EXHIBIT 10.32
CITIZENS BANK OF MASSACHUSETTS
LOAN AND SECURITY AGREEMENT
(ALL ASSETS)
March 27, 2001
1. SECURITY INTEREST. Webhire, Inc. a Delaware corporation
(hereinafter referred to as the "Borrower"), for valuable consideration, receipt
whereof is hereby acknowledged, hereby grants to Citizens Bank of Massachusetts,
a Massachusetts bank, the secured party hereunder (hereinafter called the
"Bank"), a continuing security interest in and to, and assigns to Bank, all
property of the Borrower including the following property of the Borrower,
wherever located and whether now owned or hereafter acquired:
(a) all inventory, including all goods, merchandise, raw materials,
goods and work in process, finished goods, and other tangible personal property
now owned or hereafter acquired and held for sale or lease or furnished or to be
furnished under contracts of service or used or consumed in Borrower's business
(all hereinafter called the "Inventory");
(b) all accounts (as defined in the Uniform Commercial Code,
hereinafter "Accounts"), contracts, contract rights, notes, bills, drafts,
acceptances, general intangibles (including without limitation registered and
unregistered tradenames, copyrights, customer lists, goodwill, computer
programs, computer records, computer software, computer data, trade secrets,
trademarks, patents, ledger sheets, files, records, data processing records
relating to any Accounts and all tax refunds of every kind and nature to which
Borrower is now or hereafter may become entitled to, no matter how arising),
instruments, documents, chattel paper, securities, security entitlements,
security accounts, investment property, deposit accounts, choses in action, and
all other debts, obligations and liabilities in whatever form, owing to Borrower
from any person, firm or corporation or any other legal entity, whether now
existing or hereafter arising, now or hereafter received by or belonging or
owing to Borrower, for goods sold by it or for services rendered by it, or
however otherwise same may have been established or created, all guarantees and
securities therefor, all right, title and interest of Borrower in the
merchandise or services which gave rise thereto, including the rights of
reclamation and stoppage in transit, all rights to replevy goods, and all rights
of an unpaid seller of merchandise or services (all hereinafter called the
"Receivables");
(c) all machinery, equipment, fixtures and other goods (as defined
in Article 9 of the Uniform Commercial Code) whether now owned or hereafter
acquired by the Borrower and wherever located, all replacements and
substitutions therefor or accessions thereto and all proceeds thereof (all
hereinafter called the "Equipment");
(d) the Pledged Cash; and
-1-
(e) all proceeds and products of all of the foregoing in any form,
including, without limitation, all proceeds of credit, fire or other insurance,
and also including, without limitation, rents and profits resulting from the
temporary use of any of the foregoing (which, with Inventory, Receivables and
Equipment are all hereinafter called "Collateral").
2. OBLIGATIONS SECURED; RELEASE OF PLEDGED CASH. (a) The security
interest granted hereby is to secure payment and performance of all debts,
liabilities and obligations of Borrower to Bank hereunder and also any and all
other debts, liabilities and obligations of Borrower to Bank of every kind and
description, direct or indirect, absolute or contingent, primary or secondary,
due or to become due, now existing or hereafter arising, whether or not such
obligations are related to the transactions described in this Agreement, by
class, or kind, or whether or not contemplated by the parties at the time of the
granting of this security interest, regardless of how they arise or by what
agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, and includes obligations to perform acts and refrain
from taking action as well as obligations to pay money including, without
limitation, all interest, fees, charges, expenses and overdrafts, and also
including, without limitation, all obligations and liabilities which Bank may
incur or become liable for, on account of, or as a result of, any transactions
between Bank and Borrower including any which may arise out of any letter of
credit, acceptance or similar instrument or obligation issued or caused to be
issued pursuant to this Agreement (all hereinafter called "Obligations").
(b) After the Conversion Event the Bank agrees to release the pledge
of the Pledged Cash.
3. BORROWER'S PLACES OF BUSINESS, INVENTORY LOCATIONS AND RETURNS
POLICY. Borrower warrants that Borrower has no places of business other than
that shown at the end of this Agreement, unless other places of business are
listed on Schedule "A", annexed hereto, in which event Borrower represents that
it has additional places of business at those locations set forth on Schedule
"A".
Borrower's principal executive office and the office where Borrower
keeps its records concerning its accounts, contract rights and other property,
is that shown at the end of this Agreement. All Inventory presently owned by
Borrower is stored at the locations set forth on Schedule "A".
Borrower will promptly notify Bank in writing of any change in the
location of any place of business or the location of any Inventory or the
establishment of any new place of business or location of Inventory or office
where its records are kept which would be shown in this Agreement if it were
executed after such change.
4. BORROWER'S ADDITIONAL REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants that:
(a) Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and shall hereafter
remain in good standing as a corporation in that state, and is duly qualified
and in good standing in every other state, and shall
-2-
hereafter remain duly qualified and in good standing, in which the failure to
qualify or become licensed can be reasonably be expected to have a material
adverse effect on the financial condition, business or operations of the
Borrower.
(b) Borrower's exact legal name is as set forth in this Agreement
and Borrower will not undertake or commit to undertake any act which will result
in a change of Borrower's legal name, without giving Bank at least thirty (30)
days' prior written notice of the same.
(c) The execution, delivery and performance of this Agreement, and
any other document executed in connection herewith, are within the Borrower's
corporate powers, have been duly authorized, are not in contravention of law or
the terms of the Borrower's charter, bylaws or other incorporation papers, or of
any indenture or material agreement or undertaking to which the Borrower is a
party or by which it or any of its properties may be bound.
(d) Borrower's Certificate of Incorporation and all amendments
thereto of Borrower have been duly filed and are in proper order. All capital
stock issued by Borrower and outstanding was and is properly issued and all
books and records of Borrower, including but not limited to its minute books,
bylaws and books of account, are accurate and up to date and will be so
maintained.
(e) Borrower owns all of the assets reflected in the most recent of
Borrower's financial statements provided to Bank, except assets sold or
otherwise disposed of in the ordinary course of business since the date thereof,
and such assets together with any assets acquired since such date, including
without limitation the Collateral, are free and clear of any lien, pledge,
security interest, charge, mortgage or encumbrance of any nature whatsoever,
except (i) the security interests and other encumbrances (if any) listed on
Schedule "B" annexed hereto, (ii) those leases set forth on Schedule "C" annexed
hereto, (iii) those liens permitted pursuant to Section 14(g) of this Agreement,
or (iv) liens and security interests in favor of Bank.
(f) Borrower has made or filed all tax returns, reports and
declarations relating to any material tax liability required by any jurisdiction
to which it is subject (any tax liability which may result in a lien on any
Collateral being hereby deemed material); has paid all taxes shown or determined
to be due thereon except those being contested in good faith and which Borrower
has, prior to the date of such contest, identified in writing to Bank as being
contested; and has made adequate provision for the payment of all taxes so
contested, so that no lien will encumber any Collateral, and in respect of
subsequent periods.
(g) Borrower (i) is subject to no charter, corporate or other legal
restriction, or any judgment, award, decree, order, governmental rule or
regulation or contractual restriction which could reasonably be expected to have
a material adverse effect on its financial condition, business or prospects, and
(ii) is in compliance with its charter documents and bylaws, all contractual
requirements by which it or any of its properties may be bound and all
applicable laws, rules and regulations (including without limitation those
relating to environmental protection) other than laws, rules or regulations the
validity or applicability of which it is contesting in good faith or provisions
of any of the foregoing the failure to comply with which
-3-
cannot reasonably be expected to materially adversely affect its financial
condition, business or prospects or the value of any Collateral.
(h) There is no action, suit, proceeding or investigation pending,
of which Borrower has received notice or, to Borrower's knowledge, threatened
against or affecting it or any of its assets before or by any court or other
governmental authority which, if determined adversely to it, would have a
material adverse effect on its financial condition, business or prospects or the
value of any Collateral.
(i) Borrower is in compliance with ERISA; no Reportable Event has
occurred and is continuing with respect to any Plan; and it has no unfunded
vested liability under any plan. The word "Plan" as used in this Agreement means
any employee plan subject to Title IV of the Employee Retirement Income Security
Act of 1974 ("ERISA") maintained for employees of Borrower, any subsidiary of
Borrower or any other trade or business under common control with Borrower
within the meaning of Section 414(c) of the Internal Revenue Code of 1986 or any
regulations thereunder.
5. LOANS AND OTHER FINANCIAL ACCOMMODATIONS.
(a) From time to time upon Borrower's request, so long as the sum of
the aggregate principal amount of all loans outstanding and the requested loan
does not exceed the lesser of (i) the Borrowing Base (as defined below), or (ii)
the Credit Limit (as defined below), Bank shall make such requested loan,
provided that there has not occurred and is not continuing an Event of Default
or an event which, with notice or the lapse of time or both, would constitute an
Event of Default.
(b) All loans shall bear interest and at the option of the Bank
shall be evidenced by and repayable in accordance with a revolving note drawn to
the order of Bank substantially the form of Exhibit 1 hereto (the "Note"), as
the same may hereafter be amended, supplemented or restated from time to time
and any note or notes issued in substitution therefor, but in the absence of the
Note shall be evidenced by Bank's records of loans and repayments as limited by
Section 7.
Interest will be charged to Borrower at a fluctuating rate which is
the daily equivalent to a rate equal to the Prime Rate, or at such other rate
agreed on from time to time by the parties, upon any balance owing to Bank at
the close of each day and shall be payable (i) on the first day of each month in
arrears; (ii) on termination of this Agreement pursuant to Section 19 hereof;
(iii) on acceleration of the time for payment of the Obligations pursuant to
Section 15 hereof; and (iv) on the date the Obligations are paid in full. The
rate of interest payable by Borrower shall be changed effective as of that date
in which a change in the Prime Rate becomes effective. Interest shall be
computed on the basis of the actual number of days elapsed over a year of three
hundred sixty (360) days. The term "Prime Rate" as used herein and in any
supplement and amendment hereto shall mean the per annum rate of interest
announced from time to time by Bank at its offices in Boston, Massachusetts, as
its Prime Rate (or if Bank ceases to announce a rate so designated, any similar
successor rate designated by Bank), it being understood that such rate is a
reference rate and not necessarily the lowest rate of interest
-4-
charged by Bank. Interest shall be payable in lawful money of the United States
of America to Bank, or as Bank shall direct, without set-off, deduction or
counterclaim monthly, in arrears, on the first day of each month, commencing on
the first day of the month next succeeding the date hereof.
(c) The term "Borrowing Base" as used herein shall mean the sum of
the following:
I. Prior to the Conversion Event:
(i) one hundred (100%) percent of the Pledged Cash.
II. After the Conversion Event:
(i) one hundred (100%) percent of the Pledged Cash (if still pledged
to the Bank), PLUS
(ii) seventy (70%) percent of the unpaid face amount of Final Amount
(as defined below) Qualified Accounts (as defined below) or such other
percentage thereof as may from time to time be fixed by Bank upon notice
to Borrower, if Bank determines in its reasonable judgment that there has
been a change in circumstances relating to any or all Accounts from those
circumstances in existence on or prior to the date hereof; PLUS
(iii) the lesser of (x) One Million ($1,000,000.00) Dollars, or (y)
fifty (50%) percent of the unpaid face amount of Deferred Amount (as
defined below) Qualified Accounts or such other percentage thereof as may
from time to time be fixed by Bank upon notice to Borrower, if Bank
determines in its reasonable judgment that there has been a change in
circumstances relating to any or all Accounts from these circumstances in
existence on or prior to the date hereof.
but in no event shall the sum of all loans plus the sum of the aggregate amount
undrawn on all letters of credit and acceptances be in excess of the Credit
Limit. As used herein "Pledged Cash" shall mean the collected funds on deposit
at the Bank subject only to a first lien in favor of the Bank. As used herein
"Final Amount" shall mean those accounts for which payment is due and all
services have been performed all as shown on the Borrower's accounts receivable
aging in the column entitled "Final Amount." As used herein "Deferred Amount"
shall mean those accounts owed for internet-based services (such as Webhire
Recruiter) and/or software maintenance services offered on a subscription basis,
for which payment is due, but not all services have yet been performed all as
shown on the Borrower's accounts receivable aging in the column entitled
"Deferred Amount Schedule." A sample of the Borrower's accounts receivable aging
relied upon by Bank in establishing the Borrowing Base is attached as Exhibit 4.
(d) The term "Credit Limit" as used herein shall mean an amount
equal to Three Million ($3,000,000.00) Dollars.
-5-
(e) The term "Conversion Event" as used herein shall mean provided
no event has occurred or failed to occur (and such occurrence or failure to
occur is then continuing) which event is or solely with the passage of time or
giving of notice (or both) would constitute an Event of Default, the Borrower
has provided the Bank with satisfactory evidence that the Borrower has satisfied
the conditions described on Exhibit 3 annexed hereto.
(f) Borrower hereby, authorizes and directs Bank, in Bank's sole
discretion (provided, however, Bank shall have no obligation to do so): (i) to
pay accrued interest as the same becomes due and payable pursuant to this
Agreement or pursuant to any note or other agreement between Borrower and Bank,
and to treat the same as a loan to Borrower, which shall be added to Borrower's
loan balance pursuant to this Agreement; (ii) to charge any of Borrower's
accounts under the control of Bank; or (iii) apply the proceeds of Collateral,
including, without limitation, payments on Accounts and other payments from
sales or lease of Inventory and any other funds to the payment of such items.
Bank shall promptly notify Borrower of any such charges or applications.
(g) The Borrowing Base formula set forth above is intended solely
for monitoring purposes. The making of loans, advances, and credits by Bank to
the Borrower in excess of the above described Borrowing Base formula is for the
benefit of the Borrower and does not affect the obligations of Borrower
hereunder; all such loans constitute Obligations and must be repaid by Borrower
in accordance with the terms of this Agreement.
(h) Borrower shall pay to Bank the principal amount of all loans as
follows:
(i) Borrowing Base Exceeded. Whenever the outstanding
principal balance of all loans exceed the Borrowing Base, Borrower
shall immediately pay to Bank the excess of the outstanding
principal balance of the loans over the Borrowing Base.
(ii) Payment in Full on Termination. On termination of this
Agreement, pursuant to Section 19 or acceleration of the obligations
pursuant to Section 15, Borrower shall pay to Bank the entire
outstanding principal balance of all loans and shall deliver to Bank
cash collateral in an amount equal to the aggregate of (A) amounts
then undrawn on all outstanding Letters of Credit issued pursuant to
this Agreement for the account of the Borrower, and (B) the amount
of all outstanding acceptances issued pursuant to this Agreement.
(i) Bank may, at any time and from time to time, in its reasonable
judgment establish reserves against the Accounts of the Borrower. The amount of
such reserves shall be subtracted from Qualified Accounts when calculating the
amount of the Borrowing Base.
(j) It is the intention of the parties hereto to comply strictly
with applicable usury laws, if any; accordingly, notwithstanding any provisions
to the contrary in this Agreement or any other documents or instruments executed
in connection herewith, in no event shall this Agreement or such documents or
instruments require or permit the payment, taking, reserving, receiving,
collecting or charging of any sums constituting interest under applicable laws
which
-6-
exceed the maximum amount permitted by such laws. If any such excess interest is
called for, contracted for, charged, paid, taken, reserved, collected or
received in connection with the Obligations or in any communication by Bank or
any other person to the Borrower or any other person, or in the event all or
part of the principal of the Obligations or interest thereon shall be prepaid or
accelerated, so that under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for, charged, taken,
collected, reserved, or received on the amount of principal actually outstanding
from time to time under this Agreement shall exceed the maximum amount of
interest permitted by applicable usury laws, if any, then in any such event it
is agreed as follows: (i) the provisions of this paragraph shall govern and
control, (ii) neither the Borrower nor any other person or entity now or
hereafter liable for the payment of the Obligations shall be obligated to pay
the amount of such interest to the extent such interest is in excess of the
maximum amount of interest permitted by applicable usury laws, if any, (iii) any
such excess which is or has been received notwithstanding this paragraph shall
be credited against the then unpaid principal balance hereof or, if the
Obligations have been or would be paid in full by such credit, refunded to the
Borrower, and (iv) the provisions of this Agreement and the other documents or
instruments executed in connection herewith, and any communication to the
Borrower, shall immediately be deemed reformed and such excess interest reduced,
without the necessity of executing any other document, to the maximum lawful
rate allowed under applicable laws as now or hereafter construed by courts
having jurisdiction hereof or thereof. Without limiting the foregoing, all
calculations of the rate of interest contracted for, charged, taken, collected,
reserved, or received in connection herewith which are made for the purpose of
determining whether such rate exceeds the maximum lawful rate shall be made to
the extent permitted by applicable laws by amortizing, prorating, allocating and
spreading during the period of the full term of the Obligations, including all
prior and subsequent renewals and extensions, all interest at any time
contracted for, charged, taken, collected, reserved or received. The terms of
this paragraph shall be deemed to be incorporated in every Loan Document and
communication relating to the Obligations.
(k) Unused Fee. In addition to any other fee or expense paid by the
Borrower on account of the Loans, the Borrower shall pay the Bank, an unused
facility fee of one-quarter of one (.25%) percent per annum on the average
monthly unused portion of the revolving credit based upon the Credit Limit which
unused facility fee shall be paid monthly.
6. DEFINITION OF QUALIFIED ACCOUNT. The term "Qualified Account", as
used herein, means an Account owing to Borrower which met the following
specifications at the time it came into existence and continues to meet the same
until it is collected in full:
(a) The Account is not more than ninety (90) days from the date of
the earlier of shipment or invoice thereof.
(b) The Account arose from the performance of services (whether or
not the services have yet been performed) or an outright sale of goods by
Borrower, such goods have been shipped to the account debtor, and Borrower has
possession of, or has delivered to Bank, shipping and delivery receipts
evidencing such shipment.
-7-
(c) The Account is not subject to any prior assignment, claim, lien,
or security interest, and Borrower will not make any further assignment thereof
or create any further security interest therein, nor permit Borrower's rights
therein to be reached by attachment, levy, garnishment or other judicial
process.
(d) The Account is not subject to setoff, credit, allowance or
adjustment by the account debtor, except discount allowed for prompt payment and
the account debtor has not complained as to his liability thereon and has not
returned any of the goods from the sale of which the Account arose.
(e) The Account arose in the ordinary course of Borrower's business
and did not arise from the performance of services or a sale of goods to a
supplier or employee of the Borrower.
(f) No notice of bankruptcy or insolvency of the account debtor has
been received by or is known to the Borrower.
(g) The Account is not owed by an account debtor whose principal
place of business is outside the United States of America unless specifically
consented to by the Bank.
(h) The Account is not owed by an entity which is a parent,
brother/sister, subsidiary or affiliate of Borrower.
(i) The account debtor is not located in the State of New Jersey or
in the State of Minnesota, unless Borrower has filed and shall file all legally
required Notice of Business Activities Reports with the New Jersey Division of
Taxation or the Minnesota Department of Revenue, as the case may be.
(j) The Account when aggregated with all of the Accounts of that
account debtor does not exceed thirty-five (35%) percent, or fifty (50%) percent
if pre-approved by the Bank, of the then aggregate of Qualified Accounts,
provided, however, this subsection shall not apply to investment-grade
customers, customers whose accounts are covered by satisfactory credit insurance
in favor of the Bank, or supported by a satisfactory letter of credit in favor
of the Bank.
(k) The Account is not evidenced by a promissory note.
(l) The Account did not arise out of any sale made on a xxxx and
hold, dating of more than thirty (30) days or delayed shipment basis.
(m) The Account does not arise out of a progress billing prior to
completion of the order therefor.
(n) Bank, in accordance with its normal credit policies, has not
deemed the Account to be unacceptable for any reason.
-8-
PROVIDED THAT if at any time twenty-five (25%) percent or more of the aggregate
amount of the Accounts due from any account debtor are unpaid in whole or in
part more than ninety (90) days from the respective earlier dates of shipment of
product or performance of services, or the date on which payment is due, from
and after such time none of the Accounts (then existing or hereafter arising)
due from such account debtor shall be deemed to be Qualified Accounts until such
time as all Accounts due from such account debtor are (as a result of actual
payments received thereon) no more than ninety (90) days from the earlier date
of shipment or invoice; Accounts payable by Borrower to an account debtor shall
be netted against Accounts due from such account debtor and the difference (if
positive) shall constitute Qualified Accounts from such account debtor for
purposes of determining the Borrowing Base (notwithstanding paragraph (d)
above); characterization of any Account due from an account debtor as a
Qualified Account shall not be deemed a determination by Bank as to its actual
value nor in any way obligate Bank to accept any Account subsequently arising
from such account debtor to be, or to continue to deem such Account to be, a
Qualified Account; it is Borrower's responsibility to determine the
creditworthiness of account debtors and all risks concerning the same and
collection of Accounts are with Borrower; and all Accounts whether or not
Qualified Accounts constitute Collateral.
7. BANK'S REPORTS. After the end of each month, Bank will render to
Borrower a statement of Borrower's loan account with Bank hereunder, showing all
applicable credits and debits. Each statement shall be considered correct and to
have been accepted by Borrower and prima facie evidence in respect of all
charges, debits and credits of whatsoever nature contained therein under or
pursuant to this Agreement, and the closing balance shown therein, unless
Borrower notifies Bank in writing of any discrepancy within thirty (30) days
from the mailing by Bank to Borrower of any such monthly statement.
8. CONDITIONS OF LENDING.
(a) The obligation of Bank to make the initial loan hereunder shall
be subject to the condition precedent that Bank shall have received all of the
following, each in form and substance satisfactory to Bank:
(i) This Agreement, properly executed on behalf of Borrower.
(ii) The Note drawn to the order of Bank in the face amount of
the Credit Limit.
(iii) A true and correct copy of any and all leases pursuant
to which Borrower is leasing any real property, together with a landlord's
consent and waiver with respect to the Massachusetts real property.
(iv) Except for searches in Massachusetts which shall be
complete and satisfactory to the Bank, evidence of the commencement of
searches of appropriate filing offices with respect (A) to state and
federal tax liens, if any, in effect against Borrower, (B) financing
statements filed and in effect against Borrower.
-9-
(v) The Bank has duly filed all financing statements necessary
to perfect the security interests granted hereunder, to the extent the
security interests are capable of being perfected by filing.
(vi) A certificate of the Secretary or an Assistant Secretary
of the Borrower, certifying as to (A) the resolutions of the directors
authorizing the execution, delivery and performance of this Agreement and
related documents, (B) the Certificate of Incorporation and By-Laws of
Borrower, and (C) the signatures of the officers or agents of Borrower
authorized to execute and deliver this Agreement and other instruments,
agreements and certificates, including loan requests, on behalf of
Borrower.
(vii) A current certificate issued by the Secretary of State
of the state of the Borrower's incorporation, certifying that Borrower is
in compliance with all corporate organizational requirements of such
state.
(viii) Evidence that Borrower is duly licensed or qualified to
transact business in all jurisdictions in which the failure to qualify or
become licensed can be reasonably be expected to have a material adverse
effect on the financial condition, business or operations of the Borrower.
(ix) An opinion of counsel to the Borrower, addressed to Bank.
(x) Certificates of the insurance required hereunder, with all
hazard insurance containing a lender's loss payable endorsement in favor
of Bank.
(xi) A Pledge Agreement, properly executed by the Borrower
granting the Bank a perfected first lien in and to the Pledged Cash.
(xii) Payment of the fees due through the date of the initial
loan and expenses incurred by Bank through such date required to be paid
by Borrower pursuant to this Agreement.
(xiii) A Borrowing Base Certificate which indicates that the
Borrower has the necessary loan availability to pay all existing secured
lenders.
(xiv) Such other documents, instruments and agreements as Bank
may reasonably require.
(b) The obligation of Bank to make each loan shall be subject to the
further conditions precedent on such date:
(i) the representations and warranties contained in Sections 3
and 4 hereof are correct on and as of the date of such loan as though made
on and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date; and
-10-
(ii) no event has occurred and is continuing, or would result
from such loan which constitutes an Event of Default or which, with notice
or the passage of time or both, would constitute an Event of Default.
9. CAPITAL ADEQUACY.
(a) If Bank shall reasonably determine that, after the date hereof,
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank or its parent
corporation with any requirement or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(i) shall subject Bank or its parent corporation to any tax,
duty or other similar charge with respect to the loans or the Note or
shall change the basis of taxation of payments to Bank or its parent
corporation of the Obligations or the principal of or interest on the
loans or of any other amounts due under this Agreement in respect of the
loans or the Note (except for any change in respect of any tax imposed on
the overall income of Bank or its parent corporation); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal Reserve
System) against assets of, deposits with or for the account of, or credit
extended by, Bank or its parent corporation or shall impose on Bank or its
parent corporation any other condition affecting the loans or the Note;
and the result of any of the foregoing is to increase the cost to Bank or its
parent corporation of making or maintaining any loans, or to reduce the amount
of any sum received or receivable by Bank or its parent corporation under this
Agreement or the Note with respect thereto, by an amount deemed by Bank or its
parent corporation to be material, then upon demand by Bank, Borrower shall pay
to Bank such additional amount or amounts as will compensate Bank or its parent
corporation for such increased cost or reduction.
(b) If Bank shall reasonably determine that the adoption after the
date hereof of any applicable law, rule or regulation regarding capital
adequacy, or any change therein after the date hereof, any change after the date
hereof in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank or its parent corporation with
any guideline or request issued after the date hereof regarding capital adequacy
(whether nor not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's or the Bank's parent corporation's capital as a consequence of the
loans or the Bank's obligations hereunder to a level below that which the Bank
or its parent corporation could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies with respect to
capital adequacy and those of the Bank's parent corporation) by an amount
reasonably deemed to the Bank or its parent
-11-
corporation to be material, then from time to time on demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank or its parent corporation for such reduction.
(c) Bank shall allocate such cost increases or reductions in its
returns among its customers reasonably and in good faith and on an equitable
basis. Notwithstanding anything to the contrary contained herein, the Borrower
shall not have any obligation to pay to the Bank amounts owing under this
section unless, at the time it requests such compensation, it is the policy or
general practice of the Bank to request compensation for comparable costs in
similar circumstances under other comparable loan agreements. Certificates of
the Bank sent to the Borrower from time to time claiming compensation under this
section, stating the reason therefor and setting forth in reasonable detail the
calculation of the additional amount or amounts to be paid to the Bank hereunder
shall be conclusive absent manifest error. In determining such amounts, the Bank
or its parent corporation may use any reasonable averaging and attribution
methods consistent with the other provisions of this section.
10. COLLECTIONS; SET OFF; NOTICE OF ASSIGNMENT; EXPENSES; POWER OF
ATTORNEY.
(a) Borrower will immediately, upon receipt of all checks, drafts,
cash and other remittances in payment of any Inventory sold or in payment or on
account of Borrower's accounts, contracts, contract rights, notes, bills,
drafts, acceptances, general intangibles, choses in action and all other forms
of obligations, deliver the same to Bank accompanied by a remittance report in
form specified by Bank. Said proceeds shall be delivered to Bank in the same
form received except for the endorsement of Borrower where necessary to permit
collection of items, which endorsement Borrower agrees to make. Bank will credit
(conditional upon final collection) all such payments against the principal or
interest of any loans secured hereby. The order and method of such application
shall be in the sole discretion of Bank and any portion of such funds which Bank
elects not to so apply shall be paid over from time to time by Bank to Borrower.
Bank will at all times have the right to require Borrower (i) to enter into a
lockbox arrangement with Bank for the collection of such remittances and
payments, or (ii) to maintain its primary deposit accounts at Bank, or, in the
alternative, at another financial institution which has agreed to accept drafts
drawn on it by Bank under a written depository transfer agreement with Bank and
to block Borrower's account and waive its rights as against such account.
(b) Borrower or any guarantor hereby grant to Bank a lien, security
interest and right of setoff as security for all liabilities and Obligations to
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 Bank or any entity in the control of Citizens
Financial Group, Inc., or in transit to any of them. At any time, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or Obligation of Borrower or any guarantor even though unmatured
and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS
-12-
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
(c) Bank may at any time, after the occurrence and during the
continuance of an Event of Default or an event which, with notice or the passage
of time or both, would constitute an Event of Default, notify account debtors
that Collateral has been assigned to Bank and that payments shall be made
directly to or as directed by Bank. Upon request of Bank at any time, Borrower
will so notify such account debtors and will indicate on all xxxxxxxx to such
account debtors that their Accounts must be paid directly to or as directed by
Bank. Bank shall have full power to collect, compromise, endorse, sell or
otherwise deal with the Collateral or proceeds thereof in its own name or in the
name of Borrower; provided that Bank shall comply with the provisions of Section
15(c).
(d) Subject to the limitations set forth in the Bank's Commitment
Letter, dated March 8, 2001, to Borrower, Borrower shall pay to Bank within five
(5) days of demand any and all reasonable counsel fees and other reasonable
expenses incurred by Bank in connection with the preparation, interpretation,
enforcement, administration or amendment of this Agreement, or of any documents
relating thereto, and any and all reasonable expenses, including, but not
limited to, a collection charge on all Accounts collected, all attorneys' fees
and expenses, and all other expenses of like or unlike nature which may be
expended by Bank to obtain or enforce payment of any Account either as against
the account debtor, Borrower, or any guarantor or surety of Borrower or in the
prosecution or defense of any action or concerning any matter growing out of or
connected with the subject matter of this Agreement, the Obligations or the
Collateral or any of Bank's rights or interests therein or thereto, including,
without limiting the generality of the foregoing, any counsel fees or expenses
incurred in any bankruptcy or insolvency proceedings and all costs and expenses
incurred or paid by Bank in connection with the administration, supervision,
protection or realization on any security held by Bank for the debt secured
hereby, whether such security was granted by Borrower or by any other person
primarily or secondarily liable (with or without recourse) with respect to such
debt, and all costs and expenses incurred by Bank in connection with the
defense, settlement or satisfaction of any action, claim or demand asserted
against Bank in connection with the debt secured hereby, all of which amounts
shall be considered advances to protect Bank's security, and shall be secured
hereby. At its option, and without limiting any other rights or remedies, Bank
may at any time pay or discharge any taxes, liens, security interests or other
encumbrances at any time levied against or placed on any of the Collateral, and
may procure and pay any premiums on any insurance required to be carried by
Borrower, and provide for the maintenance and preservation of any of the
Collateral, and otherwise take any action reasonably deemed necessary to Bank to
protect its security and all amounts expended by Bank in connection with any of
the foregoing matters, including reasonable attorneys' fees, shall be considered
obligations of Borrower and shall be secured hereby.
(e) Borrower does hereby make, constitute and appoint any officer or
agent of Bank as Borrower's true and lawful attorney-in-fact, with power to
endorse the name of Borrower or any of Borrower's officers or agents upon any
notes, checks, drafts, money orders, or other instruments of payment (including
payments payable under any policy of insurance on the
-13-
Collateral) or Collateral that may come into possession of Bank in full or part
payment of any amounts owing to Bank; to sign and endorse the name of Borrower
or any of Borrower's officers or agents upon any invoice, freight or express
xxxx, xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts, and any
instrument or documents relating thereto or to Borrower's rights therein; to
give written notice to such office and officials of the United States Post
Office to effect such change or changes of address so that all mail addressed to
Borrower may be delivered directly to Bank; granting upon Borrower's said
attorney full power to do any and all things necessary to be done in and about
the premises as fully and effectually as Borrower might or could do, and hereby
ratifying all that said attorney shall lawfully do or cause to be done by virtue
hereof. Neither Bank nor the attorney shall be liable for any acts or omissions
nor for any error of judgment or mistake, except for their gross negligence or
willful misconduct. This power of attorney shall be irrevocable for the term of
this Agreement and all transactions hereunder and thereafter as long as Borrower
may be indebted to Bank.
11. FINANCING STATEMENTS. At the request of Bank, Borrower will join
with Bank in executing one or more Financing Statements pursuant to the Uniform
Commercial Code or other notices appropriate under applicable law in form
satisfactory to Bank and will pay the cost of filing the same in all public
offices wherever filing is deemed by Bank to be necessary or desirable. A
legible carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement. The Borrower authorizes the Bank to file a
financing statement describing the Collateral.
12. BORROWER'S REPORTS.
(a) After the Conversion Event, Borrower shall deliver to Bank,
within thirty (30) days of month end, a schedule in form and content
satisfactory to Bank describing the invoices issued by Borrower since the last
schedule submitted to Bank. The schedules to be provided under this subsection
are solely for the convenience of Bank in administering this Agreement and
maintaining records of the Collateral. Borrower's failure to provide Bank with
any such schedule shall not affect the security interest of Bank in such
Accounts.
(b) Borrower shall cause all of its invoices, including the copies
thereof, to be printed and to bear consecutive numbers and shall prepare and
issue its invoices in such consecutive numerical order. If requested by Bank,
all copies of invoices not previously delivered to Bank shall be delivered to
Bank with each schedule of Accounts. Copies of all invoices which are voided or
canceled or which for any other reason do not evidence an Account shall be
included in such delivery. If any invoice or copy thereof is lost, destroyed or
otherwise unavailable, Borrower shall account in writing, in form satisfactory
to Bank, for such missing invoice.
(c) Within thirty (30) calendar days after the end of each month or
on such other more frequent basis as may be required by Bank from time to time
after the occurrence of an Event of Default and while same is continuing,
Borrower shall submit to Bank an aging report in form satisfactory to Bank
showing the amounts due and owing on all Accounts according to Borrower's
records as of the close of such month or such shorter period as may reasonably
be
-14-
required by Bank from time to time after the occurrence of an Event of Default
and while same is continuing, together with such other information as Bank may
reasonably require. If Borrower's monthly aging reports are prepared by an
accounting service or other agent, Borrower hereby authorizes such service or
agent to deliver such aging reports and any other related documents to Bank.
(d) Within thirty (30) calendar days after the end of each month or
on such other basis as may be required by Bank from time to time after the
occurrence of an Event of Default and while same is continuing, Borrower shall
submit to Bank an accounts payable aging report in form satisfactory to Bank
showing the amounts due and owing on all accounts payable according to
Borrower's records as of the close of such month or such shorter period as may
be reasonably required by Bank from time to time after the occurrence of an
Event of Default and while same is continuing, together with such other
information as Bank may reasonably require. If Borrower's monthly accounts
payable aging reports are prepared by an accounting service or other agent,
Borrower hereby authorizes such service or agent to deliver such accounts
payable aging reports and any other related documents to Bank.
(e) Borrower shall deliver to Bank all documents, as frequently as
indicated below, or at such other times as Bank may reasonably request, and all
other documents and information reasonably requested by Bank:
--------------------------------------------------------------------------------------------------------------------------
DOCUMENT FREQUENCY DUE
--------------------------------------------------------------------------------------------------------------------------
(i) A Borrowing Base Certificate, including cash After the Conversion Event Monthly within fifteen
receipts, credit memos, sales, debit memos, the (15) days after the end of each calendar month.
unpaid loan balance, new borrowing requests and
the adjusted loan balance
--------------------------------------------------------------------------------------------------------------------------
(ii) List of names and addresses of account debtors Annually, within sixty (60) days after the end of
to whom Borrower has made sales during the each fiscal year of Borrower
previous fiscal year
--------------------------------------------------------------------------------------------------------------------------
(iii) Reconciliation report, in form satisfactory to Monthly within thirty (30) days after the end of
Bank, showing all accounts, collections, each calendar month.
payments, credits, and extensions since the
preceding report
--------------------------------------------------------------------------------------------------------------------------
(iv) Projections of Borrower's balance sheet, Annually, within thirty (30) days after the end of
statement of profit and loss and cash flow each fiscal year of the Borrower
for the next succeeding fiscal year broken
down on a month to month basis
--------------------------------------------------------------------------------------------------------------------------
(v) A listing of the names and addresses of all Annually, within sixty (60) days after the end of
suppliers and vendors from whom Borrower has each fiscal year of Borrower
made purchases in excess of $5,000.00 during the
previous fiscal year, together with a listing of
any other suppliers or vendors from whom
Borrower expects to make purchases
during the succeeding fiscal year
--------------------------------------------------------------------------------------------------------------------------
-15-
--------------------------------------------------------------------------------------------------------------------------
(vi) Notice of noncompliance with the Immediately upon learning of such
provisions of this Agreement noncompliance, or if any representation or
warranty contained herein was not true or accurate
as of the date it was made or as of the date to
which it relates
--------------------------------------------------------------------------------------------------------------------------
(vii) Compliance Certificate in the form As soon as available and in any event within sixty
annexed hereto as Exhibit 2 (60) days after the close of each quarterly period
of Borrower's fiscal year
--------------------------------------------------------------------------------------------------------------------------
(f) Borrower will furnish Bank as soon as available, and in any
event within thirty (30) days after the close of each calendar month period of
its fiscal year, a balance sheet as of the end of such period, and a statement
of income and retained earnings for the period commencing at the end of the
previous fiscal year and ending with the end of such period, and a statement of
cash flows of the Borrower for the portion of the fiscal year ended with the
last day of such period, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
previous fiscal year, and all prepared in accordance with generally accepted
accounting principles consistently applied, certified by the chief financial
officer of the Borrower (subject to year end adjustment).
(g) Borrower will furnish Bank as soon as available, and in any
event within sixty (60) days after the close of each quarterly period of its
fiscal year, a balance sheet as of the end of such period, and a statement of
income and retained earnings for the period commencing at the end of the
previous fiscal year and ending with the end of such period, and a statement of
cash flows of the Borrower for the portion of the fiscal year ended with the
last day of such period, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
previous fiscal year, and all prepared in accordance with generally accepted
accounting principles consistently applied, certified by the chief financial
officer of the Borrower (subject to year end adjustment).
(h) Borrower will furnish Bank, annually, as soon as available, and
in any event within one hundred and five (105) days after the end of each fiscal
year of Borrower, a balance sheet as of the end of such fiscal year, and a
statement of income and retained earnings for such fiscal year, and a statement
of cash flows for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period in
the prior fiscal year, and all prepared in accordance with generally accepted
accounting principles consistently applied, accompanied by an opinion thereon
acceptable to Bank by independent public accountants selected by the Borrower
and reasonably acceptable to Bank.
(i) Borrower will promptly, upon receipt thereof, deliver to Bank,
copies of any reports submitted to the Borrower by Borrower's independent public
accountants in connection with the examination of the financial statements of
the Borrower made by such accountants (the so-called "Management Letter").
-16-
(j) After the Conversion Event, the Borrower shall deliver to the
Bank a Covenant Compliance Certificate in the form of Exhibit 2 indicating that
the Borrower is in compliance with this Agreement.
(k) In addition to the foregoing, the Borrower promptly shall
provide Bank with such other and additional information concerning the Borrower,
the Collateral, the operation of the Borrower's business, and the Borrower's
financial condition, including financial reports and statements, as Bank may
from time to time reasonably requested from the Borrower. All financial
information provided Bank by the Borrower shall be prepared in accordance with
generally accepted accounting or auditing principles (as applicable) applied
consistently in the preparation thereof and with prior periods to fairly reflect
the financial conditions of the Borrower at the close of, and its results of
operations for, the periods in question.
-17-
13. GENERAL AGREEMENTS OF BORROWER
(a) Borrower agrees to keep all the Collateral insured with coverage
and in amounts not less than that usually carried by one engaged in a like
business and in any event not less than that reasonably required by Bank with
loss payable to Bank and Borrower, as their interests may appear, hereby
appointing Bank as attorney for Borrower in obtaining, adjusting, settling and
canceling such insurance and endorsing any drafts. As further assurance for the
payment and performance of the Obligations, Borrower hereby assigns to Bank all
sums, including returns of unearned premiums, which may become payable under any
policy of insurance on the Collateral and Borrower hereby directs each insurance
company issuing any such policy to make payment of such sums directly to Bank.
(b) Bank or its agents have the right to inspect the Collateral and
all records pertaining thereto at reasonable intervals to be determined by Bank
and without hindrance or delay.
(c) Although, as above set forth, Bank has a continuing security
interest in all of Borrower's Collateral and in the proceeds thereof, Borrower
will at all times maintain as the minimum security hereunder a Borrowing Base
not less than the aggregate unpaid principal of all loans made hereunder and if
Borrower fails to do so, Borrower will immediately make the necessary reduction
in the unpaid principal amount of said loans so that the loans outstanding
hereunder do not in the aggregate exceed the Borrowing Base.
(d) Borrower will at all times keep accurate and complete records of
Borrower's Inventory, Accounts and other Collateral, and Bank, or any of its
agents, shall have the right to call at Borrower's place or places of business
at reasonable intervals to be determined by Bank, and without hindrance or
delay, to inspect, audit, check, and make extracts from any copies of the books,
records, journals, orders, receipts, correspondence which relate to Borrower's
Accounts, and other Collateral or other transactions, between the parties
thereto and the general financial condition of Borrower and Bank may remove any
of such records temporarily for the purpose of having copies made thereof.
Borrower shall pay to Bank all reasonable audit fees plus all travel and other
reasonable expenses incurred in connection with any such audit.
(e) Borrower will maintain a standard and modem system of accounting
which enables Borrower to produce financial statements in accordance with
generally accepted accounting principles and maintain records pertaining to the
Collateral that contain information as from time to time may be reasonably
requested by Bank.
(f) Borrower will maintain its corporate existence in good standing
and comply in all material respects with all material laws and regulations of
the United States or of any state or states thereof or of any political
subdivision thereof, or of any governmental authority which may be applicable to
it or to its business.
(g) Borrower will pay all real and personal property taxes,
assessments and charges and all franchises, income, unemployment, old age
benefits, withholding, sales and other
-18-
taxes assessed against it, or payable by it at such times and in such manner as
to prevent any penalty from accruing or any lien or charge from attaching to its
property; provided that nothing herein shall prohibit any "permitted protest" as
set forth in Section 14(f).
(h) Bank may in its own name or in the name of others communicate
with account debtors in order to verify with them to Bank's satisfaction the
existence, amount and terms of any Accounts.
(i) This Agreement may but need not be supplemented by separate
assignments of Accounts and if such assignments are given the rights and
security interests given thereby shall be in addition to and not in limitation
of the rights and security interests given by this Agreement.
(j) If any of Borrower's Accounts arise out of contracts with the
United States or any department, agency, or instrumentality thereof, Borrower
will immediately notify Bank thereof in writing and execute any instruments and
take any steps required by Bank in order that all monies due and to become due
under such contracts shall be assigned to Bank and notice thereof given to the
Government under the Federal Assignment of Claims Act.
(k) If any of Borrower's Accounts should be evidenced by promissory
notes, trade acceptances, or other instruments for the payment of money,
Borrower will immediately deliver same to Bank, appropriately endorsed to Bank's
order and, regardless of the form of such endorsement, Borrower hereby waives
presentment, demand, notice of dishonor, protest and notice of protest and all
other notices with respect thereto.
(l) Borrower will promptly pay when due all taxes and assessments
upon the Collateral or for its use or operation or upon this Agreement, or upon
any note or notes evidencing the Obligations, and will, at the request of Bank,
promptly furnish Bank the receipted bills therefor; provided that nothing herein
shall prohibit any "permitted protest" as set forth in Section 14(f). At its
option, Bank may discharge taxes, liens or security interests or other
encumbrances at any time levied or placed on the Collateral, may pay for
insurance on the Collateral and may pay for the maintenance and preservation of
the Collateral. Borrower agrees to reimburse Bank on demand for any payments
made, or any expenses incurred by Bank pursuant to the foregoing authorization,
and upon failure of the Borrower so to reimburse Bank, any such sums paid or
advanced by Bank shall be deemed secured by the Collateral and constitute part
of the Obligations.
(m) Borrower will immediately notify Bank upon receipt of
notification of any potential or known release or threat of release of hazardous
materials, hazardous waste, hazardous or toxic substance or oil from any site
operated by Borrower or of the incurrence of any expense or loss in connection
therewith or with the Borrower's obtaining knowledge of any investigation,
action or the 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 the Borrower may be liable. As used herein, the
terms "hazardous waste," "hazardous or toxic substance," "hazardous material" or
"oil" shall have the same meanings as defined and used in any of the following
(the "Acts"): the Comprehensive Environmental
-19-
Response, Compensation and Liability Act of 1980, 42 USC Sections 9601-9657, as
amended by the Superfund Accounts and Reauthorization Act of 1986; the Federal
Resource Conservation, and Recovery Act, 42 USC Sections 6901 et seq,; the
Hazardous Materials Transportation Act, 49 USC Sections 1801 et seq,; the Toxic
Substances Control Act, 15 USC Sections 2601 et seq,; the Federal Water
Pollution Control Act, 33 USC Sections 1251 et seq.; the Clean Air Act, 42 USC
Sections 741 et seq,; the Clean Water Act, 33 USC Section 701; the Safe Drinking
Water Act, 42 USC Sections 300(f)- 300(j); M.G.L.A. c. 21E (Massachusetts Oil
and Hazardous Material Release Prevention Act); M.G.L.A. c. 21C (Massachusetts
Hazardous Waste Management Act); and/or the regulations adopted and publications
promulgated pursuant to any of the Acts, as the same may be amended from time to
time.
(n) Except for Bank's gross negligence or willful misconduct,
Borrower will indemnify and save Bank harmless from all loss, costs, damage,
liability or expenses (including, without limitation, court costs and reasonable
attorneys' fees) that Bank may sustain or incur by reason of defending or
protecting this security interest or the priority thereof or enforcing the
Obligations, or in the prosecution or defense of any action or proceeding
concerning any matter growing out of or in connection with this Agreement and/or
any other documents now or hereafter executed in connection with this Agreement
and/or the Obligations and/or the Collateral. This indemnity shall survive the
repayment of the Obligations and the termination of Bank's agreement to make
loans available to Borrower and the termination of this Agreement.
(o) At the option of Bank, Borrower will furnish to Bank, from time
to time, within five (5) days after the accrual in accordance with applicable
law of Borrower's obligation to make deposits for F.I.C.A. and withholding taxes
and/or sales taxes, proof satisfactory to Bank that such deposits have been made
as required.
(p) Should Borrower fail to make any of such deposits or furnish
such proof then Bank may, in its sole and absolute discretion, (a) make any of
such deposits or any part thereof, (b) pay such taxes, or any part thereof, or
(c) setup such reserves as Bank, in its judgment, shall deem necessary to
satisfy the liability for such taxes. Each amount so deposited or paid shall
constitute an advance under the terms hereof, repayable on demand with interest,
as provided herein, and secured by all Collateral and any other property at any
time pledged by Borrower with Bank. Nothing herein shall be deemed to obligate
Bank to make any such deposit or payment or setup such reserve and the making of
one or more of such deposits or payments or the setting-up of such reserve shall
not constitute (i) an agreement on Bank's part to take any further or similar
action, or (ii) a waiver of any default by Borrower under the terms hereof.
(q) All advances by Bank to Borrower under this Agreement and under
any other agreement constitute one general revolving fluctuating loan, and all
indebtedness of Borrower to Bank under this and under any other agreement
constitute one general Obligation. Each advance to Borrower hereunder or
otherwise shall be made upon the security of all of the Collateral held and to
be held by Bank. It is distinctly understood and agreed that all of the rights
of Bank contained in this Agreement shall likewise apply, insofar as applicable,
to any modification of or supplement to this Agreement and to any other
agreements between Bank and Borrower. Any default of this Agreement by Borrower
shall constitute, likewise, a default by Borrower of any other existing
agreement with Bank, and any default by Borrower of any other
-20-
agreement with Bank shall constitute a default of this Agreement. The entire
Obligation of Borrower to Bank shall become due and payable upon termination of
this Agreement.
(r) Intentionally Deleted.
(s) Borrower will, at its expense, upon request of Bank promptly and
duly execute and deliver such documents and assurances and take such actions as
may be necessary or desirable or as Bank may request in order to correct any
defect, error or omission which may at any time be discovered or to more
effectively carry out the intent and purpose of this Agreement and to establish,
perfect and protect Bank's security interest, rights and remedies created or
intended to be created hereunder. Without limiting the generality of the above,
Borrower will join with Bank in executing financing and continuation statements
pursuant to the Uniform Commercial Code or other notices appropriate under
applicable Federal or state law in form satisfactory to Bank and filing the same
in all public offices and jurisdictions wherever and whenever requested by Bank.
(t) Borrower shall perform any and all further steps requested by
Bank to perfect Bank's security interest in Inventory, such as leasing
warehouses to Bank or its designee, placing and maintaining signs, appointing
custodians, maintaining stock records and transferring Inventory to warehouses.
A physical listing of all Inventory, wherever located, shall be taken by
Borrower at least annually and whenever requested by Bank if one or more of the
Events of Default exist.
(u) Borrower hereby grants to Bank for a term to commence on the
date of this Agreement and continuing thereafter until all debts and Obligations
of any kind or character owed to Bank are fully paid and discharged, a
non-exclusive irrevocable royalty-free license in connection with Bank's
exercise of its rights hereunder, to use, apply or affix any trademark, trade
name logo or the like and to use any patents, in which the Borrower now or
hereafter has rights, which license may be used by Bank upon and after the
occurrence of any one or more of the Events of Default, provided, however, that
such use by Bank shall be suspended if such Events of Default are cured. This
license shall be in addition to, and not in lieu of, the inclusion of all of
Borrower's trademarks, servicemarks, tradenames, logos, goodwill, patents,
franchises and licenses in the Collateral; in addition to the right to use said
Collateral as provided in this paragraph, Bank shall have full right to exercise
any and all of its other rights regarding Collateral with respect to such
trademarks, servicemarks, tradenames, logos, goodwill, patents, franchises and
licenses.
14. BORROWER'S NEGATIVE COVENANTS. Borrower will not at any time
without the written consent of Bank:
(a) (Tangible Capital Base to Senior Indebtedness) after the
Conversion Event permit the aggregate amount of its Tangible Capital Base to be
less than 1.0 times the amount of its Senior Indebtedness;
-21-
(b) (Cash Balances) after the Conversion Event permit the Borrower's
unencumbered cash on deposit with the Bank to be less than three (3) months
projected Cash Burn as shown on the projections prepared by the Borrower and
approved by the Bank.;
(c) (EBITDA) after the Conversion Event permit EBITDA for each three
(3) month period ending on the last day of any fiscal quarter to be less than
$1;
(d) (Liquidity) after the Conversion Event permit the ratio of
aggregate of unencumbered cash on deposit with the Bank and Qualified Accounts
to Senior Indebtedness to be less than 2.5 to 1.
(e) (Disposition of Collateral) sell, assign, exchange or otherwise
dispose of any of the Collateral, other than Inventory consisting of (i) scrap,
waste, defective goods and the like; (ii) obsolete goods; (iii) finished goods
sold in the ordinary course of business or any interest therein to any
individual, partnership, trust or other corporation; and (iv) Equipment which is
no longer required or deemed necessary for the conduct of Borrower's business,
so long as Borrower receives therefor a sum substantially equal to such
Equipment's fair value, remits such sum to Bank in accordance with the terms of
this Agreement or replaces such Equipment with other equipment of similar value
which is subject to a first security interest in Bank's favor;
(f) (Liens) create, permit to be created or suffer to exist any
lien, encumbrance or security interest of any kind ("Lien") upon any of the
Collateral or any other property of Borrower, now owned or hereafter acquired,
except: (i) landlords', carriers', warehousemen's, mechanics' and other similar
liens arising by operation of law in the ordinary course of Borrower's business;
(ii) arising out of pledge or deposits under worker's compensation, unemployment
insurance, old age pension, social security, retirement benefits or other
similar legislation; (iii) purchase money Liens arising in the ordinary course
of business (so long as the indebtedness secured thereby does not exceed the
lesser of the cost or fair market value of the property subject thereto, and
such Lien extends to no other property); (iv) Liens which total more than
$25,000.00 in aggregate other than those granted to the Bank provided such Liens
are subject and subordinate to the Bank in form and substance satisfactory to
the Bank; (v) Liens for unpaid taxes that are either (x) not yet due and
payable, or (y) are subject of permitted protests; (vi) Liens which are the
subject of permitted protests; (vii) those Liens and encumbrances set forth on
Schedule "B" annexed hereto; and (viii) in favor of Bank; the term "permitted
protests" as used herein means the right of the Borrower to protest any Lien
(other than a Lien that secures the Obligations), tax (other than payroll taxes
or taxes that are the subject of a federal or state tax lien) or rental payment,
provided that (x) a reserve with respect to such liability is established on the
books of the Borrower in an amount that is reasonably satisfactory to the Bank,
(y) any such protest is instituted and diligently prosecuted by the Borrower in
good faith, and (z) the Bank is satisfied that, while such protest is pending,
there will be no impairment of the enforceability, validity or priority of any
of the Liens of the Bank in and to the Collateral;
(g) (Dividends) pay any dividends on or make any distribution on
account of any class of Borrower's capital stock in cash or in property (other
than additional shares of such Stock), or redeem, purchase or otherwise acquire,
directly or indirectly, any of such stock, other
-22-
than repurchase of employee stock pursuant to repurchase rights provided in the
agreement which such stock was issued ("Employee Equity Agreements");
(h) (Loans) make any loans or advances to any individual,
partnership, trust or other corporation, including without limitation Borrower's
directors, officers and employees, except advances to officers or employees with
respect to expenses incurred by them in the ordinary course of their duties
which are properly reimbursable by Borrower or pursuant to Employee Equity
Agreements;
(i) (Guarantees) assume, guaranty, endorse or otherwise become
directly or contingently liable in respect of (including without limitation by
way of agreement, contingent or otherwise, to purchase, provide funds to or
otherwise invest in a debtor or otherwise to assure a creditor against loss),
any indebtedness which total more than $25,000.00 in the aggregate (except
guarantees by endorsement of instruments for deposit or collection in the
ordinary course of business and guarantees in favor of Bank) of any individual,
partnership, trust or other corporation;
(j) (Investments) (i) use any loan proceeds to purchase or carry any
"margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) or (ii) invest in or purchase any stock or securities of
any individual, partnership, trust or other corporation except (x) readily
marketable direct obligations of, or obligations guaranteed by, the United
States of America or any agency thereof or (y) time deposits with or
certificates of deposit issued by the Bank;
(k) (Transactions with Affiliates) enter into any lease or other
transaction with any shareholder, officer or affiliate on terms any less
favorable than those which might be obtained at the time from persons who (or
entities which) are not such a shareholder, officer or affiliate;
(l) (Subsidiaries) sell, transfer or otherwise dispose of any stock
of any subsidiary of Borrower; or
(m) (Mergers, Consolidations or Sales) (a) merge or consolidate with
or into any corporation; (b) enter into any joint venture or partnership with
any person, firm or corporation; (c) convey, lease or sell all or any material
portion of its property or assets or business to any other person, firm or
corporation, except for the sale of Inventory in the ordinary course of its
business; or (d) convey, lease or sell any of its assets to any person, firm or
corporation for less than the fair market value thereof.
For purposes of this section: "affiliate" shall mean any person or
entity (i) which directly or indirectly controls, or is controlled by or is
under common control with the Borrower or a subsidiary, (ii) which directly or
indirectly beneficially holds or owns five (5%) percent or more of any class of
voting stock of the Borrower or any subsidiary, or (iii) five (5%) percent or
more of the voting stock of which is directly or indirectly beneficially owned
or held by the Borrower or a subsidiary; "capital assets" shall mean assets
that, in accordance with generally accepted accounting principles, are required
or permitted to be depreciated or amortized on the
-23-
Borrower's balance sheet; "capital expenditures" shall mean but not be limited
to amounts paid during such fiscal year for capital assets or capital leases and
shall include, in the case of a purchase, the entire purchase price and, in the
case of a capital lease (but not an operating lease), the entire rental for the
term; "capital leases" shall mean capital leases, conditional sales contracts
and other title retention agreements relating to the purchase or acquisition of
capital assets; "cash flow" shall mean EBITDA, minus unfinanced capital
expenditures, minus taxes actually paid; "cash burn" shall mean net change in
cash from beginning to end of the applicable measurement period according to
generally accepted accounting principles consistently applied; "CMLTD" shall
mean the current maturity of long term indebtedness paid during the applicable
period, including but not limited to, amounts required to be paid during such
period under capital leases; "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any person or entity, whether through the ownership of voting
securities, by contract or otherwise; "distributions" shall mean all payment or
distributions to shareholders in cash or in property other than reasonable
salaries, bonuses and expense reimbursements; "EBITDA" shall mean, for the
applicable period, income from continuing operations before the payment of
interest and taxes, plus depreciation and amortization, determined in accordance
with generally accepted accounting principles; "fixed charges" shall mean
interest, plus CMLTD; "indebtedness" shall mean (i) all liabilities for borrowed
money, for the deferred purchase price of property or services, and under leases
which are or should be, under generally accepted accounting principles, recorded
as capital leases, in respect of which a person or entity is directly or
indirectly, absolutely or contingently liable as obligor, guarantor, endorser or
otherwise, or in respect of which such person or entity otherwise assures a
creditor against loss, (ii) all liabilities of the type described in (i) above
which are secured by (or for which the holder has an existing right, contingent
or otherwise, to be secured by) any lien upon property owned by such person or
entity, whether or not such person or entity has assumed or become liable for
the payment thereof, and (iii) all other liabilities or obligations which would,
in accordance with generally accepted accounting principles, be classified as
liabilities of such person or entity; "interest" shall mean, for the applicable
period, all interest paid or payable, including, but not limited to, interest
paid or payable on indebtedness and on capital leases, determined in accordance
with generally accepted accounting principles; "senior indebtedness" shall mean
any indebtedness which is not subordinated indebtedness; "subordinated
indebtedness" shall mean indebtedness which is expressly stated to be
subordinated or junior in right of payment to Borrower's Obligations to Bank in
a manner and in a form which is satisfactory to Bank; "tangible capital base"
shall mean Borrower's tangible net worth plus its subordinated indebtedness;
"tangible net worth" shall mean Borrower's stockholders' equity determined in
accordance with generally accepted accounting principles, consistently applied,
subtracting therefrom (i) intangibles (as determined in accordance with such
principles so applied) and (ii) accounts and indebtedness owing to Borrower from
any employee or parent, subsidiary or other affiliate of Borrower; and
"unfinanced capital expenditures" shall mean capital expenditures, minus long
term indebtedness issued during the applicable period for the acquisition of
capital assets.
-24-
15. DEFAULT; RIGHTS AND REMEDIES UPON DEFAULT.
(a) Upon the occurrence of any one or more of the following events
(herein, "Events of Default") which event remains continuing and uncured, Bank
may decline to make any or all further loans hereunder or under any other
agreements with Borrower, any and all Obligations of the Borrower to Bank shall
become immediately due and payable, at the option of Bank and without notice or
demand. The occurrence of any such Event of Default shall also constitute,
without notice or demand, a default under all other agreements between Bank and
the Borrower and instruments and papers given Bank by the Borrower, whether such
agreements, instruments, or papers now exist or hereafter arise, namely:
(i) The failure by the Borrower to pay when due any principal,
interest, fees, costs, and expenses due pursuant to this Agreement.
(ii) The failure by the Borrower to pay, when due, any other
Obligations.
(iii) Default by the Borrower in the observance or performance of
any of the covenants or agreements of the Borrower contained in Sections
5(h), 10(a), 10(d), or 14 of this Agreement.
(iv) The failure by the Borrower to promptly, punctually and
faithfully perform, or observe any term, covenant or agreement on its part
to be performed or observed pursuant to any of the provisions of this
Agreement, other than those described in Section 15(a)(iii) above for
which no grace period shall apply other than for what may be specified in
such sections, or in any other agreement with Bank which is not remedied
within the earlier of ten (10) days after the earlier of (i) notice
thereof by Bank to Borrower, or (ii) the date Borrower was required to
give notice to Bank pursuant to Section 12 hereof.
(v) The determination by Bank that any material representation or
warranty heretofore, now or hereafter made by the Borrower to Bank, in any
documents, instrument, agreement, or paper was not true or accurate when
given in any material respect.
(vi) The occurrence of any event such that any material indebtedness
of the Borrower from any lender other than Bank could be accelerated,
notwithstanding that such acceleration has not taken place.
(vii) The occurrence of any event which would cause a lien creditor,
as that term is defined in Section 9-301 of the Code, to take priority
over advances made by Bank, which event is not cured within ten (10) days
of Borrower receiving notice of such event.
(viii) Subject to the Borrower's right to contest provided in
Section 14(f), a filing against or relating to the Borrower of (A) a
federal tax lien in favor of the United States of America or any political
subdivision of the United States of America, or (B) a
-25-
state tax lien in favor of any state of the United States of America or
any political subdivision of any such state.
(ix) The occurrence of any event of default under any other
agreement between Bank and the Borrower or other instrument or paper given
Bank by the Borrower, whether such agreement, instrument, or paper now
exists or hereafter arises (notwithstanding that Bank may not have
exercised its rights upon default under any such other agreement,
instrument or paper).
(x) Any act by, against, or relating to the Borrower, or its
property or assets, which act constitutes the application for, consent to,
or sufferance of the appointment of a receiver, trustee or other person,
pursuant to court action or otherwise, over all, or any material part of
the Borrower's property, which is not dismissed within ten (10) days of
Borrower receiving notice thereof.
(xi) The granting of any trust mortgage or execution of an
assignment for the benefit of the creditors of the Borrower, or the
occurrence of any other voluntary or involuntary liquidation or extension
of debt agreement for the Borrower; the failure by the Borrower to
generally pay the debts of the Borrower as they mature; adjudication of
bankruptcy or insolvency relative to the Borrower; the entry of an order
for relief or similar order with respect to the Borrower in any proceeding
pursuant to Title 11 of the United States Code entitled "Bankruptcy"
(hereinafter the "Bankruptcy Code") or any other federal bankruptcy law;
the filing of any complaint, application, or petition by or against the
Borrower initiating any matter in which the Borrower is or may be granted
any relief from the debts of the Borrower pursuant to the Bankruptcy Code
or any other insolvency statute or procedure; the calling or sufferance of
a meeting of creditors of the Borrower; the meeting by the Borrower of a
formal or informal creditor's committee; the offering by or entering into
by the Borrower of any composition, extension or any other arrangement
seeking relief or extension for the debts of the Borrower, or the
initiation of any other judicial or non-judicial proceeding or agreement
by, against or including the Borrower which seeks or intends to accomplish
a reorganization or arrangement with creditors; provided that none of the
foregoing shall constitute an Event of Default if such is dismissed or
terminated within ten (10) days of notice to Borrower thereof.
(xii) The entry of any judgment(s) against Borrower in an amount of
more than $25,000.00 which judgment(s) is not satisfied or appealed from
(with execution or similar process stayed) within fifteen (15) days of its
entry.
(xiii) The occurrence of any event or circumstance with respect to
the Borrower such that Bank shall believe in good faith that the prospect
of payment of all or any part of the Obligations or the performance by the
Borrower under this Agreement or any other agreement between Bank and the
Borrower is impaired or there shall occur any material adverse change in
the business or financial condition of the Borrower.
-26-
(xiv) The entry of any court order which enjoins, restrains or in
any way prevents the Borrower from conducting all or any material part of
its business affairs in the ordinary course of business.
(xv) The service of any process upon Bank seeking to attach by
trustee process any funds of the Borrower in excess of $25,000.00 on
deposit with Bank which action is not dismissed prior to the Bank filing
an answer with the court.
(xvi) Any change in the identity, authority or responsibilities of
both the chief financial officer and chief executive officer, or a change
in the majority of the board of directors from that existing at the
execution of this Agreement.
(xvii) The occurrence of any material uninsured loss, theft, damage
or destruction to any material asset(s) of the Borrower.
(xviii) Any act by or against, or relating to the Borrower or
material portion of its assets pursuant to which any creditor of the
Borrower seeks to reclaim or repossess or reclaims or repossesses all or a
portion of the Borrower's assets which is not dismissed within ten (10)
days of Borrower's receipt of notice thereof.
(xix) The death, termination of existence, dissolution, or
liquidation of the Borrower, or the ceasing to carry on actively any
substantial part of Borrower's current business.
(xx) This Agreement shall, at any time after its execution and
delivery and for any reason, cease (A) to create a valid and perfected
first priority security interest in and to the property purported to be
subject to this Agreement; or (B) to be in full force and effect or shall
be declared null and void, or the validity or enforceability hereof shall
be contested by the Borrower or any guarantor of the Borrower denies it
has any further liability or obligation hereunder.
(xxi) Any of the following events occur or exist with respect to the
Borrower or any ERISA affiliate: (A) any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Internal Revenue
Code) involving any Plan; (B) any reportable event" (as defined in Section
4043 of ERISA and the regulations issued under such Section) shall occur
with respect to any Plan; (C) The filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of any Plan;
(D) any event or circumstance exists which might constitute grounds
entitling the Pension Benefit Guaranty Corporation (PBGC) to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by
the PBGC of any such proceedings; (E) or partial withdrawal under Section
4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan; and in each case
above, such event or condition, together with all other events or
conditions, if any, could in the opinion of Bank subject the Borrower to
any tax, penalty, or other liability to a Plan, a Multiemployer Plan, the
PBGC, or otherwise.
-27-
(xxii) The occurrence of (A) any of the Events of Default described
in Sections 15(vi), 15(viii), 15(xi), 15(xii), or 15(xix), with respect to
any guarantor to Bank of the 0bligations, as if such guarantor were the
"Borrower" described therein, or (B) the failure by any guarantor to Bank
of the Obligations to perform in accordance with the terms of any
agreement between such guarantor and the Bank.
(xxiii) The termination of any guaranty by any guarantor of the
Obligations.
Upon the occurrence of an Event of Default which is continuing Bank,
may declare any obligation Bank may have hereunder to be canceled, declare
all Obligations of Borrower to be due and payable and proceed to enforce
payment of the Obligations and to exercise any and all of the rights and
remedies afforded to Bank by the Uniform Commercial Code or under the
terms of this Agreement or otherwise. In addition, upon the occurrence of
an Event of Default, if Bank proceeds to enforce payment of the
Obligations, Borrower shall be obligated to deliver to Bank cash
collateral in an amount equal to the aggregate amounts then undrawn on all
outstanding Letters of Credit or acceptances issued or guaranteed by Bank
for the account of Borrower, and Bank may proceed to enforce payment of
the same and to exercise all rights and remedies afforded to Bank by the
Uniform Commercial Code or under the terms of this Agreement or otherwise.
Upon the occurrence of, and during the continuance of, an Event of
Default, the Borrower, as additional compensation to the Bank for its
increased credit risk, promises to pay interest on all Obligations
(including, without limitation, principal, whether or not past due, past
due interest and any other amounts past due under this Agreement) at a per
annum rate of four (4%) percent greater than the rate of interest then
specified in Section 5 of this Agreement.
(b) Upon the filing of any complaint, application, or petition by or
against the Borrower initiating any matter in which the Borrower is or may be
granted any relief from the debts of the Borrower pursuant to the Bankruptcy
Code, Bank's obligation hereunder shall be canceled immediately, automatically,
and without notice, and subject to the grace period in Section 15(xi) above, all
Obligations of the Borrower then outstanding shall become immediately due and
payable without presentation, demand, or notice of any kind to the Borrower.
(c) Any sale or other disposition of the Collateral may be at public
or private sale upon such terms and in such manner as the Bank deems advisable,
having due regard to compliance with any statute or regulation which might
affect, limit or apply to the Bank's disposition of the Collateral; provided
that Borrower shall have the right to receive reasonable notice and opportunity
to participate and bid at any such sale. The Bank may conduct any such sale or
other disposition of the Collateral upon the Borrower's premises. Unless the
Collateral is perishable or threatens to decline speedily in value, or is of a
type customarily sold on a recognized market (in which event the Bank shall
provide the Borrower with such notice as may be practicable under the
circumstances), the Bank shall give the Borrower at least the greater of the
minimum notice required by law or seven (7) days prior written notice of the
date, time and place of any proposed public sale, and of the date after which
any private sale or other
-28-
disposition of the Collateral may be made. The Bank may purchase the Collateral,
or any portion of it at any public sale.
(d) In connection with the Bank's exercise of the Bank's rights
after the occurrence of an Event of Default, the Bank may enter upon, occupy and
use any premises owned or occupied by the Borrower, and may exclude the Borrower
from such premises or portion thereof as may have been so entered upon,
occupied, or used by the Bank. The Bank shall not be required to remove any of
the Collateral from any such premises upon the Bank's taking possession thereof,
and may render any Collateral unusable to the Borrower. In no event shall the
Bank be liable to the Borrower for use or occupancy by the Bank of any premises
pursuant to this Agreement.
(e) Upon the occurrence and during the continuance of any Event of
Default, the Bank may require the Borrower to assemble the Collateral and make
it available to the Bank at the Borrower's sole risk and expense at a place or
places which are reasonably convenient to both the Bank and the Borrower.
16. PROCESSING AND SALES OF INVENTORY. So long as Borrower is not in
default hereunder, Borrower shall have the right, in the regular course of
business, to process and sell Borrower's Inventory. A sale in the ordinary
course of business shall not include a transfer in total or partial satisfaction
of a debt.
17. WAIVER OF JURY TRIAL. BORROWER AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE OR HEREAFTER HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT. Borrower hereby certifies that neither Bank nor any
of its representatives, agents or counsel has represented, expressly or
otherwise, that Bank would not, in the event of any such suit, action or
proceeding, seek to enforce this waiver of right to trial by jury. Borrower
acknowledges that Bank has been induced to enter into this Agreement by, among
other things, this waiver. Borrower acknowledges that it has read the provisions
of this Agreement and in particular, this section; has consulted legal counsel;
understands the right it is granting in this Agreement and is waiving in this
section in particular; and makes the above waiver knowingly, voluntarily and
intentionally.
18. CONSENT TO JURISDICTION. Borrower and Bank agree that any action
or Proceeding to enforce or arising out of this Agreement may be commenced in
any court of the Commonwealth of Massachusetts sitting in the county of Suffolk,
or in the District Court of the United States for the District of Massachusetts,
and Borrower waives personal service of process and agrees that a summons and
complaint commencing an action or proceeding in any such court shall be properly
served and confer personal jurisdiction if served by registered or certified
mail to Borrower, or as otherwise provided by the laws of the Commonwealth of
Massachusetts or the United States of America.
-29-
19. TERMINATION
(a) Unless renewed in writing, this Agreement shall terminate on
March 27, 2003 (the "Termination Date"), and all Obligations shall be due and
payable in full without presentation, demand, or further notice of any kind,
whether or not all or any part of the Obligations is otherwise due and payable
pursuant to the agreement or instrument evidencing same. Bank may terminate this
Agreement immediately and without notice upon the occurrence of an Event of
Default which is continuing. Notwithstanding the foregoing or anything in this
Agreement or elsewhere to the contrary, the security interest, Bank's rights and
remedies hereunder and Borrower's obligations and liabilities hereunder shall
survive any termination of this Agreement and shall remain in full force and
effect until all of the Obligations outstanding, or contracted or committed for
(whether or not outstanding), before the receipt of such notice by Bank, and any
extensions or renewals thereof (whether made before or after receipt of such
notice), together with interest accruing thereon after such notice, shall be
finally and irrevocably paid in full. No Collateral shall be released or
financing statement terminated until such final and irrevocable payment in full
of the Obligations, as described in the preceding sentence.
(b) In the event that Bank continues to make loans hereunder after
the Termination Date without a written extension of the Termination Date, all
such loans: (i) shall be made in the sole and absolute discretion of Bank; and
(ii) shall, together with all other Obligations, be payable thereafter ON
DEMAND.
20. MISCELLANEOUS.
(a) No delay or omission on the part of Bank in exercising any
rights shall operate as a waiver of such right or any other right. Waiver on any
one occasion shall not be construed as a bar to or waiver of any right or remedy
on any future occasion. All Bank's rights and remedies, whether evidenced hereby
or by any other agreement, instrument or paper, shall be cumulative and may be
exercised singularly or concurrently.
(b) Bank is authorized to make loans under the terms of this
Agreement upon the request, either written or oral, in the name of Borrower or
any authorized person whose name appears at the end of this Agreement or of any
of the following named person, or persons, from time to time, holding the
following offices of Borrower, President, Treasurer and such other officers and
authorized signatories as may from time to time be set forth in separate
resolutions.
(c) This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties hereto; provided,
however, that Borrower may not assign this Agreement or any rights or duties
hereunder without Bank's prior written consent and any prohibited assignment
shall be absolutely void. No consent to an assignment by Bank shall release
Borrower from its Obligations. Bank may assign this Agreement and its rights and
duties hereunder and no consent or approval by Borrower is required in
connection with any such assignment. Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in Bank's rights and benefits hereunder. In connection with any
assignment or participation, Bank may disclose all documents and information
which Bank now or hereafter may have relating to Borrower or Borrower's
business. To the extent that Bank
-30-
assigns its rights and obligations hereunder to another party, Bank thereafter
shall be released from such assigned obligations to Borrower and such assignment
shall effect a novation between Borrower and such other party; provided that the
assignee agrees to be bound by the terms of this Agreement.
(d) Borrower agrees that any and all loans made by Bank to Borrower
or for its account under this Agreement shall be conclusively deemed to have
been authorized by Borrower and to have been made pursuant to duly authorized
requests therefor on its behalf.
(e) Unless otherwise defined in this Agreement, capitalized words
shall have the meanings set forth in the Uniform Commercial Code as in effect in
the Commonwealth of Massachusetts as of the date of this Agreement.
(f) Paragraph and section headings used in this Agreement are for
convenience only, and shall not effect the construction of this Agreement. If
one or more provisions of this Agreement (or the application thereof) shall be
invalid, illegal or unenforceable in any respect in any jurisdiction, the same
shall not, invalidate or render illegal or unenforceable such provision (or its
application) in any other jurisdiction or any other provision of this Agreement
(or its application). This Agreement is the entire agreement of the parties with
respect to the subject matter hereof and supersedes any prior written or verbal
communications or instruments relating thereto.
(g) Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other loan document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, or telefacsimile to Borrower or to
Bank, as the case may be, at its address set forth below:
If to Bank: Citizens Bank of Massachusetts
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to: Goulston & Storrs, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-31-
If to Borrower: Webhire, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to: Webhire, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Gaz Xxxxxxxxxx, Esquire
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demand sent in accordance with this section shall be
deemed received on the earlier of the date of actual receipt or three (3) days
after the deposit thereof in the mail.
(h) Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Bank or Borrower, whether under any rule
of construction or otherwise. On the contrary, this Agreement has been reviewed
by all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.
(i) Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
(j) This Agreement, together with the other documents and
instruments executed concurrently herewith represent the entire and final
understanding of the parties with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by evidence of any prior,
contemporaneous or subsequent other agreement, oral or written, before the date
hereof.
(k) This Agreement can only be amended by a writing signed by both
Bank and Borrower.
-32-
(l) The laws of Massachusetts shall govern the construction of this
Agreement and the rights and duties of the parties hereto. This Agreement shall
take effect as a sealed instrument.
Witnessed by:
WEBHIRE, INC.
G. L. [ILLEGIBLE] By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------- -----------------------------
Xxxxxxx X. Xxxxxxx
Chief Financial Officer
Address: 00 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
Address: 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
-33-
EXHIBIT 10.32
CITIZENS BANK OF MASSACHUSETTS
REVOLVING NOTE
$3,000,000.00 Boston, Massachusetts
March 27, 2001
For value received, the undersigned, Webhire, Inc., a Delaware corporation
(the "Borrower"), hereby promises to pay on March 27, 2003 to the order of
Citizens Bank of Massachusetts (the "Lender"), at its main office in Boston,
Massachusetts, or at any other place designated at any time by the holder
hereof, in lawful money of the United States of America and in immediately
available funds, the principal sum of Three Million ($3,000,000.00) Dollars, or,
if less, the aggregate unpaid principal amount of all loans made by the Lender
to the Borrower under the Loan Agreement (defined below) together with interest
on the principal amount hereunder remaining unpaid from time to time, computed
on the basis of the actual number of days elapsed and a 360-day year, from the
date hereof until this Note is fully paid at the rate from time to time in
effect under the Loan and Security Agreement (All Assets) of even date herewith
(the "Loan Agreement") by and between the Lender and the Borrower. The principal
hereof and interest accruing thereon shall be due and payable as provided in the
Loan Agreement. This Note may be prepaid only in accordance with the Loan
Agreement.
This Note is issued pursuant, and is subject, to the Loan Agreement, which
provides, among other things, for acceleration hereof. This Note is the "Note"
referred to in the Loan Agreement.
This Note is secured, among other things, pursuant to the Loan Agreement,
and may now or hereafter be secured by one or more other security agreements,
mortgages, deeds of trust, assignments or other instruments or agreements.
The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses in the event this Note is not paid when due,
whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest
are expressly waived.
-1-
All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts and this Note shall be deemed to be under seal.
WEBHIRE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
Chief Financial Officer
-2-
