1
EXHIBIT 4.0
BANKBOSTON, N.A.
TO
GALILEO CORPORATION
LOAN AGREEMENT
Dated as of January 27, 1998
16
2
TABLE OF CONTENTS
SECTION I DEFINITIONS...................................................... 1
1.1 General.......................................................... 1
1.2 Accounting Terms................................................. 8
SECTION II DESCRIPTION OF CREDIT........................................... 8
2.1 The Loan......................................................... 8
2.2 Notice and Manner of Borrowing and/or Selection of
Interest Period.................................................. 9
2.3 Commitment Fee................................................... 10
2.4 The Loan Account................................................. 10
2.5 Duration of Interest Periods..................................... 10
2.6 Facility Fee..................................................... 10
2.7 Interest Rate and Payments of Interest........................... 11
2.8 Changed Circumstances............................................ 12
2.9 Payments and Prepayments of the Loan............................. 13
2.10 Method of Payment................................................ 14
2.11 Overdue Payments................................................. 14
2.12 Payments Not at End of Interest Period........................... 14
2.13 Computation of Interest.......................................... 15
SECTION III CONDITIONS OF LOAN............................................. 15
3.1 Conditions Precedent to the Loan................................. 15
3.2 Conditions Precedent to Future Advances.......................... 17
SECTION IV REPRESENTATIONS AND WARRANTIES.................................. 17
4.2 Corporate Authority.............................................. 17
4.3 Valid Obligations................................................ 18
4.4 Consents or Approvals............................................ 18
4.5 Title to Properties; Absence of Liens............................ 18
4.6 Financial Statements............................................. 18
4.7 Changes.......................................................... 18
4.8 Franchises, Licenses, Registrations, etc......................... 19
4.9 Compliance with Other Instruments, etc........................... 19
4.10 Outstanding Securities........................................... 19
4.11 Defaults......................................................... 20
4.12 Taxes............................................................ 20
-i-
3
4.13 No Margin Regulation Violation................................... 20
4.14 Litigation....................................................... 20
4.15 Investment Company Act........................................... 20
4.16 Compliance with ERISA; Multiemployer Plans....................... 20
4.17 No Materially Adverse Contracts, etc............................. 21
4.18 Compliance with Environmental Laws............................... 21
SECTION V COVENANTS OF THE BORROWER........................................ 22
5.1 Financial Statements of the BORROWER
and other Reporting Requirements................................. 22
5.2 Conduct of Business.............................................. 24
5.3 Maintenance and Insurance........................................ 24
5.4 Taxes............................................................ 24
5.5 Inspection....................................................... 24
5.6 Maintenance of Books and Records................................. 24
5.7 Liens............................................................ 25
5.8 Consolidated Tangible Net Worth.................................. 25
5.9 Ratio of Indebtedness to Consolidated Tangible Net Worth......... 25
5.10 Interest Coverage Ratio.......................................... 25
5.11 Limitations on Capital Expenditures. ........................... 25
5.12 Limitations on Business Activities............................... 25
5.13 Limitations on Losses. ......................................... 25
SECTION VI NEGATIVE COVENANTS.............................................. 26
6.1 Indebtedness..................................................... 26
6.2 Contingent Liabilities........................................... 26
6.3 ERISA............................................................ 27
6.4 Merger; Consolidation; Sale or Lease of Assets................... 27
6.5 Sale and Leaseback............................................... 27
SECTION VII DEFAULTS....................................................... 27
7.1 Events of Default; Acceleration of Note.......................... 27
SECTION VIII MISCELLANEOUS................................................. 30
8.1 Notices.......................................................... 30
8.2 Expenses......................................................... 31
8.3 Set-Off.......................................................... 31
8.4 Term of Agreement................................................ 31
8.5 No Waivers....................................................... 31
8.6 Governing Law.................................................... 31
-ii-
4
8.7 Amendments....................................................... 32
8.8 Binding Effect of Agreement...................................... 32
8.9 Counterparts..................................................... 32
8.10 Severability..................................................... 32
8.11 Captions......................................................... 32
8.12 Entire Agreement................................................. 32
8.13 JURY WAIVER...................................................... 32
-iii-
5
EXHIBITS
Exhibit A: Promissory Note
Exhibit B: Notice of Borrowing and/or Selection of Interest Period
Exhibit C: List of Subsidiaries
Exhibit D: Existing Liens
Exhibit E: Litigation
Exhibit F: Environmental Compliance Matters
-iv-
6
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made as of this ______ day of January,
1998, by and between GALILEO CORPORATION, a Delaware corporation duly qualified
as a foreign corporation under the laws of the Commonwealth of Massachusetts,
with its principal place of business at Galileo Park, Sturbridge, Worcester
County, Massachusetts ("BORROWER"), and BANKBOSTON, N.A., a national banking
association having its principal offices at 100 Federal Street, Boston, Suffolk
County, Massachusetts ("BANK")
SECTION I
DEFINITIONS
1.1 GENERAL.
All capitalized terms used in this Agreement or in any certificate, report or
other document made or delivered pursuant to this Agreement (unless otherwise
defined therein) shall have the meanings assigned to them below:
ADJUSTED LIBOR RATE - Applicable to any Interest Period, shall mean a
rate per annum determined pursuant to the following formula:
AER = [ IOR ]*
-----------
[1.00 - RP]
AER = Adjusted LIBOR Rate
IOR = Interbank Offered Rate
RP = Reserve Percentage
* The amount in brackets shall be rounded upwards, if necessary,
to the next higher 1/100 of 1%.
Where:
"INTERBANK OFFERED RATE" applicable to any LIBOR Loan for any
Interest Period means the rate of interest determined by the BANK to be
the prevailing rate per annum at which deposits in U.S. dollars are
offered to the BANK by banks in the interbank LIBOR market in which it
regularly participates on or about 10:00 a.m. (Boston, MA time) two
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the LIBOR Loan to which
such Interest Period is to apply for a period of time approximately
equal to such Interest Period.
1
7
"RESERVE PERCENTAGE" applicable to any Interest Period means
to the rate (expressed as a decimal) applicable to the BANK during such
Interest Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System for determining the maximum
reserve requirement (including, without limitation, any basic,
supplemental, emergency or marginal reserve requirement) of the BANK
with respect to "Eurocurrency liabilities" as that term is defined
under such regulations, it being understood that, as of the date of
this Agreement, the Reserve Percentage is zero (0).
The BANK agrees to give written notice to the BORROWER of any change in the
Adjusted LIBOR Rate and such written notice will become effective upon receipt
by the BORROWER, provided that any such change will not affect the interest rate
in effect for the then existing Interest Period.
AGREEMENT. This Agreement (including all exhibits, schedules, annexes
and the like referred to herein) as originally executed, or if amended, varied
or supplemented from time to time, as so amended, varied or supplemented.
BASE RATE. The higher of (a) the annual rate of interest announced from
time to time by the Bank at the Bank's Head Office, as its "Base Rate" and (b)
one-half of one percent (1/2%) above the Federal Funds Effective Rate. For the
purposes of this definition, "Federal Funds Effective Rate" shall mean for any
day, the rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
the Bank from three funds brokers of recognized standing selected by the Bank.
BASE RATE LOAN. All or any portion of the Loan bearing interest
determined with respect to the Base Rate.
BUSINESS DAY. Any day other than a Saturday, Sunday or legal holiday on
which banks in Boston, MA, are authorized to close.
CAPITAL LEASE. Any lease or other agreement for the use of property
which is required to be capitalized on a balance sheet of the lessee or other
user of property in accordance with generally accepted accounting principles.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended.
2
8
COLLATERAL. Any and all property of the BORROWER or any Guarantor in
which the BANK now has, by this Agreement or under the Security Agreements of
even date herewith, acquires or hereafter acquires a security interest lien, or
encumbrance therein.
CONSOLIDATED CURRENT INDEBTEDNESS. As of the date of any determination
thereof, Current Indebtedness of the BORROWER and its Subsidiaries, determined
on a consolidated basis, after eliminating all offsetting debits and credits
among the BORROWER and its Subsidiaries and other items to be eliminated in
accordance with generally accepted accounting principles.
CONSOLIDATED NET INCOME. Consolidated Net Income at any date as of
which the amount thereof to be determined, all amounts that should, in
accordance with generally accepted accounting principles, be included as the
Consolidated Net Income of the BORROWER and its Subsidiaries.
CONSOLIDATED TANGIBLE NET WORTH. As of the date of any determination
thereof, (i) Shareholders' Equity, less (ii) any intangibles including, without
limitation or duplication, unamortized debt discount and expense and deferred
charges, goodwill, trademarks, trade names, patents, customer lists, licenses,
franchises, copyrights, trade secrets and any other intangibles which would
appear on the consolidated balance sheet of the BORROWER or its Subsidiaries,
determined on a consolidated basis, after eliminating all offsetting debits and
credits among the BORROWER and its Subsidiaries and all other items to be
eliminated in accordance with generally accepted accounting principles.
CONVERSION DATE. Two (2) years from the date hereof at which time,
provided that there is no Event of Default under the terms of the Obligations,
the Loan will be converted from a Revolving Loan to a Term Note and amortized in
accordance with Section II of this Agreement.
CONTROLLED GROUP. All trades or businesses (whether or not
incorporated) under common control that, together with the BORROWER, are treated
as a single employer under Section 414(b) or 414(c) of the Code or Section 4001
of ERISA.
DEFAULT. An Event of Default or an event or condition that, with the
passage of time or the giving of notice, or both, would constitute an Event of
Default.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time to
time to be supplemented or amended.
ERISA AFFILIATE. Any person which is under "common control" with the
BORROWER within the meaning of Section 4001 of ERISA.
ERISA TERMINATION EVENT. (i) A "reportable event" described in Section
4043 of ERISA and the regulations issued thereunder (other than a "reportable
event" not subject to the provision
3
9
for 30-day notice to the PBGC under such regulations), (ii) the withdrawal of
the BORROWER or any of its ERISA Affiliates from a Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the providing of a notice of intent to terminate a Plan pursuant to
Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (iv) the institution of proceedings to
terminate a Plan by the PBGC, or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
LIBOR LOAN. The Loan, which will bear interest at a rate determined
with reference to the Adjusted LIBOR Rate.
EVENT OF DEFAULT. Any event described in SECTION 6.1.
EXCHANGE ACT. Shall mean the Securities Exchange Act of 1934, as
amended from time to time.
FEDERAL BANKRUPTCY CODE. The United States Bankruptcy Code, 11
U.S.C.sec.101 et. seq., as amended from time to time.
GUARANTEES. As applied to the BORROWER, all guarantees, endorsements or
other contingent or surety obligations with respect to obligations of others
whether or not reflected on the balance sheet of the BORROWER, including any
obligation to furnish funds, directly or indirectly (whether by virtue of
partnership arrangements, by agreement to keep-well or otherwise), through the
purchase of goods, supplies or services, or by way of stock purchase, capital
contribution, advance or loan, or to enter into a contract for any of the
foregoing, for the purpose of payment of obligations of any other person or
entity.
GUARANTOR. Leisegang Medical, Inc.
GUARANTY. The Guaranty of Leisegang Medical, Inc. of even date
herewith.
INDEBTEDNESS. As applied to the BORROWER (i) all obligations for
borrowed money or other extensions of credit, including all obligations
representing the deferred purchase price of property, other than accounts
payable and accrued expenses arising in the ordinary course of business, it
being understood that the use of the phrase "ordinary course of business"
includes, without limitation, all of the BORROWER's operating leases, (ii) all
obligations evidenced by bonds, notes, debentures or other similar instruments,
(iii) all obligations secured by any mortgage, pledge, security interest or
other lien on property owned or acquired by the BORROWER whether or not the
obligations secured thereby shall have been assumed, (iv) that portion of all
obligations arising under capital leases that is required to be capitalized on
the balance sheet of the BORROWER, (v) all Guarantees, and (vi) all obligations
that are
4
10
immediately due and payable out of the proceeds of or production from property
now or hereafter owned or acquired by the BORROWER.
INSURANCE CERTIFICATES. As required by the Security Agreement.
INTEREST PERIOD. The period commencing on the date of the initiation or
continuation of the Loan in each instance ending thirty, sixty, ninety or
one-hundred eighty days thereafter, as the BORROWER may elect in the applicable
Notice of Borrowing and/or Selection of Interest Period, PROVIDED THAT:
a) any Interest Period that would otherwise end on a day
that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar month,
in which case such Interest Period shall end on the immediately
preceding Business Day;
b) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last business Day of a calendar month; and
c) no Interest Period shall have a duration of less than
thirty (30) days; and if any Interest Period applicable to the Loan
would be for a shorter period, such Interest Period shall not be made
available hereunder.
INVESTMENTS. The purchase or acquisition of any share of capital stock,
partnership interest, evidence of indebtedness or other equity security of any
other person or entity, any loan, advance or extension of credit to, or
contribution to the capital of, any other person or entity, any real estate held
for sale or investment, any commodities futures contracts held other than in
connection with bona fide hedging transactions, any other investment in any
other person or entity, and the making of any commitment or acquisition of any
option to make an Investment.
LANDLORD'S WAIVER. To be obtained by the Borrower or any of its
Subsidiaries from the Landlord at any location in which the value of the
Borrower's assets or any of its Subsidiaries exceed ONE MILLION and 00/100
($1,000,000.00) DOLLARS.
LIEN. Any interest in property securing an obligation owed to, or a
claim by, any person other than the owner of the property, whether such interest
shall be based on the common law, statute or contract, whether or not such
interest shall be recorded or perfected and whether or not such interest shall
be contingent upon the occurrence of some future event(s) or the existence of
some future circumstance(s), and including the lien or security interest arising
from a mortgage, encumbrance, pledge, adverse claim or charge, conditional sale
or trust receipt, or from a lease, consignment or bailment for security
purposes. The term "Lien" shall also include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases
5
11
and other title exceptions and encumbrances affecting property. For the purposes
of this Agreement, a person shall be deemed to be the owner of any property that
such person shall have acquired or shall hold subject to a conditional sale
agreement or other arrangement (including a leasing arrangement) pursuant to
which title to the property shall have been retained by or vested in some other
person for security purposes.
LOAN. A Loan made to the BORROWER by the BANK pursuant to SECTION II of
this Agreement.
LOAN DOCUMENTS. The Promissory Note and all other documents executed by
the BORROWER and the Guarantor in favor of the BANK as required in connection
with the terms of the Loan.
MAXIMUM COMMITMENT. TWELVE MILLION AND 00/100 DOLLARS ($12,000,000.00).
MULTIEMPLOYER PLAN. As defined in Section 4001(a)(3) of ERISA.
NOTE. The Promissory Note of the BORROWER substantially in the form of
Exhibit "A" hereto, evidencing the obligation of the BORROWER to the BANK to
repay the Loans.
NOTICE OF BORROWING AND/OR SELECTION OF INTEREST PERIOD. See
SECTION 2.2.
OBLIGATIONS. Any and all obligations of the BORROWER and the Guarantor
to the 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 or acquired, regardless of how they arise or are acquired or
by what agreement or instrument, if any, and including obligations to perform
acts and refrain from taking action as well as obligations to pay money
including, but not limited to, the Loan.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
PERMITTED LIENS. The term "Permitted Liens" shall mean:
a) Liens securing taxes, assessments, governmental
charges or levies or the claims of carriers, warehousemen, materialmen,
mechanics and other like persons not yet due; PROVIDED, HOWEVER, that
this clause (b) shall not be deemed to permit any Liens which may be
imposed pursuant to ss.4068 of ERISA;
b) Liens incidental to the normal conduct of business or
the ownership of properties and assets (including warehousemen's and
statutory landlords' Liens), Liens, deposits or pledges securing the
performance of bids, tenders or trade contracts, and Liens
6
12
securing statutory obligations (including those arising under workers'
compensation, unemployment insurance and other social security
legislation) or surety or appeal bonds in connection with proceedings
in which the BORROWER or any Subsidiary is a party;
c) minor survey exceptions and minor reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other minor title exceptions and
encumbrances affecting property, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other restrictions
as to the use of real properties, which are necessary for the conduct
of the activities of the BORROWER and its Subsidiaries or which
customarily exist on properties of corporations engaged in similar
activities and similarly situated and which do not in any event
materially impair the use of any of such properties in the operation of
the business of the BORROWER;
d) Liens (including any Capital Leases) originally
created to secure payment of a portion of the purchase price relating
to any property or any interest therein, which the BORROWER or any
Subsidiary (or, in the case of any Capital Lease, the owner) shall
acquire after the date hereof, but, with respect to any such Lien,
which property, or interest shall not be acquired more than 60 days
prior to the date of the creation of such Lien.
e) Liens in replacement, extension or renewal of any
Liens described in the preceding clauses (a) through (d) inclusive; and
PERSON. Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, unincorporated organization or
government (or any agency or political subdivision thereof).
PLAN. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the BORROWER or any
member of the Controlled Group for employees of the BORROWER or any member of
the Controlled Group or (ii) if such Plan is established, maintained pursuant to
a collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the BORROWER, or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five Plan years made contributions.
PLEDGE AGREEMENTS. Pledge Agreements encumbering up to sixty-six (66%)
percent of the Pledged Stock (as defined in said Pledge Agreements) of each
wholly owned foreign subsidiary of the Borrower now existing or hereafter
acquired.
7
13
REVOLVING CREDIT PERIOD. The period beginning on the date of this
Agreement to the earlier date on which the commitment to make advances under the
terms of the Loan is terminated or the Conversion Date.
REVOLVING LOAN. A Loan made available to BORROWER prior to the
Conversion Date pursuant to SECTION 2 of this Agreement.
SEC. The Securities and Exchange Commission and any successor
organization.
SECURITIES ACT. The Securities Act of 1933, as amended from time to
time.
SECURITY AGREEMENTS. A certain Security Agreement of even date herewith
by and between the BORROWER and the BANK encumbering assets located in the
Commonwealth of Massachusetts and a certain Security Agreement of even date
herewith by and between the Guarantor and the Bank encumbering assets located in
the State of Florida and any other assets of the BORROWER or the Guarantor,
wherever located.
SHAREHOLDERS' EQUITY. The total stockholders' equity (including,
without limitation, the sum of the capital stock excluding treasury stock and
capital stock subscribed and unissued and surplus including retained earnings,
additional paid-in capital and the balance of the current profit and loss
account not transferred to surplus) of the BORROWER and its Subsidiaries, as
determined on a consolidated basis, after eliminating all offsetting debits and
credits among the BORROWER and its Subsidiaries and all other items to be
eliminated in accordance with generally accepted accounting principles.
SINGLE EMPLOYER PLAN. Any "single employer plan" as defined in Section
4001 of ERISA.
SUBSIDIARY. The term "Subsidiary", when used herein, shall mean a
corporation, limited liability company or business trust, a majority of the
shares or percentage of the ownership interest of which is owned directly or
indirectly by the BORROWER.
TARGET COMPANY. A company targeted for acquisition by the BORROWER
using all or a substantial portion of the Proceeds of the Note, subject to the
BANK's approval of historical financial information and pro forma projections
for said company when integrated with the BORROWER's financial information.
1.2 ACCOUNTING TERMS. All terms of an accounting character shall have the
meanings assigned thereto by generally accepted accounting principles as used by
the Financial Accounting Standards Board and/or the American Institute of
Certified Public Accountants applied on a basis consistent with the financial
statements referred to in SECTION 4.6 of this Agreement, modified to the extent,
but only to the extent, that such meanings are specifically modified herein;
PROVIDED, HOWEVER, that if any change in the applicable generally accepted
accounting principles will
8
14
materially and adversely affect the BORROWER's ability to comply with its
financial covenants hereunder, such change in generally accepted accounting
principles shall not be taken into account in calculating compliance with such
financial covenants unless and until this Agreement shall have been amended with
the intention of taking such change into account.
SECTION II
DESCRIPTION OF CREDIT
2.1 THE LOAN. Subject to the terms and conditions hereof, the BANK will
make available to the BORROWER Loans in the aggregate amount outstanding of up
to TWELVE MILLION AND 00/100 DOLLARS ($12,000,000.00) evidenced by a TWELVE
MILLION AND 00/100 DOLLAR ($12,000,000.00) note ("Note") with interest payable
quarterly until and including June 30, 1998 at the Base Rate, and thereafter
interest shall be payable at times as determined by the Notice of Borrowing
and/or Selection of Interest Period provided by the BORROWER to the BANK,
provided that payments of interest will be provided at a minimum on a quarterly
basis regardless of the Interest Period reflected by the BORROWER's Notice of
Borrowing and/or Selection of Interest Period. During the Revolving Credit
Period, the BORROWER may borrow, prepay, and reborrow pursuant to this
Agreement. After the Conversion Date, the Loan shall be payable based upon
payments provided on a quarterly basis equivalent to a fixed amount of principal
plus interest so as to make full payment of the outstanding balance over a three
(3) year period immediately subsequent to the Conversion Date. At the BORROWER's
option, interest will continue to accrue as set forth within this Agreement or
the BORROWER will have the option to select a fixed rate interest option and/or
a swap rate (if these Loan products are then available to the BANK) and the
BORROWER will be provided with the calculation of the applicable rate based upon
a determination made on or before the Conversion Date.
2.2 NOTICE AND MANNER OF BORROWING AND/OR SELECTION OF INTEREST PERIOD.
a) Whenever the BORROWER desires to obtain or continue a Loan
hereunder or convert all or a portion of an outstanding Loan into a Loan of
another type provided for in this Agreement, the BORROWER shall notify the BANK
(which notice shall be irrevocable) by telex, telegraph or telephone received no
later than 10:00 a.m. (Boston, MA time) on the date one (1) business day before
the day on which the requested Loan is to be made or continued as or changed to
a Base Rate Loan, and received no later than 10:00 a.m. (Boston, MA time) on a
date three (3) business days before the day on which the requested Loan is made
or continued as or converted to a LIBOR Loan. Such notice shall specify (i) the
effective date and amount of each Loan or portion thereof to be continued or
converted, subject to the limitations set forth in SECTION 2.1, (ii) the
interest rate option to be applicable thereto, and (iii) the duration of the
applicable Interest Period, if any. Each such notification, a Notice of
Borrowing and/or Selection of Interest Period, shall be immediately followed by
a written confirmation thereof by the BORROWER in substantially the form of
Exhibit "B" hereto, PROVIDED that if such written
9
15
confirmation differs in any material respect from the action taken by the BANK,
the records of the BANK shall control, absent manifest error.
b) During the Revolving Credit Period and subject to the terms
and conditions hereof, the BANK shall make each Loan on the effective date
specified therefor by debiting the amount of such Loan to the Loan Account and
crediting a like amount to the demand deposit account of the BORROWER with the
BANK, or, to such other account as the BORROWER may direct.
c) During the Revolving Credit Period and subject to the terms
and conditions hereof, the BORROWER may obtain Loans hereunder by writing drafts
on any checking account which it may maintain with the BANK or any of its
affiliates. The amount of each such Loan shall be debited to the Loan Account.
2.3 THE LOAN ACCOUNT. The Loan shall be evidenced by debit entries to the
Loan Account. The Bank shall also record in the Loan Account all payments made
by the Borrower on account of indebtedness evidenced by the Loan Account and all
proceeds of Collateral which are finally paid to the Bank at its office in cash
or solvent credits, and may record therein, in accordance with customary
accounting practice, other debits and credits, including all charges and
expenses properly chargeable to the Borrower and any other Obligation. The debit
balance of the Loan Account shall reflect the amount of the Borrower's
indebtedness to the Bank from time to time by reason of Loans and other
appropriate charges hereunder. At least once each month the Bank shall render
(i) a statement of account showing as of its date the debit balance of the loan
Account and charges to the Loan Account for such month; and (ii) a statement of
account showing as of its date the balance of any deposit account maintained
with the Borrower with the Bank and charges to such deposit account for such
month. Each such statement referred to above shall be considered correct and
accepted by the Borrower and conclusively binding upon it absent manifest error
unless, within thirty (30) days after the date of receipt of any such statement,
notice to the contrary is received by the Bank from the Borrower.
2.4 DURATION OF INTEREST PERIODS.
a) Subject to the provisions of the definition of Interest
Period, the duration of each Interest Period applicable to the Loan shall be as
specified in the applicable Notice of Borrowing and/or Selection of Interest
Period.
b) If the BANK does not receive a notice of election of duration
of an Interest Period within the applicable time limits specified therein, or
if, when such notice must be given, a Default exists, the BORROWER shall be
deemed to have elected to select a thirty (30) day Interest Period subject to
the requirements of payment of interest and/or principal as set forth within
this Agreement.
10
16
c) Notwithstanding the foregoing, the BORROWER may not select an
Interest Period that would end, but for the provisions of the definition of
Interest Period, after the maturity date of the Loan.
2.5 FACILITY FEES. The BORROWER shall pay the following facility fees to
the BANK:
a) FIVE THOUSAND AND 00/100 DOLLARS ($5,000.00) previously paid
in connection with the execution of the Commitment Letter.
b) FIVE THOUSAND AND 00/100 DOLLARS ($5,000.00) payable at the
time of closing.
c) FIFTEEN THOUSAND AND 00/100 DOLLARS ($15,000.00) payable at
the time of the first advance under the terms of the Loan.
d) An unused commitment fee payable to the Bank quarterly in
arrears and computed at the rate of one-quarter (.25%) per annum on the average
daily amount of the unborrowed portion of the commitment amount during each
quarter or portion thereof.
2.6 INTEREST RATE AND PAYMENTS OF INTEREST. Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof at a rate per annum equal
to the Base Rate, which rate shall change contemporaneously with any change in
the Base Rate. If the Adjusted LIBOR Rate is selected, the Loan shall bear
interest on the outstanding principal amount thereof for each Interest Period
applicable thereto at a rate per annum equal to the Adjusted LIBOR Rate plus an
amount to be determined based upon management-generated operating results for
the preceding quarter and payable using the following calculations (which will
be submitted to the Bank within fifteen (15) days from the end of each quarter):
a) In the event that Consolidated Net Income before taxes results
in a sales margin equal to or greater than three percent (3%), than the Interest
Rate payable in connection with the Loan will be equivalent to Adjusted LIBOR
Rate plus two percent (2%);
b) In the event that Consolidated Net Income before taxes results
in a sales margin equal to or greater than five percent (5%), than the Interest
Rate payable in connection with the Loan will be equivalent to Adjusted LIBOR
Rate plus one and one-half percent (1.5%);
c) In the event that Consolidated Net Income before taxes results
in a sales margin equal to or greater than ten percent (10%), than the Interest
Rate payable in connection with the Loan will be equivalent to Adjusted LIBOR
Rate plus one and one-quarter percent (1.25%);
d) In the event that Consolidated Net Income before taxes results
in a sales margin of less than three percent (3%), than the Interest Rate
payable in connection with this Loan will be equivalent to Base Rate;
11
17
e) In the event that the BORROWER's audited operating results
differ from the unaudited results reported to the BANK, and the effect of such
difference would cause the Interest Rate as calculated pursuant to this Section
2.7 to be increased or decreased, then the amount payable or to be credited as
interest in connection with the Loan will be adjusted retroactively and be
payable by or credited to the BORROWER at the time of the next payment due in
connection with the Note.
Such interest shall be payable for each Interest Period on the last day
thereof, whether at maturity, by reason of acceleration or otherwise, provided
that, if such Interest Period is ninety (90) days or longer, interest shall be
payable at intervals not to exceed ninety (90) days after the first day thereof.
2.7 CHANGED CIRCUMSTANCES.
a) In the event that:
(1) on any date on which the Adjusted LIBOR Rate would
otherwise be set the BANK shall have determined in good faith (which
determination shall be final and conclusive) that adequate and fair
means do not exist for ascertaining the Interbank Offered Rate, or
(2) at any time the BANK shall have determined in good
faith (which determination shall be final and conclusive) that:
(a) the making or continuation of the Loan as a
LIBOR Loan has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely
affects the interbank LIBOR market or (2) compliance by the
BANK in good faith with any applicable law or governmental
regulation, guideline or order or interpretation or change
thereof by any governmental authority charged with the
interpretation or administration thereof or with any request
or directive of any such governmental authority (whether or
not having the force of law); or
(b) the Adjusted LIBOR Rate shall no longer
represent the effective cost to the BANK for U.S. dollar
deposits in the interbank market for deposits in which it
regularly participates;
then, and in any such event, the BANK shall forthwith so notify the BORROWER
thereof. Until the BANK notifies the BORROWER that the circumstances giving rise
to such notice no longer apply, the obligation of the BANK to allow selection by
the BORROWER of LIBOR Loans shall be suspended. If at the time the BANK so
notifies the BORROWER, the BORROWER has previously given the BANK a Notice of
Borrowing and/or Selection of Interest Period with
12
18
respect to the Loan but the new Interest Period has not yet gone into effect,
such notification shall be deemed to be void and the BANK will be required to
provide the BORROWER with a right to borrow in accordance with an index as
similar to the Adjusted LIBOR as possible, with an interest rate and selection
of an Interest Period deemed by the BANK, in its sole discretion, to be as near
equal as possible to the rate of interest and available selection of Interest
Periods previously provided to the BORROWER; PROVIDED, FURTHER, that if such
rate selected by the BANK is deemed unacceptable by the BORROWER, then the Loan
will bear interest at the Base Rate from the time of completion of the last
Interest Period and the BORROWER will have the right to prepay the Loan without
penalty.
Upon such date as shall be specified in such notice (which shall not be earlier
than the date such notice is given) the BORROWER shall make selection of an
Interest Period (if applicable) for a Loan of the type designated in accordance
with the preceding paragraph hereof by using a replacement form of Notice of
Borrowing and/or Selection of Interest Period (if applicable) which will be
provided to the BORROWER by the BANK for use in future selections of Interest
Periods pursuant to SECTION 2.2 hereof.
b) In case the adoption of or any change in law, regulation,
treaty or official directive or the interpretation or application thereof by any
court or by any governmental authority charged with the administration thereof
or the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law) made after the
date of this Agreement:
(1) subjects the BANK to any tax with respect to payments
of principal or interest or any other amounts payable hereunder by the
BORROWER or otherwise with respect to the transactions contemplated
hereby (except for taxes on the overall net income of the BANK imposed
by the United States of America or any political subdivision thereof),
or
(2) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by, the
BANK (other than such requirements as are already included in the
determination of the Adjusted LIBOR Rate), or
(3) imposes upon the BANK any other condition with
respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the BANK,
reduce the income receivable by the BANK or impose any expense upon the BANK
with respect to any Loans, the BANK shall notify the BORROWER thereof. The
BORROWER agrees to pay to the BANK the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, within thirty (30) days of presentation by
13
19
the BANK of a statement in the amount and setting forth in reasonable detail the
BANK's calculation thereof, which statement shall be deemed true and correct
absent manifest error.
2.8 PAYMENTS AND PREPAYMENTS OF THE LOAN. Prepayments of the Loan will not
be allowed during any Interest Period. Prepayments of the Loan in increments of
a minimum of $100,000.00 will be allowed without penalty at the end of any
applicable Interest Period. Any such prepayments shall be applied towards the
minimum annual principal repayment obligation for the year during which said
prepayment is made to the BANK. Notwithstanding the foregoing, to the extent
that the Loan is a Base Rate Loan, it may be prepaid at any time without premium
or penalty on one (1) business day's notice and the interest accrued on the
amount so paid to the date of such payment must be paid at the time of any such
payment.
2.9 METHOD OF PAYMENT. All payments and prepayments of principal and all
payments of interest, fees and other amounts due hereunder shall be made by the
BORROWER to the BANK at 100 Federal Street, Boston, MA, in immediately available
funds and in United States Dollars, on or before 11:00 a.m. (Boston time) on the
due date thereof, free and clear of, and without any deduction or withholding
for, any taxes or other payments. The BANK may, and the BORROWER hereby
authorizes the BANK to, debit the amount of any payment not made by such time to
the demand deposit account of the BORROWER with the BANK.
2.10 OVERDUE PAYMENTS.
a) Overdue principal (whether at maturity, by reason of
acceleration or otherwise) and, to the extent permitted by applicable law,
overdue interest and fees or any other amounts payable hereunder or under the
Note, shall bear interest from and including the due date thereof until paid,
payable on demand, at a rate per annum equal to two percent (2%) above the
interest rate applicable to the Note for such Interest Period.
b) If a payment of principal or interest hereunder is not made
within fifteen (15) days of BORROWER's receipt of written notice from the BANK
that such payment was not made on or before its due date, the BORROWER will also
pay on demand a late payment charge equal to five percent (5%) of the amount of
such payment. Nothing in the preceding sentence shall affect the BANK's right to
exercise any of its rights or remedies, including those provided in SECTION 6.1,
if an Event of Default has occurred.
2.11 PAYMENTS NOT AT END OF INTEREST PERIOD. If the BORROWER for any reason
makes any payment of principal with respect to any LIBOR Loan on any day other
than the last day of an Interest Period applicable to such Loan, the BORROWER
shall pay to the BANK an amount computed pursuant to the following formula:
14
20
L = (R - T) x P x D
---------------
360
L = amount payable to the BANK
R = interest rate on such Loan
T = effective interest rate per annum at which any readily
marketable bond or other obligation of the United States,
selected at the BANK's sole discretion, maturing on or near
the last day of the then applicable Interest Period of such
Loan and in approximately the same amount as such Loan can be
purchased by the BANK on the day of such payment of principal
P = the amount of principal prepaid
D = the number of days remaining in the Interest Period as of the
date of such payment
The BORROWER shall pay such amount upon presentation by the BANK of a statement
setting forth in reasonable detail the amount and the BANK's calculation thereof
pursuant hereto, which statement shall be deemed true and correct absent
manifest error. No amount shall be payable by the BORROWER pursuant to this
SECTION 2.12 if T is equal to or higher than R.
2.12 COMPUTATION OF INTEREST. Interest payable hereunder shall be computed
daily on the basis of a year of 360 days and paid for the actual number of days
for which due. If the due date for any payment of principal is extended by
operation of law, interest shall be payable for such extended time. Except as
provided in Paragraph (a) of the definition of Interest Period, if any payment
required by this Agreement becomes due on a day that is not a Business Day such
payment shall be made on the next succeeding Business Day, and such extension
shall be included in computing interest in connection with such payment.
SECTION III
CONDITIONS OF LOAN
3.1 CONDITIONS PRECEDENT TO THE LOAN.
The obligation of the BANK to make the Loan is subject to the following
conditions precedent:
a) the BANK shall have received, in form and substance reasonably
satisfactory to the BANK and its counsel:
(i) this Agreement, the Note, the Guaranty, the Security
Agreements, the Pledge Agreements and the Loan Documents duly executed
in connection with said Note duly executed by the BORROWER or the
Guarantor, as the case may be;
15
21
(ii) a certificate of the Clerk or an Assistant Clerk of
the BORROWER with respect to resolutions of the Board of Directors
authorizing the execution and delivery of this Agreement and the Note
and identifying the officer(s) authorized to execute, deliver and take
all other actions required under this Agreement, and providing specimen
signatures of such officers;
(iii) a Certificate of Legal Existence and Good Standing of
the BORROWER of reasonably recent date issued by the Secretary of State
of Delaware, listing all documents on file with said Secretary of
State;
(iv) a Certificate of Authority to transact business
regarding the BORROWER's qualification to transact business as a
foreign corporation in the Commonwealth of Massachusetts, and each
jurisdiction in which the nature of its property or its business
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business,
financial condition, assets or properties of the BORROWER;
(v) a Certificate of Good Standing of reasonably recent
date issued by the Department of Revenue of the Commonwealth of
Massachusetts, unless provision is made at the time of closing to
extend the time for the BANK's receipt of same;
(vi) a Certificate signed by the Clerk or an Assistant
Clerk of the BORROWER as to the truth, correctness and completeness of
copies of (i) Articles of Organization filed with the Secretary of
State of the BORROWER's jurisdiction of incorporation together with all
amendments thereto; and (ii) By-laws of the BORROWER;
(vii) a certificate of the Clerk or an Assistant Clerk of
the Guarantor with respect to resolutions of the Board of Directors
authorizing the execution and delivery of this Agreement and the Note
and identifying the officer(s) authorized to execute, deliver and take
all other actions required under this Agreement, and providing specimen
signatures of such officers;
(viii) a Certificate of Legal Existence and Good Standing of
the Guarantor of reasonably recent date issued by the Secretary of
State of Florida, listing all documents on file with said Secretary of
State;
(ix) a Certificate of Authority to transact business
regarding the Guarantor's qualification to transact business as a
foreign corporation in each jurisdiction in which the nature of its
property or its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the business, financial condition, assets or properties of the
Guarantor;
16
22
(x) a Certificate of Good Standing of reasonably recent
date issued by the Department of Revenue of the Commonwealth of
Massachusetts, unless provision is made at the time of closing to
extend the time for the BANK's receipt of same;
(xi) a Certificate signed by the Clerk or an Assistant
Clerk of the Guarantor as to the truth, correctness and completeness of
copies of (i) Articles of Organization filed with the Secretary of
State of the Guarantor's jurisdiction of incorporation together with
all amendments thereto; and (ii) By-laws of the Guarantor;
(xii) favorable opinions addressed to the BANK from the
BORROWER's counsel, Palmer and Dodge LLP;
(xiii) evidence of the filing of UCC-1 Financing Statements
in favor of the BANK for filing in all offices necessary to perfect the
BANK's security interest in the Collateral;
(xiv) receipt of evidence in form and substance
satisfactory to the Bank that the Borrower requires funding to allow
acquisition of the Target Company;
(xv) a Landlord's Waiver from all applicable business
locations (if any), in a form deemed satisfactory to the BANK; and
(xvi) such other documents, and completion of such other
matters, as counsel for the BANK may reasonably deem necessary or
appropriate.
b) based on its most recently delivered financial statements, the
BORROWER will be in compliance with all financial covenants;
c) the BORROWER shall have performed all of its obligations to be
performed hereunder prior to or on the closing date; and
d) the representations and warranties of the BORROWER contained
in SECTION IV hereof shall be true on and as of the closing date with the same
effect as though such representations and warranties had been made on and as of
the closing date. There shall exist on the closing date no Event of Default and
no condition or event which, with notice or lapse of time or both, would
constitute an Event of Default if the Note had been outstanding at all times
from and after the date hereof.
3.2 CONDITIONS PRECEDENT TO FUTURE ADVANCES. The conditions precedent to
future advances prior to the Conversion Date and with respect to the Obligation
of the BANK to make the Loans, are further subject to the following conditions:
17
23
(a) The timely receipt by the BANK of the Notice of Borrowing or
Conversion as provided in SECTION 2.2;
(b) The representations and warranties contained herein should be
true and accurate as of the effective date of each Notice of Borrowing or
Conversion; and on the Conversion Date (except to the extent that such
representations and warranties expressly relate to an earlier date) and no
default shall have occurred and be continuing; and
(c) The resolutions referred to in SECTION 3.1(a)(ii) shall remain
in full force and effect and no change shall have occurred in any law or
regulation or interpretation thereof that, in the opinion of counsel for the
BANK, would make it illegal or against the policy of any governmental agency or
authority for the BANK to provide advances hereunder or continue making the Loan
hereunder.
SECTION IV
REPRESENTATIONS AND WARRANTIES
4.1 ORGANIZATION AND QUALIFICATION. The BORROWER and each of its
Subsidiaries listed on Exhibit "C" (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, (ii) has all requisite corporate power to own its property and
conduct its business as now conducted and as presently contemplated, and (iii)
is duly qualified and in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where the nature of its
properties or business requires such qualification, except where the failure to
be so qualified would not have a material adverse effect on the business,
financial condition, assets or properties of the BORROWER or of the BORROWER and
its Subsidiaries taken as a whole.
4.2 CORPORATE AUTHORITY. The execution, delivery, and performance of this
Agreement and the Note and the transactions contemplated hereby are within the
corporate power and authority of the BORROWER and have been authorized by all
necessary corporate proceedings, and do not and will not (i) require any consent
or approval of the stockholders of the BORROWER; (ii) contravene any provision
of the charter documents or by-laws of the BORROWER or any law, rule or
regulation applicable to the BORROWER; (iii) contravene any provision of, or
constitute an event of default or event that, but for the requirement that time
elapse or notice be given, or both, would constitute an event of default under,
any other agreement, instrument, order or undertaking binding on the BORROWER;
or (iv) have a materially adverse effect on business earnings, properties or
conditions (financial or otherwise) of the BORROWER and its Subsidiaries taken
as a whole.
18
24
4.3 VALID OBLIGATIONS. This Agreement and all of its terms and provisions
are the legal, valid and binding obligations of the BORROWER, enforceable in
accordance with its terms except as limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally, and except as the remedy of specific performance or of
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
4.4 CONSENTS OR APPROVALS. The execution, delivery and performance of this
Agreement and the transactions contemplated herein do not require any approval
or consent of, or filing or registration with, any governmental or other agency
or authority, or any other party.
4.5 TITLE TO PROPERTIES; ABSENCE OF LIENS. The BORROWER has good and
marketable title to all of the properties, assets and rights of every name and
nature now purported to be owned by it, including without limitation, title to
all of the properties, assets, and rights of every name and nature now purported
to be owned by it and as reflected in the financial statements provided to the
BANK and referenced in SECTION 4.6 (except such properties, assets or rights as
have been disposed of in the ordinary course of business since the date
thereof), free from all Liens except Permitted Liens or those Liens disclosed in
Exhibit "D" hereto, and, except as so disclosed, free from all defects of title
that might materially adversely affect such properties, assets or rights, taken
as a whole.
4.6 FINANCIAL STATEMENTS. The BORROWER has furnished the BANK its
consolidated balance sheet as of September 30, 1997, and its consolidated
statements of operations, changes in shareholders' equity and cash flow for the
fiscal year then ended, and related footnotes, audited and certified by Ernst &
Young LLP, Independent Certified Public Accountants (the "Accountants"). Such
financial statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
specified and present fairly the financial position of the BORROWER and its
Subsidiaries as of such date and the results of the operations of the BORROWER
and its Subsidiaries for such period. There are no material liabilities,
contingent or otherwise, not disclosed in such financial statements or in the
financial statements furnished to the BANK pursuant to Section 5.1.
4.7 CHANGES. Since the date of the most recent financial statements
furnished to the BANK pursuant to SECTION 4.6 OR SECTION 5.1, there have been no
changes in the assets, liabilities, financial condition, business or prospects
of the BORROWER other than changes in the ordinary course of business, the
effect of which has not, in the aggregate, been materially adverse and, except
for the payment of regular quarterly dividends on its common stock, the BORROWER
has not directly or indirectly declared, ordered paid or set apart any sum or
property for any Restricted Payment or agreed to do so.
4.8 FRANCHISES, LICENSES, REGISTRATIONS, ETC. The BORROWER and its
Subsidiaries each own or possess, and hold free from burdensome restrictions or
known conflicts with the rights of others, all franchises, licenses,
registrations, permits, rights of way, easements, consents,
19
25
copyrights, trademarks, service marks, trade names and patents, and all rights
with respect to the foregoing, necessary for the conduct of their respective
businesses as now conducted and as proposed to be conducted, and are in full
compliance with the terms and conditions, if any, of all such franchises,
licenses, registrations, permits, rights of way, easements, consents,
copyrights, trademarks, service marks, trade names and patents, and the terms
and conditions of any agreements relating thereto, except for such conflicts or
noncompliance which, either individually or in the aggregate, do not materially
and adversely affect, and in the future will not (so far as the BORROWER can now
reasonably foresee) materially and adversely affect, the business, earnings,
properties or condition (financial or other) of the BORROWER and its
Subsidiaries, taken as a whole.
4.9 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the BORROWER nor any of
its Subsidiaries is (a) in violation of any term of its charter or by-laws or
(b) in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in, and is not otherwise in
default under, (i) any evidence of Indebtedness or any instrument or agreement
in connection therewith, or (ii) to the best of the BORROWER's knowledge any
other instrument or agreement to which it is a party or by which it is bound or
any of its properties is affected except, in the case of any defaults under
instruments and agreements described in clause (ii), such defaults which, either
individually or in the aggregate, do not materially and adversely affect, and
will not (so far as the BORROWER can now reasonably foresee) materially and
adversely affect, the business, earnings, properties or condition (financial or
other) of the BORROWER and its Subsidiaries, taken as a whole. Neither the
execution, delivery nor performance of this Agreement does or will (A) conflict
with or violate the charter or by-laws of the BORROWER or any of its
Subsidiaries, (B) conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any Lien on any of the properties or assets of the BORROWER or any
of its Subsidiaries or any other instrument referred to in this SECTION 4.9 to
which the BORROWER or any of its Subsidiaries is a party for which it is bound,
or (C) require any consent of or other action by any trustee or any creditor of,
any lessor to or any investor in the BORROWER or any of its Subsidiaries.
4.10 OUTSTANDING SECURITIES. All outstanding securities (as defined in the
Securities Act) of the BORROWER and its Subsidiaries have been offered, issued,
sold and delivered by the BORROWER or any of its Subsidiaries, as the case may
be, in compliance with, or pursuant to exemptions from, all applicable federal
and state laws, and the rules and regulations of federal and state regulatory
bodies governing the offering, issuance, sale and delivery of securities.
4.11 DEFAULTS. As of the date of this Agreement, no Default exists.
4.12 TAXES. The BORROWER and each Subsidiary have filed all federal, state
and other tax returns required to be filed, and all taxes, assessments and other
governmental charges due from the BORROWER and each Subsidiary have been fully
paid except those being contested in good
20
26
faith. The BORROWER and each Subsidiary have established on their books reserves
adequate for the payment of all federal, state and other tax liabilities.
4.13 NO MARGIN REGULATION VIOLATION. None of the transactions contemplated
by this Agreement will violate or result in a violation of Section 7 of the
Exchange Act or any regulations issued pursuant thereto, including, without
limitation, Regulation T (12 C.F.R., Part 220), as amended, Regulation U (12
C.F.R., Part 221), as amended, and Regulation X (12 C.F.R., Part 224), as
amended, of the Board of Governors of the Federal Reserve System. The assets of
the BORROWER do not include any "margin securities" within the meaning of such
Regulation U, and the BORROWER has no present intention of acquiring any such
margin securities.
4.14 LITIGATION. Except as set forth on Exhibit "E" hereto, or as reported
in or with the financial statements delivered to the BANK pursuant to SECTION
4.6 OR 5.1, there is no litigation, arbitration, proceeding or investigation
pending, or, to the knowledge of the BORROWER's or any Subsidiary's officers,
threatened, against the BORROWER or any Subsidiary that, if adversely
determined, could result in a material judgment not fully covered by insurance,
could result in a forfeiture of all or any substantial part of the property of
the BORROWER or its Subsidiaries, or could otherwise have a material adverse
effect on the assets, business or prospects of the BORROWER and its
Subsidiaries, taken as a whole.
4.15 INVESTMENT COMPANY ACT. Neither the BORROWER nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
4.16 COMPLIANCE WITH ERISA; MULTIEMPLOYER PLANS. Neither the execution and
delivery of this Agreement and the Note by the BORROWER, nor the consummation of
any of the other transaction contemplated by this Agreement is or will
constitute a "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA. Each Plan other than a Multiemployer Plan is in
material compliance with ERISA. No Plan which is a Single Employer Plan has an
"accumulated funding deficiency" within the meaning of Section 412 of the Code,
whether or not waived. No proceedings have been instituted by the PBGC to
terminate any Plan which is a Single Employer Plan. To the best of the
BORROWER's knowledge, each Plan which is a Multiemployer Plan is in material
compliance with ERISA, does not have an "accumulated funding deficiency" within
the meaning of Section 412 of the Code, whether or not waived, and is not in
"reorganization" within the meaning of Section 4241 of ERISA. Neither the
BORROWER nor any ERISA Affiliate has incurred any material liability to or on
account of a Plan under ERISA. The BORROWER has made all contributions to the
Plans required to be made by it. The actuarial present value of all accrued
benefit liabilities under each Plan which is a Single Employer Plan, as defined
in Section 4001(a)(15) of ERISA (based on the assumptions used in the funding of
such Plan, which assumptions are reasonable, and determined as of the last day
of the most recent plan year of such Plan for which annual reports had been
filed with the Internal Revenue Service) does not exceed the current fair market
value of the assets of such Plan.
21
27
4.17 NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the BORROWER nor any of
its Subsidiaries is a party to any contract or agreement, or subject to any
order, writ, injunction or decree or other action of any court or any
governmental department, commission, bureau, board or other administrative
agency or official, or any charter or other corporate or contractual
restriction, which, to the best of the BORROWER's knowledge, materially and
adversely affects, or in the future will (so far as the BORROWER can now
reasonably foresee) materially and adversely affect, the business, earnings,
properties or condition (financial or other) of the BORROWER and its
Subsidiaries, taken as a whole.
4.18 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The BORROWER and its Subsidiaries each are, and will continue
to be, in compliance with all applicable federal, state and local environmental
laws, regulations and ordinances governing its business, products, properties or
assets with respect to all discharges into the ground and surface water,
emissions into the ambient air and generation, accumulation, storage, treatment,
transportation, labeling or disposal of waste materials or process by-products,
the violation of which could materially and adversely affect the business,
earnings, properties or condition (financial or other) of the BORROWER and its
Subsidiaries, taken as a whole, and neither the BORROWER nor any of its
Subsidiaries is liable for any material penalties, fines or forfeitures for
failure to comply with any of the foregoing. All licenses, permits or
registrations required for the business of the BORROWER and its Subsidiaries, as
presently conducted and proposed to be conducted, under any federal, state or
local environmental laws, regulations or ordinances have been obtained or made
other than any such licenses, permits or registrations the failure to obtain or
make which, either individually or in the aggregate, do not materially and
adversely affect, and will not (so far as the BORROWER can now reasonably
foresee) materially and adversely affect, the business, earnings, properties or
condition (financial or other) of the BORROWER and its Subsidiaries, taken as a
whole, and the BORROWER and its Subsidiaries each are in compliance therewith.
(b) No release, emission, or discharge into the environment of
hazardous substances, as defined under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended; or hazardous waste, as defined under
the Resource Conservation and Recovery Act; or air pollutants, as defined under
the Clean Air Act; or pollutants, as defined under the Clean Water Act; has
occurred or is presently occurring on or from any property owned or leased by
the BORROWER or its Subsidiaries in excess of federal, state or local permitted
releases or reportable quantities, or other concentrations, standards or
limitations under the foregoing laws or any state or local law governing the
protection of health and the environment or under any other federal, state or
local laws or regulations (then or now applicable, as the case may be) other
than any such releases, emissions or discharges which, either individually or in
the aggregate, do not materially and adversely affect, and will not (so far as
the BORROWER can now reasonably foresee) materially and adversely affect, the
business, earnings, properties or condition (financial or other) of the BORROWER
and its Subsidiaries, taken as a whole.
22
28
c() Except as set forth in Exhibit "F" hereto, neither the
BORROWER nor any of its Subsidiaries has been held within the last year from the
date hereof legally responsible for any release or threatened release of any
hazardous substance, or received notification from any federal, state or other
governmental authority of any release or threatened release, or that it may be
required to pay any costs or expenses incurred or to be incurred in connection
with any efforts to mitigate the environmental impact of any release or
threatened release, of any hazardous substance from any site or structure owned,
occupied or operated by the BORROWER or any of its Subsidiaries.
SECTION V
COVENANTS OF THE BORROWER
So long as the Loan remains outstanding, the BORROWER covenants as follows:
5.1 FINANCIAL STATEMENTS OF THE BORROWER AND OTHER REPORTING REQUIREMENTS.
The BORROWER shall furnish to the BANK:
a() as soon as available to the BORROWER, but in any event within
ninety (90) days after the end of each fiscal year, audited, consolidated
balance sheet of the BORROWER and its Subsidiaries as of the end of such fiscal
year, and the consolidated statements of operations, retained earnings and cash
flows of the BORROWER and its Subsidiaries for such fiscal year, setting forth
in each case, in comparative form, the figures for the preceding fiscal year,
all in reasonable detail, such financial statements to be accompanied by an
opinion of the Accountants or a firm of independent certified public accountants
of nationally recognized standing, which opinion shall state that (i) the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards and,
accordingly, included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances, and (ii)
such financial statements present in all material respects fairly the financial
position of the BORROWER and its Subsidiaries at such date and the results of
operations and cash flows thereof for such period and have been prepared in
conformity with generally accepted accounting principles, except for changes in
application in which such accountants concur; and
b() as soon as practicable and, in any case, within twenty (20)
days of the end of each month, monthly management prepared financial information
containing consolidated financial statements of the BORROWER and its
Subsidiaries, including unaudited consolidated statements of earnings, retained
earnings and cash flows and net income from the BORROWER and its Subsidiaries
for such monthly accounting period and for the fiscal year to date, certifying
by the Chief Financial Officer as fairly representing the financial information
therein, subject to year-end adjustments and accompanied by a Covenant
Compliance Certificate in a form mutually agreed upon between the BORROWER and
the BANK.
23
29
c() within thirty (30) days of the close of each fiscal year,
detailed and updated financial projections, providing annualized financial data
broken down by quarters and by product area in a form deemed satisfactory to the
BANK;
d() promptly after the receipt thereof by the BORROWER, copies of
any reports submitted to the BORROWER by independent public accountants in
connection with any interim review of the accounts of the BORROWER made by such
accountants;
e() promptly after the same are available, copies of all proxy
statements, financial statements and reports as the BORROWER shall send to its
stockholders or as the BORROWER may file with the Securities and Exchange
Commission or any governmental authority at any time having jurisdiction over
the BORROWER or its Subsidiaries;
f() if and when the BORROWER gives or is required to give notice
to the PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan administrator of any Plan has given or is required to give notice of any
such Reportable Event, a copy of the notice of such Reportable Event given or
required to be given to the PBGC
g() as soon as possible and, in any event, within five (5) days
after becoming aware of the existence of any condition or event that constitutes
a Default, written notice thereof specifying the nature and duration thereof and
the action being or proposed to be taken with respect thereto;
h() promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against the BORROWER or any of its Subsidiaries of which it has
notice, the outcome of which would have a materially adverse effect on the
assets, business or prospects of the BORROWER or the BORROWER and its
Subsidiaries taken as a whole, written notice thereof and the action being or
proposed to be taken with respect thereto;
i() from time to time, such other financial data and information
about the BORROWER and its Subsidiaries as the BANK may reasonably request.
5.2 CONDUCT OF BUSINESS. Each of the BORROWER and its Subsidiaries shall:
a() duly observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets (including without limitation all
Environmental Laws and ERISA), and shall maintain and keep in full force and
effect all licenses and permits necessary in any material respect to the proper
conduct of its business; and
24
30
b() maintain its corporate existence, provided that this section
shall not be deemed to prohibit transactions otherwise permitted by this
Agreement.
5.3 MAINTENANCE AND INSURANCE. The BORROWER and each of its Subsidiaries
shall maintain its properties in good repair, working order and condition as
required for the normal conduct of its business and as required by the Security
Agreement. The BORROWER and each of its Subsidiaries shall at all times maintain
liability and casualty insurance with financially sound and reputable insurers
in such amounts as the officers of the BORROWER in the exercise of their
reasonable judgment deem to be adequate.
5.4 TAXES. The BORROWER shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or any of its Subsidiaries
or its or their properties on or prior to the time when they become due;
PROVIDED that this covenant shall not apply to any tax, assessment or charge
that is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are being
maintained in accordance with generally accepted accounting principles.
5.5 INSPECTION. The BORROWER and its Subsidiaries each will permit the BANK
by its representatives, agents or attorneys, (i) to examine all books of
account, records, reports and other papers of the BORROWER and its Subsidiaries,
(ii) to make copies and take extracts from any thereof (it being understood that
no copies may be made or extracts taken of any proprietary information), (iii)
to discuss the affairs, finances and accounts of the BORROWER and its
Subsidiaries with their respective officers and independent certified public
accountants (and by this provision the BORROWER hereby authorizes said
accountants to discuss with the BANK the finances and accounts of the BORROWER
and its Subsidiaries), and (iv) to visit and inspect, upon reasonable notice, at
reasonable times during normal business hours the properties of the BORROWER or
any of its Subsidiaries.
5.6 MAINTENANCE OF BOOKS AND RECORDS. The BORROWER and each of its
Subsidiaries shall keep adequate books and records of account, in which true and
complete entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with generally
accepted accounting principles consistently applied and applicable law.
5.7 LIENS. Neither the BORROWER nor any Subsidiary will create, incur or
suffer to exist any Lien upon any of its assets or property now or hereafter
owned, or upon the income or profits thereof, except for Permitted Liens or
Liens for the benefit of the BANK.
5.8 CONSOLIDATED TANGIBLE NET WORTH. The BORROWER and its Subsidiaries will
maintain at all times a Consolidated Tangible Net Worth of not less than the sum
of (a) TWENTY-TWO MILLION AND 00/100 DOLLARS ($22,000,000.00) plus (b) one
hundred percent (100%) of Consolidated Net Income for each fiscal year of the
BORROWER beginning with the fiscal year ended on September 30, 1997.
25
31
5.9 RATIO OF INDEBTEDNESS TO CONSOLIDATED TANGIBLE NET WORTH. The BORROWER
will maintain a ratio of Indebtedness to Consolidated Tangible Net Worth of not
greater than 1:1.
5.10 INTEREST COVERAGE RATIO. The Interest Coverage Ratio shall be not less
than 3:1 calculated at the end of the fiscal quarter ending on June 30, 1998,
and shall not be less than 5:1 calculated at the end of each fiscal quarter
ending on or after September 30, 1998. For purposes of this section, the
Interest Coverage Ratio shall be the ratio of (i) the BORROWER's Consolidated
Net Income, but calculated without deduction of amounts for interest and tax
expense, to (ii) the BORROWER's interest expense, all calculated in accordance
with generally accepted accounting principles. If no interest has accrued during
the relevant period of the Loan, then for the purpose of calculating compliance
with this ratio, the Bank will assume a minimum amount of interest of One and
00/100 Dollar ($1.00) has accrued. The fiscal period for which the Interest
Coverage Ratio shall be calculated (I) at June 30, 1998 shall be the fiscal
quarter ended on that date; (II) at September 30, 1998, shall be the two fiscal
quarters ended on that date; (III) at December 31, 1998, shall be the three
fiscal quarters ended on that date; and (IV) at March 30, 1998, and thereafter,
shall be the four fiscal quarters ended on that date.
5.11 LIMITATIONS ON CAPITAL EXPENDITURES. Each year that the Loan is
outstanding, capital expenditures will be limited to the amount set forth in the
plan of capital expenditures furnished by the BORROWER to the BANK and approved
by the BANK.
5.12 LIMITATIONS ON BUSINESS ACTIVITIES. The BORROWER and its Subsidiaries,
taken as a whole, shall engage in business of the same general nature as the
business presently conducted by them.
5.13 LIMITATIONS ON LOSSES. The financial loss attributable to the
consolidated operations of the BORROWER for the fiscal quarter ending December
31, 1997 will not exceed ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
($1,500,000.00) and FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00) for
the fiscal quarter ending March 30, 1998.
SECTION VI
NEGATIVE COVENANTS
So long as the Bank is providing funding hereunder or any Loan or other
Obligation remains outstanding, the Borrower covenants as follows:
6.1 INDEBTEDNESS. The BORROWER will not create, incur, assume, guarantee or
be or remain liable with respect to any Indebtedness other than the following:
26
32
a Indebtedness of the BORROWER to the BANK, any direct or
indirect subsidiary of the BANK or any of the BANK's affiliates;
b Indebtedness existing as of the date of this Agreement and
disclosed in the financial statements referred to in SECTION 4.6.
c Indebtedness secured by Permitted Liens.
d Indebtedness incurred in the ordinary course of business.
e Indebtedness to other financial institutions with the BANK's
prior approval which shall not be unreasonably withheld.
f Indebtedness incurred as a result of acquisitions provided
that after integrating the financial information relative to the acquired entity
that the BORROWER remains in compliance with all financial covenants set forth
within this Agreement.
6.2 CONTINGENT LIABILITIES. The Borrower shall not create, incur, assume,
guarantee or remain liable with respect to any Guarantees other than the
following:
a Guarantees in favor of the Bank, or any of its affiliates;
b Guarantees existing on the date of this Agreement and/or
disclosed in the financial statements referred to in SECTION 4.6;
c Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
d Guarantees with respect to surety, appeal performance and
return-of-money and other similar obligations incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money);
e Guarantees of normal trade debt relating to the acquisition of
goods and supplies; and
f Guarantees of the obligations of Subsidiaries, provided that
after giving effect to such Guarantees the BORROWER remains in compliance with
all financial covenants set forth within this Agreement.
6.3 ERISA. Neither the Borrower nor any member of the Controlled Group
shall permit any Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code, (ii) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA)
27
33
whether or not waived, or (iii) terminate any Plan in a manner that could result
in the imposition of a lien or encumbrance on the assets of the Borrower
pursuant to Section 4068 of ERISA.
6.4 MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS. The Borrower shall not
sell, lease or otherwise dispose of assets or properties (valued at the lower of
cost or market), or liquidate, merge or consolidate into or with any other
person or entity, provided, however, the BORROWER may (i) sell inventory in the
ordinary course of its business on reasonable commercial terms, (ii) dispose of
other assets not constituting all or substantially all of its assets for fair
consideration in the ordinary course of its business provided that such
dispositions will not exceed the aggregate amount of FIVE HUNDRED THOUSAND AND
00/100 DOLLARS ($500,000.00) during any fiscal year that the Obligations are
outstanding, (iii) merge with another corporation provided that the BORROWER is
the surviving corporation, that the size (e.g. purchase price) of the
acquisition does not exceed ONE MILLION AND 00/100 DOLLARS ($1,000,000.00) and
that after giving effect to the merger the BORROWER remains in compliance (with
all financial covenants set forth within this Agreement) and will stay in
compliance for the foreseeable future based upon projections, performance, or
other financial information made available to the BANK, (iv) merge with or
acquire OFC Corporation ("OFC") provided that within thirty (30) days of such
merger or acquisition the Bank receives the unlimited Corporate Guaranty of OFC
supported by all reasonable due diligence required by the Bank and its counsel
and a first priority security interest in all the assets of OFC in which a
security interest can be granted under the Uniform Commercial Code, (v) merge
with or acquire Galenica Inc. and its affiliates.
6.5 SALE AND LEASEBACK. Without the prior written consent of the Bank, the
Borrower shall not enter into any arrangement, directly or indirectly, whereby
it shall sell or transfer any property owned by it in order to lease such
property or lease other property that the Borrower intends to use for
substantially the same purpose as the property being sold or transferred.
SECTION VII
DEFAULTS
7.1 EVENTS OF DEFAULT; ACCELERATION OF NOTE. If any of the following
conditions or events ("Events of Default") shall occur and be continuing:
a the BORROWER shall fail to pay any principal of or interest on
the Note as and when due or otherwise fail to make payment of principal or
interest under the terms of any other Obligation hereunder or as set forth in
any agreement, instrument or other document evidencing, securing or otherwise
delivered in connection with the Obligations; or
b loss, theft or substantial damage of or to any substantial
portion of the Collateral, or the issuance of an attachment or an injunction
against the BORROWER or any of its Subsidiaries affecting any substantial
portion of the Collateral; or
28
34
c an Event of Default as set forth under the terms of the
Security Agreement or any of the Loan Documents executed in connection with the
Note; or
d the BORROWER shall default in the due and punctual performance
of or compliance with any other covenant, condition or agreement to be performed
or observed by it under any provision hereto; or
e any representation or warranty of the Borrower contained in
this Agreement or in any certificate, statement or other writing furnished in
connection herewith or pursuant hereto or in connection with any of the Loan
Documents shall prove to have been false or inaccurate in any material respect
on the date as of which such representation or warranty was made; or
f a final judgment(s) entered by a court(s) of competent
jurisdiction for the payment of money in excess of $250,000 in the aggregate
shall be rendered against the Borrower or any Subsidiary and shall not be
discharged, bonded or stayed within sixty (60) days; or
g the Borrower or any Subsidiary shall (i) commence a voluntary
case under any chapter of the Federal Bankruptcy Code (as now or hereafter in
effect), or shall consent to (or fail to controvert in a timely manner) the
commencement of an involuntary case against it under said Code; (ii) institute
proceedings for liquidation, rehabilitation, readjustment or composition (or any
related or similar purpose) under any law (other than the Federal Bankruptcy
Code) relating to financial distressed debtors, their creditors or property, or
shall consent to (or fail to controvert in a timely manner) the institution of
any such proceedings against it; (iii) make an assignment for the benefit of
creditors or enter into any arrangement for the benefit of creditors or enter
into any arrangement for the adjustment or composition of debts or claims; (iv)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator, assignee, sequestrator (or other
similar official) of itself or any of its property; or (v) take corporate action
for the purpose or with the effect of authorizing, acknowledging or confirming
the taking or existence of any action or condition specified in clause (i),
(ii), (iii) or (iv) above; or
h a court or other governmental authority or agency having
jurisdiction shall enter a decree or order (i) for the appointment of a
receiver, liquidator, assignee, trustee, custodian or sequestrator (or other
similar official) of the Borrower or any Subsidiary or of any part of its
property, or for the winding-up or liquidation of its affairs, and such decree
or order shall remain in force undischarged and unstayed for a period of more
than 60 days, or (ii) for the sequestration or attachment of any part of the
property of the Borrower or any Subsidiary which is a material part of the
property of the Borrower and its Subsidiaries, taken as a while, without its
unconditional return to the possession of the Borrower or such Subsidiary, or
its unconditionally release from such sequestration or attachment, within 60
days thereafter; or
29
35
i a court having jurisdiction shall enter an order for relief in
any involuntary case commenced against the Borrower or any Subsidiary under the
Federal Bankruptcy Code, and such order shall remain in force undischarged and
unstayed for a period of more than 60 days; or
j a court or other governmental authority or agency having
jurisdiction shall enter a decree or order approving or acknowledging as
properly filed or commenced against the Borrower or any Subsidiary a petition or
proceedings for liquidation, rehabilitation, readjustment or composition (or for
any related or similar purpose) under any law (other than the Federal Bankruptcy
Code) relating to financially distressed debtors, their creditors or property,
and any such decree or order shall remain in force undischarged and unstayed for
a period of more than 60 days; or
k the Borrower or any Subsidiary shall be unable, or shall admit
in writing its inability, to pay its debts as they come due; or
l (i) any Plan (other than a Multiemployer Plan) shall incur an
"accumulated funding deficiency," within the meaning of Section 412(a) of the
Code, with respect to any plan year, or (ii) any waiver of such standard shall
be sought or granted under Section 412(d) of the Code, or (iii) any Plan shall
be terminated or the subject of termination proceedings under ERISA in a manner
that could result in the imposition of a lien or encumbrance on the assets of
the BORROWER pursuant to Section 4068 of ERISA, or (iv) the Borrower or any
Subsidiary shall incur or be likely to incur a liability to or on account of a
Plan under Section 4062, 4063, 4064, or 4201 of ERISA, and there shall result
for any such event or events in each of (i), (ii), (iii), or (iv) either a
liability or a material risk of incurring a liability to the PBGC or a Plan,
which in the opinion of any holder of a Note could have a material and adverse
effect on the business, earnings, properties or condition (financial or other)
of the Borrower and its Subsidiaries, taken as a whole;
m Notwithstanding anything contained herein to the contrary, if
the BORROWER shall fail to perform or observe the Obligations described herein
in Article 7.1 b), c), d), e) and l), an Event of Default shall not be deemed to
have occurred unless the BORROWER shall fail to cure such breach within fifteen
(15) days following written notice of said default; provided that, if such
default is susceptible of cure but cannot reasonably be cured within such
fifteen (15) day period, and if the BORROWER shall in good faith commence to
cure such default within such fifteen (15) day period, and thereafter diligently
and expeditiously proceed to cure the same, such fifteen (15) day period shall
be extended for such time as is reasonably necessary for the BORROWER in the
exercise of due diligence to cure such default, but in no event shall such
period exceed forty-five (45) days after the BORROWER first obtains knowledge of
such default.
then, the BANK shall have rights to exercise the remedies set forth within the
terms of the Security Agreement or any other remedies as set forth within any of
the Loan Documents executed by the BORROWER.
30
36
SECTION VIII
MISCELLANEOUS
8.1 NOTICES. All notices, requests and demands to or upon the BORROWER or
the BANK shall be deemed to have been duly given or made: if by telecopy, telex,
telegram or by hand, immediately upon sending or delivery; if by any overnight
delivery service, one (l) day after dispatch; and if mailed by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests,
and demands are to be given or made to the respective parties at the following
addresses (or to such other address as any party may designate by notice in
accordance with this section):
a) If to the BORROWER:
Galileo Corporation
Galileo Park
P.O. Box 550
Sturbridge, MA 01566
Attention: Gregory Riedel, Chief Financial Officer
Telephone: 508/347-4222
Telecopier: 508/347-9693
b) with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attention: David R. Pokross, Jr., Esq.
Telephone: 617/573-0100
Telecopier: 617/227-4420
c) If to the BANK:
BankBoston, N.A.
100 Federal Street
Boston, MA 02110
Telephone: 617/434-2200
Telecopier:
31
37
d) With a copy to:
Cohen, Rosenthal P.C.
One Monarch Place, Suite 1300
Springfield, MA 01144-1001
Attention: Francis R. Mirkin, Esq.
Telephone: 413/781-0472
Telecopier: 413/734-9013
8.2 EXPENSES. The BORROWER shall pay or reimburse the BANK for all
reasonable expenses, including attorneys' fees incurred or paid by the BANK in
connection with the preparation, negotiation and closing of this Agreement up to
the amount of TWELVE THOUSAND AND 00/100 DOLLARS ($12,000.00) provided that such
fees and expenses are not intended to include out-of-pocket costs and
disbursements by BANK counsel and Facility Fees.
8.3 SET-OFF. Any deposits or other sums, at any time credited by or due
from the BANK to the BORROWER may at any time after the occurrence of an Event
of Default without notice to the BORROWER be applied to or set off against
Obligations on which the BORROWER is primarily liable.
8.4 TERM OF AGREEMENT. This Agreement shall continue in force and effect so
long as the Note or any extensions, renewals or amendments remain outstanding.
8.5 NO WAIVERS. No failure or delay by the BANK in exercising any right,
power or privilege hereunder or under any other documents or agreements executed
in connection herewith shall operate as a waiver thereof; nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
otherwise provided by law.
8.6 GOVERNING LAW. This Agreement shall be deemed to be a contract made
under seal and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts (without giving effect to any conflicts of
laws provisions contained therein).
8.7 AMENDMENTS. Neither this Agreement nor any provision hereof or thereof
may be amended, waived, discharged or terminated except by a written instrument
signed by the BANK and, in the case of amendments, by the BORROWER.
8.8 BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the BORROWER and the BANK and their respective
successors and assigns; provided that the BORROWER may not assign or transfer
its rights hereunder. The BANK may assign all of its rights and obligations
hereunder without the consent of the BORROWER, provided, however, that no such
assignment by the BANK before the Conversion Date shall relieve it of its
obligation
32
38
to make Loans to the BORROWER. The BANK may sell, transfer or grant
participation in the Note under SECTION 8.8 without the prior written consent of
the BORROWER; provided that, notwithstanding any such transfer or participation,
the BORROWER may, for all purposes of this Agreement, treat the BANK as the
person entitled to exercise all rights hereunder and under the Note and to
receive all payments with respect thereto.
8.9 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
8.10 SEVERABILITY. The invalidity or unenforceability of any one or more
phrases, clauses or sections of this Agreement shall not affect the validity or
enforceability of the remaining portions of it.
8.11 CAPTIONS. The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.
8.12 ENTIRE AGREEMENT. This Agreement and the documents and agreements
executed in connection herewith constitute the final agreement of the parties
hereto and supersede any prior agreement or understanding, written or oral, with
respect to the matters contained herein and therein.
8.13 JURY WAIVER. THE BORROWER AND THE BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THEY MAY HAVE OR HEREAFTER HAVE
TO A TRIAL BY JURY IN RESPECT TO ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT. BORROWER HEREBY CERTIFIES THAT NEITHER THE BANK
NOR ANY OF THE ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE 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 THE BANK HAS BEEN INDUCED TO ACCEPT THIS AGREEMENT AND MAKE
THE LOAN REPRESENTED BY THIS AGREEMENT BY, AMONG OTHER THINGS, THIS WAIVER.
BORROWER ACKNOWLEDGES THAT IT HAS READ THE PROVISIONS OF THIS AGREEMENT AND, IN
PARTICULAR, THIS PARAGRAPH; HAS CONSULTED LEGAL COUNSEL; UNDERSTANDS THE RIGHT
IT IS GRANTING IN THIS AGREEMENT AND IS WAIVING IN THIS PARAGRAPH IN PARTICULAR;
AND MAKES THE ABOVE WAIVER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY.
33
39
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as an instrument under seal as of the day and
year first above written.
Witness: GALILEO CORPORATION
- --------------------------------- By: /s/ Gregory Riedel
---------------------------------
Its Vice President, Finance and
Chief Financial Officer
BANKBOSTON, N.A.
- --------------------------------- By: /s/ Thomas Creed
---------------------------------
Its Vice President
34