Exhibit 10.4.1
CREDIT AGREEMENT
This CREDIT AGREEMENT is made as of January 23, 1997, by and among
CITIZENS BANK OF MASSACHUSETTS, a Massachusetts banking corporation with its
principal office at 55 Summer Street, Boston, Massachusetts (the "Lender");
ASAHI/AMERICA, INC., a Massachusetts business corporation ("AAI") and ASAHI
ENGINEERED PRODUCTS, INC., a Massachusetts business corporation ("AEPI") (AAI
and AEPI are sometimes hereinafter referred to collectively as the "Borrowers"
and individually as a "Borrower").
In consideration of any loans or other financial accommodations made
or to be made hereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties jointly
and severally agree as follows:
Section 1. Certain Definitions. The following terms shall have
the meanings set forth in this S1 or elsewhere in this Agreement.
"Acquisition" has the meaning given to it in Section 6.11.
"Affiliate" means singly and collectively, any Person (including
without limitation a Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with, a Borrower, and the legal
representative, successor or assignee of any such Person. For purposes of this
definition, a Person shall be deemed to be "controlled by" another Person if
such other Person possesses, directly or indirectly, power either to (i) vote
10% or more of the securities having ordinary voting power for the election of
directors of the Person controlled, or (ii) direct or cause the direction of the
management and policies of the Person controlled, whether such power arises by
contract or otherwise.
Agreement. This Credit Agreement, including the Exhibits
and Schedules hereto, as in effect at the time of reference
thereto.
Audit Fee means a fee of $300.00 per person per day for each
examination performed by the Lender as provided in Section 6.5 hereof, plus all
out-of-pocket costs incurred by the Lender in connection therewith.
Bond Reimbursement Agreement means that certain Reimbursement
Agreement dated as of March 1, 1994 between the Borrower and Citizens Trust
Company, an affiliate of Lender ("Citizens") with respect to the reimbursement
obligations of the Borrower in
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respect of a letter of credit dated March 16, 1994 issued by Citizens for the
account of the AAI relating to the Bonds, including any amendments to,
restatements of or successor agreement to said agreement.
Bonds means those certain Massachusetts Industrial Finance Agency
Industrial Revenue Bonds Asahi/America Issue, Series 1994, including any bonds
issued in renewal or refunding thereof.
Business Day. Any day on which Lender's head office in Boston,
Massachusetts is open for the transaction of commercial banking business, and in
the case of any LIBOR Loan, any day that the Lender or its participant in the
Loan conducts eurodollar market activities.
Capitalized Lease Obligations means all lease obligations which have
been or should be, in accordance with GAAP, capitalized on the books of the
lessee.
Cash Equivalent Investments means any Investment in (i) direct
obligations of the United States or any agency, authority or instrumentality
thereof, or obligations guaranteed by the United States or any agency, authority
or instrumentality thereof, whether or not supported by the full faith and
credit of, a right to borrow from or the ability to be purchased by the United
States; (ii) commercial paper rated in the highest grade by a nationally
recognized statistical rating agency or which, if not rated, is issued or
guaranteed by any issuer with outstanding long-term debt rated A or better by
any nationally recognized statistical rating agency; (iii) demand and time
deposits with, and certificates of deposit and bankers acceptances issued by,
any office of the Lender or any of its Affiliates, or any other bank or trust
company which is organized under the laws of the United States or any state
thereof and has capital, surplus and undivided profits aggregating at least
$500,000,000; (iv) any short-term note which has a rating of MIG-2 or better by
Moody's Investors Service Inc. or a comparable rating from any other nationally
recognized statistical rating agency; (v) any municipal bond or other
governmental obligation (including without limitation any industrial revenue
bond or project note) which is rated A or better by any nationally recognized
statistical rating agency; (vi) any other obligation of any issuer, the
outstanding long-term debt of which is rated A or better by any nationally
recognized statistical rating agency; or (vii) any repurchase agreement with any
financial institution described in clause (iii) above, relating to any of the
foregoing instruments and fully collateralized by such instruments. Each Cash
Equivalent Investment shall have a maturity of less than one year at the time of
purchase; provided that the maturity of any repurchase
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agreement shall be deemed to be the repurchase date and not the maturity of the
subject security and that the maturity of any variable or floating rate note
subject to prepayment at the option of the holder shall be the period remaining
(including any notice period remaining) before the holder is entitled to
prepayment.
Cash Flow means, on a consolidated basis for a particular period,
EBIT for such period, plus all depreciation, amortization and other non-cash
charges taken by AAI and/or its Subsidiaries in accordance with GAAP and
deducted in computing its Net Income for such period, minus any capital
expenditures made during such period, but only to the extent such capital
expenditures were not financed by the incurrence of long-term indebtedness, as
defined in accordance with GAAP, and minus any taxes paid in cash by AAI and its
Subsidiaries during such period.
Closing Date. The date on which the first Loan is made
hereunder.
Consolidated Current Assets means as to each Borrower all cash, Cash
Equivalent Investments, trade accounts receivable, inventory and marketable
securities of such Borrower and its Subsidiaries which would, in accordance with
GAAP on a consolidated basis, be classified as current assets of corporations
conducting a business the same as or similar to that of such Borrower and/or its
Subsidiaries, excluding any intangible assets (as intangible assets are defined
under the definition of Consolidated Total Tangible Assets below).
Consolidated Current Liabilities means as to each Borrower all
liabilities of such Borrower and its Subsidiaries which would, in accordance
with GAAP on a consolidated basis, be classified as current liabilities of
corporations conducting a business the same as or similar to that of such
Borrower and/or its Subsidiaries, including, without limitation, all lease
rental payments under Capitalized Lease Obligations and fixed prepayments of,
and sinking fund payments and reserves with respect to, Indebtedness, in each
case required to be made within one year from the date of determination.
Consolidated Total Tangible Assets means as to each Borrower all
assets of such Borrower and its Subsidiaries which would, in accordance with
GAAP on a consolidated basis, be classified as assets of a corporation
conducting a business the same as or similar to that of such Borrower and any of
its Subsidiaries, such total assets to be determined in accordance with GAAP
consistent with those applied in the preparation of the audited financial
statements referred to in Section 6.6, excluding however, from
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the determination of total assets (i) all assets which would be classified as
intangible assets under GAAP, including without limitation goodwill (whether
representing the excess of cost over book value of assets acquired or
otherwise), patents, trademarks, trade names, copyrights, franchises, the
benefit of a covenant not to compete and deferred charges (including, without
limitation, unamortized debt discount and expense, organization costs, and
research and development costs), (ii) treasury stock and interests of less than
51% of any other corporation or business entity, (iii) cash set apart and held
in a sinking or other analogous fund established for the purpose of redemption
or other retirement of capital stock, (iv) to the extent not already deducted
from total assets, reserves for depreciation, depletion, obsolescence and/or
amortization of properties and all other reserves or appropriations of retained
earnings which, in accordance with GAAP, should be established in connection
with the business conducted by the Person whose tangible net worth is being
determined, (v) any upward revaluation or other write-up in book value of assets
subsequent to the date of the audited financial statements referred to in
Section 6.6 and (vi) loans and advances to shareholders, directors, officers or
employees of a Borrower or any of its Subsidiaries.
Consolidated Total Liabilities means as to each Borrower all
liabilities of such Borrower and its Subsidiaries which would, in accordance
with GAAP on a consolidated basis, be classified as liabilities of a corporation
conducting a business the same as or similar to that of such Borrower and any of
its Subsidiaries, including, without limitation, all lease rental payments under
Capitalized Lease Obligations and fixed prepayments of, and sinking fund payment
and reserves with respect to, Indebtedness.
Default means an event or condition which with the giving of notice
or lapse of time or both would become an Event of Default.
EBIT means, for any period, Net Income (loss) during such fiscal
period, plus the amount, if any, deducted in the calculation thereof with
respect to (i) interest expensed by AAI and its Subsidiaries during such period,
and (ii) any taxes expensed by AAI and its Subsidiaries during such period, all
determined in accordance with GAAP.
Event of Default. Has the meaning given to it in Section 7 hereof.
GAAP Has the meaning given to it in Section 4.4 hereof.
Hazardous Material means any substance or material defined or
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by
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any federal, state or local environmental statute, regulation or ordinance.
Indebtedness means, for any Person, (i) all indebtedness or other
obligations of said Person for borrowed money or for the deferred purchase price
of property or services, (ii) all indebtedness or other obligations of any other
Person ("Other Person") for borrowed money or for the deferred purchase price of
property or services, the payment or collection of which said Person has
guaranteed (except by reason of endorsement of negotiable instruments for
collection in the ordinary course of business) or in respect of which said
Person is liable, contingently or otherwise, including, without limitation,
liable by way of agreement to purchase or lease, to provide funds for payment,
to supply funds to purchase, sell or lease property or services primarily to
assure a creditor of such Other Person against loss or otherwise to invest in or
make a loan to the Other Person, or otherwise to assure a creditor of such Other
Person against loss, (iii) all indebtedness or other obligations of any Person
for borrowed money or for the deferred purchase price of property or services
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien upon or in any property
owned by said Person, whether or not said Person has assumed or become liable
for the payment of such indebtedness or obligations, (iv) Capitalized Lease
Obligations of said Person and (v) all other liabilities or obligations of said
Person which would, in accordance with GAAP, be classified as liabilities of
such a Person. Leases characterized under GAAP as operating leases shall not be
considered Indebtedness.
Interest Period shall mean, with respect to any LIBOR Loans made or
continued by Lender hereunder, a period (in increments of not less than 30
days), as the Borrowers may as to specific Loans from time to time elect, from
30 to 365 consecutive days, as applicable, during the term of this Agreement, as
specified from time to time by Lender; provided, however, that (i) if any
Interest Period pertaining to a LIBOR Loan would otherwise end on a day which is
not a Business Day, such Interest Period 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; (ii) 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, subject to
clause (iii) below, end on the last Business Day of the relevant calendar month;
(iii) any Interest Period that would otherwise end after the Termination Date
shall end on the Termination Date; and (iv) clause (iii) above notwithstanding,
no Interest Period shall have a duration
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of less than one month, and if any Interest Period applicable to a LIBOR Loan
would be for a shorter period, such Interest Period shall not be available
hereunder.
LIBOR shall mean, with respect to a Loan as to which LIBOR shall
serve as a reference rate hereunder, the rate equal to the rate at which Lender
is offered U.S. Dollar deposits at or about 10:00 A.M., New York City time, two
Business Days prior to the beginning of the applicable Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its LIBOR Loans are then being conducted for
delivery on the first day of such Interest Period for the approximate number of
days comprised therein (as elected by the Borrower) and in an amount comparable
to the amount of its LIBOR Loan to be outstanding during such Interest Period,
taking into account any applicable reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other governmental authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such Board of
Governors) maintained by a member bank of such System.
Loan(s). Any advance(s) by the Lender to or for the account of either
or both Borrowers, as contemplated by this Agreement. Loans may, at the request
of the Borrowers and the discretion of the Lender, take the form of letters of
credit (other than the letter of credit issued in support of the Bonds) and/or
acceptances issued or arranged by the Lender, and the face amount of any such
letter of credit and/or acceptance (including any interest accrued thereon), and
the unreimbursed amount of any draw under such a letter of credit, shall
constitute a Loan of like amount hereunder.
Loan Documents. Collectively, this Agreement, each of the Notes and
any other instruments or documents delivered or to be delivered pursuant to this
Agreement, as well as the Bond Reimbursement Agreement and any "Other Documents"
(as defined in the Bond Reimbursement Agreement, and any amendment thereto,
restatement thereof or successor agreement thereto.
Maximum Debt to Tangible Net Worth means, during each of the periods
set forth below, a ratio of (i) the Borrowers' Consolidated Total Liabilities to
(ii) the Borrowers' Tangible Net Worth of less than or equal to:
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Period Ratio
------ -----
Date hereof through
September 30, 1997 1.0*
thereafter 0.9**
* 1.7 post-Acquisition; ** 1.5 post-Acquisition.
Minimum Debt Service Coverage means, during each of the periods set
forth below, a ratio of (i) the Borrowers' consolidated Cash Flow to (ii)
interest charges on its Indebtedness greater than or equal to:
Period Ratio
------ -----
Date hereof through
September 30, 1997 3.0*
thereafter 4.0**
* 2.5 post-Acquisition; ** 3.0 post-Acquisition.
Minimum Tangible Net Worth means, during each of the periods set
forth below, Tangible Net Worth in an amount not less the amount set forth below
opposite each such period:
Period Amount
------ ------
Date hereof through
September 30, 1997 $13,000,000*
thereafter the amount required
as of the end of the
preceding fiscal
quarter, plus 50% of
Net Income for the
immediately preced-
ing fiscal quarter**
* $12,000,000 post-Acquisition; ** $12,500,000, plus 50% of Net Income for the
immediately preceding fiscal quarter, post-Acquisition.
Minimum Working Capital means, during each of the periods set forth
below, Working Capital in an amount not less than the amount set forth below
opposite each such period:
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Period Amount
------ ------
Date hereof through
September 30, 1997 $8,000,000*
thereafter $9,000,000**
* $3,000,000 post-Acquisition previously consummated; ** $3,500,-
000 post-Acquisition.
Net Income means the consolidated net, after-tax income (loss) of AAI
and its Subsidiaries determined in accordance with GAAP.
Notes. Collectively, the Revolving Credit Note and the Discretionary
Line Note, as such terms are defined in Section 2, and any other term promissory
notes from time to time outstanding as contemplated by Sections 2.1(b) or 2.2(b)
hereof.
Obligations. Obligations shall mean all amounts at any time owed to
the Lender in respect of this Agreement, the Notes or any other Loan Document
executed in connection herewith.
Person. Any individual, corporation, association, partnership, trust,
limited liability company, unincorporated association, business or other legal
entity, and any government or any governmental agency or political subdivision
thereof.
Premises has the meaning given to it in Section 4.15 hereof.
Prime Rate means the fluctuating rate of interest per annum
designated by the Lender from time to time as being its "Prime Rate" or "Base
Rate" of interest, it being understood that such rate is a reference rate only
and not necessarily the lowest rate of interest charged by the Lender on
commercial loans.
Subsidiary means any corporation or other legal entity, if any, of
which more than 50% of the outstanding interests having ordinary voting power to
elect a majority of the board of directors or other managers of such entity
(irrespective of whether or not at the time capital stock or other equity
interests of any other class or classes of such corporation or other entity
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by a Borrower or by a Borrower and/or one
or more Subsidiaries or the management of which corporation or other entity is
under control of a Borrower and/or any other Subsidiary, directly or indirectly
through one or more Persons and any other Person which, under GAAP, should at
any time for financial reporting purposes be consolidated with a Borrower and/or
any other Subsidiary.
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Tangible Net Worth means the excess, if any, of the Consolidated
Total Tangible Assets of the Borrowers over the Consolidated Total Liabilities
of the Borrowers.
Termination Date. The date upon which the Lender's obligation to make
Loans in accordance with the provisions of this Agreement ends, including by
reason of an Event of Default or, if applicable, a discretionary decision by the
Lender for Loans advanced under Section 2.2 hereof.
"Unused Line Fee" means a fee in an amount equal to one quarter of
one percent (0.25%) per annum of the difference between (i) $5,000,000, and (ii)
the average daily outstanding principal balance of all Loans made under Section
2.1 hereof, payable on the last Business Day of each March, June, September and
December during the period the Lender has any obligation to make such Loans.
Working Capital means the Borrowers' Consolidated Current Assets
minus the Borrowers' Consolidated Current Liabilities.
Any terms not specifically defined herein which are defined in the
Uniform Commercial Code as in effect in the Commonwealth of Massachusetts shall
have the same meanings herein as therein. Each reference herein to a particular
person (including, without limitation, the Lender) shall include a reference to
such person's successors and permitted assigns. The words "herein", "hereof",
"hereunder" and words of like import shall refer to this Agreement as a whole
and not to any particular section or subdivision of this Agreement.
Section 2. THE LOANS.
Section 2.1. Committed Revolving Credit Line; Limitations; Purposes.
(a) Revolving Credit Loans; Commitment to Lend.
Subject to the terms and conditions set forth herein, the Borrowers (or either
of them) may borrow (including the continuation of any then outstanding LIBOR
Loan after the expiration of the Interest Period applicable to it), repay and
reborrow from time to time between the Closing Date and September 29, 1998 or
any earlier Termination Date, upon notice to the Lender given in such manner as
Lender may from time to time prescribe, such amounts as requested by the
Borrower(s) for the purpose of providing funding for their regular operations,
as well as for acquisitions of other enterprises in accordance with the
provisions of Section 6.11 hereof; provided, however, that the maximum aggregate
principal amount of all loans made under this Section 2.1(a) outstanding at any
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time shall not exceed $5,000,000, and any such excess shall immediately be
repaid by the Borrowers and until repaid shall be treated for purposes of this
Agreement as a Loan made in accordance with the provisions of this Agreement.
Each request for a Loan hereunder shall constitute a joint and several
representation by the Borrowers that all applicable conditions to such advance
have been satisfied on the date of such request. The obligation of the Lender to
make loans hereunder shall terminate on the Termination Date, and all loans then
outstanding shall become immediately due and payable without notice or other
action by the Lender, except that Borrowers shall have 120 days after the
Termination Date to repay any Obligations then outstanding provided that during
such period there shall be no Event of Default.
(b) Promissory Note. The indebtedness resulting from Loans
made pursuant to Section 2.1(a) hereof shall be an absolute, unconditional and
joint and several obligation of the Borrowers, and such indebtedness shall be
evidenced by a Revolving Credit Note executed and delivered by the Borrowers to
the Lender on the Closing Date in substantially the form of Exhibit 2.1(b)
hereto (the "Revolving Credit Note"), which Revolving Credit Note shall set
forth the interest and payment terms applicable to the indebtedness represented
thereby.
(c) Periodic Review. Lender shall review its revolving
credit commitment under this Section 2.1 periodically, and may in its absolute
discretion at any time elect to terminate such commitment, effective on or after
the earlier of (i) an Event of Default, or (ii) September 30, 1998.
(d) Unused Line Fee. The Borrowers shall pay an Unused Line
Fee in respect of the revolving line of credit established pursuant to this
Section 2.1.
Section 2.2. Discretionary Revolving Credit Line; Limitations;
Purposes.
(a) Revolving Credit Loans; Commitment to Lend. In addition
to and separate from the revolving credit line established pursuant to Section
2.1(a) hereto, and subject to the terms and conditions set forth herein and the
absolute discretion of the Lender, the Borrowers (or either of them) may borrow
(including the continuation of any then outstanding LIBOR Loan after the
expiration of the Interest Period applicable to it), repay and reborrow from
time to time between the Closing Date and September 29, 1997 or any earlier
Termination Date, upon notice to the Lender given in such manner as Lender may
from time to time prescribe, such amounts as requested by the Borrower(s) for
the
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sole purpose of providing funding for its regular operations, and any other
Acquisitions as herein defined; provided, however, that the maximum aggregate
principal amount of all loans made under this Section 2.2(a) outstanding shall
not at any time exceed $5,000,000, and any such excess shall immediately be
repaid by the Borrowers and until repaid shall be treated for purposes of this
Agreement as a Loan made in accordance with the provisions of this Agreement.
Each request for a Loan hereunder shall constitute a joint and several
representation by the Borrowers that all applicable conditions to such advance
have been satisfied on the date of such request. Borrowers' right to request
Loans hereunder shall terminate on the Termination Date, and all loans made
under this Section 2.2 then outstanding shall become immediately due and payable
without notice or other action by the Lender, except that Borrowers shall have
120 days after the Termination Date to repay any Obligations then outstanding
provided that during such period there shall be no Event of Default. The making
of any Loans under this Section 2.2 shall be entirely within the absolute
discretion of the Lender.
(b) Promissory Note. The indebtedness resulting from Loans
under Section 2.2(a) hereof shall be an absolute, unconditional and joint and
several obligation of the Borrowers, and such indebtedness shall be evidenced by
a Discretionary Credit Line Note executed and delivered by the Borrowers to the
Lender on the Closing Date in substantially the form of Exhibit 2.2(b) hereto
(the "Discretionary Credit Line Note"), which Discretionary Credit Line Note
shall set forth the interest and payment terms applicable to the indebtedness
represented thereby.
(c) Periodic Review. Lender shall review its discretionary
revolving credit facility under this Section 2.2 periodically, and may at any
time in its absolute discretion decline to make a Loan requested under this
Section 2.2 and/or terminate the revolving credit line established under said
Section 2.2.
Section 2.3. Interest Rate and Related Matters. (a) The rate of
interest applicable to each Loan shall be, as AAI may elect by written notice to
Lender from time to time at least two (2) Business Days prior to the making of
such Loan, either (i) the Prime Rate, or (ii) LIBOR plus 165 basis points
(1.65%), each such rate to fluctuate as and when the relevant reference rate
changes, except that the LIBOR rate shall be fixed for the relevant Interest
Period. In the absence of a timely election by AAI as provided above, whether as
to an initial borrowing or the continuation of a LIBOR Loan after the expiration
of the Interest Period applicable to it, the interest rate applicable to any
such Loan shall be the Prime Rate. Once the interest rate applicable to a Loan
is so elected by the Borrowers, it may not be changed
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except with the written consent of the Lender, which may be withheld for any
reason.
(b) The Borrowers shall have the right at any time to prepay in whole
or in part, without premium or penalty, any Loan as to which interest then is
based upon the Prime Rate rather than LIBOR.
(c) Where interest on a Loan is at the time of any prepayment based
upon LIBOR, the Borrowers shall provide Lender with not fewer than two Business
Days prior written notice of such prepayment and at the time of such prepayment,
and as a condition thereto, also pay to the Lender in the case of a LIBOR Loan
which is paid in whole or part on a day which is not the last day of the then
current Interest Period with respect thereto, an amount equal to any actual or
estimated loss or expense incurred by the Lender by reason of such prepayment
(if estimated loss, such estimated amount to be reconciled with the actual loss
as soon as possible thereafter, with evidence of any adjustment to the
previously estimated loss to be submitted to Borrowers), assuming that the
Lender had match funded such LIBOR Loan with eurodollar deposits, including any
transaction fees incurred by the Lender in reinvesting the amount prepaid.
(d) The Borrowers further hereby jointly and severally agree to
indemnify the Lender and to hold it harmless from any loss or expense which the
Lender may sustain or incur as a consequence of (i) default by a Borrower in
making a borrowing of or continuation of LIBOR Loans after such Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, or (ii) default by a Borrower in making any prepayment of any LIBOR
Loan after such Borrower has given a notice thereof in accordance with the
provisions of this Agreement.
(e) If the Borrowers for any reason make any payment of principal of
a LIBOR Loan on any day other than the last day of an applicable Interest
Period, or fail to borrow or continue a LIBOR Loan after having giving notice to
Lender of their intention to do so, the Lender may estimate its losses and
expenses related thereto based upon, in the case of expenses, its experience in
comparable situations and, in the case of losses, the effective interest rate
per annum at which any readily marketable bond or other obligation of the United
States, selected at Lender's sole discretion, maturing on or near the last day
of the then applicable Interest Period of such LIBOR Loan and in approximately
the same amount as such LIBOR Loan or prepaid amount, as the case may be, can be
purchased by the Lender on the day of such prepayment of principal or failure to
borrow or continue
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such LIBOR Loan (if such losses and/or expenses are so estimated, such estimated
amount(s) shall be reconciled with the actual losses and/or expenses as soon as
possible thereafter, with evidence of any adjustment to the previously estimated
loss to be submitted to Borrowers).
(f) In the event the Lender shall have determined in good faith
(which determination shall be final and conclusive) that: (i) adequate and fair
means do not exist to ascertain LIBOR as of the date any LIBOR Loan is to be
made or continued hereunder, or (ii) the making or continuation of a LIBOR Loan
has been made impracticable or unlawful for any reason, or (iii) that LIBOR no
longer represents the effective cost to the Lender for U.S. dollar deposits in
the interbank market for deposits in which it regularly participates, THEN and
in any such event the Lender shall so notify the Borrowers. Until the Lender
notifies the Borrowers that the circumstances giving rise to such notice no
longer apply, the obligation of the Lender to allow selection by the Borrowers
of LIBOR Loans shall be suspended. If at the time the Lender so notifies the
Borrowers, a Borrower has previously given the Lender a notice of request for
the making or continuation of a LIBOR Loan but such LIBOR Loans have not yet
been made or continued, such notice shall be deemed void and the Borrowers shall
be deemed to have requested such Loan with interest determined with reference to
the Prime Rate. Upon such date as shall be specified in such notice (which shall
not be earlier than the date such notice is given) the Borrowers shall forthwith
prepay all outstanding LIBOR Loans, together with interest thereon, and may
borrow a Loan of comparable amount with interest determined by reference to the
Prime Rate.
Section 2.4. Increased Costs. If any law, executive order or
regulation, or any governmental directive (whether or not having the force of
law), or any interpretation of any of the foregoing by any court or
administrative or governmental authority charged with the administration
thereof, or any change therein, shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirements against any of
the Loans (including any letters of credit or acceptances issued or arranged by
the Lender for the benefit of the Borrowers); or (ii) impose on the Lender any
tax or other condition or requirements relating to any of the Loans; and the
result of any such event shall be to increase the cost to the Lender of
providing any Loans hereunder, then, upon demand by the Lender and delivery to
the Borrowers of a certificate of an officer of the Lender explaining in
reasonable detail such law, executive order, regulation, directive, or the
interpretation thereof, its impact on the Lender and the basis for determining
such increased costs and their allocation, the Borrowers shall immediately pay
to the Lender such amounts as
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shall be sufficient to compensate the Lender for such increased cost, including
any interest accrued thereon, from the date of demand through the date of
payment, at the rate applicable to the Loans in question; provided, however,
that the foregoing provisions shall not apply to any law with respect to (a)
taxes imposed upon or measured by the net income of the Lender, or (b) taxes
which would have been imposed even if there had been no provision for LIBOR
Loans, letters of credit and/or acceptances in this Agreement. The determination
of Lender of the amount of such costs, if made in good faith and in the absence
of manifest error, shall be conclusive; and provided, further, that any
increased cost of providing or maintaining LIBOR Loans related to any reserve or
similar requirements shall be reimbursable hereunder from and after the date
such increased cost first was incurred by Lender, even if demand for
reimbursement thereof shall be made thereafter.
Section 2.5. Interest Limitation. Notwithstanding any other term of
this Agreement or any other Loan Document, the maximum amount of interest which
may be charged to or collected from any Person liable hereunder or under any
Note, shall be absolutely limited to, and shall in no event exceed, the maximum
amount of interest which could lawfully be charged or collected under applicable
law (the "Maximum Rate"), so that the total of all amounts constituting interest
under applicable law, howsoever computed, shall never exceed as to any Person
liable therefor the Maximum Rate, and any term of this Agreement or any other
Loan Document which could be construed as providing for interest in excess of
such lawful maximum shall be and hereby is made expressly subject to and
modified by the provisions of this paragraph. If, in any month, the effective
interest rate on any amounts owing in respect of any Loan, absent the Maximum
Rate limitation contained herein, would have exceeded the Maximum Rate, and if
in the future months, such effective interest rate would otherwise be less than
the Maximum Rate, then the effective interest rate for such month shall be
increased to the Maximum Rate until such time as the total amount of interest
paid equals the amount of interest which would have been paid if the same had
not been limited by the Maximum Rate.
Section 2.6. Joint and Several Responsibility to Repay Loans. The
obligations of the Borrowers in respect of Loans to either of them shall be
joint and several, without regard to the application of the proceeds of any
Loan, the Borrowers specifically acknowledging that their business relationship
is such that Loans to either of them will benefit the other and that each shall
be an agent for the other in requesting Loans hereunder.
14
Section 2.7. Requests for Loans. The Lender is authorized to receive
and act upon telephone, telecopy and written Loan requests from either Borrower
in accordance with the Lender's applicable procedures as in effect from time to
time, and shall not be liable to the Borrowers on account of any defect therein,
if Lender acts in good faith and without actual knowledge that the person making
such request is unauthorized to do so.
Section 3. SECURITY. NOT USED.
Section 4. REPRESENTATIONS AND WARRANTIES. The Borrowers jointly
and severally hereby represent and warrant to the Lender as
follows:
Section 4.1. Corporate Existence. Each Borrower is a business
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts, (ii) has adequate corporate power and
authority and full legal right to own or to hold under lease its properties and
to carry on the business in which it is presently engaged and will be engaged
upon the Closing Date, and (iii) is qualified as a foreign corporation in each
jurisdiction wherein such qualification is necessary.
Section 4.2. Due Authority, etc. The execution and delivery by each
Borrower of each of the Loan Documents to which it is or is to become a party
and the performance by it of all of its agreements and obligations thereunder
are within its legal power and have been duly authorized by all necessary action
on its part, and do not and will not (i) contravene any provision of law or its
charter, by-laws or other organizational documents (each as from time to time in
effect), (ii) conflict with, or result in a breach of any term, condition or
provision of, or constitute a default under or result in the creation of any
mortgage, lien, pledge, charge, security interest or other encumbrance upon any
of the property of the Borrower under, any agreement, mortgage or other
instrument to which the Borrower is or may become a party or by which it or any
of its property is or may become bound or affected, or (iii) violate any law,
regulation or judicial or administrative order.
Section 4.3. Binding Effect of Documents, etc. Each Borrower has duly
executed and delivered each of the Loan Documents to which it is a party and
each such Loan Document is in full force and effect and constitutes the legal,
valid and binding obligation of each Borrower, as the case may be, enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency or
other laws affecting generally the enforcement of creditors' rights and general
principles of equity.
15
Section 4.4 Financial Statements; No Adverse Change. The Borrowers
have heretofore furnished to Lender those financial statements described in
Schedule 4.4 hereto, all of which present fairly the financial condition,
assets, liabilities and income of the subject thereof as of the dates thereof
and for the periods then ended and have been prepared in accordance with
generally accepted accounting principles consistently applied ("GAAP"). There
has not been any material adverse change in the financial condition, assets,
liabilities or income of either Borrower from the date of the most recent
balance sheet applicable to it to the Closing Date.
Section 4.5. Litigation. There is not pending or, to the best
knowledge of either Borrower, threatened, any action, suit, or proceeding before
any court, governmental or regulatory authority, agency, commission, or board of
arbitration against either Borrower, which by itself or taken together with
other such litigation, has a reasonable possibility of materially and adversely
affecting the financial condition, assets or operations of either Borrower, nor
is any basis for any such proceeding or matter known to exist.
Section 4.6. Ownership of Assets; Location of Offices. Each Borrower
is the owner of its properties free and clear of all liens except as may be
specifically set forth in Schedule 4.6A hereto; and each Borrower will defend
its properties against all claims and demands of all persons at any time
claiming an interest therein. The address of the chief executive office and
chief place of business of each Borrower is as set forth in the first paragraph
of this Agreement, and neither Borrower has any other place of business except
as set forth in Schedule 4.6B hereof.
Section 4.7. Tax Matters. Each Borrower has filed all federal, state
and local tax returns and other reports it is required to file and has paid or
made adequate provision for payment of all such taxes, assessments and other
governmental charges.
Section 4.8. No Margin Stock Credit. Neither Borrower is engaged in
the business of extending credit for the purpose of purchasing or carrying
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System (12 CFR Part 221), nor does either Borrower own or
have any present intention of acquiring any such margin stock or a "margin
security" within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System (12 CFR, Part 207). None of the proceeds of the Loans
will be used directly or indirectly by either Borrower for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry, any such margin
securi-
16
ty or margin stock or for any other purpose which might constitute a transaction
contemplated by said Regulation G or Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities and Exchange Act of 1934, as amended, or any rules or
regulations promulgated under either said statute.
Section 4.9. No Investment Company. Neither Borrower is an
"investment company" or a company "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended.
Section 4.10. Solvency. After giving effect to the Borrowings to be
made under this Agreement, each Borrower (a) will be able to pay its debts as
they become due, (b) will have funds and capital sufficient to carry on its
business and all businesses in which it is about to engage, and (c) will own
property having a value both at fair valuation and at fair saleable value in the
ordinary course of such Borrower's business, greater than the amount required to
pay its Indebtedness, including for this purpose unliquidated and disputed
claims. Neither Borrower will be rendered insolvent (as such term is defined in
11 U.S.C. Section 01-(31)) by the execution and delivery of this Agreement or
the consummation of any transactions contemplated herein.
Section 4.11. Approvals; Licenses. Any approvals required from all
Persons, including without limitation all governmental authorities, with respect
to the execution and performance of the Loan Documents by the Borrowers have
been obtained. Each Borrower has all permits, governmental licenses,
registrations and approvals, required in carrying out their respective
businesses as presently conducted and as required by law or the rules and
regulations of any federal, foreign, state, county or local association,
corporation or governmental agency, body, instrumentality or commission having
jurisdiction over such Borrower, including but not limited to the United States
Environmental Protection Agency, the United States Department of Labor, the
United States Occupational Safety and Health Administration, the United States
Equal Employment Opportunity Commission and analogous and related state and
foreign agencies. There is no violation or failure of compliance or allegation
of such violation or failure of compliance on the part of either Borrower with
any of the foregoing permits, licenses, registrations, approvals, rules or
regulations and there is no action, proceeding or investigation pending or to
the knowledge of either Borrower threatened nor has any Borrower received any
notice of such which might result in the termination or suspension of any such
permit, license, registration or approval.
17
Section 4.12. Ownership Interests. INTENTIONALLY OMITTED.
Section 4.13. Subsidiaries. AEPI is the only Subsidiary of AAI
and, except as noted on Schedule 4.13, no Borrower except AAI has
any Subsidiaries as of the date hereof.
Section 4.14. Environmental Matters. Neither Borrower nor, to the
best knowledge of each Borrower after due inquiry, any other
Person:
(a) has ever caused, permitted, or suffered to exist
any Hazardous Material to be spilled, placed, held, located or disposed of on,
under, or about, nor are any now existing on, under, or about, any premises
owned, leased or otherwise operated by a Borrower ("Premises"), or into the
atmosphere, any body of water, any wetlands, or on any other real property
adjacent to the Premises, other than as disclosed on Schedule 4.14A hereto, or
in respect of Hazardous Material used or disposed of in compliance with law;
(b) has any knowledge after due inquiry that any
Premises or any other real property adjacent to the Premises or has ever been
used (whether by a Borrower or, to the best knowledge of each Borrower after due
inquiry, by any other Person) as a treatment, storage (except for its own
material in the ordinary course of business) or disposal (whether permanent or
temporary) site for any Hazardous Material; and
(c) except as previously disclosed in writing to Lender
and as described in Schedule 4.14A hereto, has any knowledge after due inquiry
of any notice of violation, lien or other notice issued by any governmental
agency with respect to the environmental condition of the Premises, or any other
real property adjacent to the Premises.
Section 4.15. No Adverse Effect on Bond Reimbursement Agreement. The
consummation of the transactions contemplated by this Agreement will not limit,
conflict with or otherwise impair the rights and obligations of Citizens or the
Borrowers in respect of the Bond Reimbursement Agreement.
Section 4.16. Other Representations. Each of the representations and
warranties made by either Borrower in any of the Loan Documents was true and
correct in all material respects when made and continues to be true and correct
in all material respects on the Closing Date, except to the extent that any of
such representations and warranties expressly relate to an earlier date only.
18
Section 4.17. Disclosure. No information furnished by or on behalf of
either Borrower in any Loan Document or in any other document, certificate,
statement or letter furnished to the Lender in connection with any of the
transactions contemplated by any of the Loan Documents, including information
contained in any tax returns or financial statements, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein not misleading in light of the
circumstances in which they are made. There is no fact known to either Borrower
(other than general economic and political conditions affecting business
generally) which materially and adversely affects, or which is reasonably likely
in the future materially and adversely to affect, the financial position,
business, operations, prospects or affairs of either Borrower.
Section 5. Conditions to Lending. The obligations of the Lender to
make any Loan on or after the Closing Date shall be subject to the satisfaction
at such time of each of the following conditions precedent:
Section 5.1. Representations and Warranties. Each of the
representations and warranties made by or on behalf of the Borrowers to the
Lender in this Agreement or the other Loan Documents, except to the extent that
they expressly relate to an earlier date only, shall then be true and correct in
all material respects.
Section 5.2. Legality of Transactions. It shall not then be unlawful
for the Lender or either Borrower to perform any of its respective agreements or
obligations under any of the Loan Documents.
Section 5.3. No Defaults. No Default or Event of Default shall then
exist.
Section 5.4 Proceedings and Documents. All corporate, governmental
and other proceedings in connection with the transactions contemplated by the
Loan Documents, and all instruments and documents incidental thereto, shall be
in form and substance satisfactory to the Lender and the Lender shall have
theretofore received all such executed originals or certified or other copies of
all such instruments and documents as the Lender shall have reasonably
requested.
Section 5.5 Legal Opinion. As a condition precedent to the first Loan
hereunder, the Lender shall have received a written opinion, addressed to the
Lender, dated the Closing Date, from counsel to
19
the Borrowers in form and substance satisfactory to the Lender and its counsel.
Section 6. Covenants of the Borrowers. The Borrowers hereby covenant,
jointly and severally, that, so long as any Loan is outstanding or the Lender
has any obligation to make any Loan hereunder, unless the Lender otherwise
agrees in writing:
Section 6.1. Legal Existence, etc. Each Borrower will (a) maintain
its legal existence and good standing under the laws of its jurisdiction of
organization, and (b) maintain its qualification to do business in each state in
which the failure to do so would have a material adverse effect on the
condition, financial or otherwise, of a Borrower.
Section 6.2. Use of Loan Proceeds. Each Borrower shall use the
proceeds of all Loans made to it only as permitted by Section 2.
Section 6.3. Conduct of Business. Each Borrower will continue to
engage primarily in the business engaged in by it on the date hereof.
Section 6.4. Access; Audit. Each Borrower will permit the Lender, by
its representatives and agents, to inspect any of its properties, including,
without limitation, books and records, computer files and tapes and financial
records, to audit, examine and make copies of its books of account and other
records and to discuss its affairs, finances and accounts with, and to be
advised as to the same by, its officers and other responsible employees and
professional advisers at such reasonable times and intervals as the Lender may
designate. Without limiting the generality of the foregoing, the Lender shall
have the right at any time to conduct an internal audit of the Borrowers upon
not less than ten (10) days advance notice to AAI's senior management; the
Borrowers shall pay all Audit Fees (not in excess of $1,200 per calendar year,
excluding Audit Fees incurred (a) during a Default or Event of Default, or (b)
in respect of the first such audit conducted after an Acquisition by AAI or any
of its Affiliates, the Audit Fees for which post-Acquisition audit shall not
exceed $1,200).
Section 6.5. Negative Pledge; etc. Neither Borrower shall at any time
mortgage, pledge, grant or permit to exist any lien or other charge or
encumbrance upon, any of its assets, now owned or hereafter acquired, except:
(a) for taxes, assessments or governmental charges or levies on property if the
same shall not at the time be delinquent or thereafter can be paid without
penalty or interest, or (if foreclosure, distraint, sale or other similar
proceedings shall not have been commenced) are being contested in good faith and
by appropriate proceedings diligently conducted
20
and for which proper reserve or other provision has been made in accordance with
GAAP; (b) imposed by law, such as carriers', warehousemen's and mechanics'
liens, bankers' set-off rights and other similar liens arising in the ordinary
course of business for sums not yet due or being contested in good faith and by
appropriate proceedings diligently conducted and for which proper reserve or
other provision has been made in accordance with GAAP; (c) arising in the
ordinary course of business out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation; (d) arising from or
upon any judgment or award (which, together with any others then outstanding and
unpaid, exceeds $100,000), provided that such judgment or award is being
contested in good faith by proper appeal proceedings and only so long as
execution thereon shall be stayed; (e) existing on the date hereof and set forth
on Schedule 4.6A hereto; (f) now or hereafter granted to the Lender as
collateral for the Loans and/or Borrowers' other obligations arising in
connection with or under this Agreement or any other Loan Document; (g) that
constitute deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of a Borrower's business; (h) that constitute easements, rights
of way, restrictions and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount, and
which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of business by AAI or any
Subsidiary; and/or (i) incurred as purchase money mortgages or other liens or
retained security titles of a conditional vendor in the ordinary course of AAI's
or any Subsidiary's business on property acquired or held by AAI and/or any such
Subsidiary to secure the purchase price of such property; provided that the
liens or other charges or encumbrances permitted by this clause (i) shall at all
times be confined solely to the item of property so purchased and shall secure
an obligation which does not exceed eighty percent (80%) of the lower of the
fair market value or the actual cost of the item of property so purchased and
that any such obligations shall not otherwise be prohibited by the terms of this
Agreement.
Section 6.6. Financial Information. The Borrowers shall provide to the
Lender (a) within 10 days after the filing thereof, their federal income tax
returns, including those most recently filed before the date hereof, as well as
any quarterly, annual and special reports filed on SEC Forms 10-Q, 10-K and 8-K
(or any successor forms), and any exhibits thereto; (b) within 120 days after
the end of their fiscal year, an income statement, balance sheet and any other
related consolidated financial statements of
21
the Borrowers, prepared in accordance with GAAP and audited and certified
without qualification by the Borrowers' outside auditors (being Arthur Andersen
LLP or such other firm as the Lender may hereafter approve); (c) within 30 days
after the end of each month, internally prepared consolidated financial
statements of the Borrowers similar to those required by clause (b) above,
except that they will have been internally prepared without outside review
(together with accounts receivable and accounts payable agings for and as of the
end of such month, and from the beginning of the then current fiscal year to the
end of such month), certified to by the chief financial officer of AAI as being
in compliance with GAAP, subject only to normal year-end adjustments and except
that such internally prepared statements need not contain footnotes; (d)
promptly upon receipt thereof, copies of all management letters and other
material reports which are submitted to a Borrower by its independent auditors,
if any; (e) within 15 days after their distribution, copies of reports to and
any other communications with their shareholders; (f) within forty-five (45)
days after the end of each calendar quarter hereafter, a certificate of the
chief financial officer of AAI which shall contain a statement to the effect
that no Event of Default or Default has occurred, without having been waived in
writing, or if there shall have been an Event of Default not previously waived
in writing pursuant to the provisions hereof, or a Default, such officer's
certificate shall disclose the nature thereof and all steps then being taken to
remedy it. In each such officer's certificate relating to a fiscal quarter of
AAI the officer of AAI shall also calculate, set forth and certify to the
accuracy of the amounts required to be calculated in the financial covenants of
Borrowers contained in this Agreement; (g) on or before the 90th day after the
end of each fiscal year ending on or after December 31, 1996, an updated
proposed budget together with cash flow statement, prepared on a monthly basis,
and updated financial projections (together, the "Budget") for the then current
fiscal year, setting forth in detail reasonably satisfactory to the Lender the
projected results of operations of AAI and its Subsidiaries, including without
limitation, projected revenues and expenses, capital expenditures, stating
underlying assumptions and certified by an authorized officer of AAI as being
fair and reasonable in the light of AAI's and its Subsidiaries' business
condition and prospects; and (h) promptly upon request and in form satisfactory
to the Lender, all such other information as the Lender may reasonably request
from time to time.
Section 6.7. Maintenance of Banking Relationship; Cash Management.
Each Borrower will maintain all of its deposit, checking and other bank accounts
with the Lender, excluding only those accounts which are used (a) solely for the
purchase and sale of
22
foreign currency, (b) solely to buy and sell eurodollar deposits, or (c) solely
for payroll purposes.
Section 6.8. Financial Covenants. The Borrowers will maintain, as of
the end of each quarter-annual fiscal period, the Maximum Debt to Tangible Net
Worth ratio, the Minimum Debt Service Coverage ratio, Minimum Tangible Net Worth
and Minimum Working Capital.
Section 6.9. Senior Management. At least two of the following three
persons shall remain in the office set forth after his name (or a substantively
comparable position): Leslie B. Lewis, President, Chairman and CEO; Kozo Terada,
Vice President, Treasurer and CFO; and Timothy Robinson, Executive Vice
President and COO; provided, however, that no Default or Event of Default shall
arise by breach of this Section 6.9 if (a) replacement personnel satisfactory to
Lender are retained within 180 days after the departure of his predecessor, and
(b) at all times prior to the retention of such permanent successor, the duties
of the departed officer shall be performed by interim personnel in a manner
reasonably satisfactory to Lender.
Section 6.10. Other Covenants. The Borrowers shall continue to comply
with all affirmative and negative covenants contained in those documents
described in Schedule 6.10 hereto, even after the Indebtedness evidenced and/or
governed by such documents no longer is outstanding, except to the extent that
any such other covenant is inconsistent with any of the provisions of this
Agreement or any other Loan Document.
Section 6.11. Acquisitions. Neither Borrower nor any Subsidiary shall
acquire, whether by purchase of capital stock, assets or otherwise, any other
Person or business, except for such an acquisition (an "Acquisition") which
satisfies each of the following conditions: (a) the business acquired is in the
same or compatible industry as that of the purchaser or any subsidiary thereof;
and (b) prior to executing any legally binding agreement to undertake such
acquisition (if intended to be financed in whole or part by Lender), the
purchaser submits to the Lender (i) historical financial statements for the
Person or business to be acquired for at least the two most recent complete
fiscal years, plus any year-to-date interim statements, together with (ii)
projected, pro forma financial statements for the Person or business to be
acquired, as combined with the Borrowers, for at least two complete fiscal years
following the anticipated acquisition date, showing compliance with all
financial covenants contained in this Agreement and applicable to the Borrowers
following an Acquisition. Lender shall respond to any written request for
approval of an Acquisition hereunder within ten (10) business days after receipt
of all information necessary to
23
consider such request, and failure of Lender to respond within such ten (10)-day
period shall constitute Lender's consent to such Acquisition under this Section
6.11. This S6.11 shall not apply to acquisitions not financed by Lender
hereunder.
Section 6.12. Other Negative Covenants. Neither Borrower nor any
Subsidiary shall:
(a) Sell or otherwise transfer any of its assets to any entity,
including Subsidiaries or Affiliates of AAI, other than for equivalent value and
in the ordinary course of its business.
(b) Engage in any transaction or enter into any agreement with any
Affiliate, or in the case of Affiliates or Subsidiaries, with AAI or another
Affiliate or Subsidiary, on other than an arm's length basis.
(c) Change its fiscal year from a year ending on December 31 provided
that the Lender's consent to a fiscal year change shall not be unreasonably
withheld so long as the parties are able to agree to an appropriate adjustment
to the financial covenants contained in this Agreement.
(d) Own any Subsidiary unless the Lender shall have given its prior
written consent thereto and such Subsidiary shall have become a party hereto as
a joint and several obligor with AAI pursuant to a written assumption agreement
and amendment hereto in form and substance satisfactory to Lender.
(e) Dissolve, liquidate, wind up, merge or consolidate with, or
acquire all or a substantial portion of the assets of (whether in one
transaction or a series of transactions), another Person, other than in the
ordinary course of its business or as permitted by Section 6.11 hereof.
(f) Become involved, or permit any tenant or other occupant of the
Premises to become involved, in any operations at the Premises generating,
storing, disposing, or handling Hazardous Material or any other activity that
could lead to the imposition on a Borrower, the Lender or the Premises, of any
material liability or lien under any environmental laws.
Section 6.13. Other Affirmative Covenants. Each Borrowers shall:
(a) Maintain casualty insurance coverage (including flood insurance),
on its physical assets and other insurance against other risks, including public
liability and product liability insurance in such amounts and of such types as
may be reasonably requested by the Lender, and in any event, as are ordinarily
24
carried by similar businesses. In the event of acquisition of additional assets
or of incurrence of additional risk of any nature, the Borrowers shall cause
such insurance coverage to be increased or amended in such manner and to such
extent as prudent business judgment would dictate. In the case of all policies
insuring property in which the Lender may from time to time have a security
interest or other lien of any kind whatsoever, all such insurance policies shall
provide that the loss payable thereunder shall be payable to Borrowers and the
Lender, as their respective interests may appear, with the Lender to be named as
an additional insured on any liability policy. A list of all said policies or
certificates thereof, including all endorsements thereof and those required
hereunder, shall be deposited with the Lender, and such policies shall contain
provisions that no such insurance may be cancelled or decreased without at least
twenty (20) days prior written notice to the Lender. At the Lender's request,
copies of all such policies shall be delivered to the Lender. If Borrowers shall
at any time or times hereafter fail to obtain and maintain any of the policies
of insurance required herein, or fail to pay any premium in whole or in part
relating to any such policies, the Lender may, but shall not be obligated to,
obtain and/or cause to be maintained insurance coverage with respect to the
assets of Borrowers, including, at Lender's option, the coverage provided by all
or any of the policies of Borrowers and pay all or any part of the premium
thereunder, without waiving any Event of Default by Borrowers, and any sums so
disbursed by the Lender shall be additional Obligations of Borrowers to Lender
payable on demand. Following an Event of Default, the Lender shall have the
right to settle and compromise any and all claims under any of the policies
required to be maintained by Borrowers hereunder, to demand, receive and receipt
for all monies payable thereunder, and to execute in the name of Borrowers,
Lender or both any proof of loss, notice or other instruments in connection with
such policies or any loss thereunder, and each of the Borrowers hereby
constitutes the Lender its attorney-in-fact for purposes of enforcing Lender's
rights under this Section 6.13(a).
(b) Promptly notify Lender of any Default or Event of Default, and
promptly notify Lender of any changes in the financial condition of AAI and its
Subsidiaries which, individually or cumulatively, may result in a material
adverse change to AAI and/or its Subsidiaries.
(c) If Borrowers shall now or hereafter maintain an employee benefit
plan subject to the Employee Retirement Income Security Act of 1974, as amended
(hereinafter "ERISA"), it shall promptly: (i) notify Lender of the filing of a
notice with the Pension Benefit Guaranty Corporation ("PBGC") pursuant to ERISA
25
that the plan is to be terminated; and (ii) notify Lender of receipt of notice
of or institution of any proceedings by the PBGC under ERISA concerning any such
plan.
(d) Notify Lender at least thirty (30) days prior to: (i) any change
in the address of the chief executive office and/or chief place of business of a
Borrower; (ii) any change in the location of any records pertaining to the
accounts receivable of Borrowers; (iii) any change in the address where any
inventory (including returns of inventory) with a cost in excess of $100,000
is or may be stored, and (iv) notify Lender within ten (10) days after the
granting to a Borrower or any Subsidiary of any patent, trademark, copyright or
other intellectual property right. Schedule 6.13 discloses the (i) existing
chief executive office and chief place of business for each Borrower, (ii)
existing location of the records pertaining to the accounts receivable of each
Borrower, (iii) existing locations of all inventory (including returns of
inventory), and (iv) presently owned patents, trademarks, copyrights or other
intellectual property rights.
(e) Keep complete and accurate books and records with respect to the
business of AAI and its Subsidiaries and all its properties, consistent with
good business practice.
(f) Pay or deposit promptly when due all taxes, assessments and
governmental charges upon and relating to its ownership or use of any of its
assets or its income, or the operation of its business or otherwise, for which a
Borrower is or may be liable and submit to Lender proof satisfactory to Lender
that such payments and/or deposits have been made.
(g) Timely pay each Unused Line Fee.
(h) Timely pay each Audit Fee.
(i) From time to time hereafter, execute and deliver or cause to be
executed and delivered, such additional instruments, certificates and documents,
and take all such actions, as Lender shall reasonably request for the purpose of
implementing or effectuating the provisions of the Loan Documents, and upon the
exercise by Lender of any power, right, privilege or remedy pursuant to the Loan
Documents which requires any consent, approval, registration, qualification or
authorization of any governmental authority or instrumentality, exercise and
deliver all applications, certifications, instruments and other documents and
papers that Lender may be so required to obtain.
26
(j) Comply strictly and in all respects with the requirements of all
federal, state, and local laws and regulations, including without limitation
those pertaining to employee compensation and safety, environmental matters and
product safety.
(k) Notify the Lender promptly in the event of any spill, hazardous
waste pollution or contamination affecting any Premises for which the Borrowers
could have liability in a material amount; forward to the Lender promptly any
notices relating to such matters received from any governmental agency; and pay
promptly when due any material fine or assessment against the Premises for which
the Borrowers have liability in a material amount unless the Borrowers are
contesting the same by appropriate legal action for which appropriate reserves
are maintained.
(l) Immediately contain and remove any Hazardous Material in excess
of maximum amounts permitted by applicable law found on any Premises for which
the Borrowers could have liability in a material amount, in compliance with
applicable laws and at Borrowers' expense, subject however, to the right of the
Lender, at the Lender's option but at Borrowers' expense, to have an
environmental engineer or other representative review the work being done.
(m) Promptly upon the request of the Lender, based upon the Lender's
reasonable belief that a hazardous waste or other environmental problem exists
with respect to Premises for which the Borrowers could have liability in a
material amount, provide the Lender with an environmental site assessment report
or an update of any existing report, all in scope, form and content and
performed by such company as may be reasonably satisfactory to the Lender, to
the extent that the Borrowers are permitted to do so under the lease under which
they are occupying the applicable Premises.
(n) Indemnify, defend, and hold the Lender harmless from and against
any claim, cost, damage (including without limitation consequential damages),
expense (including without limitation attorneys' fees and expenses), loss,
liability, or judgment now or hereafter arising as a result of any claim for
environmental cleanup costs, any resulting damage to the environment and any
other environmental claims against Borrowers, the Lender, or any Premises (other
than claims, costs or damages directly resulting from actions of Lender or its
agents in managing the Premises). The provisions of this Section 6.13(n) shall
continue in effect and shall survive (among other events) any termination of
this Agreement, foreclosure, a deed in lieu transaction, and payment and
satisfaction of the Notes and other obligations of Borrowers hereunder.
27
(o) Maintain keyman insurance on the life of Leslie B. Lewis with an
insurer reasonably satisfactory to Lender and with a death benefit equal to not
less than $5,000,000, including any policies already maintained by either or
both of the Borrowers for the benefit of the Lender pursuant to prior credit
arrangements.
Section 7. Events of Default; Acceleration. If any of the follow-
ing events (each an "Event of Default") shall occur and be continuing:
(a) if a Borrower shall fail to pay any principal of or
interest on any Loan when the same is due, or fail to pay any other
sums due hereunder or under any other Loan Document, within 10 days
after the same shall have become due and payable, whether on demand,
at the stated date of maturity or any accelerated date of maturity or
at any other date fixed for payment;
(b) if a Borrower shall fail to comply with any of its
other covenants contained herein or in any other Loan Document or
outstanding letters of credit (or applications or reimbursement
agreements related thereto) and not remedy such failure within 30
days after notice thereof from the Lender;
(c) if any representation or warranty made by a Borrower in
this Agreement or in any other Loan Document or information contained
in any other document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any
material respect upon the date when, or when deemed, made;
(d) if a Borrower or a Subsidiary thereof shall be involved
in financial difficulties as evidenced:
(i) by its commencement of a voluntary case under
Title 11 of the United States Code as from time to time in
effect, or by its authorizing, by appropriate proceedings
of its board of directors or other governing body, the
commencement of such a voluntary case;
(ii) by the entry of an order for relief against
it in any involuntary case commenced under said Title 11
which remains undischarged or unstayed for more than thirty
(30) days;
(iii) by its seeking relief as a debtor under any
applicable law, other than said Title 11, of any juris-
28
diction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights
of creditors, or by its consenting to or acquiescing in
such relief;
(iv) by entry of an order by a court of competent
jurisdiction (A) finding it to be bankrupt or insolvent or
(B) ordering or approving its liquidation, reorganization
or any modification or alteration of the rights of its
creditors which remains undischarged or unstayed for more
than thirty (30) days;
(v) by the entry of an order by a court of
competent jurisdiction levying or executing upon, assuming
custody of, or appointing a receiver or other custodian
for, all or a substantial part of its property;
(vi) by its making an assignment for the benefit
of, or entering into a composition with, its creditors, or
appointing or consenting to the appointment of a receiver
or other custodian for all or a substantial part of its
property;
(e) if there shall remain in force, undischarged,
unsatisfied, unstayed and unbonded, for more than thirty (30) days,
any final judgment against a Borrower or a Subsidiary from which no
further appeal may be taken and which, with any other outstanding
final judgments, undischarged, unsatisfied, unstayed and unbonded,
against one or more such Person(s) exceeds $100,000 in aggregate
amount;
(f) if a Borrower is dissolved;
(g) If AAI or any Subsidiary shall default (after giving
effect to any applicable grace period) in the due and punctual
payment of the principal of or interest on any Indebtedness exceeding
in the aggregate $100,000 (other than the Obligations), or if any
default shall have occurred and be continuing after any applicable
grace period under any mortgage, note or other agreement evidencing,
securing or providing for the creation of such Indebtedness which
results in the acceleration of such Indebtedness or which permits, or
with the giving of notice would permit, any holder or holders of any
such Indebtedness to accelerate the stated maturity thereof;
(h) Loss, theft, damage or destruction of any material
portion of the property of a Borrower for which there is no
insurance coverage;
29
(i) If there shall be an attachment of any deposits or
other property of AAI and/or any Subsidiary in the possession of
Lender or an attachment of any other property of AAI and/or any
Subsidiary which shall not be discharged within thirty (30) days of
the date of such attachment;
(j) If a Borrower is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of
its business affairs; or
(k) If there shall be a default or event of default in
respect of the Bond Reimbursement Agreement or, as defined therein,
any Related Document;
THEN, the Lender may by notice in writing to the Borrowers terminate its
commitments under this Agreement and upon such termination shall have no further
obligation to make Loans to the Borrowers, and may declare all amounts owing
with respect to this Agreement and the Notes to be, and they shall thereupon
forthwith mature and become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrowers. No remedy herein conferred upon the Lender or the
holder of any of the Notes is intended to be exclusive of any other remedy and
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder, in the other Loan Documents or now or hereafter
existing at law or in equity or by statute or any other provision of law.
Section 8. Setoff. Regardless of the adequacy of any collateral for
the Loans, any deposits or other sums credited by or due from the Lender to a
Borrower may be applied to or set off against the payment of the indebtedness
evidenced by any of the Notes at any time after the occurrence of any Default or
Event of Default. The Lender will give written notice to the Borrowers promptly
after any exercise of its rights under this Section 8.
Section 9. Expenses. Whether or not the transactions contemplated
hereby shall be consummated, the Borrowers will pay the reasonable fees,
expenses and disbursements of the Lender's counsel incurred in connection with
the preparation and (after any Default or Event of Default hereunder or under
any other Loan Document) the administration and enforcement of this Agreement
and other Loan Documents, and in connection with any litigation, proceeding or
dispute whether arising hereunder or otherwise, in any way related to the
Lender's relationship with the Borrowers under this Agreement or with respect to
the transactions contemplated hereby, except for any of the foregoing which
result from the
30
gross negligence or willful misconduct of the Lender. In any investigation,
proceeding or litigation, or the preparation therefor, the Lender shall be
entitled to select its own counsel and, in addition to the foregoing indemnity,
the Borrowers agree jointly and severally to pay promptly the reasonable fees
and expenses of such counsel, on a progress basis if so requested. The covenants
of this Section 9 shall survive payment or satisfaction of all amounts owing
with respect to the Notes and the other Loan Documents.
Section 10. Survival of Covenants, Etc. All covenants, agreements,
representations and warranties made herein or in any other Loan Document shall
be deemed to have been relied upon by the Lender, notwithstanding any
investigation heretofore or hereafter made by it, and shall survive the making
by the Lender of any Loans as herein contemplated, and shall continue in full
force and effect so long as any amount remains due under this Agreement or any
Note or the Lender has any obligation to make any further Loans.
Section 11. Parties in Interest. All the terms of this Agreement and
the other Loan Documents shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto
and thereto; provided that neither Borrower shall assign or transfer any of its
rights hereunder or under any other Loan Document without the prior written
consent of the Lender. The Borrowers agree that the Lender may disclose
information obtained by the Lender pursuant to this Agreement or other Loan
Documents where required or requested by governmental or regulatory authorities
or in connection with the sale of any interests in the Loans. If at any time or
times by assignment, participation or otherwise Lender transfers, grants
participation in or assigns any or all of the Obligations, collateral (if any)
or the rights of Lender under this Agreement with respect to the Obligations or
collateral participated in or transferred, the assignee or transferee shall
become vested with said powers and rights whether or not they are specifically
referred to in the transfer or assignment. If and to the extent Lender retains
any Obligations or collateral after giving effect to any assignment or transfer,
Lender shall continue to have the rights and powers herein set forth with
respect thereto. In the event Lender shall grant a participation in any or all
of the Obligations or collateral, Lender shall continue to have all of the
rights and powers herein set forth with respect thereto.
Section 12. Notices, Etc. Except as otherwise expressly provided in
this Agreement, all notices and other communications made or required to be
given pursuant to this Agreement or the other Loan
31
Documents shall be in writing and shall be delivered in hand, mailed by United
States registered or certified first-class mail, postage prepaid, return receipt
requested, or sent by telegraph or telex and confirmed by mail, addressed as
follows:
(a) if to the Borrowers addressed to them at:
Asahi/America, Inc., 19 Green Street, Malden, MA 02148, Attn:
Treasurer, or at such other address for notice as either Borrower
shall last have furnished in writing to the Person giving the notice,
with a copy to Burton Winnick, Esq., Gadsby & Hannah LLP, 125 Summer
Street, Boston, MA 02110; or
(b) if to the Lender, Robert Bender, Vice President,
Citizens Bank of Massachusetts, 55 Summer Street, Boston, MA 02110,
or such other address for notice as the Lender shall last have
furnished in writing to the Person giving the notice, with a copy to
Gary M. Markoff, Esq., Sherin and Lodgen LLP, 100 Summer Street,
Boston, MA 02110.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand to an officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, or (b) if sent by registered or certified first-class mail, postage
prepaid, or by a nationally recognized overnight express delivery service upon
the date of first attempted delivery, as shown on the return receipt therefor or
the returned item itself
Section 13. Miscellaneous. Except as otherwise provided therein or
required by the laws of any jurisdiction in which any collateral is located, the
Loan Documents shall each be deemed to be contracts under seal and shall for all
purposes be construed in accordance with and governed by the internal laws of
the Commonwealth of Massachusetts, without reference to principles of conflicts
of law of any jurisdiction. The captions in this Agreement are for convenience
of reference only and shall not define or limit the provisions hereof. This
Agreement, together with the other Loan Documents, expresses the entire
understanding of the parties with respect to the transactions contemplated
hereby and supersedes any prior or contemporaneous agreement or discussions;
provided, however, that nothing herein supersedes or modifies any provision of
the Bond Reimbursement Agreement or, as therein defined, any Related Document,
and the provisions of all such documents (as from time to time expressly amended
and in effect) shall continue to apply to the Borrowers in accordance with their
terms. Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement to be given by the Lender may
be given, and any term of
32
this Agreement or of any other Loan Document may be amended, and the performance
or observance by the Borrowers of any terms of this Agreement or such other Loan
Document or the continuance of any Event of Default may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the written consent of the Lender. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Lender in
exercising any right shall operate as a waiver prejudicial thereto. No notice to
or demand upon the Borrowers shall entitle the Borrowers to other or further
notice or demand in similar or other circumstances. All obligations of the
Borrowers under this Agreement and in respect of the Notes, the Loans and the
other Loan Documents shall be joint and several.
Section 14. Waiver of Jury Trial; Place of Suit. EACH BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CLAIM EVER BROUGHT BY IT
AGAINST THE LENDER (INCLUDING ITS OFFICERS, DIRECTORS, EMPLOYEES OR COUNSEL)
RELATED IN ANY WAY TO THIS AGREEMENT, THE LOANS, THE NOTES OR ANY OTHER LOAN
DOCUMENTS. NO PARTY WILL SEEK TO CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL
HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS
NOT BEEN WAIVED. THE PROVISIONS OF THIS SECTION 4 HAVE BEEN FULLY DISCUSSED BY
THE PARTIES HERETO AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO
PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. ANY
COURT PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS SHALL
BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS (OR
THE FEDERAL COURTS LOCATED THEREIN) AND EACH BORROWER HEREBY AGREES THAT ANY
LEGAL PROCESS ISSUING FROM ANY SUCH COURT SENT TO IT BY MAIL IN ACCORDANCE WITH
S12 SHALL BE SUFFICIENT TO SUBJECT IT TO THE PERSONAL JURISDICTION OF SUCH
COURT.
Section 15. Severability. In the event any provision of this
Agreement or any Loan Document shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other term or provision hereof, and such
agreement shall be interpreted and construed as if such provision, to the extent
the same shall have been invalid, illegal or unenforceable, had never been
contained herein. The parties hereto agree that they will negotiate in good
faith to replace any provision so held invalid, illegal or unenforceable with a
valid provision which is as similar as possible in substance to the invalid,
illegal or unenforceable provision.
33
WITNESS: ASAHI/AMERICA, INC.
/s/ John E. Lawrence By: /s/ Leslie B. Lewis
__________________________ ___________________________
John E. Lawrence
Title: President
________________________
ASAHI ENGINEERED PRODUCTS, INC.
/s/ John E. Lawrence By: /s/ Leslie B. Lewis
_________________________ _______________________________
John E. Lawrence
Title: President
_______________________
CITIZENS BANK OF MASSACHUSETTS
By /s/ Robert Bender
____________________________
Robert Bender, Vice President
34
List of Schedules & Exhibits
Exhibit # Description
--------- -----------
2.1(b) Form of Revolving Credit Note
2.2(b) Form of Discretionary Credit
Line Note
Schedule # Description
---------- -----------
4.4 List of Financial Statements
Provided to Lender
4.6A List of Encumbrances on Borr-
owers' Assets
4.6B List of Borrower Office/Assets
Locations
4.13 List of Subsidiaries
4.15A Environmental Matters
6.10 Other Documents Containing
Covenants Incorporated by
Reference into this Agreement
6.13 (i) existing chief executive office and chief place
of business for each Borrower, (ii) existing
location of the records pertaining to the accounts
receivable of each Borrower, (iii) existing
locations of all inventory (including returns of
inventory), and (iv) presently owned patents,
trademarks, copyrights or other intellectual
property rights.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
35
Exhibit 2.1 (b)
REVOLVING CREDIT NOTE
$5,000,000.00 January 23, 1997
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned ASAHI/AMERICA, INC., a
Massachusetts business corporation ("AAI"), and ASAHI ENGINEERED PRODUCTS, INC.,
a Massachusetts business corporation ("AEPI") (AAI and AEPI are hereinafter
referred to collectively as the "Borrowers"), hereby absolutely, unconditionally
and jointly and severally promise to pay to the order of CITIZENS BANK OF
MASSACHUSETTS, a Massachusetts bank, at its principal office at 55 Summer
Street, Boston, Massachusetts 02110 (hereinafter, including any subsequent
holder hereof, the "Lender"):
(a) the principal amount of FIVE MILLION DOLLARS ($5,0-
00,000.00) or, if less or more, the aggregate unpaid principal amount
of revolving credit loans advanced by the Lender from time to time
pursuant to Section 2.1 of that certain Credit Agreement dated as of
the date hereof (the "Credit Agreement"), among the Borrowers and the
Lender; and
(b) any then unpaid interest on the principal balance
hereof from time to time outstanding from the date hereof through and
including the date on which such principal amount is paid in full.
Except as otherwise provided below, revolving credit loans
outstanding from time to time shall bear interest from the date such Loans are
made until repaid in full at the rate provided in Section 2.3 of the Credit
Agreement. Interest shall be computed on the basis of a 360-day year for the
number of days actually elapsed.
Interest on the indebtedness evidenced by this Note shall be payable
monthly in arrears on the 1st day of the succeeding month, commencing February
1, 1997, with a final payment at the maturity of this Note. The principal amount
of the indebtedness evidenced by this Note shall be due and payable upon the
earlier of (i) September 30, 1998, (ii) the Termination Date or (iii) the
occurrence of an Event of Default, whereupon the entire unpaid principal amount
of this Note and all of the unpaid interest
36
accrued thereon may be declared and thereby become immediately due and payable.
Lender may charge any Borrower's accounts with Lender for all payments of
interest, principal and fees due in respect of this Note, and Lender shall
within two (2) business days thereafter provide the Borrowers with a statement
of such charges. Whenever a payment hereunder becomes due on a day which is not
a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.
Overdue principal and (to the extent permitted by applicable law)
interest on the indebtedness evidenced by this Note, and all other overdue
amounts payable hereunder, shall, upon notice to the Borrowers from the Lender,
bear interest at a rate per annum equal to four hundred (400) basis points above
the rate of interest otherwise payable hereunder, compounded daily and payable
on DEMAND, to accrue from the date of such notice until payment thereof.
Payments (other than of principal) made more than ten (10) days after their due
date shall be subject to a 5% late payment penalty.
This Note evidences borrowings under, and has been issued by the
Borrowers in accordance with the terms of, the Credit Agreement. The Lender and
any holder hereof is entitled to the benefits of the Credit Agreement and may
enforce the agreements of the Borrowers contained therein (and in any other Loan
Document), and any holder may exercise the respective remedies provided for
therein or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All initially capitalized terms used but not otherwise
defined in this Note shall have the same meanings herein as in the Credit
Agreement.
The Borrowers shall have the right to prepay the whole or any part of
the principal of this Note, upon the terms and subject to the conditions set
forth in Section 2.3 of the Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, assent to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable in respect of this
Note.
37
The indebtedness evidenced by this Note is commercial in nature and
shall not be used for personal, family, household or agricultural purposes.
This Note shall be deemed to take effect as a sealed instrument under
the internal laws of the Commonwealth of Massachusetts (excluding the conflict
of law rules thereof) and for all purposes shall be construed in accordance with
such laws.
IN WITNESS WHEREOF, ASAHI/AMERICA, INC. and ASAHI ENGINEERED
PRODUCTS, INC. has each executed and delivered this Note by its
duly authorized officer as of the day and year first above
written.
WITNESS: ASAHI/AMERICA, INC.
__________________________ By:
___________________________
Title: President
________________________
ASAHI ENGINEERED PRODUCTS, INC.
__________________________ By:
___________________________
Title: President
________________________
38
Exhibit 2.2 (b)
DISCRETIONARY CREDIT LINE NOTE
$5,000,000.00 January 23, 1997
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned ASAHI/AMERICA, INC., a
Massachusetts business corporation ("AAI"), and ASAHI ENGINEERED PRODUCTS, INC.,
a Massachusetts business corporation ("AEPI") (AAI and AEPI are hereinafter
referred to collectively as the "Borrowers"), hereby absolutely, unconditionally
and jointly and severally promise to pay to the order of CITIZENS BANK OF
MASSACHUSETTS, a Massachusetts bank, at its principal office at 55 Summer
Street, Boston, Massachusetts 02110 (hereinafter, including any subsequent
holder hereof, the "Lender"):
(a) the principal amount of FIVE MILLION DOLLARS
($5,000,000.00) or, if less or more, the aggregate unpaid principal
amount of revolving credit loans advanced by the Lender from time to
time pursuant to Section 2.2 of that certain Credit Agreement dated
as of the date hereof (the "Credit Agreement"), among the Borrowers
and the Lender; and
(b) any then unpaid interest on the principal balance
hereof from time to time outstanding from the date hereof through and
including the date on which such principal amount is paid in full.
Except as otherwise provided below, revolving credit loans
outstanding from time to time shall bear interest from the date such Loans are
made until repaid in full at the rate provided in Section 2.3 of the Credit
Agreement. Interest shall be computed on the basis of a 360-day year for the
number of days actually elapsed.
Interest on the indebtedness evidenced by this Note shall be payable
monthly in arrears on the 1st day of the succeeding month, commencing February
1, 1997, with a final payment at the maturity of this Note. The principal amount
of the indebtedness evidenced by this Note shall be due and payable upon the
earlier of (i) DEMAND by Lender, (ii) September 30, 1997, (iii) the Termination
Date or (iv) the occurrence of an Event of Default, whereupon the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
be declared and thereby become immediately due and payable. Lender may charge
any Borrower's accounts with Lender for all payments of interest,
39
principal and fees due in respect of this Note, and Lender shall within two (2)
business days thereafter provide the Borrowers with a statement of such charges.
Whenever a payment hereunder becomes due on a day which is not a Business Day,
the due date for such payment shall be extended to the next succeeding Business
Day, and interest shall accrue during such extension.
Overdue principal and (to the extent permitted by applicable law)
interest on the indebtedness evidenced by this Note, and all other overdue
amounts payable hereunder, shall, upon notice to the Borrowers from the Lender,
bear interest at a rate per annum equal to four hundred (400) basis points above
the rate of interest otherwise payable hereunder, compounded daily and payable
on DEMAND, to accrue from the date of such notice until payment thereof.
Payments (other than of principal) made more than ten (10) days after their due
date, shall be subject to a 5% late payment penalty, AND except when payment
becomes due solely by reason of DEMAND by Lender in the absence of an Event of
Default and prior to September 30, 1997.
This Note evidences borrowings under, and has been issued by the
Borrowers in accordance with the terms of, the Credit Agreement. The Lender and
any holder hereof is entitled to the benefits of the Credit Agreement and may
enforce the agreements of the Borrowers contained therein (and in any other Loan
Document), and any holder may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All initially capitalized terms used but not otherwise
defined in this Note shall have the same meanings herein as in the Credit
Agreement.
The Borrowers shall have the right to prepay the whole or any part of
the principal of this Note, upon the terms and subject to the conditions set
forth in Section 2.3 of the Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, assent to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable in respect of this
Note.
40
The indebtedness evidenced by this Note is commercial in nature and
shall not be used for personal, family, household or agricultural purposes.
This Note shall be deemed to take effect as a sealed instrument under
the internal laws of the Commonwealth of Massachusetts (excluding the conflict
of law rules thereof) and for all purposes shall be construed in accordance with
such laws.
IN WITNESS WHEREOF, ASAHI/AMERICA, INC. and ASAHI ENGINEERED
PRODUCTS, INC. has each executed and delivered this Note by its duly authorized
officer as of the day and year first above written.
WITNESS: ASAHI/AMERICA, INC.
__________________________ By:
___________________________
Title:
________________________
ASAHI ENGINEERED PRODUCTS, INC.
__________________________ By:
___________________________
Title:
________________________
41