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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission File Number: 000-23989
PROVANT, Inc.
(Exact name of Registrant as Specified in its Charter)
DELAWARE 04-3395167
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
67 BATTERYMARCH STREET, SUITE 600
BOSTON, MA 02110
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 261-1600
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]
Number of shares of common stock outstanding at June 5, 1998: 9,795,558
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PROVANT, INC.
INDEX
PART I. - FINANCIAL INFORMATION
Page
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Item 1. Financial Statements
Balance Sheets as of June 30, 1997 and March 31, 1998 and
Pro Forma as of March 31, 1998........................................... 3
Pro Forma Combined Statements of Operations for the three
and nine months ended March 31, 1997 and 1998............................ 4
Statements of Operations for the three and nine months ended
March 31, 1997 and 1998.................................................. 5
Statements of Cash Flows for the nine months ended March 31 1997 and 1998... 6
Notes to Financial Statements............................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................... 8
PART II. - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds........................ 11
Item 6. Exhibits and Reports on Form 8-K................................. 11
Signature................................................................ 12
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PROVANT, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Combined
Assets June 30, 1997 March, 31 1998 March, 31 1998
-------- -------- --------
<S> <C> <C> <C>
Current assets: (UNAUDITED) (UNAUDITED)
Cash and cash equivalents .............................. $ 1 $ 32 $ 6,011
Investments ............................................ -- -- 401
Accounts receivable, net ............................... -- -- 18,468
Due from related parties ............................... -- -- 554
Other current assets ................................... -- -- 1,080
-------- -------- --------
Total current assets ............................... 1 32 26,514
Property and equipment, net .............................. 150 147 2,467
Other assets ............................................. -- 1,017 2,860
Goodwill ................................................. -- -- 49,813
-------- -------- --------
Total assets ....................................... $ 151 $ 1,196 $ 81,654
======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ....................................... $ -- $ 825 $ 3,868
Accrued expenses ....................................... -- -- 1,341
Accrued compensation ................................... -- -- 2,995
Payable to stockholder/affiliate ....................... 298 1,300 --
Deferred revenue ....................................... -- -- 2,514
Other current liabilities .............................. -- -- 535
Deferred income taxes .................................. -- -- 1,906
Current portion of long term debt ...................... -- -- 163
-------- -------- --------
Total current liabilities .......................... 298 2,125 13,322
Long term debt, net of current portion ................... -- -- 1,056
-------- -------- --------
Total liabilities .................................. 298 2,125 14,378
Stockholders equity (deficit):
Common stock, $.01 par value; 1,950,518,
3,346,217, and 9,795,558 shares issued
and outstanding, respectively .......................... 20 33 98
Additional paid-in capital ............................. -- 676 70,014
Accumulated deficit .................................... (167) (1,638) (2,836)
-------- -------- --------
Total stockholders' equity (deficit) ............... (147) (929) 67,276
-------- -------- --------
Total liabilities and stockholders' equity (deficit) $ 151 $ 1,196 $ 81,654
======== ======== ========
</TABLE>
See accompanying notes to financial statements
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PROVANT, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1997 1998 1997 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Total revenue ............................... $ 16,527 $ 19,945 $ 49,471 $ 55,903
Cost of revenue ............................. 7,104 8,475 22,132 24,423
---------- ---------- ---------- ----------
Gross profit ......................... 9,423 11,470 27,339 31,480
Operating expenses .......................... 7,262 8,601 21,162 24,443
Goodwill amortization ....................... 320 320 962 962
---------- ---------- ---------- ----------
Income from operations ............... 1,841 2,549 5,215 6,075
Other income, net ........................... 26 3 99 2
---------- ---------- ---------- ----------
Income before income taxes ........... 1,867 2,552 5,314 6,077
Provision for income taxes .................. 875 1,149 2,511 2,815
---------- ---------- ---------- ----------
Net income ........................... $ 992 $ 1,403 $ 2,803 $ 3,262
========== ========== ========== ==========
Earnings per share, basic and diluted ....... $ 0.10 $ 0.14 $ 0.29 $ 0.33
---------- ---------- ---------- ----------
Shares used in computing earnings per share.. 9,795,558 9,795,558 9,795,558 9,795,558
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements
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PROVANT, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1997 1998 1997 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total revenue ................. $ -- $ -- $ -- $ --
Cost of revenue ............... -- -- -- --
------- ------- ------- -------
Gross profit ............ -- -- -- --
Operating expenses ............. 40 295 100 1,394
Goodwill amortization .......... -- -- -- --
------- ------- ------- -------
Loss from operations .... (40) (295) (100) (1,394)
Interest expense, net ......... -- (47) -- (95)
------- ------- ------- -------
Loss before income taxes (40) (342) (100) (1,489)
Provision for income taxes ..... -- -- --
------- ------- ------- -------
Net loss ................ $ (40) $ (342) $ (100) $(1,489)
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements
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PROVANT, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended March 31,
1997 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss ........................................... $ (100) $(1,489)
Depreciation ....................................... -- 18
Non-cash interest .................................. -- 36
Non-cash compensation .............................. -- 485
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in assets and liabilities:
Other assets ................................... -- (1,017)
Accounts payable ............................... -- 825
------- -------
Net cash used in operating activities ........ (100) (1,142)
Cash flows from investing activities:
Acquisition of property and equipment ............ -- (15)
------- -------
Net cash used in investing activities ......... -- (15)
Cash flows from financing activities:
Issuance of stock ................................ 2 2
Increase in notes payable to stockholders ........ 103 1,186
------- -------
Net cash provided by financing activities ...... 105 1,188
------- -------
Net increase in cash and cash equivalents .......... 5 31
Cash and cash equivalents, beginning of period ..... -- 1
------- -------
Cash and cash equivalents, end of period ........... $ 5 $ 32
======= =======
</TABLE>
See accompanying notes to financial statements
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PROVANT, INC.
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
PROVANT Inc., a Delaware corporation ("PROVANT"), was founded in November
1996 to become a leading provider of training and development services and
products and to pursue the consolidation of the highly fragmented training and
development industry. On May 4, 1998, PROVANT acquired seven companies (the
"Founding Companies") for $22.4 in million cash and 3,459,341 shares of common
stock (the "Combination"). On May 4 and 7, 1998, PROVANT also completed its
initial public offering (the "IPO") of 2,990,000 shares of its common stock.
Prior to the IPO, PROVANT did not conduct any revenue generating activities of
its own and all of its activities had been related to the completion of the IPO
and the Combination. All references to the "Company" include PROVANT and the
Founding Companies.
The information contained in the following notes to the accompanying
financial statements is condensed from that which would appear in the annual
audited financial statements. Accordingly, the financial statements included
herein should be reviewed in conjunction with the financial statements and
related notes thereto contained in the Prospectus included in the Registration
Statement on Form S-1 (file no. 333-46157) (the "IPO Registration Statement")
filed by PROVANT with the Securities and Exchange Commission.
On April 28, 1998 PROVANT declared a stock dividend which had the effect
of a 979.0292-for-1 stock split on shares of common stock outstanding on that
date. All references to common stock, options, warrants and all share and per
share data have been restated to give effect to the stock dividend. On February
26, 1998 PROVANT amended its Certificate of Incorporation to increase its
authorized common stock from 10,000 to 45,000,000 shares. Stockholders' equity
at June 30, 1997 and March 31, 1998 has been presented to give effect to the
increase in the authorized shares and the stock dividend.
BASIS OF PRESENTATION
The unaudited pro forma combined financial statements give effect to (i)
the Combination of PROVANT and the Founding Companies, (ii) the consummation of
the IPO and the application of the net proceeds therefrom, (iii) acquisitions
completed by one of the Founding Companies, (iv) the exclusion of a
non-recurring stock compensation charge of $485 during the six months ended
December 31, 1997, (v) provision for income tax for those Founding Companies
that were treated as S corporations for tax purposes during the relevant periods
and (vi) the compensation differential. The compensation differential represents
pro forma adjustments to salary, bonuses and benefits paid to certain
pre-combination owners of the Founding Companies to which they have agreed
prospectively. The aggregate compensation differentials for the three-month
periods ended March 31, 1997 and 1998 and nine-month periods ended March 31,
1997 and 1998 were $397, $844, $4,894, and $5,429, respectively. In the
Combination, subsidiaries of PROVANT merged with each of the Founding Companies.
The Combination occurred simultaneously with the closing of the IPO and has been
accounted for using the purchase method of accounting. PROVANT has been
identified as the accounting acquiror in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 97. Goodwill resulting from the
Combination will be amortized as a non-cash charge to operations over a 40-year
period. The pro forma statements are based on the historical financial
statements of the Founding Companies and the estimates and assumptions set forth
below.
The unaudited pro forma combined balance sheet gives effect to the
Combination and the IPO as if they had occurred on March 31, 1998. The unaudited
pro forma combined statements of operations give effect to these transactions
and the acquisitions by one of the Founding Companies as if they had occurred on
July 1, 1996.
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The pro forma adjustments are based on estimates, available information
and certain assumptions which may be revised as additional information becomes
available. The pro forma financial data do not purport to represent what the
Company's combined financial position or results of operations would actually
have been if such transactions had in fact occurred on those dates and are not
necessarily representative of the Company's financial position or results of
operations for any future period. Since the Founding Companies were not under
common control or management, historical combined results may not be comparable
to, or indicative of, future performance.
The interim and combined pro forma financial statements included herein
are unaudited; however, they include all adjustments of a normal recurring
nature which, in the opinion of management, are necessary to present fairly the
interim and combined pro forma financial information presented therein as of and
for the periods indicated. Accounting measurements at interim dates inherently
involve greater reliance on estimates than at year-end. The results of
operations for the interim periods presented are not necessarily indicative of
the results to be expected for the entire year.
2. PER SHARE INFORMATION
Per share calculations are based on the total number of common shares
outstanding after completion of the Combination and the IPO. Upon completion of
the Combination and the IPO, the Company had 9,795,558 shares issued and
outstanding consisting of 3,459,341 shares issued in consideration for the
acquisition of the Founding Companies, 2,990,000 shares sold in the offering and
3,346,217 shares held by stockholders prior to the offering. This amount has
been used to calculate pro forma earnings per share for all periods presented.
While options and warrants were outstanding for certain of the periods
presented, their effect was not dilutive. For historical periods prior to March
31, 1998, PROVANT's results of operations compared to its common stock result in
earnings per share amounts that are not meaningful. As a result, historical
earnings per share for these periods has not been presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (IN THOUSANDS)
The following should be read in conjunction with the response to Part I,
Item 1 of this Report and the IPO Registration Statement.
RESULTS OF OPERATIONS
The Company provides a broad range of training and development services
and products to Fortune 1000 companies, other large and medium-sized
corporations and government entities. The Company's services and products are
designed to increase the productivity of organizations by improving employee
selection, recruitment and retention; enhancing employee work skills; developing
employee management and leadership skills; and facilitating organizational
assessment, direction and change. The Company offers both customized and
off-the-shelf services and products that are designed to provide measurable
improvements in employee performance and productivity. The Company delivers its
services and products through multiple delivery methods, including
instructor-led and train-the-trainer seminars, interactive multimedia software
(such as CD-ROM) and distance-based media (such as video conferencing, intranets
and the Internet).
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PRO FORMA COMBINED RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
MARCH 31, 1997 AND 1998
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1997 1998 1997 1998
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue ........ $16,527 100.0% $19,945 100.0% $49,471 100.0% $55,903 100.0%
Cost of revenue ...... 7,104 43.0% 8,475 42.5% 22,132 44.7% 24,423 43.7%
------- ------- ------- ------- ------- ------- ------- -------
Gross profit ......... 9,423 57.0% 11,470 57.5% 27,339 55.3% 31,480 56.3%
Operating expenses ... 7,262 43.9% 8,601 43.1% 21,162 42.8% 24,443 43.7%
Goodwill amortization 320 1.9% 320 1.6% 962 1.9% 962 1.7%
------- ------- ------- ------- ------- ------- ------- -------
Income from operations $ 1,841 11.1% $ 2,549 12.8% $ 5,215 10.5% $ 6,075 10.9%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
PRO FORMA COMBINED RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1997 (THE "1997
QUARTER") COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1998 (THE "1998 QUARTER")
Revenue. Revenue increased $3.4 million, or 20.7%, from $16.5 million in
the 1997 Quarter to $19.9 million in the 1998 Quarter. The increase was
primarily due to increased demand for the Company's train-the-trainer seminars
and consulting services.
Cost of Revenue. Cost of revenue as a percentage of revenue decreased
slightly from 43.0% in the 1997 Quarter to 42.5% in the 1998 Quarter primarily
due to better utilization of certain fixed overhead costs.
Gross Profit. Gross profit increased $2.0 million, or 21.7%, from $9.4
million in the 1997 Quarter to $11.4 million in the 1998 Quarter primarily due
to the increase in revenue. As a percentage of revenue, gross profit increased
slightly from 57.0% in the 1997 Quarter to 57.5% in the 1998 Quarter.
Operating Expenses. Operating expenses increased $1.3 million, or 18.4%,
from $7.3 million in the 1997 Quarter to $8.6 million in the 1998 Quarter
primarily due to the costs of establishing the corporate office and higher
selling expenses associated with increased revenue. As a percentage of revenue,
operating expenses decreased from 43.9% in the 1997 Quarter to 43.1% in the 1998
Quarter primarily due to the fixed nature of a portion of the Company's
operating expenses.
PRO FORMA COMBINED RESULTS FOR THE NINE MONTHS ENDED MARCH 31, 1997 (THE "1997
PERIOD") COMPARED TO THE NINE MONTHS ENDED MARCH 31, 1998 (THE "1998 PERIOD")
Revenue. Revenue increased $6.4 million, or 13.0%, from $49.5 million in
the 1997 Period to $55.9 million in the 1998 Period. The increase was primarily
due to increased demand for the Company's train-the-trainer seminars and
consulting services.
Cost of Revenue. Cost of revenue as a percentage of revenue decreased from
44.7% in the 1997 Period to 43.7% in the 1998 Period primarily due to better
utilization of certain fixed overhead costs.
Gross Profit. Gross profit increased $4.1 million, or 15.1%, from $27.3 in
the 1997 Period to $31.4 million in the 1998 Period primarily due to the
increase in revenue. As a percentage of revenue, gross profit increased from
55.3% in the 1997 Period to 56.3% in the 1998 Period.
Operating Expenses. Operating expenses increased $3.2 million, or 15.5%,
from $21.2 million in the 1997 Period to $24.4 million in the 1998 Period
primarily due to the costs of establishing the corporate office and higher
selling expenses associated with increased revenue. As a percentage of revenue,
operating expenses increased from 42.8% in the 1997 Period to 43.7% in the 1998
Period primarily due to the costs of establishing the corporate office.
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COMBINED LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had, on a combined pro forma basis,
after giving effect to the Combination, the IPO and the application of net
proceeds from the IPO, cash of $6.0 million and outstanding indebtedness of $1.2
million.
On April 8, 1998, the Company entered into a revolving credit facility
with Fleet National Bank (the "Credit Facility"), the material terms of which
are summarized as follows: The Credit Facility provides the Company with a
revolving line of credit of up to $40.0 million, guaranteed by all of the
Company's wholly-owned operating subsidiaries and secured by a pledge of the
capital stock of the Company's significant wholly-owned operating subsidiaries.
The Credit Facility may be used for refinancing of existing indebtedness,
post-IPO acquisitions and working capital. The Credit Facility will mature April
28, 2001, and all amounts outstanding thereunder (if any) will be due at such
time.
The Company anticipates that its cash flow from operations, the net
proceeds from the IPO and borrowings under the Credit Facility will provide cash
sufficient to satisfy the Company's working capital needs, debt service
requirements and planned capital expenditures for the next 12 months. The
Company has assessed its various information and technology systems and does not
believe that it will be required to incur significant costs to correct any Year
2000 deficiencies.
The Company intends to pursue acquisition opportunities. The Company
expects to fund future acquisitions through the issuance of additional common
stock, borrowings, including use of amounts available under its Credit Facility,
and cash flow from operations. To the extent the Company funds a significant
portion of the consideration for future acquisitions with cash, it may have to
increase the amount of the Credit Facility or obtain other sources of financing.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("FAS 131") that requires companies to
determine reportable segments based on how management makes decisions about
allocating resources to the segments and measures their performance. Disclosures
for segments are similar to those required under current standards. However,
certain new information and quarterly disclosures will be required. In addition,
new entity-wide disclosures will be required about products and services and the
countries in which material assets are located and that report material
revenues. Prior period information disclosed will be restated to comply with FAS
131. The Company will be adopting FAS 131 in fiscal 1999 and it will be
applicable for the Company's year-end disclosures. The disclosure requirements
under FAS 131 for interim quarters will be applicable for the Company's first
quarter disclosures in fiscal 2000. The Company does not expect this statement
to have an impact on its reporting requirements.
In February 1998, the FASB issued Financial Accounting Standard No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits" ("FAS
132"). The implementation of FAS 132 will revise certain footnote disclosure
requirements and add certain new disclosures related to pension and other
retiree benefit plans. However, it does not change the measurement or
recognition requirements for those plans. Implementation of FAS 132 is required
for the year-end fiscal 1999 disclosure.
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This report on Form 10-Q contains statements, which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "estimates," "will," "should,"
"plans" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. Readers are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and that actual
results may vary materially from those in the forward-looking statements as a
result of any number of factors, many of which are beyond the control of
management. These factors include an absence of combined operating history,
risks of integration, risks of internal growth, risks associated with the
acquisition strategy and the effectiveness of management's strategies and
decisions, to name a few, and are hereby incorporated by reference from the risk
factors and other factors included in the IPO Registration Statement.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
For information regarding recent sales of unregistered securities,
reference is made to Item 15 of the IPO Registration Statement. On April 28,
1998, the Company declared a stock dividend having the effect of a
979.0292-for-1 stock split on all shares of common stock outstanding on that
date.
The Company's IPO Registration Statement was declared effective by the
Securities and Exchange Commission on April 28, 1998. The offering under the
Registration Statement of 2,990,000 shares of common stock by the Company for
its account commenced on April 28, 1998, the sale of 2,600,000 shares closed on
May 4, 1998 and the sale of the remaining 390,000 shares closed on May 7, 1998.
All of the shares of Common Stock registered under the Registration Statement
were sold for an aggregate price of $38.9 million (before deducting underwriting
discounts and commissions and offering expenses). The managing underwriters of
the offering were NationsBanc Montgomery Securities LLC, Salomon Smith Barney
and Piper Jaffray Inc. After deducting total expenses comprised of $2.7 million
in underwriting discounts and commissions and $3.5 million in offering expenses,
the Company received net proceeds from the offering of $32.7 million. Of the
$3.5 million in offering expenses, approximately $800,000 represented repayments
of advances previously made to the Company by Paul M. Verrochi and Dominic J.
Puopolo. Except for such repayments, no offering expenses or underwriting
discounts and commissions were paid or are to be paid to directors, officers or
their associates, or to any affiliate of the Company or any person(s) owning 10%
or more of the Company's Common Stock.
Of the total net proceeds of the offering, the Company used $22.4 million
to pay the cash portion of the consideration for the Founding Companies in the
Combination, some of which was received by certain principals of the Founding
Companies who became directors of PROVANT in connection with the Combination.
The Company also used $5.8 million to retire certain indebtedness of the
Founding Companies and approximately $1.0 million to repay advances (not
constituting offering expenses) previously made to the Company by Messrs.
Verrochi and Puopolo.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
10. Revolving Credit Agreement dated April 8, 1998 between PROVANT,
Inc., and Fleet National Bank.
27. Financial Data Schedule.
B. REPORTS ON FORM 8-K:
None.
11
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PROVANT, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PROVANT, INC.
Date: June 10, 1998 By: /s/ RAJIV BHATT
Rajiv Bhatt
Senior Vice President, Treasurer and Chief
Accounting Officer
12
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REVOLVING CREDIT AGREEMENT
Dated as of April 8, 1998
between
PROVANT, INC., AS BORROWER
and
FLEET NATIONAL BANK
AND THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE I HERETO
and
FLEET NATIONAL BANK, as Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 1 - DEFINITIONS AND RULES OF INTERPRETATION................................................ 1
1.1. Definitions...................................................................... 1
1.2. Rules of Interpretation.......................................................... 13
SECTION 2 - THE REVOLVING CREDIT FACILITY.......................................................... 14
2.1. Commitment to Lend............................................................... 14
2.2. Commitment Fee................................................................... 14
2.3. Optional Reduction of Total Commitment........................................... 15
2.4. The Revolving Credit Notes....................................................... 15
2.5. Interest on Revolving Credit Loans............................................... 15
2.6. Requests for Revolving Credit Loans.............................................. 16
2.7. Conversion and Continuation Options.............................................. 16
2.7.1. Conversion to Different Type of Revolving Credit Loan.................. 16
2.7.2. Continuation of Type of Revolving Credit Loan.......................... 17
2.7.3. Eurodollar Rate Loans.................................................. 17
2.8. Funds for Revolving Credit Loans................................................. 17
2.8.1. Funding Procedures..................................................... 17
2.8.2. Advances by Agent...................................................... 17
2.9. Repayment of the Revolving Credit Loans.......................................... 18
2.9.1. Maturity............................................................... 18
2.9.2. Mandatory Repayments of Revolving Credit Loans......................... 18
2.9.3. Optional Repayments of Revolving Credit Loans.......................... 18
SECTION 3 - LETTERS OF CREDIT...................................................................... 19
3.1. Letter of Credit Commitments..................................................... 19
3.1.1. Commitment to Issue Letters of Credit.................................. 19
3.1.2. Letter of Credit Applications.......................................... 19
3.1.3. Terms of Letters of Credit............................................. 19
3.1.4. Reimbursement Obligations of Banks..................................... 20
3.1.5. Participation of Banks................................................. 20
3.2. Reimbursement Obligation of the Borrower......................................... 20
3.3. Letter of Credit Payments........................................................ 21
3.4. Obligations Absolute............................................................. 21
3.5. Reliance by Agent................................................................ 22
3.6. Letter of Credit Fee............................................................. 22
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4 - CERTAIN GENERAL PROVISIONS............................................................. 22
4.1. Funds for Payments............................................................... 22
4.1.1. Payments to Agent...................................................... 22
4.1.2. No Offset, etc......................................................... 23
4.2. Computations..................................................................... 23
4.3. Inability to Determine Eurodollar Rate........................................... 23
4.4. Illegality....................................................................... 24
4.5. Additional Costs, etc............................................................ 24
4.6. Capital Adequacy................................................................. 25
4.7. Certificate...................................................................... 26
4.8. Indemnity........................................................................ 26
4.9. Interest After Default........................................................... 26
4.10. Replacement Bank................................................................. 26
SECTION 5 - SECURITY AND GUARANTIES................................................................ 27
5.1. Stock Pledge..................................................................... 27
5.2. Guaranty......................................................................... 27
SECTION 6 - REPRESENTATIONS AND WARRANTIES......................................................... 27
6.1. Corporate Authority.............................................................. 27
6.1.1 Incorporation; Good Standing........................................... 27
6.1.2. Authorization.......................................................... 28
6.1.3. Enforceability......................................................... 28
6.2. Governmental Approvals........................................................... 28
6.3. Title to Properties, Leases...................................................... 28
6.4. Financial Statements and Projections............................................. 28
6.4.1. Financial Statements................................................... 28
6.4.2. Projections............................................................ 29
6.5. No Material Changes, etc......................................................... 29
6.6. Franchises, Patents, Copyrights, etc............................................. 29
6.7. Litigation....................................................................... 29
6.8. No Materially Adverse Contracts, etc............................................. 30
6.9. Compliance with Other Instruments, Laws, etc..................................... 30
6.10. Tax Status....................................................................... 30
6.11. No Event of Default.............................................................. 30
6.12. Holding Company and Investment Company Acts...................................... 30
6.13. Absence of Financing Statements, etc............................................. 31
6.14. Collateral....................................................................... 31
6.15 Certain Transactions............................................................. 31
6.16. Employee Benefit Plans........................................................... 31
6.16.1. In General............................................................. 31
</TABLE>
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6.16.2. Terminability of Welfare Plans......................................... 31
6.16.3. Guaranteed Pension Plans............................................... 31
6.16.4. Multiemployer Plans.................................................... 32
6.17. Use of Proceeds; Regulations U and X............................................. 32
6.18. Environmental Compliance......................................................... 32
6.19. Subsidiaries, etc................................................................ 34
6.20. Chief Executive Offices.......................................................... 34
6.21. Fiscal Year...................................................................... 34
6.22. Disclosure....................................................................... 34
6.23. Insurance........................................................................ 34
6.24 Delivery of Certain Documents.................................................... 34
SECTION 7 - AFFIRMATIVE COVENANTS OF THE BORROWER.................................................. 35
7.1. Punctual Payment................................................................. 35
7.2. Maintenance of Office............................................................ 35
7.3. Records and Accounts............................................................. 35
7.4. Financial Statements, Certificates and Information............................... 35
7.5. Notices ....................................................................... 36
7.5.1. Defaults............................................................... 36
7.5.2. Environmental Events................................................... 37
7.5.3. Notification of Claim against Collateral............................... 37
7.5.4. Notice of Litigation and Judgments..................................... 37
7.6. Corporate Existence; Maintenance of Properties................................... 37
7.7. Insurance........................................................................ 38
7.8. Taxes ....................................................................... 38
7.9. Inspection of Properties and Books, etc.......................................... 38
7.10. Compliance with Laws, Contracts, Licenses and Permits............................ 38
7.11. Employee Benefit Plans........................................................... 39
7.12. Use of Proceeds.................................................................. 39
7.13. Additional Subsidiaries.......................................................... 39
7.14. Further Assurances............................................................... 39
SECTION 8 - CERTAIN NEGATIVE COVENANTS OF THE BORROWER............................................. 40
8.1. Restrictions on Indebtedness..................................................... 40
8.2. Restrictions on Liens............................................................ 41
8.3. Restrictions on Investments...................................................... 42
8.4. Distributions.................................................................... 43
8.5. Merger, Consolidation and Disposition of Assets.................................. 43
8.5.1. Mergers and Acquisitions............................................... 43
8.5.2. Disposition of Assets.................................................. 44
8.6. Intentionally Omitted............................................................ 44
</TABLE>
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8.7. Compliance with Environmental Laws............................................... 44
8.8. Employee Benefit Plans........................................................... 44
8.9. Fiscal Year...................................................................... 45
8.10 Subsidiaries..................................................................... 45
8.11. Negative Pledges................................................................. 45
8.12. Transactions with Affiliates..................................................... 45
8.13. Inconsistent Agreements.......................................................... 45
8.14. Modification of Documents........................................................ 45
SECTION 9 - FINANCIAL COVENANTS OF THE BORROWER.................................................... 46
9.1. Consolidated Total Net Worth..................................................... 46
9.2. Profitable Operations............................................................ 46
9.3. Leverage Ratio................................................................... 46
9.4. Minimum Consolidated EBITDA...................................................... 46
9.5. Interest Coverage Ratio.......................................................... 46
9.6. Capital Expenditures............................................................. 47
SECTION 10 - CONDITIONS TO INITIAL CLOSING......................................................... 47
10.1. Loan Documents, etc.............................................................. 47
10.2. Certified Copies of Charter Documents............................................ 47
10.3. Corporate Action................................................................. 47
10.4. Incumbency Certificate........................................................... 47
10.5. Validity of Liens................................................................ 48
10.6. UCC Search Results............................................................... 48
10.7. Certificates of Insurance........................................................ 48
10.8. Solvency Certificate............................................................. 48
10.9. Opinion of Counsel............................................................... 48
10.10. Payment of Expenses.............................................................. 48
10.11. Evidence of Payoff............................................................... 48
10.12. Completion of Transaction........................................................ 48
10.13. Disbursement Instructions........................................................ 49
SECTION 11 - CONDITIONS TO ALL BORROWINGS.......................................................... 49
11.1. Representations True; No Event of Default........................................ 49
11.2. No Legal Impediment.............................................................. 49
11.3. Governmental Regulation.......................................................... 49
11.4. Proceedings and Documents........................................................ 49
SECTION 12 - EVENTS OF DEFAULT; ACCELERATION, ETC.................................................. 50
12.1. Events of Default and Acceleration............................................... 50
12.2. Termination of Commitments....................................................... 53
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12.3. Remedies......................................................................... 53
12.4. Distribution of Collateral Proceeds.............................................. 54
SECTION 13 - SETOFF................................................................................ 55
SECTION 14 - THE AGENT............................................................................. 55
14.1. Authorization.................................................................... 55
14.2. Employees and Agents............................................................. 56
14.3. No Liability..................................................................... 56
14.4. No Representations............................................................... 56
14.5. Payments......................................................................... 57
14.5.1. Payments to Agent...................................................... 57
14.5.2. Distribution by Agent.................................................. 57
14.5.3. Delinquent Banks....................................................... 57
14.6. Holders of Revolving Credit Notes................................................ 58
14.7. Indemnity........................................................................ 58
14.8. Agent as Bank.................................................................... 58
14.9. Resignation...................................................................... 58
14.10. Notification of Defaults and Events of Default................................... 59
14.11. Duties in the Case of Enforcement................................................ 59
14.12. Agent's Fee...................................................................... 59
SECTION 15 - EXPENSES.............................................................................. 59
SECTION 16 - INDEMNIFICATION....................................................................... 60
SECTION 17 - SURVIVAL OF COVENANTS, ETC............................................................ 60
SECTION 18 - ASSIGNMENT AND PARTICIPATION.......................................................... 61
18.1. Conditions to Assignment by Banks................................................ 61
18.2. Certain Representations and Warranties; Limitations; Covenants................... 61
18.3. Register......................................................................... 62
18.4. New Revolving Credit Notes....................................................... 63
18.5. Participations................................................................... 63
18.6. Disclosure....................................................................... 63
18.7. Assignee or Participant Affiliated with the Borrower............................. 64
18.8. Miscellaneous Assignment Provisions.............................................. 64
18.9. Assignment by Borrower........................................................... 64
SECTION 19 - NOTICES, ETC.......................................................................... 65
SECTION 20 - GOVERNING LAW......................................................................... 65
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SECTION 21 - HEADINGS.............................................................................. 66
SECTION 22 - COUNTERPARTS.......................................................................... 66
SECTION 23 - ENTIRE AGREEMENT, ETC................................................................. 66
SECTION 24 - WAIVER OF JURY TRIAL.................................................................. 66
SECTION 25 - CONSENTS, AMENDMENTS, WAIVERS, ETC.................................................... 66
SECTION 26 - TERMINATION OF CREDIT AGREEMENT....................................................... 67
SECTION 27 - SEVERABILITY.......................................................................... 67
</TABLE>
SCHEDULES
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Schedule I Lending Institutions
Schedule II Existing Stockholders
Schedule 6.3. Exceptions to Title to Properties
Schedule 6.7. Claims or Litigation
Schedule 6.15 Transactions Between Persons
Schedule 6.19. Listing of Subsidiaries
Schedule 8.1. Existing Indebtedness
Schedule 8.2. Existing Liens
Schedule 8.3 Existing Investments
EXHIBITS
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Exhibit A Form of Promissory Note
Exhibit B Form of Revolving Credit Loan Request
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
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REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of April 8, 1998, by and
among PROVANT, INC., a Delaware corporation (the "Borrower"), having its
principal place of business at 67 Batterymarch Street, Suite 500, Boston, MA
02110, and FLEET NATIONAL BANK, a national banking association ("Fleet"), and
the other lending institutions listed on SCHEDULE I hereto, and FLEET NATIONAL
BANK, as agent for itself and such other lending institutions.
1. DEFINITIONS AND RULES OF INTERPRETATION
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
ADJUSTMENT DATE. The first day of the month immediately following the
month in which a Compliance Certificate is to be delivered by the Borrower
pursuant to ss.7.4(c) hereof.
AFFILIATE. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
AGENT. Fleet National Bank acting as agent for the Banks.
AGENT'S HEAD OFFICE. The Agent's head office located at One Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
AGENT'S SPECIAL COUNSEL. Hutchins, Wheeler & Dittmar, A Professional
Corporation, or such other counsel as may be approved by the Agent.
APPLICABLE MARGIN. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to the Leverage Ratio, as determined for the period
ending on the fiscal quarter ended immediately preceding the applicable Rate
Adjustment Period:
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INTEREST RATES FEES
- ------------------------------------------------------------------------------
Prime Eurodollar Commitment Letter of
Leverage Ratio Rate Loans Rate Loans Fee Rate Credit
Fee Rate
- ------------------------------------------------------------------------------
<1.00 0.00% 0.50% 0.150% 0.50%
- ------------------------------------------------------------------------------
>/=1.00<2.00 0.00% 1.00% 0.200% 1.00%
- ------------------------------------------------------------------------------
>/=2.00<3.00 0.00% 1.50% 0.250% 1.50%
- ------------------------------------------------------------------------------
>/=3.00 0.50% 2.00% 0.375% 2.00%
- ------------------------------------------------------------------------------
The determination of the Leverage Ratio as set forth in the foregoing table
shall be based upon the Compliance Certificate delivered by the Borrower
pursuant to ss.7.4(c) hereof. In the event that such Compliance Certificate is
not delivered within the time period specified in said ss.7.4(c), for purposes
of determining the Applicable Margin the Leverage Ratio shall be deemed to be >
3.00 until such time as a completed Compliance Certificate, demonstrating a
lesser Leverage Ratio for the relevant fiscal period, has been delivered to the
Agent.
ASSIGNMENT AND ACCEPTANCE. See ss.18.1 hereof.
BANKS. Fleet and the other lending institutions listed on SCHEDULE I
hereto and any other Person who becomes an assignee of any rights and
obligations of a Bank pursuant to ss.18 hereof.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in the case
of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and goodwill); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
CAPITAL EXPENDITURES. Amounts paid or indebtedness incurred by the
Borrower or its Subsidiaries in connection with the purchase or lease by the
Borrower or its Subsidiaries of Capital Assets that would be required to be
capitalized and shown on the balance sheet of such Person in accordance with
generally accepted accounting principles, PROVIDED, HOWEVER, that for purposes
of determining compliance with the covenant concerning maximum aggregate Capital
Expenditures set forth in ss.9.6 hereof, Capital Assets acquired as part of
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any Permitted Acquisition shall not be included in the calculation of the amount
of Capital Expenditures incurred during any fiscal period.
CAPITALIZATION DOCUMENTS. The certificate of incorporation and by-laws
of the Borrower.
CAPITALIZED LEASES. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See ss.6.18 hereof.
CLOSING DATE. The first date on which the conditions set forth in
ss.ss.10 and 11 hereof have been satisfied and any Revolving Credit Loans are to
be made or any Letter of Credit is to be issued hereunder.
CODE. The Internal Revenue Code of 1986, as amended.
COLLATERAL. All of the property, rights and interests of the Borrower
and its Subsidiaries that are or are intended to be subject to the security
interests created by the Security Documents.
COMMITMENT. With respect to each Bank, the amount set forth on SCHEDULE
I hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to the Borrower and to participate in the issuance, extension and renewal of
letters of credit for the account of the Borrower, as the same may be reduced
from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.
COMMITMENT FEE RATE. The applicable rate per annum set forth in the
chart contained in the definition of Applicable Margin under the heading
"Commitment Fee Rate".
COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set
forth on SCHEDULE I hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
COMPLIANCE CERTIFICATE. See ss.7.4(c) hereof.
CONSOLIDATED or CONSOLIDATED. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
CONSOLIDATED EBITDA. For any fiscal period, the sum of (a) the
Consolidated Net Income for the Borrower and its Subsidiaries for such period
(including with respect to
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Subsidiaries acquired during such period), after all expenses and other proper
charges but before payment or provision for any income taxes or interest expense
of the Borrower for such period, PLUS (b) the aggregate amount of depreciation,
amortization and other non-cash charges made in calculating Consolidated Net
Income for such period, all as determined in accordance with generally accepted
accounting principles. For purposes of calculating Consolidated EBITDA for the
Current Subsidiaries or for any subsequently-acquired Subsidiary with respect to
any fiscal period, an adjustment (which in each case shall be subject to the
approval of the Agent based upon detailed supporting information submitted by
the Borrower) may be made for such fiscal period to reduce management
compensation expense during such period to an amount which reflects the
management compensation expense of such Current Subsidiary or a newly-acquired
Subsidiary, as the case may be, since the date of its acquisition by the
Borrower.
CONSOLIDATED TOTAL FUNDED DEBT. At any time, all Indebtedness of the
Borrower and its Subsidiaries at such time, whether secured or unsecured and
whether or not contingent, (a) in respect of money borrowed or the deferred
purchase price of property and services (excluding trade accounts payable), (b)
in respect of letters of credit, bankers' acceptances, or similar facilities,
(c) in respect of any Capitalized Leases, (d) evidenced by any loan or credit
agreement, reimbursement agreement, promissory note, debenture, bond, or other
similar contract, and (e) any Indebtedness of any other entity of a type
described in (a), (b), (c), or (d) that the Borrower or its Subsidiaries has
guaranteed or for which the Borrower or its Subsidiaries is otherwise
responsible or liable, directly or indirectly.
CONSOLIDATED NET INCOME (OR DEFICIT). For any period, the consolidated
net income (or deficit) of the Borrower and its Subsidiaries for such period,
after deduction of all expenses, taxes, and other proper charges, determined in
accordance with generally accepted accounting principles, after eliminating
therefrom all extraordinary nonrecurring items of income.
CONSOLIDATED TOTAL ASSETS. All items which, in accordance with
generally accepted accounting principles, would be included in determining the
total assets on the asset side of a consolidated balance sheet of the Borrower
and its Subsidiaries.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate
amount of interest required to be paid or accrued by the Borrower and its
Subsidiaries during such period on all Indebtedness of the Borrower and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of any
Capitalized Lease, and including commitment fees, agency fees, facility fees,
balance deficiency fees and similar fees or expenses in connection with the
borrowing of money.
CONSOLIDATED TOTAL LIABILITIES. All items which, in accordance with
generally accepted accounting principles, would be included in determining the
total liabilities on the liability side of a consolidated balance sheet of the
Borrower and its Subsidiaries.
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CONSOLIDATED TOTAL NET WORTH. At any date as of which the amount
thereof shall be determined, the excess of Consolidated Total Assets over
Consolidated Total Liabilities.
CONVERSION REQUEST. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Revolving Credit Loan in accordance
with ss.2.7 hereof.
CREDIT AGREEMENT. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto, as amended or supplemented, and in effect from
time to time.
CURRENT SUBSIDIARIES. The Subsidiaries of the Borrower existing as of
the date hereof and listed on SCHEDULE 6.19 hereto.
DEFAULT. See ss.12.1 hereof.
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Person, other than
dividends payable solely in shares of capital stock of such Person; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of any Person, directly or indirectly through a Subsidiary of such Person
or otherwise; the return of capital by any Person to its shareholders as such;
or any other distribution on or in respect of any shares of any class of capital
stock of any Person.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
DOLLAR EQUIVALENT. On any particular date, with respect to any amount
denominated in Dollars, such amount in Dollars, and with respect to any amount
denominated in a currency other than Dollars, the amount (as conclusively
ascertained by the Agent absent manifest error) of Dollars which could be
purchased by the Agent (in accordance with its normal banking practices) in the
London foreign currency deposit markets with such amount of such currency at the
spot rate of exchange prevailing at or about 11:00 a.m. (London time) on such
date.
DOMESTIC LENDING OFFICE. Initially, the office of each Bank designated
as such in SCHEDULE I hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Prime
Rate Loans.
DRAWDOWN DATE. The date on which any Revolving Credit Loan is made or
is to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with ss.2.7 hereof.
EBITDA. For any fiscal period for any Person, the sum of (a) the net
income for such Person for such period, after all expenses and other proper
charges but before payment or provision for any income taxes or interest expense
of such Person for such period, after eliminating therefrom all extraordinary
nonrecurring items of income, PLUS (b) the aggregate
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amount of depreciation, amortization and other non-cash charges made in
calculating the net income in clause (a) for such period for such Person, all as
determined in accordance with generally accepted accounting principles.
ELIGIBLE ASSIGNEE. Any of (a) a commercial bank organized under the
laws of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (c) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any country
which is a member of the OECD; and (e) if, but only if, any Event of Default has
occurred and is continuing, any other bank, insurance company, commercial
finance company or other financial institution approved by the Agent, such
approval not to be unreasonably withheld.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
ss.3(2) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
ENVIRONMENTAL LAWS. See ss.6.18(a) hereof.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer with
the Borrower under ss.414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the reserve rate applicable to the
Eurocurrency Liabilities pursuant to said Regulation D.
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EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open for
business (including dealings in Dollar deposits) in London, England and Boston,
Massachusetts.
EURODOLLAR RATE. For any Eurodollar Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/32
of 1%) appearing on Telerate Page 3750 in Dollars at approximately 11:00 a.m.
(London time) two (2) Eurodollar Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any reason
such rate is not available, the term "Eurodollar Rate" shall mean, for any
Eurodollar Rate Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/32 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.
In the event that the Eurocurrency Reserve Rate is increased during a Eurodollar
Interest Period, the Agent reserves the right to adjust the Eurodollar Rate to
reflect such increase.
EURODOLLAR RATE LOANS. Revolving Credit Loans bearing interest
calculated by reference to the Eurodollar Rate.
EVENT OF DEFAULT. See ss.12.1 hereof.
EXISTING STOCKHOLDERS. That certain group of persons who hold, or will
hold, common stock of the Borrower, consisting of (i) the Persons listed on
SCHEDULE II hereto, all of whom are or will be holders of the outstanding common
stock of the Borrower as of consummation of the Transaction (as hereinafter
defined), and (ii) those Persons (x) who hereafter acquire common stock of the
Borrower by virtue of their ownership interest or senior management status in
any corporation or other entity which is the subject of a Permitted Acquisition
(as hereinafter defined) by the Borrower, and (y) who are approved by the Agent
as additional Existing Stockholders, which approval shall be based upon the
Agent's confirmation of ownership interest or senior management status as
described in (x) above. In connection with any such addition of Existing
Stockholders hereunder, the Borrower shall submit to the Agent an amended
SCHEDULE II which updates the listing of all Existing Stockholders and all other
categories of information presented therein.
FLEET. Fleet National Bank, a national banking association, in its
individual capacity.
FOUNDING COMPANIES. See definition of Transaction.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (a) When used in ss.9 hereof,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the
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Balance Sheet Date, and (ii) to the extent consistent with such principles, the
accounting practice of the Borrower reflected in its financial statements for
the year ended on the Balance Sheet Date, and (b) when used in general, other
than as provided above, means principles that are (i) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors, as in effect from time to time, and (ii) consistently
applied with past financial statements of the Borrower adopting the same
principles, provided that in each case referred to in this definition of
"generally accepted accounting principles" a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
GUARANTOR. Any Subsidiary of the Borrower that is a party to the
Guaranty or that delivers an Instrument of Adherence to the Guaranty pursuant to
ss.7.13 hereof.
GUARANTY. The Guaranty, dated or to be dated on or prior to the Closing
Date, made by each of the Current Subsidiaries in favor of the Banks and the
Agent pursuant to which such entities jointly and severally guarantee to the
Banks and the Agent the payment and performance of the Obligations in form and
substance satisfactory to the Agent.
HAZARDOUS SUBSTANCES. See ss.6.18(b) hereof.
INDEBTEDNESS. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect; (b) all Capitalized Leases; (c) all liabilities secured by any
mortgage, pledge, security interest, lien, charge or other encumbrance existing
on property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; and (d) all guarantees, endorsements
and other contingent obligations, whether direct or indirect, in respect of
indebtedness of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of credit.
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INTEREST PAYMENT DATE. (a) As to any Prime Rate Loan, the last day of
the calendar quarter which includes the Drawdown Date thereof; and (b) as to any
Eurodollar Rate Loan, the last day of such Interest Period.
INTEREST PERIOD. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Loan and ending on
the last day of one of the periods set forth below, as selected by the Borrower
in a Revolving Credit Loan Request (i) for any Prime Rate Loan, the last day of
each calendar quarter; and (ii) for any Eurodollar Rate Loan, 30, 60, 90 or 180
days; and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Revolving Credit Loan and ending on
the last day of one of the periods set forth above, as selected by the Borrower
in a Conversion Request; provided that all of the foregoing provisions relating
to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business
Day, that Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end
on the immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Prime Rate Loan would
end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the Borrower shall fail to give notice of a conversion as
provided in ss.2.7.1 hereof, the Borrower shall be deemed to
have requested (i) the continuance of each affected Eurodollar
Rate Loan as a new Eurodollar Rate Loan having the same
Interest Period, and (ii) the continuance of all Prime Rate
Loans as Prime Rate Loans, in each case on the last day of the
then current Interest Period with respect thereto;
(d) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar
month; and
(e) any Interest Period relating to any Eurodollar Rate Loan that
would otherwise extend beyond the Revolving Credit Loan
Maturity Date shall end on the Revolving Credit Loan Maturity
Date.
INSTRUMENT OF ADHERENCE. An Instrument of Adherence to the Guaranty
substantially in the form of Exhibit A to the Guaranty.
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INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
LETTER OF CREDIT. See ss.3.1.1.
LETTER OF CREDIT APPLICATION. See ss.3.1.1.
LETTER OF CREDIT FEE. The applicable rate per annum set forth in the
chart contained in the definition of Applicable Margin under the heading "Letter
of Credit Fee Rate".
LETTER OF CREDIT PARTICIPATION. See ss.3.1.4.
LEVERAGE RATIO. As of the last day of any fiscal quarter, the ratio of
(a) Consolidated Total Funded Debt to (b) Consolidated EBITDA, determined for
the four consecutive fiscal quarters of the Borrower ended on such date.
LOAN DOCUMENTS. This Credit Agreement, the Revolving Credit Notes, the
Letter of Credit Applications, the Letters of Credit, the Security Documents and
all other documents designated by the parties thereto as a "Loan Document" for
purposes hereof.
MAJORITY BANKS. As of any date, the Banks holding at least sixty-six
and two-thirds percent (66 2/3%) of the outstanding principal amount of the
Revolving Credit Notes on such date; and if no such principal is outstanding,
the Banks whose aggregate Commitments constitute at least fifty-one percent
(51%) of the Total Commitment.
MATERIAL SUBSIDIARY. A Subsidiary of the Borrower whose (i) total
assets represent ten percent (10%) or more of the consolidated assets of the
Borrower and its Subsidiaries, or (ii) EBITDA represents ten percent (10%) or
more of Consolidated EBITDA, all as determined in accordance with generally
accepted accounting principles; PROVIDED, however, that in all events each of
the Current Subsidiaries shall be deemed to be a Material Subsidiary.
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MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
ss.3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
OBLIGATIONS. All indebtedness, obligations and liabilities of any of
the Borrower and any of its Subsidiaries to any of the Banks and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, in each case
arising or incurred under this Credit Agreement or any of the other Loan
Documents or in respect of any of the Revolving Credit Loans made or
Reimbursement Obligations incurred or any of the Revolving Credit Notes, Letter
of Credit Applications or Letters of Credit or other instruments at any time
evidencing any thereof.
OPTIONAL CURRENCY. Dutch Guilders, Canadian Dollars, Australian
Dollars, Pounds Sterling, and the "Euro", so long as such currency is freely
convertible into Dollars and is traded on any recognized Eurocurrency Interbank
Market selected by the Agent in good faith.
OUTSTANDING. With respect to the Revolving Credit Loans, the aggregate
unpaid principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERMITTED ACQUISITIONS. See ss.8.5.1 hereof.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by ss.8.2 hereof.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PRIME RATE. At any time, the annual rate of interest most recently
announced and made effective by Fleet at its head office in Boston,
Massachusetts, as its "Prime Rate". Such rate is used for reference purposes
only and is not necessarily the best or lowest rate charged by Fleet to its most
substantial or creditworthy customer and serves only as the basis upon which
effective rates of interest are calculated for obligations making reference
thereto.
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PRIME RATE LOANS. Revolving Credit Loans bearing interest calculated by
reference to the Prime Rate.
PRO FORMA BALANCE SHEET. See ss.6.4 hereof.
REAL ESTATE. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or any of its Subsidiaries.
REIMBURSEMENT OBLIGATION. The Borrower's obligation to reimburse the
Agent and the Banks on account of any drawing under any Letter of Credit as
provided in ss.3.2 hereof.
REVOLVING CREDIT LOAN MATURITY DATE. Three (3) years from the Closing
Date, or such earlier date on which the Total Commitment is terminated pursuant
to the provisions hereof.
REVOLVING CREDIT LOAN REQUEST. See ss.2.6 hereof.
REVOLVING CREDIT LOANS. Revolving credit loans made or to be made by
the Banks to the Borrower pursuant to ss.2 hereof.
REVOLVING CREDIT NOTE RECORD. The grid attached to a Revolving Credit
Note, or the continuation of such grid, or any other similar record, including
computer records, maintained by any Bank with respect to any Revolving Credit
Loan referred to in such Revolving Credit Note.
REVOLVING CREDIT NOTES. See ss.2.4 hereof.
SECURITY DOCUMENTS. The Stock Pledge Agreement, the Guaranty and all
Instruments of Adherence to the Guaranty delivered after the Closing Date
pursuant to ss.7.13 hereof.
STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement, dated or to be
dated on or prior to the Closing Date, between the Borrower and the Agent in
form and substance satisfactory to the Agent.
SUBORDINATED DEBT. Unsecured Indebtedness of the Borrower that is
expressly subordinated and made junior to the payment and performance in full of
the Obligations, and evidenced as such by a subordination agreement or by
another written instrument containing subordination provisions in form and
substance approved by the Agent in writing.
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
TOTAL COMMITMENT. The sum of the Commitments of the Banks, as in effect
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from time to time. The Total Commitment on the Closing Date is $40,000,000.
TRANSACTION. The series of related transactions occurring prior to or
contemporaneously with the Closing Date, in which (i) pursuant to a series of
Agreements and Plans of Merger, each dated as of February 12, 1998 (together,
the "Merger Agreements") between the Borrower, its respective Current
Subsidiaries and seven (7) separate companies (the "Founding Companies"), each
respective Founding Company is to be merged with and into a Current Subsidiary
for cash and stock consideration, with the Current Subsidiary, in each case, to
be the surviving entity, and (ii) concurrently with the merger transactions
described in clause (i) above, the Borrower will consummate an initial public
offering of 2,600,000 shares of its common stock and shall have received cash
proceeds therefrom (net of all underwriting fees and all other expenses of such
offering) of not less than $22,000,000. The Transaction is more particularly
described in the Borrower's Form S-1 registration statement (File No. 333-46157)
filed with the Securities and Exchange Commission.
TRANSACTION DOCUMENTS. All documents, instruments and agreements
(including without limitation the Merger Agreements) which have been or are to
be executed in connection with the Transaction, all in form and substance
satisfactory to the Agent and the Banks.
TYPE. As to any Revolving Credit Loan, its nature as a Prime Rate Loan
or a Eurodollar Rate Loan.
UNAUDITED FINANCIAL STATEMENTS. See ss.6.4.1 hereof.
UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
UNPAID REIMBURSEMENT OBLIGATIONS. Any Reimbursement Obligation for
which the Borrower does not reimburse the Agent and the Banks on the date
specified in, and in accordance with, ss.3.2 hereof.
VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
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1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented
from time to time in accordance with its terms and the terms
of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting
principles applied on a consistent basis by the accounting
entity to which they refer.
(f) The words "include," "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the
Uniform Commercial Code as in effect in The Commonwealth of
Massachusetts, have the meanings assigned to them therein,
with the term "instrument" being that defined under Article 9
of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein," "hereof," "hereunder," and words of like
import shall refer to this Credit Agreement as a whole and not
to any particular section or subsection of this Credit
Agreement.
2. THE REVOLVING CREDIT FACILITY
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set
forth in this Credit Agreement, each of the Banks severally agrees to lend to
the Borrower and the Borrower may borrow, repay, and reborrow from time to time
between the Closing Date and up to but not including the Revolving Credit Loan
Maturity Date upon notice by the Borrower to the Agent given in accordance with
ss.2.6 hereof, such sums as are requested by the Borrower up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Bank's Commitment MINUS such Bank's Commitment
Percentage of the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations, PROVIDED that the sum of the outstanding amount of the Revolving
Credit Loans (after giving effect to all amounts requested) PLUS the Maximum
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Drawing Amount and all Unpaid Reimbursement Obligations shall not at any time
exceed the Total Commitment. The Revolving Credit Loans shall be made PRO RATA
in accordance with each Bank's Commitment Percentage. Each request for a
Revolving Credit Loan hereunder shall constitute a representation and warranty
by the Borrower that the conditions set forth in ss.ss.11 and 12 hereof, in the
case of the initial Revolving Credit Loans to be made, and ss.12, in the case of
all other Revolving Credit Loans thereafter, have been satisfied on the date of
such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the Commitment Fee Rate per annum on the average
daily amount during each calendar quarter or portion thereof from the Closing
Date to the Revolving Credit Loan Maturity Date by which the Total Commitment
MINUS the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations exceeds the outstanding amount of Revolving Credit Loans during such
calendar quarter. The commitment fee shall be payable quarterly in arrears on
the first day of each calendar quarter for the immediately preceding calendar
quarter commencing on the first such date following the date hereof, with a
final payment on the Revolving Credit Loan Maturity Date.
2.3. OPTIONAL REDUCTION OF TOTAL COMMITMENT. The Borrower shall have
the right at any time and from time to time upon five (5) Business Days prior
written notice to the Agent to reduce by $2,000,000 or a larger integral
multiple of $500,000 or terminate entirely the Total Commitment, whereupon the
Commitments of the Banks shall be reduced PRO RATA in accordance with their
respective Commitment Percentages of the amount specified in such notice or, as
the case may be, terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this ss.2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such reduction or termination,
the Borrower shall pay to the Agent for the respective accounts of the Banks the
full amount of any commitment fee then accrued in the amount of the reduction.
No reduction of the Total Commitment or termination of the Commitments may be
reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrower in substantially the form
of EXHIBIT A hereto (each a "Revolving Credit Note"), dated as of the Closing
Date and completed with appropriate insertions. One Revolving Credit Note shall
be payable to the order of each Bank in a principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Revolving Credit Loans
made by such Bank, plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Revolving Credit Loan or at the time
of receipt of any payment of principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Revolving Credit Note Record reflecting the
making of such Revolving Credit Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Revolving Credit Loans set forth on such
Bank's Revolving Credit Note Record shall be PRIMA FACIE evidence of the
principal amount thereof owing and unpaid
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to such Bank, but the failure to record, or any error in so recording, any such
amount on such Bank's Revolving Credit Note Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Revolving Credit
Note to make payments of principal of or interest on any Revolving Credit Note
when due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise
provided in ss.4.10 hereof:
(a) Each Prime Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at the
annual rate equal to the sum of the Prime Rate as in effect
from time to time while such Prime Rate Loan is outstanding,
PLUS the Applicable Margin (if any) with respect to Prime Rate
Loans as in effect from time to time.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at the
annual rate equal to the sum of the Eurodollar Rate determined
for such Interest Period PLUS the Applicable Margin with
respect to Eurodollar Rate Loans as in effect from time to
time.
(c) The Borrower promises to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect
thereto.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS. The Borrower shall give
to the Agent written notice in the form of EXHIBIT B hereto (or telephonic
notice confirmed in a writing in the form of EXHIBIT B hereto) of each Revolving
Credit Loan requested hereunder (a "Revolving Credit Loan Request") no later
than (a) 12:00 noon (Boston time) on the Business Day of the proposed Drawdown
Date of any Prime Rate Loan and (b) 10:00 a.m. (Boston time) on the date two (2)
Eurodollar Business Days prior to the proposed Drawdown Date of any Eurodollar
Rate Loan. Each such notice shall specify (w) the principal amount of the
Revolving Credit Loan requested, (x) the proposed Drawdown Date of such
Revolving Credit Loan, (y) the Interest Period for such Revolving Credit Loan
and (z) the Type of such Revolving Credit Loan. Promptly upon receipt of any
such notice, the Agent shall notify each of the Banks thereof. Each Revolving
Credit Loan Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Revolving Credit Loan requested from the
Banks on the proposed Drawdown Date. Each Revolving Credit Loan Request shall be
in a minimum aggregate amount of $200,000 or a larger integral multiple of
$50,000.
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2.7. CONVERSION AND CONTINUATION OPTIONS.
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN.
The Borrower may elect from time to time to convert any outstanding Revolving
Credit Loan to a Revolving Credit Loan of another Type, provided that (a) with
respect to any such conversion of a Eurodollar Rate Loan to a Prime Rate Loan,
the Borrower shall give the Agent at least two (2) Business Days prior written
notice of such election; (b) with respect to any such conversion of a Prime Rate
Loan to a Eurodollar Rate Loan, the Borrower shall give the Agent at least two
(2) Eurodollar Business Days prior written notice of such election; (c) with
respect to any such conversion of a Eurodollar Rate Loan into a Revolving Credit
Loan of another Type, such conversion shall only be made on the last day of the
Interest Period with respect thereto or, if not made on such date, shall be
subject to the provisions of ss.4.8 hereof; and (d) no Revolving Credit Loan may
be converted into a Eurodollar Rate Loan when any Event of Default has occurred
and is continuing. On the date on which such conversion is being made each Bank
shall take such action as is necessary to transfer its Commitment Percentage of
such Revolving Credit Loans to its Domestic Lending Office or its Eurodollar
Lending Office, as the case may be. All or any part of outstanding Revolving
Credit Loans of any Type may be converted into a Revolving Credit Loan of
another Type as provided herein, provided that any partial conversion shall be
in an aggregate minimum principal amount of $200,000 and an integral multiple of
$50,000 in excess thereof. Each Conversion Request relating to the conversion of
a Revolving Credit Loan to a Eurodollar Rate Loan shall be irrevocable by the
Borrower.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any
Revolving Credit Loan of any Type shall be continued as a Revolving Credit Loan
of the same Type upon the expiration of an Interest Period with respect thereto
(and, in the case of any continued Eurodollar Rate Loan, shall have a new
Interest Period which is the same as the expiring Interest Period) UNLESS the
Borrower affirmatively elects to convert to another Type of Revolving Credit
Loan by complying with the notice provisions that are contained in ss.2.7.1
hereof; PROVIDED, HOWEVER, that no Eurodollar Rate Loan may be continued as such
when any Default or Event of Default has occurred and is continuing, but shall
be automatically converted to a Prime Rate Loan on the last day of the first
Interest Period relating thereto ending during the continuance of any Default or
Event of Default of which officers of the Agent active upon the Borrower's
account have actual knowledge. The Agent shall notify the Banks promptly when
any such automatic conversion occurs.
2.7.3. EURODOLLAR RATE LOANS. Any conversion to or from
Eurodollar Rate Loans shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of all Eurodollar Rate Loans having the same Interest Period shall not be less
than $200,000 and a whole multiple of $50,000 in excess thereof.
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2.8. FUNDS FOR REVOLVING CREDIT LOANS.
2.8.1. FUNDING PROCEDURES. Not later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans, each of the
Banks will make available to the Agent, at its Head Office, in immediately
available funds, the amount of such Bank's Commitment Percentage of the amount
of the requested Revolving Credit Loans. Upon receipt from each Bank of such
amount, and upon receipt of the documents required by ss.ss.11 and 12 hereof and
the satisfaction of the other conditions set forth therein, to the extent
applicable, the Agent will make available to the Borrower the aggregate amount
of such Revolving Credit Loans made available to the Agent by the Banks. The
failure or refusal of any Bank to make available to the Agent at the aforesaid
time and place on any Drawdown Date the amount of its Commitment Percentage of
the requested Revolving Credit Loans shall not relieve any other Bank from its
several obligation hereunder to make available to the Agent the amount of such
other Bank's Commitment Percentage of any requested Revolving Credit Loans.
2.8.2. ADVANCES BY AGENT. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount of such Bank's
Commitment Percentage of the Revolving Credit Loans to be made on such Drawdown
Date, and the Agent may (but it shall not be required to), in reliance upon such
assumption, make available to the Borrower a corresponding amount with written
notice to the Borrower of such Bank's failure to fund. If any Bank makes
available to the Agent such amount on a date after such Drawdown Date, such Bank
shall pay to the Agent on demand an amount equal to the product of (a) the
average, computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, times (b) the amount of such
Bank's Commitment Percentage of such Revolving Credit Loans, times (c) a
fraction, the numerator of which is the number of days that elapse from and
including such Drawdown Date to the date on which the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans shall become immediately
available to the Agent, and the denominator of which is 365. A statement of the
Agent submitted to such Bank with respect to any amounts owing under this
paragraph shall be PRIMA FACIE evidence of the amount due and owing to the Agent
by such Bank. If the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans is not made available to the Agent by such Bank within
three (3) Business Days following such Drawdown Date, the Agent shall be
entitled to recover such amount from the Borrower on demand, with interest
thereon at the rate per annum applicable to the Revolving Credit Loans made on
such Drawdown Date.
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2.9. REPAYMENT OF THE REVOLVING CREDIT LOANS.
2.9.1. MATURITY. The Borrower promises to pay on the Revolving
Credit Loan Maturity Date, and there shall become absolutely due and payable on
the Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
2.9.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at
any time the sum of the outstanding amount of the Revolving Credit Loans, the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds the
Total Commitment, then the Borrower shall immediately pay the amount of such
excess to the Agent for application: FIRST, to any Unpaid Reimbursement
Obligations; SECOND, to the Revolving Credit Loans; and THIRD, to provide to the
Agent cash collateral for Reimbursement Obligations as contemplated by ss.3.2(b)
and (c). Each payment of any Unpaid Reimbursement Obligations or prepayment of
Revolving Credit Loans shall be allocated among the Banks, in proportion, as
nearly as practicable, to each Reimbursement Obligation or (as the case may be)
the respective unpaid principal amount of each Bank's Revolving Credit Note or
loan account, as the case may be, with adjustments to the extent practicable to
equalize any prior payments or repayments not exactly in proportion.
2.9.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The
Borrower shall have the right, at its election, to repay the outstanding amount
of the Revolving Credit Loans, as a whole or in part, at any time without
penalty or premium, provided that any full or partial prepayment of the
outstanding amount of any Eurodollar Rate Loans pursuant to this ss.2.9.3 may be
made only on the last day of the Interest Period relating thereto. The Borrower
shall give the Agent, no later than 10:00 a.m. (Boston time), at least two (2)
Business Days' prior written notice of any proposed prepayment pursuant to this
ss.2.9.3 of Prime Rate Loans, and two (2) Eurodollar Business Days' notice of
any proposed prepayment pursuant to this ss.2.9.3 of Eurodollar Rate Loans, in
each case specifying the proposed date of prepayment of Revolving Credit Loans
and the principal amount to be prepaid. Each such partial prepayment of the
Revolving Credit Loans shall be in an integral multiple of $50,000, shall be
accompanied by the payment of accrued interest on the principal prepaid to the
date of prepayment and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Prime Rate Loans and then to the principal
of Eurodollar Rate Loans. Each partial prepayment shall be allocated among the
Banks, in proportion, as nearly as practicable, to the respective unpaid
principal amount of each Bank's Revolving Credit Note, with adjustments to the
extent practicable to equalize any prior repayments not exactly in proportion.
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3. LETTERS OF CREDIT
3.1. LETTER OF CREDIT COMMITMENTS.
3.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by the Borrower of a
letter of credit application on the Agent's customary form (a "Letter of Credit
Application"), the Agent on behalf of the Banks and in reliance upon the
agreement of the Banks set forth in ss.3.1.4 and upon the representations and
warranties of the Borrower contained herein, agrees, in its individual capacity,
to issue, extend and renew for the account of the Borrower one or more standby
or documentary letters of Credit (individually, a "Letter of Credit"),
denominated in Dollars or any Optional Currency in such form as may be requested
from time to time by the Borrower and agreed to by the Agent; PROVIDED, HOWEVER,
that, after giving effect to such request, (a) the sum of the aggregate Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not exceed
$3,000,000 (or the Dollar Equivalent) at any one time, and (b) the sum of (i)
the Dollar Equivalent of the Maximum Drawing Amount on all Letters of Credit,
(ii) the Dollar Equivalent of all Unpaid Reimbursement Obligations, and (iii)
the Dollar Equivalent of the amount of all Revolving Credit Loans outstanding
shall not exceed the Total Commitment.
3.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In the event
that any provision of any Letter of Credit Application shall be inconsistent
with any provision of this Credit Agreement, then the provisions of this Credit
Agreement shall, to the extent of any such inconsistency, govern.
3.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (a) provide for
the payment of sight drafts for honor thereunder when presented in accordance
with the terms thereof and when accompanied by the documents described therein,
and (b) have any expiry date not later than the date which is [twenty (20)] days
prior to the Revolving Credit Loan Maturity Date. Each Letter of Credit so
issued, extended or renewed shall be subject to the Uniform Customs.
3.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
agrees that it shall be absolutely liable, without regard to the occurrence of
any Default or Event of Default or any other condition precedent whatsoever, to
the extent of such Bank's Commitment Percentage, to reimburse the Agent on
demand for the amount of each draft paid by the Agent (as calculated pursuant to
ss.3.2) under each Letter of Credit to the extent that such amount is not
reimbursed by the Borrower pursuant to ss.3.2 (such agreement for a Bank being
called herein the "Letter of Credit Participation" of such Bank).
3.1.5. PARTICIPATION OF BANKS. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a participating interest
in the Borrower's Reimbursement Obligation under ss.3.2 in an amount equal to
such payment. Each Bank shall
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share in accordance with its participating interest in any interest which
accrues pursuant to ss.3.2.
3.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce
the Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder for the account of the Borrower,
(a) except as otherwise expressly provided in ss.3.2(b) and (c),
on each date that any draft presented under such Letter of
Credit is honored by the Agent, or the Agent otherwise makes
a payment with respect thereto (in the same currency in which
such Letter of Credit was issued or the Dollar Equivalent
thereof), (i) the amount paid by the Agent under or with
respect to such Letter of Credit, and (ii) the amount of any
taxes (other than taxes based upon or measured by the income
or profits of a Bank or the Agent), fees, charges or other
costs and expenses whatsoever incurred by the Agent or the
Banks in connection with any payment made by the Agent or any
Bank under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount,
an amount equal to such difference, which amount shall be held
by the Agent for the benefit of the Banks and the Agent as
cash collateral for all Reimbursement Obligations, and
(c) upon the termination of the Total Commitment or the
acceleration of the Reimbursement Obligations with respect to
all Letters of Credit in accordance with ss.12, an amount
equal to the then Maximum Drawing Amount on all Letters of
Credit, which amount shall be held by the Agent for the
benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrower under this ss.3.2 at any time from the date such amounts become due
and payable (whether as stated in such ss.3.2, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be payable to the
Agent on demand at the rate specified in ss.4.9 for overdue principal on the
Revolving Credit Loans.
3.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Agent
shall notify the Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Borrower fails to reimburse the Agent as
provided in ss.3.2 on or before the date that such draft is paid or other
payment is made by the Agent, the Agent may at any time thereafter notify the
Banks
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of the amount of any such Unpaid Reimbursement Obligation and shall specify such
amount in Dollars (based upon the actual exchange rate at which the Agent
anticipates being able to obtain the applicable Optional Currency on the date
payment is to be made by the Banks, with any excess payment being refunded to
the Banks and any deficiency being payable by the Banks) required from each of
the Banks. No later than 3:00 p.m. (Boston time) on the Business Day next
following the receipt of such notice, each Bank shall make available to the
Agent, at the Agent's Head Office in immediately available funds, such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation, together with an
amount equal to the product of (a) the average, computed for the period referred
to in clause (c) below, of the Overnight Rate for each day included in such
period, TIMES (b) the amount equal to such Bank's Commitment Percentage of such
Unpaid Reimbursement Obligation, TIMES (c) a fraction, the numerator of which is
the number of days that elapse from and including the date the Agent paid the
draft presented for honor or otherwise made payment to the date on which such
Bank's Commitment Percentage of such Unpaid Reimbursement Obligation shall
become immediately available to the Agent and the denominator of which is 365.
The responsibility of the Agent to the Borrower and the Banks shall be only to
determine that the documents (including each draft) delivered under each Letter
of Credit in connection with such presentment shall be in conformity in all
material respects with such Letter of Credit. From and after such purchase of
the applicable Letter of Credit Participations, such Unpaid Reimbursement
Obligations shall be deemed to have been converted into Prime Rate Loans made by
the Banks, and all amounts from time to time accruing, and all amounts from time
to time payable, on account of such Unpaid Reimbursement Obligations shall be
payable in Dollars as if such Letter of Credit had originally been issued in
Dollars.
3.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this ss.3
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. The Borrower further agrees with the Agent
and the Banks that the Agent and the Banks shall not be responsible for, and the
Borrower's Reimbursement Obligations under ss.3.2 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Borrower, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower against the beneficiary of any
Letter of Credit or any such transferee. The Agent and the Banks shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit. The Borrower agrees that any action taken or omitted by
the Agent or any Bank under or in connection with each Letter of Credit and the
related drafts and documents, if done in good faith, shall be binding upon the
Borrower and shall not result in any liability on the part of the Agent or any
Bank to the Borrower.
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3.5. RELIANCE BY AGENT. To the extent not inconsistent with ss.3.4,
the Agent shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Credit Agreement unless it
shall first have received such advice or concurrence of the Majority Banks as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or refraining from
acting, under this Credit Agreement in accordance with a request of the Majority
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon the Banks and all future holders of the Revolving Credit
Notes, loan accounts or a Letter of Credit Participation.
3.6. LETTER OF CREDIT FEE. The Borrower shall pay to the Agent a
Letter of Credit Fee in respect of each Letter of Credit issued pursuant to this
Credit Agreement on the face amount of each such Letter of Credit, which shall
be for the accounts of the Banks in accordance with their respective Commitment
Percentages. The Letter of Credit Fees for each Letter of Credit shall be
payable quarterly in arrears on the last day of each calendar quarter (prorated
for any portion of such quarter during which any such Letter of Credit is not
outstanding). In respect of each Letter of Credit, the Borrower shall also pay
the Agent for the Agent's own account, on the date of any issuance, extension,
renewal or amendment of any Letter of Credit, or at such other time or times as
such charges are customarily made by the Agent, the Agent's customary issuance,
amendment, negotiation or document examination and other administrative fees as
in effect from time to time.
4. CERTAIN GENERAL PROVISIONS
4.1. FUNDS FOR PAYMENTS.
4.1.1. PAYMENTS TO AGENT. All payments of principal, interest,
commitment fees and any other amounts due hereunder or under any of the other
Loan Documents shall be made to the Agent, for the respective accounts of the
Banks and the Agent, at the Agent's Head Office or at such other location in the
Boston, Massachusetts, area that the Agent may from time to time designate, in
each case in immediately available funds.
4.1.2. NO OFFSET, ETC. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without setoff 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 jurisdiction or any political subdivision thereof or taxing
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or other authority therein unless the Borrower is compelled by law to make such
deduction or if any such obligation is imposed upon the Borrower with respect to
any amount payable by it hereunder or under any of the other Loan Documents, the
Borrower will pay to the Agent, for the account of the Banks or (as the case may
be) the Agent, on the date on which such amount is due and payable hereunder or
under such other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Agent to receive the same net amount which
the Banks or the Agent would have received on such due date had no such
obligation been imposed upon the Borrower. The Borrower will deliver promptly to
the Agent certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower hereunder or
under such other Loan Document.
4.2. COMPUTATIONS. All computations of interest on the Revolving Credit
Loans and commitment fees, Letter of Credit Fees or other fees shall, unless
otherwise expressly provided herein, be based on a 360-day year and paid for the
actual number of days elapsed. Except as otherwise provided in the definition of
the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on a day
that 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. The outstanding amount of the Revolving Credit Loans as reflected on
the Revolving Credit Note Records from time to time shall be considered correct
and binding on the Borrower absent manifest error or unless within five (5)
Business Days after receipt of any notice by the Agent or any of the Banks of
such outstanding amount, the Agent or such Bank shall notify the Borrower to the
contrary.
4.3. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Agent shall determine or be notified by the Majority Banks that (i) adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate that would
otherwise determine the rate of interest to be applicable to any Eurodollar Rate
Loan during any Interest Period, (ii) the implementation of Eurodollar Rate
Loans has been made impracticable by the occurrence of a contingency that
materially and adversely affects the London Interbank Market, or (iii) the
Eurodollar Rate shall no longer represent the effective cost to the Banks for
U.S. dollar deposits in the London Interbank Market, as applicable for deposits
in which they regularly participate, the Agent shall forthwith give notice of
such determination (which shall be conclusive and binding on the Borrower and
the Banks) to the Borrower and the Banks. In such event (a) any Revolving Credit
Loan Request or Conversion Request with respect to Eurodollar Rate Loans shall
be automatically withdrawn and shall be deemed a request for Prime Rate Loans,
(b) each Eurodollar Rate Loan will automatically, on the last day of the then
current Interest Period relating thereto, become a Prime Rate Loan, and (c) the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended until
the Agent or the Majority Banks determine that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent or, as the case may be, the
Agent upon the instruction of the Majority Banks, shall so notify the Borrower
and the Banks.
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4.4. ILLEGALITY. Notwithstanding any other provisions herein, if
any present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice of
such circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert Revolving
Credit Loans of another Type to Eurodollar Rate Loans shall forthwith be
suspended and (b) such Bank's Revolving Credit Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the last day of each Interest Period applicable to such Eurodollar Rate
Loans or within such earlier period as may be required by law. The Borrower
hereby agrees promptly to pay the Agent for the account of such Bank, upon
demand by such Bank, any additional amounts necessary to compensate such Bank
for any costs incurred by such Bank in making any conversion in accordance with
this ss.4.4, including any interest or fees payable by such Bank to lenders of
funds obtained by it in order to make or maintain its Eurodollar Rate Loans
hereunder.
4.5. ADDITIONAL COSTS, ETC. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with
respect to this Credit Agreement, the other Loan Documents,
such Bank's Commitment or the Revolving Credit Loans (other
than taxes based upon or measured by the income or profits of
such Bank or the Agent); or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Revolving Credit Loans or
any other amounts payable to any Bank or the Agent under this
Credit Agreement or any of the other Loan Documents; or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit
Agreement) any special deposit, reserve, assessment,
liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or
letters of credit issued by, or commitments of an office of
any Bank; or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other
Loan Documents, any Letters of Credit, the Revolving Credit
Loans, such Bank's Commitment, or any class of
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loans, letters of credit or commitments of which any of the
Revolving Credit Loans or such Bank's Commitment forms a part,
and the result of any of the foregoing is:
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of
the Revolving Credit Loans or such Bank's Commitment
or any Letter of Credit; or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation, or other amount payable to
such Bank or the Agent hereunder on account of such
Bank's Commitment, any Letter of Credit or any of the
Revolving Credit Loans; or
(iii) to require such Bank or the Agent to make any payment
or to forego any interest or other sum payable
hereunder, the amount of which payment or foregone
interest or other sum is calculated by reference to
the gross amount of any sum receivable or deemed
received by such Bank or the Agent from the Borrower
hereunder;
then, and in each such case, the Borrower will, upon demand made by such Bank or
(as the case may be) the Agent at any time and from time to time and as often as
the occasion therefor may arise, pay to such Bank or the Agent such additional
amounts as will be sufficient to compensate such Bank or the Agent for such
additional cost, reduction, payment or foregone interest or other sum applicable
to the Revolving Credit Loans, Reimbursement Obligations and Unpaid
Reimbursement Obligations hereunder.
4.6. CAPITAL ADEQUACY. If after the date hereof any Bank or the
Agent determines that (a) the adoption of or change in any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) regarding capital requirements for banks or bank holding companies
or any change in the interpretation or application thereof by a court or
governmental authority with appropriate jurisdiction, or (b) compliance by such
Bank or the Agent or any corporation controlling such Bank or the Agent with any
law, governmental rule, regulation, policy, guideline, or directive (whether or
not having the force of law) of any such entity regarding capital adequacy, has
the effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Revolving Credit Loans to a level below that which such Bank or
the Agent could have achieved but for such adoption, change, or compliance
(taking into consideration such Bank's or the Agent's then existing policies
with respect to capital adequacy and assuming full utilization of such entity's
capital) by any amount deemed by such Bank or (as the case may be) the Agent to
be material, then such Bank or the Agent may notify the Borrower of such fact.
To the extent that the amount of such reduction in the return on capital is not
reflected in the Prime Rate, the Borrower agrees to pay such Bank or (as the
case may be) the Agent for the amount of such reduction in the return on capital
as and when such reduction is determined upon presentation by such Bank or (as
the case may be) the Agent of a certificate in accordance
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with ss.4.7 hereof. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
4.7. CERTIFICATE. A certificate setting forth any additional
amounts payable pursuant to ss.4.5 or ss.4.6 and a brief explanation of such
amounts which are due, submitted by any Bank or the Agent to the Borrower, shall
be conclusive, absent manifest error, that such amounts are due and owing.
4.8. INDEMNITY. The Borrower agrees to indemnify each Bank and to
hold each Bank harmless from and against any loss, cost, or expense (including
loss of anticipated profits) that such Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment of the principal amount of
or any interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by such
Bank to lenders of funds obtained by it in order to maintain its Eurodollar Rate
Loans, (b) default by the Borrower in making a borrowing or conversion after the
Borrower has given (or is deemed to have given) a Revolving Credit Loan Request
or a Conversion Request relating thereto in accordance with ss.2.6 or ss.2.7, or
(c) the making of any payment of a Eurodollar Rate Loan or the making of any
conversion of any such Revolving Credit Loan to a Prime Rate Loan on a day that
is not the last day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders of funds obtained by
it in order to maintain any such Revolving Credit Loans.
4.9. INTEREST AFTER DEFAULT. Overdue principal and (to the extent
permitted by applicable law) interest on the Revolving Credit Loans and all
other overdue amounts payable hereunder or under any of the other Loan Documents
shall bear interest payable on demand at a rate per annum equal to two percent
(2%) above the Prime Rate until such amount shall be paid in full (after as well
as before judgment).
4.10. REPLACEMENT BANK. Within thirty (30) days after any Bank has
demanded compensation from the Borrower pursuant to ss.4.5 or ss.4.6 hereof or
any Bank has become a Delinquent Bank, as defined in ss.14.5.3 hereof (any such
Bank described in the foregoing clause is hereinafter referred to as an
"Affected Bank"), the Borrower may request that the non-Affected Banks acquire
all, but not less than all, of the Affected Bank's outstanding Revolving Credit
Loans and assume all, but not less than all, of the Affected Bank's Commitment.
If the Borrower so requests, the non-Affected Banks may elect to acquire all or
any portion of the Affected Bank's outstanding Revolving Credit Loans and to
assume all or any portion of the Affected Bank's Commitment. If the non-Affected
Banks do not elect to acquire and assume all of the Affected Bank's outstanding
Revolving Credit Loans and Commitment, the Borrower may designate a replacement
bank or banks, which must be satisfactory to the Agent, to acquire and assume
that portion of the outstanding Revolving Credit Loans and Commitment of the
Affected Bank not being acquired and assumed by the non-Affected Banks. The
provisions of ss.18 hereof shall apply to all reallocations pursuant to this
ss.4.10, and the Affected Bank and any non-Affected Banks and/or replacement
banks
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which are to acquire the Revolving Credit Loans and Commitment of the Affected
Bank shall execute and deliver to the Agent, in accordance with the provisions
of ss.18 hereof, such Assignments and Acceptances and other instruments,
including, without limitation, Revolving Credit Notes, as are required pursuant
to ss.18 hereof to give effect to such reallocations. Any non-Affected Banks
and/or replacement banks which are to acquire the Revolving Credit Loans and
Commitment of the Affected Bank shall be deemed to be Eligible Assignees for all
purposes of ss.18 hereof. On the effective date of the applicable Assignments
and Acceptances, the Borrower shall pay to the Affected Bank all interest
accrued on its Revolving Credit Loans up to but excluding such date, along with
any fees payable to such Affected Bank hereunder up to but excluding such date.
5. SECURITY AND GUARANTIES
5.1. STOCK PLEDGE. The Obligations shall be secured by a pledge by
the Borrower of all the capital stock of its Subsidiaries owned by Borrower,
whether now owned or hereafter acquired, pursuant to the terms of the Stock
Pledge Agreement.
5.2. GUARANTY. The Obligations shall also be guaranteed pursuant to
the terms of the Guaranty, as amended by any Instrument of Adherence delivered
pursuant to ss.7.13 hereof after the Closing Date.
6. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Banks and the Agent as
follows:
6.1. CORPORATE AUTHORITY.
6.1.1. INCORPORATION; GOOD STANDING. Each of the Borrower and
each of its Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated, and (c) is in good standing as a
foreign corporation and is duly authorized to do business in each jurisdiction
where such qualification is necessary except where a failure to be so qualified
would not have a materially adverse effect on the business, assets or financial
condition of the Borrower and its Subsidiaries, considered as a whole.
6.1.2. AUTHORIZATION. The execution, delivery and performance
of this Credit Agreement and the other Loan Documents to which the Borrower or
any of its Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby (a) are within the corporate authority of such
Person, (b) have been duly authorized by all necessary corporate proceedings,
(c) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which the Borrower or such
Subsidiary of the Borrower is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower or such Subsidiary, and (d) do not
conflict with any provision of the
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corporate charter or by-laws of, or any agreement or other instrument binding
upon, the Borrower or such Subsidiary.
6.1.3. ENFORCEABILITY. The execution and delivery of this
Credit Agreement and the other Loan Documents to which the Borrower or any
Subsidiary of the Borrower is or is to become a party will result in valid and
legally binding obligations of the Borrower or such Subsidiary of the Borrower
enforceable against such Person in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.
6.2. GOVERNMENTAL APPROVALS. The execution, delivery and
performance by the Borrower and any of its Subsidiaries of this Credit Agreement
and the other Loan Documents to which the Borrower or any Subsidiary of the
Borrower is or is to become a party and the transactions contemplated hereby and
thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.
6.3. TITLE TO PROPERTIES, LEASES. Except as indicated on
SCHEDULE 6.3 hereto, the Borrower and each of its Subsidiaries owns all of the
assets reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date or acquired since that date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
6.4. FINANCIAL STATEMENTS AND PROJECTIONS.
6.4.1. FINANCIAL STATEMENTS. There has been furnished to the
Agent an unaudited internally prepared consolidated PRO FORMA balance sheet of
the Borrower and its Subsidiaries as at December 31, 1997 (the "PRO FORMA
Balance Sheet"), and related PRO FORMA combined statements of financial
condition, income, changes in stockholders' equity and cash flows of the
Borrower and its Subsidiaries (assuming merger of the Current Subsidiaries with
the Founding Companies) for the six-month period ended December 31, 1997 (the
"Unaudited Financial Statements"). The Unaudited Financial Statements have been
prepared in accordance with generally accepted accounting principles and fairly
present the financial condition of the Borrower and its Subsidiaries as at the
close of business on the date thereof. There are no contingent liabilities of
the Borrower or any of its Subsidiaries as of such date involving material
amounts, known to the officers of the Borrower, which were not disclosed in the
Unaudited Financial Statements and the notes related thereto. There has also
been furnished to the Agent audited consolidated financial statements of
financial condition, income, changes in stockholders' equity and cash flows as
of and for the two (2) most
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recently concluded fiscal years for each Current Subsidiary, which financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered thereby
and present fairly the financial condition of each Current Subsidiary, as the
case may be, for such period.
6.4.2. PROJECTIONS. The projections of the annual operating
budgets of the Borrower and its Subsidiaries (assuming merger of the Current
Subsidiaries with the Founding Companies) on a consolidated basis, balance
sheets and cash flow statements for the 1998 calendar year, copies of which have
been delivered to the Agent, disclose all assumptions made with respect to
general economic, financial and market conditions used in formulating such
projections. To the knowledge of the Borrower, no facts exist that (individually
or in the aggregate) would result in any material change in any of such
projections. The projections are based upon reasonable estimates and
assumptions, have been prepared on the basis of the assumptions stated therein
and reflect the reasonable estimates of the Borrower and its Subsidiaries of the
results of operations and other information projected therein.
6.5. NO MATERIAL CHANGES, ETC. Since the Pro Forma Balance Sheet
date, there has occurred no materially adverse change in the financial condition
or business of the Borrower as shown on or reflected in the balance sheet of the
Borrower as at the Pro Forma Balance Sheet date, or the statement of income for
the fiscal year then ended, other than changes in the ordinary course of
business that have not had any materially adverse effect either individually or
in the aggregate on the business or financial condition of the Borrower. Since
the Pro Forma Balance Sheet date, the Borrower has not made any Distribution.
6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and its
Subsidiaries possess all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of their business substantially as now conducted without known
conflict with any rights of others.
6.7. LITIGATION. Except as set forth on SCHEDULE 6.7, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of the Borrower's Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrower or its
Subsidiaries or materially impair the right of the Borrower or any of its
Subsidiaries, considered as a whole, to carry on business substantially as now
conducted by them, or result in any substantial liability not adequately covered
by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrower or
any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment,
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decree, order, rule or regulation that has or is expected in the future to have
a materially adverse effect on the business, assets or financial condition of
the Borrower and the Borrower's Subsidiaries considered as whole. None of the
Borrower or any of the Borrower's Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrower's officers,
to have any materially adverse effect on the business of the Borrower and the
Borrower's Subsidiaries considered as a whole.
6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the
Borrower or any of the Borrower's Subsidiaries is in violation of any provision
of its charter documents, by-laws, or any agreement or instrument to which it
may be subject or by which it or any of its properties may be bound or any
decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could result in the imposition of substantial
penalties or materially and adversely affect the financial condition, properties
or business of the Borrower and the Borrower's Subsidiaries considered as a
whole.
6.10. TAX STATUS. The Borrower and the Borrower's Subsidiaries (a)
have made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which any of them is
subject, (b) have paid all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (c) have
set aside on their books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.
6.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the
Borrower or any of the Borrower's Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an affiliate" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935; nor is it an "investment company," or an "affiliated company" or a
"principal underwriter" of an "investment company," as such terms are defined in
the Investment Company Act of 1940.
6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of the Borrower's Subsidiaries
and any rights relating thereto.
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6.14. COLLATERAL. The Collateral and the Agent's rights with respect
to the Collateral are not subject to any setoff, claims, withholdings or other
defenses. The Borrower is the owner of the Collateral free from any lien,
security interest, encumbrance and any other claim or demand, except for
Permitted Liens.
6.15. CERTAIN TRANSACTIONS. Except as shown on SCHEDULE 6.15 and
except for arm's length transactions pursuant to which the Borrower or its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Borrower or such Subsidiary could obtain from third
parties, none of the officers, directors, or employees of the Borrower or any of
the Borrower's Subsidiaries is presently a party to any transaction with the
Borrower or a Subsidiary of the Borrower (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Borrower, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
6.16. EMPLOYEE BENEFIT PLANS.
6.16.1. IN GENERAL. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including but not
limited to the provisions thereunder respecting prohibited transactions. The
Borrower has heretofore delivered to the Agent the most recently completed
annual report, Form 5500, with all required attachments, and actuarial statement
required to be submitted under ss.103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
6.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the meaning of
ss.3(l) or ss.3(2)(B) of ERISA, no benefits are due unless the event giving rise
to the benefit entitlement occurs prior to plan termination (except as required
by Title I, Part 6 of ERISA). The Borrower or an ERISA Affiliate, as
appropriate, may terminate each such Plan at any time (or at any time subsequent
to the expiration of any applicable bargaining agreement) in the discretion of
the Borrower or such ERISA Affiliate without liability to any Person.
6.16.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to avoid
the incurrence of an accumulated funding deficiency, the notice or lien
provisions of ss.302(f) of ERISA, or otherwise, has been timely made. No waiver
of an accumulated funding deficiency or extension of amortization periods has
been received with respect to any Guaranteed Pension Plan. No liability to the
PBGC (other than required insurance premiums, all of which have been paid) has
been incurred by the Borrower or any ERISA Affiliate with respect to any
Guaranteed Pension
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Plan and there has not been any ERISA Reportable Event, or any other event or
condition which presents a material risk of termination of any Guaranteed
Pension Plan by the PBGC. Based on the latest valuation of each Guaranteed
Pension Plan (which in each case occurred within twelve months of the date of
this representation), and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed Pension
Plans within the meaning of ss.4001 of ERISA did not exceed the aggregate value
of the assets of all such Guaranteed Pension Plans, disregarding for this
purpose the benefit liabilities and assets of any Guaranteed Pension Plan with
assets in excess of benefit liabilities.
6.16.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any
ERISA Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under ss.4201 of ERISA or as a result of
a sale of assets described in ss.4204 of ERISA. Neither the Borrower nor any
ERISA Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of ss.4241 or ss.4245
of ERISA or that any Multiemployer Plan intends to terminate or has been
terminated under ss.4041A of ERISA.
6.17. USE OF PROCEEDS; REGULATIONS U AND X. The proceeds of the
Revolving Credit Loans and the obtaining of the Letters of Credit shall be used
for general corporate purposes, including (i) refinancing existing indebtedness
of the Borrower, (ii) providing working capital, and (iii) making Permitted
Acquisitions. No portion of any Revolving Credit Loan is to be used, and no
portion of any Letter of Credit is to be obtained, for the purpose of purchasing
or carrying any "margin security" or "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.
6.18. ENVIRONMENTAL COMPLIANCE. The Borrower represents that, to its
knowledge:
(a) none of the Borrower, its Subsidiaries or any operator of the
Real Estate or any operations thereon is in violation, or
alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental
matters, including, without limitation, those arising under
the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health,
safety or the environment (hereinafter "Environmental Laws"),
which violation would have a material adverse effect on the
business, assets or financial condition of the Borrower and
its Subsidiaries taken as a whole;
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<PAGE> 41
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party, including, without limitation,
any federal, state or local governmental authority, (i) that
it has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party
under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any
hazardous waste, as defined by 42 U.S.C.ss.6903(5), any
hazardous substances, as defined by 42 U.S.C. ss.9601(14), any
pollutant or contaminant, as defined by 42 U.S.C.ss.9601(33),
and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws
("Hazardous Substances") which it has generated, transported
or disposed of has been found at any site at which a federal,
state or local agency or other third party has conducted or
has ordered that the Borrower or such Subsidiary of the
Borrower conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii)
that it is or shall be a named party to any claim, action,
cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out
of any third party's incurrence of costs, expenses, losses or
damages of any kind whatsoever in connection with the release
of Hazardous Substances;
(c) (i) no portion of the Real Estate has been used for the
handling, processing, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental
Laws; (ii) in the course of any activities conducted by the
Borrower, any of its Subsidiaries or operators of its
properties, no Hazardous Substances have been generated or are
being used on the Real Estate except in accordance with
applicable Environmental Laws; (iii) there have been no
releases (i.e., any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Substances on, upon, into or from the
properties of the Borrower or any of its Subsidiaries, which
releases would have a material adverse effect on the value of
any of the Real Estate or adjacent properties or the
environment; (iv) to the best of the Borrower's knowledge,
there have been no releases on, upon, from or into any real
property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be
located on, and which would have a material adverse effect on
the value of, the Real Estate; and (v) in addition, any
Hazardous Substances that have been generated on any of the
Real Estate have been transported offsite only by carriers
having an identification number issued by the EPA, treated or
disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities have
been and are, to the best of the Borrower's knowledge,
operating in compliance with such permits and applicable
Environmental Laws; and
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(d) none of the Borrower, its Subsidiaries or any of the Real
Estate is subject to any applicable Environmental Law
requiring the performance of Hazardous Substances site
assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any governmental agency
or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of
the transactions set forth herein and contemplated hereby, or
as a condition to the effectiveness of any other transactions
contemplated hereby.
6.19. SUBSIDIARIES, ETC. The Borrower does not have any Subsidiaries
except for the Current Subsidiaries as set forth on SCHEDULE 6.19 hereto. Except
as set forth on SCHEDULE 6.19 hereto, the Borrower is not engaged in any joint
venture or partnership with any other Person.
6.20. CHIEF EXECUTIVE OFFICES. The Borrower's chief executive office
is at 67 Batterymarch Street, Suite 500, Boston, MA 02110 at which location its
books and records are kept.
6.21. FISCAL YEAR. The Borrower has a fiscal year which is the
twelve (12) months ending on June 30 of each year.
6.22. DISCLOSURE. No representation or warranty made by the Borrower
in this Credit Agreement or in any agreement, instrument, document, certificate,
statement or letter furnished to the Agent by or on behalf of the Borrower in
connection with any of the transactions contemplated by any of the Loan
Documents 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 under which they are made.
6.23. INSURANCE. The Borrower and its Subsidiaries maintain with
financially sound and reputable insurers insurance with respect to their
properties and businesses against such casualties and contingencies as are in
accordance with sound business practices.
6.24. DELIVERY OF CERTAIN DOCUMENTS. The Borrower has delivered to
the Agent true and complete copies of all of the Transaction Documents
(including any amendments thereto). Each of the representations and warranties
made by the Borrower and any of its Subsidiaries in any of the Transaction
Documents was true and correct in all material respects when made and will
continue to be true and correct in all material respects on the Closing Date,
except to the extent that any of such representations and warranties relate, by
the express terms thereof, solely to a date falling prior to the Closing Date,
and except to the extent that any of such representations and warranties may
have been affected by the consummation of the transactions contemplated and
permitted or required by the Loan Documents.
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<PAGE> 43
7. AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Revolving Credit Note, Unpaid Reimbursement Obligation or Letter of Credit
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligation to issue, extend or renew any Letter of Credit:
7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Revolving Credit Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the commitment fees and
all other amounts provided for in this Credit Agreement and the other Loan
Documents to which the Borrower is a party, all in accordance with the terms of
this Credit Agreement and such other Loan Documents.
7.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
executive office in Boston, Massachusetts or at such other place in the United
States of America as the Borrower shall designate upon written notice to the
Agent, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents to which the Borrower is a party may be given or
made.
7.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with generally accepted accounting principles and (b)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves.
7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Borrower will deliver to the Agent:
(a) as soon as practicable, but in any event not later than one
hundred fifty (150) days after the end of each fiscal year of
the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries and the consolidating balance sheet of
the Borrower and its Subsidiaries, each as at the end of such
year, and the related consolidated statement of income and
statement of cash flow for such year, and the consolidating
statement of income and statement of cash flow for such year,
each setting forth in comparative form the figures for the
previous fiscal year and all such statements to be in
reasonable detail, prepared in accordance with generally
accepted accounting principles, and certified without
qualification by KPMG Peat Marwick or by other independent
certified public accountants satisfactory to the Agent, that,
in making the examination necessary to said certification,
they have obtained no knowledge of any Default or Event of
Default, or, if such accountants shall have obtained knowledge
of any then existing Default or Event of Default they shall
disclose in such statement any such Default or Event of
Default; provided that such accountants
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shall not be liable to the Banks for failure to obtain
knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than sixty
(60) days after the end of each of the first three fiscal
quarters of the Borrower, copies of the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries and the
unaudited consolidating balance sheet of the Borrower and its
Subsidiaries, each as at the end of such quarter, and the
related consolidated statement of income and statement of cash
flow and consolidating statement of income and statement of
cash flow, each for the portion of the Borrower's fiscal year
then elapsed, all in reasonable detail and prepared in
accordance with generally accepted accounting principles,
together with a certification by the principal financial or
accounting officer of the Borrower that the information
contained in such financial statements fairly presents the
financial position of the Borrower and its Subsidiaries on the
date thereof (subject to year-end adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of
the Borrower in substantially the form of EXHIBIT C hereto and
setting forth in reasonable detail computations evidencing
compliance with the covenants contained in ss.9 and (if
applicable) reconciliations to reflect changes in generally
accepted accounting principles since the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the
Securities and Exchange Commission or sent to the stockholders
of the Borrower;
(e) promptly upon receipt thereof, a copy of each report or
"management letter" submitted to the Borrower or any of its
Subsidiaries by its independent accountants in connection with
any annual, interim or special audit;
(f) thirty (30) days prior to the beginning of each fiscal year,
an operating plan and budget for the Borrower and its
Subsidiaries updating those projections delivered to the Agent
and referred to in ss.6.4.2 or, if applicable, updating any
later such projections delivered in response to a request
pursuant to this ss.7.4(f); and
(g) from time to time such other financial data and information as
the Agent or any Bank may reasonably request.
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7.5. NOTICES.
7.5.1. DEFAULTS. The Borrower will promptly notify the Agent
in writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Credit Agreement or
any other note, evidence of indebtedness, indenture or other obligation to which
or with respect to which the Borrower or any of its Subsidiaries is a party or
obligor, whether as principal, guarantor, surety or otherwise, the Borrower
shall forthwith give written notice thereof to the Agent, describing the notice
or action and the nature of the claimed default.
7.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give
notice to the Agent (a) of any violation of any Environmental Law that the
Borrower reports in writing or is reportable by such Person in writing (or for
which any written report supplemental to any oral report is made) to any
federal, state or local environmental agency and (b) upon becoming aware
thereof, of any inquiry, proceeding, investigation, or other action, including a
notice from any agency of potential environmental liability, of any federal,
state or local environmental agency or board, that has the potential to
materially affect the assets, liabilities, financial conditions or operations of
the Borrower and its Subsidiaries taken as a whole, or the Agent's security
interests pursuant to the Security Documents.
7.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrower
will, immediately upon becoming aware thereof, notify the Agent in writing of
any setoff, claims (including, with respect to the Real Estate, environmental
claims), withholdings or other defenses to which any of the Collateral, or the
Agent's rights with respect to the Collateral, are subject.
7.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will
give notice to the Agent in writing within fifteen (15) days of becoming aware
of any litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting the Borrower or any of its Subsidiaries or to which
the Borrower or any of its Subsidiaries is or becomes a party involving an
uninsured claim against the Borrower or any of its Subsidiaries that could
reasonably be expected to have a materially adverse effect on the Borrower and
its Subsidiaries taken as a whole, and stating the nature and status of such
litigation or proceedings. The Borrower will give notice to the Agent, in
writing, in form and detail satisfactory to the Agent, within ten (10) days of
any judgment not covered by insurance against the Borrower or any of its
Subsidiaries in an amount in excess of $500,000.
7.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of its Subsidiaries
to, convert to a limited liability company. It (a) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition,
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repair and working order and supplied with all necessary equipment, (b) will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Borrower may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times, and (c) will, and will cause each of its
Subsidiaries to, continue to engage primarily in the businesses now conducted by
them and in related businesses; provided that nothing in this ss.7.6 shall
prevent the Borrower from discontinuing the operation and maintenance of any of
its properties if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate materially adversely affect the business of the Borrower and its
Subsidiaries, considered as a whole.
7.7. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent and in accordance with the terms of the Security
Agreements.
7.8. TAXES. The Borrower will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Borrower or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto; and PROVIDED FURTHER that the Borrower
will, and will cause each of its Subsidiaries to, pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security therefor.
7.9. INSPECTION OF PROPERTIES AND BOOKS, ETC. The Borrower shall
permit the Banks, through the Agent or any of the Banks' other designated
representatives, to visit and inspect any of the properties of the Borrower and
its Subsidiaries, to examine the books of account of the Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss
the affairs, finances and accounts of the Borrower and its Subsidiaries with,
and to be advised as to the same by, its and their officers, all at such
reasonable times and intervals as the Agent or any Bank may reasonably request.
7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS. The
Borrower will, and will cause each of its Subsidiaries to, comply with (a) the
applicable laws and regulations wherever its business is conducted, including
all Environmental Laws, in all material respects, (b) the provisions of its
charter documents and by-laws, (c) all agreements and instruments by which it or
any of its properties may be bound in all material respects
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<PAGE> 47
'
and (d) all applicable decrees, orders, and judgments. If any authorization,
consent, approval, permit or license from any officer, agency or instrumentality
of any government shall become necessary or required in order that the Borrower
or its Subsidiaries may fulfill any of its obligations hereunder or any of the
other Loan Documents to which the Borrower or its Subsidiaries is a party, the
Borrower will immediately take or cause to be taken all reasonable steps within
the power of the Borrower to obtain such authorization, consent, approval,
permit or license and furnish the Agent and the Banks with evidence thereof.
7.11. EMPLOYEE BENEFIT PLANS. The Borrower will (a) promptly upon
filing the same with the Department of Labor or Internal Revenue Service,
furnish to the Agent a copy of the most recent actuarial statement required to
be submitted under ss.103(d) of ERISA and Annual Report, Form 5500, with all
required attachments, in respect of each Guaranteed Pension Plan and (b)
promptly upon receipt or dispatch, furnish to the Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension Plan under ss.ss.302,
4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.
7.12. USE OF PROCEEDS. The Borrower will use the proceeds of the
Revolving Credit Loans solely for the purposes as stated in ss.6.17.
7.13. ADDITIONAL SUBSIDIARIES.
(a) The Borrower will not, and will not permit its Subsidiaries
to, form or acquire any Subsidiaries except as permitted
under ss.8.5 hereof. If, after the Closing Date, the Borrower
acquires, either directly or indirectly, any Subsidiary in
accordance with ss.8.5 hereof, it will notify the Agent five
(5) Business Days prior to such acquisition and provide the
Agent with an updated SCHEDULE 6.19, and will, concurrently
with the acquisition of any Subsidiary, pledge to the Agent
all capital stock (or similar interests) of such Subsidiary
pursuant to the Stock Pledge Agreement.
(b) The Borrower shall cause each of its Material Subsidiaries
that are not parties on the Closing Date to the Guaranty to
execute and deliver to the Agent, on a date no later than five
(5) Business Days after such Person becomes a Material
Subsidiary of the Borrower, an Instrument of Adherence to the
Guaranty, together with such supporting documentation,
including legal opinions and corporate authority documents as
the Agent may reasonably request.
(c) The Borrower, or a Subsidiary, shall at all times own all of
the outstanding capital stock of each Subsidiary.
7.14. FURTHER ASSURANCES. The Borrower will, and will cause each of
its Subsidiaries to, cooperate with the Banks and the Agent and execute such
further instruments and documents as the Banks or the Agent shall reasonably
request to carry out to their
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satisfaction the transactions contemplated by this Credit Agreement and the
other Loan Documents.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Revolving Credit Note, Unpaid Reimbursement Obligation or Letter of Credit
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligations to issue, extend or renew any Letter of Credit:
8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will
not permit its Subsidiaries to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of
the Loan Documents;
(b) current liabilities of the Borrower and its Subsidiaries
incurred in the ordinary course of business not incurred
through (i) the borrowing of money, or (ii) the obtaining of
credit except for credit on an open account basis customarily
extended and in fact extended in connection with normal
purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies
to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of
ss.7.8;
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in
respect of which the Borrower or its Subsidiaries shall at the
time in good faith be prosecuting an appeal or proceedings for
review and in respect of which a stay of execution shall have
been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in
the ordinary course of business;
(f) Subordinated Debt;
(g) Indebtedness of a Subsidiary of the Borrower to the Borrower,
so long as such Subsidiary is a Guarantor hereunder;
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(h) Indebtedness hereafter incurred in connection with the
acquisition of any real or personal property by the Borrower
or its Subsidiaries or under any Capitalized Lease (whether
incurred directly or arising by virtue of inheriting any
outstanding Indebtedness of such type pursuant to the
Transaction or any Permitted Acquisition), provided that the
aggregate principal amount of all such Indebtedness of the
Borrower and its Subsidiaries shall not exceed the aggregate
amount of $5,000,000 at any one time outstanding; and
(i) Indebtedness existing on the date hereof and listed and
described on SCHEDULE 8.1 hereto.
8.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not
permit its Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (e) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; provided that the Borrower and its
Subsidiaries may create or incur or suffer to be created or incurred or to
exist:
(i) liens to secure taxes, assessments and other
government charges in respect of obligations not
overdue or liens on properties to secure claims for
labor, material or supplies in respect of obligations
not overdue;
(ii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation,
unemployment insurance, old age pensions or other
social security obligations;
(iii) liens on properties in respect of judgments or
awards, the Indebtedness with respect to which is
permitted by ss.8.1(d);
(iv) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in
existence less than 120 days from the date of
creation thereof in respect of obligations not
overdue;
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(v) encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on
the use of real property and defects and
irregularities in the title thereto, landlord's or
lessor's liens under leases to which the Borrower or
any of its Subsidiaries is a party, and other minor
liens or encumbrances none of which in the opinion of
the Borrower interferes materially with the use of
the property affected in the ordinary conduct of the
business of the Borrower or such Subsidiary of the
Borrower which defects do not individually or in the
aggregate have a materially adverse effect on the
business of the Borrower and its Subsidiaries
considered as a whole;
(vi) liens existing on the date hereof and listed on
SCHEDULE 8.2 hereto;
(vii) purchase money security interests in or purchase
money mortgages on real or tangible personal property
acquired after the date hereof to secure purchase
money Indebtedness of the type and amount permitted
by ss.8.1(h), incurred in connection with the
acquisition of such property, which security
interests or mortgages cover only the real or
personal property so acquired; and
(viii) liens in favor of the Agent for the benefit of the
Banks and the Agent under the Loan Documents.
8.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not make or
permit to exist or to remain outstanding any Investment by the Borrower or its
Subsidiaries except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the
date of purchase by the Borrower;
(b) demand deposits, certificates of deposit, bankers acceptances
and time deposits of United States banks having total assets
in excess of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the
United States of America or any state thereof that at the time
of purchase have been rated and the ratings for which are not
less than "P 1" if rated by Moody's Investors Services, Inc.,
and not less than "A 1" if rated by Standard and Poor's;
(d) Investments existing on the date hereof and listed on
SCHEDULE 8.3 hereto;
(e) Investments consisting of the Guaranty and the Instruments of
Adherence delivered after the Closing Date pursuant to ss.7.13
hereof;
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(f) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in
the ordinary course of business not to exceed $50,000 in the
aggregate at any time outstanding; and
(g) Investments with respect to Indebtedness of a Subsidiary to
the Borrower to the extent permitted by ss. 8.1(g) hereof.
8.4. DISTRIBUTIONS. The Borrower will not make any Distributions
except distributions to shareholders of any Subsidiary which is an "S"
corporation for payment of personal tax liability related to the earnings of
such Subsidiary.
8.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
8.5.1. MERGERS AND ACQUISITIONS.
(a) The Borrower will not, and will not permit its Subsidiaries to
become a party to any merger or consolidation, or agree to or
effect any asset acquisition or stock acquisition (other than
the acquisition of assets in the ordinary course of business
consistent with past practices) except for (i) the mergers
contemplated by the Transaction, and (ii) the merger or
consolidation of one or more wholly-owned Subsidiaries of the
Borrower with and into the Borrower, or the merger or
consolidation of two or more wholly-owned Subsidiaries of the
Borrower.
(b) Notwithstanding the provisions of ss.8.5.1(a), the Borrower
may become a party to any asset acquisition or stock
acquisition (each, a "Permitted Acquisition") if the
following conditions have been met: (i) the proposed
transaction will not otherwise create a Default or Event of
Default; (ii) the Person being acquired (or whose assets are
being substantially acquired) shall be predominantly involved
in the existing lines of business of the Borrower and its
Subsidiaries or in lines of business substantially related
thereto; (iii) all of the assets material to the operation of
the business of the Person being acquired or all or
substantially all of the assets being acquired and material
to the operation of the business of the Borrower shall be
located in the United States; (iv) in the event of a stock
acquisition, the Borrower shall have complied with the
provisions of ss.7.13 to the satisfaction of the Bank in its
reasonable discretion; (v) the board of directors and (if
required by applicable law) the shareholders, or the
equivalent thereof, of the business to be acquired shall have
approved such transaction; (vi) the Borrower shall have
provided calculations showing compliance with the covenants
set forth in ss.9 on a PRO FORMA historical combined basis as
if the proposed transaction occurred on the first day of the
period of measurement; (vii) the business being acquired
shall have had positive operating cash flow for at least the
two (2) fiscal years immediately preceding the acquisition,
as such operating cash flow may be
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adjusted, in a manner reasonably satisfactory to the Agent, to
reduce management compensation expense in any such two-year
period to an amount which reflects projected management
compensation expense on an ongoing basis, following the
acquisition; (viii) the cash consideration for the Permitted
Acquisition does not exceed $15,000,000 and the total
consideration for such Permitted Acquisition does not exceed
$20,000,000; and (ix) the Agent shall have received, at least
ten (10) days prior to the acquisition, (w) an accurate
summary of the material terms of the proposed transaction, (x)
a copy of the applicable acquisition agreement, (y) a
Compliance Certificate in the form of EXHIBIT C hereto
demonstrating PRO FORMA compliance with all of the financial
covenants set forth in ss.9 hereof assuming consummation of
the proposed transaction, and (z) audited financial statements
for the two (2) most recently completed fiscal years of the
Person being acquired (or whose assets are being substantially
acquired).
8.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will
not permit its Subsidiaries to, become a party to or agree to or effect any
disposition of assets, other than the disposition of assets in the ordinary
course of business, consistent with past practices.
8.6 INTENTIONALLY OMITTED.
8.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, and
will not permit its Subsidiaries to (a) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, except in accordance with applicable Environmental Laws, (b)
generate any Hazardous Substances on any of the Real Estate, (c) conduct any
activity at any Real Estate or use any Real Estate in any manner so as to cause
a release (i.e. releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping) or
threatened release of Hazardous Substances on, upon or into the Real Estate or
(d) otherwise conduct any activity at any Real Estate or use any Real Estate in
any manner that would materially violate any Environmental Law or bring such
Real Estate in material violation of any Environmental Law.
8.8. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for the Borrower or any of its
Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency," as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; or
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(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance
on the assets of the Borrower or any of its Subsidiaries
pursuant to ss.302(f) or ss.4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of ss.4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose
the benefit liabilities and assets of any such Plan with
assets in excess of benefit liabilities.
8.9. FISCAL YEAR. The Borrower will not, and will not permit its
Subsidiaries to, change the date of the end of its fiscal years from that set
forth in ss.6.21 hereof.
8.10. SUBSIDIARIES. The Borrower will not, and will not permit its
Subsidiaries to, form, acquire or in any manner have any Subsidiaries except for
Subsidiaries acquired pursuant to a Permitted Acquisition or with the Majority
Banks' prior written consent.
8.11. NEGATIVE PLEDGES. The Borrower will not, and will not permit
its Subsidiaries to, enter into any agreement (excluding this Credit Agreement
and the Loan Documents) which (i) restricts the ability of any Subsidiary to pay
or make dividends or distributions in cash or kind, or to make loans, advances,
distributions or other payments of any nature of any or all of its assets to the
Borrower or any other Subsidiary, or (ii) prohibits the creation or assumption
of any lien for the benefit of the Agent and/or the Banks upon the properties,
revenues or assets of the Borrower or any of its Subsidiaries, whether now owned
or hereafter acquired, other than agreements with Persons prohibiting any such
lien on assets in which such Person has a prior security interest which is
permitted by ss.8.2.
8.12. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will
not permit its Subsidiaries to, enter into, or cause, suffer or permit to exist
(a) any arrangement or contract with any of its other Affiliates of a nature
customarily entered into by Persons which are Affiliates of each other
(including management or similar contracts or arrangements relating to the
allocation of revenues, taxes and expenses or otherwise) requiring any payments
to be made by the Borrower or such Subsidiary of the Borrower unless such
arrangement is fair and equitable to the Borrower or such Subsidiary; or (b) any
other transaction, arrangement, contract with any of its Affiliates which would
not be entered into by a prudent Person in the position of the Borrower or such
Subsidiary with, or which is on terms which are less favorable than are
obtainable from, any person which is not one of its Affiliates.
8.13. INCONSISTENT AGREEMENTS. The Borrower will not, and will not
permit its Subsidiaries to, enter into any agreement containing any provision
which would be violated or breached by the performance by the Borrower of its
obligations hereunder or under any of the Loan Documents.
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8.14. MODIFICATION OF DOCUMENTS. The Borrower will not, and will not
permit its Subsidiaries to, consent to or agree to any amendment, supplement or
other modification to its certificate of incorporation or its by-laws; provided
that the Borrower or its Subsidiaries may amend, supplement, and modify its
certificate of incorporation and its by-laws with written notice to the Agent,
so long as such amendment, supplement or other modification shall not have a
materially adverse effect on (i) the ability of the Borrower to enter into and
to perform and observe its obligations under the Loan Documents, (ii) the
assets, properties, business, operations, condition (financial and otherwise),
and prospects of the Borrower and its Subsidiaries taken as a whole, or (iii)
the Agent's or the Banks' rights under the Loan Documents.
9. FINANCIAL COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan or Revolving Credit Note is outstanding or any Bank has any obligation to
make any Revolving Credit Loans:
9.1. CONSOLIDATED TOTAL NET WORTH. The Borrower will maintain, at
all times, Consolidated Total Net Worth in an amount equal to at least:
(a) $50,000,000, PLUS
(b) fifty percent (50%) of the accumulated total of Consolidated
Net Income for all fiscal quarters of the Borrower, beginning
with the fiscal quarter concluded on March 31, 1998 (no
reduction being given for any Consolidated Net Deficit in
calculating the minimum Consolidated Total Net Worth), PLUS
(c) one hundred percent (100%) of the proceeds from any issuance
of equity securities of the Borrower, net of all underwriting
costs and out-of-pocket expenses incurred by the Borrower in
connection with such offering.
9.2. PROFITABLE OPERATIONS. The Borrower will not permit
Consolidated Net Income for two consecutive fiscal quarters to be less than
$1.00.
9.3. LEVERAGE RATIO. The Borrower will not permit, as at the last
day of each fiscal quarter, the Leverage Ratio to exceed 3.25:1.00.
9.4. MINIMUM CONSOLIDATED EBITDA. The Borrower will maintain, as at
the last day of any fiscal quarter, Consolidated EBITDA as determined for the
four consecutive fiscal quarters of the Borrower ended on such date in an amount
at least equal to the GREATER of (a) $10,000,000, or (b) ninety percent (90%) of
Consolidated EBITDA reported for the immediately preceding fiscal year.
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9.5. INTEREST COVERAGE RATIO. The Borrower will not permit, as of
the last day of each fiscal quarter, the ratio of Consolidated EBITDA to
Consolidated Total Interest Expense, in each case as determined for the four
consecutive fiscal quarters of the Borrower ended on such date, to exceed
3.00:1.00.
9.6. CAPITAL EXPENDITURES. The Borrower and its Subsidiaries will
not make in the aggregate Capital Expenditures in any amounts which exceed the
respective amounts for each respective fiscal year of the Borrower as set forth
below:
Fiscal Year Maximum Aggregate Capital Expenditures
----------- --------------------------------------
1998 $2,000,000
1999 $2,500,000
2000 $3,000,000
2001 $3,500,000
PROVIDED, HOWEVER, that if during any fiscal year the amount of Capital
Expenditures permitted for that fiscal year is not so utilized, such unutilized
amount may be utilized in the next succeeding fiscal year but not in any
subsequent fiscal year.
10. CONDITIONS TO INITIAL CLOSING
The obligations of the Banks to make the initial Revolving Credit Loan
and/or to issue any initial Letter of Credit shall be subject to the
satisfaction of the following conditions precedent on or prior to the Closing
Date:
10.1. LOAN DOCUMENTS, ETC. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto, shall be in
full force and effect and shall be in form and substance satisfactory to each of
the Banks. Each Bank shall have received a fully executed copy of each such
document.
10.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
received from the Borrower and each Subsidiary a copy, certified by a duly
authorized officer of such Person to be true and complete on the Closing Date,
of each of (a) its charter or other incorporation documents as in effect on such
date of certification, and (b) its bylaws as in effect on such date.
10.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Agent shall have been provided to the Agent.
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10.4. INCUMBENCY CERTIFICATE. The Agent shall have received from
each of the Borrower and each of the Subsidiaries an incumbency certificate,
dated as of the Closing Date, signed by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be, and giving the name and bearing
a specimen signature of each individual who shall be authorized: (a) to sign, in
the name and on behalf of each of the Borrower or such Subsidiary, as the case
may be, each of the Loan Documents to which the Borrower or such Subsidiary is
or is to become a party; (b) with respect to the Borrower, to make Revolving
Credit Loan Requests and Conversion Requests; and (c) to give notices and to
take other action on its behalf under the Loan Documents.
10.5. VALIDITY OF LIENS. The Security Documents shall be effective
to create in favor of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All filings, recordings, deliveries of instruments
and other actions necessary or desirable in the opinion of the Agent to protect
and preserve such security interests shall have been duly effected. The Agent
shall have received evidence thereof in form and substance satisfactory to the
Agent.
10.6. UCC SEARCH RESULTS. The Agent shall have received results of
UCC searches with respect to the Collateral and all other personal property of
the Borrower and its Subsidiaries, all in form and substance satisfactory to the
Agent.
10.7. CERTIFICATES OF INSURANCE. The Agent shall have received (a) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying its insurers, types of insurance, and insurance
limits, and (b) certified copies of all policies evidencing such insurance (or
certificates therefore signed by the insurer or an agent authorized to bind the
insurer).
10.8. SOLVENCY CERTIFICATE. The Agent shall have received an
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower following the consummation of the transactions
contemplated herein and in form and substance satisfactory to the Banks.
10.9. OPINION OF COUNSEL. Each of the Banks and the Agent shall have
received a favorable legal opinion addressed to the Banks and the Agent, dated
as of the Closing Date, in form and substance satisfactory to the Banks and the
Agent, from Nutter, McClennen & Fish, LLP, counsel to the Borrower.
10.10. PAYMENT OF EXPENSES. The Borrower shall have paid the
reasonable fees and expenses of the Agent's Special Counsel incurred in
connection with the Loan Documents.
10.11. EVIDENCE OF PAYOFF. The Agent shall have received appropriate
payoff letters, termination letters and collateral discharges in form and
substance satisfactory to the
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Agent from holders of any existing Indebtedness of the Borrower and its
Subsidiaries not otherwise permitted hereunder.
10.12. COMPLETION OF TRANSACTION. The Agent shall have received
evidence, including a legal opinion of the Borrower's counsel, that all of the
material closing conditions in the Transaction Documents have been satisfied as
contemplated by such Transaction Documents and the Transaction shall have been
completed pursuant to the Transaction Documents and otherwise on terms and
conditions that are reasonably satisfactory to the Agent in all respects. The
cash component of the purchase price of the assets and business acquired
pursuant to the Transaction and all expenditures and transaction costs
associated therewith shall not exceed $22,500,000 in the aggregate.
10.13. DISBURSEMENT INSTRUCTIONS. The Agent shall have received
disbursement instructions from the Borrower with respect to the proceeds of the
initial Revolving Credit Loan.
11. CONDITIONS TO ALL BORROWINGS
The obligations of the Banks to make any Revolving Credit Loan,
including the initial Revolving Credit Loan, whether on or after the Closing
Date, shall also be subject to the satisfaction of the following conditions
precedent:
11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrower and its Subsidiaries contained in
this Credit Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Credit Agreement shall be true
as of the date as of which they were made and shall also be true at and as of
the time of the making of such Revolving Credit Loan with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
11.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Bank would make it illegal for such Bank to make such Revolving
Credit Loan.
11.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
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11.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with
the transactions contemplated by this Credit Agreement, the other Loan Documents
and all other documents incident thereto shall be satisfactory in substance and
in form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
12. EVENTS OF DEFAULT; ACCELERATION, ETC.
12.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the Revolving
Credit Loans or any Reimbursement Obligations when the same
shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other
date fixed for payment;
(b) the Borrower shall fall to pay any interest on the Revolving
Credit Loans, the commitment fee, any Letter of Credit Fee or
other sums due hereunder or under any of the other Loan
Documents, when the same shall become due and payable, whether
at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment and such
failure shall continue for a period of three (3) Business
Days;
(c) the Borrower shall fail to comply with any of its covenants
contained in ss.8.1, 8.4 - 8.7, 8.9, 8.10, 8.12, 8.14 or 9.1 -
9.6;
(d) the Borrower shall fail to perform any term, covenant or
agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this
ss.12.1) for fifteen (15) days after written notice of such
failure has been given to the Borrower by the Agent;
(e) any representation or warranty of the Borrower or any
Subsidiary in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered
pursuant to or in connection with this Credit Agreement shall
prove to have been false in any material respect upon the date
when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received or in respect
of any Capitalized Leases, in either case with respect to
obligations in excess of $500,000, or fail to observe or
perform any material term, covenant or agreement contained in
any agreement by which it is bound, evidencing or securing
borrowed money or credit received or in respect of any
Capitalized Leases, in either case with respect to obligations
in excess of
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$500,000, for such period of time as would permit (assuming
the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof, and shall not cure such
failure within three (3) Business Days thereof.
(g) the Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing
its inability to pay or generally fail to pay its debts as
they mature or become due, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator or
receiver of the Borrower or any of its Subsidiaries or of any
substantial part of the assets of the Borrower or any of its
Subsidiaries or shall commence any case or other proceeding
relating to the Borrower or any of its Subsidiaries under any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar
law of any jurisdiction, now or hereafter in effect, or shall
take any action to authorize or in furtherance of any of the
foregoing, or if any such petition or application shall be
filed or any such case or other proceeding shall be commenced
against the Borrower or any of its Subsidiaries and the
Borrower or such Subsidiary shall indicate its approval
thereof, consent thereto or acquiescence therein or such
petition or application shall not have been dismissed within
sixty (60) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower
or any of its Subsidiaries bankrupt or insolvent, or approving
a petition in any such case or other proceeding, or a decree
or order for relief is entered in respect of the Borrower or
any of its Subsidiaries in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not
consecutive, any final judgment against the Borrower or any of
its Subsidiaries that, with other outstanding final judgments,
undischarged, against the Borrower or any of its Subsidiaries
exceeds in the aggregate $500,000;
(j) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded or the Agent's security interests,
mortgages or liens in a substantial portion of the Collateral
shall cease to be perfected, or shall cease to have the
priority contemplated by the Security Documents, in each case
otherwise than in accordance with the terms thereof or with
the express prior written agreement, consent or approval of
the Banks, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Borrower
or Subsidiary party thereto or any of its stockholders, or any
court or any other governmental or regulatory authority or
agency of competent jurisdiction shall
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make a determination that, or issue a judgment, order, decree
or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance
with the terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks
shall have determined in their reasonable discretion that such
event reasonably could be expected to result in liability of
the Borrower or any of its Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding
$500,000 and such event in the circumstances occurring
reasonably could constitute grounds for the termination of
such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of
a trustee to administer such Guaranteed Pension Plan; or a
trustee shall have been appointed by the United States
District Court to administer such Plan; or the PBGC shall have
instituted proceedings to terminate such Guaranteed Pension
Plan;
(l) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court
or any administrative or regulatory agency from conducting any
material part of its business and such order shall continue in
effect for more than thirty (30) days;
(m) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of
God or public enemy, or other casualty, which in any such case
causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing
activities at any facility of the Borrower or its Subsidiaries
if such event or circumstance is not covered by business
interruption insurance and would have a material adverse
effect on the business or financial condition of the Borrower
and its Subsidiaries, considered as a whole;
(n) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter
acquired by the Borrower or any of its Subsidiaries if such
loss, suspension, revocation or failure to renew would have a
material adverse effect on the business or financial condition
of the Borrower and its Subsidiaries, considered as a whole;
(o) the Borrower or any of its Subsidiaries shall be indicted for
a state or federal crime, or any civil or criminal action
shall otherwise have been brought against the Borrower or any
of its Subsidiaries a punishment for which in any such case
could include the forfeiture of any assets of the Borrower or
any of its Subsidiaries having a fair market value in excess
of $500,000 or a material adverse effect on the business or
financial condition of the Borrower and its Subsidiaries,
considered as a whole;
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(p) The Existing Stockholders collectively shall at any time,
legally or beneficially, own in the aggregate less than 51% of
the issued and outstanding capital stock of the Borrower;
(q) Any Person (other than a current stockholder of Borrower) or
"group" of Persons shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934,
as amended), directly or indirectly, of 25% or more of the
issued and outstanding capital stock of Borrower;
(r) at any time individuals who were directors of the Borrower on
the Closing Date or within six (6) months of the Closing Date
shall cease, for any reason, to constitute a majority of the
board or directors (except to the extent that individuals who
were directors on the Closing Date were replaced by
individuals (i) elected by a majority of the remaining members
of the board of directors of the Borrower or (ii) nominated
for election by a majority of the remaining members of the
board of directors of the Borrower); or
(s) there shall occur any material adverse change in the financial
condition of the Borrower and its Subsidiaries as reported on
the audited financial statements of the Borrower for the
fiscal year ended June 30, 1998 delivered to the Agent in
accordance with ss.7.4, hereof, from the financial condition
of the Borrower and its Subsidiaries as reported on the
Unaudited Financial Statements;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Revolving Credit Notes and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; PROVIDED that in the event of any Event of Default
specified in ss.ss.12.1(g) or 12.1(h)), all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Agent or any Bank.
12.2. TERMINATION OF COMMITMENTS. If any one or more of the Events
of Default specified in ss.12.1(g) or ss.12.1(h)) shall occur, any unused
portion of the credit hereunder shall forthwith terminate and each of the Banks
shall be relieved of all further obligations to make Revolving Credit Loans to
the Borrower and the Agent shall be relieved of all further obligations to
issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, the Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Revolving Credit Loans and the Agent
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit. No termination of the credit hereunder shall relieve the Borrower of
any of the Obligations.
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12.3. REMEDIES. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to ss.12.1, each
Bank, if owed any amount with respect to the Revolving Credit Loans, may proceed
to protect and enforce its rights by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank; provided that, prior to undertaking such
action, the Banks shall have requested the Agent to do so and shall have given
the Agent reasonable time to do so, but the Agent shall have failed to do so.
The Agent shall also have all rights and remedies with respect to the Collateral
as are set forth in the Security Documents. No remedy herein conferred upon any
Bank or the Agent or the holder of any Revolving Credit Note or purchaser of any
Letter of Credit Participation 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 or now or hereafter existing at law or in equity or
by statute or any other provision of law.
12.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that
following the occurrence or during the continuance of any Default or Event of
Default, the Agent or any Bank, as the case may be, receives any monies in
connection with the enforcement of any or all of the Loan Documents or otherwise
with respect to the realization upon any of the Collateral, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable
costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Agent in connection with the
collection of such monies by the Agent, for the exercise,
protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under
this Credit Agreement or any of the other Loan Documents or in
respect of the Collateral or in support of any provision of
adequate indemnity to the Agent against any taxes or liens
which by law shall have, or may have, priority over the rights
of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference
as the Majority Banks may determine; provided, however, that
distributions in respect of such obligations shall be made (i)
pari passu among Obligations and (ii) Obligations owing to the
Banks with respect to each type of Obligation such as
interest, principal, fees and expenses, shall be made among
the Banks PRO RATA; and provided, further, that the Agent may
in its discretion make proper allowance to take into account
any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks and
the Agent of all of the Obligations, to the
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payment of any obligations required to be paid pursuant to
ss.9-504(l)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto.
13. SETOFF
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any investment securities or other property of the
Borrower in the possession of such Bank may be applied to or set off by such
Bank, with notice to the Borrower, against the payment of Obligations and any
and all other liabilities, direct, or indirect, absolute or contingent, then
due, now existing or hereafter arising, of the Borrower to such Bank under the
Credit Agreement. Each of the Banks agrees with each other Bank that (a) if an
amount to be set off is to be applied to Indebtedness of the Borrower to such
Bank, other than Indebtedness evidenced by the Revolving Credit Notes held by
such Bank or constituting Reimbursement Obligations owed to such Bank, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness evidenced by all such Revolving Credit Notes held by such Bank or
constituting Reimbursement Obligations, and (b) if such Bank shall receive from
the Borrower, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Revolving
Credit Notes held by, or constituting Reimbursement Obligations owed to, such
Bank by proceedings against the Borrower at law or in equity or by proof thereof
in bankruptcy, reorganization, liquidation, receivership or similar proceedings,
or otherwise, and shall retain and apply to the payment of the Revolving Credit
Note or Revolving Credit Notes held by, or constituting Reimbursement
Obligations owed to, such Bank any amount in excess of its ratable portion of
the payments received by all of the Banks with respect to the Revolving Credit
Notes held by, or constituting Reimbursement Obligations owed to, all of the
Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, PRO TANTO
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Revolving Credit Notes held by it or the
Reimbursement Obligations owed to it, its proportionate payment as contemplated
by this Credit Agreement; PROVIDED that if all or any part of such excess
payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
14. THE AGENT
14.1. AUTHORIZATION.
(a) The Agent is authorized to take such action on behalf of each
of the Banks and to exercise all such powers as are hereunder
and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as
are reasonably incident thereto, provided that no duties or
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responsibilities not expressly assumed herein or therein shall
be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is
that of an independent contractor. The use of the term "Agent"
is for convenience only and is used to describe, as a form of
convention, the independent contractual relationship between
the Agent and each of the Banks. Nothing contained in this
Credit Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary
relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to
exercise certain rights and perform certain duties and
responsibilities hereunder and under the other Loan Documents,
the Agent is nevertheless a "representative" of the Banks, as
that term is defined in Article I of the Uniform Commercial
Code, for purposes of actions for the benefit of the Banks and
the Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions
include the designation of the Agent as "secured party,"
mortgagee" or the like on all financing statements and other
documents and instruments, whether recorded or otherwise,
relating to the attachment, perfection, priority or
enforcement of any security interests, mortgages or deeds of
trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of
the Banks and the Agent.
14.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
14.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
14.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Revolving
Credit Notes or any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Revolving
Credit Notes or the Letters of Credit, or for the value of any such collateral
security or for the validity, enforceability or collectability of any such
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amounts owing with respect to the Revolving Credit Notes, or for any recitals or
statements, warranties or representations made herein or in any of the other
Loan Documents or in any certificate or instrument hereafter furnished to it by
or on behalf of the Borrower, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Revolving Credit Notes or to inspect any
of the properties, books or records of the Borrower. The Agent shall not be
bound to ascertain whether any notice, consent, waiver or request delivered to
it by the Borrower or any holder of any of the Revolving Credit Notes shall have
been duly authorized or is true, accurate and complete. The Agent has not made
nor does it now make any representations or warranties, express or implied, nor
does it assume any liability to the Banks, with respect to the credit worthiness
or financial conditions of the Borrower. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
upon such information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
14.5. PAYMENTS.
14.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the
Agent hereunder or any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Agent agrees promptly to distribute
to each Bank such Bank's PRO RATA share of payments received by the Agent for
the account of the Banks except as otherwise expressly provided herein or in any
of the other Loan Documents.
14.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent
the distribution of any amount received by it in such capacity hereunder, under
the Revolving Credit Notes or under any of the other Loan Documents might
involve it in liability, it may refrain from making distribution until its right
to make distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that any amount
received and distributed by the Agent is to be repaid, each Person to whom any
such distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
14.5.3. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan Documents,
any Bank that fails (a) to make available to the Agent its pro rata share of any
Revolving Credit Loan or to purchase any Letter of Credit Participation, or (b)
to comply with the provisions of ss.13 with respect to making dispositions and
arrangements with the other Banks, where such Bank's share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata share of
such payments due and payable to all of the Banks, in each case as, when and to
the full extent required by the provisions of this Credit Agreement, shall be
deemed delinquent (a "Delinquent Bank") and shall be deemed a Delinquent Bank
until such time as such delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it from the Borrower,
whether on account of outstanding Revolving Credit Loans, Unpaid Reimbursement
Obligations, interest, fees or otherwise, to the remaining
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nondelinquent Banks for application to, and reduction of, their respective pro
rata shares of all outstanding Revolving Credit Loans. The Delinquent Bank
hereby authorizes the Agent to distribute such payments to the nondelinquent
Banks in proportion to their respective PRO RATA shares of all outstanding
Revolving Credit Loans and Unpaid Reimbursement Obligations. A Delinquent Bank
shall be deemed to have satisfied in full a delinquency when and if, as a result
of application of the assigned payments to all outstanding Revolving Credit
Loans of the nondelinquent Banks, the Banks' respective pro rata shares of all
outstanding Revolving Credit Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
14.6. HOLDERS OF REVOLVING CREDIT NOTES. The Agent may deem and treat
the payee of any Revolving Credit Note or the purchaser of any Letter of Credit
Participation as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
14.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrower as
required by ss.15), and liabilities of every nature and character arising out of
or related to this Credit Agreement, the Revolving Credit Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
14.8. AGENT AS BANK. In its individual capacity as a Bank, Fleet shall
have the same obligations and the same rights, powers and privileges in respect
to its Commitment and the Revolving Credit Loans made by it, and as the holder
of any of the Revolving Credit Notes and as the purchaser of any Letter of
Credit Participations, as it would have were it not also the Agent.
14.9. RESIGNATION. The Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other
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Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
14.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this ss.14.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
14.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one or more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (a) so requested by
the Majority Banks and (b) the Banks have provided to the Agent such additional
indemnities and assurances against expenses and liabilities as the Agent may
reasonably request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral. The Majority Banks may
direct the Agent in writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify and hold the Agent,
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, PROVIDED that the Agent need not
comply with any such direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
14.12. AGENT'S FEE. During any period of time as there exist two or more
Banks hereunder by virtue of a syndication of the Total Commitment or subsequent
assignments of Commitments or otherwise, the Borrower shall pay to the Agent an
annual administration fee of $10,000, payable in advance, and prorated for any
portion of any year for which there ceases to be two or more Banks hereunder.
15. EXPENSES
The Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of the
Banks (other than taxes based upon the Agent's or any Bank's net income) on or
with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (d) the fees,
expenses and disbursements of the Agent incurred by the Agent in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, including in connection with any commercial
finance examinations, (e) the reasonable fees, expenses and disbursements
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incurred by the Agent in connection with the syndication of the revolving credit
facility described herein, (f) all reasonable out-of-pocket expenses (including
without limitation reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or the
Agent's relationship with the Borrower or its Subsidiaries and (g) all
reasonable fees, expenses and disbursements of any Bank or the Agent incurred in
connection with UCC searches, UCC filings or mortgage recordings. The covenants
of this ss.15 shall survive payment or satisfaction of all other Obligations.
16. INDEMNIFICATION
The Borrower agrees to indemnify and hold harmless the Agent and the
Banks from and against any and all claims, actions and suits not arising out of
the negligence or willful misconduct of the Agent or such Bank, whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby including, without limitation, (a) any actual or proposed use by the
Borrower or any of its Subsidiaries of the proceeds of any of the Revolving
Credit Loans or the Letters of Credit, (b) the Borrower entering into or
performing this Credit Agreement or any of the other Loan Documents or (c) with
respect to the Borrower and its Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release or threatened release
of any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including, but
not limited to, claims with respect to wrongful death, personal injury or damage
to property), in each case including, without limitation, the reasonable fees
and disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding. In
litigation, or the preparation therefor, the Banks and the Agent shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this ss.16 are unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The covenants contained in this ss.16
shall survive payment or satisfaction in full of all other Obligations.
17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the Borrower or its
Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Banks and the Agent, notwithstanding any
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investigation heretofore or hereafter made by any of them, and shall survive the
making by the Banks of any of the Revolving Credit Loans and the issuance,
extension or renewal by the Agent of any Letters of Credit, as herein
contemplated, and shall continue in full force and effect so long as any amount
due under this Credit Agreement, the Revolving Credit Notes, any Reimbursement
Obligations or any of the other Loan Documents remains outstanding or any Bank
has any obligation to make any Revolving Credit Loans or the Agent has any
obligation to issue, extend or renew any Letter of Credit, and for such further
time as may be otherwise expressly specified in this Credit Agreement. All
statements contained in any certificate or other paper delivered to any Bank or
the Agent at any time by or on behalf of the Borrower pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower hereunder.
18. ASSIGNMENT AND PARTICIPATION
18.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Revolving Credit Loans at the time owing to it and the Revolving Credit
Notes held by it and its participating interest in the risk relating to any
Letters of Credit); provided that (a) each of the Agent and, unless a Default or
Event of Default shall have occurred and be continuing, the Borrower shall have
given its prior written consent to such assignment, which consent, in the case
of the Borrower, will not be unreasonably withheld, (b) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Bank's rights and obligations under this Credit Agreement, (c) each assignment
shall be in an amount that is a whole multiple of $5,000,000, (d) each Bank
which is a Bank on the date hereof shall retain, free of any such assignment, an
amount of its Commitment of not less than $15,000,000, and (e) the parties to
such assignment shall execute and deliver to the Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance, substantially
in the form of EXHIBIT D hereto (an "Assignment and Acceptance"), together with
any Revolving Credit Notes subject to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (x) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder, and (y) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the Agent
of the registration fee referred to in ss.18.3, be released from its obligations
under this Credit Agreement.
18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS;
COVENANTS. By executing and delivering an Assignment and Acceptance, the parties
to the assignment thereunder confirm to and agree with each other and the other
parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse
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claim, the assigning Bank makes no representation or warranty,
express or implied, and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Credit Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency
or value of this Credit Agreement, the other Loan Documents or
any other instrument or document furnished pursuant hereto or
the attachment, perfection or priority of any security
interest or mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial
condition of the Borrower and its Subsidiaries or any other
Person primarily or secondarily liable in respect of any of
the Obligations, or the performance or observance by the
Borrower or any other Person primarily or secondarily liable
in respect of any of the Obligations of any of their
obligations under this Credit Agreement or any of the other
Loan Documents or any other instrument or document furnished
pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent
financial statements referred to in ss.6.4 and ss.7.4 and such
other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into
such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Bank, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking
or not taking action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers
under this Credit Agreement and the other Loan Documents as
are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental
thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Bank;
and
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
18.3. REGISTER. The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to, and
the Letter of Credit Participations held
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<PAGE> 71
by, the Banks from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agent and
the Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Credit Agreement. The Register shall be
available for inspection by the Borrower and the Banks at any reasonable time
and from time to time upon reasonable prior notice. Upon each such recordation,
the assigning Bank agrees to pay to the Agent a registration fee in the sum of
$3,500.
18.4. NEW REVOLVING CREDIT NOTES. Upon its receipt of an Assignment
and Acceptance executed by the parties to such assignment, together with each
Revolving Credit Note subject to such assignment, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt notice
thereof to the Borrower and the Banks (other than the assigning Bank). Within
five (5) Business Days after receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Agent, in exchange for each
surrendered Revolving Credit Note, a new Revolving Credit Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Revolving Credit
Note to the order of the assigning Bank in an amount equal to the amount
retained by it hereunder. Such new Revolving Credit Notes shall provide that
they are replacements for the surrendered Revolving Credit Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Revolving Credit Notes, shall be dated the effective date of such in
Assignment and Acceptance and shall otherwise be substantially the form of the
assigned Revolving Credit Notes. Within five (5) days of issuance of any new
Revolving Credit Notes pursuant to this ss.18.4, the Borrower shall deliver an
opinion of counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Revolving Credit Notes and the
legality, validity and binding effect thereof, in form and substance
satisfactory to the Banks. The surrendered Revolving Credit Notes shall be
canceled and returned to the Borrower.
18.5. PARTICIPATIONS. Each Bank may sell participations to one or
more banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) any such sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Borrower and (b) the only rights granted to
the participant pursuant to such participation arrangements with respect to
waivers, amendments or modifications of the Loan Documents shall be the rights
to approve waivers, amendments or modifications that would reduce the principal
of or the interest rate on any Revolving Credit Loans, extend the term or
increase the amount of the Commitment of such Bank as it relates to such
participant, reduce the amount of any commitment fees or Letter of Credit Fees
to which such participant is entitled or extend any regularly scheduled payment
date for principal or interest.
18.6. DISCLOSURE. The Borrower agrees that in addition to
disclosures made in accordance with standard and customary banking practices any
Bank may disclose information obtained by such Bank pursuant to this Credit
Agreement to assignees or participants and potential assignees or participants
hereunder; provided that such assignees or
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<PAGE> 72
participants or potential assignees or participants shall agree (a) to treat in
confidence such information unless such information otherwise becomes public
knowledge, (b) not to disclose such information to a third party, except as
required by law or legal process and (c) not to make use of such information for
purposes of transactions unrelated to such contemplated assignment or
participation.
18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to ss.12.1 or ss.12.2, and
the determination of the Majority Banks shall for all purposes of this Agreement
and the other Loan Documents be made without regard to such assignee Bank's
interest in any of the Revolving Credit Loans. If any Bank sells a participating
interest in any of the Revolving Credit Loans to a participant, and such
participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to vote as a Bank hereunder
or under any of the other Loan Documents for purposes of granting consents or
waivers or for purposes of agreeing to amendments or modifications to any of the
Loan Documents or for purposes of making requests to the Agent pursuant to
ss.12.1 or ss.12.2 to the extent that such participation is beneficially owned
by the Borrower or any Affiliate of the Borrower, and the determination of the
Majority Banks shall for all purposes of this Agreement and the other Loan
Documents be made without regard to the interest of such transferor Bank in the
Revolving Credit Loans to the extent of such participation.
18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to ss.16 with respect to any claims
or actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. Anything contained in
this ss.18 to the contrary notwithstanding, any Bank may at any time pledge all
or any portion of its interest and rights under this Credit Agreement (including
all or any portion of its Revolving Credit Notes) to any of the twelve Federal
Reserve Banks organized under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341.
No such pledge or the enforcement thereof shall release the pledgor Bank from
its obligations hereunder or under any of the other Loan Documents.
18.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
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<PAGE> 73
19. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first class
mail, postage prepaid, sent by overnight courier, or sent by telegraph,
telecopy, facsimile or telex and confirmed by delivery via courier or postal
service, addressed as follows:
(a) if to the Borrower, at 67 Batterymarch Street, Suite 500,
Boston, Massachusetts 02110, Attention: Treasurer, or at such
other address for notice as the Borrower shall last have
furnished in writing to the Person giving the notice;
(b) if to the Agent, at One Federal Street, Boston, Massachusetts
02110, USA, Attention: Mary M. Barcus, Vice President, or such
other address for notice as the Agent shall last have
furnished in writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on SCHEDULE I
hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the
notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the fifth Business Day following the mailing thereof.
20. GOVERNING LAW
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SS.19. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR
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<PAGE> 74
ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
21. HEADINGS
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
22. COUNTERPARTS
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
23. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.25.
24. WAIVER OF JURY TRIAL
The Borrower hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Revolving Credit Notes, the Letters of Credit or any of the other
Loan Documents, any rights or obligations hereunder or thereunder or the
performance of which rights and obligations. The Borrower (a) certifies that no
representative, agent or attorney of any Bank or the Agent has represented,
expressly or otherwise, that such Bank or the Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that the
Agent and the Banks have been induced to enter into this Credit Agreement or the
other Loan Documents to which it is a party, among other things, the waivers and
certifications contained herein.
25. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement
to be given by the Banks may be given, and any term of this Credit Agreement,
the other Loan Documents or any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower or any
of its Subsidiaries of any terms of this Credit Agreement, the other Loan
Documents or such other instrument or the continuance of any Default or 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
Borrower and the written consent of the Majority Banks. Notwithstanding the
foregoing, the rate of interest on the Revolving Credit Notes (other than
interest accruing
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<PAGE> 75
pursuant to ss.4.9 following the effective date of any waiver by the Majority
Banks of the Default or Event of Default relating thereto), the term of the
Revolving Credit Notes, the amount of the Commitments of the Banks and the
amount of commitment fee hereunder may not be changed without the written
consent of the Borrower and the written consent of each Bank affected thereby;
the definition of Majority Banks may not be amended without the written consent
of all of the Banks; and ss.14 may not be amended without the written consent of
the Agent. 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 Agent or any Bank in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Borrower shall entitle the Borrower to other or further notice
or demand in similar or other circumstances.
26. TERMINATION OF CREDIT AGREEMENT
The parties hereto acknowledge and agree that this Credit Agreement, and
any and all obligations of the Agent and the Banks hereunder, shall terminate
automatically and shall be of no further force and effect in the event that the
Transaction is not consummated by June 15, 1998. Notwithstanding any such
termination, the Borrower shall continue to be bound by its obligations set
forth in ss.ss.15, 16 and 17 hereof.
27. SEVERABILITY
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 76
REVOLVING CREDIT AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have duly executed this Revolving
Credit Agreement as a sealed instrument as of the date first set forth above.
PROVANT, INC.
By: /s/ Dominic J. Puopolo
-------------------------------
Name: Dominic J. Puopolo
Title: Chief Financial Officer
FLEET NATIONAL BANK, INDIVIDUALLY
AND AS AGENT
By: /s/ Susan Mason
-------------------------------
Name: Susan Mason
Title: Vice President
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<PAGE> 77
SCHEDULE I
Name And Address Of Bank Commitment Commitment %
- ------------------------ ----------- ------------
Fleet National Bank $40,000,000 100%
One Federal Street
Boston, MA 02110
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<PAGE> 78
EXHIBIT A
---------
REVOLVING CREDIT NOTE
$40,000,000 ___________, 1998
FOR VALUE RECEIVED, the undersigned Provant, Inc., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of Fleet
National Bank (the "Bank") at the Agent's Head Office (as defined in the Credit
Agreement referred to below) in immediately available funds:
(a) prior to or on the Revolving Credit Loan Maturity Date (as
defined in the Credit Agreement referred to below) the principal amount of Forty
Million Dollars ($40,000,000) or, if less, the aggregate unpaid principal amount
of Revolving Credit Loans advanced by the Bank to the Borrower pursuant to the
Revolving Credit Agreement, dated as of April 8, 1998 (as amended and in effect
from time to time, the "Credit Agreement"), among the Borrower, the Bank and
other parties thereto; and
(b) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rates provided in the
Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank and any
holder hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein and may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All capitalized terms used in this Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit Loan or
at the time of receipt of any payment of principal of this Note, an appropriate
notation on a grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be PRIMA FACIE evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
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<PAGE> 79
EXHIBIT A
---------
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents 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.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN ss.19 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
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<PAGE> 80
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit
Note to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal] PROVANT, INC.
By:
-------------------------------
Title:
-73-
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUN-30-1997
<PERIOD-END> MAR-31-1998
<CASH> 32
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32
<PP&E> 150
<DEPRECIATION> 3
<TOTAL-ASSETS> 1196
<CURRENT-LIABILITIES> 2125
<BONDS> 0
0
0
<COMMON> 33
<OTHER-SE> (962)
<TOTAL-LIABILITY-AND-EQUITY> 1196
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1394
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95
<INCOME-PRETAX> (1489)
<INCOME-TAX> 0
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