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Exhibit 10.03
LOAN AGREEMENT
LOAN AGREEMENT ( the "Agreement") dated as of this 22nd day of April,
1999 by and between NASHUA CORPORATION, a Delaware corporation with a principal
place of business of 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxxxxx 00000-0000 (the
"Borrower") and FLEET BANK-NH, a bank incorporated under the laws of the State
of New Hampshire with a principal place of business at 0000 Xxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000 (the "Bank").
W I T N E S S E T H :
WHEREAS, the Borrower has requested and the Bank has agreed to make a
certain Fifteen Million Dollars ($15,000,000) Revolving Line of Credit Loan (the
"Line of Credit" or the "Loan") to the Borrower; and
WHEREAS, the parties wish to set forth in writing the terms and
conditions upon which the Bank will make the Loan to the Borrower;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties covenant, stipulate and
agree as follows:
ARTICLE I. THE LINE OF CREDIT. The Bank agrees to make, the Line of Credit
available to the Borrower subject to and upon the following terms and
conditions:
1.1 BORROWER. The Borrower under the Line of Credit shall be NASHUA
CORPORATION. The Borrower shall sign a promissory note (the "Line of Credit
Note" or the "Note") evidencing its obligation to pay and perform the Line of
Credit.
1.2 AMOUNT. Under the Line of Credit, the Bank agrees to loan the
Borrower an amount up to Fifteen Million Dollars ($15,000,000); PROVIDED,
HOWEVER, the availability under the Line of Credit for direct borrowings shall
be reduced by the aggregate amount of all outstanding foreign exchange
facilities and letters of credit issued by the Bank or any affiliate thereof for
the benefit or on behalf of the Borrower.
1.3 USE OF PROCEEDS. The proceeds of the Line of Credit shall be used
by the Borrower for general corporate purposes, including, but not limited to,
direct borrowings, letters of credit and foreign exchange facilities.
1.4 INTEREST RATE. Sums advanced under the Line of Credit shall bear
interest in accordance with the terms of Article II hereof.
1.5 REPAYMENT. Unless demand is sooner made due to an Event of
Default (as hereinafter defined) or the Line of Credit is renewed by the Bank,
the Line of Credit shall mature on April 22, 2001 (the "Maturity Date"). On or
before each anniversary date of this Agreement, the Bank shall review the Line
of Credit to determine whether it will renew the
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Line of Credit for an additional one (1) year period so that such annual renewal
will result in a "rolling" two (2) year Line of Credit. If the Bank, in its sole
discretion, elects not to renew the Line of Credit on or before each anniversary
date of this Agreement, then the Line of Credit shall mature on the date which
is one (1) year from the date of the anniversary date of this Agreement upon
which the Bank elected not to renew the Line of Credit, unless demand is sooner
made due to an Event of Default. Prior to maturity, the Borrower shall make
payments of interest only to the Bank on a monthly basis, in arrears, with the
first such payment being made on that date thirty (30) days from the date hereof
(or on such other date as the parties may agree upon in writing to provide for a
convenient payment date) with subsequent payments being made on the
corresponding day of each succeeding month. All payments required under this
Agreement, the Note or any other Loan Document shall be in lawful money of the
United States in immediately available funds. The due dates of all payments
required under the Agreement, the Note or any other Loan Document are subject to
adjustment in accordance with the Modified Following Business Day Convention.
Modified Following Business Day Convention means the convention for adjusting
any relevant date if it would otherwise fall on a day that is not a Business Day
to the date that will be the first following day that is a Business Day (unless
that day falls in the next calendar month, in which case that date will be the
first preceding day that is a Business Day). The term "Business Day" means, in
respect to any date that is specified in the Agreement or the Note to be subject
to adjustment in accordance with applicable Modified Following Business Day
Convention, a day on which commercial banks settle payments in (a) London, if
the payment obligation is calculated by reference to any LIBOR Rate (as
hereinafter defined) or (b) New York, if the payment obligation is calculated by
reference to the Prime Rate (as hereinafter defined).
1.6 SECURITY. Borrower's payment and performance of the Line of
Credit shall be secured by a perfected first priority security interest in all
of the Borrower's accounts receivable and inventory.
1.7 GUARANTY, SECURITY THEREFOR. The payment and performance of the
Line of Credit by the Borrower shall be unconditionally guaranteed by the
Guarantors (as defined in Section 4.22 hereof).
1.8 FEES AND EXPENSES. In connection with the Loan, the Borrower
agrees to pay the Bank the following fees:
(a) A Twenty Thousand Dollar ($20,000) closing fee payable at
closing;
(b) An unused facility fee equal to one quarter of one percent (1/4%)
per annum on the average daily principal amount of the unused portion of the
Line of Credit to be paid quarterly in arrears; and
(c) The letter of credit fees for any usage under the Line of Credit
for letters of credit shall be 1.25% per annum of the face amount of such letter
of credit.
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1.9 CROSS DEFAULT. The Borrower's obligations to the Bank with
respect to the Line of Credit shall be and hereby are cross defaulted with all
loans, letters of credit, foreign exchange facilities or other obligations, now
existing and hereafter arising, of the Borrower or any Guarantor, owed to the
Bank or any affiliate thereof, including the Line of Credit and the Master
Agreement (as hereinafter defined), as the same may be hereafter amended.
ARTICLE II. INTEREST RATE AND OTHER APPLICABLE LIBOR PROVISIONS
2.1 Subject to the terms of Section 2.2 hereof, the Borrower shall
have the option to elect that the sums advanced under the Line of Credit shall
bear interest at a variable per annum rate equal to the Prime Rate, (the
"Floating Rate Option"). The term "Prime Rate" means the variable per annum rate
of interest so designated from time to time by Fleet Bank-NH as its Prime Rate.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate being charged to any customer. Each time the Prime Rate changes,
the interest rate on such Loan shall change. Interest under the Floating Rate
Option and under the LIBOR Fixed Rate Option (as hereinafter defined) shall be
calculated and charged on the basis of actual days elapsed over a banking year
of three hundred sixty (360) days.
2.2 As a material inducement for the Borrower to enter into this
Agreement, the Borrower shall also have the option to elect (the "LIBOR Fixed
Rate Option") that the interest rate payable under the Line of Credit shall be
equal to the LIBOR Rate (as hereinafter defined) plus one and three quarters
percent (1 3/4%) per annum. If the Borrower maintains compensating balances in
its accounts with the Bank of at least Five Hundred Thousand Dollars ($500,000),
the LIBOR Fixed Rate Option shall automatically be reduced to equal the LIBOR
Rate plus one hundred sixty basis points (1.60%) per annum. The election of the
LIBOR Fixed Rate Option shall be fixed for one (1), two (2), three (3) or six
(6) month periods (the "LIBOR Rate Interest Period(s)") and shall be in the
minimum amount of One Hundred Thousand Dollars ($100,000) and, if greater, in
additional increments of Fifty Thousand Dollars ($50,000). In the absence of an
election by the Borrower to exercise the LIBOR Fixed Rate Option, the Line of
Credit shall bear interest at a rate equal to the Floating Rate Option and said
interest rate shall apply to the entire principal amount outstanding thereunder.
No LIBOR Rate Interest Period shall extend beyond the maturity of the Line of
Credit. Any LIBOR Interest Rate Period chosen by the Borrower will be so
structured such that the principal amount to be repaid at maturity hereunder
shall either bear interest at the Floating Rate Option or bear interest at a
LIBOR Fixed Rate Option having a LIBOR Rate Interest Period which terminates on
the day such principal repayment is to be made. Any LIBOR Rate Interest Period
which would otherwise end on a day which is not a Business Day shall be extended
to the next Business Day unless that day falls into the next calendar month, in
which case, that day will be the first preceding Business Day, or, provided that
the Bank shall have given reasonable notice to the Borrower, as otherwise
determined by the Bank in accordance with the then current foreign banking
practice. At the expiration of each LIBOR Rate Interest Period, any part of the
principal amount of the Line of Credit bearing interest based under LIBOR Fixed
Rate Option as to which no notice of renewal has been received as provided below
shall automatically be converted to the Floating Rate Option. The Bank shall
attempt to notify the Borrower of any such
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automatic conversion. If the Bank offers and the Borrower elects to do so, then
the Borrower and the Bank may exchange the LIBOR Fixed Rate Option (one (1)
month LIBOR only) pursuant to an interest rate swap contract (in the form of an
International Swap Dealer's Association Master Agreement and Confirmation
Agreement between the Borrower and Fleet National Bank ("FNB"), both of which
are referred to as the "Master Agreement") for a fixed rate of interest.
2.3 "LIBOR RATE" shall mean the per annum rate as determined by the
Bank (rounded upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for
the applicable LIBOR Rate Interest Period, which appears on the Telerate page
3750 as of 11:00 a.m. London time on the day that is two (2) London Business
Days preceding the first day of such LIBOR Rate Interest Period; provided,
however, if the rate described above does not appear on the Telerate System on
any applicable interest determination date, the LIBOR Rate shall be the rate
(rounded upwards as described above, if necessary) for deposits in dollars for a
period substantially equal to LIBOR Rate Interest Period on the Reuters Page
"LIBO" (or such other page as may replace the LIBO Page on that service for the
purpose of displaying such rates), as of 11:00 a.m. (London Time), on the day
that is two (2) London Business Days prior to the beginning of such interest
period.
If both the Telerate and Reuters system are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such LIBOR Rate Interest
Period which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) London Business
Days preceding the first day of such LIBOR Rate Interest Period as selected by
the Bank's calculation agent. The principal London office of each of the four
major London banks will be requested to provide a quotation of its U.S. dollar
deposit offered rate. If at least two such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to such LIBOR Rate Interest Period which
are offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that is two (2) London Business Days preceding the first
day of such LIBOR Rate Interest Period. If the Bank is unable to obtain any such
quotation as provided above, then it will be deemed that LIBOR Rate cannot be
determined and the Bank will have no obligation to make LIBOR Rate based loans.
If the Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of the Bank, then for any period
during which such Reserve Percentage shall apply, LIBOR Rate shall be equal to
the amount determined above divided by an amount equal to 1 minus the Reserve
Percentage. Reserve Percentage means the rate (expressed as a decimal) at which
the Bank is required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System against Eurodollar liabilities
outstanding.
2.4 Notwithstanding the foregoing, if as a result of any change in
any foreign or United States law or regulation (or change in the interpretation
thereof) it is determined by the
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Bank that it is unlawful to maintain a LIBOR Rate based loan, or if any central
bank or governmental authority (foreign or domestic) shall assert that it is
unlawful to maintain a LIBOR Rate based loan, then such LIBOR Rate based loan
shall terminate, be automatically converted to an advance under the Floating
Rate Option and the Borrower shall have no further right hereunder to elect the
LIBOR Fixed Rate Option. If for any reason a LIBOR Rate based loan is terminated
or prepaid by the Borrower prior to the end of the applicable LIBOR Rate
Interest Period for which the LIBOR Rate is to be in effect, then the Borrower
shall, upon demand by Bank, pay to Bank any amounts required to compensate Bank
for any additional losses, costs, or expenses which it may reasonably incur as a
result of such termination or prepayment, including, without limitation, any
losses, costs, or expenses incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by the Bank to fund or maintain such LIBOR
Rate based loan. If the Bank determines that by reason of circumstances
affecting the London interbank market, adequate and reasonable means do not
exist for determining the LIBOR Rate in the relevant amount and for the relevant
maturity are not available to the Bank in the London interbank market, with
respect to a proposed LIBOR Rate based loan, then the Bank shall give the
Borrower prompt notice of such determination. Until such notice has been
withdrawn, the Bank shall have no obligation to make LIBOR Rate based loans, or
maintain outstanding LIBOR Rate based loans.
2.5 If, due to any one or more of: (i) the introduction of any
applicable law or regulation or any change in the interpretation or application
by any authority charged with the interpretation or application thereof of any
law or regulation; or (ii) the compliance with any guideline or request from any
governmental central bank or other governmental authority (whether or not having
the force of law), there shall be an increase in the cost to the Bank of
agreeing to make or making, funding or maintaining LIBOR Rate based loans,
including, without limitation, changes which affect or would affect the amount
of capital or reserves required or expected to be maintained by the Bank, with
respect to all or any portion of the LIBOR Rate based loans, or any corporation
controlling the Bank, on account thereof, then the Borrower from time to time
shall, upon written demand by the Bank within ninety (90) days of an event which
gives rise to such increased costs, pay the Bank additional amounts sufficient
to indemnify the Bank against such increased cost as such increased costs relate
to the Borrower. A certificate as to the amount of the increased cost and the
reason therefor submitted to Borrower by the Bank in the absence of manifest
error, shall be conclusive and binding for all purposes.
2.6 In order for the Borrower to elect the LIBOR Fixed Rate Option,
the following conditions must be met:
(i) The Bank shall have received a written notice (the "LIBOR Fixed
Rate Request") from the Borrower at least two (2) London Business
Days prior to the first day of any LIBOR Rate Interest Period
requested, such notice to specify the first day and length of the
LIBOR Rate Interest Period (a "LIBOR Fixed Rate Period"), the
dollar amount of the LIBOR Portion and as to which Loan the LIBOR
Fixed Rate Request shall apply; and
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(ii) The Bank shall not have determined in good faith that it is
unable to determine the LIBOR Rate in respect of the requested
LIBOR Fixed Rate Period.
2.7 If, at any time (i) the interest rate on the Loan is a fixed
rate, and (ii) the Bank in its sole discretion should determine that current
market conditions can accommodate a prepayment request, then the Borrower shall
have the right at any time and from time to time to prepay such Loan in whole
(but not in part) and the Borrower shall pay to the Bank a yield maintenance fee
in an amount computed as follows: The current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the term chosen pursuant to the LIBOR Fixed Rate
Option as to which the prepayment is made, shall be subtracted from the "cost of
funds" component of the fixed rate in effect at the time of prepayment. If the
result is zero or a negative number, then there shall be no yield maintenance
fee. If the result is a positive number, then the resulting percentage shall be
multiplied by the amount of the principal balance being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of days remaining in
the term chosen pursuant to the LIBOR Fixed Rate Option as to which the
prepayment is made. Said amount shall be reduced to present value calculated by
using the number of days remaining in the designated term and using the
above-referenced United States Treasury securities rate and the number of days
remaining in the term chosen pursuant to the LIBOR Fixed Rate Option as to which
the prepayment is made. The resulting amount shall be the yield maintenance fee
due to the Bank upon prepayment of the fixed rate loan. If the Bank elects to
declare the Loan to be immediately due and payable upon the occurrence of an
Event of Default, then any yield maintenance fee with respect to such Loan shall
become due and payable in the same manner as though the Borrower had exercised
such right of prepayment. If the interest rate under the Loan is swapped
pursuant to the Master Agreement, the Master Agreement sets forth additional
restrictions, limitations, and penalties associated with prepayment under said
Loan. In the event any prepayment is made by the Borrower, the amount thereof
will be applied first to delinquency charges, costs of collection and accrued
interest and thereafter to principal in the reverse order of maturity.
2.8 In the event that the Borrower fails to pay any amount that is
due and owing to FNB under and pursuant to the Master Agreement (after giving
effect to any applicable grace period), then upon demand by FNB, in its sole
discretion, the Bank shall pay such amount directly to FNB for the account of
the Borrower and the Borrower hereby authorizes and consents to such payment by
the Bank. The Borrower agrees that (i) FNB shall have no obligation to demand
the Bank to advance such funds on behalf of the Borrower, (ii) the making of
such a demand by FNB will not create any obligation to make such a demand in the
future, and (iii) at all times FNB may choose not to make such demand and
choose, instead to exercise its rights under the Master Agreement. It shall be
an additional obligation of the Borrower to reimburse the Bank for any amount
the Bank may pay on account of any amount that is due and owing by the Borrower
to FNB. Such additional obligation shall be due upon demand and shall bear
interest at a rate per annum equal to the default rate set forth in the Note
from, and including, the date of payment by the Bank to, but excluding, the date
the Borrower reimburses the Bank for such additional obligation. FNB is an
intended third-party beneficiary of the Bank's obligations under this Section.
It is expressly agreed by the parties hereto that
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the terms of this Section shall apply to any and all Master Agreements entered
into by the Borrower with respect to any Loan.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BORROWER AND GUARANTORS. To
induce the Bank to enter into this Agreement and to make the Loan, the Borrower
and the Guarantors warrant and represent to the Bank that:
3.1 LEGAL EXISTENCE. The Borrower is a corporation duly organized and
validly existing under the laws of the State of Delaware with the power to own
its property and to carry on its business as it is now being conducted. In
addition, the Borrower is duly qualified to do business and is in good standing
in New Hampshire and in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
3.2 AUTHORITY OF BORROWER. The Borrower has full power and authority
to enter into this Agreement and to borrow hereunder, to execute and deliver
this Agreement, and any other documents the purpose of which is to evidence or
secure the Loan (the foregoing, including, without limitation, this Agreement,
being hereinafter sometimes collectively referred to as the "Loan Documents" and
the security described therein sometimes hereinafter collectively referred to as
the "Collateral") and to incur the obligations provided for herein and in the
Loan Documents, all of which have been duly authorized by all proper and
necessary corporate or other action. Any consent or approval of stockholders, or
of any agency or of any public authority, or of any other party required as a
condition to the legal validity of this Agreement or the Loan Documents has been
obtained.
3.3 AUTHORITY OF GUARANTORS. Each Guarantor has full power and
authority to enter into, to execute and deliver all of the Loan Documents and to
incur the obligations provided for herein and in the Loan Documents, all of
which have been duly authorized by all proper and necessary action. Any consent
or approval of any agency or of any public authority, or any other party
required as a condition to the legal validity of this Agreement or the Loan
Documents has been obtained.
3.4 BINDING AGREEMENT. This Agreement and the Loan Documents
constitute the valid and legally binding obligations of the Borrower and each of
the Guarantors enforceable in accordance with their terms; PROVIDED, that the
enforceability of any provisions in the Loan Documents, or of any rights granted
to the Bank pursuant thereto may be subject to and affected by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and that the right of the Bank to specifically
enforce any provisions of the Loan Documents is subject to general principles of
equity.
3.5 LITIGATION. Except as disclosed on Schedule 3.5 attached hereto,
there are no suits pending or, to the knowledge of the Borrower or the
Guarantors, threatened, against or affecting the Borrower or any of the
Guarantors or any of the Borrower's or the Guarantors' assets which, if
adversely determined, would have a material adverse effect on the condition,
financial or otherwise, or business of the Borrower or any of the Guarantors and
which have not been disclosed in writing to the Bank. There are no proceedings
by or before any governmental commission, board, bureau or other administrative
agency pending, or, to the knowledge of the Borrower or any of the Guarantors,
threatened against the Borrower or any of the Guarantors, which, if adversely
determined, would have a material adverse effect on the condition, financial or
otherwise, or business of the Borrower or any of the Guarantors and which have
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not been disclosed in writing to the Bank. Notwithstanding the above, there are
certain suits pending or threatened which are listed on Schedule 3.5 and which
have been disclosed by Borrower or the Guarantors to Bank ("Disclosed Suits").
3.6 CONFLICTING AGREEMENTS. There is no charter provision or bylaw of
the Borrower, and no provision(s) of any existing mortgage, indenture, contract
or agreement binding on the Borrower or any of the Guarantors or affecting any
of the Borrower's or Guarantors' property, which would conflict with, be in
contravention hereof, have a material adverse effect upon, or in any way prevent
the execution, delivery, or performance of the terms of this Agreement or the
Loan Documents.
3.7 FINANCIAL CONDITION. The annual financial statements heretofore
delivered to the Bank by Borrower and the Guarantors have been prepared in
accordance with generally accepted accounting principles, consistently applied,
are complete and correct, and fairly present the financial condition and results
of the Borrower and the Guarantors. There are no material liabilities, direct or
indirect, fixed or contingent, of the Borrower or the Guarantors which are not
reflected therein or in the notes thereto which would be required to be
disclosed therein in accordance with Generally Accepted Accounting Principles
("GAAP") and there has been no material adverse change in the financial
condition or operations of the Borrower since the date of such financial
statements. Except as set forth on Schedule 3.7, to the best of Borrower's
knowledge, the Borrower's and the Guarantors' assets are free of encumbrances of
any nature.
3.8 TAXES. The Borrower and the Guarantors have filed all federal,
state and local tax returns required to be filed by the Borrower and the
Guarantors and have paid or have made adequate provision for the payment of all
taxes shown by such returns to be due and payable on or before the due dates
thereof except such that are being contested in good faith. Except as set forth
on Schedule 3.8, there are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction and the Guarantors and the
officers of the Borrower know of no basis for any such claim.
3.9 LICENSES, FRANCHISES, ETC. The Borrower possesses all material
permits, approvals, licenses, franchises, patents, trademarks, service marks,
trademark and service xxxx rights, trade names, trade name rights and copyrights
necessary to conduct its business substantially as now conducted, and as
proposed to be conducted, in each case subject to no mortgage, pledge, lien,
lease, encumbrance, charge, security interest, title retention agreement or
option which is not permitted by this Agreement to exist, and, without any known
conflict with any such rights or assets of others.
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3.10 NO PURCHASE OF MARGIN STOCK. No part of the proceeds received by
the Borrower from the Loan will be used directly or indirectly for the purpose
of purchasing or carrying, or for payment in full or in part of indebtedness
which was incurred for the purposes of purchasing or carrying any margin stock,
as such term is used and defined in Regulation U of the Board of Governors of
the Federal Reserve System.
3.11 SOLVENCY. The present fair saleable value of the Borrower's
assets is greater than the amount required to pay its total liabilities, the
amount of Borrower's capital is adequate in view of the type of business in
which it is engaged and the Borrower is able to pay its debts as they mature.
3.12 NOT A SUCCESSOR. Except as set forth on Schedule 3.12, the
Borrower has not, within the six year (6) period immediately preceding the date
of this Agreement, changed its name, been the surviving corporation of a merger
or consolidation, or acquired all or substantially all of the assets of any
person, corporation, partnership or entity.
3.13 BROKERAGE. There are no claims against the Borrower or any of the
Guarantors for brokerage commissions, finder's fees or similar compensation
arising out of or due to any act of the Borrower or any of the Guarantors in
connection with the transactions contemplated by this Agreement; and the
Borrower or any of the Guarantors will defend, indemnify and hold the Bank
harmless against any liability or expenses arising out of any such claim.
3.14 EMPLOYEE BENEFIT PLANS. The Borrower has not incurred any
material accumulated funding deficiency within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), has not incurred
any material liability to the Pension Benefit Guaranty Corporation established
under ERISA (or any successor thereto) in connection with any profit sharing,
group insurance, bonus, deferred compensation, percentage compensation, stock
option, severance pay, insurance, pension or retirement plan or other oral or
written agreement or commitment relating to employment or fringe benefits or
perquisites for employees, officers or directors of the Borrower (an "Employee
Benefit Plan"), and no Employee Benefit Plan which is subject to ERISA had, as
of its latest valuation date, accrued benefits (whether or not vested) the
present value of which exceeded the value of the assets of such Employee Benefit
Plan, based upon actuarial assumptions utilized for such Plan.
3.15 SUBSIDIARIES. The Borrower does not have any subsidiaries other
than those identified on Schedule 3.15 hereof (the "Subsidiaries"). The
Subsidiaries listed on Schedule 3.15 under the column "Material Subsidiaries" on
said Schedule 3.15 constitute any Subsidiaries which alone account for five
percent (5%) or more of the Borrower's consolidated total assets or account for
five percent (5%) or more of the Borrower's consolidated total revenue for
continuing operations for the immediately preceding fiscal year.
3.16 OWNERSHIP AND LIENS. The Borrower has title to, or valid
leasehold interests in, all of its properties and assets, real and personal,
including the properties and assets and leasehold interest reflected in the
financial statements referred to in Section 3.7 (other than any properties or
assets disposed of in the ordinary course of business), and none of the
properties
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and assets owned by the Borrower and none of its leasehold interests is subject
to any lien, except such as are provided on Schedule 3.7 attached hereto or may
be permitted pursuant to Section 5.6 of this Agreement.
3.17 STATUTORY COMPLIANCE. The Borrower is in compliance, in all
material respects, with all statutes, regulations, ordinances, directives, and
orders of every federal, state, municipal or other governmental authority which
has or claims jurisdiction over them, any of its assets, or any person in any
capacity under which it would be responsible for the conduct of such person
where the failure to so comply would have no material adverse effect on the
Borrower.
3.18 YEAR 2000 REPRESENTATION. The Borrower has (i) initiated a review
and assessment of all areas within the business and operations of the Borrower
and each of its Subsidiaries that could be adversely affected by the "YEAR 2000
PROBLEM" (that is, the risk that computer applications used by it or any of its
Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to an any date after December 31, 1999),
(ii) developed a plan and time line for addressing the Year 2000 Problem on a
timely basis and (iii) to date, implemented such plan in accordance with such
timetable. The Borrower reasonably believes that all of its computer
applications that are material to the business or operations of the Borrower or
any of its Subsidiaries will on a timely basis be able to perform properly
date-sensitive functions for all dates before and from and after January 1,
2000, except to the extent that a failure to do so could not reasonable be
expected to have a material adverse effect on the Borrower or its Subsidiaries.
3.19 FULL DISCLOSURE. None of the information with respect to the
Borrower and any of the Guarantors which has been prepared and furnished by the
Borrower and any of the Guarantors to the Bank in connection with the
transactions contemplated hereby is false or misleading with respect to any
material fact, or omits to state any material fact necessary in order to make
the statements therein not misleading.
ARTICLE IV. AFFIRMATIVE COVENANTS OF BORROWER AND GUARANTORS. Until payment
in full of the indebtedness now existing or hereafter incurred under this
Agreement and the performance of all its obligations hereunder, the Borrower and
the Guarantors agree that, unless the Bank shall otherwise consent in writing,
the Borrower and/or the Guarantors (as applicable) shall:
4.1 PROMPT PAYMENT. Pay promptly when due all amounts due and owing
to the Bank under this Agreement.
4.2 USE OF PROCEEDS. Use the proceeds of the Loan only for the
purposes set forth herein and will furnish the Bank such evidence as it may
reasonably require with respect to such use.
4.3 FINANCIAL STATEMENTS. (a) The Borrower shall furnish the Bank
within forty-five (45) days after the end of each quarter during Borrower's
fiscal year internally prepared quarterly (including year to date) financial
statements of the Borrower and its affiliates,
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including a balance sheet and a profit and loss statement. All such statements
shall be prepared in the format previously approved by the Bank.
(b) The Borrower shall furnish the Bank within one hundred twenty
(120) days after the close of each fiscal year (i) a statement of stockholders'
equity and a statement of changes in financial position of the Borrower for such
fiscal year; (ii) an income statement of the Borrower for such fiscal year; and
(iii) balance sheets of the Borrower as of the end of such fiscal year. All such
annual statements shall be prepared in accordance with generally accepted
accounting principles consistently applied, and shall present fairly the
financial position and result of operations of Borrower. The annual financial
statements of Borrower shall be prepared on an audited basis, by an independent
certified public accountant selected by Borrower and reasonably acceptable to
the Bank. Such financial statements shall be accompanied by an opinion of the
auditor which (i) shall not disclaim the auditor's obligation to address the
Year 2000 Risk as it relates to the Borrower's liabilities or contingent
liabilities and (ii) shall not be qualified due to the Borrower's possible
failure to take all appropriate steps to successfully address the Year 2000
Risk. The Bank shall have the right, from time to time, to discuss the affairs
of Borrower directly with Borrower's accountant after reasonable notice to
Borrower and opportunity of Borrower to be represented at any such discussions.
(c) Promptly deliver to the Bank upon receipt thereof, copies of any
reports submitted to Borrower by Borrower's accountants in connection with any
examination of the financial statements of Borrower made by such accountants.
(d) On an annual basis prior to Borrower's fiscal year end, furnish
the Borrower's business plan and budget for the upcoming fiscal year which
include a projected profit and loss statement, balance sheet, cash flow
projections and a capital budget.
(e) Furnish the Bank with a fully executed compliance certificate
substantially in the form of covenant compliance certificate attached hereto as
Schedule 4.3(e), within forty-five (45) days after the end of each fiscal
quarter (the "Covenant Compliance Certificate").
(f) Furnish the Bank with such other financial information or reports
(such as agings and inventory) as the Bank may reasonably request.
4.4 MAINTENANCE OF EXISTENCE. Take all necessary action to maintain
the Borrower's existence, including the filing of required reports and tax
returns with the Secretary of State of the State of New Hampshire and with the
appropriate authorities in any other state where required.
4.5 MAINTENANCE OF PROPERTY, PLANT, EQUIPMENT AND COLLATERAL.
Maintain the Borrower's property, plant and equipment, including the Collateral,
in good working order, subject only to reasonable wear and tear and make all
necessary repairs thereto and replacements therefor so that operations may be
properly conducted in accordance with prudent business management.
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4.6 MAINTENANCE OF INSURANCE. Maintain insurance on the Borrower's
property (including real estate, machinery, equipment and inventory) and other
related insurance reasonably satisfactory to the Bank with such insurance
companies as are reasonably satisfactory to the Bank. Such insurance shall be
payable to the Bank as its interest may appear. All policies of insurance shall
provide for not less than thirty (30) days' written notice of cancellation to
the Bank. Upon the request of the Bank, the Borrower shall escrow payments on
account of its insurance premiums with the Bank.
4.7 INSPECTION BY THE BANK. Upon prior reasonable notice (other than
in emergencies when no notice shall be required), permit any person designated
by the Bank to inspect any of its properties, including its books, records, and
accounts during regular business hours (and including the making of copies
thereof and extracts therefrom).
4.8 PROMPT PAYMENT OF TAXES. Accrue the Borrower's and the
Guarantors' tax liability in accordance with GAAP and pay or discharge (or cause
to be paid or discharged) as they become due all taxes, assessments, and
government charges upon its property, operations, income and products (as well
as all claims for labor, materials or supplies), which, if unpaid might become a
lien upon any of its property; PROVIDED, that the Borrower and/or the Guarantors
(as applicable) shall, prior to payment thereof, have the right to contest such
taxes, assessments and charges in good faith by appropriate proceedings so long
as the Bank's interests are protected by the Borrower having established
adequate reserves therefor.
4.9 NOTIFICATION OF DEFAULT UNDER THIS AND OTHER LOAN OR FINANCING
ARRANGEMENTS. Promptly notify the Bank in writing of the occurrence of any Event
of Default under this Agreement (or any occurrence that would, with the passage
of time, constitute an Event of Default) or any other loan or financing
arrangement.
4.10 NOTIFICATION OF LITIGATION. Promptly notify the Bank in writing
of any litigation that has been instituted or is pending or threatened against
the Borrower involving aggregate amounts in excess of Five Hundred Thousand
Dollars ($500,000) or more or the outcome of which might have a material adverse
effect on the Borrower's or any of the Guarantors' continued operations or
condition, financial or otherwise.
4.11 NOTIFICATION OF GOVERNMENTAL ACTION. Promptly notify the Bank in
writing of any material governmental investigation or proceeding that has been
instituted or is pending or threatened and the outcome thereof, including
without limitation, material matters relating to the federal or state tax
returns of the Borrower, compliance with the Occupational Safety and Health Act,
or proceedings by the Treasury Department, Labor Department, or Pension Benefit
Guaranty Corporation with respect to matters affecting employee welfare, benefit
or retirement programs.
4.12 NOTIFICATION OF MATERIAL ADVERSE CHANGE. Promptly notify the Bank
in writing of (a) any material adverse changes in the business prospects or
financial condition of the Borrower or any of the Guarantors; and (b) any
accounting rule change that would have a material adverse effect on the business
or financial condition of the Borrower.
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4.13 PRESERVATION OF THE COLLATERAL. Take all reasonably necessary
steps to keep the Collateral current and not obsolete and free of unpermitted
liens and give the Bank access to and permit it to inspect the same during all
business hours and other reasonable times.
4.14 MAINTENANCE OF RECORDS. Keep adequate records and books of
account, in which appropriate entries will be made in a manner reasonably
acceptable to the Bank and consistently applied, reflecting all financial
transactions of the Borrower required to be stated therein.
4.15 COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. Comply in all
material respects with all applicable material laws, rules, regulations, and
orders; PROVIDED, HOWEVER, that Borrower shall be entitled to contest the same
in good faith so long as such action does not have an adverse effect upon the
Bank's rights hereunder or the security furnished therefor. Without limiting in
any manner the scope or generality of the foregoing, each of the Borrower and
the Guarantors agrees to comply in all material respects with all federal, state
and other laws and regulations regarding the generation, treatment, storage,
disposal or transportation of hazardous waste or materials, as defined under
applicable federal and state law; and agrees to defend, indemnify and hold the
Bank harmless from and against any and all liabilities, costs and expenses
(including reasonable attorneys' fees) attributable to or in any way connected
with the failure to comply with such laws and regulations.
4.16 COMPOSITION OF MANAGEMENT. Maintain current role and management
responsibilities of senior management of the Borrower listed on Schedule 4.16;
PROVIDED, HOWEVER, the failure of any of the aforesaid individuals to continue
their current role or responsibilities shall not constitute a default hereunder
if such individual is replaced, within a period of six (6) months, with another
individual of comparable skill and experience.
4.17 ACCOUNTS AND DEPOSITS. Maintain the Borrower's primary operating
and deposit accounts with the Bank. The Borrower hereby authorizes the Bank to
charge such accounts directly for payments of principal, interest and fees due
under the Loan Documents. The Borrower shall also compensate the Bank for
certain services to be provided to the Borrower by the Bank through the payment
of the Bank's standard service charges, such services to include monthly
checking account activity, cash management services and electronic funds
transfers.
4.18 APPRAISALS. The Bank shall have the right to appraise all of
Borrower's assets at reasonable times and upon reasonable notice and at
reasonable frequency at the expense of the Borrower.
4.19 SUBORDINATION OF SUMS PAYABLE. All of the Borrower's obligations,
if any, to any of the Guarantors, shareholders, officers or directors of the
Borrower for borrowed money shall be subordinated to the Borrower's performance
of its obligations to the Bank with respect to the Loan.
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4.20 MAINTENANCE OF SELECTED FINANCIAL RATIOS AND MEASURES. Maintain
or achieve the following financial ratios or measures determined or computed in
accordance with GAAP with respect to the Borrower:
(a) MINIMUM EBITDA: The Borrower's earnings before interest, taxes,
depreciation and amortization expenses on a consolidated basis shall be at least
$1,000,000 per quarter as of the end of each fiscal quarter and at least
$7,500,000 per fiscal year as of the end of each fiscal year.
(b) MINIMUM TANGIBLE NET WORTH. At all times, the Borrower's
stockholders equity (as reflected on the Borrower's balance sheet delivered
pursuant to Section 4.3 hereof) minus general intangibles included as assets on
such balance sheet shall not be less than $65,000,000.
(c) MAXIMUM CAPITAL EXPENDITURES. Tested as of the end of each fiscal
quarter, the Borrower's annual capital expenditures shall not exceed $13,500,000
for fiscal year 1999. The maximum capital expenditure limitation for each fiscal
year thereafter will be determined by the Bank, but shall not be less than
$13,500,000 in any one fiscal year.
(d) MAXIMUM OTHER INDEBTEDNESS. Except as permitted pursuant to
Section 5.4 hereof, the Borrower's indebtedness (not to include Accounts Payable
and Accrued Expenses as defined by GAAP) to parties other than the Bank shall
not exceed $5,000,000 in the aggregate at any one time.
4.21 SPECIAL COVENANTS RELATING TO INVENTORY AND ACCOUNTS. (a) At such
intervals as the Bank may reasonably request in writing, the Borrower shall
notify the Bank of all Collateral which has come into existence or changes in
Collateral since the date of the last such notification and shall provide the
Bank with schedules of the Collateral (which notification and schedules shall be
in such forms as the Bank may specify).
(b) The Borrower shall accord the Bank and the Bank's representatives
with access from time to time (including periodic audits performed at the Bank's
reasonable discretion) as the Bank and such representatives may reasonably
require to all properties owned by or over which the Borrower has control, for
the purposes of auditing the Borrower's books and records. The Borrower shall
pay the Bank such fees and expenses as it customarily charges in connection with
such audits which are incurred in connection with not more than one (1) audit
per year, during the term of this Agreement. The Bank and the Bank's
representatives, shall have the right, and the Borrower will permit the Bank and
such representatives from time to time as the Bank and such representatives may
reasonably request, to examine, inspect, copy and make extracts from any and all
of the Collateral, and any and all of the Borrower's books, records,
electronically stored data, papers and files, and to verify the Collateral or
any portion thereof (such verification, including, without limitation, through
contact with account debtors).
(c) The Borrower may grant such allowances or other adjustments to
the Borrower's account debtors as the Borrower may reasonably deem to be in
accord with sound business practice; provided, however, the authority granted
the Borrower pursuant to this
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paragraph may be limited or terminated by the Bank upon the occurrence of an
Event of Default which has not been remedied within any applicable cure period.
(d) At such intervals as the Bank may reasonably request, the
Borrower shall promptly furnish the Bank with detailed reports in such form as
the Bank may prescribe of all allowances, adjustments, returns, and
repossessions concerning the Borrower's accounts and accounts receivable and its
inventory, and of any downgrading in the quality of any of the inventory or
event affecting the marketability of the inventory, and of all inventory
detained from, refused entry into, or required to be removed from the United
States by the appropriate governmental authorities.
(e) Upon the occurrence of an Event of Default which has not been
remedied within any applicable cure period, the Bank shall have the right to
notify any of the Borrower's account or contract debtors, either in the name of
the Bank or the Borrower, to make payments directly to the Bank, and to advise
any person of the Bank's security interest in and to any of the Collateral, and
to collect all amounts due on account of the Collateral. Upon the occurrence of
an Event of Default which has not been remedied within any applicable cure
period and upon request by the Bank, the Borrower agrees to provide written
notification to any or all of the Borrower's account or contract debtors
regarding the Bank's security interest in the receivables Collateral and will
request that such account or contract debtors forward payment thereof to the
Bank. The within obligations on the part of the Borrower directly, being unique,
shall be specifically enforceable by the Bank.
(f) Upon the occurrence of an Event of Default which has not been
remedied within any applicable cure period, the Borrower hereby irrevocably
constitutes and appoints the Bank as the Borrower's true and lawful attorney,
with full power of substitution, to convert the Collateral into cash at the sole
risk, cost and expense of the Borrower. The rights and powers granted the Bank
by the within appointment include, but are not limited to, the right and power
to compromise, settle, or execute releases with any of the Borrower's account
debtors, and to prosecute, defend, compromise, or release any action relating to
the Collateral; to receive, open, and dispose of all mail addressed to the
Borrower and to take therefrom any remittances on or proceeds of any Collateral
in which the Bank has a security interest; to notify Post Office authorities to
change the address to which the Borrower's mail is to be sent as the Bank shall
designate; to endorse the name of the Borrower in favor of the Bank upon all
checks, drafts, money orders, notes, acceptances, or other instruments of the
same or different nature; to sign and endorse the name of the Borrower on, and
to receive as a secured party, any of the Collateral, invoices, schedules of
Collateral, freight or express receipts, or bills of lading, storage receipts,
warehouse receipts, or other documents to title of a same or different nature
relating to the Collateral; to sign the name of the Borrower on any notice to
the Borrower's account debtors for verification of the receivables Collateral;
and to sign and file or record on behalf of the Borrower any financing or other
statement in order to perfect or protect the Bank's security interest. The Bank
shall not be obligated to do any of the acts or to exercise any of the powers
authorized herein, but if the Bank elects to do any such act or to exercise any
such power, it shall not be accountable for more than it actually receives as a
result of such exercise of power, and shall not be responsible to the Borrower
except for the Bank's gross negligence or willful misconduct. All powers
conferred upon the Bank by this Agreement,
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being coupled with an interest, shall be irrevocable until the within Agreement
is terminated as provided herein.
4.22 MATERIAL SUBSIDIARY GUARANTORS. The Borrower shall immediately
notify the Bank of the addition of any new Subsidiaries and whether such
Subsidiary is a Material Subsidiary (as defined in Section 3.15 hereof). Upon
the Bank's request, the Borrower shall cause such Material Subsidiary to execute
a guaranty of the Borrower's obligations hereunder and a Subordination Agreement
(if applicable) each in the form attached hereto, and to deliver all such
financial statements, information and reports as the Bank may reasonably
request. Such Material Subsidiary or Material Subsidiaries, as the case may be,
are on occasion referred to herein individually as a "Guarantor" or collectively
as the "Guarantors".
4.23 LINE OF CREDIT BALANCE. Maintain a Debit Balance, as defined in
the Line of Credit Note, of not more than the maximum principal sum provided for
in such note or under this Agreement at any time.
ARTICLE V. NEGATIVE COVENANTS OF BORROWER AND GUARANTORS. Until payment in
full of the indebtedness now existing or hereafter incurred under this Agreement
and the performance of all obligations hereunder, the Borrower and the
Guarantors (as applicable) will not, without the express prior written consent
of the Bank, engage in the following:
5.1 NATURE AND SCOPE OF BUSINESS. The Borrower shall not enter into
any type of business other than that in which it is presently engaged, or
otherwise significantly change the scope or nature of its business.
5.2 MERGER, CONSOLIDATION OR ACQUISITIONS. The Borrower shall not be
a party to any merger, consolidation or any other reorganization, or acquire by
purchase, lease or otherwise all or substantially all of the assets or capital
stock of any person, partnership, corporation or entity.
5.3 SALE OR DISPOSITION OF ASSETS. The Borrower shall not sell,
lease, transfer or otherwise dispose of all or, a substantial portion of the
Borrower's assets and properties, except in the ordinary course of business.
5.4 ADDITIONAL INDEBTEDNESS. The Borrower shall not incur
indebtedness for borrowed money (or lease expense or issue or sell any of its
bonds, debentures, notes or similar obligations) except:
(a) Borrowings under this Agreement;
(b) Other obligations to the Bank;
(c) Borrowings used to prepay in full borrowing under this Agreement;
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(d) Accounts Payable and Accrued Expenses (as defined by GAAP).
(e) Borrowings disclosed to the Bank in the financial statements
previously delivered to the Bank described in Section 3.7.
(f) Borrowing from parties other than the Bank provided the same do
not exceed an aggregate of $5,000,000 at any time ("Permitted Other
Indebtedness").
5.5 GUARANTIES, ENDORSEMENT AND CONTINGENT LIABILITIES. Except as set
forth in Schedule 5.5 and except for guarantees, endorsements or liabilities for
the obligations of others which do not exceed $250,000 in the aggregate at any
one time, the Borrower and the Guarantors shall not guarantee, endorse or
otherwise become absolutely or contingently liable for the obligations of any
other person, partnership, corporation or other entity.
5.6 LIENS AND MORTGAGES. The Borrower shall not incur, create, assume
or suffer to exist any mortgage, pledge, lien, charge or other encumbrance of
any nature whatsoever on any of their respective assets, now or hereafter owned,
other than (a) the security interests, liens or mortgages, granted to the Bank
pursuant to the Loan Documents; (b) deposits under Workmen's Compensation,
Unemployment Insurance and Social Security laws; (c) liens imposed by law, such
as carriers, warehousemen's or mechanic's liens and other liens incurred in good
faith in the ordinary course of business; (d) liens evidencing the Permitted
Other Indebtedness as defined in Section 5.4(f) above; (e) those presently
existing liens and encumbrances permitted under the Borrower's Security
Agreement of even date (the "Security Agreement"); or (f) deposits or pledges
securing the performance of bids, tenders, contracts, leases, surety and appeal
bonds and other obligations of like nature make in the ordinary course of
business.
5.7 LOAN AND ADVANCES. Except for intercompany loans which do not
exceed $1,000,000 in the aggregate at any one time, the Borrower shall not make
any loans or advances to any individual, firm or corporation, including, without
limitation, any parent, affiliate, subsidiaries, shareholders, directors,
officers and employees; PROVIDED, HOWEVER, that the Borrower may make advances
to its employees, including its officers, with respect to reasonable expenses
incurred by such employees, which expenses are reimbursable by the Borrower and
directly related to the conduct of the Borrower's business.
5.8 DIVIDENDS AND DISTRIBUTIONS. The Borrower shall not declare or
pay dividends, or make any other payment or distribution on account of its
capital stock if there is a violation of or after such distribution or dividend
there would be a violation of any of the financial covenants set forth in
Section 4.20 hereof.
5.9 CONVERSION; CAPITAL STRUCTURE; ACQUISITION OF STOCK. The Borrower
and the Guarantors shall not alter, amend or convert the Borrower's form of
organization or capital structure. Furthermore, the Borrower shall not purchase,
obligate itself to purchase, redeem or otherwise acquire for value any of its
outstanding capital stock or any other of its equity securities if there is a
violation of or after such action there would be a violation of any of the
financial covenants set forth in Section 4.20 hereof.
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ARTICLE VI. CONDITIONS PRECEDENT TO MAKING OF LOAN
6.1 CONDITIONS PRECEDENT TO INITIAL DISBURSEMENT.
(a) The obligation of the Bank to make the Loan and make
disbursements of the proceeds of the same to the Borrower is subject to the
satisfaction by the Borrower or its representatives of the following conditions
precedent:
(i) The Borrower's and the Guarantors' warranties and representations
as contained herein shall be accurate and complete, in all
material respects, as of the date of Closing. (ii) The Borrower
and the Guarantors shall not be in default under any of the
covenants contained herein as of the date of Closing.
(iii) The Borrower and the Guarantors shall have executed and delivered
all of the Loan Documents as described herein. Without limiting
the foregoing, the Borrower shall have delivered to the Bank all
of those items identified as Borrower's and the Guarantors'
Documents" on the Closing Agenda attached hereto as Schedule
6.1(a)(iii) and made a part hereof, all of which must be
reasonably acceptable, in form and substance, to the Bank.
(b) Without limiting in any manner the scope or generality of the
foregoing, certain of said items are more particularly described as follows:
(i) All of the Borrower's obligations, if any, to the Guarantors
shall have been subordinated to the Borrower's performance of its
obligations to the Bank with respect to the Loan.
(ii) The Bank shall have received:
(A) acknowledgment copies of proper financing statements (Form
UCC-1) duly filed under the Uniform Commercial Code of all
jurisdictions as may be necessary or, in the opinion of the
Bank, desirable to perfect the security interests created
under the Loan Documents; and
(B) certified copies of Requests for Information or Copies (Form
UCC-11) listing the financing statements referred to in
paragraph (i) above and all other effective financing
statements which name the Borrower (under its present name
and any previous names) as debtor and which are filed in the
jurisdictions referred to in said paragraph (A), together
with copies of such other financing statements (none of
which shall cover the Collateral purported to be covered by
the Security Agreement).
(iii) The Borrower shall pay the costs and fees of the Bank
hereinbefore described herein.
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(iv) The Borrower shall deliver a Covenant Compliance Certificate in
accordance with Section 4.3(e) hereof.
(v) Counsel to the Borrower and the Guarantors shall deliver an
opinion to the Bank to the effect that (A) the Borrower is a
business corporation duly organized and validly existing under
the laws of the State of Delaware and is duly qualified to do
business in New Hampshire and all jurisdictions in which the
nature of its business or assets make such qualification
necessary; (B) that the Loan Documents constitute binding
obligations of the Borrower or the Guarantors enforceable in
accordance with their terms; (C) that the Borrower's and the
Guarantors' entrance into the obligations evidenced by the Loan
Documents does not constitute a breach of the articles of
incorporation or bylaws of the Borrower or, to the knowledge of
such counsel, any other arrangements or agreements by which
Borrower or any of the Guarantors is bound and that the
Borrower's and the Guarantors' entrance into and performance of
the Borrower's loan obligations will not require any further
approvals or consents; (D) that there is neither pending nor, to
the knowledge of such counsel, threatened any litigation,
administrative proceedings or investigations that would have a
material adverse effect on the Borrower or any of the Guarantors
or the Borrower's or any of the Guarantors' condition, financial
or otherwise; (E) that the security interests granted to the Bank
in connection with the Loan constitute a valid perfected security
interest in the collateral described therein; and (F) addressing
such other matters as deemed appropriate by the Bank.
(c) Borrower shall furnish the Bank with such other documents,
opinions, certificates, evidence and other matters as may be requested by the
Bank at or prior to Closing.
6.2 SUBSEQUENT BORROWING. The obligation of the Bank to make each
Loan to be made by it hereunder (including the initial Loan) is subject to the
following conditions precedent:
(a) At the time of each Loan (as evidenced by a certificate executed
on behalf of the Borrower if the Bank shall so require):
(i) The Borrower shall have complied and shall then be in compliance
in all material respects with all the terms, covenants and
conditions of this Agreement which are binding on it;
(ii) There shall exist no Event of Default or no event (including an
event caused by such Loan) which would be an Event of Default but
for the requirement that notice be given or time elapse or both;
(iii) The representations and warranties contained in this Agreement
shall be true and correct in all material respects as of the date
of such Loan; and
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(iv) There shall have been no material adverse change in the
Borrower's financial condition as evidenced by the financial
information submitted to the Bank pursuant to this Agreement.
(b) All of the Loan Documents shall remain in full force and effect
and the validity of any Loan Document shall not have been contested.
6.3 DISBURSEMENT OF THE LOAN. The Bank shall credit the proceeds of
the Loan to the deposit accounts of the Borrower with the Bank for the benefit
of the Borrower or as otherwise directed in writing by the Borrower, including
payments to third parties through electronic funds transfers. Advances under the
Line of Credit shall (1) be made in accordance with the disbursement procedures
set forth in the Line of Credit Note; (2) shall not cause the Debit Balance, as
defined in the Line of Credit Note, to exceed Fifteen Million Dollars
($15,000,000); PROVIDED, HOWEVER, the availability under the Line of Credit for
direct borrowings shall be reduced by the aggregate amount of all outstanding
foreign exchange facilities and letters of credit issued by the Bank or any
affiliate thereof for the benefit or on behalf of the Borrower; and (3) shall be
for a purpose defined in Article I herein.
ARTICLE VII. EVENTS OF DEFAULT; ACCELERATION; REMEDIES
7.1 The occurrence of any one or more of the following events shall
constitute an event of default (an "Event of Default") after the expiration of
applicable notice and cure periods, if any, under this Agreement:
(a) If any statement, representation or warranty made by the Borrower
or any of the Guarantors herein or in the Loan Documents shall prove to have
been false or misleading when made, or subsequently becomes false or misleading,
in any materially adverse respect.
(b) Default by the Borrower in payment after three (3) days of its
due date of any principal or interest called for under its payment obligations
with respect to the Loan.
(c) Default by the Borrower or any of the Guarantors, in any material
respect, in the performance or observance of any of the other provisions, terms,
conditions, warranties or covenants of the Loan Documents.
(d) The dissolution, termination of existence, death, merger or
consolidation of the Borrower or any of the Guarantors or a sale of the
Borrower's or any of the Guarantors business or the assets of the Borrower or
any of the Guarantors out of the ordinary course of business.
(e) The Borrower shall (i) apply for or consent to the appointment of
a receiver, trustee or liquidator of it or any of its property, (ii) admit in
writing its inability to pay its debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or
insolvent, (v) file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed
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against it in any proceeding under any such law or (vi) offer or enter into any
composition, extension or arrangement seeking relief or extension of its debts.
(f) Proceedings shall be commenced or an order, judgment or decree
shall be entered, without the application, approval or consent of the Borrower,
in or by any court of competent jurisdiction, relating to the bankruptcy,
dissolution, liquidation, reorganization or the appointment of a receiver,
trustee or liquidator of the Borrower, of all or a substantial part of its
assets, and such proceedings, order, judgment or decree shall continue
undischarged or unstayed for a period of sixty (60) days.
(g) A final and unappealable judgment for the payment of money, not
covered by insurance, in excess of Two Hundred Fifty Thousand Dollars ($250,000)
shall be rendered against the Borrower and the same shall remain undischarged
for a period of thirty (30) days, during which period execution shall not be
effectively stayed.
(h) The Collateral is materially injured or destroyed by fire or
otherwise which casualty is not insured.
(i) Any attachment or mechanic's, laborer's, materialman's
architect's, artisan's or similar statutory liens or any notice thereof shall be
filed against any Collateral and shall not be discharged within thirty (30) days
of such filing.
(j) The Line of Credit is hereby cross-defaulted as more fully set
forth in Section 1.19 hereof, to the end that a default under one loan or
obligation shall constitute a default under all of such loans and obligations.
7.2 Upon the occurrence of any Event of Default (which, in the case
of an Event or Default listed in Section 9.1(a) or 9.1(c) above remains
unremedied for a period of ten (10) days after the earlier of the date of notice
thereof to the Borrower by the Bank or the date the Borrower becomes aware of
such default), the Bank's commitment to make further loans under this Agreement
or any other agreement with the Borrower will immediately cease and terminate
and, at the election of the Bank, all of the obligations of the Borrower to the
Bank under this Agreement will immediately become due and payable without
further demand, notice or protest, all of which are hereby expressly waived.
Thereafter, the Bank may proceed to protect and enforce its rights, at law, in
equity, or otherwise, against the Borrower, and any other endorser or guarantor
of the Borrower's obligations, either jointly or severally, and may proceed to
liquidate and realize upon any of its security in accordance with the rights of
a secured party under the Uniform Commercial Code, or any Loan Document, any
agreement between the Borrower and the Bank relating to the Loan, or any other
agreement between any guarantor or endorser of the Borrower's obligations to the
Bank hereunder.
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ARTICLE VIII. MISCELLANEOUS PROVISIONS
8.1 ENTIRE AGREEMENT; WAIVERS. This Agreement and the Loan Documents
together constitute the entire agreement between the Borrower and the Bank and
no covenant, term, condition or other provision thereof nor any default in
connection therewith may be waived except by an instrument in writing signed by
the Bank and the Borrower and delivered to the Borrower. The Bank's failure to
exercise or enforce any of its rights, powers or privileges under this Agreement
or the Loan Documents shall not operate as a waiver thereof. In the event of any
conflict between the terms, covenants, conditions and restrictions contained in
the Loan Documents, the term, covenant, condition or restriction which confers
the greatest benefit upon the Bank shall control. The determination as to which
term, covenant, condition or restriction is more beneficial shall be made by the
Bank in its sole discretion.
8.2 REMEDIES CUMULATIVE. All remedies provided under this Agreement
and the Loan Documents or afforded by law shall be cumulative and available to
the Bank until all of the Borrower's obligations to the Bank have been paid in
full.
8.3 SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein and in certificates delivered in
connection herewith shall be deemed to have been relied on by the Bank,
notwithstanding any investigation made by the Bank or in its behalf, and shall
survive the execution and delivery of this Agreement and the Loan Documents
until payment in full of the Loan. All such covenants, agreements,
representations and warranties shall be joint and several obligations of the
Borrower and bind and inure to the benefit of the Borrower's and the Bank's
successors and assigns, whether so expressed or not.
8.4 GOVERNING LAW; JURISDICTION. This Agreement and the Loan
Documents shall be construed and their provisions interpreted under and in
accordance with the laws of the State of New Hampshire. The Borrower and the
Guarantors, to the extent they may legally do so, hereby consent to the
jurisdiction of the courts of the State of New Hampshire and the United States
District Court for the State of New Hampshire, as well as to the jurisdiction of
all courts from which an appeal may be taken from such courts for the purpose of
any suit, action or other proceeding arising out of any of their obligations
hereunder or with respect to the transactions contemplated hereby, and expressly
waive any and all objections they may have to venue in any such courts. THE
BORROWER AND THE BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS
AGREEMENT AND MAKE THE LOAN.
8.5 ASSURANCE OF EXECUTION AND DELIVERY OF ADDITIONAL INSTRUMENTS.
The Borrower agrees to execute and deliver, or to cause to be executed and
delivered, to the Bank all such further instruments, and to do or cause to be
done all such further acts and things, as the Bank
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may reasonably request or as may be necessary or desirable to effect further the
purposes of this Agreement and the Loan Documents. Upon receipt of an affidavit
of an officer of the Bank as to the loss, theft, destruction or mutilation of
the Note or any other security document which is not of public record, and, in
the case of any such loss, theft, destruction or mutilation, upon surrender and
cancellation of such Note or other security document, Borrower will issue, in
lieu thereof, a replacement Note or other security document in the same
principal amount thereof and otherwise of like tenor.
8.6 WAIVERS AND ASSENTS BY THE BORROWER AND THE GUARANTORS. With the
exception of specific notices provided in the Loan Documents (if any), the
Borrower and any guarantor or endorser of the Borrower's obligations to the Bank
hereunder hereby waive, to the fullest extent permitted by law, demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description with respect both to
the Loan Documents and Collateral. The Borrower and the Guarantors assent to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Bank may deem
advisable. Any demand upon or notice to the Borrower that the Bank may be
required or may elect to give shall be mailed by registered or certified mail,
return receipt requested, postage prepaid and shall be effective on the date of
the first attempted delivery thereof by the U.S. Postal Service, as shown on the
registered or certified mail return receipt for such notice addressed to the
Borrower at their address as set forth at the beginning of the Agreement.
8.7 NO DUTY OF THE BANK WITH RESPECT TO THE COLLATERAL. The Bank
shall have no duty as to the collection or protection of Collateral security
furnished to it hereunder or any income thereon, nor as to the preservation of
rights against prior parties, nor as to the preservation of any rights
pertaining thereto, beyond the safe custody thereof.
8.8 ELECTION OF THE BANK. The Bank may exercise its rights with
respect to the Collateral without resorting or regard to other collateral or
sources of reimbursement for the liabilities.
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8.9 ASSIGNMENT BY THE BANK. The Bank may assign its rights and
obligations under the Loan Documents with the prior consent of the Borrower
which consent shall not be unreasonably withheld. If at any time, by permitted
assignment , the Bank transfers its rights in the Borrower's obligations
hereunder and its rights in the security therefor, in whole or in part, such
transfer shall carry with it the powers and rights of the Bank under this
Agreement and the Collateral so transferred and the transferee shall become
vested with such powers and rights whether or not they are specifically referred
to in the instrument evidencing the transfer. If, and to the extent that the
Bank retains such rights and Collateral, the Bank shall continue to have the
rights and powers herein set forth with respect thereto. This Agreement shall be
binding upon and inure to the benefit of the Bank, the Borrower, and their
successors, permitted assigns, heirs and personal representatives; provided,
however, the rights and obligations of the Borrower hereunder are not
assignable, delegable or transferable without the consent of the Bank. All of
the rights of the Bank hereunder shall inure to the benefit of any participating
bank or banks and its or their successors and assigns.
The Bank shall have the unrestricted right at any time and from time to
time, and without the consent of or notice to Borrower or any Guarantor, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in the Bank's obligation to lend
hereunder and/or any or all of the Loan held by the Bank hereunder. In the event
of any such grant by the Bank of a participating interest to a Participant,
whether or not upon notice to the Borrower, the Bank shall remain responsible
for the performance of its obligations hereunder and the Borrower shall continue
to deal solely and directly with the Bank in connection with the Bank's rights
and obligations hereunder. The Bank may furnish any information concerning the
Borrower in its possession from time to time to prospective assignees and
Participants, provided that the Bank shall require any such prospective assignee
or Participant to agree in writing to maintain the confidentiality of such
information.
8.10 EXPENSES; PROCEEDS OF COLLATERAL. The Borrower covenants and
agrees that it shall pay to the Bank, on demand, any and all reasonable
out-of-pocket expenses, including reasonable attorneys' fees incurred or paid by
the Bank in protecting and enforcing its rights under this Agreement, the costs
of preparation of this Agreement and its supporting documents including all
filing and appraisal fees. Without limiting the foregoing, the Bank shall have
the right to recover its out-of-pocket costs in connection with the
administration of the Loan, and to recover its reasonable out-of-pocket costs
and/or collect fees in connection with requests for consents and waivers of
compliance with covenants, or other material changes in the Loan. After
deducting all of said reasonable expenses and the reasonable expenses of
retaking, holding, preparing for sale, selling and the like, the residue of any
proceeds of collections of sale of the Collateral shall be applied to the
payment of principal of or interest on the Loan in such order or preference as
the Bank may determine, and any excess shall be returned to the Borrower
(subject to the provisions of Section 9-504 of the Uniform Commercial Code) and
the Borrower shall remain liable for any deficiency.
8.11 THE BANK'S RIGHT OF SETOFF. Borrower and any Guarantor hereby
grant to the Bank, a lien, security interest and right of setoff as security for
all liabilities and obligations to the Bank, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of
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the Bank or any entity under the control of Fleet Financial Group, Inc., or in
transit to any of them. Upon an Event of Default or upon notice of issue of any
legal process by which process any of the Borrower's or Guarantor's assets in
the possession or control of the Bank or any entity under the control of Fleet
Financial Group, Inc., may be trusteed, attached or levied upon, the Bank may
without demand or notice set off the same or any part thereof and apply the same
to any liability or obligation of the Borrower and any Guarantor even though
unmatured and regardless of the adequacy of any other collateral securing the
loan. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
IN WITNESS WHEREOF, the BANK and the BORROWER have executed this Agreement by
their duly authorized officers.
FLEET BANK-NH
______________________________ By:__________________________________
Witness Xxx XxXxxxx Xxxxxxx, Its Duly
Authorized Vice President
NASHUA CORPORATION
______________________________ By:__________________________________
Witness Xxxx X. Xxxxxxxxx, Its Duly
Authorized Vice President-Finance, Chief
Financial Officer and Treasurer
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SCHEDULE 3.5
Litigation
[To Be Completed By Borrower]
2
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SCHEDULE 3.7
Liens
[To Be Completed By Borrower]
3
28
SCHEDULE 3.8
Taxes
[To Be Completed By Borrower]
4
29
SCHEDULE 3.12
Successor
[To Be Completed By Borrower]
5
30
SCHEDULE 3.15
Subsidiaries
[To Be Completed By Borrower]
I. MATERIAL SUBSIDIARIES (Those Subsidiaries which alone account for five
percent (5%) or more of the Borrower's consolidated total assets or
five percent (5%) or more of the Borrower's consolidated total
revenue):
II. OTHER SUBSIDIARIES:
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SCHEDULE 4.16
Senior Management
NAME TITLE
[To Be Completed By Borrower]
7
32
SCHEDULE 4.3(e)
Covenant Compliance Certificate
Fleet Bank-NH
0000 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxx XxXxxxx Xxxxxxx, Vice President
Dear Xx. XxXxxxx Xxxxxxx:
Pursuant to the provisions of a certain Loan Agreement dated as of
April 22, 1999 with respect to a line of credit loan in the amount of
$15,000,000 (collectively, the "Loan Agreement") by and between Nashua
Corporation (the "Borrower") and Fleet Bank-NH (the "Bank"), the undersigned
hereby certifies as follows:
1. That the financial statements (the "Financial Statements") of the
Borrower and/or Guarantors delivered to the Bank with this Certificate fairly
present the financial condition of the Borrower in all material respects for the
periods covered therein as of the date hereof.
2. That the undersigned is a duly elected, qualified and acting
__________ of the Borrower and as such officer is authorized to make and deliver
this Covenant Compliance Certificate.
3. That during the period set forth in the Financial Statements, the
Borrower was in compliance with all financial covenants of the Loan Agreement.
As of __________, 199__, the Minimum EBITDA (as defined in the Loan Agreement)
is $__________. As of _______________, 199__, the Minimum Tangible Net Worth (as
defined in the Loan Agreement) is $____________. As of ___________, 199__, the
amount of the Maximum Capital Expenditures (as defined in the Loan Agreement)
incurred during the current fiscal year to date is $__________. As of
__________, 199_, the amount of the Maximum Other Indebtedness (as defined in
the Loan Agreement) is $_________________.
4. The representations and warranties contained in the Loan
Agreement and the representations and warranties of the Borrower and the
Guarantors contained in each of the other Loan Documents are to the best of the
Borrower's knowledge, true, correct and complete in every material respect on
and as of the date hereof with the same force in effect as though made on and as
of the date hereof. All covenants contained in the Loan Agreement have been and
continue to be met in all material respects.
5. To the best of the Borrower's knowledge, no event has occurred or
is continuing which constitutes a default or an Event of Default.
Terms defined in the Loan Agreement which is not otherwise expressly defined
herein are used herein with the meaning so defined in the Loan Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this Covenant
Compliance Certificate on this _____ day of ___________, 1999.
NASHUA CORPORATION
_________________________ By:_________________________________
Witness Xxxx X. Xxxxxxxxx, Its Duly
Authorized Vice President-Finance,
Chief Financial Officer and Treasurer
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SCHEDULE 5.5
Guaranties, Endorsements and Contingent Liabilities
[To Be Completed By Borrower]
10
35
SCHEDULE 6.1(a)(iii)
Closing Agenda
11
