Exhibit 10.8
THIRD AMENDED AND RESTATED LOAN AGREEMENT
This Third Amended and Restated Loan Agreement made as of May 4, 1999,
by and between Citizens Bank of Massachusetts (herein "BANK"), and DM Management
Company, a Delaware corporation (herein "BORROWER").
Reference is made to that certain Loan Agreement made as of June 5,
1997 by and between BANK and BORROWER, as the same has been amended and restated
in (i) a certain Amended and Restated Loan Agreement dated as of October 31,
1997, as amended, and (ii) a certain Second Amended and Restated Loan Agreement
dated March 5, 1998, as amended by a certain First Amendment to Second Amended
and Restated Loan Agreement dated as of June 30, 1998, a certain Second
Amendment to Second Amended and Restated Loan Agreement dated as of September 4,
1998, a certain Third Amendment to Second Amended and Restated Loan Agreement
dated September 4, 1998, a certain Fourth Amendment to Second Amended and
Restated Loan Agreement dated as of December 31, 1998 and a certain Fifth
Amendment to Second Amended and Restated Loan Agreement dated as of March 30,
1999. (Collectively the 'LOAN AGREEMENT")
WITNESSETH:
WHEREAS, BORROWER wishes to borrow additional sums from the BANK and
wishes certain other accommodations; and
WHEREAS, the BANK is willing, on the terms, provisions and conditions
contained herein, to extend additional credit and accommodations subject to the
terms, conditions and provisions herein set forth;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereby agree that effective as of the date hereof, the
Loan Agreement is hereby further amended and restated as follows:
ARTICLE I
DEFINITIONS
1.01 Capitalized words and phrases in this Agreement shall have the
meanings ascribed to them in this Article.
"ACCOUNTANTS" shall mean the independent certified public accountants
of recognized national standing, who are selected and engaged by the BORROWER
and who are reasonably satisfactory to the BANK. Any one of the so-called "Big
5" national accounting firms shall be satisfactory to the BANK.
"ADJUSTED LIBOR RATE" shall mean, for any INTEREST PERIOD, an interest
rate per annum determined by the BANK pursuant to the following formula:
ADJUSTED LIBOR RATE = LIBOR BASE RATE
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1.00 - RESERVE RATE
"ADVANCE(S)" shall mean the amounts loaned by the BANK to the BORROWER
under Section 2.01 which shall be either LIBOR RATE ADVANCES or PRIME RATE
ADVANCES.
"AVAILABILITY PERIOD" shall mean the period commencing on the CLOSING
DATE and ending on the TERMINATION DATE.
"BANK" shall mean Citizens Bank of Massachusetts and is successors and
assigns.
"BANK DEPOSITS" shall mean all sums of money on deposit to the credit
of the BORROWER at any bank, trust company, national banking association,
savings bank, savings and loan association or similar institution.
"BANKING DAY" shall mean any BUSINESS DAY on which banks are open for
business in Boston, Massachusetts.
"BANK'S OFFICE" shall mean the office of the BANK located at 28 State
Street, Boston, Massachusetts 02109 or such other office of the BANK as the BANK
shall, from time to time, designate by notice to the BORROWER.
"BORROWER" is defined in the Recitals.
"BORROWING" shall mean the making of an ADVANCE.
"BORROWING DATE" shall mean that date on which an ADVANCE is made.
"BORROWING REQUEST" shall mean a request by the BORROWER for a
BORROWING.
"BUSINESS DAY" shall mean a calendar day other than (a) a Saturday,
Sunday or legal holiday in The Commonwealth of Massachusetts, and (b) a calendar
day on which banks are not authorized to be open for business in Boston,
Massachusetts.
"CAPITALIZED LEASE OBLIGATION(S)" shall mean all rental obligations
which, under GAAP, are required to be capitalized on the books of the BORROWER
in each case taken at the amount thereof accounted for as indebtedness (net of
interest expense) in accordance with GAAP.
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"CATALOG(S)" shall mean the CATALOGS and other written offerings of
INVENTORY made by the BORROWER to the general public from time to time and all
rights therein.
"CLOSING" is defined in Article XVI.
"CLOSING DATE" shall mean April 22, 1999.
"CODE" shall mean the Internal Revenue Code of 1986, as amended,
supplemented or modified from time to time, and all regulations issued
thereunder.
"COLLATERAL" shall mean all of BORROWER'S personal property, tangible
or intangible, including without limitation all accounts, BANK DEPOSITS,
DOCUMENTS, INVENTORY, GENERAL INTANGIBLES, contracts, CUSTOMER LISTS, INVESTMENT
PROPERTY, LEASES, EQUIPMENT, CATALOGS, rights to the trademarks "Nicole Summers"
and "J. Jill, Ltd.", and other property described in the SECURITY AGREEMENT,
whether now existing or hereafter arising or acquired and wherever located, and
all proceeds thereof, including, without limitation, all proceeds of fire and
other insurance.
"CONTINGENT OBLIGATIONS" shall mean any undertaking by the BORROWER
guaranteeing or in effect guaranteeing any indebtedness, leases, dividends or
other obligations for borrowed money ("PRIMARY OBLIGATIONS") of any other PERSON
in any manner, whether directly or indirectly, including, without limitation,
any obligations, whether or not contingent: (a) to purchase any such PRIMARY
OBLIGATION or any property constituting direct or indirect security therefor;
(b) to advance or supply funds(i) for the purchase or payment of any such
PRIMARY OBLIGATIONS; or (ii) to maintain working capital or equity capital of
such PERSON or otherwise to maintain the net worth or solvency of such PERSON;
(c) to purchase property, securities or services primarily for the purpose of
assuring the owner of any such PRIMARY OBLIGATION of the ability of such PERSON
to make payment of such PRIMARY OBLIGATION; or (d) otherwise to assure or hold
harmless the owner of such PRIMARY OBLIGATION against loss in respect thereof;
provided, however, that the term "CONTINGENT OBLIGATION" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.
"CONVERSION DATE" shall mean any date on which pricing of the REAL
ESTATE LOAN shall change by reason of an election by the BORROWER or a provision
of this Agreement.
"COST OF FUNDS REDEPLOYMENT is defined in Section 7.23.
"CREDIT BALANCE" shall mean the aggregate unpaid amount of ADVANCES
under Article II and L/C BALANCE outstanding from time to time.
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"CURRENT FINANCIALS" are described in Section 9.10 hereof.
"CUSTOMER LISTS" shall mean each and all of the mailing lists to which
CATALOGS are sent from time to time which BORROWER represents to BANK are
proprietary to it regardless of the media on which the same are stored.
"DEBT SERVICE COVERAGE" shall hereafter mean the ratio of (A) the
aggregate of the net earnings of BORROWER before interest expense, taxes,
depreciation, amortization and rent and lease expense, but specifically
including interest income; less (i) UNFINANCED CAPITAL EXPENDITURES, less (ii)
SHAREHOLDER PAYMENTS, less (iii) taxes paid in cash; to (B) the aggregate of (i)
interest paid and (ii) the amounts of all maturities of long-term debt falling
due in the twelve (12) month period succeeding the calculation date, including
principal payments due on the REAL ESTATE LOAN plus (iii) rent and lease
expense. Long Term Debt is amounts due in whole or in part more than 12 months
after the incurring thereof; however, for the purposes of calculating this
covenant the REVOLVING LOANS are specifically excluded from Long Term Debt.
"DEFAULT" shall mean the occurrence of an event which with the passage
of time or the requiring of the giving of notice, or both, may become an EVENT
OF DEFAULT.
"DOCUMENTS" shall mean a document of title as defined in the UCC.
"DOLLARS" or "$" shall mean lawful currency of the United States of
America.
"ENVIRONMENTAL LAW(S)" shall mean any and all present and future
federal, state and local laws, rules and regulations, and any orders and
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or toxic (all as
defined in such applicable laws, rules and regulations) or HAZARDOUS MATERIAL
into the environment.
"EQUIPMENT" shall mean and include, without limitation, all of
BORROWER'S tangible personal property utilized in the conduct of BORROWER'S
business, all replacements and substitutions therefor, and all accessions
thereto, and including, without in any way limiting the generality of the
foregoing, all of BORROWER'S machinery, equipment, furniture, trade fixtures and
motor vehicles, but excluding therefrom INVENTORY, as said term is defined in
the CODE.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, supplemented or modified from time to time, and all regulations
issued thereunder.
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"EVENT OF DEFAULT" is defined in Article XII.
"EXCESS CASH FLOW" shall mean funds obtained from sources other than
BORROWINGS.
"FINANCING AGREEMENTS" shall mean, collectively, this Third Amended and
Restated Loan Agreement, the THIRD REPLACEMENT REVOLVING NOTE, the REAL ESTATE
NOTE, the REAL ESTATE MORTGAGE, each L/C APPLICATION, and the SECURITY
AGREEMENT, all as amended from time to time and all other agreements executed
and delivered by the BORROWER hereunder, including any additional agreements
granting a LIEN, and all other agreements of every kind and nature now or
hereafter in force between the BANK and the BORROWER relating to the
OBLIGATIONS, as the same may have been or may, from time to time, be amended or
supplemented.
"FISCAL YEAR" shall mean the fiscal year of the BORROWER.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time and applied with respect to the preparation of financial
statements.
"GENERAL INTANGIBLES" shall mean the BORROWER'S general intangibles, as
defined in the CODE, and all proceeds thereof, and shall also include goodwill,
trade secrets, computer programs, CUSTOMER LISTS, trade names, trademarks,
patents, rights to tax refunds of every kind and nature and proceeds of each of
the foregoing.
"HAZARDOUS MATERIAL" shall mean any chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any ENVIRONMENTAL LAW.
"INDEBTEDNESS" shall mean, at any time, all items which would, in
conformity with GAAP, be classified as liabilities on a consolidated balance
sheet of BORROWER as at such time, and in any event including (a) indebtedness
arising under acceptance facilities, (b) CAPITALIZED LEASE OBLIGATIONS, (c)
CONTINGENT OBLIGATIONS and (d) liabilities secured by any LIEN on any property
even though the owner of such property has not assumed or otherwise become
liable for the payment thereof.
"INTEREST PAYMENT DATE" shall mean:
(a) With respect to PRIME RATE ADVANCES, the last day of each month,
commencing with the last day of the month in which the first PRIME RATE ADVANCE
is made.
(b) With respect to LIBOR RATE ADVANCES:
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(i) the last day of each INTEREST PERIOD; and
(ii) if the applicable INTEREST PERIOD is more than three
months, the last day of each three-month period during such INTEREST PERIOD.
(c) With respect to the REAL ESTATE LOAN, the last day of each monthly
payment of principal, commencing with the first such payment.
"INTEREST PERIOD" shall mean:
(a) With respect to each LIBOR RATE ADVANCE: (i) initially, the period
(A) commencing on the BORROWING DATE of such ADVANCE, and (B) ending one, two,
three or six months thereafter, as the case may be, as determined in accordance
with the provisions of this Agreement; and (ii) thereafter, each subsequent
INTEREST PERIOD for such LIBOR RATE ADVANCE shall begin on the last day of the
immediately preceding INTEREST PERIOD and shall end one, two, three or six
months thereafter, as the BORROWER may select pursuant to Section 2.01; provided
that (A) any INTEREST PERIOD which would otherwise end on a day which is not a
BANKING DAY shall end and the next INTEREST PERIOD shall commence on the next
preceding day which is a BANKING DAY as determined conclusively by the BANK in
accordance with the then current bank practices in London, England, and (B) any
INTEREST PERIOD for a LIBOR RATE ADVANCE that would otherwise extend beyond the
TERMINATION DATE shall end on the TERMINATION DATE.
(b) With respect to each PRIME RATE ADVANCE: the entire period during
which such advance is unpaid.
(c) With respect to the REAL ESTATE LOAN with respect to any period
when LIBOR RATE PRICING is not in effect, the entire period during which any
pricing other than LIBOR RATE PRICING is in effect.
(d) With respect to the REAL ESTATE LOAN with respect to any period
that LIBOR RATE PRICING is in effect: (i) initially, the period (A) commencing
on the BORROWING DATE of such period, and (B) ending one, two, three or six
months thereafter, as the case may be, as determined in accordance with the
provisions of this Agreement; and (ii) thereafter, each subsequent INTEREST
PERIOD for such LIBOR RATE PRICING shall begin on the last day of the
immediately preceding INTEREST PERIOD and shall end one, two, three or six
months thereafter, as the BORROWER may select pursuant to Section 2.01; provided
that (A) any INTEREST PERIOD which would otherwise end on a day which is not a
BANKING DAY shall end and the next INTEREST PERIOD shall commence on the next
preceding day which is a BANKING DAY as determined conclusively by the BANK in
accordance with the then current bank practices in London, England, and (B) any
INTEREST PERIOD during which
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LIBOR RATE PRICING is in effect that would otherwise extend beyond the MATURITY
DATE of said loan shall end on the TERMINATION DATE.
"INVENTORY" shall mean all of BORROWER'S inventory, merchandise,
finished inventory and all other tangible personal property held by BORROWER for
sale or lease, furnished or to be furnished under contracts of service, or used
or consumed in BORROWER'S business.
"INVESTMENT PROPERTY" shall mean all of BORROWER'S securities,
securities entitlements and securities accounts, and all other INVESTMENT
PROPERTY within the meaning of such term under the UCC.
"LEASE(S)" shall mean any right of BORROWER to use real or personal
property which property is owned by another.
"L/C APPLICATION" shall mean the BANK'S standard form of letter of
credit application and reimbursement agreement from time to time, which may be
submitted by electronic means or by facsimile transmission.
"L/C BALANCE shall mean the aggregate undrawn, uncanceled portions of
all LETTER(S) OF CREDIT outstanding from time to time and at any time.
"LETTER(S) OF CREDIT" shall mean LETTER(S) OF CREDIT issued by the BANK
for the account of the BORROWER, payable on sight to a beneficiary who is a
supplier of goods to the BORROWER, which, upon delivery to BORROWER, will be
INVENTORY and which LETTER(S) OF CREDIT require the delivery and presentation to
BANK at the BANK'S OFFICE of DOCUMENTS reflecting a sale of such goods to the
BORROWER, as a condition of BANK'S payment thereon.
"LIBOR BASE RATE" shall mean, with respect to any LIBOR RATE ADVANCE
for any INTEREST PERIOD, the rate per annum determined by the BANK to be the
rate at which deposits in DOLLARS are offered to BANK in the London Interbank
Market at approximately 10:00 a.m. (Boston time) two BUSINESS DAYS prior to the
first day of such INTEREST PERIOD for delivery on the first day of such INTEREST
PERIOD for a period equal to such INTEREST PERIOD and in an amount substantially
equal to the principal amount of the BORROWING of which a LIBOR RATE ADVANCE or
LIBOR RATE election is a part.
"LIBOR MARGIN" shall mean one and one half percent 1.5% per annum.
"LIBOR RATE" shall mean, with respect to any INTEREST PERIOD for each
LIBOR RATE ADVANCE, an interest rate per annum equal at all times during such
INTEREST PERIOD to the sum of (i) the ADJUSTED LIBOR RATE and (ii) the LIBOR
MARGIN.
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"LIBOR RATE ADVANCE(S)" shall mean any ADVANCE, the interest rate on
which is calculated by reference to the LIBOR RATE.
"LIBOR RATE PRICING" shall mean any election of the BORROWER to pay or
to continue to pay the LIBOR RATE for any INTEREST PERIOD with respect to the
REAL ESTATE LOAN.
"LIEN" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing.
"LOAN ACCOUNT" shall mean the account or accounts on the books of BANK
in which will be recorded REVOLVING LOANS, and any other extensions of credit
made by BANK to the BORROWER pursuant to Article II hereof, payments made on
such REVOLVING LOAN(S) and extensions of credit and any other appropriate debits
and credits as provided by the FINANCING AGREEMENTS, other than the REAL ESTATE
LOAN.
"LOAN AGREEMENT " shall mean the Loan Agreement as amended from time to
time, including by this instrument, unless otherwise specified herein.
"MARGIN-STOCK" shall have the meaning set forth in Regulation U (12 CFR
221) of the Board of Governors of the Federal Reserve System.
"MATURITY DATE" shall mean July 30, 2002.
"MULTIEMPLOYER PLAN" shall mean a PLAN which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"OBLIGATIONS" shall mean all LOANS, ADVANCES, indebtedness,
liabilities, and amounts, liquidated or unliquidated, owing from the BORROWER to
the BANK, at any time, and arising under the FINANCING AGREEMENTS, absolute or
contingent, due or to become due, now existing or hereafter arising or
contracted. Said term shall also include all interest, fees and other charges
chargeable to the BORROWER or due from the BORROWER to the BANK from time to
time hereunder and also all covenants, agreements or undertakings of the
BORROWER to the BANK whether for the payment of money or otherwise arising under
the FINANCING AGREEMENTS.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to ERISA.
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"PERSON" shall mean any individual, corporation (including a business
trust), partnership, trust, unincorporated association, joint stock company or
other legal entity or organization and any government or agent or political
subdivision thereof.
"PLAN" shall mean any plan of a type described in Section 4021(a) of
ERISA in respect of which the BORROWER is an "employer" as defined in Section
3(5) of ERISA.
"PRIMARY OBLIGATION(S)" shall have the meaning set forth in the
definition of CONTINGENT OBLIGATIONS above.
"PRIME RATE" shall mean the annual rate of interest announced by the
BANK in Boston from time to time, as its "Prime Rate".
"PRIME RATE ADVANCE(S)" shall mean an ADVANCE, the interest rate on
which is calculated by reference to the PRIME RATE.
"PRIME RATE PRICING" shall mean any election of the BORROWER to pay the
PRIME RATE for any INTEREST PERIOD with respect to the REAL ESTATE LOAN or
pricing at the PRIME RATE in default of such election.
"QUARTERLY PERIOD" shall mean any three (3) month period ending on or
about the last day of the third, sixth, ninth and twelfth months of BORROWER'S
FISCAL YEAR.
"REAL ESTATE" shall mean the real property located in Meredith, N.H. at
which the BORROWER maintained a distribution facility and commonly known and
numbered as One Winterbrook Way.
"REAL ESTATE CLOSING" shall mean the date of the closing of the REAL
ESTATE LOAN which occurred on July 30, 1997.
"REAL ESTATE LOAN" shall mean the loan which was made by the BANK to
the BORROWER pursuant to Article VI hereof.
"REAL ESTATE LOAN BALANCE" shall mean the outstanding unpaid balance
from time to time owed with respect to the REAL ESTATE LOAN.
"REAL ESTATE MORTGAGE" shall mean a mortgage of the REAL ESTATE, as the
same may hereafter be amended from time to time, granted by the BORROWER to the
BANK securing repayment of the OBLIGATIONS including without limitation the REAL
ESTATE NOTE, which shall include without limitation:
(a) A first security interest in the BORROWER'S equipment and fixtures
from time to time located at the REAL ESTATE, and in addition to the foregoing,
all
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contract rights, accounts, general intangibles and other personal property now
owned or hereafter acquired relating thereto.
(b) A first lien by assignment of the rents, leases and profits which
may from time to time be realized in connection with the REAL ESTATE. This
assignment shall call for exercise by the BANK only upon the occurrence of an
EVENT OF DEFAULT by BORROWER.
"REAL ESTATE NOTE" shall mean the promissory note dated as at the date
of the REAL ESTATE CLOSING in the face amount provided in Section 6.02 hereof
issued by the BORROWER to the order of BANK and evidencing the obligation to
repay the REAL ESTATE LOAN.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"RESERVE RATE" shall mean the rate (expressed as a decimal) at which
the BANK would be required to maintain reserves under Regulation D (or its
equivalent) of the Board of Governors of the Federal Reserve System against
Eurocurrency Liabilities if such liabilities were outstanding. The ADJUSTED
LIBOR RATE shall be adjusted automatically on and as of the effective date of
any change in the RESERVE RATE, and the rate of interest thereby effected shall
simultaneously change.
"REVOLVING CREDIT COMMITMENT AMOUNT" (sometimes the "REVOLVING
COMMITMENT AMOUNT") shall mean the sum of Thirty Million Dollars
($30,000,000.00) unless BORROWER delivers written notice to the BANK requesting
a lesser amount and BANK confirms same in writing.
"REVOLVING LOAN(S)" shall mean the ADVANCES under Article II hereof.
"SECURITY AGREEMENT" shall mean a Security Agreement dated June 5,
1997, duly executed and delivered by the BORROWER, to the BANK granting a
security interest in all of the assets of the BORROWER, including, without
limitation, the COLLATERAL and securing the payment and performance of the
OBLIGATIONS as provided in Article VIII hereof, as the same has been amended and
may hereafter be amended, from time to time.
"SHAREHOLDER PAYMENTS" shall mean any payment or distribution to or for
the benefit of any holder of any class of capital stock of BORROWER with respect
to such capital stock, directly or indirectly, whether in cash or in kind,
including, without limitation, dividends or payments in redemption or retirement
of any stock.
"SUBSIDIARY" shall mean any PERSON in which fifty percent (50%) of the
ownership interests are owned, directly or indirectly, by the BORROWER.
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"TANGIBLE NET WORTH" shall mean the net worth of the BORROWER including
any "Deferred Tax Asset" but excluding all other GENERAL INTANGIBLES.
"TERMINATION DATE" shall mean June 1, 2001.
"THIRD REPLACEMENT REVOLVING NOTE" shall mean the promissory note dated
as of the date hereof in the face amount of Thirty Million Dollars
($30,000,000.00) issued by the BORROWER to the order of the BANK, and evidencing
the obligation to repay the REVOLVING LOAN.
"TREASURY BASE RATE" shall mean the annual rate of interest equal to
the yield of United States Treasury securities with a three (3) year maturity
with respect to the REAL ESTATE LOAN as determined by the BANK.
"TREASURY MARGIN" shall mean one and one-half percent (1.5%).
"TREASURY RATE" shall mean with respect to any INTEREST PERIOD an
interest rate per annum equal at all times during said INTEREST PERIOD to the
sum of (i) the TREASURY BASE RATE and (ii) the TREASURY MARGIN.
"TREASURY RATE PRICING" shall mean any election of the BORROWER to pay
the TREASURY RATE for any INTEREST PERIOD with respect to the REAL ESTATE LOAN.
"UCC" shall mean the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts, as amended from time to time.
"UNFINANCED CAPITAL EXPENDITURES" shall mean capital expenditures minus
new long term indebtedness issued during the applicable period plus the
aggregate amount of all long term indebtedness prepaid during such period. For
the purpose of this calculation the INDEBTEDNESS shown on Schedule 1.01 shall be
considered new long term indebtedness in the applicable period.
1.02 All terms defined in the UCC and used in this Agreement, and not
otherwise defined herein, shall have the meaning ascribed to them in the UCC.
1.03 All accounting terms used in this agreement, including, without
limitation, "net worth", "current assets", "current liabilities", "liabilities",
"net income", "income" and "expense" shall, except as otherwise specifically
provided herein, be determined in accordance with GAAP.
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ARTICLE II
REVOLVING LOANS
2.01 Subject to, and upon the terms and conditions herein provided,
during the AVAILABILITY PERIOD, the BANK agrees to make ADVANCES to the BORROWER
including, without limitation, those ADVANCES provided for in Section 3.06
hereof which shall be deemed ADVANCES under this Section 2.01, so long as (A)
after giving effect to the making of each ADVANCE, then the CREDIT BALANCE does
not exceed the REVOLVING CREDIT COMMITMENT AMOUNT and (B) at the time of such
ADVANCE the conditions specified in Section 2.08 have been and remain fulfilled.
2.02 Whenever the BORROWER wishes to request the making of an ADVANCE
hereunder, the BORROWER shall make such BORROWING REQUEST in writing, which
shall be substantially in the form of Exhibit "2.02", and shall deliver the same
to the BANK not later than 12:00 noon (Boston time) two (2) BUSINESS DAYS prior
to the BORROWING DATE specified therein if the ADVANCE is to be a LIBOR RATE
ADVANCE, and not later than 12:00 noon (Boston time) on the BORROWING DATE
(followed by written certification within two (2) BUSINESS DAYS thereafter), if
the ADVANCE is to be a PRIME RATE ADVANCE).
2.03 Each BORROWING REQUEST for an ADVANCE pursuant to Section 2.02
shall specify the proposed BORROWING DATE, the aggregate amount of the proposed
ADVANCE, whether such ADVANCE will be a PRIME RATE ADVANCE or a LIBOR RATE
ADVANCE and, in the case of a LIBOR RATE ADVANCE, the initial INTEREST PERIOD
with respect thereto.
2.04 The BANK will credit the amount of each ADVANCE to a demand
deposit account maintained by the BORROWER.
2.05 The debit balance of the LOAN ACCOUNT shall reflect the amount of
the BORROWER'S indebtedness to the BANK from time to time by reason of ADVANCES
under this Article II and any other appropriate charges under the FINANCING
AGREEMENTS. At least once each month the BANK shall render to the BORROWER a
statement of account showing as of its date the debit balance on the LOAN
ACCOUNT which, unless within thirty (30) days of such date, notice to the
contrary is received by the BANK from the BORROWER, shall be considered correct
and accepted by the BORROWER and conclusively binding upon it absent manifest
error.
2.06 No ADVANCE under this Article II will be made on or after the
TERMINATION DATE.
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2.07 All OBLIGATIONS arising under or by reason of this Article II
shall be paid in full, without notice or demand, on the TERMINATION DATE or upon
any earlier acceleration, notwithstanding any provisions of the THIRD
REPLACEMENT REVOLVING NOTE or other instrument evidencing any part of the
OBLIGATIONS.
2.08 No ADVANCES Under this Article II will be made, nor any LETTERS OF
CREDIT issued, unless each of the following conditions shall have been and
remain fulfilled as of the BORROWING DATE.
(a) All conditions precedent as set forth in Article XV shall have
been and remain fulfilled.
(b) No EVENT OF DEFAULT shall have occurred and be continuing, nor
shall a DEFAULT have occurred and be continuing.
(c) The warranties and representations set forth in Article IX
hereof shall be true and correct, in all material respects, as
of the date they were made, and, except to the extent that
written notice of a change thereof shall have been given by
the BORROWER to the BANK, and such change would not constitute
a DEFAULT or EVENT OF DEFAULT, on the date of the BORROWING
REQUEST.
2.09 All ADVANCES and repayments of principal of the PRIME RATE
ADVANCES shall be in integral multiples of Ten Thousand Dollars ($10,000.00).
All LIBOR RATE ADVANCES shall be in the minimum amount of Five Hundred Thousand
Dollars ($500,000.00) and in integral multiples of One Hundred Thousand Dollars
($100,000.00).
2.10 If at any time the CREDIT BALANCE exceeds the REVOLVING CREDIT
COMMITMENT AMOUNT, BORROWER shall forthwith pay to the BANK such amount as may
be necessary to reduce the CREDIT BALANCE to the REVOLVING CREDIT COMMITMENT
AMOUNT.
2.11 During the AVAILABILITY PERIOD, BORROWER may repay, in whole or in
part, without penalty, the outstanding principal of the PRIME RATE ADVANCES.
Such repayment may be effected by a new BORROWING subject to the provisions
hereof.
2.12 Notwithstanding the provisions of this Article II, the BANK, in
its discretion, may make ADVANCES in excess of the REVOLVING CREDIT COMMITMENT
AMOUNT.
2.13 The obligation of the BORROWER to repay the REVOLVING LOANS with
interest thereon is and shall be evidenced by the THIRD REPLACEMENT REVOLVING
NOTE.
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2.14 Prior to the TERMINATION DATE, all LIBOR RATE ADVANCES shall be
repaid in full at the end of each applicable INTEREST PERIOD. Such repayment may
be effected by a new BORROWING.
2.15 A request by the BORROWER for a LIBOR RATE ADVANCE shall be
irrevocable.
2.16 The initial BORROWING under this instrument shall be in the form
of the making of ADVANCE(S) pursuant to Section 2.01 in an aggregate principal
amount which is sufficient to pay all OBLIGATIONS owed to the BANK other than
the then outstanding OBLIGATIONS with respect to (i) the REVOLVING LOANS and
(ii) the REAL ESTATE LOAN, and shall be applied to pay in full all such
OBLIGATIONS. The proceeds of all subsequent ADVANCES shall be applied to the
working capital needs of the BORROWER.
2.17 At least once each consecutive thirteen (13) month period
commencing with the date hereof, the BORROWER shall fully repay the REVOLVING
LOANS which repayment shall not be effected by BORROWING, and BORROWER shall not
effect or permit any ADVANCE for a period of thirty (30) consecutive days
thereafter within said thirteen (13) month period, provided however that the
foregoing shall not apply to any issuances of LETTERS OF CREDIT in the normal
course of business during such period.
ARTICLE III
LETTERS OF CREDIT
3.01 Subject to and upon the terms and conditions herein provided,
during the AVAILABILITY PERIOD, the BANK shall issue LETTERS OF CREDIT to
purchase INVENTORY so long as: (A) After giving effect to each such issuance,
the CREDIT BALANCE does not exceed the REVOLVING COMMITMENT AMOUNT; (B) All
conditions specified in Section 2.08 shall have been fulfilled; (C) BORROWER
shall have delivered to the BANK (i) an L/C APPLICATION, duly completed and
executed, or a facsimile application followed up by the original documents
received by the BANK within Three (3) BUSINESS DAYS thereafter, or by electronic
transmission, which is not required to be followed by additional submissions,
(ii) such other accompanying documentation as the BANK shall require, and (iii)
an amount equal to BANK'S then customary letter of credit application fee and
other fees, which amounts shall be non-refundable. The face amount of any LETTER
OF CREDIT shall not exceed the purchase price of the INVENTORY purchased
therewith and covered by the document relating thereto.
3.02 No LETTER OF CREDIT shall be issued after the TERMINATION DATE. No
LETTER OF CREDIT to be issued hereunder shall permit a draft to be presented
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thereunder after the earlier of (A) 180 days after the date of issue thereof or
(b) three (3) BANKING DAYS before the TERMINATION DATE.
3.03 Each LETTER OF CREDIT shall be in such form, contain such terms
and support such transactions as shall be satisfactory to the BANK consistent
with its then current practices.
3.04 The BORROWER hereby agrees to indemnify and hold harmless the BANK
from and against any and all claims and damages, losses, liabilities, costs or
expenses which the BANK may incur (or which may be claimed against the BANK by
any PERSON whatsoever) by reason of or in connection with the execution and
delivery or transfer of, or payment or refusal to pay, under any LETTER OF
CREDIT; provided that the BORROWER shall not be required to indemnify the BANK
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by (x) the willful misconduct or gross negligence
or bad faith of the BANK in determining whether a request presented under any
LETTER OF CREDIT complied with the terms of such LETTER OF CREDIT or (y) the
BANK's failure to pay under any LETTER OF CREDIT after the presentation to it of
a draft and DOCUMENTS strictly complying with the terms and conditions of such
LETTER OF CREDIT. Nothing in this Section is intended to limit the other
obligations of the BORROWER or the BANK under this Agreement.
3.05 Notwithstanding the provisions of Section 3.01, BANK in its
discretion may issue LETTERS OF CREDIT such that the CREDIT BALANCE exceeds the
REVOLVING COMMITMENT AMOUNT.
3.06 If a draft shall be presented under a LETTER OF CREDIT and the
BANK shall honor the same, the BANK shall charge any demand deposit account of
the BORROWER and if the balance(s) of such account(s) is not sufficient, such
presentation, up to the full amount of the LETTER OF CREDIT, shall be deemed to
be a request of the BANK for a PRIME RATE ADVANCE, pursuant to Section 2.01
hereof without any notice to or from BORROWER being required and the amount paid
by the BANK with respect to such draft shall be deemed to be a PRIME RATE
ADVANCE provided however that if by virtue of such ADVANCE, the CREDIT BALANCE
shall exceed the REVOLVING COMMITMENT AMOUNT, the excess shall be forthwith
repaid by the BORROWER.
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ARTICLE IV
TERM LOAN
INTENTIONALLY DELETED
ARTICLE V
THE INTERIM LOAN
INTENTIONALLY DELETED
ARTICLE V(A)
BRIDGE LOAN
INTENTIONALLY DELETED
ARTICLE V(B)
SHORT TERM REVOLVING LOAN
INTENTIONALLY DELETED
ARTICLE VI
REAL ESTATE LOAN
6.01 The terms, provisions and conditions hereof having been fulfilled,
no DEFAULT or EVENT OF DEFAULT having occurred and the provisions of Section
2.08(a) having been fulfilled, and those in Sections 2.08(b) and 2.08(c) having
been represented by the BORROWER to have been fulfilled, the BANK made the
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REAL ESTATE LOAN to BORROWER in accordance with the terms, provisions and
conditions set forth below.
6.02 The amount of the REAL ESTATE LOAN was One Million Six Hundred
Fifty Thousand Dollars ($1,650,000.00).
6.03 Payment of the REAL ESTATE LOAN shall be effected in fifty-nine
(59) consecutive monthly payments in the principal amount of Nine Thousand One
Hundred Sixty-Seven Dollars ($9,167.00) and a final payment equal to the then
REAL ESTATE LOAN BALANCE.
6.04 The obligation of the BANK to make the REAL ESTATE LOAN was
subject to satisfaction by the BANK of each of the following:.
(a) The BANK having received an appraisal satisfactory to it.
(b) The BANK having been furnished with a satisfactory survey of
the REAL ESTATE depicting the following: that the bounds and measurements shown
on the plan are substantially correct, that the title lines and actual lines of
possession are the same; the location of all means of ingress to and egress from
the REAL ESTATE; the actual and/or plan location of all utilities services from
the REAL ESTATE to the nearest public road or right-of-way, and if from the REAL
ESTATE to the public right-of-way they pass over land owned by others, said
passage shall be by means of valid, recorded easement not subject to
divestiture; the bounds of any areas submitted to the Federal Flood Disaster
Protection Act and any other area restricting use; the location of all easements
and takings affecting the REAL ESTATE; and depicting that no encroachment over
any property lines or over any easements, servitudes or rights-of-way exist. The
survey having been certified to by a licensed professional engineer reasonably
acceptable to the BANK.
(c) The BANK having been furnished with a certificate of a
licensed professional engineer satisfactory to the BANK certifying to the
following: (1) That the utilities services, storm drainage and sewage facilities
are sufficient to adequately service the REAL ESTATE; (2) the REAL ESTATE and
its current use comply with all applicable zoning, building code, health, fire,
safety and environmental statutes, codes, bylaws and regulations.
(d) There having been delivered to the BANK the opinions of
BORROWER'S counsel relating to (i) due authorization, enforceability,
non-contravention absence of litigation; (ii) zoning and land use; (iii) such
other matters (not including compliance with ENVIRONMENTAL LAWS) as the BANK
shall reasonably require.
(e) The BANK having received satisfactory reports from acceptable,
qualified professionals indicating on the basis of soils tests and other tests
and inspections
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that the REAL ESTATE complies with ENVIRONMENTAL LAWS and areas adjacent thereto
are free from hazardous materials, hazardous wastes, asbestos, PCB's or toxic
substances and that the REAL ESTATE has not been used as a dump site for oil,
hazardous materials, hazardous wastes, asbestos, PCB's or toxic substances or
otherwise used in such a manner which would cause the likelihood of incurring
any liability under Federal or state legal requirements regarding oil, hazardous
materials, hazardous wastes or toxic substances. Without limitation, the REAL
ESTATE MORTGAGE shall contain a provision whereby BORROWER shall be obligated to
immediately contain and remove any hazardous waste and toxic substances found on
the REAL ESTATE. In addition, it shall be an event of default under the REAL
ESTATE MORTGAGE if BORROWER shall fail to obtain a satisfaction of any "Notice
of Violation" ("NOV") within 60 days after the issuance thereof or if any
"Superlien" claim is filed against the REAL ESTATE under the Superfund Act.
(f) The REAL ESTATE MORTGAGE having been insured by a title
insurer acceptable to the BANK, which policy shall comply with the following: it
shall be in the standard ALTA form; there shall be no exceptions for survey,
easements or other use restrictions not shown on the survey which are acceptable
to the BANK; there shall be no inspection exceptions except in respect to
improvements thereafter added; the standard form so-called pending disbursement
exception shall be permitted; and there shall be no other exceptions which in
the opinion of counsel to the BANK may have an adverse effect upon the use of
all or any portion of the REAL ESTATE as contemplated.
(g) The conditions specified in Article XV and Section 2.08 having
been, and remaining fulfilled.
(h) There having been delivered to the BANK an insurance policy,
including liability and extended coverage, in amounts satisfactory to the BANK
and first payable to the BANK as mortgagee. The BANK shall have been furnished
with evidence that flood insurance is not required for the REAL ESTATE under the
Federal Flood Disaster Protection Act. In the event that flood insurance is
required, flood insurance written by a company satisfactory to the BANK and in
an amount and form acceptable to the BANK shall also have been disclosed.
(i) The BANK having received such other customary documents as the
BANK shall reasonably have requested.
6.05 All closing documents prepared to close the REAL ESTATE LOAN
contemplated hereby were in form and contain terms and provisions consistent
with this Article VI and as reasonably required by counsel to the BANK.
6.06 While the REAL ESTATE LOAN remains outstanding, no portion of the
REAL ESTATE PREMISES may be sold. While the REVOLVING LOAN(s) or
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REAL ESTATE LOAN remain outstanding, there shall be no other liens on the REAL
ESTATE granted by the BORROWER except such as granted to the BANK hereunder.
6.07 (a) The REAL ESTATE LOAN shall bear interest at the rate of six
and 81/100% (6.81%) per annum from the date of the REAL ESTATE CLOSING until
August 31, 1999. Thereafter it shall bear interest at the PRIME RATE unless
there shall be an election as provided below.
(b) If, effective on or after September 1, 1999, the BORROWER
wishes to convert the REAL ESTATE LOAN from PRIME RATE PRICING or what would be
PRIME RATE PRICING but for an election as provided herein, to LIBOR RATE
PRICING, or if the BORROWER wishes to continue to pay interest at the LIBOR RATE
after the end of a current INTEREST PERIOD during which LIBOR RATE PRICING has
been elected, as the case may be, BORROWER shall give an irrevocable request to
the BANK which must be received by the BANK not later than 10:00 a.m., Boston
time, two (2) BANKING DAYS before (i) the CONVERSION DATE if PRIME RATE PRICING
is, or would be, in effect, or (ii) the last day of any current INTEREST PERIOD
during which LIBOR RATE PRICING is in effect, as the case may be, requesting
that interest rate be so converted, or continued, as the case may be, and notice
of the requested CONVERSION DATE if the request is to convert from PRIME RATE
PRICING. The request shall specify the duration of the INTEREST PERIOD
applicable to such conversion or continuance, subject to any requirements
elsewhere herein set forth.
(c) If the BORROWER wishes to convert the REAL ESTATE LOAN from
PRIME RATE PRICING or LIBOR RATE PRICING to TREASURY RATE PRICING, BORROWER
shall give an irrevocable request to the BANK which must be received by the BANK
not later than 10:00 a.m., Boston time, two (2) BANKING DAYS before (i) the
CONVERSION DATE if PRIME RATE PRICING is in effect or (ii) or the last day of
any current INTEREST PERIOD during which LIBOR RATE PRICING is in effect, as the
case may be, requesting that interest rate be so converted and notice of the
requested CONVERSION DATE if the request is to convert from PRIME RATE PRICING.
Notwithstanding any other provision hereof, once TREASURY RATE PRICING is
elected, it shall be for the balance of the term of the REAL ESTATE LOAN.
(d) No such election to pay any rate other than the PRIME RATE
shall be given effect if on the date of election or the date on which such
election would be given effect, there exists any DEFAULT or EVENT OF DEFAULT.
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ARTICLE VII
INTEREST, FEES AND COMPUTATION
7.01 The BORROWER will pay interest on the daily outstanding unpaid
balance of principal of the ADVANCES at the following rates:
(a) On PRIME RATE ADVANCES, the PRIME RATE; and
(b) On LIBOR RATE ADVANCES, the LIBOR RATE.
7.02 Interest on the unpaid balance of the ADVANCES shall be paid on
each INTEREST PAYMENT DATE and upon the TERMINATION DATE or earlier upon
acceleration.
7.03 INTENTIONALLY DELETED.
7.04 INTENTIONALLY DELETED.
7.05 INTENTIONALLY DELETED.
7.06 The BORROWER will pay interest on the REAL ESTATE LOAN BALANCE at
the rates provided in Section 6.07(a) unless BORROWER shall have made an
election to pay at the TREASURY RATE or LIBOR RATE as permitted in said Section
6.07 in which case interest shall be payable at the rate so elected.
7.07 The BORROWER will also pay to the BANK on demand such standard and
regular charges as the BANK makes with respect to commercial letters of credit,
including, without limitation issuance, negotiation and amendment fees.
7.08 BORROWER shall pay to BANK a commitment fee (the "Commitment Fee")
for the period commencing on the date hereof, to and including the earlier of
the TERMINATION DATE or acceleration of the CREDIT BALANCE equal to one eighth
of one percent (.125%) per annum (computed daily on the basis of the actual
number of days elapsed over a 360 day year) on the amount by which the REVOLVING
CREDIT COMMITMENT AMOUNT exceeds CREDIT BALANCE. The Commitment Fee shall be
payable monthly in arrears and on the TERMINATION DATE.
7.09 In the event any payment of principal or interest, fee, or other
amount payable by the BORROWER under the FINANCING AGREEMENTS shall not be paid
when due and shall remain unpaid for ten (10) days thereafter, the BORROWER
shall pay interest with respect thereto commencing as of the date such payment
was initially due at a per ANNUM rate equal to the sum of (x) the rate of
interest in effect on the due date of such payment, and (y) four percent (4%)
per annum. In the event that
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BORROWER shall default under terms of the L/C APPLICATION, amounts due from
BORROWER shall bear interest at a rate equal to (a) PRIME RATE plus (b) three
percent (3%) per annum payable daily.
7.10 All rates of interest based on the PRIME RATE shall change
immediately upon the date upon which a change in the PRIME RATE shall become
effective.
7.11 Except as otherwise expressly provided in this Agreement, whenever
any payment to be made by the BORROWER hereunder shall be stated to be due on a
day other than a BANKING DAY, such payment shall be made on the next succeeding
BANKING DAY, and such extension of time shall in such case be included in the
computation of such payment.
7.12 All payments by the BORROWER under this Agreement shall be made
without set-off or counterclaim and free and clear of and without deduction for
any taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any country or any political subdivision thereof or taxing
or other authority therein unless the BORROWER is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the BORROWER
with respect to any amount payable by it hereunder, the BORROWER will pay to the
BANK, on the date on which the said amount becomes due and payable hereunder,
such additional amount as shall be necessary to enable the BANK to receive the
same net amount which it would have received on such due date had no such
obligation been imposed upon the BORROWER. The BORROWER will deliver promptly to
the BANK certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the BORROWER hereunder.
7.13 The BORROWER agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, charges or similar
levies, excluding, in the case of the BANK, taxes imposed on it by the
jurisdiction under the laws of which the BANK is organized or any political
subdivision thereof and taxes imposed on its net income and franchise taxes
imposed on it, which arise from any payment made by the BORROWER hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this LOAN AGREEMENT, or any other of the FINANCING AGREEMENTS. The BORROWER will
indemnify the BANK on demand for the full amount of any such taxes, charges or
similar levies paid by the BANK or any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto.
7.14 Without prejudice to the survival of any other agreement of the
BORROWER hereunder, the agreements and obligations of the BORROWER contained in
Sections 7.13 AND 7.14 shall survive the payment in full of principal of and
interest on the LOANS. The BANK agrees to give to the BORROWER notice of any
such taxes, charges or similar levies paid by it and for which demand for
payment may be made hereunder, and the BORROWER shall have the right to contest
the
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validity or legal assertion thereof; provided, however, that the foregoing shall
in no way limit the BORROWER'S obligation to indemnify the BANK as in this
Agreement provided.
7.15 All interest, fees or other charges payable by BORROWER to BANK
shall be computed on the basis of a year of three hundred sixty (360) days and
for the actual number of days elapsed.
7.16 INTENTIONALLY DELETED.
7.17 Interest not paid when due shall become a portion of the loans to
which they relate and bear interest at the applicable rate until paid in full.
7.18 Upon the occurrence and during the continuance of an EVENT OF
DEFAULT, BORROWER hereby authorizes BANK to charge any account maintained by it
with BANK for any payment due from BORROWER hereunder or under any of the
FINANCING AGREEMENTS. In any of such cases, such authorization, however, does
not obligate BANK so to charge nor does it limit BORROWER's obligation to make
such payment when due.
7.19 Each payment to be made by BORROWERS hereunder, whether principal,
interest, fees, or of any other kind, shall be paid not later than 2:00 p.m.
(Boston time) on the day when due to the BANK at the BANK's OFFICE in DOLLARS
and in immediately available funds.
7.20 The BANK shall calculate all interest rates arising and all
interest and fees due hereunder.
7.21 In the event that the BORROWER shall, before the due date
therefor, prepay all or any portion of the REAL ESTATE LOAN which is subject to
TREASURY RATE PRICING, whether by reason of voluntary prepayment or
acceleration, BORROWER shall pay a prepayment charge equal to the BANK's COST OF
FUNDS REDEPLOYMENT unless such prepayment is made from BORROWER'S EXCESS CASH
FLOW.
7.22 In addition to and not in limitation of any other provision of
this Agreement, BORROWER will, on demand by the BANK at any time, indemnify the
BANK against COST OF FUNDS REDEPLOYMENT as a consequence of:
(a) The breach by the BORROWER of its OBLIGATIONS to borrow a
LIBOR RATE ADVANCE on the BORROWING DATE thereof;
(b) The failure by the BORROWER to pay, punctually on the due date
thereof, any amount payable hereunder with respect to a LIBOR
RATE ADVANCE;
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(c) The repayment or prepayment of any principal of any LIBOR RATE
ADVANCE of the REAL ESTATE LOAN at a time when the said
obligation is subject to LIBOR RATE PRICING, on a date other
than the due date of such principal, whether due to
acceleration or otherwise.
7.23 COSTS OF FUNDS REDEPLOYMENT shall mean the following:
(i) any costs incurred by the BANK in carrying funds
which were to have been borrowed by the BORROWER or
in carrying funds to cover the amount of any overdue
principal of or overdue interest thereon;
(ii) any interest payable by the BANK to lenders of the
funds borrowed by the BANK in order to carry the
funds referred to in the immediately preceding
sub-clause (i); and
(iii) any losses incurred by the BANK in liquidating or
re-employing funds acquired from third parties to
effect or maintain the same. The amount (and the
computations thereof) of any such losses, costs and
expenses shall be determined reasonably by the BANK
and set forth in a certificate signed by an officer
of the BANK, which certificate shall, save for
manifest error, be conclusive and binding upon the
BORROWER.
7.24 Without prejudice to any other rights it may have, the BANK may
collect a "late charge" equal to five (5%) percent of any OBLIGATION not paid
within fifteen (15) days of the due date thereof.
7.25 If at any point, during the term of the REVOLVING LOAN or the REAL
ESTATE LOAN, the LIBOR BASE RATE shall cease to be available then, thereafter,
during such period of unavailability, LIBOR RATE ADVANCES and LIBOR RATE PRICING
shall cease to be available hereunder with respect thereto.
ARTICLE VIII
SECURITY, GUARANTIES AND SUBORDINATION
8.01 Any and all deposits or other sums at any time credited by or due
from BANK to BORROWER shall, at all times constitute security for all
OBLIGATIONS and upon and during the continuance of an EVENT OF DEFAULT may be
set off against any of the OBLIGATIONS at any time when due whether or not other
security held by BANK is deemed to be adequate.
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8.02 Subject to any contrary provision of this Agreement, the
OBLIGATIONS are secured by the security interests granted in the SECURITY
AGREEMENT, as well as by all of the other FINANCING AGREEMENTS, which shall be
subject to no LIENS except those permitted under Section 11.06.
ARTICLE IX
WARRANTIES AND REPRESENTATIONS BY BORROWERS
9.01 The BANK has entered into this Agreement in reliance upon the
warranties and representations of the BORROWER set forth in this Article, each
of which is acknowledged by the BORROWER to be continuing and material. Each
such warranty and representation shall be deemed to have been newly made on each
day BORROWER requests an ADVANCE except to the extent that written notice of a
change thereof shall have been given by the BORROWER to the BANK, and such
change would not constitute a default or event of default pursuant to Section
12.01(e).
9.02 The BORROWER is a duly organized and existing corporation under
the laws of its state of incorporation and is in good standing under the laws
thereof.
9.03 The BORROWER is duly qualified to do business and is in good
standing as a foreign corporation in each state or other jurisdiction where the
failure to so qualify would have a material adverse effect on the BORROWER. All
such jurisdictions, if any, are listed on Exhibit "9.03" to this instrument.
9.04 The BORROWER has good title to all properties and assets which it
purports to own, as reflected in the CURRENT FINANCIALS, free and clear of all
mortgages, liens, pledges, security interests and encumbrances except as set
forth on Exhibit 9.04 or permitted by Section 11.06 to this instrument.
9.05 The BORROWER owns or leases and holds all real and personal
property necessary or incidental to the conduct of its businesses, including
without limitation, patents, trademarks, service marks, trade names, copyrights
and licenses and other rights with respect to the foregoing.
9.06 All books and records of the BORROWER, including, but not limited
to, minute books, by-laws and books of account fairly reflect all matters and
transactions which should currently be reflected therein.
9.07 The BORROWER'S business is now limited to the sale of personal
property from CATALOGS and activities related thereto (including without
limitation the sale of personal property from retail outlet stores) and in the
future will be so limited except that such retail stores are not required to be
so-called "outlet" stores.
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9.08 Except as set forth in Exhibit 9.08 to this instrument, the
BORROWER has no subsidiaries nor any investments in the stock or securities of
any other corporation, firm, trust or other entity, except Birch Pond Realty
Corp.
9.09 Except as set forth in Exhibit 9.09 to this instrument, there are
no actions, suits, proceedings, or investigations pending or, to the knowledge
of BORROWER, threatened against the BORROWER or any of its properties in any
court, before any governmental authority, arbitration board, or any other
tribunal which, singly or in the aggregate, if decided adversely to BORROWER,
would materially and adversely affect the business, properties or condition
(whether financial or otherwise) of the BORROWER. BORROWER is not, nor by
execution and delivery of the FINANCING AGREEMENTS and performance of the
OBLIGATIONS (with or without the passage of time or the giving of notice), will
be, in default with respect to any order of any court, governmental authority,
arbitration board or other tribunal.
9.10 BORROWER has furnished to the BANK the financial statements at
December 31, 1998 for the prior twelve (12) month period. Said statements, the
"CURRENT FINANCIALS," fairly present the condition of the BORROWER at the dates
thereof, all in conformity with GAAP except, in respect of interim statements,
with respect to footnotes, and subject to customary year end adjustments.
9.11 Except to the extent reflected or reserved against in the CURRENT
FINANCIALS or as set forth on Exhibit "9.11" to this instrument, if any,
BORROWER, as of the date of said financial statements, had no material
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities, due or to become due, or arising
out of transactions entered into or any state of facts existing prior thereto,
of a type required by GAAP to be reflected or reserved against on financial
statements.
9.12 Since the date of the CURRENT FINANCIALS and through the date
hereof, and except as shown on Exhibit "9.12" to this instrument, there has not
been:
(a) any change in the condition of the BORROWER'S assets or
liabilities, other than changes in its ordinary course of
business, none of which has been materially adverse.
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the BORROWER'S
properties or business;
(c) any declaration of, setting aside of, or making of a payment
or any dividend or other distribution with respect to the
BORROWER'S capital stock or any direct or indirect redemption,
purchase or other acquisition of any such stock;
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(d) any materially adverse:
(i) controversy with any labor organization or
employees;
(ii) claim or controversy involving any federal,
state or local government agencies; or
(iii) other event or condition affecting the
businesses of or properties of the BORROWER.
9.13 The BORROWER has filed all federal and state income tax returns,
excise tax returns and all other tax returns of every kind and nature which are
required to be filed by it and has paid all taxes shown to be due on said
returns, except where in the future such taxes are being contested in good faith
by appropriate proceedings. To BORROWER's knowledge, no audit or other
investigation is presently being conducted with respect to any tax obligation of
BORROWER.
9.14 INTENTIONALLY DELETED
9.15 The execution and delivery of the FINANCING AGREEMENTS, the
borrowing by BORROWER as herein provided, the execution and delivery by them of
all instruments, agreements and documents of every kind and nature pursuant to
this instrument and the performance by the BORROWER of the OBLIGATIONS have been
duly authorized by the Board of Directors of the BORROWER and, to the extent
required by law or otherwise, by stockholders, and the FINANCING AGREEMENTS and
all instruments, agreements and documents executed pursuant thereto are valid
and binding obligations of the BORROWER enforceable in accordance with their
terms, except to the extent that such enforceability may be limited by laws of
general application affecting the rights of creditors.
9.16 There is no provision in the articles of organization, the
by-laws, or other charter documents of BORROWER, or any other indenture,
contract or agreement to which it is party or by which it is bound, which
prohibits the execution and delivery of the FINANCING AGREEMENTS or the
performance by the BORROWER of the OBLIGATIONS.
9.17 No DEFAULT or EVENT OF DEFAULT exists. Neither the nature of
BORROWER'S businesses or properties, nor any relationships in connection with
the execution or delivery of the FINANCING AGREEMENTS is such as to require a
consent, approval, license, permit or authorization of, or filing, registration,
or qualification with, any governmental authority on the part of BORROWER as a
condition to the execution and delivery of the FINANCING AGREEMENTS or any
instrument, agreement or document contemplated hereby, or the performance by the
BORROWER of the OBLIGATIONS.
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9.18 Exhibit "9.18" to this instrument sets forth a full list of all
patents, patent applications, registered copyrights, and registered trademarks
and service marks currently used by the BORROWER.
9.19 Exhibit "9.19" to this instrument contains a description of all
real property and material personal property which the BORROWER holds under a
term of a LEASE, including a description of the property, the date of the LEASE
and the identity of the lessor.
9.20 The BORROWER represents and warrants to the BANK that the BORROWER
has taken such actions as are disclosed in its most recent filing of Form 10Q to
be filed with the United States Securities and Exchange Commission (a copy of
which is attached as Schedule 9.20) to assess, evaluate and correct all of the
hardware, software, embedded microchips and other processing capabilities it
uses directly or indirectly, to ensure that it will be able to function
accurately and without interruption or ambiguity using the information before,
during and after January 1, 2000.
ARTICLE X
AFFIRMATIVE COVENANTS
10.01 BORROWER shall furnish to BANK, in form and detail acceptable to
BANK:
(a) As soon as practicable and in any event within one hundred
twenty (120) days after the end of each fiscal year,
statements, on an unqualified audit basis of income, retained
earnings and cash flow of the BORROWER for such year, and
audited balance sheets of the BORROWER as at the end of such
year, setting forth in each case in comparative form
corresponding figures for the preceding fiscal year from the
preceding annual audit, all in reasonable detail and
reasonably satisfactory in scope to the BANK and certified by
the ACCOUNTANTS whose certificate shall be on an unqualified,
audited basis representing an unqualified opinion, all in
scope and substance satisfactory to the BANK, and such
financial statements shall be prepared in accordance with
GAAP.
(b) As soon as practicable and in any event within forty-five (45)
days after the end of each of the first three quarterly period
in each FISCAL YEAR, statements of income and cash flow of the
BORROWER for the period from the beginning of the current
FISCAL YEAR to the end of such quarterly period, and balance
sheet of the BORROWER as at the end of such quarterly period,
setting forth in each case commencing one year from the date
hereof, in comparative form, figures for the corresponding
period in the preceding FISCAL YEAR, all in reasonable detail,
and such financial statements shall be prepared in accordance
with GAAP subject
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to customary year end adjustments and the absence of
footnotes. Such quarterly statements may be prepared
internally.
(c) At the time of delivery of the reports required by Sections
10.01(a) and 10.01(b); a certificate of the Chief Financial
Officer, Vice President of Finance or Controller of the
BORROWER (i) stating that, in his, her or their opinions, if
such be the case, there has been and is existing no DEFAULT or
EVENT OF DEFAULT hereunder, or if that not be the case,
setting forth the details of all such DEFAULT or EVENT OF
DEFAULT, and (ii) showing appropriate calculations indicating
compliance (or non-compliance) with the covenants set forth in
Article XI and XII.
(d) Periodically, promptly after filed, copies of all notices to
shareholders, all proxies, reports and any other publicly
available materials filed with the Securities Exchange
Commission and all press releases.
(e) With reasonable promptness, such other financial data and/or
operating data as the BANK may reasonably request in such form
as the BANK may reasonably request.
10.02 The BORROWER will, duly and punctually, pay all interest,
principal and all other amounts of money becoming due from it to the BANK and
will duly and punctually perform all things on its part to be done or performed
under the FINANCING AGREEMENTS.
10.03 The BORROWER shall, at all times, keep proper books of account
which shall at all times fairly reflect its financial condition and in which
entries will be made of its transactions in accordance with GAAP to the extent
applicable thereto.
10.04 The BORROWER shall make its books and records available, in its
offices, for inspection, examination and copying by the BANK and the BANK's
representatives and will at all reasonable times (and, prior to a DEFAULT or
EVENT OF DEFAULT, upon reasonable notice), permit inspection of its books and
records and properties by the BANK and the BANK's representatives.
10.05 The BORROWER will maintain its corporate existence in good
standing. The BORROWER will comply with all laws and regulations of the United
States, or any state or states thereof, of any political subdivision thereof and
of any governmental authority which may be applicable to it or to its business
including, without limitation, the ENVIRONMENTAL LAWS; provided, however, that a
failure so to comply which does not materially and adversely affect its
businesses or financial condition shall not be a breach hereof.
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10.06 The BORROWER will pay all real and personal property taxes,
assessments and charges and all franchise, income, unemployment, old age
benefit, withholding, sales and other taxes assessed against it or payable by it
at such times and in such manner to prevent any penalty from accruing or any
lien or charge from attaching to its properties. The provisions of this section,
however, shall not preclude BORROWER from contesting in good faith any such tax,
nor shall there be a default hereunder, by reason of the existence of a lien for
taxes not then due provided that the BORROWER shall have set aside on its books
reserves certified by the BORROWER to be adequate for the timely satisfaction of
such obligations.
10.07 The BORROWER will put and maintain its properties in good repair,
working condition and order, reasonable wear and tear excepted, and from time to
time, make all needful and proper repairs, renewals and replacements.
10.08 The BORROWER will maintain insurance covering such risks and in
such minimum amounts as BANK may reasonably require, all such insurance to be in
such form and for such periods and written by such companies as shall be
reasonably acceptable to BANK. The BANK shall be named as an additional "loss
payee" as elsewhere herein provided and the BANK shall receive certified copies
of such original policies, if available, and upon the occurrence of an EVENT OF
DEFAULT the BANK shall forthwith be provided with and hold the originals of each
such policy.
10.09 The BORROWER will punctually and promptly make when due, after
the expiration of all applicable periods of grace or notice, all payments and
perform all other obligations which may be required of it with respect to any
indebtedness (whether for money borrowed, goods purchased, services rendered or
however such indebtedness may arise) owing to persons, firms or corporations
other than the BANK, including, without limitation, indebtedness which may be
secured by a security interest in assets of the BORROWER or its property and all
obligations under the terms of any Leases. The provisions of this Section shall
not preclude the BORROWER from contesting in good faith any such indebtedness or
obligation. The BORROWER may accept extended payment terms regularly offered by
any creditor selling goods to the BORROWER or furnishing services to the
BORROWER.
10.10 The BORROWER shall pay or cause to be paid when due all amounts
necessary to fund in accordance with its terms any deferred compensation and/or
other employee benefit plans, whether now in existence or hereafter created and
whether subject to the applicable provisions of ERISA and all regulations
thereunder, and it will not withdraw from participation in, permit the
termination or partial termination of, or permit the occurrence of any other
event with respect to any deferred compensation plan maintained for the benefit
of employees under circumstances that could result in any liability to "PBGC",
or any of its successors or assigns, or to the entity which provides funds for
such deferred compensation plan. To the extent that BORROWER become subject to
the provision of the ERISA, BORROWER will, promptly upon obtaining knowledge
thereof, notify the BANK of (i) the occurrence of any "reportable event"
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described in Section 4043 of ERISA, (ii) receipt of notice of an application by
the PBGC to institute proceedings to terminate an employee benefit plan, and
(iii) receipt of notice of any liability pursuant to Section 4202 of ERISA. The
BORROWER is not a party to a MULTI-EMPLOYER PLAN.
10.11 The BORROWER shall promptly give notice to BANK of the
commencement of any suit or proceedings against the BORROWER, in which the
amount claimed exceeds Two Hundred and Fifty Thousand and 00/100 Dollars
($250,000.00) unless such liability is fully covered by insurance in effect and
the insurer is defending such action without reservation of rights against the
BORROWER.
10.12 Upon the occurrence of any DEFAULT or EVENT OF DEFAULT, BORROWER
shall promptly give the BANK notice thereof.
10.13 The BORROWER will give the BANK not less than thirty (30) days'
prior notice of any proposed change in its principal places of business or chief
executive offices or the establishment of any other location of COLLATERAL,
other than as currently shown on Exhibit 10.13 to this instrument.
10.14 The BORROWER will give the BANK not less than thirty (30) days'
prior notice of any intended change in its corporate name or the adoption of any
trade name.
10.15 In the event of any change in the identification of the directors
and statutory officers of the BORROWER as reflected on Exhibit "10.15" to this
instrument, the BORROWER shall, within thirty (30) days thereafter, give notice
thereof to BANK.
10.16 The BORROWER shall continue to maintain its primary deposit
accounts with BANK, from which payments due on LOANS may be deducted.
ARTICLE XI
NEGATIVE COVENANTS
11.01 The BORROWER will not issue evidences of INDEBTEDNESS nor create,
assume, become contingently liable for, nor suffer to exist INDEBTEDNESS for
borrowed money in addition to indebtedness to the BANK; provided, however, that
BORROWER (a) may incur liabilities other than for money borrowed which are
incurred or arise in the ordinary course of the BORROWER'S business, and (b) may
in any fiscal year of the BORROWER grant purchase money security interests in
connection with the purchase of property with a purchase price not to exceed
Five Hundred Thousand Dollars ($500,000.00), and (c) has been given permission
to incur such INDEBTEDNESS as is shown on Schedule 1.01.
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11.02 The BORROWER shall not make or continue any loans to any
individual, firm or corporation, including, without limitation, BORROWER'S,
officers and employees except for loans or advances to employees and officers in
the ordinary course of the BORROWER'S business not to exceed Two Hundred Fifty
Thousand Dollars ($250,000.00) at any time.
11.03 Except as described in Section 9.08, the BORROWER shall not
invest in or purchase any stock or securities of any individual, firm,
partnership, joint venture or corporation without the BANK's prior written
consent; provided, however, that the BORROWER, without the BANK's consent may
invest in direct obligations of or securities guaranteed by the United States of
America or any agency thereof, certificates of deposit or other obligations of
the BANK or any other member bank of the Federal Reserve System having assets of
not less than One Hundred Million Dollars, prime banker's acceptances,
money-market funds, commercial paper of a domestic issue rated either A1 by
Standard & Poor's Corporation or P1 by Moody's Investor Service, Inc., and other
securities the cost to BORROWER of which do not exceed One Hundred Thousand
Dollars ($100,000.00) in the case of any single issuer.
11.04 The BORROWER will not merge or consolidate or be merged or
consolidated with or into any other corporation or entity.
11.05 Except for sales of INVENTORY in the ordinary course of business,
the BORROWER shall not sell or dispose of any of BORROWER'S assets except that
the BORROWER may sell or otherwise dispose of EQUIPMENT which is no longer
needed by the BORROWER for the conduct of its business.
11.06 Except with respect to the BANK as provided herein, or as
previously consented to in writing by the BANK, the BORROWER shall not grant or
suffer to exist, any mortgage, pledge, title retention agreement, security
interest, lien or encumbrance with respect to any of its assets, tangible or
intangible, whether now owned or hereafter acquired including, but not limited
to, its ownership interests, and any other of its interests, in Birch Pond
Realty Corporation, or subject any of its assets to the prior payment of any
indebtedness, or transfer in any manner any of such assets with the intent or
purpose, directly or indirectly, of subjecting such assets to the payment of
INDEBTEDNESS except (i) landlords', carriers', warehousemans', mechanics' and
other similar liens arising by operation of law in the ordinary course of the
BORROWER'S businesses; (ii) liens arising out of pledge or deposits under
worker's compensation, unemployment insurance, old age pension, social security,
retirement benefits or other similar legislation; (iii) liens in favor of the
BANK; (iv) liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings and the BORROWER maintains appropriate reserves
(reasonably approved by the BANK) in respect thereto; (v) judgment or
prejudgment liens with respect to which there has issued a stay of execution
pending appeal or otherwise and as to which the BORROWER maintain appropriate
reserves in respect thereto (reasonably approved by the BANK); (vi) easements,
rights of way, restrictions and other similar charges or liens relating to
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real property and not interfering in a material way with the ordinary conduct of
the BORROWER'S business; (vii) liens securing the payment of INDEBTEDNESS
permitted under Section 11.01 hereof; and (viii) encumbrances on the BORROWER'S
property or assets created in connection with the refinancing of INDEBTEDNESS
secured by liens on such property permitted hereunder that do not extend to
property and assets of the BORROWER not encumbered prior to such refinancing.
11.07 The BORROWER will not engage in any business other than the
business in which it is currently engaged or a business reasonably allied
thereto including, without limitation, those businesses referred to in Section
9.07.
11.08 The BORROWER shall not guaranty, endorse, contingently agree to
purchase or otherwise become liable for obligations for borrowed money of any
other person, firm partnership, joint venture, corporation or other entity;
provided, however, that the provisions of this Section 11.08 shall not preclude
the BORROWER from endorsing checks, drafts or other similar items for collection
in the ordinary course of business.
11.09 The BORROWER will not make or enter into any so-called management
agreement whereby management, supervision or control of its business or any of
its principal functions shall be delegated to any persons other than its duly
elected officers and directors.
11.10 The BORROWER will not change its FISCAL YEAR.
11.11 The BORROWER will not, for any QUARTERLY PERIOD, permit its ratio
of INDEBTEDNESS to TANGIBLE NET WORTH to exceed 1.50 to 1.
11.12 The BORROWER will not for any QUARTERLY PERIOD permit its ratio
of current assets to current liabilities to be less than 1.50 to 1 for any
QUARTERLY PERIOD through the QUARTERLY PERIOD ending December 25, 1999 or 1.75
to 1 for any QUARTERLY PERIOD ending thereafter.
11.13 The BORROWER will not, for any four (4) consecutive fiscal
quarters, permit DEBT SERVICE COVERAGE to be less than 1.25 to 1. Such covenant
shall be calculated quarterly based upon the preceding 12 months of operations
commencing with the twelve-month period ending on or about June 26, 1999.
Notwithstanding the foregoing, the calculation for the quarter ending on or
about March 31, 1999 shall be made without any deduction for UNFINANCED CAPITAL
EXPENDITURES.
11.14 Borrower does not own and has no present intention of acquiring
any MARGIN STOCK. None of the funds advanced to the Borrower hereunder will be
used to purchase or carry any MARGIN STOCK. Neither Borrower, nor any agent
acting on its behalf, has taken any action which might cause this Agreement or
either of the Notes to violate Regulation G, Regulation T, Regulation U,
Regulation X or any other
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regulation of the Board of Governors of the Federal Reserve System or to violate
the Securities Exchange Act of 1934, as now in effect.
ARTICLE XII
EVENTS OF DEFAULT
12.01 The occurrence of any of the following events shall be any EVENT
OF DEFAULT hereunder and under each of the FINANCING AGREEMENTS:
(a) The REVOLVING LOAN(S) and all accrued interest thereon shall
not be paid in full on the TERMINATION DATE.
(b) The BORROWER shall fail to make a payment of interest or
principal on account of the REAL ESTATE LOAN or any other fee
or charge arising under the FINANCING AGREEMENTS within five
(5) days of when such payment is due, (or if within any grace
period provided therein).
(c) The BORROWER shall fail to observe or perform any covenants
contained in this Agreement other than with respect to the
payment of money within TEN (10) days of notice from the BANK
or such earlier date as may be necessary to protect the
interests of the BANK.
(d) The BORROWER shall fail to observe any other covenant or
agreement contained in any FINANCING AGREEMENT or in any
instrument, document or agreement executed pursuant thereto
when required or within any grace period provided therein.
(e) Any written warranty, representation or statement made or
furnished to BANK by or on behalf of the BORROWER proves to
have been false in any material respect when made or
furnished.
(f) Any event which results in the acceleration of the maturity of
the indebtedness of the BORROWER (i) to the BANK, or (ii) to
any other party under any indenture, agreement, undertaking or
otherwise if the same relates to aggregate INDEBTEDNESS, in
excess of $250,000.00.
(g) Any levy or seizure of any property of the BORROWER in which
the amount involved exceeds in the aggregate $250,000.00 and
which levy or seizure is not stayed within thirty (30) days
and if reasonably required by the BANK adequate security is
imposed.
(h) Any attachment of any property of the BORROWER which
attachment secures claim in the aggregate of more than Two
Hundred and Fifty
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Thousand and 00/100 Dollars ($250,000.00) or more and is not
discharged within thirty (30) days.
(i) Dissolution, termination of existence, as the case may be of
the BORROWER.
(j) The BORROWER shall: (i) cease, be unable or admit in writing
its, inability to pay its debts as they mature or make a
general assignment for the benefit of, or enter into any
composition, trust mortgage or other arrangement with
creditors; (ii) apply for, or consent (by admission of
material allegations of a petition or otherwise) to the
appointment of a receiver, trustee or liquidator of the
BORROWER or of a substantial part of its assets, or authorize
such application or consent, or proceedings seeking such
appointment shall be commenced against the BORROWER and
continue unstayed and undismissed for sixty (60) days; or
(iii) apply for, or consent (by admission of material
allegations of a petition or otherwise) to the application of
any bankruptcy, reorganization, readjustment of debt,
insolvency, dissolution, liquidation or other similar law of
any jurisdiction, or authorize such application or consent, or
proceedings to such end shall be instituted against the
BORROWER and remain unstayed and undismissed for sixty (60)
days, be approved as properly instituted or result in
adjudication of bankruptcy or insolvency.
(k) Birch Pond Realty Corporation, a SUBSIDIARY, shall grant or
suffer to exist, any mortgage, pledge, title retention
agreement, security interest or, lien other than a mortgage to
John Hancock Real Estate Finance, Inc. with respect to that
real estate in Tilton, New Hampshire originally subject to a
mortgage to the BANK and subsequently conveyed to Birch Pond
Realty Corporation with the written consent of the BANK or
shall, as to itself, fail to comply with any covenant provided
in Sections 10.05, 10.06, 10.07, 10.08, 10.10, 10.11, 11.03,
11.04, 11.05 and 11.08 hereof within a period of time extended
by a period equal to any notice and grace period provided
herein for an equivalent obligation of BORROWER, if
applicable, or shall fail to engage only in those businesses
now permitted by its Articles of Organization.
12.02 Upon the occurrence of any EVENT OF DEFAULT, all OBLIGATIONS
including, without limitation, the REVOLVING LOAN, and/or the REAL ESTATE LOAN,
shall, at the BANK's option, become immediately due and payable without notice
or demand and the BANK shall have all such rights and remedies as are provided
herein or under the other FINANCING AGREEMENTS or at law or in equity.
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ARTICLE XIII
NOTICES
13.01 All communications herein provided shall be in writing and shall
be sufficient if (i) sent by United States mail, registered or certified,
postage prepaid, (ii) delivered by national courier service which requires
receipt evidencing delivery or (iii) sent by confirmed telephone facsimile and
addressed as provided in this Article.
13.02 The addresses to which such communications shall be sent are as
follows:
a) If intended for the BORROWER, to:
DM Management Company
25 Recreation Drive
Hingham, MA 02043
Fax: (617) 740-2408
Attn: Olga L. Conley, Chief Financial Officer
with courtesy copies to:
Foley, Hoag & Eliot, LLP
One Post Office Square
Boston, MA 02109
Fax: (617) 832-7000
Attn: David R. Pierson, Esq.
b) If intended for BANK to:
Citizens Bank of Massachusetts
28 State Street
Boston, MA 02109
Fax: (617) 725-5690
Attn: Lori B. Leeth, Senior Vice President
with courtesy copies to:
Goldstein & Manello, P.C.
265 Franklin Street
Boston, MA 02110
Fax: 617-946-8181
Attn: Richard J. Snyder, Esq.
13.03 The addresses set forth herein may be changed by notice to the
other party hereunder.
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13.04 Any notice sent in accordance with the provisions and this
Article XIII shall be effective (i) if mailed, on the second BUSINESS DAY, (ii)
if delivered by courier service, upon receipt or (iii) if sent by confirmed
telephone facsimile, upon transmission.
ARTICLE XIV
MISCELLANEOUS
14.01 The BORROWER will, from time to time, execute and deliver to the
BANK all such other and further reasonable instruments and documents and take or
cause to be taken all such other and further action as the BANK or any other
party which is a bank, trust company or other institutional lender which shall
acquire an interest in the BANK's right hereunder may reasonably request in
order to effect and confirm more securely in the BANK all rights contemplated in
this Agreement, and in any other of the FINANCING AGREEMENTS.
14.02 The BORROWER may take any action herein prohibited or omit to
perform any act required to be performed by the BORROWER if the BORROWER shall
obtain the BANK's prior written consent to each such action, or omission to act.
No waiver on the BANK's part on any one occasion shall be deemed a waiver on any
other occasion. The BANK shall not be deemed to have waived any of its rights
hereunder unless such waiver shall be in writing and duly signed by an
authorized officer of the BANK.
14.03 This Agreement may be amended only by an instrument in writing
and duly signed by the BORROWER and an authorized officer of the BANK.
14.04 All covenants, agreements, representations and warranties
contained in this Agreement shall bind the BORROWER and its successors and
assigns, and shall inure to the BANK's benefit and the benefit of the BANK's
successors and assigns, whether expressed or not; provided, however, that the
BORROWER may not assign its rights or benefits hereunder.
14.05 All rights of the BANK hereunder shall be cumulative. The BANK
shall not be required to have recourse to any COLLATERAL or other security
before enforcing its rights or remedies against the BORROWER. BORROWER hereby
waives presentment and protest of any instrument and any notice thereof.
14.06 If any provisions of this Agreement shall be held to be illegal
or unenforceable, such illegality or unenforceability shall relate solely to
such provision and shall not affect the remainder of this Agreement.
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14.07 This Agreement shall be construed and enforced as an instrument
under seal in accordance with the laws of the Commonwealth of Massachusetts.
14.08 The captions herein contained are inserted as a matter of
convenience only and such captions do not form a part of this Agreement and
shall not be utilized in the construction hereof.
14.09 In the event the BORROWER fails to make any payment or take any
action required by this Agreement or any other of the FINANCING AGREEMENTS, BANK
may, but shall not be required to, upon prior notice to the BORROWER make such
payment or to take, or cause to be taken, such action. If the BANK chooses to
make any such payment or to take or cause to be taken any such action, the
amount of such payment and the cost of such action shall become part of the
OBLIGATIONS, shall be payable upon demand and, until paid in full, shall bear
interest at the rate set forth in Section 7.09 hereof.
14.10 The BORROWER shall pay on demand all reasonable out-of-pocket
costs and expenses of every kind and nature, including reasonable attorneys'
fees and costs, incurred or expended by the BANK in connection with the
preparation of the FINANCING AGREEMENTS, the making of LOANS hereunder, the
collection or sale or attempted collection or sale of the COLLATERAL and the
protection or supervision thereof and the protection or enforcement of the
BANK's rights hereunder. The BORROWER acknowledges that such supervision will
include audits of the BORROWER' business, records, and assets by employees,
agents, or other representatives of the BANK but the BORROWER shall not be
required for to pay for such audits unless undertaken after EVENT OF DEFAULT
shall have occurred and while the same shall be continuing.
14.12 THE BANK, and the BORROWER each irrevocably waive all right to a
trial by jury in any proceeding hereafter instituted by or against the BANK or
the BORROWER in respect of this Agreement or arising out of any FINANCING
AGREEMENTS.
ARTICLE XV
CONDITIONS PRECEDENT
15.01 Unless each of the following conditions are satisfied at the
CLOSING, and until each of the following conditions are satisfied, no ADVANCES
will be made, and the BANK shall have no obligation under this Agreement:
(a) All instruments and documents required to be executed on or
prior to the CLOSING pursuant to the terms hereof shall have
been duly executed and delivered.
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(b) The BANK shall hold a valid and perfected security interest in
the COLLATERAL subject to no other lien, charge, encumbrances
or security interest of any kind or nature except as otherwise
explicitly provided in this Agreement.
(c) The BANK shall have received from counsel to the BORROWER
opinions satisfactory in form and substance to the BANK.
(d) The BANK shall have received a certificate from the Clerk or
other appropriate recording officer of each of the BORROWER in
form and substance satisfactory to the BANK and its counsel,
showing the authority of the BORROWER to enter into and amend
and restate this Agreement and, without limitation, the
FINANCING AGREEMENTS, to perform the OBLIGATIONS and the
specific authority of the persons executing this Agreement and
all instruments and documents pursuant hereto so to execute.
The BANK shall have received any amendments, certified copies
of the Articles of Organization (or other charter documents)
and By-Laws of the BORROWER since the same were last submitted
to it.
(e) All policies of insurance described herein or in any other of
the FINANCING AGREEMENTS, have been obtained, be in full force
and effect, and shall show BANK as an additional loss payee.
The BANK shall have received a binder with respect to each
such policy showing compliance herewith. Such policies shall
not be canceled except upon thirty (30) days advance written
notice to BANK.
(f) The BANK shall have received such certificates from public
officials with respect to the corporate existence of each of
the corporations constituting the BORROWER and its
qualification to do business and good standing, as the BANK
may reasonably require.
(f) BANK shall have received such other and further documents and
instruments as BANK may reasonably require.
ARTICLE XVI
CLOSING
16.01 All instruments and documents then to be executed pursuant hereto
were executed and delivered at a CLOSING held on the CLOSING DATE at the offices
of Goldstein & Manello, P.C., 265 Franklin Street, Boston, Massachusetts.
ARTICLE XVII
TERMINATION
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17.01 Upon the TERMINATION DATE, all obligations of BANK to make
ADVANCES shall terminate, and the CREDIT BALANCE shall become immediately due
and payable in full without notice or demand.
17.02 Notwithstanding the passage of the TERMINATION DATE, and the
payment of the CREDIT BALANCE, until all OBLIGATIONS shall have been fully paid,
performed and satisfied, all rights of BANK arising under this Agreement and
other FINANCING AGREEMENTS shall continue, and all obligations of BORROWER
arising under this Agreement and the other FINANCING AGREEMENTS shall continue.
17.03 BANK in its sole discretion, from time to time may extend the
TERMINATION DATE by written notice to BORROWER. BANK may condition any such
extension on such matters that it determines appropriate. BANK is in no way
obligated to extend or to consider extending the TERMINATION DATE.
ARTICLE XVIII
INCONSISTENCY IN FINANCING AGREEMENTS
18.01 In the event that in any provision of the other FINANCING
AGREEMENTS, is inconsistent with a provision of this Second Amended and Restated
Loan Agreement, then and in such event, the provisions of this instrument shall
control.
18.02 The existence of a provision in the other FINANCING AGREEMENTS
which are not present in this Second Amended and Restated Loan Agreement shall
not be deemed to be an inconsistency.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as of the date first above written.
DM MANAGEMENT COMPANY
By: /s/ Peter J. Tulp
------------------------------------
Peter J. Tulp, Corporate Controller
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Lori B. Leeth, SVP
------------------------------------
Lori B. Leeth, Senior Vice President
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Schedule 1.01
EXISTING INDEBTEDNESS
$9,500,000 loan from Citizens Leasing Corporation
$980,000 loan from the Belknap County Economic Development Council, Inc.
$12,000,000 loan to Birch Pond Realty Corp. by John Hancock Real Estate Finance,
Inc.