SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: April 15, 1997
NEW ENGLAND BUSINESS SERVICE, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2942374
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 Main Street, Groton, MA 01471
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (508) 448-6111
Item 2. Acquisition or Disposition of Assets
On March 31, 1997, New England Business Service, Inc. (NEBS)
acquired all of the assets and assumed certain liabilities of Chiswick
Trading, Inc. (Chiswick) for consideration of approximately $34,600,000
in cash and approximately $8,400,000 in shares of NEBS common stock,
for an aggregate purchase price of $43,000,000. The source of the cash for
the purchase price was a loan made to NEBS in the ordinary course of
business under its revolving line of credit with The First National Bank of
Boston and Fleet National Bank, as lenders and agents thereunder, and
certain other financial institutions.
Chiswick markets a line of retail and industrial packaging, shipping
and warehouse supplies sold primarily to small wholesalers, manufacturers
and retailers. NEBS intends to continue to use the assets acquired from
Chiswick for these purposes. Chiswicks headquarters are located in
Sudbury, Massachusetts, where Chiswick will continue to operate as a
division of NEBS.
In negotiating the amount of consideration to be paid for the assets
of Chiswick, NEBS considered, among other things, the following factors
with respect to Chiswick: historical and projected financial results, the
quality and performance of management, the market values of comparable
public companies, and the projected financial performance of Chiswick
and NEBS on a combined basis.
There is no material relationship between NEBS and Chiswick or
any of their respective officers, directors or stockholders, other than the
Asset Purchase Agreement pursuant to which the acquisition was made
and the other agreements pertaining thereto, including without limitation
the lease agreements for real property. Upon consummation of the transaction,
Theodore Pasquarello, Chiswick's sole shareholder, was named an Exective Vice
President of NEBS.
Item 5. Other Events.
NEBS entered into a Revolving Credit Agreement, dated as of
March 26, 1997, with The First National Bank of Boston and Fleet
National Bank (together with certain other financial institutions, the
Banks), The First National Bank of Boston, as agent for the Banks, and
Fleet National Bank, as documentation agent for the Banks. The
Revolving Credit Agreement provides for a revolving line of credit to
NEBS of $60,000,000.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
It is impracticable at this time to provide the financial statements of the
business acquired for the periods specified in Rule 3-05(b) of Regulation S-
X. These financial statements will be filed by amendment hereto within 60
days of the date this Report on Form 8-K is required to be filed.
(b) Pro Forma Financial Information
It is impracticable at this time to provide the pro forma information
required by Article 11 of Regulation S-X. This pro forma information will
be filed by amendment hereto within 60 days of the date this Report on
Form 8-K is required to be filed.
(c) Exhibits
Exhibit Number
2.1 Asset Purchase Agreement by and among New England Business
Service, Inc., Chiswick Trading, Inc. and Theodore Pasquarello
dated as of March 31, 1997.
2.2 Agreement to Furnish Copies of Omitted Schedules and Exhibits to
Asset Purchase Agreement dated as of March 31, 1997.
10.1 Revolving Credit Agreement dated as of March 26, 1997, by and
among New England Business Service, Inc., The First National
Bank of Boston and Fleet National Bank (together with certain
other financial institutions, the Banks), The First National Bank
of Boston, as agent for the Banks, and Fleet National Bank, as
documentation agent for the Banks.
10.2 Agreement to Furnish Copies of Omitted Schedules and Exhibits to
Revolving Credit Agreement dated March 26, 1997.
24.1 Consent of Independent Accountants. (To be filed by amendment.)
SIGNATURES
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 under-
signed hereunto duly authorized.
NEW ENGLAND BUSINESS SERVICE, INC.
Registrant
DATED: April 15, 1997 By: /s/ John F. Fairbanks
John F. Fairbanks
VP, Chief Financial Officer
ASSET PURCHASE AGREEMENT
AMONG
NEW ENGLAND BUSINESS SERVICE, INC.,
CHISWICK TRADING, INC.
AND
THEODORE PASQUARELLO
MARCH 31, 1997
ASSET PURCHASE AGREEMENT
This Agreement is entered into on March 31, 1997, by and among
New England Business Service, Inc., a Delaware corporation (the
"Buyer"), Chiswick Trading, Inc., a Massachusetts corporation (the
"Seller"), and Theodore Pasquarello (the "Stockholder"). The Buyer, the
Seller and the Stockholder are referred to collectively herein as the
"Parties."
WITNESSETH:
WHEREAS, the Seller is engaged in the marketing and sale of
industrial packaging, shipping and warehouse supplies, and gift wrap
packaging, directly and indirectly to small businesses; and
WHEREAS, the Seller desires to sell, transfer and assign to the
Buyer, and the Buyer desires to purchase and acquire from the Seller, the
assets of the Seller described herein, in return for cash and shares of Buyer
Common Stock and the assumption of certain specified liabilities; and
WHEREAS, the Stockholder is the sole stockholder of the Seller
and will benefit directly from the sale of assets contemplated hereby.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties, intending to
become legally bound, agree as follows.
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, the following words and
phrases, when used herein, shall have the meanings specified or referred to
below:
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Access Period" means the longer of (a) a period of five years
following the Closing Date, or (b) the period of time beginning on the
Closing Date and ending on the date when taxes may no longer be assessed
under the applicable statutes of limitation, excluding any period of waiver
or extensions thereof.
"Acquired Assets" means all right, title, and interest in and to all of
the properties, assets, rights, privileges and business of the Seller, tangible
and intangible, including all of its (a) leaseholds and subleaseholds therein,
improvements, fixtures, and fittings thereon, and easements, rights-of-way,
and other appurtenants thereto (such as appurtenant rights in and to
public streets), (b) tangible personal property (such as machinery,
equipment, inventories of raw materials and supplies, manufactured and
purchased parts, goods in process and finished goods, furniture,
automobiles, trucks, tractors, trailers, tools, jigs, and dies), (c) Intellect-
ual Property, all goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions, and all proprietary
rights (d) leases, subleases, and rights thereunder, (e) agreements,
contracts, instruments, other similar arrangements, and rights thereunder,
(f) accounts, notes, and other receivables, (g) claims, deposits,
prepayments, causes of action, choses in action, rights of recovery, and
rights of set off, (h) franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies, (i) books, records, ledgers, files,
documents, correspondence, lists (including customer lists), plats,
architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, studies, reports, and other printed
or written materials, and (j) Cash; provided, however, that the Acquired
Assets shall not include (i) the corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification
numbers, seals, corporate minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization,
maintenance, and existence of the Seller as a corporation, (ii) the vehicles
owned or leased by the Seller which are identified in Section 3.14 of the
Disclosure Schedule as used for personal as well as business purposes, (iii)
the leases of real property in Sudbury, Massachusetts identified in Section
3.12 of the Disclosure Schedule, (iv) any rights of recoupment or refunds
related to the Seller's payment of Taxes, (v) the term life insurance policy
for the Stockholder issued by General American, Policy No. 3019878 in the
amount of $1,000,000; (vi) the revolving line of credit agreement between
the Seller and The First National Bank of Boston for borrowing up to
$3,000,000; or (vii) any of the rights of the Seller under this Agreement (or
under any other agreement between the Seller on the one hand and the
Buyer on the other hand entered into on or after the date of this
Agreement).
"Adverse Consequences" means all damages, dues, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys'
fees and expenses; provided, however, that the amount attributable to any
Adverse Consequence shall be reduced by (or shall not include) (i) any
proceeds relating to the Adverse Consequence collected by or paid to the
Indemnified Party (as defined below) under the insurance policies of any
party, and (ii) any and all actual net tax refunds or reductions in taxes
payable by the Indemnified Party or its affiliates (the "Net Tax Benefit"),
but giving effect to the time value of money, solely as a result of the
circumstance giving rise to such Adverse Consequence (provided,
however, that any tax liability of the Indemnified Party incurred in
connection with the receipt of reimbursement of such Adverse
Consequence by the Indemnified Party shall be included in the calculation
of the Net Tax Benefit).
"Agreement" means this agreement between the Parties, as the
same may be amended from time to time.
"Assumed Employees" has the meaning set forth in Section 8.07(a)
below.
"Assumed Liabilities" means (a) all Liabilities of the Seller which
are reflected on the Closing Balance Sheet, (b) all obligations of the Seller
under the agreements, contracts, leases, licenses, and other arrangements
referred to in the definition of Acquired Assets, including any warranty or
product liability obligations which arise out of products sold prior to the
Closing Date, and (c) the Liabilities and obligations of the Seller under its
Employee Benefit Plans and other non-material fringe benefit plans and
programs, all to the extent described in Section 8.07 of this Agreement;
provided, however, that the Assumed Liabilities shall not include, except to
the extent accrued on the Closing Balance Sheet (or as otherwise set forth
below), (i) any Liability of the Seller for Taxes; (ii) any obligation of the
Seller to indemnify any Person by reason of the fact that such Person was
a director, officer, employee, or agent of any of the Seller or was serving at
the request of the Seller as a partner, trustee, director, officer, employee,
or agent of another entity (whether such indemnification is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses,
expenses, or otherwise and whether such indemnification is pursuant to
any statute, charter document, bylaw, agreement, or otherwise); (iii) any
Liability of the Seller for costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby; (iv) any liability
or obligation of the Seller in respect of any options, warrants or similar
rights to acquire any shares of its capital stock; (v) any Liability or
obligation of the Seller or the Stockholder in respect of any stock
appreciation rights, including without limitation any rights accruing under
the Equity Appreciation Right Agreements by and between the Seller and
certain individuals; (vi) any obligations under the escheat or abandoned
property laws of any state which arise from or relate to the Acquired
Assets or the Seller's activities; (vii) any Liability or obligation relating
to the vehicles owned or leased by the Seller which are identified in
Section 3.14 of the Disclosure Schedule as used for personal as well as
business purposes; (viii) any Liability or obligation arising from
guarantees of the Seller, whether such guarantees are of indebtedness for
borrowed money or are guarantees of the Liabilities or obligations of any
other Person, as identified in Section 3.25 of the Disclosure Schedule;
(ix) any obligations under any unwritten agreements between the
Stockholder and the Seller; (x) any Liability or obligation arising out of or
related to any leases of real property in Sudbury, Massachusetts to which
the Seller is a party; (xi) any Liability of Seller under any Environmental,
Health and Safety Laws that arises from the Acquired Assets or the
premises to be leased by the Buyer in connection with the Acquired Assets;
(xii) any obligation of the Seller (whether accrued or unaccrued) under its
commercial promissory note dated August 28, 1991 and the related
security agreement, each relating to the revolving line of credit agreement
between the Seller and The First National Bank of Boston; (xiii) any
liability for funded debt in excess of $300,000.00; or (xiv) any Liability or
obligation of the Seller under this Agreement (or under any other
agreement between the Seller on the one hand and the Buyer on the other
hand entered into on or after the date of this Agreement).
"Benefits Closing Date" has the meaning set forth in Section 8.07(b)
below.
"Buyer" has the meaning set forth in the preface above.
"Buyer Common Stock" means the common stock of the Buyer, par
value $1.00 per share.
"Buyer's 401(k) Plan" has the meaning set forth in Section 8.07(d)
below.
"Cash" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance with
GAAP applied on a basis consistent with the preparation of the September
30, 1996 Financial Statements.
"Closing" has the meaning set forth in Section 2.04 below.
"Closing Balance Sheet" has the meaning set forth in Section 2.05
below.
"Closing Date" has the meaning set forth in Section 2.04 below.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
"Commission" means the Securities and Exchange Commission.
"Covered Matter" has the meaning set forth in Section 7.04(b)
below.
"Dispute Notice" has the meaning specified in Section 2.05(b)
below.
"Disclosure Schedule" has the meaning set forth in Article III
below.
"Eligible Individuals" has the meaning set forth in Section 8.07(c)
below.
"Employee Benefit Plan" means any (a) non-qualified deferred
compensation agreement or arrangement or qualified retirement plan
which is an Employee Pension Benefit Plan, or (b) Employee Welfare
Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sect.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sect.3(1).
"Environmental, Health, and Safety Laws" means all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, and rulings thereunder) of federal, state, and local
governments (and all agencies thereof) concerning pollution or protection
of the environment, public health and safety, or employee health and
safety.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Extremely Hazardous Substance" has the meaning set forth in
Sect.302 of the Emergency Planning and Community Right-to-Know Act
of 1986, as amended.
"Fair Value" means the average of the closing price of a share of
the Buyer Common Stock for the twenty (20) successive trading days
ending on and including the third trading day preceding the Closing Date,
as reported by the New York Stock Exchange.
"Fiduciary" has the meaning set forth in ERISA Sect.3(21).
"Final Purchase Price" has the meaning set forth in Section 2.05(c)
below.
"Financial Statements" has the meaning set forth in Section 3.07
below.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 7.04(a)
below.
"Indemnifying Party" has the meaning set forth in Section 7.04(a)
below.
"Initial Purchase Price" has the meaning set forth in Section 2.03
below.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, and extensions thereof, (b) all trademarks, service marks, trade
dress, logos, trade names, and corporate names, together with all
combinations thereof and including all goodwill associated therewith, and
all registration applications, registrations, and registration renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
registration applications, registrations, and registration renewals in
connection therewith, (d) all mask works and all registration applications,
registrations, and registration renewals in connection therewith, (e) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation), and (g) all
copies and tangible embodiments thereof (in whatever form or medium).
"Knowledge of the Seller" or "Seller's Knowledge" means the
actual knowledge of the Stockholder, Judith L. McConnell, Ronald Doyle,
Rand Goddard, Kenneth Murphy, Joel Karsh, and Barbara-Marie Scalzi,
and any other employees of the Seller with specific responsibility for the
matters as to which the Seller is making representations and warranties
hereunder.
"Lease Agreements" means (i) the Lease of even date herewith
between Theodore Pasquarello, as Trustee of the E. B. Realty Trust, and
the Seller for the premises at 33 Union Avenue, Sudbury, Massachusetts,
(ii) the Lease of even date herewith between Theodore Pasquarello, as
Trustee of the Paris Trust, and the Seller for the premises at 31 Union
Avenue, Sudbury, Massachusetts, and (iii) the Lease between Theodore
Pasquarello, as Trustee of the Paris Trust, and the Seller for the premises
at 25 Union Avenue, Sudbury, Massachusetts (when executed), in the form
attached hereto as Exhibit A.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained
within the December 31, 1996 Financial Statements.
"Most Recent Fiscal Year End" has the meaning set forth in
Section 3.07 below.
"Multiemployer Plan" has the meaning set forth in
ERISA Sect. 3(37).
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, partnership, corporation, limited
liability company, association, joint stock company, trust, estate, joint
venture, unincorporated organization, or governmental entity (or any
department, agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in
ERISA Sect.406 and Code Sect.4975, but excludes any transaction so
described which is exempt from the prohibitions of ERISA pursuant to
Section 408 of ERISA and the excise taxes of Code Sect.4975 pursuant to
Code Sect.4975.
"Registration Expenses" has the meaning set forth in
Section 8.05(a) below.
"Related Agreement" means any agreement, certificate or
instrument executed and delivered by a Party at the Closing or otherwise
in connection with the consummation of the transactions contemplated by
this Agreement.
"Reportable Event" has the meaning set forth in ERISA Sect.4043.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Security Interest" means any mortgage, pledge, lien, lis pendens,
charge, attachment, easement, covenant, restriction or other encumbrance
of any nature, except (a) mechanic's, materialman's, and similar liens,
(b) liens for Taxes not yet due and payable or for Taxes that the taxpayer
is contesting in good faith through appropriate proceedings, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of
Business and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's 401(k) Plan" has the meaning set forth in Section 8.07(d)
below.
"Selling Expenses" has the meaning set forth in Section 8.05(a)
below.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common
stock or has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code Sect.59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 7.04(a)
below.
"Transition Arrangements" has the meaning set forth in Section
8.07(b) below.
"WARN Act" has the meaning set forth in Section 8.07(e) below.
ARTICLE II
PURCHASE AND SALE
2.01 Purchase and Sale of Assets. On and subject to the terms
and conditions of this Agreement, at the Closing the Buyer agrees to
purchase from the Seller, and the Seller agrees to sell, transfer, convey, and
deliver to the Buyer, all of the Acquired Assets, free and clear of all
Security Interests, for the consideration specified below in this Article II,
pursuant to a Bill of Sale delivered in connection herewith and such other
instruments or agreements as the Buyer may reasonably request.
2.02 Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, at the Closing the Buyer agrees to assume
and become responsible for all of the Assumed Liabilities pursuant to an
Assumption Agreement delivered in connection herewith and such other
instruments or agreements as the Seller may reasonably request. The
Buyer will not assume or have any responsibility, however, with respect to
any other obligation or Liability of the Seller not included within the
definition of Assumed Liabilities.
2.03 Initial Purchase Price. The Buyer agrees to pay to the Seller
at the Closing the aggregate amount of $43,000,000.00 (the "Initial
Purchase Price") by delivery of (i) shares (rounded to the nearest whole
share) of its Buyer Common Stock having a Fair Value at the Closing Date
of $8,400,000.00, and (ii) cash for the balance of the Initial Purchase Price
payable by wire transfer or delivery of other immediately available funds.
2.04 The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Hill &
Barlow in Boston, Massachusetts, on March 31, 1997 or such other date as
the Parties may mutually determine (the "Closing Date").
2.05 Adjustments to Initial Purchase Price. The Initial Purchase
Price shall be subject to adjustment after the Closing Date as follows:
(a) As promptly as possible following the Closing Date,
the Seller and the Stockholder shall deliver to the Buyer a balance
sheet of the Seller prepared by the Seller's independent accountant
as of the Closing Date (the "Closing Balance Sheet"). The Closing
Balance Sheet shall be prepared in accordance with subsection (d)
below, and shall be accompanied by a certificate of the Seller's
independent accountant attesting to such preparation.
(b) In the event that the Buyer disputes the presentation
of any item or items contained in the Closing Balance Sheet, the
Buyer shall notify the Seller and the Stockholder in writing (the
"Dispute Notice") of the amount, nature and basis of such dispute,
within 15 calendar days after delivery of the Closing Balance Sheet.
In the event of such a dispute, the Stockholder and the Buyer shall
first use their best efforts to resolve such dispute among themselves.
If the Stockholder and the Buyer are unable to resolve the dispute
within 25 calendar days after delivery of the Closing Balance Sheet,
the dispute shall be submitted to the Boston, Massachusetts office of
Price Waterhouse LLP ("Price Waterhouse"). Price Waterhouse
shall be required to resolve the dispute and determine a final
Closing Balance Sheet within 30 days after submission in
accordance with the standard set forth in subsection (d) below, and
their determination shall be binding and conclusive upon all the
Parties. The fees and expenses of Price Waterhouse in connection
with the resolution of disputes hereunder shall be shared equally by
the Stockholder and the Buyer.
(c) Immediately upon the expiration of the 15-day period
for giving the Dispute Notice, if no Dispute Notice is given, or
immediately upon the resolution of disputes, if any, pursuant to
Section 2.05(b) above, the Purchase Price shall be adjusted as
follows (as so adjusted, the "Final Purchase Price"). If the total
stockholder's equity set forth in the Closing Balance Sheet exceeds
$9,134,679, the amount of such excess shall be paid immediately by
the Buyer to the Seller by wire transfer or delivery of other
immediately available funds. If such total stockholder's equity is
less than $9,134,679, the Stockholder shall cause the Seller to pay
immediately to the Buyer by wire transfer or delivery of other
immediately available funds the amount of such shortfall.
(d) The Closing Balance Sheet as prepared by the Seller's
independent accountant and, if there are any disputes relating
thereto as described in Section 2.05(b) above, as finally determined
by the parties or by Price Waterhouse, (i) shall be prepared in
accordance with GAAP to the extent consistent with the Seller's
September 30, 1996 balance sheet included in the Financial
Statements, without any adjustments applicable solely as a result of
the acquisition of the Acquired Assets by the Buyer on the Closing
Date, and (ii) shall include all Liabilities of the Seller that are set
forth on the face of the Most Recent Balance Sheet (rather than in
any notes thereto) to the extent the same have not been satisfied
prior to the Closing Date, except that there shall not be included as
liabilities in the Closing Balance Sheet any Liabilities that are not
Assumed Liabilities (and the Closing Balance Sheet shall reflect any
adjustments necessary or appropriate in connection with such
exclusion).
2.06 Allocation. The Final Purchase Price shall be allocated by
the Buyer in consultation with the Seller among the Acquired Assets in
accordance with the relative fair market values and pursuant to Section
1060 of the Code. The parties hereto shall furnish such information to the
Internal Revenue Service with respect to allocation of the Final Purchase
Price payable hereunder as may be required by Section 1060 of the Code.
The Buyer and the Seller shall furnish each other with a copy of the
information it proposes to submit to the Internal Revenue Service at least
30 days prior to the due date for filing such material, and the parties shall
furnish information consistent therewith to the Internal Revenue Service
in connection with the filing of their fiscal year-end 1997 federal income
tax return.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND
THE STOCKHOLDER
The Seller and the Stockholder jointly and severally represent and
warrant to the Buyer that the statements contained in this Article III are
correct and complete as of the date of this Agreement, except as set forth
in the disclosure schedule attached to this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in sections
corresponding to the numbered sections contained in this Article III.
3.01 Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Section 3.01 of the Disclosure Schedule
identifies each jurisdiction in which the Seller is duly qualified to do
business as a foreign corporation, and the Seller is not required to be
licensed or qualified to conduct its business or own its property in any
other jurisdiction where the failure to be so licensed or qualified would
have a material adverse effect. The Seller is in good standing in each
jurisdiction in which it is qualified to do business, except as otherwise
disclosed in Section 3.01 of the Disclosure Schedule.
3.02 Authorization of Transaction. Each of the Seller and the
Stockholder has full right, power, authority and capacity to execute and
deliver this Agreement and the Related Agreements to which it is or may
become party, and to perform its obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and the
Related Agreements by the Seller has been duly authorized by the Seller's
Board of Directors and the Stockholder. This Agreement and the Related
Agreements to which each of the Seller and the Stockholder is or may
become a party constitute (or will constitute when executed or delivered in
accordance herewith) the valid and legally binding obligations of the Seller
and Stockholder, as applicable, enforceable in accordance with their
respective terms.
3.03 Noncontravention. Neither the execution and the delivery of
this Agreement and the Related Agreements, nor the consummation of the
transactions contemplated hereby and thereby (including the assignments
and assumptions referred to in Article II above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental
agency, or court to which either the Seller or the Stockholder is subject or
any provision of the charter or bylaws of the Seller, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Seller is a party or by which it
is bound or to which any of its assets is subject. Except for (1) a filing
under the Hart-Scott-Rodino Act, (2) any filing required to change the
Seller's name, and (3) any filings with the United States Patent and
Trademark Office and corresponding Canadian authorities required to
transfer to the Buyer the Seller's registered Intellectual Property and
applications therefor as set forth in Section 3.13, neither the Seller nor the
Stockholder needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
3.04 Brokers' Fees. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
3.05 Title to Assets. The Seller has valid title to, or a valid
leasehold interest in, the properties and assets used by it, located on its
premises, or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests, except as otherwise
indicated in Section 3.05 of the Disclosure Schedule, and except for
properties and assets disposed of in the Ordinary Course of Business since
the date of the Most Recent Balance Sheet.
3.06 Subsidiaries. The Seller has no Subsidiaries and does not
own, directly or indirectly (which term shall not include ownership
interests of the Stockholder), any of the capital stock or beneficial interest
of any corporation, association, partnership, trust, joint venture, or similar
entity.
3.07 Financial Statements. Attached hereto as Exhibit B are the
following financial statements of the Seller (collectively the "Financial
Statements"): (i) the unaudited balance sheet and statements of income,
retained earnings, and cash flows, as of and for the nine months ended
September 30, 1996; and (ii) audited balance sheets and statements of
income, retained earnings, changes in stockholder's equity, and cash flows
as of and for the fiscal years ended December 31, 1994, 1995 and
December 31, 1996 (the "Most Recent Fiscal Year End"). The Financial
Statements (including the notes thereto) have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered
thereby, and present fairly the financial condition of the Seller as of such
dates and the results of operations of the Seller for such periods; provided,
however, that the Financial Statements identified in clause (i) above are
subject to normal year-end adjustments and lack footnotes and other
presentation items.
3.08 Events Subsequent to Most Recent Fiscal Year End. Since
the Most Recent Fiscal Year End, there has not been any material adverse
change in the business, financial condition, operations, results of
operations, or future prospects of the Seller. Without limiting the
generality of the foregoing, since that date:
(a) no party (including the Seller) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $50,000 to which the Seller is a party
or by which it is bound;
(b) the Seller has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, nor any capitalized lease
obligation in excess of $50,000;
(c) the Seller has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
(d) the Seller has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
property, other than wear and tear in the Ordinary Course of
Business;
(e) except for cash distributions, if any, to the
Stockholder, the Seller has not made any loan to, or entered into
any other transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business;
(f) the Seller has not paid or declared any dividends to
the Stockholder, other than cash distributions;
(g) the Seller has not granted any increase in the base
compensation of, or otherwise made any material change in
employment terms for, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(h) the Seller has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to
any other Employee Benefit Plan);
(i) except as described in clauses (c), (e) or (f) above, the
Seller has neither purchased nor sold or otherwise disposed of any
properties or assets (other than inventory) having a value in excess
of $50,000;
(j) to the Seller's Knowledge, there has not been any
other material occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving the
Seller and an amount in excess of $50,000; and
(k) the Seller has not entered into any agreement
requiring or otherwise committed to any of the foregoing.
3.09 Undisclosed Liabilities. To the Seller's Knowledge, the Seller
does not have any Liability (and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto), and (ii) Liabilities which have arisen
after the Most Recent Fiscal Year End in the Ordinary Course of
Business.
3.10 Legal Compliance. The Seller has complied in all material
respects, subject to the provisions of Section 10.15 hereof and except where
non-compliance would not have a material adverse effect on the Seller's
business, financial condition and results of operations, with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, and rulings thereunder) of federal, state, local, and foreign
governments (and all agencies thereof). The Seller has received no notice
from any such governmental authority of any such violation or alleged
violation, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against it
alleging any failure so to comply.
3.11 Tax Matters. The Seller has timely filed all material Tax
Returns that it was required to file and has paid all Taxes shown to be due
thereon. The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party. The Seller has never been a member of an affiliated group as
defined in Code Sect.1504 (a) and is not a foreign person as defined in
Code Sect. 1445.
3.12 Real Property. The Seller owns no real property.
Section 3.12 of the Disclosure Schedule lists and describes briefly all real
property leased or subleased to the Seller, and separately identifies any
such real property with respect to which the Stockholder has received
written notice of pending or likely reassessment. The Seller has delivered
to the Buyer correct and complete copies of such leases and subleases (as
amended to date). With respect to each lease and sublease listed in
Section 3.12 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(b) neither the Seller nor, to the Seller's Knowledge, any
other party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification,
or acceleration thereunder; and
(c) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation of
the Seller's business therein and have been operated and
maintained by the Seller in accordance with the terms and
conditions of such approvals.
3.13 Intellectual Property.
(a) The Seller is the owner of the registration of the
service mark CHISWICK with the United States Patent and
Trademark Office, Registration No. 1,237,799, dated May 10, 1983,
based on use of the mark since 1974; such registration is
incontestable pursuant to and within the meaning of Section 15 of
the U.S. Trademark Act, 15 U.S.C. Sect.Sect. 1051 et seq. The
Seller is the owner of the pending application to register the mark
CHISWICK in the Canadian Intellectual Property Office, Trade-
marks, Serial No. 808481, allowed on January 24, 1997. The Seller
has adopted and used the mark BAGS & BOWS since 1994, but has
not made any federal, state or foreign trademark or service mark
application therefor. The Seller has not made any federal, state or
foreign trademark or service mark application for the mark
"CHISWICK TRADING." Except as set forth on Section 3.13 of
the Disclosure Schedule, to Seller's Knowledge, Seller has the right
to use the names "Chiswick," "Chiswick Trading," and "Bags &
Bows" in connection with its business.
(b) Subject to subsection (a) above, the Seller owns or has
the right to use all Intellectual Property necessary for the operation
of its businesses as now conducted. Each item of Intellectual
Property owned or used by the Seller immediately prior to the
Closing hereunder will be owned or available for use by the Buyer
on identical terms and conditions immediately subsequent to the
Closing hereunder.
(c) To the Knowledge of the Seller, it has not infringed
upon, misappropriated, or violated any Intellectual Property rights
of third parties, and none of the Seller's directors and officers (and
employees with responsibility for Intellectual Property matters)
have ever received any written charge, complaint, claim, demand, or
notice alleging any such infringement, misappropriation, or
violation (including any claim that the Seller must license or refrain
from using any Intellectual Property rights of any third party) that
has not been finally resolved. To the Knowledge of the Seller, no
third party has infringed upon, misappropriated, or violated any
Intellectual Property rights of the Seller that have not been finally
resolved.
(d) Section 3.13 of the Disclosure Schedule identifies each
patent, trademark registration or copyright registration which has
been issued to the Seller with respect to any of its Intellectual
Property, identifies each pending patent application or application
for trademark registration which the Seller has made with respect to
any of its Intellectual Property, and identifies each outstanding
license, agreement, or other permission which the Seller has granted
to any third party with respect to any Intellectual Property owned
by the Seller. The Seller has delivered to the Buyer correct and
complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date).
Section 3.13 of the Disclosure Schedule also identifies each material
trade name or material unregistered trademark used by the Seller in
connection with any of its businesses. With respect to each item of
Intellectual Property identified in Section 3.13 of the Disclosure
Schedule:
(i) the Seller possesses all right, title, and interest
in and to the item as so identified, free and
clear of any Security Interest, license, or other
restriction; provided, that in the case of a
trademark or service mark, the foregoing shall
apply only to the registration therefor;
(ii) the item is not subject to any outstanding
injunction, judgment, order, decree, or ruling;
(iii) no action, suit, proceeding, hearing,
investigation, complaint, claim, or demand is
pending or, to the Knowledge of any of the
Seller's directors, officers, and employees with
responsibility for Intellectual Property
matters, is threatened which challenges the
legality, validity, enforceability, use, or
ownership of the item; and
(iv) the Seller has never agreed to indemnify any
Person for or against any interference,
infringement, misappropriation, or other
conflict with respect to the item.
(e) Section 3.13 of the Disclosure Schedule identifies each
item of Intellectual Property that the Seller uses pursuant to a
written license, sublicense, agreement, or permission. The Seller has
delivered to the Buyer correct and complete copies of all such
written licenses, sublicenses, agreements, and permissions (as
amended to date). With respect to each item of Intellectual
Property required to be identified in Section 3.13 of the Disclosure
Schedule;
(i) the license, sublicense, agreement, or
permission pursuant to which the Seller uses
the item is legal, valid, binding, enforceable,
and in full force and effect;
(ii) the license, sublicense, agreement, or
permission will continue to be legal, valid,
binding, enforceable, and in full force and
effect on identical terms following the
consummation of the assignments and
assumptions referred to in Article II above;
(iii) neither the Seller nor, to the Seller's
Knowledge, any other party to the license,
sublicense, agreement, or permission is in
breach or default, and to the Seller's
Knowledge no event has occurred which with
notice or lapse of time would constitute a
breach or default or permit termination,
modification, or acceleration thereunder;
(iv) neither the Seller nor, to the Seller's
Knowledge, any other party to the license,
sublicense, agreement, or permission has
repudiated (in writing, with respect to any
party other than the Seller) any provision
thereof;
(v) with respect to each sublicense, to the Seller's
Knowledge, the representations and
warranties set forth in subsections (i) through
(iv) above are true and correct with respect to
the underlying license;
(vi) to the Seller's Knowledge, the underlying item
of Intellectual Property is not subject to any
outstanding injunction, judgment, order,
decree, or ruling;
(vii) to the Seller's Knowledge, no action, suit,
proceeding, hearing, investigation, complaint,
claim, or demand is pending or threatened
which challenges the legality, validity, or
enforceability of the underlying item of
Intellectual Property; and
(viii) the Seller has not granted any sublicense or
similar right with respect to the license,
sublicense, agreement, or permission.
3.14 Tangible Assets. The Seller owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct
of its business as presently conducted. Each such tangible asset has been
maintained in accordance with normal industry practice, and is in
reasonably good operating condition and repair (subject to normal wear
and tear). Section 3.14 of the Disclosure Schedule identifies each location
at which the Seller maintains tangible assets and indicates, for each such
location, the category or categories of tangible assets at each such location
and the approximate book value thereof. Section 3.14 of the Disclosure
Schedule also lists each vehicle owned or leased by the Seller and identifies
those vehicles which are used by employees of the Seller for personal as
well as business purposes.
3.15 Inventory. The inventory of the Seller consists of raw
materials and supplies, manufactured and purchased parts, goods in
process, and finished goods, all of which is merchantable. The Seller holds
no inventory on a consignment basis, except to the extent of any reserves
therefor set forth on the Closing Balance Sheet.
3.16 Contracts. Section 3.16 of the Disclosure Schedule lists the
following contracts and other agreements to which the Seller is a party:
(a) any agreement (or group of related agreements) for
the lease of personal property to or from any Person providing for
lease payments in excess of $50,000.00 per annum;
(b) any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year, or involve consideration in excess of
$50,000.00;
(c) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, or under which it has imposed a Security Interest on any
of its assets, tangible or intangible;
(d) any agreement concerning confidentiality or
noncompetition, or limiting in any way the Seller's freedom to
purchase from alternate suppliers;
(e) any written agreement involving the Stockholder;
(f) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees, other than any such plan or arrangement
which is an Employee Benefit Plan;
(g) any collective bargaining agreement;
(h) any written agreement or, to the Seller's Knowledge,
any other agreement for the employment of any individual on a full-
time, part-time, consulting, or other basis providing annual
compensation in excess of $10,000.00 or providing severance
benefits;
(i) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees outside
the Ordinary Course of Business;
(j) any agreement with any sales agent or distributor;
(k) any agreement under which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of the Seller; or
(l) any other written agreement (or group of related
agreements), or, to the Seller's Knowledge, any other unwritten
agreement (or group of related agreements), in either case the
performance of which involves consideration in excess of
$50,000.00.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 3.16 of the Disclosure Schedule (as
amended to date). With respect to each such agreement: (i) the agreement
is legal, valid, binding, enforceable, and in full force and effect; (ii) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and
assumptions referred to in Article II above); (iii) neither the Seller nor, to
the Seller's Knowledge, any other party is in breach or default, and, to the
Seller's Knowledge, no event has occurred which with notice or lapse of
time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (iv) neither the
Seller nor, to the Seller's Knowledge, any other party has repudiated any
provision of the agreement.
3.17 Notes and Accounts Receivable. All notes and accounts
receivable of the Seller are reflected properly on their books and records,
and are valid receivables subject to no setoffs or counterclaims, except to
the extent of any reserves therefor set forth on the Closing Balance Sheet.
3.18 Powers of Attorney and Banking Matters. There are no
outstanding powers of attorney executed on behalf of the Seller. Section
3.18 of the Disclosure Schedule sets forth and describes all arrangements
which the Seller has with any banking institution, and identifies the Person
or Persons authorized to make deposits, withdrawals, or otherwise take
actions in respect thereof.
3.19 Insurance. Copies of all insurance policies held at any time
by the Seller and now in the Seller's possession have been delivered to the
Buyer at or prior to the date hereof. Section 3.19 of the Disclosure
Schedule sets forth the following information with respect to each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements)
to which the Seller has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past 5 years (other than
general liability and casualty insurance, for which the name of the insurer
and period of coverage will be provided as to all policies held at any time
by the Seller and now in the Seller's possession):
(a) the name, address, and telephone number of the
agent;
(b) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments
or other loss-sharing arrangements.
With respect to each such insurance policy stated as being currently in
effect on the Disclosure Schedule: (i) the policy is legal, valid, binding,
enforceable, and in full force and effect; (ii) the policy will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article II
above); (iii) the Seller is not in breach or default (including with respect to
the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or acceleration,
under the policy; and (iv) neither the Seller nor, to the Seller's Knowledge,
any other party to the policy has repudiated any provision thereof. At the
Closing, the Buyer shall assume the policy issued by Connecticut National
Life Insurance Company, Policy No. 0C0013032, currently held by the
Seller for term life insurance for the Stockholder in the amount of
$1,000,000.00.
3.20 Litigation. Section 3.20 of the Disclosure Schedule sets forth
each instance in which the Seller (a) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge, or (b) is a party or
to the Knowledge of the Seller, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator.
3.21 Product Warranty. To the Seller's Knowledge, each product
manufactured, sold, or delivered by the Seller has been in conformity with
all applicable contractual commitments and all express and implied
warranties, and to the Seller's Knowledge the Seller has no Liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to
any Liability) for replacement or repair thereof or other damages in
connection therewith. No product manufactured, sold, or delivered by the
Seller is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. Section 3.21 of
the Disclosure Schedule includes copies of the standard terms and
conditions of sale for the Seller (containing applicable guaranty, warranty,
and indemnity provisions).
3.22 Product Liability. To the Seller's Knowledge, it has no
Liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of
any product manufactured, sold, or delivered by the Seller.
3.23 Employees. Section 3.23 of the Disclosure Schedule identifies
each of the Seller's employees, each such employee's annual compensation,
and the jurisdiction, to Seller's Knowledge, in which such employees
reside. To the Knowledge of the Seller, no executive, key employee, or
group of employees has any plans to terminate employment with the Seller
other than pursuant to this Agreement. The Seller is not a party to or
bound by any collective bargaining agreement, nor has the Seller
experienced any strikes, written grievances, written claims of unfair labor
practices, or other labor disputes. The Seller has no Knowledge of any
organizational effort presently being made or threatened by or on behalf
of any labor union with respect to employees of the Seller.
3.24 Employee Benefits.
(a) Section 3.24 of the Disclosure Schedule lists each
Employee Benefit Plan that the Seller maintains or to which the
Seller contributes.
(i) To the Seller's Knowledge, each such
Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form
and in operation in all material respects with
the applicable requirements of ERISA, the
Code, and other applicable laws.
(ii) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan has received a
favorable determination letter from the
Internal Revenue Service as to its qualification
under Code Section 401(a) and, to the Seller's
Knowledge, there is no basis for the revocation
of any such letter.
(iii) The Seller has delivered to the Buyer correct
and complete copies of the plan documents
and summary plan descriptions, the most
recent determination letter received from the
Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related
trust agreements, insurance contracts, and
other funding agreements which implement
each such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that the
Seller maintains or to which it contributes:
(i) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than
any Multiemployer Plan) has been completely
or partially terminated or been the subject of a
Reportable Event as to which notices would be
required to be filed with the PBGC. No
proceeding by the PBGC to terminate any
such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been
instituted or, to the Knowledge of any of the
directors and officers (and employees with
responsibility for employee benefits matters) of
the Seller, threatened.
(ii) No action, suit, proceeding, hearing, or (to
Seller's Knowledge) investigation with respect
to the administration or the investment of the
assets of any such Employee Benefit Plan
(other than routine claims for benefits) is
pending or, to Seller's Knowledge, threatened.
(c) The Seller does not contribute to any Multiemployer
Plan.
(d) The Seller does not maintain or contribute to and has
never maintained or contributed to, nor ever has been required to
contribute to, any Employee Welfare Benefit Plan providing post-
employment medical, health, or life insurance or other welfare-type
benefits for any Assumed Employee (as defined in Section 8.07),
their spouses, or their dependents (other than in accordance with
Code Sect.4980B and applicable state insurance laws).
(e) The Seller and the Stockholder shall each notify the
Buyer within fifteen (15) business days after receiving written
notice of any of the following events, whether such events (or the
Seller's or Stockholder's receipt of written notice thereof) have
occurred before, on or after the Closing Date:
(i) The revocation or threatened revocation of
any favorable determination letter referred to
in paragraph (a), clause (ii) of this Section 3.24
or
(ii) The commencement or threatened
commencement of any action, suit, proceeding,
hearing or investigation of the type described
in paragraph (b), clause (ii) of this Section
3.24.
In each such event, the Seller shall also promptly (at its own
expense) take the following actions, as applicable:
(i) The Seller shall take reasonable steps to
preserve the qualified status under Code
Section 401(a) of any Employee Pension
Benefit Plan as to which revocation of a
favorable determination letter is made or
threatened; and
(ii) The Seller shall defend or otherwise respond
appropriately to any pending or threatened
action, suit, proceeding, hearing or
investigation referred to in this paragraph (e).
3.25 Guaranties. Section 3.25 of the Disclosure Schedule sets
forth each instance in which the Seller is a guarantor or otherwise is liable
for any Liability or obligation of any other Person (excluding any guaranty
of indebtedness for borrowed money).
3.26 Disclosure. The representations and warranties contained in
this Article III do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
and information contained in this Article III not misleading.
3.27 Environment, Health, and Safety.
(a) The Seller has complied in all material respects with
all Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, complaint, claim, demand, or
notice has been filed or commenced against it alleging any failure so
to comply. Without limiting the generality of the preceding
sentence, the Seller has obtained and been in compliance with all of
the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and
Safety Laws. Section 3.27 of the Disclosure Statement identifies
each such permit, license or other authorization, and indicates
whether any such permit, because of authorization, cannot be freely
assigned to the Buyer hereunder.
(b) Except as set forth in Section 3.27 of the Disclosure
Schedule, the Seller has no Liability (and Seller has not handled or
disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present or
future action, suit, proceeding, hearing, investigation, complaint,
claim, or demand against the Seller giving rise to any Liability) for
damage by the Seller to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental,
Health, and Safety Law.
(c) All equipment used in the business of Seller is free of
any asbestos which is or could become friable or otherwise require
removal or notification of hazard to any Person, PCB's, methylene
chloride, trichloroethylene, 1,2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
3.28 Investment. The Seller and the Stockholder (a) understand
that the shares of Common Stock have not been registered under the
Securities Act, or under any state securities laws, and are being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (b) the Seller is acquiring the shares of
Buyer Common Stock solely for its own account for investment purposes,
and not with a view to the distribution thereof (except to the Stockholder),
(c) the Seller and the Stockholder are sophisticated investors with
knowledge and experience in business and financial matters, (d) the Seller
and the Stockholder have received certain information concerning the
Buyer and have had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in holding the
shares of Buyer Common Stock, and (e) each of the Seller and the
Stockholder is an Accredited Investor for the reasons set forth in
Section 3.28 of the Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement, and that such statements will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV)
except as may be set forth in any supplemental disclosure delivered by the
Buyer to the Seller on or prior to Closing Date.
4.01 Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Buyer is duly licensed or qualified to
do business as a foreign corporation in every jurisdiction where the failure
to be so licensed or qualified would have a material adverse effect.
4.02 Authorization of Transaction. The Buyer has full right,
power and authority (including full corporate power and authority) to
execute and deliver this Agreement and the Related Agreements to which
it is or may become a party and to perform its obligations hereunder and
thereunder. The execution, delivery, and performance of this Agreement
and the Related Agreements have been duly authorized by the Buyer's
Board of Directors. No approval or authorization is required from the
Buyer's stockholders for the execution, delivery, or performance of this
Agreement or the Related Agreements. This Agreement and the Related
Agreements to which the Buyer is or may become a party constitute (or
will constitute when executed and delivered) the valid and legally binding
obligations of the Buyer, enforceable in accordance with their respective
terms.
4.03 Noncontravention. Neither the execution and the delivery of
this Agreement and the Related Agreements, nor the consummation of the
transactions contemplated hereby or thereby (including the assignments
and assumptions referred to in Article II above), will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental
agency, or court to which the Buyer is subject or any provision of its
charter or bylaws or (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its
assets is subject, except that the consent of the Buyer's lender is required.
Except for a filing under the Hart-Scott-Rodino Act, the Buyer does not
need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and
assumptions referred to in Article II above).
4.04 Brokers' Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
4.05 Financial Statements. Attached hereto as Exhibit C are the
following financial statements of the Buyer: (i) audited balance sheets and
statements of income, stockholder's equity, and cash flow as of and for the
fiscal years ended June 24, 1994, June 30, 1995 and June 29, 1996; and
(ii) an unaudited balance sheet and statement of income, and cash flow as
of and for the period ended February 22, 1997. The financial statements
attached hereto as Exhibit B (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly the financial
condition of the Buyer as of such dates and the results of operations of the
Buyer for such periods and are correct and complete; provided, however,
that the unaudited financial statements are subject to normal year-end
adjustments (which will not be material individually or in the aggregate)
and lack footnotes and other presentation items.
4.06 Capitalization of Buyer. As of March 27, 1997, the Buyer
had duly authorized 40 million shares of common stock, $1.00 par value, of
which 13,121,380 shares were issued and outstanding and 2,196,517 were
reserved for issuance for various corporate purposes, and 1,000,000 shares
of preferred stock, $1.00 par value, none of which was issued and
outstanding.
4.07 Buyer Common Stock. The shares of Buyer Common Stock
to be issued to the Seller hereunder will, when so issued, be duly
authorized, validly issued and outstanding, and fully paid and
non-assessable. Provided that the statements contained in Section 3.28 are
true and correct, such shares of Buyer Common Stock will have been
issued pursuant to an exemption from registration under the Securities Act
and the applicable blue sky laws of The Commonwealth of Massachusetts.
4.08 Buyer SEC Reports. The Buyer has previously
furnished the Seller and the Stockholder with true and complete copies of
the Buyer's Annual Report on Form 10-K for the year ended June 29,
1996, its proxy statement for the Annual Meeting of Stockholders held
September 11, 1996, all communications mailed by the Buyer to its
stockholders since June 11, 1996, and all Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K filed after June 29, 1996. The financial
statements and schedules of the Buyer contained in said reports (or
incorporated therein by reference) were prepared in accordance with
GAAP applied on a consistent basis except as noted therein, and fairly
present the information purported to be shown therein. Such proxy
statement and stockholder communications, Annual Report on Form 10-K,
Current Reports on Form 8-K, and Quarterly Reports on Form 10-Q did
not, on the date of mailing in the case of such proxy statement and
stockholder communications, and on the date of filing in the case of such
reports, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Buyer has timely filed all proxy statements, Annual
Reports on Form 10-K, Current Reports on Form 8-K, Quarterly Reports
on Form 10-Q, and other statements and reports required to be filed under
the Securities Act and the Securities Exchange Act of 1934, as amended,
and as of their respective dates all such statements and reports complied in
all material respects with the published rules and regulations of the
Commission with respect thereto.
4.09 Litigation. The Buyer is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge; nor is the Buyer a
party or, to its knowledge, threatened to be made a party to, any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator.
ARTICLES V AND VI INTENTIONALLY OMITTED
ARTICLE VII
INDEMNIFICATION
7.01. Survival of Representations and Warranties. All of the
representations and warranties contained in Sections 3.03 through 3.27
(except as set forth below) and Sections 4.03 through 4.07 of this
Agreement shall survive the Closing and continue in full force and effect
for a period of eighteen months thereafter; provided, that the
representations and warranties contained in Section 3.27, insofar as they
relate solely to any real property subject to a Lease Agreement, shall
survive for the term of the applicable Lease Agreement. All of the other
representations, warranties and covenants contained in this Agreement
shall survive the Closing and continue in full force and effect forever
thereafter (subject to any applicable statutes of limitations).
7.02 Indemnification Provisions for Benefit of the Buyer. In the
event the Seller and the Stockholder breach any of the representations,
warranties, and covenants contained in this Agreement or any Related
Agreement, and, if there is an applicable survival period pursuant to
Section 7.01 above, provided that the Buyer makes a specific written claim
for indemnification against either the Seller or the Stockholder pursuant to
Section 10.07 below within such survival period, then the Seller and the
Stockholder jointly and severally agree to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of, or caused by the
breach; provided, however, that the Seller and the Stockholder shall not
have any obligation to indemnify the Buyer from and against any Adverse
Consequences resulting from, arising out of, or caused by the breach (or
alleged breach) of any representation or warranty of the Seller or the
Stockholder contained in this Agreement or any Related Agreement until
the Buyer has suffered Adverse Consequences by reason of all such
breaches in excess of a $1,000,000.00 aggregate threshold (and then only to
the extent of such Adverse Consequences exceeding that amount).
Notwithstanding the limitations contained in the foregoing sentence,
the Seller and the Stockholder jointly and severally agree to indemnify the
Buyer from and against the entirety of any Adverse Consequences the
Buyer may suffer resulting from, arising out of, relating to, in the nature
of, or caused by any Liability of the Seller which is not an Assumed
Liability; provided, that any amounts so indemnified by the Seller or the
Stockholder in accordance with this paragraph shall be taken into account
as indemnity payments in determining the Seller's and the Stockholder's
maximum cumulative aggregate indemnification obligation set forth in the
following paragraph; and provided, further, that for purposes of this
Section 7.02 there shall not be deemed to be any breach of any
representation, warranty, or covenant of the Seller or the Stockholder
contained in this Agreement or any Related Agreement to the extent that
the Seller or the Stockholder makes a payment under this paragraph that
would not have been required to be made absent such a breach in the first
instance..
In no event, however, will the Seller's and the Stockholder's
indemnification obligations under this Section 7.02 exceed the Final
Purchase Price.
7.03 Indemnification Provisions for Benefit of the Seller and the
Stockholder. In the event the Buyer breaches (or in the event any third
party alleges facts that, if true, would mean the Buyer has breached) any
of its representations, warranties, and covenants contained in this
Agreement or any Related Agreement and, if there is an applicable
survival period pursuant to Section 7.01 above, provided that either the
Seller or the Stockholder makes a written claim for indemnification against
the Buyer pursuant to Section 10.07 below within such survival period,
then the Buyer agrees to indemnify the Seller and the Stockholder from
and against the entirety of any Adverse Consequences the Seller or the
Stockholder may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller or the
Stockholder may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach); provided, however, that the Buyer shall not
have any obligation to indemnify the Seller or the Stockholder from and
against any Adverse Consequences resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or alleged breach) of any
representation or warranty of the Buyer contained in Article IV of this
Agreement until the Seller and the Stockholder have in the aggregate
suffered Adverse Consequences by reason of all such breaches (or alleged
breaches) in excess of a $50,000.00 aggregate threshold (and then only to
the extent of such Adverse Consequences exceeding that amount).
7.04 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against
any other Party (the "Indemnifying Party") under this Article VII,
then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing and shall provide all relevant information
and documentation in the Indemnified Party's possession; provided,
however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party or in providing any such relevant
information and documentation shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice (but only insofar as such Third Party Claim may give
rise to a claim for indemnification against that Party (a "Covered
Matter")) so long as the Indemnifying Party notifies the
Indemnified Party in writing within 60 days after the Indemnified
Party has given notice of the Covered Matter that the Indemnifying
Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, or caused by the Covered
Matter.
(c) So long as the Indemnifying Party is conducting the
defense of the Covered Matter in accordance with Section 7.04(b)
above, (i) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the
Covered Matter, (ii) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect to
the Covered Matter without the prior written consent of the
Indemnifying Party, and (iii) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement
with respect to the Covered Matter without the prior written
consent of the Indemnified Party (A) in any case in which (1) the
Indemnified Party may be subject to an injunction or other
equitable relief pursuant to the proposed judgment or settlement or
(2) settlement of, or an adverse judgment with respect to, the
Covered Matter is, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the
Indemnified Party and (B) provided, that if the Indemnified Party
withholds such consent with respect to any monetary award, the
Indemnified Party shall thereafter be responsible for the defense of
such Covered Matter and the Indemnifying Party's liability with
respect thereto shall not exceed the amount of the proposed
judgment or settlement from which the Indemnified Party withheld
its consent.
(d) In the event any of the conditions in Section 7.04(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any judgment or
enter into any settlement with respect to, the Third Party Claim in
any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the
Covered Matter (including reasonable attorneys' fees and
expenses), and (iii) the Indemnifying Parties will remain responsible
for any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused
by the Covered Matter to the fullest extent provided in this
Article VII.
7.05 Other Indemnification Provisions. Any indemnification
payments payable under this Article VII shall for all purposes be treated
as an adjustment to the Final Purchase Price, and the parties hereby agree
that they will not take any positions or other actions (including reporting
the adjustments on their applicable Tax Returns) inconsistent with this
treatment. With respect to any action, suit, proceeding, complaint, claim,
or demand brought by the Buyer against the Stockholder hereunder, the
Stockholder hereby agrees that he will not make any claim for
indemnification against the Buyer by reason of the fact that he was a
director, officer, employee, or agent of the Seller or was serving at the
request of any such entity as a partner, trustee, director, officer, employee,
or agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter
document, bylaw, agreement, or otherwise).
ARTICLE VIII
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing.
8.01 Further Assurances. In case at any time after the Closing
any further action is necessary or desirable on the part of any party to this
Agreement to effectively transfer and assign to, and vest in, the Buyer each
of the Acquired Assets and the Assumed Liabilities, such party shall (and
in the case of the Seller, the Stockholder shall cause the Seller to) take such
further action without further consideration (including the execution and
delivery of such further instruments and documents) as the other party
reasonably may request. After the Closing the Stockholder will cause the
Seller and the Seller's professional advisors and agents to cooperate with
the Buyer, at the Buyer's expense, to permit the Buyer to (i) enjoy the
Seller's rating and benefits under the workman's compensation laws of
applicable jurisdictions, to the extent permitted by such laws, and (ii) file
on a timely basis all reports required to be filed with any government or
governmental agency.
8.02 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (a) any transaction contemplated under this Agreement or (b) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Seller, each of the other Parties will
cooperate with the contesting or defending Party and his or its counsel in
the contest or defense, make available his or its personnel, and provide
such testimony and access to his or its books and records as shall be
necessary in connection with the contest or defense, all (solely with respect
to third party costs) at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Article VII above).
8.03 Covenant Not to Compete. For a period of five years from
and after the Closing Date, neither the Seller nor the Stockholder will,
directly or indirectly, (1) engage or invest in, own, manage, operate,
finance, control, or participate in the ownership, management, operation,
financing or control of, be employed by, associated with, or in any manner
be connected with, or lend the Stockholder's name or credit to, or render
services or advice to, in any business whose products or activities compete
in whole or in part with the products or activities of the Seller conducted
on the Closing Date in any geographic area in which the Seller conducts
that business as of the Closing Date, (2) solicit, employ, or otherwise
engage as an employee, independent contractor, or otherwise, whether
directly or for the benefit of any other person or entity, any employee of
the Buyer, or (3) interfere with the Buyer's relationship with any person,
including any employee, contractor, supplier or customer; provided,
however, that no owner of less than 1% of the outstanding stock of any
publicly traded corporation shall be deemed to engage solely by reason
thereof in any of its businesses. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this
Section 8.03 is invalid or unenforceable, the Parties agree that the court
making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable
as so modified after the expiration of the time within which the judgment
may be appealed.
8.04 Use of Names "Chiswick Trading," "Chiswick," and "Bags
& Bows". . The Seller and the Stockholder acknowledge and agree that as
a result of the consummation of the transaction contemplated hereby, the
Buyer is acquiring Seller's rights to use the names "Chiswick Trading,"
"Chiswick," and "Bags & Bows" in connection with the Seller's business,
for which the Seller and the Stockholder will receive full and adequate
consideration, and that neither the Seller nor the Stockholder will use such
name or any similar name subsequent to the Closing. Immediately
following the Closing the Seller will change its name to "Cambria
Corporation".
8.05 Registration of the Buyer Common Stock.
(a) Registration Procedures and Expenses. The Buyer
shall use all reasonable efforts to effect the registration of the shares
of Buyer Common Stock issued to the Seller hereunder under and
in compliance with the Securities Act for sale as expeditiously as
reasonably possible following the Closing by performing the
following:
(i) Following the Closing, the Buyer shall prepare
and file with the Commission a registration
statement on Form S-3 with respect to the
shares of Buyer Common Stock issued to the
Seller hereunder and use its best efforts to
cause such registration statement to become
effective within forty-five (45) days following
the Closing and to remain effective for a
period of two years (or such shorter period as
the Stockholder and the Buyer may agree)
from the Closing Date and shall take such
action as is necessary under applicable state
securities laws to permit the sale of such shares
of the Buyer Common Stock thereunder. The
Seller's and/or the Stockholder's plan of
distribution with respect to such shares of the
Buyer Common Stock shall be as follows:
(a) sale of shares from time to time by the
Seller, the Stockholder or by pledgees, donors,
transferees or other successors in interest;
(b) a block trade in which the broker or dealer
so engaged will attempt to sell the shares as
agent but may position and resell a portion of
the block as principal to facilitate the
transaction; (c) purchases by a broker or
dealer as principal and resale by such broker
or dealer for its own account, (d) regular
brokerage transactions executed on the New
York Stock Exchange, (e) negotiated
transactions effected at such prices as may be
obtainable and as may be satisfactory to the
Stockholder, or (f) other means. If the
Securities Act requires that such registration
statement or the prospectus forming a part
thereof be amended or supplemented in order
to properly reflect the Seller's and the
Stockholder's plan of distribution, the
Stockholder will promptly notify the Buyer of
such matters and cooperate with the Buyer in
effecting such amendment or supplement. If
the Seller or the Stockholder transfers any
shares of the Buyer Common Stock to a
broker or dealer, it or he shall advise such
transferee of the fact that the shares are sold
or to be sold pursuant to such registration
statement and of the provisions of this
Section 8.05. The registration statement shall
permit delayed or continuous offerings
pursuant to Rule 415 under the Securities Act
until the expiration of the period set forth
above. If, at the expiration of the initial
registration statement described in this clause
(i) the Seller, the Stockholder, and/or their
respective donors, transferees, or other
successors in interest have not effected the sale
or other disposition of all of the Buyer
Common Stock included in the registration
statement, and if the Seller and/or the
Stockholder cannot otherwise sell the Buyer
Common Stock (or such number of shares
thereof as the Seller or Stockholder wishes to
sell) under Rule 144(k) under the Securities
Act (or any successor provision), the Seller
and/or the Stockholder shall have the right,
exercisable by written notice to the Buyer, to
demand that the Buyer effect (within thirty
(30) days of the date of the applicable notice)
up to three (3) additional registrations of such
Buyer Common Stock on terms corresponding
to the terms of this Section 8.05 (other than
Section 8.05(d) below); provided, that the then
Fair Market Value of the Buyer Common
Stock to be included in any such registration
shall not be less than One Hundred Thousand
Dollars ($100,000).
(ii) The Buyer shall prepare and file with the
Commission such amendments and
supplements to such registration statement
and the prospectus used in connection
therewith as may be necessary to update and
keep such registration statement effective and
to comply with the provisions of the Securities
Act with respect to the sale of all securities
covered by such registration statement.
Notwithstanding anything else to the contrary
contained herein, the Buyer shall not be
required to disclose any confidential
information concerning pending acquisitions
not otherwise required to be disclosed.
(iii) The Buyer shall furnish to the Seller and the
Stockholder such number of copies of the
registration statement, each amendment and
supplement thereto, the prospectus included in
the registration statement (including each
preliminary prospectus and each amendment
or supplement thereto), and such other
publicly-available documents as the Seller or
the Stockholder may reasonably request in
order to facilitate the disposition of the shares
of Buyer Common Stock covered by the
registration statement. Subject to the Buyer's
performance of its obligations under clause
(iv) below, the Seller and the Stockholder shall
comply with all prospectus delivery
requirements under the Securities Act.
(iv) The Buyer shall notify the Seller and the
Stockholder, at any time when a prospectus
relating to the registration statement is
required to be delivered under the Securities
Act, of the happening of any event as a result
of which the prospectus included in the
registration statement contains an untrue
statement of a material fact or omits any fact
necessary to make the statements therein not
misleading, and, at the request of the Seller or
the Stockholder, the Buyer will promptly
prepare, complete, and file as necessary (and,
when completed, give notice to the Stockholder
and the Seller) a supplement or amendment to
such prospectus so that, as thereafter
delivered to the purchasers of such shares of
Buyer Common Stock, such prospectus will
not contain an untrue statement of a material
fact or omit to state any fact necessary to make
the statements therein not misleading.
(v) The Buyer shall cause all of the shares of
Buyer Common Stock issued to the Seller
hereunder to be listed on each securities
exchange on which securities of the same class
issued by the Buyer are then listed.
(vi) The Buyer shall provide a transfer agent and
registrar for all of the shares of Buyer
Common Stock issued to the Seller hereunder
not later than the effective date of the
registration statement.
(vii) In the event of the issuance of any stop order
suspending the effectiveness of the registration
statement, or of any order suspending or
preventing the use of any related prospectus
or suspending the qualification of any shares
of Buyer Common Stock included in the
registration statement for sale in any
jurisdiction, the Buyer shall use its reasonable
best efforts promptly to obtain the withdrawal
of such order.
All expenses incurred by Buyer in complying with this
subsection (a), including, without limitation, all registration and
filing fees, printing expenses, and fees and disbursements of counsel
for the Buyer, are herein called "Registration Expenses". All selling
commissions applicable to the sales of the Buyer Common Stock and
all fees and disbursements of counsel for any Stockholder are herein
called "Selling Expenses".
(b) Allocation of Expenses. The Buyer will pay all
Registration Expenses in connection with registration pursuant to
this Section 8.05. All Selling Expenses in connection with such
registration shall be borne by the Stockholder.
(c) Indemnification. In connection with the registration
of shares of the Buyer Common Stock under the Securities Act
pursuant to this Section 8.05, the Buyer will indemnify and hold
harmless the seller of such shares of Buyer Common Stock, each
underwriter of such shares of Buyer Common Stock and each other
person, if any, who controls such seller or underwriter within the
meaning of Section 15 of the Securities Act, against any losses,
claims, damages, liabilities or expenses (including reasonable
attorneys' fees and disbursements), joint or several, to which such
seller, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement
under which such shares of Buyer Common Stock were registered
under the Securities Act pursuant to this Section 8.05, or any post-
effective amendment thereof, or the omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any
untrue statement (or alleged untrue statement) of a material fact
contained in any final prospectus (as amended or supplemented, if
the Buyer shall have filed with the Commission any amendment
thereof or supplement thereto), or the omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
and will reimburse such seller, underwriter and each such
controlling person for any legal or other expenses reasonably
incurred by such seller, underwriter or such controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or expense, provided, however, that the Buyer will
not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon any
untrue statement (or alleged untrue statement) or omission (or
alleged omission) of a material fact made in said registration
statement, said preliminary prospectus or said prospectus or said
amendment or supplement in reliance upon and in conformity with
written information furnished to the Buyer through an instrument
duly executed by such seller or underwriter specifically for use in
the preparation thereof. In connection with the registration of
shares of the Buyer Common Stock under the Securities Act
pursuant to this Section 8.05, each seller of such shares of Buyer
Common Stock severally and not jointly, will indemnify and hold
harmless the Buyer, each person, if any, who controls the Buyer
within the meaning of Section 15 of the Securities Act, each officer
of the Buyer who signs the registration statement, each director of
the Buyer, each underwriter and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages, liabilities or expenses (including
reasonable attorneys' fees and disbursements), joint or several, to
which the Buyer or such officer, director, underwriter or
controlling person may become subject under the Securities Act or
otherwise, and will reimburse the Buyer or such officer, director,
underwriter or controlling person for any legal or other expenses
reasonably incurred by the Buyer or such officer, director,
underwriter or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or expense, but
only insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon any
untrue statement (or alleged untrue statement) or omission (or
alleged omission) of a material fact referred to in clause (i) or (ii) of
this subsection (c), and provided, however, that this paragraph shall
apply if and only if such statement (or alleged untrue statement) or
omission (or alleged omission) was made in reliance upon and in
conformity with information furnished in writing to the Buyer by or
on behalf of such seller specifically for use in such registration
statement or prospectus. It shall be a condition of the Buyer's
obligations to effect registration of the shares of Buyer Common
Stock hereunder that the sellers participating in such registration
provide the Buyer and the underwriters, if any, with all material
facts, including, without limitation, furnishing such certificates,
questionnaires and legal opinions as may be required by the Buyer
or such underwriters, concerning such participating sellers which
are reasonably required to be stated in the registration statement or
in the prospectus or are otherwise required in connection with the
offering. If any third party shall notify any Party with respect to
any matter that may give rise to a claim for indemnification against
any other Party under this Section 8.05(c), the Parties' respective
defense, settlement, participation, and other procedural rights with
respect to that matter shall be determined by applying, mutatis
mutandis, the procedures set forth in Section 7.04 above. The
indemnification provided for in this Section 8.05 shall remain in full
force and effect following the Closing regardless of any
investigation made by or on behalf of the indemnified party or any
officer, director, or controlling person of the indemnified party, and
shall survive the transfer of the Buyer Common Stock covered by
the applicable registration statement.
(d) If the registration statement described in subsection
(a) above has not been declared effective within forty-five (45) days
following the Closing, or if the Buyer has not taken such action as is
necessary under applicable state securities laws to permit the sale of
the Buyer Common Stock thereunder within that 45-day period (or
if there is in effect on that forty-fifth (45th) day a stop order or
other order described in subsection (a)(vii) above that is not
withdrawn within ten (10) business days), then Seller shall have the
right, exercisable by written notice to Buyer given no later than
thirty (30) days after such forty-fifth (45th) or fifty-fifth (55th) day,
as applicable (but not later than the termination of the event that
gave rise to the Seller's right hereunder), to sell to the Buyer all of
the Buyer Common Stock issued to the Seller under Article II of this
Agreement at a price of $8,400,000, plus any dividends on the Buyer
Common Stock accrued but unpaid as of such date. In the event
that Seller exercises the right described in this clause (d), the Seller
shall sell the Buyer Common Stock to the Buyer, and the Buyer
shall purchase the Buyer Common Stock from the Seller, at a
closing to be held within thirty (30) days of the date of Seller's
notice hereunder, at which the Buyer shall deliver the purchase
price for the Buyer Common Stock to the Seller by wire transfer or
delivery of other immediately available funds against the Seller's
delivery of the Buyer Common Stock (as evidenced by the
certificates issued therefor and duly executed stock powers), free
and clear of all Security Interests.
8.06 Access to Books and Records. Subject to the following
sentence, during the Access Period the Buyer agrees to maintain in a
reasonably accessible place the books and records of the Seller delivered to
it at Closing; to provide the Stockholder and its representatives,
reasonable access to such books and records at reasonable times, in a
manner so as not to interfere with the normal business operations of the
Seller; and to provide copies of such books and records to the Stockholder.
If at any time during the Access Period the Buyer wishes to dispose of such
books and records, the Buyer agrees to give the Stockholder sixty days'
prior notice of such disposition, and to deliver such books and records to
the Stockholder should the Stockholder so request during such 60 day
period. With respect to books and records retained by the Seller at the
Closing, the Stockholder agrees to give the Buyer the same access during
the Access Period and the same notice and rights in the event of any
proposed disposition thereof.
8.07 Employees and Employee Benefits.
(a) Hiring. At the Closing Date, the Buyer will
offer to employ on an at will basis (except where otherwise
contemplated by this Agreement) each of the Seller's then existing
employees (including any employees then absent due to sickness or
disability or other authorized leave of absence), on substantially the
same terms and conditions, including rates of pay, subject to
changes as may be made by the Buyer in the Ordinary Course of
Business after the Closing Date (including changes in the
Stockholder's compensation as contemplated by the parties hereto).
Such individuals as accept Buyer's offer hereunder are hereinafter
referred to as the "Assumed Employees."
(b) Continuation of Certain Arrangements
Subsequent to Closing. Seller shall continue to operate Seller's
Employee Welfare Benefit Plans and payroll systems (the
"Transition Arrangements") for the Buyer's account and for the
benefit of the Eligible Individuals (as defined in subsection (c)
below) on substantially the same basis as in effect immediately prior
to the Closing Date for such Eligible Individuals for the period
commencing on the Closing Date and ending on such date, not later
than thirty (30) days after the Closing Date, as the Buyer may
specify by advance written notice (the specified date being herein
referred to as the "Benefits Closing Date"). Buyer shall be fully
responsible for all payroll, payroll taxes, benefit claims and
premiums incurred and all related out-of-pocket costs (including
surcharges or penalties attributable to the temporary continuation
or cancellation of coverage contemplated by this paragraph (b))
incurred by the Seller in the conduct of the Transition
Arrangements after the Closing Date and through the Benefits
Closing Date in respect of Eligible Individuals. The Buyer shall
reimburse the Seller for such amounts in accordance with the
Seller's funding practices and procedures for the Transition
Arrangements promptly upon receipt of reasonable written
substantiation of the amounts thereof; provided, however, that
Seller shall not be obligated to advance funds for payroll or payroll
taxes and instead Buyer shall make adequate sums available for
such purpose on a timely basis in accordance with the reasonable
instructions of the Seller. For purposes of operating the Transition
Arrangements through the Benefits Closing Date, Seller shall be
entitled to assume all of its employees are Assumed Employees and
all rates of pay, tax withholding and benefit elections and other
relevant facts continue exactly as in effect on the Closing Date
(i) unless and until otherwise notified in writing by the Buyer and
(ii) until any change of which the Seller is duly notified may be
implemented consistent with its existing practices and procedures
for the Transition Arrangements.
It is the intent of the parties that the Buyer shall be
liable for, and the Seller and the Stockholder shall have no liability
for, all coverages, benefits, claims, costs, expenses and other
liabilities incurred under or in connection with the Transition
Arrangements. To that end, Buyer shall and does hereby indemnify
and hold the Seller and the Stockholder harmless from any and all
such coverages, benefits, claims, costs, expenses and other liabilities
(including reasonable attorneys' fees and other costs) of any kind
resulting from, arising out of or during the course of, or caused by
the Transition Arrangements or the employment (or termination of
employment, whether actual or constructive) of the Assumed
Employees on or after the Closing Date or any action taken in
respect thereof, including but not limited to, any severance,
termination pay, or similar obligations, or liability under law. For
purposes of the foregoing indemnity, the provisions of Section 7.04,
if otherwise applicable, shall apply but in no event shall the
minimum liability limitation of Section 7.03 apply.
(c) Welfare Benefits. Commencing as of the
Benefits Closing Date, the Buyer shall provide the Assumed
Employees and their dependents and beneficiaries (collectively with
such Assumed Employees, the "Eligible Individuals") Employee
Welfare Benefit Plan (including severance plans) coverages (i) in
each case as provided by Buyer's comparable Employee Benefit
Plan, (ii) without application or reapplication of any elimination or
waiting period, eligibility period (other than such periods as may be
generally applicable to Buyer's employees, and subject to (iii)
following), or exclusion of pre-existing condition, and (iii) taking
into account each Assumed Employee's service with the Seller
through the Closing Date as though such service had been
performed with the Buyer only for the purposes of determining
vacation, vacation pay, severance benefits and service awards.
After the Benefits Closing Date, Seller's comparable group health
plan shall also be responsible and liable for any provision
subsequent to the Benefits Closing Date of health care coverage
otherwise required of Seller's group health plan at such time
(determined without regard to the anticipated termination of
Seller's group health plan subsequent to the Benefits Closing Date)
in respect of any current or former employee (or spouse or child or
other eligible dependent of such employee) of Seller whether or not
such employee is an Assumed Employee.
(d) 401(k) Plan. The parties acknowledge that the
Buyer is not assuming the Chiswick Trading Inc. 401(k) Plan
("Seller's 401(k) Plan") but instead that Seller intends to promptly
distribute all balances under Seller's 401(k) Plan as soon as
practicable following the Closing Date. Each Assumed Employee
instead shall be eligible to participate in the 401(k) Plan for
Employees of New England Business Service, Inc.("Buyer's 401(k)
Plan") commencing as of July 1, 1997. Service of the Assumed
Employees with the Seller through the Closing Date shall not be
taken into account for purposes of the Buyer's 401(k) Plan. The
Buyer and the Seller shall reasonably cooperate to facilitate the
rollover of each electing Assumed Employee's account balance in
Seller's 401(k) Plan, if at that time still an employee of the Buyer,
from Seller's 401(k) Plan to Buyer's 401(k) Plan.
(e) WARN. The Buyer agrees that, for the period
beginning on the Closing Date and ending on the sixtieth (60th) day
after the Benefits Closing Date, it will not permit any of the
Assumed Employees to suffer "employment loss" for purposes of
the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Sect.Sect. 2101-2109, and related regulations (the "WARN Act") if
such employment loss could create any liability for the Seller or the
Stockholder, unless the Buyer delivers notices under the WARN Act
in such a manner and at such a time that the Seller and the
Stockholder bear no liability with respect thereto, except as such
notices may be excused under the WARN Act.
(f) Cooperation of Buyer's Employees. The Buyer
shall and shall cause the Assumed Employees to provide, on a timely
basis and at the Buyer's cost and expense, such assistance as the
Seller may reasonably request in the administration of the
Transition Arrangements through the Benefits Closing Date and,
thereafter, in the termination of such Arrangements and Seller's
401(k) Plan.
8.08 Lease Agreement. The Buyer shall enter into a Lease
Agreement in the form attached hereto as Exhibit A for the property at 25
Union Avenue, Sudbury, Massachusetts, promptly following the
acquisition of such property by the Seller or the Stockholder (or an
affiliate of either such party).
ARTICLE IX INTENTIONALLY OMITTED
ARTICLE X
MISCELLANEOUS
10.01 Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the prior
written approval of the other Party; provided, however, that any Party
may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its publicly-
traded securities (in which case the disclosing Party will use its reasonable
efforts to advise the other Party prior to making the disclosure).
10.02 No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
10.03 Entire Agreement. This Agreement and the Related
Agreements constitute the entire agreement between the Parties and
supersede any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way
to the subject matter hereof.
10.04 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party may assign
either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other Party; provided,
however, that the Buyer may assign any or all of its rights and interests
(but none of its obligations or duties) hereunder to one or more of its
affiliates.
10.05 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
10.06 Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.07 Notices. All notices, consents, requests, waivers, demands,
claims, and other communications hereunder must be in writing. Any
notice, consent, request, waiver, demand, claim, or other communication
hereunder shall be deemed duly given if it is delivered (1) by hand, (2) by
overnight delivery (and then the next business day), or (3) by registered or
certified mail (and then two business days after), return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth
below, provided that in any case a copy is mailed by registered mail, return
receipt requested, to the appropriate addresses set forth below:
If to the Seller: Theodore Pasquarello
74 Fox Run Road
Sudbury, MA 01776
with a copy to: Donald B. Abrams, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, MA 02110
If to the Buyer: New England Business Service,
Inc.
500 Main Street
Groton, MA 01471
Attn: John F. Fairbanks
with a copy to: Terrence W. Mahoney, Esq.
Hill & Barlow, a Professional
Corporation
One International Place
Boston, MA 02110
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), with a copy to the appropriate addresses set forth below delivered
by the same means, but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the
address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
10.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of
Massachusetts without regard to conflicts of laws principles.
10.09 Amendments and Waivers. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and
signed by the Buyer and the Seller or the Stockholder. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
10.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof
or the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
10.11 Expenses. Each of the Buyer, Seller, and the Stockholder
will bear his or its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. The Seller agrees that it has not borne any of the
costs and expenses of the Seller and the Stockholder (including any of their
legal fees and expenses) in connection with this Agreement or any of the
transactions contemplated hereby, except to the extent reflected in the
Closing Balance Sheet. The Seller also agrees that it has not paid any
amount to any third party, and will not pay any amount to any third party
until after the Closing, with respect to any of the costs and expenses of the
Seller and the Stockholder (including any of their legal fees and expenses)
in connection with this Agreement or any of the transactions contemplated
hereby, except to the extent reflected in the Closing Balance Sheet.
10.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties, and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of
the authorship of any of the provisions of this Agreement. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule
identifies the exception with reasonable particularity. The Parties intend
that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty, or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant. With regard to all dates and time periods set forth
in this Agreement, time is of the essence.
10.13 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement and the Disclosure Schedule are
incorporated herein by reference and made a part hereof.
10.14 Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state thereof.
10.15 Bulk Transfer Laws. The Buyer acknowledges that the
Seller will not comply with the provisions of any bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this
Agreement.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the date first above written.
CHISWICK TRADING, INC.
BY: /s/ Theodore Pasquarello
Theodore Pasquarello,
President
/s/ Theodore Pasquarello
(Theodore Pasquarello)
NEW ENGLAND BUSINESS
SERVICE, INC.
BY: /s/ Robert J. Murray
Robert J. Murray, Chief
Executive Officer
ARTICLE I DEFINITIONS 1
ARTICLE II PURCHASE AND SALE 8
2.01 Purchase and Sale of Assets. 8
2.02 Assumption of Liabilities. 8
2.03 Initial Purchase Price. 8
2.04 The Closing. 8
2.05 Adjustments to Initial Purchase Price. 8
2.06 Allocation. 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
SELLER AND THE STOCKHOLDER 10
3.01 Organization of the Seller. 10
3.02 Authorization of Transaction. 10
3.03 Noncontravention. 10
3.04 Brokers' Fees. 11
3.05 Title to Assets. 11
3.06 Subsidiaries. 11
3.07 Financial Statements. 11
3.08 Events Subsequent to Most Recent Fiscal Year End. 11
3.09 Undisclosed Liabilities. 13
3.10 Legal Compliance. 13
3.11 Tax Matters. 13
3.12 Real Property. 13
3.13 Intellectual Property. 14
3.14 Tangible Assets. 16
3.15 Inventory. 16
3.16 Contracts. 16
3.17 Notes and Accounts Receivable. 18
3.18 Powers of Attorney. 18
3.19 Insurance. 18
3.20 Litigation. 19
3.21 Product Warranty. 19
3.22 Product Liability. 19
3.23 Employees. 19
3.24 Employee Benefits. 20
3.25 Guaranties. 22
3.26 Disclosure. 22
3.27 Environment, Health, and Safety. 22
3.28 Investment. 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
BUYER 23
4.01 Organization of the Buyer. 23
4.02 Authorization of Transaction. 23
4.03 Noncontravention. 23
4.04 Brokers' Fees. 24
4.05 Financial Statements. 24
4.06 Capitalization of Buyer. 24
4.07 Buyer Common Stock.. 24
4.08 Buyer SEC Reports. 24
4.09 Litigation. 25
ARTICLE VII INDEMNIFICATION 25
7.01. Survival of Representations and Warranties. 25
7.02 Indemnification Provisions for Benefit of the Buyer. 25
7.03 Indemnification Provisions for Benefit of the Seller and the
Stockholder. 26
7.04 Matters Involving Third Parties. 27
7.05 Other Indemnification Provisions. 28
ARTICLE VIII POST-CLOSING COVENANTS 28
8.01 Further Assurances. 28
8.02 Litigation Support. 29
8.03 Covenant Not to Compete. 29
8.04 Use of Names 29
8.05 Registration of the Buyer Common Stock. 30
8.06 Access to Books and Records 35
8.07 Employees and Employee Benefits 35
8.08 Lease Agreement 37
ARTICLE X MISCELLANEOUS 38
10.01 Press Releases and Public Announcements. 38
10.02 No Third Party Beneficiaries. 38
10.03 Entire Agreement. 38
10.04 Succession and Assignment. 38
10.05 Counterparts. 38
10.06 Headings. 38
10.07 Notices. 38
10.08 Governing Law. 39
10.09 Amendments and Waivers. 39
10.10 Severability. 40
10.11 Expenses. 40
10.12 Construction. 40
10.13 Incorporation of Exhibits and Schedules. 40
10.14 Specific Performance. 40
10.15 Bulk Transfer Laws. 41
Exhibit A -- Form of Lease Agreement for Premises at 25 Union Ave.
Exhibit B -- Seller Financial Statements (Sect. 3.07)
Exhibit C -- Buyer Financial Statements (Sect. 4.05)
Exhibit D -- Environmental Reports and Related Documents
Disclosure Schedule -- Exceptions to Representations and Warranties
Exhibit 2.2
NEW ENGLAND BUSINESS SERVICE, INC.
500 Main Street
Groton, Massachusetts 01471
Agreement to Furnish Copies of Omitted Exhibits and Schedules
to Asset Purchase Agreement with Chiswick Trading, Inc.
New England Business Service, Inc. (the Registrant) is not filing
as exhibits to its Current Report on Form 8-K dated April 15, 1997,
copies of the exhibits and schedules to the Asset Purchase Agreement
among the Registrant, Chiswick Trading, Inc. and Theodore Pasquarello
dated March 31, 1997, which Agreement is filed as Exhibit 2.1 thereto.
Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, copies of such omitted exhibits and
schedules.
Dated: April 15, 1997
NEW ENGLAND BUSINESS
SERVICE, INC. (Registrant)
By: /s/ John F. Fairbanks
John F. Fairbanks
VP, Chief Financial
Officer
REVOLVING CREDIT AGREEMENT
DATED as of March 26, 1997
among
NEW ENGLAND BUSINESS SERVICE, INC.,
THE BANKS LISTED ON Schedule 1 hereto,
THE FIRST NATIONAL BANK OF BOSTON, as Agent,
and
FLEET NATIONAL BANK, as Documentation Agent
TABLE OF CONTENTS
1. DEFINITIONS AND RULES OF INTERPRETATION. 1
1.1. Definitions. 1
1.2. Rules of Interpretation. 13
2. THE REVOLVING CREDIT FACILITY. 14
2.1. Commitment to Lend Syndicated Loans. 14
2.2. Requests for Loans. 15
2.3. Competitive Bid Loans. 15
2.3.1. Competitive Bid Borrowings. 15
2.3.2. Maximum Competitive Bid Loans; Funding
Losses. 19
2.3.3. Repayment of Competitive Bid Loans. 20
2.4. Funds for Loans. 20
2.4.1. Funding Procedures. 20
2.4.2. Advances by Agent. 20
2.5. The Notes. 21
2.6. Reduction of Total Commitment. 22
2.7. Interest on Loans. 22
2.8. Conversion Options. 23
2.8.1. Conversion to Different Type of Syndicated
Loan. 23
2.8.2. Continuation of Type of Syndicated Loan. 23
2.8.3. Eurodollar Rate Loans. 24
3. REPAYMENT OF THE LOANS. 24
3.1. Maturity. 24
3.2. Mandatory Repayments of Loans. 24
3.3. Optional Repayments of Syndicated Loans. 25
4. CERTAIN GENERAL PROVISIONS. 25
4.1. Certain Fees. 25
4.1.1. Closing Fee. 25
4.1.2. Agent's Fee. 25
4.2. Facility Fee. 25
4.3. Funds for Payments. 26
4.3.1. Payments to Agent. 26
4.3.2. No Offset, etc. 26
4.4. Computations. 26
4.5. Inability to Determine Eurodollar Rate. 27
4.6. Illegality. 27
4.7. Additional Costs, etc. 28
4.8. Capital Adequacy. 29
4.9. Certificate. 29
4.10. Indemnity. 29
4.11. Interest After Default. 30
4.11.1. Overdue Amounts. 30
4.11.2. Amounts Not Overdue. 30
4.12. Guaranties. 30
5. REPRESENTATIONS AND WARRANTIES. 30
5.1. Corporate Authority. 30
5.1.1. Incorporation; Good Standing. 31
5.1.2. Authorization. 31
5.1.3. Enforceability. 31
5.2. Governmental Approvals. 31
5.3. Title to Properties; Leases. 32
5.4. Financial Statements. 32
5.5. No Material Changes, etc. 32
5.6. Franchises, Patents, Copyrights, etc. 32
5.7. Litigation. 33
5.8. No Materially Adverse Contracts, etc. 33
5.9. Compliance With Other Instruments, Laws, etc. 33
5.10. Tax Status. 33
5.11. No Event of Default. 34
5.12. Holding Company and Investment Company Acts. 34
5.13. Absence of Financing Statements, etc. 34
5.14. Chief Executive Office. 34
5.15. Certain Transactions. 34
5.16. Employee Benefit Plans. 34
5.16.1. In General. 34
5.16.2. Terminability of Welfare Plans. 35
5.16.3. Guaranteed Pension Plans. 35
5.16.4. Multiemployer Plans. 35
5.17. Purpose of Loans; Regulations U and X. 36
5.18. Environmental Compliance. 36
5.19. Subsidiaries, etc. 38
5.20. Disclosure. 38
5.21. Fiscal Year. 38
5.22. Solvency. 38
6. AFFIRMATIVE COVENANTS OF THE BORROWER. 39
6.1. Punctual Payment. 39
6.2. Maintenance of Office. 39
6.3. Records and Accounts. 39
6.4. Financial Statements, Certificates and Information. 39
6.5. Notices. 41
6.5.1. Defaults. 41
6.5.2. Environmental Events. 41
6.5.3. Notice of Litigation and Judgments. 41
6.6. Corporate Existence; Maintenance of Properties. 42
6.7. Insurance. 42
6.8. Taxes. 42
6.9. Inspection of Properties and Books, etc. 43
6.9.1. General. 43
6.9.2. Communication with Accountants. 43
6.10. Compliance with Laws, Contracts, Licenses, and
Permits. 43
6.11. Employee Benefit Plans. 44
6.12. Use of Proceeds. 44
6.13. Further Assurances. 44
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. 44
7.1. Restrictions on Indebtedness. 44
7.2. Restrictions on Liens. 46
7.3. Restrictions on Investments. 47
7.4. Distributions. 49
7.5. Merger, Consolidation. 49
7.5.1. Mergers and Acquisitions. 49
7.5.2. Disposition of Assets. 49
7.6. Sale and Leaseback. 50
7.7. Compliance with Environmental Laws. 50
7.8. Employee Benefit Plans. 50
7.9. Fiscal Year. 51
7.10. Prohibition on Negative Pledges. 51
7.11. Creation and Maintenance of Subsidiaries. 51
7.12. Conduct of Business. 51
8. FINANCIAL COVENANTS OF THE BORROWER. 52
8.1. Funded Debt to EBITDA. 52
8.2. Minimum Fixed Charge Coverage Ratio. 52
8.3. Consolidated Net Worth. 52
9. CLOSING CONDITIONS. 52
9.1. Loan Documents. 52
9.2. Certified Copies of Charter Documents. 52
9.3. Corporate Action. 52
9.4. Incumbency Certificate. 53
9.5. UCC Search Results. 53
9.6. Certificates of Insurance. 53
9.7. Solvency Certificate. 53
9.8. Opinions of Counsel. 53
9.9. Payment of Fees. 53
9.10. Repayment of Existing Indebtedness. 53
10. CONDITIONS TO ALL BORROWINGS. 54
10.1. Representations True; No Event of Default. 54
10.2. No Legal Impediment. 54
10.3. Governmental Regulation. 54
10.4. Proceedings and Documents. 54
11. EVENTS OF DEFAULT; ACCELERATION; ETC. 55
11.1. Events of Default and Acceleration. 55
11.2. Termination of Commitments. 58
11.3. Remedies. 59
12. SETOFF. 59
13. THE AGENT. 60
13.1. Authorization. 60
13.2. Employees and Agents. 60
13.3. No Liability. 61
13.4. No Representations. 61
13.5. Payments. 61
13.5.1. Payments to Agent. 61
13.5.2. Distribution by Agent. 62
13.5.3. Delinquent Banks. 62
13.6. Holders of Notes. 63
13.7. Indemnity. 63
13.8. Agent as Bank. 63
13.9. Resignation. 63
13.10. Notification of Defaults and Events of Default. 63
14. EXPENSES. 64
15. INDEMNIFICATION. 64
16. SURVIVAL OF COVENANTS, ETC. 65
17. ASSIGNMENT AND PARTICIPATION. 66
17.1. Conditions to Assignment by Banks. 66
17.2. Certain Representations and Warranties; Limitations;
Covenants. 66
17.3. Register. 68
17.4. New Notes. 68
17.5. Participations. 68
17.6. Disclosure. 69
17.7. Assignee or Participant Affiliated with the Borrower. 69
17.8. Miscellaneous Assignment Provisions. 69
17.9. Assignment by Borrower. 70
18. NOTICES, ETC. 70
19. GOVERNING LAW. 71
20. HEADINGS. 71
21. COUNTERPARTS. 71
22. ENTIRE AGREEMENT, ETC. 72
23. WAIVER OF JURY TRIAL. 72
24. CONSENTS, AMENDMENTS, WAIVERS, ETC. 72
25. SEVERABILITY. 73
26. PRIOR CREDIT AGREEMENT. 73
Exhibits
Exhibit A - Guaranty
Exhibit B - Loan Request
Exhibit C - Competitive Bid Quote Request
Exhibit D - Invitation For Competitive Bid Quotes
Exhibit E-1 - Competitive Bid Quote
Exhibit E-2 - Notice of Competitive Bid Borrowing
Exhibit E-3 - Form of Notice of Competitive Bid Loans
Exhibit F-1 - Syndicated Note
Exhibit F-2 - Competitive Bid Note
Exhibit G - Compliance Certificate
Exhibit H - Assignment and Acceptance
Schedules
Schedule 1 - Banks; Commitment Percentages
Schedule 5.3 - Title to Property; Leases
Schedule 5.5 - Distribution Since Balance Sheet Date
Schedule 5.15 - Transactions with Affiliates
Schedule 5.18 - Environmental Compliance
Schedule 5.19 - Subsidiaries, etc.
Schedule 7.1 - Existing Indebtedness
Schedule 7.2 - Existing Liens
Schedule 7.3 Existing Investments
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of
March 26, 1997, by and among NEW ENGLAND BUSINESS
SERVICE, INC. (the "Borrower"), a Delaware corporation having its
principal place of business at 500 Main Street, Groton,
Massachusetts 01471, and THE FIRST NATIONAL BANK OF
BOSTON, a national banking association, and the other lending
institutions listed on Schedule 1 hereto, THE FIRST NATIONAL
BANK OF BOSTON, as agent for itself and such other lending
institutions, and FLEET NATIONAL BANK, as documentation
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 sect.1 or elsewhere in the provisions of
this Credit Agreement referred to below:
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's Head Office. The Agent's head office located at 100
Federal Street, Boston, Massachusetts 02110, or at such other
location as the Agent may designate from time to time.
Agent's Side Letter. See sect.4.1.2.
Agent. The First National Bank of Boston acting as agent for
the Banks.
Agent's Special Counsel. Bingham, Dana & Gould LLP or
such other counsel as may be approved by the Agent.
Applicable Eurodollar Rate Margin. For any fiscal quarter or
portion thereof within any Interest Period with respect to any
Eurodollar Rate Loan, four-tenths of one percent (0.40%) per
annum; provided, however, that in the event that the ratio of
Consolidated Funded Debt (calculated as of the last day of such
fiscal quarter or portion thereof) to EBITDA (calculated for the four
(4) consecutive fiscal quarters ending on the last day of such fiscal
quarter or portion thereof) meets the requirements set forth in the
chart below, the Applicable Eurodollar Rate Margin shall,
commencing with the date on which the Borrower delivers to the
Banks the financial statements referred to in sect.6.4(a) or, as the
case may be, sect.6.4(b), be the percentage set forth opposite the
applicable ratio of Funded Debt to EBITDA in the table below:
Ratio of Funded
Debt to EBITDA
Applicable Eurodollar
Rate Margin
Less than or equal to
0.5:1
0.325%
Greater than 0.5:1 and
less than or equal to
1.0:1
0.350%
Greater than 1.0:1 and
less than or equal to
1.5:1
0.400%
Greater than 1.5:1
0.500%
Applicable Facility Fee Percentage. For any fiscal quarter or
portion thereof, one-fifth of one percent (0.20%) per annum;
provided, however, that in the event that the ratio of Consolidated
Funded Debt (calculated as of the last day of such fiscal quarter or
portion thereof) to EBITDA (calculated for the four consecutive
fiscal quarters existing on the last day of such fiscal quarter or
portion thereof) meets the requirements set forth in the chart
below, the Applicable Facility Fee Percentage shall, commencing
with the date on which the Borrower delivers to the Banks the
financial statements referred to in sect.6.4(a) or, as the case may be,
sect.6.4(b), be the percentage set forth opposite the applicable ratio
of Funded Debt to EBITDA set forth in the table below:
Ratio of Funded
Debt to EBITDA
Applicable Facility
Fee Percentage
Less than or equal to
0.5:1
0.125%
Greater than 0.5:1 and
less than or equal to
1.0:1
0.150%
Greater than 1.0:1 and
less than or equal to
1.5:1
0.200%
Greater than 1.5:1
0.250%
Assignment and Acceptance. See sect.17.1.
Balance Sheet Date. June 29, 1996.
Banks. FNBB and the other lending institutions listed on
Schedule 1 hereto and any other Person who becomes an assignee of
any rights and obligations of a Bank pursuant to sect.17.
Base Rate. The higher of (i) the annual rate of interest
announced from time to time by FNBB at its head office in Boston,
Massachusetts, as its "base rate" and (ii) one-half of one percent
(1/2%) above the Federal Funds Effective Rate. For the purposes of
this definition, "Federal Funds Effective Rate" shall mean, for any
day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published for such day (or if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of
recognized standing selected by the Agent.
Base Rate Loans. Any Syndicated Loans bearing interest
calculated by reference to the Base Rate.
Borrower. As defined in the preamble hereto.
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 any of its Subsidiaries in connection
with the purchase or lease by the Borrower or any of 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.
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 sect.5.18.
Closing Date. The first date on which the conditions set forth
in sect.9 have been satisfied and any Loans are to be made.
Code. The Internal Revenue Code of 1986.
Commitment. With respect to each Bank, the amount set
forth on Schedule 1 hereto as the amount of such Bank's
commitment to make Syndicated Loans to the Borrower, as the
same may be reduced from time to time; or if such commitment is
terminated pursuant to the provisions hereof, zero. The
Competitive Bid Loans of such Bank outstanding at any time shall
not affect such Bank's Commitment.
Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's
percentage of the aggregate Commitments of all of the Banks. The
Competitive Bid Loans of such Bank outstanding at any time shall
not affect such Bank's Commitment Percentage.
Competitive Bid Loan(s). A borrowing hereunder consisting
of one or more revolving credit loans made by any of the Banks
whose offer to make a revolving credit loan as part of such
borrowing has been accepted by the Borrower under the auction
bidding procedure described in sect.2.3 hereof.
Competitive Bid Note. See sect.2.5(b) hereof.
Competitive Bid Quote. An offer by a Bank to make a
Competitive Bid Loan in accordance with sect.2.3 hereof.
Competitive Bid Quote Request. See sect.2.3.1(b) hereof.
Competitive Bid Rate. See sect.2.3.1(d)(ii)(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 Funded Debt. At any time of determination, the
sum of (i) the amount of the Loans outstanding (after giving
account to any amounts requested) plus accrued but unpaid interest
thereon; plus (ii) the outstanding amount of any other Indebtedness
for borrowed money, in respect of Capitalized Leases or which is
otherwise subject to the payment of interest plus accrued but
unpaid interest on such Indebtedness, including expenses
consisting of interest in respect of Capitalized Leases and including
commitment fee, agency fee, facility fee, balance deficiency fee and
similar fee expenses in connection with the borrowing of money.
Consolidated Net Worth. The excess of Consolidated Total
Assets over Consolidated Total Liabilities.
Consolidated Total Assets. All assets of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with
generally accepted accounting principles.
Consolidated Total Interest Expense. For any period, the
aggregate amount of interest required to be expensed by the
Borrower and its Subsidiaries in accordance with generally
accepted accounting principles during such period on all
Indebtedness of the Borrower and its Subsidiaries outstanding
during all or any part of such period, including expense consisting
of interest in respect of Capitalized Leases and including
commitment fee, agency fee, facility fee, balance deficiency fee and
similar fee expense in connection with the borrowing of money.
Consolidated Total Liabilities. All liabilities of the Borrower
and its Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles.
Conversion Request. A notice given by the Borrower to the
Agent of the Borrower's election to convert or continue a Loan in
accordance with sect.2.8.
Credit Agreement. This Revolving Credit Agreement,
including the Schedules and Exhibits hereto.
Default. See sect.11.
Distribution. The declaration or payment of any dividend on
or in respect of any shares of any class of capital stock of the
Borrower, other than dividends payable solely in shares of common
stock of the Borrower; the purchase, redemption, or other
retirement of any shares of any class of capital stock, or of any
rights, warrants or options to acquire shares of any class of capital
stock, of the Borrower, directly or indirectly through a Subsidiary of
the Borrower or otherwise; the return of capital by the Borrower to
its shareholders as such; or any other distribution on or in respect
of any shares of any class of capital stock of the Borrower.
Dollars or $. Dollars in lawful currency of the United States
of America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other
office of such Bank, if any, located within the United States that
will be making or maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is
to be made, and the date on which any Loan is converted or
continued in accordance with sect.2.8.
EBITDA. The consolidated earnings (or loss) from the
operations of the Borrower and its Subsidiaries for any period, after
all expenses and other proper charges but before payment or
provision for any income taxes, interest expense, depreciation or
amortization for such period, determined in accordance with
generally accepted accounting principles.
Eligible Assignee. Any of (i) a commercial bank or finance
company 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; (ii) 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; (iii) 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; (iv) the central bank of any country which is a member of
the OECD; and (v) if, but only if, an Event of Default has occurred
and is continuing, any other bank, insurance company, commercial
finance company or other financial institution or other Person
approved by the Agent, such approval not to be unreasonably
withheld.
Employee Benefit Plan. Any employee benefit plan within
the meaning of sect.3(2) of ERISA maintained or contributed to by
the Borrower or any ERISA Affiliate, other than a Multiemployer
Plan.
Environmental Laws. See sect.5.18(a).
ERISA. The Employee Retirement Income Security Act of
1974, as amended, including all rules, regulations, decrees and
orders arising thereunder.
ERISA Affiliate. Any Person which is treated as a single
employer with the Borrower under sect.414 of the Code.
ERISA Reportable Event. A reportable event with respect to
a Guaranteed Pension Plan within the meaning of sect.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 Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial
banks are open for international business (including dealings in
Dollar deposits) in London or such other eurodollar interbank
market as may be selected by the Agent in its sole discretion acting
in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other
office of such Bank, if any, that shall be making or maintaining
Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a
Eurodollar Rate Loan, the rate of interest equal to (i) the arithmetic
average of the rates per annum for FNBB (rounded upwards to the
nearest 1/16 of one percent) of the rate at which FNBB's Eurodollar
Lending Office is offered Dollar deposits two Eurodollar Business
Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and
exchange operations of such Eurodollar Lending Office are
customarily conducted at or about 10:00 a.m., Boston time, for
delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the
amount of the Eurodollar Rate Loan of FNBB to which such
Interest Period applies, divided by (ii) a number equal to 1.00
minus the Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loans. Any Syndicated Loans bearing
interest calculated by reference to the Eurodollar Rate.
Event of Default. See sect.11.
FNBB. The First National Bank of Boston in its individual
capacity.
generally accepted accounting principles. (i) When used in
sect.8, whether directly or indirectly through reference to a
capitalized term used therein, means (A) 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 Balance Sheet Date, and (B)
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 (ii) when used in
general, other than as provided above, means principles that are (A)
consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, as in
effect from time to time and (B) 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 sect.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.
Guaranty. A Guaranty entered into by a Subsidiary of the
Borrower pursuant to sect.7.5.1 or, as the case may be, sect.7.11
hereof, pursuant to which such Subsidiary guaranties to the Banks
and the Agent the payment and performance of the Obligations,
each in substantially the form of Exhibit A hereto.
Hazardous Substances. See sect.5.18(b).
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,
including in any event and whether or not so classified: (i) all debt
and similar monetary obligations, whether direct or indirect; (ii) 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 (iii) 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.
Interest Payment Date. (i) As to any Base Rate Loan, the last
day of the calendar quarter which includes the Drawdown Date
thereof; (ii) as to any Competitive Bid Loan, on the last day of the
Interest Period applicable thereto; (iii) as to any Eurodollar Rate
Loan in respect of which the Interest Period is (A) 3 months or less,
the last day of such Interest Period and (B) more than 3 months,
the date that is 3 months from the first day of such Interest Period
and, in addition, the last day of such Interest Period.
Interest Period. With respect to each Loan, (i) 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 Loan Request or Notice of Competitive Bid
Borrowing (A) for any Base Rate Loan, the last day of the calendar
quarter; (B) for any Competitive Bid Loan, from 7 through 180 days;
and (C) for any Eurodollar Rate Loan, 1, 2, 3, or 6 months; and (ii)
thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such 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 Base 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 as provided
in sect.2.8, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base
Rate Loan and the continuance of all Base Rate Loans as
Base Rate Loans on the last day of the then current Interest
Period with respect thereto;
(d) any Interest Period 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 Loan that would
otherwise extend beyond the Revolving Credit Loan Maturity
Date shall end on the Revolving Credit Loan Maturity Date.
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: (i) 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; (ii) there shall be included as an Investment all
interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (iii) 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); (iv) 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 (ii) may be
deducted when paid; and (v) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.
Invitation for Competitive Bid Quotes. See sect.2.3.1(c)
hereof.
Loan Documents. This Credit Agreement, the Notes, the
Agent's Side Letter, any Guaranty and all documents evidencing or
relating to any interest rate protection arrangements entered into
between the Borrower and any Bank.
Loan Request. See sect.2.2.
Loans. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to sect.2 hereof, whether
Syndicated Loans or Competitive Bid Loans.
Majority Banks. As of any date, the Banks holding at least
fifty-one percent (51%) of the outstanding principal amount of the
Notes on such date; and if no such principal is outstanding, the
Banks whose aggregate Commitments constitutes at least fifty-one
percent (51%) of the Total Commitment.
Margin Stock. "Margin Stock" or "Margin Securities", as such
terms are used in Regulations U and X of the Board of Governors of
the Federal Revenue System, 12 C.F.R. Parts 221 and 224.
Multiemployer Plan. Any multiemployer plan within the
meaning of sect.3(37) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate.
Notes. The Competitive Bid Notes and the Syndicated Notes.
Notice of Competitive Bid Borrowing. See sect.2.3.1(f) hereof.
Obligations. All indebtedness, obligations and liabilities of
any of the Borrower and 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, arising or incurred under this Credit
Agreement or any of the other Loan Documents (including any
interest rate protection arrangements entered into between the
Borrower and any Bank), or in respect of any of the Loans or any of
the Notes or other instruments at any time evidencing any thereof.
outstanding. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by
sect.4002 of ERISA and any successor entity or entities having
similar responsibilities.
Permitted Liens. Liens, security interests and other
encumbrances permitted by sect.7.2.
Permitted Acquisition. The acquisition of any Person,
business, division, or specified group of assets by the Borrower or
any of its Subsidiaries, provided that (1) the Agent and the
Majority Banks approve, in their sole discretion, such acquisition in
writing in advance or (2) each of the following conditions is met;
(a) immediately prior to and after, and after giving
effect to, such acquisition, no Default or Event of Default shall then
exist;
(b) the aggregate consideration paid or to be paid by
the Borrower or any of its Subsidiaries in connection with all such
acquisitions (whether in the form of cash, stock (as valued for the
purposes of such acquisitions) or the assumption of Indebtedness for
borrowed money, debt or other similar monetary obligations by the
Borrower or any of its Subsidiaries (including such Indebtedness in
existence prior to the date of any such acquisition which was not
incurred in connection with or contemplation thereof)) shall not
exceed $10,000,000;
(c) such acquisition shall have been approved by the
board of directors and shareholders, if required, of such Person; and
(d) either (i) such acquisition is the acquisition of
assets only (for use in substantially the same line of business as the
line of business of the Borrower) or (ii) such acquisition involves the
purchase of the capital stock or other equity interests of a Person
and each of the following conditions is met:
(A) such acquisition is the acquisition of one
hundred percent (100%) of the capital stock or other equity
interests of such Person.
(B) such Person is in substantially the same
line of business as the Borrower,
(C) not less than ten (10) Business Days prior
to such acquisition, the Borrower shall notify the Banks
thereof, and
(D) contemporaneously with the occurrence of
such acquisition, the Borrower shall (I) cause such Person to
guaranty all of the Obligations hereunder pursuant to a
Guaranty in form and substance satisfactory to the Agent,
which such Guaranty shall be a Loan Document hereunder,
and (II) cause such Person to deliver to the Banks and the
Agent (aa) evidence of proper corporate authorization, and
(bb) legal opinions with respect to each of the matters and
documents set forth in this clause (D), in each case, in form
and substance satisfactory to the Agent and the Banks.
Person. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision
thereof.
Real Estate. All real property at any time owned or leased
(as lessee or sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of
such grid, or any other similar record, including computer records,
maintained by any Bank with respect to any Loan referred to in
such Note.
Revolving Credit Loan Maturity Date. March 26, 2002.
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.
Syndicated Loan(s). One or more revolving credit loans
funded by the Banks in accordance with their respective
Commitment Percentages.
Syndicated Note. See sect.2.5(a) hereof.
Total Commitment. The sum of the Commitments of the
Banks, as in effect from time to time, but not to exceed the
aggregate amount of $60,000,000.
Type. As to any Syndicated Loan, its nature as a Base Rate
Loan or a Eurodollar Rate Loan.
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.
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 "sect." 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 subdivision of this Credit
Agreement.
2. THE REVOLVING CREDIT FACILITY.
2.1. Commitment to Lend Syndicated Loans. 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 the Revolving Credit Loan Maturity
Date upon notice by the Borrower to the Agent given in accordance
with sect.2.2, such sums ("Syndicated Loans") as are requested by
the Borrower up to a maximum aggregate principal amount
outstanding (after giving effect to all amounts requested) at any one
time equal to such Bank's Commitment (without regard to any
Competitive Bid Loans of such Bank outstanding at such time),
provided that (i) the sum of the outstanding amount of the
Syndicated Loans (after giving effect to all amounts requested) plus
the outstanding aggregate principal amount of all Competitive Bid
Loans made by all Banks shall not at any time exceed the Total
Commitment and (ii) at all times the outstanding aggregate
principal amount of all Syndicated Loans made by each Bank shall
equal such Bank's Commitment Percentage of the outstanding
aggregate principal amount of all Syndicated Loans made pursuant
to the terms of this Credit Agreement. The Syndicated Loans shall
be made pro rata in accordance with each Bank's Commitment
Percentage. Each request for a Syndicated Loan hereunder shall
constitute a representation and warranty by the Borrower that the
conditions set forth in sect.9 and sect.10, in the case of the initial
Syndicated Loans to be made on the Closing Date, and sect.10, in
the case of all other Syndicated Loans, have been satisfied on the
date of such request.
2.2. Requests for 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 Syndicated Loan requested hereunder (a "Loan Request") by
10:00 a.m. (i) on the proposed Drawdown Date of any Base Rate
Loan and (ii) two (2) Eurodollar Business Days prior to the
proposed Drawdown Date of any Eurodollar Rate Loan. Each such
notice shall specify (A) the principal amount of the Syndicated Loan
requested, (B) the proposed Drawdown Date of such Syndicated
Loan, (C) the Interest Period for such Syndicated Loan and (D) the
Type of such Syndicated Loan. Promptly upon receipt of any such
notice, the Agent shall notify each of the Banks thereof. Each such
notice shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Syndicated Loan requested from
the Banks on the proposed Drawdown Date. Each Loan Request
shall be in a minimum aggregate amount of $1,000,000 or any
integral multiple of $500,000 in excess thereof.
2.3. Competitive Bid Loans.
2.3.1. Competitive Bid Borrowings. (a) The
Competitive Bid Option. In addition to the Syndicated Loans
permitted to be made hereunder pursuant to sect.2.1 hereof,
the Borrower may, from time to time from the Closing Date
until the Revolving Credit Loan Maturity Date pursuant to
the terms of this sect.2.3, cause the Agent to request the
Banks to make offers to fund Competitive Bid Loans to the
Borrower from time to time prior to the Revolving Credit
Loan Maturity Date. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept such offers in the manner
set forth in this sect.2.3. Each Bank may make Competitive
Bid Loans in an aggregate amount (after giving effect to all
amounts requested) not to exceed the lesser of $20,000,000
and the Total Commitment, provided that the aggregate
amount of all outstanding Syndicated Loans (after giving
effect to all amounts requested) plus the aggregate amount of
all outstanding Competitive Bid Loans (after giving effect to
all amounts requested) shall at no time exceed the Total
Commitment.
(b) Competitive Bid Quote Request. When the
Borrower wishes to request offers to make Competitive Bid
Loans under this sect.2.3, it shall transmit to the Agent by
telex or facsimile a Competitive Bid Quote Request
substantially in the form of Exhibit C attached hereto (a
"Competitive Bid Quote Request") so as to be received no later
than 1:00 p.m. (Boston time) on the Business Day prior to the
requested Drawdown Date, specifying (i) the requested
Drawdown Date (which must be a Business Day), (ii) the
amount of such Competitive Bid Loan (which must be a
minimum of $1,000,000 or any greater integral multiple of
$500,000 and may not exceed the Total Commitment), and
(iii) the Interest Period of such Competitive Bid Loan (which
may not extend beyond the Revolving Credit Loan Maturity
Date). The Borrower may request offers to make Competitive
Bid Loans for one amount and three Interest Periods in a
single Competitive Bid Quote Request.
(c) Invitation for Competitive Bid Quotes; Alternative
Manner of Auction. Subsequent to timely receipt of a
Competitive Bid Quote Request, the Agent shall send to the
Banks by telex or facsimile an Invitation for Competitive Bid
Quotes substantially in the form of Exhibit D attached hereto
(an "Invitation for Competitive Bid Quotes"), as promptly as
possible but not later than 3:00 p.m. (Boston time) on the
Business Day prior to the requested Drawdown Date which
shall constitute an invitation by the Borrower to each Bank to
submit Competitive Bid Quotes offering to make Competitive
Bid Loans to which such Competitive Bid Quote Request
relates in accordance with this sect.2.3. If, after receipt by
the Agent of a Competitive Bid Quote Request from the
Borrower in accordance with subsection (b) of this sect.2.3.1,
the Agent or any Bank shall be unable to complete any
procedure of the auction process described in subsections (c)
through (f) (inclusive) of this sect.2.3.1 due to the inability of
such Person to transmit or receive communications through
the means specified therein, such Person may rely on
telephonic notice for the transmission or receipt of such
communications. In any case where such Person shall rely on
telephone transmission or receipt, any communication made
by telephone shall, as soon as possible thereafter, be followed
by written confirmation thereof.
(d) Submission and Contents of Competitive Bid
Quotes.
(i) Each Bank may submit a Competitive Bid
Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive
Bid Quotes. Each Competitive Bid Quote must comply
with the requirements of this subsection (d) and must
be submitted to the Agent by telex or facsimile not later
than 10:00 a.m. (Boston time) on the requested
Drawdown Date, provided that Competitive Bid Quotes
may be made by the Agent in its capacity as a Bank
only if it notifies the Borrower of the terms of its
Competitive Bid Quote no later than 9:30 a.m. (Boston
time) on the requested Drawdown Date. Subject to the
provisions of sect.sect.9, 10 and 11 hereof, any
Competitive Bid Quote so made shall be irrevocable
except with the written consent of the Agent given on
the instructions of the Borrower.
(ii) Each Competitive Bid Quote shall be in
substantially the form of Exhibit E-1 attached hereto (a
"Competitive Bid Quote") and shall in any case specify:
(A) the requested Drawdown Date and
Interest Periods,
(B) the principal amount of the
Competitive Bid Loan for which each such offer
is being made, which principal amount (x) may
be greater than the Commitment Amount of the
quoting Bank but may not exceed the Total
Commitment, (y) must be $1,000,000 or a larger
multiple of $500,000 and (z) may not exceed the
aggregate principal amount of Competitive Bid
Loans for which offers were requested,
(C) the rate of interest per annum
(rounded to the nearest 1/1000th of 1%) (the
"Competitive Bid Rate") offered for each such
Competitive Bid Loan, and
(D) the identity of the quoting Bank.
(iii) Any Competitive Bid Quote shall be
disregarded if it:
(A) is not substantially in the form of
Exhibit E-1 attached hereto or does not specify
all of the information required by subsection
(d)(ii) of this sect.2.3.1;
(B) contains qualifying, conditional or
similar language (except that it may, in the case
of a quote relating to more than one Interest
Period, contain the condition that the Bank will
fund any one, but not more, of the Competitive
Bid Loans offered in such Competitive Bid
Quote);
(C) proposes terms other than or in
addition to those set forth in the applicable
Invitation for Competitive Bid Quotes; or
(D) arrives after the time set forth in
subsection (d)(i) of this sect.2.3.1.
(e) Notice to Borrower. Not later than 10:30 a.m.
(Boston time) on the requested Drawdown Date, the Agent
shall notify the Borrower of the terms of all Competitive Bid
Quotes submitted by the Banks in accordance with subsection
(d) of this sect.2.3.1. The Agent's notice to the Borrower shall
specify (i) the aggregate principal amount of Competitive Bid
Loans for which offers have been received for each Interest
Period specified in the related Competitive Bid Quote
Request, and (ii) the respective principal amounts and
Competitive Bid Rates so offered.
(f) Acceptance and Notice by Borrower. Not later than
11:00 a.m. (Boston time) on the requested Drawdown Date,
the Borrower shall notify the Agent, and the Agent shall
promptly notify each Bank with respect to its offer, of the
Borrower's acceptance or non-acceptance of the offers of
which it was notified pursuant to subsection (e) of this
sect.2.3.1. In the case of an acceptance, such notice shall (i)
be substantially in the form of Exhibit E-2 attached hereto (a
"Notice of Competitive Bid Borrowing"), (ii) be irrevocable by
the Borrower, and (iii) specify the aggregate principal amount
of offers for each Interest Period that are accepted. Each
acceptance by the Borrower of Competitive Bid Loans
hereunder shall constitute a representation and warranty by
the Borrower that the conditions set forth in sect.sect.9 and
10 hereof have been satisfied on the date of such acceptance.
The Borrower may accept any Competitive Bid Quote in
whole or in part; provided that:
(A) the aggregate principal amount of each
Competitive Bid Loan may not exceed the
applicable amount set forth in the related
Competitive Bid Quote Request,
(B) the aggregate principal amount of each
Competitive Bid Loan must be $1,000,000 or a
larger multiple of $500,000, and
(C) acceptance of offers may only be made
on the basis of ascending Competitive Bid Rates.
(g) Allocation by Agent; Usage of Commitments. If
offers are made by two or more Banks with the same
Competitive Bid Rates, for a greater aggregate principal
amount than the amount in respect of which offers are
accepted for the related Interest Period, the principal amount
of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Banks
as nearly as possible (in such multiples, not less than
$100,000 as the Agent may deem appropriate) in proportion
to the aggregate principal amounts of such offers. If any such
Bank has indicated a minimum acceptable Competitive Bid
Loan in its Competitive Bid Request, and under the
procedures of this subsection (g), the Agent would have
allocated to it an amount less than such minimum, such
Competitive Bid Quote will instead be deemed to have been
withdrawn. Determination by the Agent of the amounts of
Competitive Bid Loans and the allocation thereof shall be
conclusive in the absence of manifest error. The Agent shall,
promptly after the funding of any Competitive Bid Loan,
notify the Banks thereof pursuant to a notice substantially in
the form of Exhibit E-3 attached hereto.
(h) Funding of Competitive Bid Loans. If, on or prior
to the Drawdown Date of any Competitive Bid Loan, the Total
Commitment has not terminated in full and if, on such
Drawdown Date, the applicable conditions of sect.sect.4 and
10 hereof are satisfied, the Bank or Banks whose offers the
Borrower has accepted will fund each Competitive Bid Loan
so accepted as provided in sect.2.4.1 hereof.
2.3.2. Maximum Competitive Bid Loans; Funding
Losses. (a) Notwithstanding any other provision herein to
the contrary, at no time shall the aggregate principal amount
of Competitive Bid Loans outstanding at any time exceed the
lesser of (i) the Total Commitment minus the aggregate
principal amount of Syndicated Loans outstanding at such
time and (ii) $20,000,000.
(b) If after acceptance of any Competitive Bid Quote
pursuant to sect.2.3.1(f) hereof, the Borrower fails to borrow
any Competitive Bid Loan so accepted on the date specified
therefor, the Borrower shall indemnify the Bank funding
such Loan against any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund or maintain such unborrowed
Competitive Bid Loans, including, without limitation,
compensation as provided in sect.4.10 hereof.
2.3.3. Repayment of Competitive Bid Loans. The
principal of each Competitive Bid Loan shall become
absolutely due and payable by the Borrower on the last day of
the Interest Period relating thereto, and the Borrower hereby
absolutely and unconditionally promises to pay to the Agent,
for the accounts of the relevant Banks, on the last day of the
Interest Period relating thereto the principal amount of all
such Competitive Bid Loans plus interest thereon at the
applicable Competitive Bid Rate. Subject to the terms of this
Credit Agreement, the Borrower may reborrow any amounts
so repaid from time to time prior to the Revolving Credit Loan
Maturity Date.
2.4. Funds for Loans.
2.4.1. Funding Procedures. Not later than 1:30 p.m.
(Boston time) on the proposed Drawdown Date of any
Syndicated Loans or Competitive Bid Loans, as applicable,
each of the relevant Banks will make available to the Agent,
at the Agent's Head Office, in immediately available funds,
the amount of such Bank's Commitment Percentage of the
amount of the requested Syndicated Loans or the amount of
such Bank's Competitive Bid Loan, as applicable. Upon
receipt from each Bank of such amount, and upon receipt of
the documents required by sect.sect.9 and 10 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 Loans made available
to the Agent by the relevant Banks. The failure or refusal of
any Bank to make available to the Agent its Commitment
Percentage of the requested Syndicated Loans on any
Drawdown Date shall not excuse any other Bank from
making available to the Agent the amount of such other
Bank's Commitment Percentage of any requested Syndicated
Loans.
2.4.2. 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 Syndicated Loans (or, in the
case of Competitive Bid Loans, the amount of such Bank's
accepted offers of Competitive Bid Loans, if any) 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. 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 Syndicated Loans (or accepted offers of
Competitive Bid Loans, as applicable), 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 Syndicated Loans or Competitive
Bid Loans, as applicable, 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 sect.2.4.2 shall be prima
facie evidence of the amount due and owing to the Agent by
such Bank. If the amount of such Bank's Syndicated Loans
or Competitive Bid Loans, as applicable, 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 Syndicated Loans or Competitive Bid Loans,
as applicable, made on such Drawdown Date. Any payment
by the Borrower to the Agent of any Syndicated Loans or
Competitive Bid Loans pursuant to this sect.2.4.2 shall be
deemed to be a payment of the Loans that were to be made by
the Bank that failed to make such Syndicated Loans or
Competitive Bid Loans, as applicable.
2.5. The Notes. (a) The Syndicated Loans shall be
evidenced by separate promissory notes of the Borrower in
substantially the form of Exhibit F-1 attached hereto (each a
"Syndicated Note"), dated as of the Closing Date and completed
with appropriate insertions. A Syndicated Note shall be payable to
the order of each Bank in a principal amount equal to such Bank's
Commitment Amount or, if less, the outstanding amount of all
Syndicated Loans made by such Bank, plus interest accrued
thereon, as set forth below. The Borrower irrevocably authorizes
each Bank to make, at or about the time of the Drawdown Date of
any Syndicated Loan or at the time of receipt of any payment of
principal on such Bank's Syndicated Note, an appropriate notation
on the Record attached to such Bank's Syndicated Note reflecting
the making of such Syndicated Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the
Syndicated Loans set forth on such Bank's Record shall be prima
facie evidence of the principal amount thereof owing and unpaid to
such Bank, but the failure to record, or any error in so recording,
any such amount on such Bank's Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any
Syndicated Note to make payments of principal of or interest on any
Syndicated Note when due.
(b) The Competitive Bid Loans shall be evidenced by
separate promissory notes of the Borrower in substantially the form
of Exhibit F-2 attached hereto (each a "Competitive Bid Note"),
dated as of the Closing Date and completed with appropriate
insertions. A Competitive Bid Note shall be payable to the order of
each Bank in a principal amount equal to $20,000,000 or, if less,
the outstanding amount of all Competitive Bid Loans made by such
Bank to the Borrower hereunder, as set forth in sect.2.3 hereof, plus
interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Bank to make, at or about the time of
the Drawdown Date of any Competitive Bid Loan made by such
Bank or at the time of receipt of the payment of principal of such
Competitive Bid Loan, an appropriate notation on the Record
attached to such Bank's Competitive Bid Note reflecting the making
of such Competitive Bid Loan and repayments thereof. All such
notations shall constitute prima facie evidence of the amount of
such Competitive Bid Loans and the repayments thereof, but the
failure to record, or any error in so recording such amount on such
Bank's Record shall not limit or otherwise affect the obligations of
the Borrower hereunder or under any Competitive Bid Note to make
payments of principal or interest on any Competitive Bid Note when
due.
2.6. 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
$1,000,000 or an integral multiple thereof or terminate entirely the
unborrowed portion of 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 sect.2.6, 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 on the amount of the reduction. No reduction or
termination of the Commitments or of the Total Commitment may
be reinstated.
2.7. Interest on Loans. Except as otherwise provided in
sect.4.11,
(a) Each Base 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 Base Rate.
(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 a rate per annum equal to the sum of the
Applicable Eurodollar Rate Margin plus the Eurodollar Rate
determined for such Interest Period.
(c) Each Competitive Bid Loan shall bear interest at
the rate per annum specified in the applicable Competitive
Bid Quote with respect to such Competitive Bid Loan.
(d) The Borrower promises to pay interest on each
Loan in arrears on each Interest Payment Date with respect
thereto.
2.8. Conversion Options.
2.8.1. Conversion to Different Type of Syndicated
Loan. The Borrower may elect from time to time to convert
any outstanding Syndicated Loan to a Syndicated Loan of
another Type, provided that (i) with respect to any such
conversion of a Syndicated Loan to a Base Rate Loan, the
Borrower shall give the Agent written notice of such election
by 10:00 a.m. on the proposed conversion date of such
Syndicated Loan; (ii) with respect to any such conversion of a
Eurodollar Rate Loan into a Syndicated Loan of another
Type, such conversion shall only be made on the last day of
the Interest Period with respect thereto; (iii) with respect to
any such conversion of a Base 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
and (iv) no Syndicated Loan may be converted into a a
Eurodollar Rate Loan when any Default or 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
Syndicated Loans to its Domestic Lending Office or its
Eurodollar Lending Office, as the case may be. All or any
part of outstanding Syndicated Loans of any Type may be
converted as provided herein, provided that partial
conversions shall be in an aggregate principal amount of
$500,000 or a whole multiple thereof. Each Conversion
Request relating to the conversion of a Syndicated Loan to or
a Eurodollar Rate Loan shall be irrevocable by the Borrower.
2.8.2. Continuation of Type of Syndicated Loan. Any
Syndicated Loans of any Type may be continued as such upon
the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions
contained in sect.2.8.1; provided 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 Base 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 the
officers of the Agent active upon the Borrower's account have
actual knowledge. In the event that the Borrower fails to
provide any such notice with respect to the continuation of
any Eurodollar Rate Loan as such, then such Eurodollar Rate
Loan shall be automatically converted to a Base Rate Loan on
the last day of the first Interest Period relating thereto. The
Agent shall notify the Banks promptly when any such
automatic conversion contemplated by this sect.2.8 is
scheduled to occur.
2.8.3. 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
$1,000,000 or a whole multiple of $500,000 in excess thereof.
3. REPAYMENT OF THE LOANS.
3.1. 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 Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.
3.2. Mandatory Repayments of Loans. If at any time the
sum of the outstanding amount of the Loans exceeds the Total
Commitment, then the Borrower shall immediately pay the amount
of such excess to the Agent for application to the Loans for the
respective accounts of the Banks. Each prepayment of Loans shall
be allocated among the Banks, in proportion, as nearly as
practicable to the respective unpaid principal amount of each
Bank's Syndicated Note, with adjustments to the extent practicable
to equalize any prior payments or repayments not exactly in
proportion, and if no Syndicated Loans are outstanding, the
Competitive Bid Loans, in proportion, as nearly as practicable, to
the unpaid principal amount of each Bank's Competitive Bid Note.
If at any time the sum of the outstanding amount of the
Competitive Bid Loans exceeds $20,000,000, then the Borrower
shall immediately pay the amount of such excess to the Agent for
application to the Competitive Bid Loans made by the Banks, in
proportion, as nearly as practicable, to the unpaid principal amount
of each Bank's Competitive Bid Note.
3.3. Optional Repayments of Syndicated Loans. The
Borrower shall have the right, at its election, to repay the
outstanding amount of the Syndicated Loans, as a whole or in part,
at any time without penalty or premium, provided that all
prepayments of Eurodollar Rate Loans prior to the end of the
Interest Period relating thereto shall obligate the Borrower to pay
any breakage costs associated with such Eurodollar Rate Loans in
accordance with sect.4.10 hereof. The Borrower shall give the
Agent written notice, no later than 10:00 a.m., Boston time, on the
Business Day of any proposed repayment pursuant to this sect.3.3
of Base Rate Loans, and two (2) Eurodollar Business Days notice of
any proposed repayment pursuant to this sect.3.3 of Eurodollar
Rate Loans, in each case, specifying the proposed date of payment
of such Syndicated Loans and the principal amount to be paid.
Each such partial prepayment of the Loans shall be in an integral
multiple of $500,000, shall be accompanied by the payment of
accrued interest on the principal repaid to the date of payment and
shall be applied first to the principal of Base 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 Syndicated Note, with adjustments to the extent practicable
to equalize any prior repayments not exactly in proportion.
4. CERTAIN GENERAL PROVISIONS.
4.1. Certain Fees.
4.1.1. Closing Fee. The Borrower agrees to pay to the
Agent for the pro rata accounts of the Banks on the Closing
Date a closing fee in the amount of $90,000.
4.1.2. Agent's Fee. The Borrower agrees to pay to the
Agent the fees described in the letter dated as of the date
hereof, between the Agent and the Borrower (the "Agent's
Side Letter") in accordance with the terms and conditions
thereof.
4.2. Facility Fee. The Borrower agrees to pay to the Agent
for the accounts of the Banks in accordance with their respective
Commitment Percentages a facility fee calculated at the rate of the
Applicable Facility Fee Percentage on the average daily amount
during each calendar quarter or portion thereof from the Closing
Date to the Revolving Credit Loan Maturity Date of the Total
Commitment during such calendar quarter. The facility 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 Maturity Date or any earlier
date on which the Commitments shall terminate.
4.3. Funds for Payments.
4.3.1. 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.
4.3.2. 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 or other authority therein
unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed
upon the Borrower with respect to any amount payable by it
hereunder 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.
4.4. Computations. All computations of interest on
Competitive Bid Loans or Eurodollar Rate Loans and fees shall be
based on a 360-day year and paid for the actual number of days
elapsed. All computations of interest on Base Rate Loans shall be
based on a 365-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 Loans as reflected on the Records from
time to time shall be considered correct and binding on the
Borrower unless within five (5) Business Days after the Borrower's
receipt of any notice from the Agent or any of the Banks of such
outstanding amount, the Borrower shall notify the Agent or such
Bank to the contrary.
4.5. Inability to Determine Eurodollar Rate. In the
event that, prior to the commencement of any Interest Period
relating to any Eurodollar Rate Loan, the Agent shall determine
that 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, 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 (i) any Loan Request or Conversion Request with respect to
Eurodollar Rate Loans shall be automatically withdrawn and, shall
be deemed a request for Base Rate Loans, (ii) each Eurodollar Rate
Loan will automatically, on the last day of the then current Interest
Period thereof, become a Base Rate Loan, and (iii) the obligations of
the Banks to make Eurodollar Rate Loans shall be suspended until
the Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so notify the
Borrower and the Banks.
4.6. 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 (i) the commitment of
such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be
suspended and (ii) such Bank's Syndicated Loans then outstanding
as Eurodollar Rate Loans, if any, shall be converted automatically
to Base 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 sect.4.6, 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.
4.7. 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 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 Loans or any
other amounts payable to any Bank or the Agent under this
Credit Agreement or 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
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, the Loans, such
Bank's Commitment, or any class of loans or commitments of
which any of the 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 Loans or such Bank's Commitment, or
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank or the Agent
hereunder on account of such Bank's Commitment or
any of the 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.
4.8. Capital Adequacy. If after the date hereof any Bank
or the Agent determines that (i) 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 (ii) 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 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 Base Rate, the Borrower agrees to pay such
Bank or (as the case may be) the Agent 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 with sect.4.9 hereof. Each
Bank shall allocate such cost increases among its customers in good
faith and on an equitable basis.
4.9. Certificate. A certificate setting forth any additional
amounts payable pursuant to sect.4.7 or 4.8 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.
4.10. 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 (i) default by the
Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans or Competitive Bid 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 or
Competitive Bid Rate Loans, (ii) default by the Borrower in making
a borrowing after the Borrower has given (or is deemed to have
given) a Loan Request or a Conversion Request relating thereto in
accordance with sect.2.2 or sect.2.8 or a Notice of Competitive Bid
Borrowing in accordance with sect.2.3.1(f) hereof, or (iii) the making
of any payment of a Eurodollar Rate Loan or Competitive Bid Rate
Loan or the making of any conversion of any such Eurodollar Rate
Loan to a Base 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 Loans.
4.11. Interest After Default.
4.11.1. Overdue Amounts. Overdue principal and (to
the extent permitted by applicable law) interest on the Loans
and all other overdue amounts payable hereunder or under
any of the other Loan Documents shall bear interest
compounded monthly and payable on demand at a rate per
annum equal to four percent (4%) above the Base Rate until
such amount shall be paid in full (after as well as before
judgment).
4.11.2. Amounts Not Overdue. During the continuance
of a Default or an Event of Default the principal of the Loans
not overdue shall, until such Default or Event of Default has
been cured or remedied or such Default or Event of Default
has been waived by the Majority Banks pursuant to sect.24,
bear interest at a rate per annum equal to the greater of (i)
four percent (4%) above the rate of interest otherwise
applicable to such Loans or (ii) the rate of interest applicable
to overdue principal pursuant to sect.4.11.1.
4.12. Guaranties. The payment and performance of the
Obligations shall be guaranteed by each Subsidiary of the Borrower
which becomes a party to a Guaranty pursuant to sect. 7.5.1 or sect.
7.11.
5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the
Agent as follows:
5.1. Corporate Authority.
5.1.1. Incorporation; Good Standing. Each of the
Borrower and its Subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the
laws of its state of incorporation, (ii) has all requisite
corporate power to own its property and conduct its business
as now conducted and as presently contemplated, and (iii) is
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 or its
Subsidiaries.
5.1.2. 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 (i) are within the corporate authority of
such Person, (ii) have been duly authorized by all necessary
corporate proceedings, (iii) 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 any of its
Subsidiaries is subject or any judgment, order, writ,
injunction, license or permit applicable to the Borrower or
any of its Subsidiaries and (iv) do not conflict with any
provision of the corporate charter or bylaws of, or any
agreement or other instrument binding upon, the Borrower or
any of its Subsidiaries other than the Revolving Credit
Agreement referred to in sect.9.10, which agreement will be
terminated on the Closing Date and the Obligations with
respect to which will be repaid in full on the Closing Date.
5.1.3. Enforceability. The execution and delivery 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 will result in valid and legally binding
obligations of such Person enforceable against it 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.
5.2. 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 of its Subsidiaries 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.
5.3. Title to Properties; Leases. Except as indicated on
Schedule 5.3 hereto, the Borrower and its Subsidiaries own 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.
5.4. Financial Statements. There has been furnished to
the Agent a consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date, and a consolidated
statement of income for the fiscal year then ended, including the
opinion thereof expressed by and signed by the Borrower's
independent certified public accountants. Such balance sheet and
statement of income have been prepared in accordance with
generally accepted accounting principles and fairly present the
financial condition of the Borrower as at the close of business on the
date thereof and the results of operations for the fiscal year then
ended. There are no contingent liabilities of the Borrower or any of
its Subsidiaries as of such date involving material amounts, known
to the Borrower not disclosed in said balance sheet and the related
notes thereto.
5.5. No Material Changes, etc. Since the Balance Sheet
Date there has occurred no materially adverse change in the
financial condition or business of the Borrower and its Subsidiaries
as shown on or reflected in the consolidated balance sheet of the
Borrower and its Subsidiaries as at the Balance Sheet Date, or the
consolidated 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 on the business or financial
condition of the Borrower and its Subsidiaries on a consolidated
basis. Except as set forth on Schedule 5.5 hereto, the Borrower has
not, since the Balance Sheet Date, made any Distributions.
5.6. Franchises, Patents, Copyrights, etc. Each of the
Borrower and its Subsidiaries possesses all franchises, patents,
copyrights, trademarks, trade names, licenses and permits, and
rights in respect of the foregoing, adequate for the conduct of its
business substantially as now conducted without known conflict
with any rights of others.
5.7. Litigation. There are no actions, suits, proceedings or
investigations of any kind pending or threatened against the
Borrower or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined,
might, in any case materially adversely affect the properties, assets,
financial condition or business of the Borrower and its Subsidiaries
on a consolidated basis or materially impair the right of the
Borrower and 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, 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.
5.8. No Materially Adverse Contracts, etc. Neither the
Borrower nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, 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 of its Subsidiaries on a consolidated
basis. Neither the Borrower nor any of its 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 its Subsidiaries on a consolidated
basis.
5.9. Compliance With Other Instruments, Laws,
etc. Neither the Borrower nor any of its Subsidiaries is in violation
of any provision of its charter documents, bylaws, 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 its Subsidiaries on a consolidated
basis.
5.10. Tax Status. The Borrower and its Subsidiaries (i)
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, (ii) 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 (iii)
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 Borrower knows of no basis
for any such claim.
5.11. No Event of Default. No Default or Event of Default
has occurred and is continuing.
5.12. Holding Company and Investment Company
Acts. Neither the Borrower nor any of its 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.
5.13. 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 its Subsidiaries or rights
thereunder.
5.14. Chief Executive Office. The Borrower's chief
executive office is located at 500 Main Street, Groton,
Massachusetts 01471.
5.15. Certain Transactions. Except as set forth on
Schedule 5.15, none of the officers, directors, or employees of the
Borrower or any of its Subsidiaries is presently a party to any
transaction with the Borrower or any of its Subsidiaries (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.
5.16. Employee Benefit Plans.
5.16.1. 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 sect.103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
5.16.2. Terminability of Welfare Plans. Under each
Employee Benefit Plan which is an employee welfare benefit
plan within the meaning of sect.3(1) or sect.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.
5.16.3. 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 sect.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 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 sect.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.
5.16.4. 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 sect.4201 of ERISA or as a result
of a sale of assets described in sect.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 sect.4241 or sect.4245 of
ERISA or that any Multiemployer Plan intends to terminate
or has been terminated under sect.4041A of ERISA.
5.17. Purpose of Loans; Regulations U and X. The
proceeds of the Loans shall be used (a)(i) to finance acquisitions
permitted by sect.7.5, and (ii) to finance repurchases of the
Borrower's common stock and other Distributions to the extent
permitted by sect.7.4 and (b) for working capital and general
corporate purposes. No portion of any Loan is to be used, except as
otherwise permitted herein, 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, nor is any
portion of any Loan to be used in any manner which, after giving
effect to sect.7.5.1 and Permitted Acquisitions or to sect.7.11 or
otherwise, would be in violation of such Regulations U or X.
5.18. Environmental Compliance. The Borrower has
taken all necessary steps to investigate the past and present
condition and usage of the Real Estate and the operations
conducted thereon and, based upon such diligent investigation, has
determined that:
(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 environment or the business, assets or financial
condition of the Borrower and its Subsidiaries on a
consolidated basis;
(b) except as set forth on Schedule 5.18 attached
hereto: 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 any one of them 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. sect.6903(5), any hazardous substances as defined
by 42 U.S.C. sect.9601(14), any pollutant or contaminant as
defined by 42 U.S.C. sect.9601(33) and any toxic substances,
oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("Hazardous
Substances") which any one of them 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 any of its
Subsidiaries 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) except as set forth on Schedule 5.18 attached
hereto: (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; and no underground tank or other
underground storage receptacle for Hazardous Substances is
located on any portion of the Real Estate; (ii) in the course of
any activities conducted by the Borrower, 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 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
(d) None of the Borrower and its Subsidiaries, or any
of the other 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 recording of any
Mortgage or to the effectiveness of any other transactions
contemplated hereby.
5.19. Subsidiaries, etc. Schedule 5.19 hereto sets forth all
Subsidiaries of the Borrower. Except as set forth on Schedule 5.19
hereto, neither the Borrower nor any Subsidiary of the Borrower is
engaged in any joint venture or partnership with any other person.
Except for domestic Subsidiaries of the Borrower which are party to
a Guaranty, no domestic Subsidiary of the Borrower is presently
engaged in business activities of any kind or nature (except that
such Subsidiary may have qualified to do business in a foreign
jurisdiction), (b) has a net worth or assets of more than a de
minimus value or (c) has issued any capital stock to any person
other than the Borrower or a Subsidiary of the Borrower.
5.20. Disclosure. No representation or warranty made by
the Borrower or any of its Subsidiaries in this Credit Agreement or
any agreement, instrument, document, certificate or other written
statement furnished to the Agent or any Bank by or on behalf of the
Borrower or any of its Subsidiaries 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 in which they are
made.
5.21. Fiscal Year. Each of the Borrower and its
Subsidiaries has a fiscal year which ends during June of each
calendar year and fiscal quarters which end during September,
December and March of each calendar year.
5.22. Solvency. The Borrower and its subsidiaries on a
consolidated basis (both before and after giving effect to the
transactions contemplated by the Credit Agreement and the other
Loan Documents (i) is solvent, (ii) has assets having a fair value in
excess of its liabilities, (iii) has assets having a fair value in excess
of the amount required to pay its liabilities on its debts as they
become due and matured, and (iv) has, and expects to continue to
have, access to adequate capital for the conduct of its business and
the ability to pay its debts as they mature.
6. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan
or Note is outstanding or any Bank has any obligation to make any
Loans:
6.1. Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on the
Loans and the closing fees, facility fees and Agent's fee provided for
in this Credit Agreement, all in accordance with the terms of this
Credit Agreement and the Notes.
6.2. Maintenance of Office. The Borrower will maintain
its chief executive office in Groton, 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 may be given or made.
6.3. Records and Accounts. The Borrower will (a) keep,
and cause each of its Subsidiaries to 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; (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; and (c) will at all
times have engaged Deloitte & Touche, LLP or other independent
certified public accountants satisfactory to the Agent as its
accountants, with no more than thirty (30) days elapsing between
the termination of any such accountants as the Borrower's
accountants and the engagement of successor accountants
satisfactory to the Agent.
6.4. Financial Statements, Certificates and
Information. The Borrower will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later
than ninety (90) 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
consolidated statement of cash flow and consolidating
statement of income and consolidating statement of cash flow
for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such consolidated
and consolidating statements to be in reasonable detail,
prepared in accordance with generally accepted accounting
principles, and certified without qualification by Deloitte &
Touche LLP or by other independent certified public
accountants satisfactory to the Agent together with a written
statement from such accountants to the effect that they have
read a copy of this Credit Agreement, and 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 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 forty-five (45) days after the end of each of the 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 consolidated statement of cash flow and
consolidating statement of income and consolidating
statement of cash flow 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 G
hereto and setting forth in reasonable detail computations
evidencing compliance with the covenants contained in sect.8
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; and
(e) from time to time such other financial data and
information (including accountants' management letters) as
the Agent or any Bank may reasonably request.
6.5. Notices.
6.5.1. Defaults. The Borrower will promptly notify the
Agent and each of the Banks 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 or surety, the Borrower
shall forthwith give written notice thereof to each of the
Banks, describing the notice or action and the nature of the
claimed default.
6.5.2. Environmental Events. The Borrower will
promptly give notice to the Agent (i) of any violation of any
Environmental Law that the Borrower or any of its
Subsidiaries 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 (ii) 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 on a
consolidated basis.
6.5.3. Notice of Litigation and Judgments. The
Borrower will, and will cause each of its Subsidiaries to, 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 on a consolidated basis and stating the nature
and status of such litigation or proceedings. The Borrower
will, and will cause each of its Subsidiaries to, 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, final or otherwise, against the Borrower or any of
its Subsidiaries in an amount in excess of $1,000,000.
6.6. 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 or limited liability
partnership. The Borrower (i) 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, repair and working order and supplied with all
necessary equipment, (ii) 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 (iii) 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 sect.6.6 shall prevent the
Borrower from discontinuing the operation and maintenance of any
of its properties or those of its Subsidiaries or terminating the
corporate existence of any Subsidiary if such discontinuance or
termination 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 on a consolidated basis.
6.7. 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.
6.8. 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 (other than taxes,
assessments and other governmental charges imposed by foreign
jurisdictions that in the aggregate are not material to the business
or assets of the Borrower on an individual basis or of the Borrower
and its Subsidiaries on a consolidated basis) 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 and each
Subsidiary of the Borrower will 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.
6.9. Inspection of Properties and Books, etc.
6.9.1. General. 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 or any of its Subsidiaries to examine the books
of account of the Borrower and its Subsidiaries (and to make
copies thereof and extracts therefrom), to conduct periodic
commercial finance examinations, 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.
6.9.2. Communication with Accountants. The Borrower
authorizes the Agent and, if accompanied by the Agent, the
Banks to communicate directly with the Borrower's
independent certified public accountants following advance
notice to the Borrower offering the Borrower the opportunity
to be part of any oral communication with such accountants
and authorizes such accountants to disclose to the Agent and
the Banks any and all financial statements and other
supporting financial documents and schedules including
copies of any management letter with respect to the business,
financial condition and other affairs of the Borrower or any of
its Subsidiaries. At the request of the Agent, the Borrower
shall deliver a letter addressed to such accountants
instructing them to comply with the provisions of this
sect.6.9.2.
6.10. Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will, and will cause each of its Subsidiaries
to, comply with (i) the applicable laws and regulations wherever its
business is conducted, including all Environmental Laws, (ii) the
provisions of its charter documents and by-laws, (iii) all agreements
and instruments by which it or any of its properties may be bound
and (iv) all applicable decrees, orders, and judgments. If at any
time while any Loan or Note is outstanding or either Bank has any
obligation to make Loans hereunder, 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 may fulfill any of its obligations
hereunder, 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
Banks with evidence thereof.
6.11. Employee Benefit Plans. The Borrower will (i)
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
sect.103(d) of ERISA and Annual Report, Form 5500, with all
required attachments, in respect of each Guaranteed Pension Plan
and (ii) 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 sect.sect.302, 4041, 4042, 4043, 4063, 4065,
4066 and 4068 of ERISA, or in respect of a Multiemployer Plan,
under sect.sect.4041A, 4202, 4219, 4242, or 4245 of ERISA.
6.12. Use of Proceeds. The Borrower will use the proceeds
of the Loans solely to finance acquisitions permitted by sect.7.5 and
repurchases of the Borrower's common stock or other Distributions
to the extent permitted by sect.7.4 and for working capital and
general corporate purposes, and not in violation of Regulations U or
X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.
6.13. 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
satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan
or Note is outstanding or any Bank has any obligation to make any
Loans:
7.1. Restrictions on Indebtedness. The Borrower will not,
and will not permit any of 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 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 sect.6.8;
(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 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) obligations under Capitalized Leases not exceeding
$5,000,000 in aggregate amount at any time outstanding;
(g) Indebtedness incurred in connection with the
acquisition after the date hereof of any real or personal
property by the Borrower or any Subsidiary of the Borrower,
provided that the aggregate principal amount of such
Indebtedness of the Borrower and its Subsidiaries shall not
exceed the aggregate amount of $5,000,000 at any one time;
(h) Indebtedness existing on the date of this Credit
Agreement and listed and described on Schedule 7.1 hereto;
(i) Indebtedness of a Subsidiary of the Borrower to the
Borrower existing on the Closing Date, and after the Closing
Date, in an aggregate amount not to exceed $5,000,000 at any
one time;
(j) Indebtedness of the Borrower to any Subsidiary of
the Borrower in an aggregate amount not to exceed
$5,000,000 at any one time;
(k) Indebtedness in respect of (i) overseas lines of
credit of the Borrower or any of its Subsidiaries, (ii)
equipment leases entered into by the Borrower or any of its
Subsidiaries; (iii) letters of credit, (iv) the granting of surety,
appeal, bid, performance or other similar bonds or (v)
guaranties or other contingent obligations in respect of
Indebtedness of any Person, all of which, in the aggregate,
shall not exceed $10,000,000, and
(l) Indebtedness with respect to interest rate protection
agreements between the Borrower and any of the Banks, and
(m) Indebtedness for borrowed money, debt or similar
monetary obligations assumed in respect of Permitted
Acquisitions, to the extent permitted by paragraph 2(b) of the
definition thereof, and other Indebtedness assumed in respect
of Permitted Acquisitions and existing prior to the date of any
Permitted Acquisition and not created in contemplation
thereof;
(n) Indebtedness not expressly permitted under
Subsections (a) through (m) of this sect.7.1 in an aggregate
amount not to exceed $2,000,000 at any time.
7.2. Restrictions on Liens. The Borrower will not, and will
not permit any of its Subsidiaries to, (i) 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; (ii) 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; (iii) 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; (iv) 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 (v) 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 any Subsidiary of the Borrower
may create or incur or suffer to be created or incurred or to exist:
(a) 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;
(b) 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;
(c) liens on properties in respect of judgments or
awards, the Indebtedness with respect to which is permitted
by sect.7.1(d);
(d) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties, in existence
less than one hundred twenty (120) days from the date of
creation thereof in respect of obligations not overdue;
(e) encumbrances 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 a Subsidiary of the Borrower 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 and its Subsidiaries, which defects do not
individually or in the aggregate have a materially adverse
effect on the business of the Borrower individually or of the
Borrower and its Subsidiaries on a consolidated basis;
(f) presently outstanding liens listed on Schedule 7.2
hereto;
(g) purchase money security interests in or purchase
money mortgages on real or personal property acquired after
the date hereof to secure purchase money Indebtedness of the
type and amount permitted by sect.7.1(g), incurred in
connection with the acquisition of such property, which
security interests or mortgages cover only the real or personal
property so acquired.
(h) rights of lessors under Capitalized Leases
permitted by sect.7.1(f);
(i) liens on assets acquired pursuant to Permitted
Acquisitions and securing Indebtedness otherwise permitted
by sect.7.1(m) and the definition of Permitted Acquisitions;
and
(j) liens on any capital stock of the Borrower or other
Margin Stock for so long as such stock constitutes Margin
Stock.
7.3. Restrictions on Investments. The Borrower will not,
and will not permit any of its Subsidiaries to, make or permit to
exist or to remain outstanding any Investment 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, and demand deposits
or certificates of deposit of foreign banks having total assets
in excess of the equivalent of $25,000,000,000;
(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 7.3 hereto;
(e) Investments with respect to Indebtedness permitted
by sect.7.1(i) and sect.7.1(j) so long as such entities remain
Subsidiaries of the Borrower;
(f) Investments consisting of any Guaranty;
(g) Investments consisting of promissory notes received
as proceeds of asset dispositions permitted by sect.7.5.2;
(h) Investments consisting of loans and advances to
employees for moving, entertainment, travel, hardship and
other similar expenses in the ordinary course of business not
to exceed $1,000,000 in the aggregate at any time
outstanding; and
(i) tax exempt municipal bonds or bond funds rated AA
or higher by Standard and Poor's Ratings Group or Moody's
Investors Services, Inc.;
(j) Investments (existing as of the Closing Date) in
Subsidiaries;
(k) Investments in respect of Permitted Acquisitions to
the extent permitted by the definition thereof;
(l) Investments by a foreign Subsidiary in marketable
direct or guaranteed obligations of the national government
of its country of incorporation that mature within one (1) year
following the date of purchase by such Subsidiary;
(m) Investments by the Borrower in its capital stock
held as Treasury stock (existing as of the Closing Date or to
the extent repurchased in accordance with the requirements
of sect.7.4) or in any employee benefit plan of the Borrower;
and
(n) Investments not otherwise expressly permitted
under Subsections (a)-(m) of this sect.7.3, in an aggregate
amount not to exceed $3,000,000 at any one time.
7.4. Distributions. The Borrower will not make any
Distributions; provided, however, that so long as no Default or
Event of Default has occurred and is continuing or would occur
after giving effect thereto, and subject in particular to the
Borrower's continuing compliance with its covenants set forth in
sect.sect.8.1-8.3 hereof, the Borrower may pay dividends on its
common stock in an aggregate amount not to exceed $25,000,000 in
any fiscal year of the Borrower and may make repurchases of its
own issued and outstanding common stock pursuant to any stock
repurchase plan approved by its Board of Directors in an aggregate
amount not to exceed, when combined with cash dividends paid in
compliance with this sect.7.4, $100,000,000.
7.5. Merger, Consolidation.
7.5.1. Mergers and Acquisitions. The Borrower will
not, and will not permit any of 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 (a) the merger or
consolidation of one or more of the Subsidiaries of the
Borrower with and into the Borrower, (b) the merger or
consolidation of two or more Subsidiaries of the Borrower, or
(c) Permitted Acquisitions.
7.5.2. Disposition of Assets. The Borrower will not,
and will not permit any of its Subsidiaries to, become a party
to or agree to or effect any disposition of assets, other than (a)
the sale of inventory, (b) the license or lease of intellectual
property in the ordinary course of business, and (c) the
disposition of assets, in each case set forth in clauses (a), (b)
and (c) hereof in the ordinary course of business and
consistent with past practices, (d) dispositions of capital stock
of the Borrower and other Margin Stock for so long as such
stock constitutes Margin Stock, and (e) other dispositions of
assets in an aggregate amount not to exceed the lesser of (i)
$5,000,000 and (ii) five percent (5%) of Consolidated Total
Assets (determined as of the date or dates of such
dispositions).
7.6. Sale and Leaseback. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby the Borrower or any Subsidiary of
the Borrower shall sell or transfer any property owned by it in order
then or thereafter to lease such property or lease other property
that the Borrower or any Subsidiary of the Borrower intends to use
for substantially the same purpose as the property being sold or
transferred, other than a sale and leaseback arrangement related to
the Borrower's Flagstaff, Arizona telemarketing facility under
construction as of the date hereof, in an aggregate amount not to
exceed $3,000,000.
7.7. Compliance with Environmental Laws. Except as
set forth in Schedule 5.18 hereto, the Borrower will not, and will
not permit any of its Subsidiaries to, (i) use any of the Real Estate
or any portion thereof for the handling, processing, storage or
disposal of Hazardous Substances, (ii) cause or permit to be located
on any of the Real Estate any underground tank or other
underground storage receptacle for Hazardous Substances, (iii)
generate any Hazardous Substances on any of the Real Estate, (iv)
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 (v)
otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or
bring such Real Estate in violation of any Environmental Law.
7.8. Employee Benefit Plans. Neither the Borrower nor
any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the
meaning of sect.406 of ERISA or sect.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
sect.302 of ERISA, whether or not such deficiency is or may
be waived; or
(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 sect.302(f) or sect.4068 of ERISA;
or
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of sect.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.
7.9. Fiscal Year. Neither the Borrower nor any of its
Subsidiaries will change the date of the end of its fiscal year or any
fiscal quarter from that set forth in sect.5.22 hereof.
7.10. Prohibition on Negative Pledges. Neither the
Borrower nor any of its Subsidiaries will enter into, or be or become
bound by or subject to, any agreement prohibiting the creation or
assumption of any lien or security interest upon its properties,
whether now owned or hereafter acquired.
7.11.
Creation and Maintenance of Subsidiaries. Neither the
Borrower nor any of its Subsidiaries shall create any Subsidiary
(other than any Subsidiaries existing on the Closing Date and
disclosed in sect.5.19 hereto) unless (a) one hundred percent (100%)
of the capital stock or other equity interests (subject to the
exclusion of any legally required directors' qualifying shares) of
such Subsidiary are owned directly or indirectly by the Borrower,
(b) prior to the formation of such Subsidiary, the Borrower shall
notify the Agent and the Banks thereof, and (c) contemporaneously
with the formation of such Subsidiary, the Borrower shall (i) cause
such Subsidiary to guaranty all of the Obligations hereunder
pursuant to a Guaranty, which Guaranty shall be a Loan Document
hereunder, and (ii) cause such Subsidiary to deliver to the Banks
and the Agent satisfactory evidence of proper corporate
authorization and legal opinions with respect to such Guaranty. In
the event that any domestic Subsidiary existing on the Closing Date
and disclosed on Schedule 5.19 shall hereafter become engaged in
business of any kind or nature (except that such Subsidiary is
qualified to do business in a foreign jurisdiction), shall have a net
worth or assets of more than a de minimus value or shall have
issued any capital stock to any person other than the Borrower or a
Subsidiary of the Borrower, then the Borrower shall immediately
notify the Agent and the Banks thereof and shall immediately cause
such Subsidiary to comply with the requirement of such subsection
(c) hereof.
7.12. Conduct of Business. The Borrower will not, without
the prior written consent of the Agent and the Majority Banks,
conduct any business or operations materially different from those
conducted by it on the Closing Date.
8. FINANCIAL COVENANTS OF THE BORROWER.
8.1. Funded Debt to EBITDA. The Borrower will not as of
the end of any four (4) consecutive fiscal quarters of the Borrower
ending on any quarter end, permit the ratio of (a) Consolidated
Funded Debt as at such quarter end to (b) EBITDA for such four (4)
consecutive fiscal quarters then ended to be greater than 2.0:1.0.
8.2. Minimum Fixed Charge Coverage Ratio. The
Borrower will not, as at the end of any four (4) consecutive fiscal
quarters of the Borrower ending on any quarter end, permit the
ratio of (a) EBITDA for such period minus Capital Expenditures for
such period to (b) Consolidated Total Interest Expense for such
period plus any scheduled amortization payments on Indebtedness
permitted by sect.7.1, to be less than 3.5:1.0.
8.3. Consolidated Net Worth. The Borrower will not
permit Consolidated Net Worth at any time to be less than the sum
of $50,000,000 plus (ii) on a cumulative basis, fifty percent (50%) of
positive Consolidated Net Income for each fiscal quarter beginning
with the fiscal quarter ended March 29, 1997.
9. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Loans shall
be subject to the satisfaction of the following conditions precedent
on or prior to March 31, 1997:
9.1. Loan Documents. 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.
9.2. Certified Copies of Charter Documents. Each of the
Banks shall have received from the Borrower a copy, certified by a
duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (i) its charter or other incorporation
documents as in effect on such date of certification, and (ii) its by-
laws as in effect on such date.
9.3. 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 Banks shall have been provided to each of the Banks.
9.4. Incumbency Certificate. Each of the Banks shall
have received from the Borrower an incumbency certificate, dated
as of the Closing Date, signed by a duly authorized officer of the
Borrower, and giving the name and bearing a specimen signature of
each individual who shall be authorized: (i) to sign, in the name
and on behalf of the Borrower, each of the Loan Documents; (ii) to
make Loan Requests, Conversion Requests, Competitive Bid Quote
Requests and Notices of Competitive Bid Borrowing; and (iii) to give
notices and to take other action on its behalf under the Loan
Documents.
9.5. UCC Search Results. The Agent shall have received
from the Borrower the results of UCC searches in jurisdictions
certified by the Borrower as constituting the location of all offices
and locations, including the chief executive office, of the Borrower
and in such other jurisdictions as the Agent may request, indicating
no liens other than Permitted Liens and otherwise in form and
substance satisfactory to the Agent.
9.6. Certificates of Insurance. The Agent shall have
received a certificate of insurance from an independent insurance
broker dated as of the Closing Date, identifying insurers, types of
insurance, insurance limits, and policy terms, and otherwise
describing the insurance obtained in accordance with the provisions
hereof.
9.7. Solvency Certificate. Each of the Banks shall have
received an officer's certificate of the Borrower dated as of the
Closing Date as to the solvency of the Borrower and its Subsidiaries
following the consummation of the transactions contemplated
herein and in form and substance satisfactory to the Banks.
9.8. Opinions of Counsel. Each of the Banks and the
Agent shall have received a favorable 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 Hill &
Barlow, counsel to the Borrower and its Subsidiaries.
9.9. Payment of Fees. The Borrower shall have paid to the
Banks or the Agent, as appropriate, the closing fee and Agent's fee
pursuant to sect.4.1.
9.10. Repayment of Existing Indebtedness. The
Borrower shall have repaid all obligations to FNBB under the
Revolving Credit Agreement dated as of August 28, 1996 between
the Borrower and FNBB, including principal, interest, fees and
other amounts owing thereunder, and FNBB shall have returned to
the Borrower the Note (as defined in such Revolving Credit
Agreement dated as of August 28, 1996), marked "Cancelled" or
"Paid in Full".
10. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on
or after the Closing Date, shall also be subject to the satisfaction of
the following conditions precedent:
10.1. Representations True; No Event of Default. Each
of the representations and warranties of any 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 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.
10.2. 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 Loan.
10.3. 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.
10.4. 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.
11. EVENTS OF DEFAULT; ACCELERATION; ETC.
11.1. 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
Loans 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 fail to pay any interest on the
Loans, the facility 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;
(c) the Borrower shall fail to comply with any of its
covenants contained in sect.sect.6, 7 or 8;
(d) the Borrower or any of its Subsidiaries 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 sect.11) 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 of its Subsidiaries 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, or fail to observe or perform any
material term, covenant or agreement contained in any
agreement by which it is bound (excluding, however, any such
term, covenant or agreement relating to the pledge or
disposition of capital stock of the Borrower or other Margin
Stock for so long as such stock constitutes Margin Stock),
evidencing or securing borrowed money or credit received or
in respect of any Capitalized Leases 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;
(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 any of its Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein or such
petition or application shall not have been dismissed within
forty-five (45) 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 Subsidiary of the Borrower 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 $1,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded, in each case otherwise than
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 any of its Subsidiaries party thereto or any of
their respective stockholders, or any court or any other
governmental or regulatory authority or agency of competent
jurisdiction shall 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 $2,000,000 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 Guaranteed Pension 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 assets of the Borrower or its
Subsidiaries, 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 any of 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 on a consolidated basis;
(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 on a
consolidated basis;
(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 or threatened
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 and its Subsidiaries having a fair
market value in excess of $5,000,000; or
(p) (i) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of
1934, as amended, but other than Jay Rhoads and/or Richard
Rhoads) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of twenty percent
(20%) or more of the outstanding shares of common stock of
the Borrower; (ii) Jay Rhoads and/or Richard Rhoads shall
have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of twenty-five percent (25%) or
more of the outstanding shares of common stock of the
Borrower; or (iii) during any period of twelve (12) consecutive
calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to
constitute a majority of the board of directors of the Borrower;
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 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 sect.11.1(g), 11.1(h) or 11.1(j), all such amounts
shall become immediately due and payable automatically and
without any requirement of notice from the Agent or any Bank.
11.2. Termination of Commitments. If any one or more of
the Events of Default specified in sect.11.1(g), sect.11.1(h) or
sect.11.1(j) shall occur, any unused portion of the credit hereunder
shall forthwith terminate and each of the Banks shall be relieved of
all obligations to make Loans to the Borrower. If any other Event of
Default shall have occurred and be continuing, or if on any
Drawdown Date the conditions precedent to the making of the
Loans to be made on such Drawdown Date are not satisfied, 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 Loans. If
any such notice is given to the Borrower the Agent will forthwith
furnish a copy thereof to each of the Banks. No termination of the
credit hereunder shall relieve the Borrower of any of the
Obligations or any of its existing obligations to any of the Banks
arising under other agreements or instruments.
11.3. 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 Loans
pursuant to sect.11.1, each Bank, if owed any amount with respect
to the Loans, may, with the consent of the Majority Banks but not
otherwise, 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.
No remedy herein conferred upon any Bank or the Agent or the
holder of any Note 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. 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
securities or other property of the Borrower in the possession of
such Bank may be applied to or set off by such Bank against the
payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrower to such Bank. Each of the
Banks agrees with each other Bank that (i) 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 Notes held by such Bank,
such amount shall be applied ratably to such other Indebtedness
and to the Indebtedness evidenced by all such Notes held by such
Bank, and (ii) 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 Notes held by 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 Note or
Notes held by such Bank any amount in excess of its ratable portion
of the payments received by all of the Banks with respect to the
Notes held by 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 Notes held by 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.
13. THE AGENT.
13.1. 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 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 1 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.
13.2. 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.
13.3. 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.
13.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of this
Credit Agreement, the Notes, any of the other Loan Documents or
any instrument at anytime constituting, or intended to constitute,
collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or collectability
of any such amounts owing with respect to the 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 Notes or to inspect
any of the properties, books or records of the Borrower or any of its
Subsidiaries. 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 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 or any of its Subsidiaries. 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.
13.5. Payments.
13.5.1. 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.
13.5.2. Distribution by Agent. If in the opinion of the
Agent the distribution of any amount received by it in such
capacity hereunder, under the 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.
13.5.3. Delinquent Banks. Notwithstanding anything
to the contrary contained in this Credit Agreement or any of
the other Loan Documents, any Bank that fails (i) to make
available to the Agent its pro rata share of any Loan or (ii) to
comply with the provisions of sect.12 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 to 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 Loans, interest, fees or otherwise, to the
remaining nondelinquent Banks for application to, and
reduction of, their respective pro rata shares of all
outstanding Syndicated 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 Syndicated Loans. 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 Syndicated Loans of the
nondelinquent Banks, the Banks' respective pro rata shares
of all outstanding Syndicated Loans have returned to those in
effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
13.6. Holders of Notes. The Agent may deem and treat the
payee of any Note as the absolute owner 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.
13.7. Indemnity. The Banks ratably agree hereby to
indemnify and hold harmless the Agent and its Affiliates 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 or any of its Affiliates has not been
reimbursed by the Borrower as required by sect.14), and liabilities
of every nature and character arising out of or related to this Credit
Agreement, the Notes, or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or the
Agent's or any of its Affiliate's actions taken hereunder or
thereunder, except to the extent that any of the same shall be
directly caused by the Agent's or such Affiliate's willful misconduct
or gross negligence.
13.8. Agent as Bank. In its individual capacity, FNBB
shall have the same obligations and the same rights, powers and
privileges in respect to its Commitment and the Loans made by it,
and as the holder of any of the Notes, as it would have were it not
also the Agent.
13.9. 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 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.
13.10. 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 sect.13.10 it shall promptly notify
the other Banks of the existence of such Default or Event of
Default.
14. EXPENSES.
The Borrower agrees to pay (i) the reasonable costs of
producing and reproducing this Credit Agreement, the other Loan
Documents and the other agreements and instruments mentioned
herein, (ii) any taxes (including any interest and penalties in
respect thereto) payable by the Agent, any of its Affiliates or any of
the Banks (other than taxes based upon the Agent's, such Affiliate'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), (iii) 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,
(iv) the reasonable fees, expenses and disbursements of the Agent
incurred by the Agent in connection with the preparation,
syndication, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including in
connection with the conduct of any commercial finance
examinations, (v) all reasonable out-of-pocket expenses (including
without limitation reasonable attorneys' fees and costs, which
attorneys may be employees of either Bank or the Agent, and
reasonable consulting, accounting, appraisal, and similar
professional fees and charges) incurred by any Bank or the Agent in
connection with (A) 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 (B) 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 any
of its Subsidiaries and (vi) all reasonable fees, expenses and
disbursements of any Bank or the Agent incurred in connection
with UCC searches. The covenants of this sect.14 shall survive
payment or satisfaction of payment of amounts owing with respect
to the Notes.
15. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the
Agent and the Banks from and against any and all claims, actions
and suits 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, (i) any actual or proposed use by the
Borrower or any of its Subsidiaries of the proceeds of any of the
Loans, (ii) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan
Documents or (iii) 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
sect.15 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 sect.15 shall
survive payment of satisfaction in full of all other obligations.
16. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties
made herein, in the Notes, in any of the other Loan Documents or in
any documents or other papers delivered by or on behalf of the
Borrower or any of its Subsidiaries pursuant hereto shall be deemed
to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by
any of them, and shall survive the making by the Banks of the
Loans, as herein contemplated, and shall continue in full force and
effect so long as any amount due under this Credit Agreement or
the Notes or any of the other Loan Documents remains outstanding
or any Bank has any obligation to make any Loans, 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 or any of its Subsidiaries pursuant hereto or
in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower or such
Subsidiary hereunder.
17. ASSIGNMENT AND PARTICIPATION.
17.1. 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 Loans at the time owing to it) and the Notes held by it; provided
that (i) 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 and the Agent, will not be unreasonably
withheld, (ii) 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, (iii) each assignment shall
be in an amount that is a whole multiple of $5,000,000, and (iv)
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
$5,000,000, and (v) 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 H hereto (an "Assignment and Acceptance"),
together with any 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, (i) 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 (ii) the assigning Bank shall, to the extent provided in such
assignment and upon payment to the Agent of the registration fee
referred to in sect.17.3, be released from its obligations under this
Credit Agreement.
17.2. 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 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 and its Subsidiaries 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 sect.5.4 and sect.6.4
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.
17.3. 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 Loans owing to 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 $2,500.
17.4. New Notes. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together
with each Note subject to such assignment, the Agent shall (i)
record the information contained therein in the Register, and (ii)
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
Note, a new 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
Note to the order of the assigning Bank in an amount equal to the
amount retained by it hereunder. Such new Notes shall provide
that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal
amount of the surrendered Notes, shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in
substantially the form of the assigned Notes. Within five (5) days of
issuance of any new Notes pursuant to this sect.17.4, 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 Notes and the legality, validity and binding effect thereof,
in form and substance reasonably satisfactory to the Banks. The
surrendered Notes shall be cancelled and returned to the Borrower.
17.5. 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 (i) each such participation shall be
in an amount of not less than $5,000,000, (ii) any such sale or
participation shall not affect the rights and duties of the selling
Bank hereunder to the Borrower and (iii) 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 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 facility fees to which such participant is entitled
or extend any regularly scheduled payment date for principal or
interest.
17.6. 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 participants or potential assignees
or participants shall agree (i) to treat in confidence such
information unless such information otherwise becomes public
knowledge, (ii) not to disclose such information to a third party,
except as required by law or legal process and (iii) not to make use
of such information for purposes of transactions unrelated to such
contemplated assignment or participation.
17.7. 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
sect.11.1 or sect.11.2, 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 Loans. If any Bank sells a participating interest in
any of the 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 sect.11.1 or sect.11.2 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 Loans to the extent of such
participation.
17.8. Miscellaneous Assignment Provisions. Any
assigning Bank shall retain its rights to be indemnified pursuant to
sect.15 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. If FNBB transfers all of its interest, rights
and obligations under this Credit Agreement, the Agent shall, in
consultation with the Borrower and with the consent of the
Borrower and the Majority Banks, appoint another Bank to act as a
reference bank hereunder for purposes of the definition of
Eurodollar Rate. Anything contained in this sect.17 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 Notes) to any of the twelve
Federal Reserve Banks organized under sect.4 of the Federal
Reserve Act, 12 U.S.C. sect.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.
17.9. 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.
18. 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 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, telefax or telex
and confirmed by delivery via courier or postal service, addressed as
follows:
(a) if to the Borrower, at 500 Main Street, Groton,
Massachusetts 01471, Attention: John F. Fairbanks, 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 100 Federal Street, Boston,
Massachusetts 02110, USA, Attention: Chris D. Francis, 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 1 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 third Business Day
following the mailing thereof.
19. GOVERNING LAW.
THIS CREDIT AGREEMENT AND EACH OF THE
OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, 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 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 sect.18. 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.
20. HEADINGS.
The captions in this Credit Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
21. 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 so 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.
22. 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
sect.24.
23. 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 Notes or any of the
other Loan Documents, any rights or obligations hereunder or
thereunder or the performance of such rights and obligations.
Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition
to, actual damages. The Borrower (i) 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 (ii) acknowledges that the Agent and the Banks have
been induced to enter into this Credit Agreement, the other Loan
Documents to which it is a party by, among other things, the
waivers and certifications contained herein.
24. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Credit
Agreement, any consent or approval required or permitted by this
Credit Agreement to be given by one or more or all of the Banks
may be given, and any term of this Credit Agreement or of any
other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Borrower of
any terms of this Credit Agreement 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 Notes
(other than interest accruing pursuant to sect.4.11.2 following the
effective date of any waiver by the Majority Banks of the Default or
Event of Default relating thereto), the term of the Notes, the
amount of the Commitments of the Banks, and the amount of the
facility 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 the
amount of the Agent's fee and sect.13 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 either 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.
25. 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.
26. PRIOR CREDIT AGREEMENT.
Each of FNBB and the Borrower agree that (a) all amounts
outstanding as of the Closing Date under the Revolving Credit
Agreement dated as of August 28, 1996 between the Borrower and
FNBB, including principal interest, and fees, have been repaid and
(b) such Agreement, together with all commitments to lend
thereunder, are hereby terminated; provided that nothing contained
in this sect.26 shall be deemed to terminate those provisions of the
Revolving Credit Agreement dated as of August 28, 1996 and the
loan documents related thereto regarding indemnification and
expense reimbursement, which provisions shall survive the Closing
Date.
IN WITNESS WHEREOF, the undersigned have duly
executed this Credit Agreement as a sealed instrument as of the
date first set forth above.
NEW ENGLAND BUSINESS
SERVICE, INC.
By: /s/ John F. Fairbanks
John F. Fairbanks
Vice President and Chief
Financial Officer
THE FIRST NATIONAL
BANK OF BOSTON,
individually and as Agent
By: /s/ Chris D. Francis
Chris D. Francis
Vice President
FLEET NATIONAL BANK,
individually and as
Documentation Agent
By: /s/ Mary M. Barcus
Mary M. Barcus
Vice President
Exhibit 10.2
NEW ENGLAND BUSINESS SERVICE, INC.
500 Main Street
Groton, Massachusetts 01471
Agreement to Furnish Copies of Omitted Exhibits and Schedules
to Revolving Credit Agreement
New England Business Service, Inc. (the Registrant) is not filing
as exhibits to its Current Report on Form 8-K dated April 15, 1997,
copies of the exhibits and schedules to the Revolving Credit Agreement
dated as of March 26, 1997, by and among New England Business
Service, Inc., The First National Bank of Boston and Fleet National Bank
(together with certain other financial institutions, the Banks), The First
National Bank of Boston, as agent for the Banks, and Fleet National
Bank, as documentation agent for the Banks, which Agreement is filed
as Exhibit 2.1 thereto.
Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, copies of such omitted exhibits and
schedules.
Dated: April 15, 1997
NEW ENGLAND BUSINESS
SERVICE, INC. (Registrant)
By: /s/ John F. Fairbanks
John F. Fairbanks
VP, Chief Financial
Officer
