Service Coverage Ratio to be less than 1.25:1 for any rolling four-quarter
period ending on the last day of any fiscal quarter ending on or after March
31, 1999.
(u) Net Losses. During the period from the date of this Agreement
to and including March 31, 1999, the Borrower will not incur cumulative Net
Losses exceeding (i) $2,000,000, if during such period the Borrower does not
receive aggregate gross proceeds of issuance of Subordinated Debt of at least
$5,000,000, or (ii) $4,000,000, if during such period the Borrower receives
aggregate gross proceeds of issuance of Subordinated Debt of $5,000,000 or
more.
Section 6.03. Reporting Requirements. So long as any Loan or Letter
of Credit shall be outstanding or this Agreement remains in effect, the
Borrower shall furnish to the Bank:
(a) Quarterly Financial Statements. As soon as available and in any
event within sixty (60) days after the end of each fiscal quarter, a
Consolidated balance sheet of the Borrower as at the end of such quarter and
Consolidated statements of income, stockholders" equity and cash flows for the
Borrower and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, all in reasonable
detail and duly certified (subject to normal year-end audit adjustment) by the
Treasurer of the Borrower as having been prepared in accordance with generally
accepted accounting principles.
(b) Annual Financial Statements As soon as available and in any
event within one hundred twenty (120) days after the end of each fiscal year of
the Borrower, a copy of the annual audit report for such fiscal year for the
Borrower, including therein a Consolidated balance sheet of the Borrower as at
the end of such fiscal year and Consolidated statements of income,
stockholders" equity and cash flows for the Borrower and its Subsidiaries for
such fiscal year. Such financial statement shall be accompanied by an opinion
with respect thereto by Ernst & Young LLP or other independent certified
public accountants acceptable to the Bank in such form as is generally
recognized as "unqualified".
(c) Projections. As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of the Borrower,
financial projections for the Borrower"s current fiscal year.
(d) Compliance Certificates. At the time of delivery of each
quarterly and annual statement of the Borrower, an Officer"s Certificate (i)
stating that such officer has caused this Agreement to be reviewed and has no
knowledge of any default in the performance or observance by the Borrower of
any of the provisions of this Agreement or, if he has such knowledge,
specifying each such default and the nature thereof and (ii) setting forth in
detail the computations necessary to determine compliance with the covenants
contained in paragraphs (r) through (u) of Section 6.02, as applicable.
(e) Borrowing Base Information. Within twenty (20) days after the
end of each calendar month in which there is outstanding any Revolving Loan,
and at any time if requested by the Bank in connection with the Borrower"s
request for a Revolving Loan, a Borrowing Base Certificate in a form supplied
or approved by the Bank setting forth the Borrower"s calculation of the
Borrowing Base (each a "Borrowing Base Certificate"), together with an
accounts receivable aging report in form satisfactory to the Bank.
(f) Exchange Act Filings. When filed with the SEC, copies of the
Borrower"s quarterly reports on Form 10-Q, annual reports on Form 10-K and
reports on Form 8-K.
(g) Notice of Default. As soon as possible and in any event within
five (5) days after any officer of the Borrower learns of the occurrence of any
Event of Default and any event which, with the giving of notice or lapse of
time or both, could constitute an Event of Default, the statement of the
Borrower setting forth details of such Event of Default or event and the action
which the Borrower proposes to take with respect thereto.
(h) Notice of Suits and Proceedings. Promptly after the
commencement thereof, notice of all material actions, suits and proceedings
before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, affecting the Borrower or any
of its Subsidiaries.
(i) Audits and Management Letters. Promptly after receipt, a copy
of all audits, management letters or reports submitted to the Borrower or any
of its Subsidiaries by independent public accountants relating to the Borrower's
existing operations or financial condition in connection with any annual,
special or interim audits of the books of the Borrower or any such
Subsidiaries. Without limiting the foregoing, the Borrower shall provide the
Bank with a copy of a management letter in connection with each annual audit
as soon as available and in any event within one hundred twenty (120) days
after the end of each fiscal year of the Borrower.
(j) ERISA. As soon as possible and in any event within thirty (30)
days after the Borrower knows or has reason to know that any event which
would constitute a reportable event under Section 4043(b) of Title IV of
ERISA with respect to any employee pension or other benefit plan subject to
such Title has occurred, or that the PBGC or the Borrower has instituted or
will institute proceedings under such Title to terminate such plan, a
certificate of the Treasurer of the Borrower setting forth details as such
reportable event and the action which the Borrower proposes to take with respect
thereto, together with a copy of any notice of such reportable event which may
be required to be filed with the PBGC, or any notice delivered by the PBGC
evidencing its intent to institute such proceedings, or any notice to the PBGC
that the plan is to be terminated, as the case may be. The Borrower shall
furnish the Bank (or cause the plan administrator to furnish the Bank) with the
annual report for each plan covered by Title IV and filed with the PBGC not
later than ten (10) days after such report has been filed with the PBGC.
(k) Material Events. Promptly after the Borrower has knowledge
thereof, written notice of:
(i) termination of any material consent, license, registration,
permit or franchise, or any independent sales agency or reseller
agreement with an RBOC or other material provider or supplier,
necessary for the conduct of any material part of the business of the
Borrower or any of its Subsidiaries or the ownership of its or their
property and assets;
(ii) any material loss, damage or destruction to or of any
property or assets of the Borrower or any of its Subsidiaries (regardless
of whether the same is covered by insurance);
(iii) any material controversy with any RBOC for which the
Borrower is an independent agent or reseller or any significant tenant,
customer, account debtor or supplier of a Borrower or with employees of
the Borrower or of any of its Subsidiaries or with any labor organization;
and
(iv) any other material development adversely affecting the
Borrower, any of its Subsidiaries or their respective businesses,
properties, assets or conditions, financial or otherwise.
(l) Plant Closings. Contemporaneously with any notice thereunder
to employees or governmental authorities, a copy of any notice required to be
given under any federal or state law relating to plant closings.
(m) Other Information. Such other documents or information as the
Bank may from time to time reasonably request respecting the financial
condition, operations, or property of the Borrower and/or any of its
Subsidiaries, including without limitation filings with the SEC or any other
federal or state regulatory agency or authority.
ARTICLE VII
DEFAULT AND REMEDIES
Section 7.01. Events of Default. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) The Borrower shall fail to make any payment of principal of or
interest on any Note or any other obligation in respect of this Agreement
within five (5) days after the date when due;
(b) Any representation or warranty of the Borrower contained
herein or in the Security Agreement shall at any time prove to have been
incorrect in any material respect when made or any representation or warranty
made by the Borrower in connection with the execution and delivery of this
Agreement or any other instrument, document, certificate or statement
executed and delivered in connection with any Loan shall at any time prove to
have been incorrect in any material respect when made;
(c) The Borrower shall default in the performance or observance of
any agreement or obligation under Section 6.01(b), (c), (d) or (e), Section
6.02 or Section 6.03 of this Agreement; provided that any such default which
is capable of being remedied shall not, so long as the Borrower is making
every diligent effort to cure the same, constitute an Event of Default unless
it continues unremedied for five (5) Banking Days;
(d) The Borrower shall default in the performance of any other
term, covenant or agreement contained in this Agreement and such default
shall continue unremedied for twenty (20) days after notice thereof shall have
been given to the Borrower;
(e) Any default on the part of the Borrower or any of its
Subsidiaries shall exist, and shall remain unwaived or uncured beyond the
expiration of any applicable notice and/or grace period, under the Security
Agreement or any other contract, agreement or understanding now existing or
hereafter entered into with or for the benefit of the Bank in any capacity or
capacities;
(f) Any default shall exist and remain unwaived or uncured with
respect to any Indebtedness for borrowed money or the deferred purchase price
of property (including without limitation Subordinated Debt and Capital
Leases) of the Borrower or any of its Subsidiaries, or any such Indebtedness
shall not have been paid when due, whether by acceleration or otherwise, or
shall have been declared to be due and payable prior to its stated maturity, or
any event or circumstance shall occur which permits, or with the lapse of time
or giving of notice or both would permit, the acceleration of the maturity of
any such Indebtedness by the holder or holders thereof;
(g) The Borrower or any of its Subsidiaries shall be dissolved, shall
become insolvent or bankrupt or shall cease paying its debts as they mature or
shall make an assignment for the benefit of creditors; or a trustee, receiver or
liquidator shall be appointed for the Borrower or any Subsidiary or for a
substantial part of the property of any of the foregoing; or bankruptcy,
reorganization, arrangement, insolvency or similar proceedings shall be
instituted by or against the Borrower or any Subsidiary under the laws of any
jurisdiction (provided that, if involuntary, such proceedings shall not be an
Event of Default unless they are not stayed or dismissed within forty-five (45)
days);
(h) Any one or more judgments, writs, attachments, executions or
similar process for payment of money in excess of $250,000 singly or in the
aggregate shall be issued or levied against the Borrower, any of its property or
any Subsidiary and such judgment, writ, attachment, execution or similar
process shall not be paid, released, vacated or fully bonded within thirty (30)
days after its issue or levy;
(i) The Borrower or any of its Subsidiaries shall fail to meet its
minimum funding requirements under ERISA with respect to any employee
benefit plan (or other class of benefit which the PBGC has elected to insure) or
any such plan shall be the subject of termination proceedings (whether
voluntary or involuntary) and there shall result from such termination
proceedings a liability of the Borrower or such Subsidiary to the PBGC which
in the reasonable opinion of the Bank may have a material adverse effect upon
the business, operations or financial condition of the Borrower or such
Subsidiary; or
(j) The Borrower or any Subsidiary shall suffer substantial
uninsured loss, theft, taking, damage or destruction to or of any of its
property which would have a material adverse effect upon the business,
prospects, operations or financial condition of the Borrower or any Subsidiary;
Section 7.02. Rights and Remedies on Default. Upon the occurrence
of any Event of Default and at any time thereafter, in addition to any other
rights and remedies available to the Bank hereunder or otherwise, the Bank
may exercise any one or more of the following rights and remedies (all of
which shall be cumulative):
(a) Declare the entire unpaid principal amount of the Notes then
outstanding, all interest accrued and unpaid thereon and all other amounts
payable under this Agreement, and all other Indebtedness of the Borrower to
the Bank, to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower.
(b) Terminate the Line of Credit and/or the Term Loan Facility,
without notice.
(c) Enforce the provisions of this Agreement or the Security
Agreement by legal proceedings for the specific performance of any covenant
or agreement contained herein or therein or for the enforcement of any other
appropriate legal or equitable remedy, and the Bank may recover damages
caused by any breach by the Borrower of the provisions of this Agreement, or
the Security Agreement, including court costs, reasonable attorneys" fees and
other costs and expenses incurred in the enforcement of the obligations of the
Borrower hereunder.
(d) Exercise all rights and remedies hereunder, under the Notes,
under the Security Agreement and under any other agreement with the Bank;
and exercise all other rights and remedies which the Bank may have under
applicable law.
Section 7.03. Set-Off. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
the Borrower and any guarantor of the Borrower"s obligations hereby grant to
the Bank a lien, security interest and right of setoff as security for all
liabilities and obligations to the Bank, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and property now or
hereafter in the possession, custody, safekeeping or control of the Bank or any
entity under the control of Fleet Financial Group, Inc. or in transit to any of
them. At any time, without demand or notice, the Bank may set off the same or
any part thereof and apply the same to any liability or obligation of the
Borrower and any guarantor even though unmatured and regardless of the adequacy
of any other collateral securing the Loans. ANY AND ALL RIGHTS TO REQUIRE
THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR
ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. No Waiver; Cumulative Remedies. No failure or delay
on the part of the Bank in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law or otherwise available to the Bank. The Bank"s remedies may be
exercised without resort or regard to any other source of satisfaction of any
liabilities of the Borrower to the Bank.
Section 8.02. Amendments, Waivers and Consents. Neither this
Agreement nor any provision hereof may be amended, waived discharged or
terminated orally, but only by a statement in writing signed by the party
against whom enforcement of the amendment, waiver, discharge or termination
is sought. Any waiver or consent may be given subject to satisfaction of
conditions stated herein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Section 8.03. Addresses for Notices, etc. Except as otherwise
expressly provided in Section 2.02, all notices, requests, demands and other
communications provided for hereunder shall be in writing (including
telegraphic or facsimile communication) and shall be mailed, telegraphed,
telecopied or delivered to the applicable party at the address indicated below:
If to the Borrower:CTC Communications Corp.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Chief Financial Officer
Fax no.: 000-000-0000
If to the Bank: Fleet National Bank
One Federal Street, MA OF D04C
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. XxXxxxxxx, Vice President
Fax no.: 000-000-0000
or, as to each of the foregoing, at such other address as shall be designated by
such person in a written notice to the other party complying as to delivery with
the terms of this Section. Except as otherwise hereinabove provided, all such
notices, requests, demands and other communications shall, when mailed or
telegraphed, respectively, be effective forty-eight (48) hours after being
deposited in the mails, when delivered to the telegraph company, when sent by
facsimile or when delivered, as the case may be, addressed as aforesaid.
Section 8.04. Costs, Expenses and Taxes etc.. The Borrower agrees
to pay on demand all costs and expenses (including without limitation,
reasonable legal fees) of the Bank in connection with the preparation,
execution and delivery of this Agreement, the Notes, the Security Agreement
and all other instruments and documents to be delivered hereunder and any
waivers, amendments or modifications of any of the foregoing, or in
connection with the examination, review or administration of any of the
foregoing, as well as the costs and expenses (including, without limitation,
the reasonable fees and out-of-pocket expenses of legal counsel and independent
public accountants) incurred by the Bank in connection with interpreting,
administering, preserving, enforcing or exercising any rights or remedies
under this Agreement, the Notes, the Security Agreement, and all other
instruments and documents to be delivered hereunder, all whether or not legal
action is instituted. In addition, the Borrower shall pay any and all stamp
and other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Notes, the Security Agreement
and all other instruments and documents to be delivered hereunder, and agrees
to save the Bank harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes. In
addition, the Borrower shall indemnify and hold harmless the Bank and its
directors, officers, employees and representatives from and against any costs,
expenses, liabilities, claims and damages (including, without limitation, the
reasonable fees and out-of-pocket expenses of legal counsel) that may be
incurred or suffered by any of them in connection with any investigation,
litigation or proceeding involving the Borrower or any director, officer,
employee, representative or Affiliate of the Borrower (including subpoenas and
other legal process), other than costs, expenses, liabilities, claims and
damages that have been finally adjudicated to be due to the willful misconduct
of the Bank or other indemnified party. Any costs and expenses which the Bank
is entitled to receive from the Borrower hereunder shall, if not paid promptly
upon request by the Bank, bear interest until paid at a rate per annum equal to
four percent (4%) plus the Prime Rate.
Section 8.05. Representations and Warranties. All covenants,
agreements, representations and warranties made herein or in other documents
delivered by or on behalf of the Borrower pursuant to or in connection with
this Agreement and the Security Agreement are material and shall be deemed
to have been relied upon by the Bank, notwithstanding any investigation
heretofore or hereafter made by the Bank and shall survive the making of the
Loans as herein contemplated, and shall continue in full force and effect so
long as the Loans or other amount due under this Agreement remains
outstanding and unpaid. All statements contained in any certificate or other
paper delivered to the Bank at any time by or on behalf of the Borrower
pursuant hereto shall constitute representations and warranties by the Borrower
hereunder.
Section 8.06. Binding Effect; Assignment. This Agreement shall be
binding upon the Borrower and its respective successors and assigns, and shall
inure to the benefit of the Borrower and the Bank and their respective
successors and assigns; provided that the Borrower may not assign this
Agreement or any rights or obligations hereunder without the express written
consent of the Bank.
Section 8.07. Reproduction of Agreement. This Agreement and all
other instruments, documents and papers which relate thereto which have been
or may be hereafter furnished to the Bank may be reproduced by the Bank by
any photographic, photostatic, micro-card, miniature photographic,
xerographic, or similar process, and the Bank may destroy the original from
which any document was so reproduced. Any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business).
Section 8.08. Replacement of Notes. Upon receipt of an affidavit of
an officer of the Bank as to the loss, theft, destruction or mutilation of any
Note or any other security document which is not of public record, and, in the
case of any such loss, theft, destruction or mutilation, upon surrender and
cancellation of such Note or other security document (if the same can be
surrendered), the Borrower will issue, in lieu thereof, a replacement note or
other security document in the same principal amount thereof and otherwise of
like tenor.
Section 8.09. Pledge or Sale etc. of Loans. (a) The Bank may at any
time pledge all or any portion of its rights under this Agreement, the Notes,
the Security Agreement and the documents executed in connection herewith
including any portion of the 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 enforcement thereof shall release the Bank
from its obligations hereunder or thereunder.
(b) The Bank shall have the unrestricted right at any time or from time
to time, and without the Borrower"s or any guarantor"s consent, to assign all
or any portion of its rights and obligations hereunder to one or more banks or
other financial institutions (each an "Assignee"), and Borrower and each
guarantor agrees that it shall execute, or cause to be executed, such
documents. including without limitation amendments to this Agreement and to
any other documents, instruments and agreements executed in connection
herewith as the Bank shall deem necessary to effect the foregoing. In
addition, at the request of the Bank and any such Assignee, the Borrower shall
issue one or more new promissory notes, as applicable, to any such Assignee
and, if the Bank has retained any of its rights and obligations hereunder
following such assignment, to the Bank, which new promissory notes shall be
issued in replacement of, but not in discharge of the liability evidenced by the
Notes held by the Bank prior to such assignment and shall reflect the amount
of the respective commitments and Loans held by such Assignee and the Bank
after giving effect to such assignment. Upon the execution and delivery of
appropriate assignment documentation, amendments and any other
documentation required by the Bank in connection with such assignment, and
the payment by the Assignee of the purchase price agreed to by the Bank and
such Assignee, such Assignee shall be a party to this Agreement and shall
have all of the rights and obligations of the 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 the Bank pursuant to the assignment documentation between the
Bank and such Assignee, and the Bank shall be released from its obligations
hereunder and thereunder to a corresponding extent.
(c) The Bank shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to the Borrower or any
guarantor, to grant to one or more banks or other financial institutions (each a
"Participant") participating interests in the Bank"s obligation to lend
hereunder and/or any or all of the Loans held by the Bank hereunder. In the
event of any such grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Borrower, the Bank shall remain
responsible for the performance of its obligations hereunder and the Borrower
shall continue to deal solely and directly with the Bank in connection with the
Bank"s rights and obligations hereunder.
(d) The Bank may furnish any information concerning the Borrower in
its possession from time to time to prospective Assignees and Participants;
provided that the Bank shall require any such prospective Assignee or
Participant to agree in writing to maintain the confidentiality of such
information.
Section 8.10. Severability. In the event that any provision of this
Agreement or the application thereof to any Person, property or circumstance
shall be held to any extent to be invalid or unenforceable, the remainder of
this Agreement, and the application of such provision to Persons, properties
and circumstances other than those as to which it has been held invalid or
unenforceable, shall not be affected thereby, and each provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by
law.
Section 8.11. Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.12. Consent to Jurisdiction. The Borrower irrevocably
submits to the jurisdiction of any Massachusetts court or any federal court
sitting within the Commonwealth of Massachusetts over any suit, action or
proceeding arising out of or relating to this Agreement, the Notes or the
Security Agreement. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in such a court
and any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. The Borrower agrees that final judgment in any such
suit, action or proceeding brought in such a court shall be enforced in any
court of proper jurisdiction by a suit upon such judgment, provided that
service of process in such action, suit or proceeding shall have been effected
upon the Borrower in one of the manners specified in the following paragraph
of this Section 8.12 or as otherwise permitted by law.
The Borrower hereby consents to process being served in any suit,
action or proceeding of the nature referred to in the preceding paragraph of
this Section 8.12 either (i) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to it at its address
set forth in Section 8.03 or (ii) by serving a copy thereof upon it at its
address set forth in Section 8.03. The Borrower irrevocably waives, to the
fullest extent permitted by law, all claims of error by reason of any service
as contemplated herein and agrees that such service shall (x) be deemed in every
respect effective service upon the Borrower in any such suit, action or
proceeding and (y) to the fullest extent permitted by law, be taken and held to
be valid personal service upon and personal delivery to the Borrower, as the
case may be.
Section 8.13. Governing Law. This Agreement and the Notes shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Massachusetts.
Section 8.14. Waiver of Jury Trial. THE BORROWER AND THE
BANK MUTUALLY HEREBY 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, THE NOTES, THE SECURITY AGREEMENT
OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR THE BANK TO ACCEPT THE NOTES AND MAKE THE LOANS.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed, as an instrument under seal, by their respective
officers thereunto duly authorized as of the date first above written.
CTC COMMUNICATIONS CORP.
By: /s/ Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
Treasurer
FLEET NATIONAL BANK
By: /s/ Xxxxx X. XxXxxxxxx
Xxxxx X. XxXxxxxxx
Vice President
EXHIBIT A
CTC COMMUNICATIONS CORP.
SECURED REVOLVING NOTE
$15,000,000.00 Boston, Massachusetts
November 7, 1997
FOR VALUE RECEIVED, the undersigned CTC COMMUNICATIONS CORP., a
Massachusetts corporation (the "Borrower"), hereby promises to pay to the
order of FLEET NATIONAL BANK (the "Bank") as provided below the principal
amount of Fifteen Million Dollars ($15,000,000.00), or, if less, the
aggregate Revolving Loans under and as defined in Section 2.01 of that
certain Revolving and Term Loan Agreement dated today"s date (the "Loan
Agreement") between the Borrower and the Bank, together with interest on the
unpaid principal balance from time to time hereunder ("Principal"), payable
at the rate or rates, and at the times and in the manner, all as hereinafter
set forth, from the date hereof until payment in full of all Principal and
interest hereunder.
All unpaid Principal shall be repaid on or before the Expiration Date
(as defined in the Loan Agreement).
Interest on all unpaid Principal shall be due and payable in arrears, on
the dates, and at maturity, whether scheduled, by acceleration or otherwise,
or upon the earlier payment of this Note in full, at the rate or rates, and
in the manner, all as set forth in the Loan Agreement.
Overdue Principal and, at the Bank"s option, to the extent permitted by
law, overdue interest shall bear interest at a rate which at all times shall
be equal to four percent (4%) per annum plus the interest rate otherwise
then in effect hereunder, compounded monthly and payable on demand. As used
herein, "Prime Rate" means the variable per annum rate of interest so
designated from time to time by the Bank as its prime rate. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer. The effective rate of interest under
this Note, if based on the Prime Rate, shall change on the same day on which
any change in the Prime Rate is effective. Interest shall be calculated on
the basis of actual days elapsed and a 360-day year.
If the entire amount of any required Principal and/or interest is not
paid in full within ten (10) days after the same is due (other than
repayment on demand or acceleration), the Borrower shall pay to the Bank a
late fee equal to five percent (5%) of the required payment.
Payments of both Principal and interest shall be made at the banking
office of the Bank located at Xxx Xxxxxxx Xxxxxx, Xxxxxx, XX 02110-2010),
in lawful currency of the United States of America in immediately available
funds, or at such other address as the Bank may from time to time designate.
Every maker, endorser and guarantor hereof, or of the indebtedness
evidenced hereby (a) waives notice of and consents to any and all advances,
settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and
all receipts, substitutions, additions, exchanges and releases of
collateral, and any and all additions, substitutions and releases of any
person primarily or secondarily liable, (b) waives presentment, demand,
notice, protest and all other demands, notices and suretyship defenses
generally in connection with the delivery, acceptance, performance, default
or enforcement of or under this Note, and (c) agrees to pay, to the extent
permitted by law, all costs and expenses, including, without limitation,
reasonable attorneys" fees, incurred or paid by the Bank in enforcing this
Note and any collateral or security therefor on default, whether or not
litigation is commenced.
This Note is the Line of Credit Note referred to in and is entitled to
the benefits and security of the Loan Agreement and of the Security
Agreement (as defined in the Loan Agreement). This Note may be prepaid, and
the maturity hereof may be accelerated upon the occurrence of an Event of
Default, all as provided in the Loan Agreement.
THE BORROWER AND THE BANK MUTUALLY HEREBY 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
NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS
NOTE AND MAKE THE LOANS EVIDENCED HEREBY.
Executed as an instrument under seal, as of the day and year
first above written.
CTC COMMUNICATIONS CORP.
WITNESS:
By:
__________________________
Xxxx X. Xxxxxxxxx
Treasurer
___________________
EXHIBIT B
CTC COMMUNICATIONS CORP.
SECURED TERM NOTE
$___________________ Boston, Massachusetts
Dated: ________________
FOR VALUE RECEIVED, the undersigned CTC COMMUNICATIONS CORP.,
a Massachusetts corporation (the "Borrower"), hereby promises to
pay to the order of FLEET NATIONAL BANK (the "Bank") as provided
below the principal amount of _________________ Dollars
($_________________), together with interest on the unpaid
principal balance from time to time hereunder ("Principal"),
payable at the rate or rates, and at the times and in the manner,
all as hereinafter set forth, from the date hereof until payment in
full of all Principal and interest hereunder.
This Note evidences a Term Loan under and as defined in
Section 2.02 of that certain Revolving and Term Loan Agreement
dated November 7, 1997 (the "Loan Agreement") between the Borrower
and the Bank. The Term Loan Maturity Date (as defined in the Loan
Agreement) for the Term Loan evidenced hereby is
____________________.
The Principal of the Term Loan evidenced hereby shall be
repaid in (i)_______________ (___) equal consecutive quarterly
installments, each in an amount equal to the Installment Amount (as
defined below), the first such installment being due
______________, 19__ and the remaining such installments being due
on or about the corresponding date of each succeeding quarterly
period, and (ii) a final installment in an amount equal to the
unpaid Principal hereof which shall be due and payable on the Term
Loan Maturity Date set forth above. As used herein, "Installment
Amount" means $__________________, being the dollar amount equal to
the initial Principal hereof divided by the number of principal
payment dates hereunder (including the Term Loan Maturity Date).
Interest on all unpaid Principal shall be due and payable in
arrears, on the dates, and at maturity, whether scheduled, by
acceleration or otherwise, or upon the earlier payment of this Note
in full, at the rate or rates, and in the manner, all as set forth
in the Loan Agreement.
Overdue Principal and, at the Bank"s option, to the extent
permitted by law, overdue interest shall bear interest at a rate
which at all times shall be equal to four percent (4%) per annum
plus the interest rate otherwise then in effect hereunder,
compounded monthly and payable on demand. As used herein, "Prime
Rate" means the variable per annum rate of interest so designated
from time to time by the Bank as its prime rate. The Prime Rate is
a reference rate and does not necessarily represent the lowest or
best rate being charged to any customer. The effective rate of
interest under this Note, if based on the Prime Rate, shall change
on the same day on which any change in the Prime Rate is effective.
Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
If the entire amount of any required Principal and/or interest
is not paid in full within ten (10) days after the same is due
(other than repayment on demand or acceleration), the Borrower
shall pay to the Bank a late fee equal to five percent (5%) of the
required payment.
Payments of both Principal and interest shall be made at the
banking office of the Bank located at Xxx Xxxxxxx Xxxxxx, Xxxxxx,
XX 02110-2010), in lawful currency of the United States of America
in immediately available funds, or at such other address as the
Bank may from time to time designate.
Every maker, endorser and guarantor hereof, or of the
indebtedness evidenced hereby (a) waives notice of and consents to
any and all advances, settlements, compromises, favors and
indulgences (including, without limitation, any extension or
postponement of the time for payment), any and all receipts,
substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person
primarily or secondarily liable, (b) waives presentment, demand,
notice, protest and all other demands, notices and suretyship
defenses generally in connection with the delivery, acceptance,
performance, default or enforcement of or under this Note, and (c)
agrees to pay, to the extent permitted by law, all costs and
expenses, including, without limitation, reasonable attorneys"
fees, incurred or paid by the Bank in enforcing this Note and any
collateral or security therefor on default, whether or not
litigation is commenced.
This Note is one of the Term Notes referred to in and is
entitled to the benefits and security of the Loan Agreement and of
the Security Agreement (as defined in the Loan Agreement). This
Note may be prepaid, and the maturity hereof may be accelerated
upon the occurrence of an Event of Default, all as provided in the
Loan Agreement.
THE BORROWER AND THE BANK MUTUALLY HEREBY 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
NOTE OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS
NOTE AND MAKE THE LOANS EVIDENCED HEREBY.
Executed as an instrument under seal, as of the day and year
first above written.
WITNESS CTC COMMUNICATIONS CORP.
By:
Xxxx X. Xxxxxxxxx
Treasurer
