<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission File Number 0-17297
BTU INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-2781248
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
23 Esquire Road, North Billerica, Massachusetts 01862-2596
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 667-4111
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
Indicate the number of shares outstanding of the Registrant's Common Stock,
par value $.01 per share, as of the latest practicable date: As of November 3,
1997: 7,304,296 shares.
<PAGE> 2
BTU INTERNATIONAL, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets 1-2
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Statement of Stockholders' Investment 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-10
PART II. OTHER INFORMATION
Signatures 11
Exhibits and Reports on Form 8-K 12
Calculation of Net Income per Common and Common
Equivalent Share 13
<PAGE> 3
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
September 28, December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $12,518 $10,218
Accounts receivable, less reserves of
$160 in 1997 and $160 in 1996 10,702 10,630
Inventories (Note 2) 8,685 9,760
Other current assets 741 1,661
- --------------------------------------------------------------------------------
Total current assets 32,646 32,269
- --------------------------------------------------------------------------------
Property, plant and equipment, at cost
Land 210 210
Buildings and improvements 5,862 5,591
Machinery and equipment 5,238 5,021
Furniture and fixtures 760 731
- --------------------------------------------------------------------------------
12,070 11,553
Less-Accumulated depreciation 7,829 7,288
- --------------------------------------------------------------------------------
Net property, plant and equipment 4,241 4,265
Other assets, net of accumulated amortization
of $432 in 1997 and $421 in 1996 268 229
- --------------------------------------------------------------------------------
$37,155 $36,763
================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE> 4
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
(Unaudited)
September 28, December 31,
1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities
Current maturities of long-term debt and
capital lease obligations (Note 3) $ 225 $ 363
Accounts payable 4,058 4,124
Other current liabilities 2,602 2,514
- ----------------------------------------------------------------------------------------
Total current liabilities 6,885 7,001
- ----------------------------------------------------------------------------------------
Long-term debt and capital lease obligations, less
current maturities (Note 3) 5,365 5,352
Deferred income taxes 2,203 2,203
- ----------------------------------------------------------------------------------------
14,453 14,556
- ----------------------------------------------------------------------------------------
Stockholders' investment (Note 4)
Preferred stock, $1 par value-
Authorized - 5,000,000 shares
Issued and outstanding - none -- --
Common stock, $.01 par value-
Authorized - 25,000,000 shares;
Issued - 7,659,577 and 7,635,167 shares
at 1997 and 1996 respectively 76 76
Additional paid-in capital 20,155 20,115
Accumulated earnings 3,323 2,811
Treasury stock - 355,281 shares at cost,
at September 28, 1997 and December 31, 1996 (1,183) (1,183)
- ----------------------------------------------------------------------------------------
22,371 21,819
Cumulative foreign currency translation adjustment 331 388
- ----------------------------------------------------------------------------------------
Total stockholders' investment 22,702 22,207
- ----------------------------------------------------------------------------------------
$ 37,155 $ 36,763
========================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 5
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(Dollars in thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended . Nine Months Ended .
------------------------------ ------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 12,722 $ 10,373 $ 36,547 $ 33,867
Cost of goods sold 7,557 6,093 21,423 19,578
- ---------------------------------------------------------------------------------------------------------------------
Gross profit 5,165 4,280 15,124 14,289
Operating expenses:
Selling, general and administrative 3,717 3,284 10,993 10,441
Research, development and engineering 847 879 2,780 2,820
Restructuring charge -- -- 530 --
- ---------------------------------------------------------------------------------------------------------------------
Income from operations 601 117 821 1,028
- ---------------------------------------------------------------------------------------------------------------------
Interest income 126 126 321 223
Interest expense (120) (183) (349) (456)
Net gain on sale of investment -- -- -- 3,400
Other income (expense), net 17 17 (236) 66
- ---------------------------------------------------------------------------------------------------------------------
Income before taxes 624 77 557 4,261
Income tax provision 139 3 45 737
- ---------------------------------------------------------------------------------------------------------------------
Net income $ 485 $ 74 $ 512 $ 3,524
=====================================================================================================================
Net income per share $ 0.07 $ 0.01 $ 0.07 $ 0.48
=====================================================================================================================
Weighted average number of shares
and share equivalents outstanding 7,406,764 7,361,268 7,370,248 7,337,700
=====================================================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 6
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1997
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE TOTAL
COMMON PAID-IN ACCUMULATED TREASURY TRANSLATION STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK ADJUSTMENT INVESTMENT
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
beginning of
the period $76 $20,115 $2,811 $(1,183) $ 388 $ 22,207
Net income -- -- 512 -- -- 512
Sales of
common
stock -- 40 -- -- -- 40
Translation
adjustment -- -- -- -- (57) (57)
- -------------------------------------------------------------------------------------------------
Balance,
end of
the period $76 $20,155 $3,323 $(1,183) $ 331 $ 22,702
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 7
BTU INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 29,
1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 512 $ 3,524
Adjustments to reconcile net income to net cash
provided by (used in) operating activities -
Depreciation and amortization 664 613
Net gain on sale of investment -- (3,400)
Net changes in operating assets and liabilities-
Accounts receivable (72) 888
Inventories 1,075 (13)
Other current assets 920 (6)
Accounts payable (66) (1,194)
Other current liabilities 88 (1,828)
Other assets (39) (2)
- ----------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 3,082 (1,418)
- ----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property, plant and equipment, net (640) (705)
Net proceeds from sale of investment -- 6,876
- ----------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (640) 6,171
- ----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments under long-term debt and capital lease
obligations (247) (249)
Proceeds from mortgage refinance 122 --
Proceeds from issuance of common stock 40 71
Purchase of treasury stock -- (55)
- ----------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (85) (233)
- ----------------------------------------------------------------------------------------------------
Effect of exchange rates on cash (57) 21
- ----------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 2,300 4,541
Cash and cash equivalents, at beginning of the period 10,218 6,145
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents, at end of the period $ 12,518 $ 10,686
===================================================================================================
Supplemental disclosures of cash flow information
Cash paid (received/refunded) during the periods for -
Interest $ 349 $ 456
Income taxes $ (546) $ 1,371
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 8
BTU INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis for presentation
The condensed consolidated balance sheet as of September 28, 1997, the
condensed consolidated statement of stockholders' investment for the nine months
ended September 28, 1997, the condensed consolidated statements of cash flows
for the nine months ended September 28, 1997 and September 29, 1996, and the
related condensed consolidated statements of operations for the three and nine
months ended September 28, 1997, and September 29, 1996, are unaudited. In the
opinion of management, all adjustments necessary for the fair presentation of
such financial statements have been included. Such adjustments consisted only of
normal recurring items. Interim results are not necessarily indicative of
results for the full year. These financial statements do not include all
disclosures associated with annual financial statements, and accordingly, should
be read in conjunction with the footnotes contained in the Company's
consolidated financial statements for the period ended December 31, 1996,
together with the auditors' report, included in the Company's "1996 Annual
Report," and filed in conjunction with Form 10K.
(2) Inventories
Inventories at September 28, 1997 and December 31, 1996 consisted of:
<TABLE>
<CAPTION>
($000)
------------------------------
September 28, December 31,
1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
Raw materials and manufactured components $4,505 $5,660
Work-in-process 2,618 2,527
Finished goods 1,562 1,573
- ---------------------------------------------------------------------------
$8,685 $9,760
===========================================================================
</TABLE>
(3) Debt
Debt at September 28, 1997 and December 31,1996 consisted of:
<TABLE>
<CAPTION>
($000)
-----------------------------
September 28, December 31,
1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage note payable, 8.125% at 9-28-97, 9.0% at 12-31-96 $5,567 $5,664
Capital lease obligations, interest rates ranging from 5.9% to 15.6%,
net of interest of $5,000 and $6,000 in 1997 and 1996, respectively 23 51
- ------------------------------------------------------------------------------------------------------
5,590 5,715
Less-current maturities 225 363
- ------------------------------------------------------------------------------------------------------
$5,365 $5,352
======================================================================================================
</TABLE>
6
<PAGE> 9
BTU INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The mortgage note payable is secured by the Company's land and building
and requires monthly payments of $53,922, including interest at 8.125%. This
mortgage note payable was refinanced with the same institution on June 30, 1997,
extending the maturity date to July 1, 2004. The new agreement requires a final
balloon payment of $ 3,797,000 at maturity.
The original mortgage required a monthly payment of $68,500, including
interest at 9.0%.
(4) Earning Per Share
On March 3, 1997, the FASB issued SFAS No. 128, "Earnings Per Share."
This Statement superseded APB Opinion No. 15 regarding the presentation of
earnings per share ("EPS") on the face of the income statement. SFAS No. 128
replaces the presentation of Primary EPS with a Basic EPS calculation that
excludes the dilutive effect of common stock equivalents. The statement requires
a dual presentation of Basic and Diluted EPS, which is computed similarly to
Fully Diluted EPS pursuant to APB Opinion No. 15, for all entities with complex
capital structures. This Statement is effective for fiscal years ending after
December 15, 1997 and requires restatement of all prior-period EPS data
presented. This Statement is not expected to have a material impact on the
Company's earnings per share presentation.
7
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales - In the third quarter of 1997, net sales increased by
$2,349,000, an increase of 22.6% when compared to the third quarter of 1996. For
the first nine months of 1997, sales increased by $2,680,000, or 7.9%, when
compared to the same period in 1996. The increase in sales between the two
periods reflected a continuation in improved business activity in the
electronics industry in 1997 versus 1996, particularly in the surface mount
technology business. During the third quarter 1997 sales in North America
increased as percentage of total versus the third quarter 1996. However, for the
first nine months of 1997 sales to the Far East and Europe, increased sightly as
a percentage of total sales, when compared to the first nine months in 1996.
Gross Profit - Gross profit increased by $885,000, or 20.7%, in the third
quarter of 1997 compared to the third quarter of 1996. For the first nine months
of 1997 gross profit increased by $835,000, or 5.8% as compared to the first
nine months of 1996. Gross profit for the third quarter and year to date as a
percentage of sales decreased by 0.7%, and 0.8% respectively as compared to the
comparable periods in 1996. The increase in gross profit in the third quarter
and year to date nine months was a result of the upturn in sales versus the
third quarter and first nine months of 1996. The decrease in gross margins as a
percentage of sales for both the third quarter 1997 and the nine months year to
date versus the same periods in 1996, was due to product mix.
Selling, General and Administrative - In the third quarter of 1997,
selling, general and administrative expense increased by $433,000, or 11.6%, to
$3,717,000, as compared to the third quarter in 1996. For the first nine months
of 1997, selling, general and administrative expense increased by $552,000, or
5.3%, as compared to the year to date number in 1996. The increase in both the
third quarter and year to date numbers are related to sales commissions paid due
to the increase in sales and costs incurred to expand sales and service
operations in the Far East
Research, Development and Engineering - Expenses in this area for the third
quarter of 1997 decrease by $32,000 or 3.6% to $847,000 as compared to $879,000
for the third quarter in 1996. For the first nine months of 1997 research,
development and engineering expenses decreased by $40,000, or 1.4%, as compared
to the first nine months of 1996. The Company continues to fund ongoing
investment in the development on new products for many of its product lines at a
similar level in 1997 as it did in 1996.
Restructuring Charge - During the first quarter of 1997, the Company
incurred a restructuring charge of $530,000. This charge represented a one-time
cost regarding actions taken in response to a shift in the amount of out-sourced
materials and a change to a direct approach to sales and service support in
certain Far East territories.
Interest Income - In the third quarter of 1997 interest income was the
same, at $126,000, as for the third quarter in 1996. For the first nine months
of 1997 interest income increased by $98,000 or 43.9% as compared to the same
periods in 1996. The increase in interest income is due to the higher investment
balances in 1997 versus 1996.
Interest Expense - Interest expense decreased by $63,000, or 34.4%, for the
third quarter of 1997, and by $107,000, or 23.5%, for the first nine months, as
compared to the same periods in 1996. The decrease is partially due to the lower
level of interest due on the mortgage due to the lower rate.
8
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Net Gain on Sale of Investment - During the second quarter of 1996 the
Company sold its 19.4% interest in Bruce Technologies International (BTI) for
$7,000,000, resulting in a $3,400,000 net gain. The after tax effect of the
transaction represented $0.38 per share.
Other Income(Expense) - During the second quarter 1997 the Company incurred
a one-time charge of $271,000 for the adverse jury determination regarding a
California service representative.
Income Taxes - In the third quarter of 1997 the Company recorded a tax
provision of $139,000 versus a tax provision of $3,000 for the third quarter
1996. For the first nine months of 1997 the Company recorded a tax provision of
$45,000 versus a tax provision of $737,000 for the first nine months of 1996.
The 1997 provisions reflects the use of certain NOL carryforwards available to
the Company's U.K. subsidiary, which is profitable in 1997. The effective tax
rate for the third quarter of 1997 was 22%, as compared to an effective tax rate
for the third quarter of 1996 of 4%. The effective tax rate for the first nine
months of 1997 was 8% as compared to 17% for the same period in 1996. These
compares to the statutory rate of 34%.
9
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
During the third quarter of 1997, the Company completed two financing
agreements. The Company completed the refinancing of the mortgage note payable
with the same institution. In addition the Company expanded its line of credit
by entering into a new long term credit agreement with a Bank to provide greater
flexibility in working capital and potential expansion in the future.
The Company has an unsecured revolving line of credit with a bank which
allows for the aggregate of borrowings and/or letters of credit of up to
$14,000,000. Borrowings are available to the Company at either the Bank's base
rate or a Eurodollar rate, as elected by the Company. This loan agreement is
available to the Company until April 30, 2002, and is subject to certain
financial covenants. No amounts were outstanding under this credit agreement as
of September 28, 1997.
The Mortgage note payable had an outstanding balance of $5,567,000 at
September 28, 1997. This mortgage has an annual interest rate of 8.125%. The
Company refinanced the mortgage note payable with the same institution on June
30, 1997, extending the maturity date to July 1, 2004. The mortgage requires
monthly payments of $53,922, including interest at 8.125%. A final balloon
payment of $3,797,000 is due a maturity.
The Company expects its current cash position, ability to borrow necessary
funds, as well as cash flows from operations will be sufficient to meet its
corporate, operating and capital requirements into 1998.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
the Company's current plans and expectations and involve risks and uncertainties
that could cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking statements.
Important factors that could cause actual results to differ include, among
others, general market conditions governing supply and demand, the timely
availability and acceptance of new products, and the impact of competitive
products and pricing and other risks detailed in the Company's SEC reports.
10
<PAGE> 13
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
undersigned thereunto duly authorized.
BTU INTERNATIONAL, INC.
DATE: November 10, 1997 BY: /s/ Paul J. van der Wansem
--------------------------
Paul J. van der Wansem
President, Chief Executive Officer
(principal executive officer) and Director
DATE: November 10, 1997 BY: /s/ Thomas P. Kealy
-------------------
Thomas P. Kealy
Vice President, Corporate Controller and
Chief Accounting Officer (principal
financial and accounting officer)
11
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11.0 - Calculation of net income per common and
common equivalent share.
Exhibit 10.42 Mortgage note between BTU International,
Inc. and John Hancock Mutual Life Insurance
Company, dated June 30, 1997
Exhibit 10.43 - Credit agreement between BTU International,
Inc. and US Trust, date September 5, 1997
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
period covered by this report.
12
<PAGE> 15
Exhibit 11.0
BTU INTERNATIONAL, INC.
CALCULATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
September 28, September 29, September 28, September 29,
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 485 $ 74 $ 512 $ 3,524
- -------------------------------------------------------------------------------------------------------
Net income applicable to
common stockholders $ 485 $ 74 $ 512 $ 3,524
=======================================================================================================
Weighted average shares and share
equivalents outstanding:
Common stock 7,286,789 7,331,162 7,282,501 7,605,562
Stock options 119,975 30,106 87,747 32,138
- -------------------------------------------------------------------------------------------------------
Weighted average shares and share
equivalents outstanding 7,406,764 7,361,268 7,370,248 7,337,700
=======================================================================================================
Net income per common and common
equivalent share $ 0.07 $ 0.01 $ 0.07 $ 0.48
=======================================================================================================
</TABLE>
13
<PAGE> 1
EXHIBIT 10.42
REAL ESTATE MORTGAGE NOTE
$5,600,000.00 Boston, Massachusetts
June 30,1997
FOR VALUE RECEIVED, the undersigned, BTU International, Inc., a
Delaware corporation, having a mailing address of 23 Esquire Road, Billerica,
Massachusetts 01862 (the "Maker"), promises to pay to the order of JOHN HANCOCK
MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation, having a mailing
address at John Hancock Place, Post Office Box 111, Boston, Massachusetts 02117
(the payee and each successor holder of this Note being herein called the
"Holder".) or to such other person or at such other place as the Holder may from
time to time designate in writing, the principal sum of Five Million Six Hundred
Thousand & 00/100 Dollars ($5,600,000.00), with interest from the date hereof
payable in arrears (except as provided in Paragraph 1 (a) below) on so much
thereof as shall from time to time be outstanding at an annual rate of eight and
125/100 Percent (8.125%) per annum (the "Fixed Rate").
1. Payment of Principal and Interest. Principal and interest evidenced by
this Note shall be paid as follows:
(a) If the date of disbursement of the loan (the "Funding Date")
does not fall on the first day of a month, there shall be paid
on the Funding Date, for the period commencing on the Funding
Date and ending on and including the last day of the month in
which the Funding Date has occurred, interest only on the
principal balance outstanding on the Funding Date at the Fixed
Rate.
(b) Commencing on August 1,1997, and continuing on the first day
of each of the next successive eighty-three (83) months, there
shall be paid to the Holder the sum of and Fifty-three
Thousand Nine Hundred Twenty-one & 41/100 Dollars
($53,921.41), which shall first be applied to any payment
owing to Holder as a result of an event of default or late
charges hereunder or under any other instrument securing this
Note, next to interest at the Fixed Rate set forth above, and
any remainder to principal or applied in such other order as
the Holder may determine in its sole and absolute discretion.
(c) The entire unpaid principal balance, accrued and unpaid
interest thereon and all other sums due shall in any event be
due and payable on July 1, 2004 (the "Maturity Date").
2. Default and Acceleration. At the option of the Holder, the entire
indebtedness evidenced by this Note shall become immediately due and
payable without notice or demand upon the occurrence at any time of any
of the following events of default (a) failure to pay in full any
installment of principal or interest when due, or default of the Maker,
or any endorser or guarantor hereof, under any liability, obligation or
undertaking, hereunder or otherwise, to the Holder; (b) an Event of
Default as defined in the Mortgage and Security Agreement of even date
and
1
<PAGE> 2
delivery herewith (the "Mortgage") shall occur; (c) any default or
breach in the covenants, conditions or agreements of any other
instrument securing this Note or otherwise delivered in connection with
the Loan shall occur; (d) any statement, representation or warranty
made in or in connection with the application for the loan evidenced by
this Note, in the Mortgage, in any supporting financial statement or in
any other instrument securing the loan of the Maker, any endorser or
guarantor hereof, or any signatory to any other instrument securing
this Note or otherwise delivered in connection with the loan shall
prove to have been false, misleading or erroneous in any material
respect when made; (e) the liquidation, winding-up, termination of
existence or dissolution of the organization of the Maker, any endorser
or guarantor hereof, or any signatory to any other instrument securing
this Note or otherwise delivered in connection with the loan, or the
cessation of the business activities as presently conducted by the
Maker, any endorser or guarantor hereof, or any signatory to any other
instrument securing this Note or otherwise delivered in connection with
the loan; (f) the Maker, any endorser or guarantor hereof, or any
signatory to any other instrument securing this Note or otherwise
delivered in connection with the loan grants a trust mortgage, or
executes a general assignment for the benefit of creditors, or fails
generally to pay its debts as they mature, or petitions or applies for
the appointment of a liquidator or a receiver of the Maker, any
endorser or guarantor hereof or any signatory to any other instrument
securing this Note, or otherwise delivered in connection with the loan,
or of any substantial part of the assets of the Maker, any endorser or
guarantor hereof, or any signatory to any other instrument securing
this Note or otherwise delivered in connection with the loan, or
commences any proceeding under any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or
similar law of any jurisdiction, now or hereafter in effect, or any
order for relief shall be entered in any such proceeding, or the Maker,
any endorser or guarantor hereof, or any signatory to any other
instrument securing this Note or otherwise delivered in connection with
the loan, shall acquiesce to the entry of an order for relief in any
such proceeding; (g) the filing of any petition or application
commencing any proceeding against the Maker, any endorser or guarantor
hereof, or any signatory to any other instrument securing this Note or
otherwise delivered in connection with the loan, under any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or similar law of any jurisdiction now or hereafter in
effect, where such petition or application is not dismissed within
thirty (30) days after the date such petition or application was filed
or where such proceeding is not dismissed or stayed within thirty (30)
days after the date such proceeding was commenced; (h) the death or
adjudicated incompetence of any of the Maker (or any beneficiary of the
Maker), of any endorser or guarantor hereof, or of a signatory to any
other instrument securing this Note or otherwise delivered in
connection with the loan, and if any of the Maker, its beneficiary, or
any such signatory, endorser or guarantor is a partnership, the death
or adjudicated incompetence of any partner; or (i) failure of the Maker
to prepay the outstanding
2
<PAGE> 3
indebtedness hereunder after giving the Holder notice of its intent to
prepay pursuant to the provisions of Paragraph 4 hereof.
The Maker acknowledges that the loan evidenced by this Note was made on
the basis and assumption that the Holder would receive regular payments
of principal and interest set forth in Paragraph 1 of this Note from
the Funding Date to and including the Maturity Date. Therefore, if at
any time the entire indebtedness becomes due and payable following an
event of default hereunder, then, to the extent permitted by law, the
Holder hereof shall be entitled, in addition to the outstanding
principal balance, accrued interest and other sums due under this Note
or any other instrument securing the loan, to be paid a premium (the
"Default Premium") as of the date the indebtedness becomes due and
payable. The Default Premium shall be an amount equal to the greater
of:
(i) ten percent (10%) of the principal amount becoming due because
of such event of default and acceleration; or
(ii) the sum obtained by multiplying (x) the principal amount
becoming due because of such acceleration, (y) the number of
years and fraction thereof remaining between such acceleration
date and the Maturity Date, and (z) an annual rate of interest
equal to the difference obtained by subtracting the yield rate
on publicly traded United States Treasury Securities due on or
closest to the Maturity Date (as such yield rate is reported
in The Wall Street Journal or other similar business
publications of general circulation on the fifth day preceding
such acceleration date) from the Fixed Rate adjusted to its
semiannual equivalent rate of 8.2638%. Notwithstanding the
foregoing, if such an event of default occurs on or after the
date on which the prepayment is permitted, as set forth in
Paragraph 4 below, the Default Premium shall be equal to the
amount calculated according to clause (iii) of said Paragraph
4.
In the event that the yield rate on publicly traded United
States Treasury Securities is not obtainable, then the nearest
equivalent issue or index shall be selected, in the Holder's
reasonable determination, and used to calculate the Default
Premium.
A tender of the amount necessary to satisfy the entire
indebtedness evidenced by this Note, paid at any time
following an event of default and acceleration, including at a
foreclosure sale, shall be deemed a voluntary prepayment and,
at the Holder's option, such payment shall include the Default
Premium. Upon the occurrence of an event of default hereunder,
the Holder may apply, at the Holder's election, any payments
made by the Maker to amounts due under this Note or under any
other instrument securing this Note or delivered in connection
with the loan evidenced by this Note.
3. Interest Payable Upon Default. Upon the occurrence of an event of
default hereunder or after the Maturity Date, the Fixed Rate stated
above shall be
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<PAGE> 4
increased by an additional seven percent (7%) per annum, but in no
event more than the maximum rate allowed by law. Said increased rate of
interest shall remain in effect for such time as the default continues,
provided that any additional interest that has accrued shall be paid at
the time of, and as a condition precedent to, the curing of any
default.
The Maker agrees to pay all costs of collection, including reasonable
fees and expenses of the Holder's attorneys, upon any default in the
payment of principal or interest when due, and all costs, including
reasonable fees and expenses of the Holder's attorneys, in case it
becomes necessary to protect the security hereof, whether or not suit
is commenced.
4. Prepayment The indebtedness evidenced hereby may not be prepaid in
whole or in part before August 1, 2001.
Thereafter, the Note may be prepaid in whole, but not in part, provided
that (a) an event of default has not occurred hereunder; (b) the Maker
gives the Holder no less than thirty (30) days (nor more than ninety
(90 days) prior written notice of its intent to prepay, which notice
specifies the exact date of prepayment (the "Prepayment Date"); and (c)
the Maker pays the following on the Prepayment Date:
(i) the outstanding principal balance;
(ii) accrued interest;
(iii) a prepayment premium equal to the greater of one percent (1%)
of the then outstanding principal balance or the sum obtained
by multiplying (x) the then outstanding principal balance, (y)
the number of years and fraction thereof remaining between the
Prepayment Date and the Maturity Date, and (z) an annual rate
of interest equal to the difference obtained by subtracting
the yield rate on publicly traded United States Treasury
Securities due on or about the Maturity Date (as such yield
rate is reported in The Wall Street Journal or other similar
business publications of general circulation on the fifth day
preceding such Prepayment Date) from the Fixed Rate adjusted
to its semiannual equivalent rate of 8.2638%; provided,
however, in the event that the yield rate on publicly traded
United States Treasury Securities is not obtainable, then the
nearest equivalent issue or index shall be selected, in the
Holder's reasonable determination, and used to calculate the
foregoing prepayment premium; and
(iv) other sums due under this Note or any other instrument
securing the loan.
Notwithstanding the foregoing, this Note may be prepaid in whole, but
not in part, without premium, during the period commencing ninety (90)
days prior to the Maturity Date, through the Maturity Date, provided
that (a) an event of default has not occurred hereunder; (b) the Maker
gives the Holder not less than thirty (30)
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<PAGE> 5
days, nor more than sixty (60) days, prior written notice of its intent
to prepay, which notice specifies the Prepayment Date; and (c) the
Maker pays on the Prepayment Date the outstanding principal balance,
accrued interest and other sums due under this Note or any other
instrument securing the loan.
No partial prepayment shall be allowed.
5. Usury Laws. In the event the payments required to be made hereunder or
pursuant to the Mortgage, whether such payments are characterized as
interest or otherwise, shall at any time exceed the limits permitted by
any law governing usury or any other law applicable to the loan
evidenced hereby, all such excess sums paid by the Maker for the period
in question shall, without further agreement or notice between or by
any party hereto, be applied to the principal balance as a prepayment
thereof without premium, or at Holder's option, returned to Maker.
6. Waivers by Maker. The Maker hereof, and all endorsers and guarantors of
this Note, hereby severally waive presentment for payment, protest and
demand, notice of protest, demand and of dishonor and nonpayment of
this Note, and the Maker's (and any endorser's or guarantor's)
liability hereunder shall remain unimpaired, notwithstanding any
extension of the time of payment or other indulgence granted by the
Holder hereof, or the release of all or any part of the security for
the payment hereof or the liability of any party which may assume the
obligation to make payment of the indebtedness evidenced hereby or the
performance of the obligations of the Maker. The obligations of the
Maker and any endorsers and guarantors hereof shall be joint and
several.
7. Notices. Whenever notice, demand or a request under this Note may
properly be given to the Maker or the Holder, the same shall be in
writing and shall be (a) hand delivered to the party intended to
receive the same or (b) sent by registered or certified mail, postage
prepaid, return receipt requested, with a reference in either case to
Loan No.6516959 GB, addressed to the Maker or the Holder at the address
given in this Note, or to such other address as either party shall
furnish to the other by like notice, and any such notice, demand or
request shall be treated as having been given when so delivered, or if
mailed, when deposited with the U.S. Postal Service.
8. Compliance with Regulation G. The Maker agrees that no part of the
proceeds of this Note shall be used for the purpose, whether immediate,
incidental or ultimate, of "purchasing" or "carrying". any "margin
stock", as such terms are defined in Regulation G (12 C.F.R. Part 207)
of the Board of Governors of the Federal Reserve System, or for the
purpose of reducing or retiring any indebtedness which was originally
incurred for any such purpose.
9. Security for Note. This Note is secured by the Mortgage, which is to be
recorded with the Middlesex South District Registry of Deeds and to be
filed for registration
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with the Middlesex South Registry District of the Land Court, and by
certain other instruments securing the Note or otherwise delivered in
connection with the loan evidenced by this Note. The Mortgage
constitutes an encumbrance on certain property, more particularly
described therein, located on Esquire Road, Billerica, Middlesex
County, Massachusetts.
10. Headings. The descriptive headings of the paragraphs of this Note are
inserted for convenience only and do not constitute a part of this
Note.
This Note has been negotiated and is being delivered in and shall be
governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts, to the maximum extent the parties may so
lawfully agree.
EXECUTED AS A SEALED INSTRUMENT, as of the day and year first above
written.
In the presence of MAKER:
BTU International, Inc.
- --------------------------------------------------------------------------------
Thomas P. Kealy
Its Vice President
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<PAGE> 7
MORTGAGE AND SECURITY AGREEMENT
BTU International, Inc., a Delaware corporation, having a mailing
address of 23 Esquire Road, Billerica, Massachusetts 01862 ("Mortgagor"), for
consideration paid, GRANTS to John Hancock Mutual Life Insurance Company, a
Massachusetts corporation, having a mailing address at John Hancock Place, Post
Office Box 111, Boston, Massachusetts 02117 ("Mortgagee"), with MORTGAGE
COVENANTS, to secure payment of Five Million Six Hundred and 00/100 Dollars
($5,600,000.00), with interest thereon on such part thereof as shall from time
to time remain unpaid (the "Loan"), all payable as provided in that certain note
of even date herewith from Mortgagor to Mortgagee (the "Note"), and also to
secure the performance of all agreements contained herein, in the Note, in the
application/commitment for the Loan dated February 27, 1997 and accepted by
Mortgagee on March 19, 1997, as amended, (the "Commitment") and in all other
instruments securing the Note or otherwise delivered in connection with the Loan
(collectively, together with the Note, the Commitment and this Mortgage and
Security Agreement, the "Loan Documents") and the payment and performance of all
other debts and obligations of any nature, direct or indirect, absolute or
contingent, now or hereafter owed by Mortgagor to Mortgagee, the following:
The registered and unregistered land located on Esquire Road,
Billerica, Middlesex County, Massachusetts, as more particularly described in
Exhibit A attached hereto, and all easements, rights, and appurtenances
belonging or pertaining thereto (the "Land"), and the buildings, structures and
other improvements now or hereafter constructed thereon (the "Improvements")
(the Land and the Improvements are collectively referred to herein as the "Real
Property"); and
Together with all internal operating systems which are physically
incorporated into the Real Property and which are necessary for the operation
and maintenance of the Real Property, including, without limitation, heating,
lighting, plumbing, lifting, sprinkling and ventilating apparatus, air-cooling
and airconditioning apparatus, elevators and escalators and the like, all
materials intended for construction, reconstruction, alteration and repair of
the Real Property and any replacements thereof or additions thereto
(collectively, together with the Real Property, the "Mortgaged Property"), and
all rents, income, profits, condemnation awards, refunds or abatements of
Impositions (as defined in Paragraph 7), casualty insurance proceeds, general
intangibles or contract rights arising from or relating to the Mortgaged
Property, warranties and guaranties of construction contractors or
subcontractors or of suppliers or manufacturers of equipment or other property
incorporated into the Improvements or otherwise constituting part of the
Mortgaged Property, licenses and permits for the operation of the Mortgaged
Property, and books and records of Mortgagor relating to construction, use,
operation and occupancy of the Real Property (collectively, together with the
Mortgaged Property, the "Security"). The Security shall not include any personal
property of Mortgagor, nor any equipment, machinery or other fixtures used by
Mortgagor in connection with its business or located on any land owned by
Mortgagor not described on Exhibit A.
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Mortgagor, as debtor, hereby grants to Mortgagee, as secured party, a
first priority security interest in the above-described fixtures and agrees that
Mortgagee shall have with respect thereto (in addition to all other rights and
remedies hereunder), all rights and remedies of a secured party under the
Massachusetts Uniform Commercial Code ("Uniform Commercial Code"). This
instrument is intended to be effective as a financing statement filed as a
fixture filing under the Uniform Commercial Code.
Certain of the goods described herein are or are to become fixtures
related to the Real Property. The record owner of the Land is Mortgagor.
Mortgagor covenants and agrees with Mortgagee that:
1. Mortgagor's Interest in Security. Mortgagor is lawfully seized in
fee simple of the Security, and has good right, full power and lawful authority
to sell and convey the same in the manner aforesaid, the Security is free and
clear of all encumbrances except as otherwise provided in Exhibit B attached
hereto, and Mortgagor shall correct such defects of title and make any further
assurances of title that Mortgagee may require.
2. Performance of Obligations. Mortgagor will pay the Note and interest
thereon and any other indebtedness owed by Mortgagor to Mortgagee, all as the
same become due and payable, and will comply with and perform all of the
covenants and agreements of Mortgagor in the Loan Documents.
3. Maintenance: Compliance with laws: etc. Mortgagor will at all times
maintain the Mortgaged Property in good order, condition and repair; make all
repairs, replacements, improvements and additions which may be necessary to
preserve and maintain the Mortgaged Property; permit Mortgagee, its agents and
representatives to inspect the Mortgaged Property at any reasonable time,
including, without limitation, for the purpose of inspecting the soil and
groundwater by sampling, monitoring or other methods of detection of Hazardous
Materials (as hereinafter defined) and for the purpose of inspecting any
construction on the Mortgaged Property; comply with all requirements made by
Mortgagee with respect to maintaining and preserving the Mortgaged Property;
comply with all laws, ordinances, orders, rules and regulations of all
governmental authorities and insurance underwriters with respect to the
Mortgaged Property and any business conducted thereon and any construction or
alteration undertaken thereon; not violate or permit the violation of any
covenants or agreements affecting the Mortgaged Property; not alter, destroy or
remove any of the Mortgaged Property or commit or suffer any waste or permit the
Mortgaged Property to be altered, destroyed or removed or used for any purpose
other than that for which it is now used or for the Proposed Uses (as
hereinafter defined) without first obtaining Mortgagee's written permission
(except that Mortgagor may, in the ordinary course of its business, replace
articles of personal property with other articles of like value and utility);
not file a declaration of condominium, map or other document having the effect
of subjecting the Security to the cooperative or condominium form of ownership;
not acquire any fixtures or equipment subject to any security interest,
conditional sale, title retention arrangement or other charge or lien taking
precedence over the encumbrance hereof; complete in a good workmanlike manner
any building or improvement which is being or may hereafter be constructed or
repaired thereon; pay when due all claims for labor
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performed and material furnished and not permit any notice of contract or lien
of mechanics or materialmen to attach to the Mortgaged Property; and maintain
and preserve all rights and privileges now or hereafter held by it which are
necessary or useful in connection with the Mortgaged Property. Mortgagor will
use the Mortgaged Property solely as an owner-occupant and for research,
development and manufacturing uses (the "Proposed Uses"). Any rental agreements
must be approved by Mortgagee in accordance with the provisions of Paragraph 13
herein.
Mortgagor shall have the right to contest by appropriate legal
proceedings, but without cost or expense to Mortgagee, the validity of any laws,
ordinances, orders, rules or regulations affecting the Mortgaged Property or the
business conducted thereon if compliance therewith may legally be held in
abeyance without the incurrence of any charge, lien or liability against the
Mortgaged Property and without the loss or suspension of any license, right or
permit with respect to the Mortgaged Property; and in such event Mortgagor may
postpone compliance therewith until the final determination of any such
proceedings, provided that such proceeding is prosecuted with due diligence and
Mortgagee is furnished with security satisfactory to it against any loss or
damage by reason of such noncompliance or contest.
4. Insurance. With respect to the Mortgaged Property and its use,
Mortgagor will carry, at its expense, such insurance as Mortgagee may from time
to time require including, without limitation, special flood hazard insurance
(if any portion of the Improvements is within a flood zone as shown on the most
recent Flood Insurance Rate Map issued by Federal Emergency Management Agency
with respect to the Mortgaged Property), business interruption insurance and
so-called rent loss insurance (covering business interruptions for at least
twelve (12) months and at least twelve (12) months rent for all leases or
subleases assigned as additional security for the Loan), in each case with an
"extended period of liability" endorsement, and also such insurance as may from
time to time be required by any applicable Federal, State or local law or
regulation. All insurance against loss or damage to the Mortgaged Property by
fire and any of the risks covered by insurance of the type now known as "special
perils" shall contain a "Replacement Cost Endorsement" and an "Agreed Value
Endorsement." Mortgagor shall also acquire and maintain commercial general
coverage for bodily injury and property damage in such amounts as Mortgagee
shall require from time to time or in such amounts as required in any
collateralized leases, whichever is greater. During the construction of any
improvements which become part of the Mortgaged Property, Mortgagor will carry
insurance in "Builder's Risk Completed Value (non-reporting)" form, including
special perils type coverage; all such insurance shall also provide coverage
against perils normally covered by a so-called special endorsement, i.e.,
collapse, cost of demolition, increased cost of construction and the value of
the undamaged portion of the Mortgaged Property. All policies of insurance (with
evidence of payment of premiums thereon satisfactory to Mortgagee) so required
to be maintained, together with any other policies of insurance with respect to
the Mortgaged Property maintained by Mortgagor, shall be deposited with, and,
except for commercial general liability coverage and any other coverage
Mortgagee may determine shall not be payable to it in case of loss, shall be
first payable in case of loss
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to Mortgagee. All renewals or replacements of such insurance from time to time
in force together with evidence of payment of premiums thereon satisfactory to
Mortgagee shall be delivered to Mortgagee at least sixty (60) days before the
expiration date of then current insurance. All insurance required as aforesaid
to be maintained with respect to the Mortgaged Property shall be written by such
companies, on such terms, in such form, with such endorsements and for such
periods and amounts as Mortgagee shall from time to time approve, and in all
events the policies shall provide that they may not be cancelled, amended or
modified without at least thirty (30) days prior written notice to Mortgagee.
All insurance policies shall provide that copies of any notice of an insurer's
intent not to renew or reissue a policy or to cancel a policy, which may be
required by law to be provided to the insured, shall be forwarded to Mortgagee
at the same time that such notice is issued by the insurer. No settlement on
account of any loss covered by such insurance shall be effected without the
consent and participation of Mortgagee. If an Event of Default (as defined in
Paragraph 20 hereof) occurs, only Mortgagee shall have the right to settle,
adjust and compromise insurance claims.
Mortgagee shall be notified promptly in the event that (i) any of the
Improvements shall be damaged or destroyed in whole or in part by fire or other
casualty, or (ii) a claim is filed under any insurance policy providing coverage
for Mortgagee.
5. Application of Certain Insurance Awards. Proceeds paid under any
insurance policy which are required under Paragraph 4 to be paid to Mortgagee
shall, at the option of Mortgagee, be applied to or toward (a) the indebtedness
secured hereby (including principal, whether or not then due and payable,
accrued but unpaid interest and other amounts secured hereby or payable under
the Loan Documents) in such order and in such amounts as Mortgagee shall in its
sole discretion determine, (b) the fulfillment of any covenant contained in the
Loan Documents as Mortgagee may determine in its sole discretion, or (c) the
repair of that part of the Mortgaged Property damaged by the insured hazard. No
interest shall be allowed to Mortgagor on any insurance awards paid to and held
by Mortgagee. Mortgagor hereby covenants and agrees to and with Mortgagee, upon
request by Mortgagee, to make, execute and deliver any and all assignments and
other instruments sufficient for the purpose of assigning the aforesaid award or
awards to Mortgagee free, clear and discharged of any and all encumbrances of
any kind or nature whatsoever. Mortgagor hereby irrevocably appoints Mortgagee
its true and lawful attorney-in-fact, which shall be coupled with an interest,
to assign any policy in the event of the foreclosure of this Mortgage and
Security Agreement or the extinguishment of the indebtedness secured hereby.
6. Application of Condemnation Awards. The awards of damages on account
of any condemnation for public use of or damage to the Mortgaged Property shall
be paid to Mortgagee. No settlement on account of any damages caused by such
condemnation shall be effected without the consent and participation of
Mortgagee. If an Event of Default (as defined in Paragraph 20 hereof) occurs,
only Mortgagee shall have the right to settle, adjust and compromise
condemnation awards. At the option of Mortgagee, the condemnation award shall be
applied to or toward (a) the indebtedness secured hereby (including principal,
whether or not then due and payable, accrued but unpaid interest and other
amounts secured hereby or payable under the Loan
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Documents) in such order and in such amounts as Mortgagee shall in its sole
discretion determine, (b) the fulfillment of any covenant contained in the Loan
Documents as Mortgagee may determine in its sole discretion, or (c) the
restoration of that portion of the Mortgaged Properly which remains. Mortgagor
hereby covenants and agrees to and with Mortgagee, upon request by Mortgagee, to
make, execute and deliver any and all assignments and other instruments
sufficient for the purpose of assigning the aforesaid award or awards to
Mortgagee free, clear and discharged of any and all encumbrances of any kind or
nature whatsoever. No interest shall be allowed to Mortgagor on any condemnation
proceeds paid to and held by Mortgagee. Mortgagor hereby irrevocably appoints
Mortgagee its true and lawful attorney-in-fact, which shall be coupled with an
interest, to assign any condemnation awards in the event of the foreclosure of
this Mortgage and Security Agreement or the extinguishment of the indebtedness
secured hereby.
7. Payment of Taxes and Impositions, Contest Abatement. Subject to the
provisions of Paragraph 8 hereof, Mortgagor will pay not later than fifteen (15)
days before the last date when the same may be paid without interest or penalty,
and by such date will furnish to Mortgagee evidence of payment of, all real
estate tax, personal property taxes, sewer rents, water charges and all other
municipal and governmental rates, charges, assessments and liens (collectively,
"Impositions") which now or hereafter are imposed upon the Mortgaged Property.
If the law imposing any Imposition permits the Imposition to be paid in future
installments, Mortgagor may pay such Imposition in installments as permitted by
law.
Mortgagor hereby assigns to Mortgagee all rights of Mortgagor now or
hereafter arising in and to any refunds or abatements of Impositions. So long as
no Event of Default exists, Mortgagee shall pay over any such refunds or
abatements to Mortgagor, but, if an Event of Default exists hereunder, then
Mortgagee may apply said refunds or abatements to or toward the indebtedness
secured hereby in such order as Mortgagee may determine.
8. Reserve Funds. Notwithstanding anything to the contrary contained in
the Loan Documents, Mortgagor, at Mortgagee's option, will pay to Mortgagee on
each date upon which an installment of principal or interest is payable under
the Note, such amount as Mortgagee from time to time estimates is necessary to
create and maintain a reserve fund (the "Reserve Fund Account"), without any
interest thereon accruing to Mortgagor, from which to pay before the same become
due all Impositions, the premiums on insurance policies required to be
maintained by Mortgagor and the ground rents on the Land, if any. Payment from
the Reserve Fund Account of Impositions, insurance premiums and ground rents may
be made by Mortgagee at its discretion, even though subsequent owners of the
Mortgaged Property may benefit thereby. In the event that the balance of the
Reserve Fund Account is insufficient to make such payments, Mortgagor shall
immediately deposit sufficient funds upon notice by Mortgagee. If an Event of
Default occurs, any part or all of said Reserve Fund Account may, at the
election of Mortgagee, be applied to any part of the indebtedness secured
hereby, and, in refunding any part of said Reserve Fund Account, Mortgagee may
deal with whomever it reasonably believes to be the owner of the Mortgaged
Property at that time.
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<PAGE> 12
If requested by Mortgagee, and to the extent permitted by law,
Mortgagor shall deliver to Mortgagee all security deposits or other collateral
now or hereafter received from tenants of the Mortgaged Property, to be held and
applied by Mortgagee in accordance with the terms of the respective leases under
which said security deposits were paid, but otherwise without interest accruing
thereon to Mortgagor. In applying or returning such security deposits or
collateral, Mortgagee may deal with whomever it reasonably believes to be
entitled thereto.
9. No Prior Liens: Transfers of Security: Change in Name. Principal
Place of Business or Chief Executive Office.
(a) Mortgagor will pay, prior to the date when any interest or penalty accrues,
all sums which if not paid may result in the creation of a lien prior to the
encumbrance of this instrument, or which if not paid may confer upon a tenant of
the Mortgaged Property a right to pay such sums and treat the payment as prepaid
rent.
(b) Mortgagor will not create or permit, and will promptly discharge, any
security interest, mortgage, lien or other encumbrance or financing statement on
the Security superior to the encumbrance created by this instrument. Mortgagor
will not create or permit, and will promptly discharge, any security interest,
mortgage, lien or other encumbrance or financing statement on the Security
inferior to the encumbrance created by this instrument without the prior written
consent of the Mortgagee.
(c) Mortgagor will not cause or permit, whether voluntarily or involuntarily,
any transfer (including without limitation any sale, assignment, gift or
foreclosure) of the Security or any part thereof without the prior written
consent of the Mortgagee.
(d) Mortgagor will not cause or permit any change in its name, or change in the
location of its place of business or its chief executive office, without first
giving notice of such change to Mortgagee (which notice shall specifically refer
to this Paragraph 9(d)) and simultaneously causing to be recorded or
re-recorded, registered or re-registered and filed or re-filed such replacement
or supplementary financing statements under the Uniform Commercial Code, and
such other instruments as may be required by law or deemed advisable by
Mortgagee, to create, preserve or protect the encumbrance hereof upon the
Security or any part thereof.
(e) Mortgagor has fully disclosed to Mortgagee all facts material to the
Security, the Mortgagor, the Mortgagor's business operations, and any endorser
or guarantor of the Note.
10. Mortgagee's Right to Cure. If Mortgagor shall fail (a) to maintain
and keep in good repair the Mortgaged Property as required herein, (b) to
maintain the coverage and pay the premiums for insurance required herein, (c) to
pay and discharge all Impositions as required herein, (d) to pay the sums
required to be paid pursuant to the provisions of Paragraphs 8 and 9, or (e) to
satisfy any other term or condition of this instrument, Mortgagee may, at its
election, cause such repairs to be made, obtain such insurance, pay Impositions,
pay the sums required to be paid under Paragraphs 8 and 9 and pay any sums
necessary to discharge any liens or encumbrances on the Security prohibited
hereby, incur and pay amounts in protecting its rights hereunder and the
security hereby granted, pay any balance due under any conditional agreement of
sale of any property constituting a part of the Mortgaged Property and pay any
amounts Mortgagee deems necessary or appropriate to satisfy
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any term or condition of this instrument which Mortgagor shall have failed to
satisfy, or to remedy any breach of such term or condition. Any amounts or
expenses so paid or incurred, together with interest thereon from the date of
payment by Mortgagee at the Fixed Rate of interest provided in the Note plus
seven percent (7%) per annum, but in no event more than the maximum rate allowed
by law, shall be immediately due and payable by Mortgagor to Mortgagee and until
paid shall be added to and become a part of the principal debt secured hereby,
and the same may be collected as part of said principal debt in any suit hereon
or upon the Note. No payment by Mortgagee shall relieve Mortgagor from any
default hereunder or impair any right or remedy of Mortgagee.
11. Mortgagee's Costs and Attorneys' Fees. If any action or proceeding
be commenced, including but not limited to an action to foreclose this
instrument or to collect the debt secured hereby, to which action or proceeding
Mortgagee is made a party by reason of the execution of this instrument or by
reason of any obligations which it secures, or by reason of entry or any other
action under this instrument, or if it becomes necessary in connection with
legal proceedings or otherwise to defend or uphold this instrument or any act
taken under this instrument, all sums paid or incurred by Mortgagee for the
expense of any litigation or otherwise in connection with any rights created by
this instrument (including its attorneys' fees and expenses) with interest
thereon from the date of payment by Mortgagee at the Fixed Rate of interest
provided in the Note plus seven percent (7%) per annum, but in no event more
than the maximum rate allowed by law, shall be immediately due and payable by
Mortgagor to Mortgagee, and until paid shall be added to and become a part of
the principal debt secured hereby, and the same may be collected as part of said
principal debt in any suit hereon.
Mortgagor also agrees that Mortgagee may charge administrative fees and
be reimbursed for all costs and expenses, including, without limitation, its
attorneys' fees and expenses, associated with reviewing and processing
post-closing requests by Mortgagor in connection with the Loan.
12. Subrogation. Mortgagee shall, in addition to all other rights, be
subrogated for further security to the Security, although paid or discharged of
record, of any and all encumbrances on the Security or any part thereof to the
extent satisfied by funds of Mortgagee, whether paid out of the proceeds of the
Loan secured by this instrument or otherwise.
13. Assignment of Rents, Leases and other Contracts: Compliance with
Leases: Future Leases. Mortgagor warrants to Mortgagee that the Mortgage
Property is completely occupied by Mortgagor and that there are no leases,
tenancies or licenses affecting the Mortgaged Property.
As further security for payment of the sums secured hereby, Mortgagor hereby
transfers, assigns and sets over unto Mortgagee all future leases and tenancies
of space in the Mortgaged Property and all modifications and renewals thereof
and all guarantees thereof, together with the right to sue for, collect and
receive all rents and other sums to be paid to the landlord thereunder, and all
damages payable by any tenant upon default under any lease, and also together
with the right to enforce any and all of the agreements, terms, covenants and
conditions in said leases and
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<PAGE> 14
guarantees thereof and to give notices thereunder. The foregoing assignment
shall not be construed as a consent by the Mortgagee to any lease so assigned or
to impose upon the Mortgagee any obligation with respect thereto. Mortgagor
covenants and agrees to faithfully keep and perform all of the obligations of
the landlord under all of the leases hereafter assigned to Mortgagee and will
not permit to accrue to the account of any tenant under any such lease any
payments other than the usual prepayment of rent as would result from the
acceptance on the first day of each month of the rent for the ensuing months,
according to the terms of the various leases.
Unless Mortgagee shall first consent in writing, Mortgagor will not
hereafter (a) enter into or make any lease to any tenant; (b) modify, amend,
terminate, cancel, or renew (other than a renewal to which a tenant is entitled
under the terms of an existing lease) any lease of any portion of the Mortgaged
property; or (c) accept the surrender of any portion of the Mortgaged Property
subject to any existing lease. With respect to any portion of the Mortgaged
Property, unless Mortgagee shall first consent in writing, Mortgagor will not
hereafter (i) permit to accrue to any tenant in the Mortgaged Property any right
to prepay rent pursuant to the terms of any lease other than the usual
prepayment of rent as would result from the acceptance by the landlord on the
first day of each month of the rent for the ensuing month, according to the
terms of the various leases, unless otherwise provided in existing leases; or
(ii) reduce the payment of the rent thereunder or accept any prepayment of rent
therein (except any amount which may be required to be prepaid by the terms of
any such lease).
Mortgagor will furnish to Mortgagee a true and complete signed copy of
each lease, or renewal of lease, hereafter made by Mortgagor with respect to any
portion of the Mortgaged Property within ten (10) days after final execution of
each such lease. Each such lease or a memorandum thereof shall be executed in a
form proper for recording with the Middlesex South District Registry of Deeds
and filing with the Middlesex South Registry District of the Land Court, which
lease or memorandum shall be recorded and filed for registration by Mortgagor at
the option of Mortgagee. Mortgagor shall enforce in the ordinary course of
business all of the agreements, terms, covenants, and conditions of said leases
to be performed by the tenant thereunder. Mortgagor shall perform in such
ordinary course of business every obligation of the landlord under any lease of
space at the Mortgaged Property, and shall not suffer or permit there to exist
any default in such performance or permit any event to occur which would give
the tenant under any such lease the right to terminate same and shall not
modify, abridge, waive, terminate or cancel any such lease or tenancy. Any and
all tenants' security deposits under any and all leases or tenancies of any part
or all of the Mortgaged Property shall, at the option of Mortgagee, be deposited
with Mortgagee or, if required by applicable law, deposited in an account at a
bank acceptable to Mortgagee so that they cannot be used by Mortgagor without
the consent of Mortgagee, and in the event of a commencement of a foreclosure of
this Mortgage or the conveyance of the Mortgaged Property to Mortgagee in lieu
of foreclosure, these deposits shall be transferred to Mortgagee if title is
acquired by Mortgagee or to the purchaser in the event of a foreclosure sale.
Mortgagor shall furnish to Mortgagee, within ten (10) days after
receipt thereof, or the mailing or service thereof by Mortgagor, as the case may
be, a copy of each notice
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of default which Mortgagor shall give to or receive from, any tenant of the
Mortgaged Property or of any part thereof, based upon the
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occurrence, or alleged occurrence, of any default or defaults in the performance
of any covenant, condition, promise or obligation provided for in a lease of any
space at the Mortgaged Property. Mortgagor shall furnish to Mortgagee an
attornment agreement in form and substance reasonably satisfactory to Mortgagee
with respect to any such tenant of the Mortgaged Property.
Nothing in this Mortgage and Security Agreement, and no exercise by the
Mortgagee of its rights hereunder shall be construed to obligate the Mortgagee
to perform any of the covenants of Mortgagor as landlord under any of the leases
hereinabove assigned or shall be deemed to constitute Mortgagee a mortgagee in
possession in the absence of an actual entry into and taking of possession of
the Mortgaged Property by Mortgagee.
All agreements and obligations to pay commissions or fees in connection
with the leasing of any portion of the Mortgaged Property shall be subject and
subordinate to this Mortgage and Security Agreement and shall not be enforceable
against Mortgagee, any purchaser at a foreclosure sale hereunder, or their
respective successors and assigns.
All leases of all or any portion of the Mortgaged Property made
hereafter shall be subject and subordinate to this Mortgage, except as otherwise
provided herein, unless Mortgagee requests that they be superior, in which case
Mortgagor shall cause such lease to be superior to this Mortgage in a manner
acceptable to Mortgagee. All such leases shall contain a provision providing
that Mortgagee may, at its election, record an instrument executed by the
Mortgagee providing that each such lease is superior to this Mortgage, which
instrument upon recording with said Registry of Deeds and filing with said
Registry District shall be sufficient to cause each such lease to be superior to
this Mortgage. Upon recording with said Registry of Deeds and filing with said
Registry District such an instrument providing that one or more of such leases
are superior to this Mortgage and Security Agreement, the lease or leases
referred to therein shall be superior to this Mortgage and Security Agreement.
In addition, upon request by Mortgagee, Mortgagor shall transfer,
assign and set over unto Mortgagee all other agreements, contracts, licenses and
permits affecting the Mortgaged Property, such assignments to be made by
instruments in form satisfactory to the Mortgagee.
14. Protection of Encumbrance; Mortgagor's Estoppel Certificate.
Mortgagor will, on the request of Mortgagee, furnish a written list of all
fixtures and other articles of personal property (tangible and intangible)
belonging to Mortgagor located on the Real Property, and will, at Mortgagor's
expense, promptly cause this Mortgage and Security Agreement and financing
statements prepared pursuant to the Uniform Commercial Code, to be recorded and
re-recorded, registered and re-registered, filed and re-filed at such times and
places as may be required by law or deemed advisable by Mortgagee to create,
preserve or protect the encumbrance and priority hereof upon the Security or any
part thereof; and Mortgagor will from time to time do and cause to be done all
such things as may be required by Mortgagee or required by law, including all
things which may from time to time be necessary under the Uniform Commercial
Code, fully to create, preserve and protect the encumbrance and priority hereof
upon the Security or
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any part thereof. A carbon, photographic or other reproduction of this Mortgage
and Security Agreement or a financing statement shall be sufficient as a
financing statement. Mortgagor hereby irrevocably appoints Mortgagee its true
and lawful attorney-in-fact, which shall be deemed to be coupled with an
interest, to execute, acknowledge and deliver any such instruments on behalf of
Mortgagor which Mortgagor fails or refuses to do. This power of attorney shall
not be affected by subsequent disability or incapacity of the principal. If an
Event of Default occurs, Mortgagee may require Mortgagor to assemble the
Security which constitutes personal property and make it available to Mortgagee
at a place to be designated by Mortgagee which is reasonably convenient to both
parties.
On the request of Mortgagee, Mortgagor shall furnish a written
statement, signed and, if requested, acknowledged, setting forth the amount of
the indebtedness which Mortgagor acknowledges to be due on the Note and under
this Mortgage and Security Agreement, specifying any claims of offset or defense
which Mortgagor asserts against the indebtedness secured hereby or any
obligation to be paid or performed hereunder, and the then state of facts
relative to the condition of the Security.
15. Hazardous Materials. As used herein and in the Loan Documents,
"Hazardous Materials" shall mean and include, but shall not be limited to, any
petroleum product and all hazardous or toxic substances, wastes or substances,
any substances which because of their quantitative concentration, chemical,
radioactive, flammable, explosive, infectious or other characteristics,
constitute or may reasonably be expected to constitute or contribute to a danger
or hazard to public health, safety or welfare or to the environment, including,
without limitation, any asbestos (whether or not friable) and any
asbestos-containing materials, waste oils, solvents and chlorinated oils,
polychlorinated biphenyls (PCBs), toxic metals, etchants, pickling and plating
wastes, explosives, reactive metals and compounds, pesticides, herbicides, radon
gas, urea formaldehyde foam insulation and chemical, biological and radioactive
wastes, or any other similar materials or any hazardous or toxic wastes or
substances which are included under or regulated by any federal, state or local
law, rule or regulation (whether now existing or hereafter enacted or
promulgated, as they may be amended from time to time) pertaining to
environmental regulations, contamination, clean-up or disclosures, and any
judicial or administrative interpretation thereof, including any judicial or
administrative orders or judgments, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq. ("CERCLA"); The Federal Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"); Superfund Amendments and
Reauthorization Act of 1986, Public Law No. 99-499 (signed into law October 17,
1986) ("SARA"); Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.
("TSCA"); Massachusetts Oil and Hazardous Material Release Prevention and
Response Act, M.G.L. c. 21 E; Massachusetts Hazardous Waste Management Act,
M.G.L. c. 21C; the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801 et seq.; or any other state superlien or environmental clean-up or
disclosure statutes (all such laws, rules and regulations being referred to
collectively as "Environmental Laws.).
For purposes of this Paragraph 15, "affiliate" shall mean and include
any entity which is in control of, controlled by, or under common control with
Mortgagor.
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Subject to the matters disclosed in the Environmental Certificate,
Mortgagor Warrants, represents and covenants as follows:
(a) Mortgagor has performed reasonable investigations, studies and tests as to
any possible environmental contamination, liabilities or problems with respect
to the Mortgaged Property and such investigations, studies and tests have
disclosed no Hazardous Materials or possible violations of any Environmental
Laws.
(b) To the best of Mortgagor's knowledge, there have been no releases of
Hazardous Materials either at, upon, under or within the Mortgaged Property, and
no Hazardous Materials have migrated to the Mortgaged Property. No Hazardous
Materials are heated on or have been stored, processed or disposed of on, or
released or discharged from (including ground water contamination) the
Mortgaged Property or any other property currently owned or operated by
Mortgagor or any affiliate of Mortgagor, and no above or underground storage
tanks exist on the Mortgaged Property.
(c) Mortgagor shall not allow any Hazardous Materials to exist or be stored,
located, discharged, possessed, managed, processed or otherwise handled on the
Mortgaged Property or any other property currently or subsequently owned or
operated by Mortgagor or any affiliate of Mortgagor, and shall strictly comply
with all Environmental Laws affecting the Mortgaged Property or such other
property currently or subsequently owned or operated by Mortgagor, including
those laws regarding the generation, storage, disposal, release and discharge of
hazardous substances. Without limiting the generality of the foregoing,
Mortgagor has not been, is not, and will not become involved in operations at
the Mortgaged Property or any other property currently or subsequently owned or
operated by Mortgagor which could lead to imposition on Mortgagor of liability
under any Environmental Law, including without limitation M.G.L. c.21 E.
Mortgagor expressly warrants, represents and covenants that Mortgagor shall
strictly comply with all requirements under M.G.L. c.21 E, and shall immediately
notify Mortgagee of any releases of oil or Hazardous Materials at, upon, under
or within the Mortgaged Property.
(d) Neither Mortgagor, the Mortgaged Property nor any other property currently
or previously owned or operated by Mortgagor or any affiliate of Mortgagor (i)
has received notice of or is subject to any private or governmental lien or
judicial or administrative notice, order or action relating to Hazardous
Materials or environmental problems, impairments or liabilities with respect to
the Mortgaged Property or such other property, or (ii) is in, or with any
applicable notice or lapse of time, or failure to take certain curative or
remedial actions, will be in, either direct or indirect violation of any
Environmental Laws.
(e) Mortgagor has not received any notice of any release of Hazardous Materials
with respect to the Mortgaged Property or any other property previously owned or
operated by Mortgagor from any governmental, judicial or administrative
authority or from any tenant or other occupant of the Mortgaged Property, or any
other property previously owned or operated by Mortgagor.
(f) Mortgagor shall strictly comply with the requirements of all Environmental
Laws affecting the Mortgaged Property and any other property currently or
subsequently owned or operated by Mortgagor.
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(g) No activity shall be undertaken on the Mortgaged Property or any which would
cause (i) the Mortgaged Property or such other property to be considered a
hazardous waste treatment, storage or disposal facility as defined under any
Environmental Laws; (ii) a release or threatened release of Hazardous Materials
from the Mortgaged Property or such other property in violation of any
Environmental Laws; or (iii) the discharge of Hazardous Materials into any
watercourse, surface or subsurface water or wetland, or the discharge into the
atmosphere of any Hazardous Materials in each case requiring a permit under any
Environmental Laws and for which no such permit has been issued.
(h) Mortgagor shall immediately notify Mortgagee in writing should Mortgagor
become aware of (i) any release or threatened release of Hazardous Materials or
the occurrence of any other environmental problem or liability with respect to
the Mortgaged Property, any other property currently, previously or subsequently
owned or operated by Mortgagor or any affiliate of Mortgagor, or any real
property adjoining or in the vicinity of the Mortgaged Property or such other
property which could subject Mortgagor, the Mortgaged Property or such other
property to a claim under any Environmental Laws or to any restriction on
ownership, occupancy, transferability or use of the Mortgaged Property or such
other property under any Environmental Laws, (ii) any lien filed, action taken
or notice given of the nature described in subparagraph (d) above, (iii) any
notice given to Mortgagor from any tenant or other occupant of the Mortgaged
Property or any other property currently, previously or subsequently owned or
operated by Mortgagor or any affiliate of Mortgagor or any notice from any other
person with respect to any release or threatened release of Hazardous Materials,
or (iv) the commencement of any litigation or threat of litigation relating to
any alleged unauthorized release of any Hazardous Materials or other
environmental contamination, liability or problem with respect to or arising out
of or in connection with the Mortgaged Property or any other property currently,
previously or subsequently owned or operated by Mortgagor or any affiliate of
Mortgagor. Mortgagor shall deliver to Mortgagee any documentation or records as
Mortgagee may reasonably request and which are susceptible of being obtained by
Mortgagor without undue cost or expense and without the necessity for initiating
legal proceedings to obtain the same in connection with all such notices,
inquiries and communications, and shall endeavor to advise Mortgagee of any
subsequent developments. Mortgagor shall, at its own cost and expense, take all
actions (to the extent and at the time or from time to time) as shall be
necessary or other property currently or subsequently owned or operated by
Mortgagor advisable for the clean-up of the Mortgaged Property or such other
property currently, previously or subsequently owned or operated by Mortgagor or
any affiliate of Mortgagor, including all removal, containment and remedial
actions in accordance with all applicable Environmental Laws (and in all events
in a manner satisfactory to Mortgagee), and shall further pay or cause to be
paid at no expense to Mortgagee all clean-up, administrative, and enforcement
costs of applicable government agencies or the parties protected by such
Environmental Laws which may be asserted against the Mortgaged Property or such
other property currently or subsequently owned or operated by Mortgagor, or any
affiliate of Mortgagor or any other owner or operator of the Mortgaged Property,
or a lienholder secured thereby. All costs (including, without
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limitation, those costs set forth above), damages, liabilities, losses, claims,
expenses (including attorneys' fees and disbursements) which are incurred by
Mortgagee, without the requirement that Mortgagee wait for the ultimate outcome
of any litigation, claim or other proceeding, shall be paid by Mortgagor to
Mortgagee within ten (10) days after notice to Mortgagor from Mortgagee
itemizing the amounts incurred to the effective date of such notice, with
interest thereon from the date of payment by Mortgagee at the Fixed Rate of
interest provided in the Note plus seven percent (7%) per annum, but in no event
more than the maximum rate allowed by law. Until such amounts due and payable
shall be paid by Mortgagor, they shall be added to and become a part of the
principal debt secured hereby, and the same may be collected as part of said
principal debt in any suit hereon or upon the Note. At any time until the
indebtedness evidenced by the Note has been paid in full and the obligations of
the Loan are completely satisfied Mortgagee may, with no obligation to, enter
the Mortgaged Property to make reasonable inspections and tests thereof related
to the possible presence or threat of Hazardous Materials.
(i) Mortgagor hereby warrants and represents that all of the answers on a
certain Environmental Certificate executed on February 27, 1997 (the
"Environmental Certificate") in connection with Mortgagor's application for the
Loan are true and complete as of the date hereof. Mortgagor shall immediately
notify Mortgagee in writing should Mortgagor become aware that any of the
answers on the Environmental Certificate either (i) was not true at the time the
Environmental Certificate was executed or (ii) becomes untrue during the course
of the Loan.
(j) Mortgagor hereby covenants and agrees to unconditionally and absolutely
indemnify and save harmless Mortgagee, its officers, directors, shareholders,
employees, agents and attorneys against and from any and all damages, losses,
liabilities, obligations, claims, litigation, demands, defenses, judgments,
suits, proceedings, fines, penalties, costs, disbursements and expenses
(including, without limitation, attorneys' and experts' fees and expenses,
clean-up costs, waste disposal costs and those costs, expenses, penalties and
fines within the meaning of CERCLA), of any kind or nature whatsoever which may
at any time be imposed upon, incurred by or asserted or awarded against
Mortgagee and arising from any environmental matter described in this Mortgage
and Security Agreement, including, without limitation, matters arising out of
any breach of Mortgagor's foregoing representations and warranties, whether any
such matters arise before or after foreclosure of this Mortgage and Security
Agreement (or deed in lieu thereof or similar actions to the same effect).
Mortgagor does further agree and covenant that Mortgagee shall not assume any
liability or obligation for loss, damage, fines, penalties, claims or duty to
clean up or dispose of Hazardous Materials, or other wastes or materials, on or
relating to the Mortgaged Property or any other property currently, previously
or subsequently owned or operated by Mortgagor or any affiliate of Mortgagor,
regardless of any inspections or other actions made or taken by Mortgagee on
such property or as a result of any conveyance of title to the Mortgaged
Property to Mortgagee or otherwise. All warranties and representations above
shall be deemed to be continuing and shall remain true and correct in all
material respects until the indebtedness has been paid in full, the obligations
completely satisfied, and any limitations period with respect to any claims
under each of the Environmental Laws has
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expired. The covenants of Mortgagor contained herein shall survive any exercise
of any remedy by Mortgagee under the Loan Documents, including foreclosure of
this Mortgage and Security Agreement (or deed in lieu thereof or similar actions
to the same effect), even if, as a part of such foreclosure, deed in lieu of
foreclosure or similar action, the indebtedness secured hereby is satisfied in
full. Mortgagor agrees that the indemnification granted herein may be enforced
by Mortgagee without resorting to or exhausting any other security or collateral
or without first having recourse to the Note or the Mortgaged Property covered
by this Mortgage and Security Agreement through foreclosure proceedings or
otherwise; provided, however, that nothing herein contained shall prevent
Mortgagee from suing on the Note or foreclosing this Mortgage and Security
Agreement or from exercising any other rights under the Loan Documents.
16. Certain Rights. of Mortgagee re: Successors. Guarantors etc.
Without affecting the liability of Mortgagor or any other person (except any
person expressly released in writing) for payment of any indebtedness secured
hereby or for performance of any obligation contained herein or in the Loan
Documents, and without affecting the rights of Mortgagee with respect to any
security not expressly released in writing, Mortgagee may, at any time and from
time to time, either before or after the maturity of the Note, and without
notice or consent:
(a) Deal with any successor in interest of Mortgagor herein regarding this
instrument and the debt hereby secured in all respects as it might deal with
Mortgagor herein, it being understood and agreed that no sale of Security shall
operate to release, discharge, modify, change or affect the original liability
of any predecessor in interest of the equity owner at the time of such sale,
forbearance or extension.
(b) Release any person liable for payment of all or any part of the indebtedness
or for performance of any obligation.
(c) Make any agreement extending the time or otherwise altering the terms of
payment of all or any part of the indebtedness, or modifying or waiving any
obligation, or subordinating, modifying or otherwise dealing with the
encumbrance or charge hereof.
(d) Exercise or refrain from exercising or waive any right Mortgagee may have.
(e) Accept additional security of any kind.
(f) Release or other wise deal with any property, real or personal, securing the
indebtedness, including all or part of the Security.
17. Mortgagor's Books and Records. Mortgagor shall maintain current and
accurate books and records showing in detail satisfactory to Mortgagee the
operation of the Mortgaged Property and any business conducted thereon by
Mortgagor, and Mortgagee shall have the right to inspect and copy such books and
records.
Mortgagor shall deliver to Mortgagee within ninety (90) days after the
close of Mortgagor's fiscal year, balance sheets and statements of annual income
and expense, in form and substance acceptable to Mortgagee, for the preceding
year for Mortgagor and for the Mortgaged Property, and shall deliver to
Mortgagee such other information with respect to Mortgagor and the Mortgaged
Property as Mortgagee may reasonably request from time to time, including, but
not limited to, a rent roll for the Mortgaged Property, including tenant names,
base commencement and expiration dates, square footage, annual rent, expense
contributions and any other information Mortgagee may request. All financial
statements shall be accompanied by a certification of an
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independent certified public accountant, who is a member of the American
Institute of Certified Public Accountants, certifying that such statements are
accurate and are in accordance with generally accepted accounting principles,
consistently applied or, at Mortgagee's option, by a certification of the
financial officer of Mortgagor who is responsible for the preparation of such
financial statements.
18. Mortgagor's Authority. Mortgagor represents and warrants to
Mortgagee that it is a corporation duly organized and validly existing under the
laws of the State of Delaware and is duly qualified to do business in the
Commonwealth of Massachusetts, that it has the requisite power and authority to
enter into the Loan evidenced by the Note, to execute and deliver all of the
Loan Documents and to perform all of the obligations of the Mortgagor under the
Loan Documents.
19. Change in Law. In the event of the passage of any state, federal,
municipal or other governmental law, order, rule or regulation, subsequent to
the date hereof, in any manner changing or modifying the laws now in force
governing the taxation of mortgages or debts secured by mortgages or the manner
of collecting taxes so as to affect adversely Mortgagee, all sums secured by
this Mortgage and Security Agreement and all interest accrued thereon shall,
without notice, become due and payable forthwith at the option of Mortgagee;
provided, however, Mortgagee shall not make such election if Mortgagor is
permitted by law to pay such tax, and if, within ten (10) days after the
imposition of such tax, Mortgagor does pay such tax and all other payments
required hereunder and agrees to pay any such tax when thereafter levied or
assessed against the Mortgaged Property.
20. Events of Default. The entire indebtedness secured hereby shall
become immediately due and payable at the option of Mortgagee without notice to
Mortgagor, and an Event of Default shall exist hereunder, if (a) any default
shall occur under the Note; (b) the liquidation, winding-up, termination of
existence or dissolution of the organization of Mortgagor, any endorser or
guarantor of the Note, or any signatory to any other instrument securing the
Note, or the cessation of the business activities as presently conducted by
Mortgagor or any guarantor of the Note; (c) Mortgagor, any endorser or guarantor
of the Note, or any signatory to any other instrument securing the Note grants a
trust mortgage, or executes a general assignment for the benefit of creditors,
or fails to generally pay its debts as they mature, or petitions or applies for
the appointment of a liquidator or a receiver of Mortgagor, any endorser or
guarantor of the Note, or any signatory to any other instrument securing the
Note, or of any substantial part of the assets of Mortgagor, any endorser or
guarantor of the Note, or any signatory to any other instrument securing the
Note, or commences any proceeding under any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or similar law
of any jurisdiction, now or hereafter in effect, or any order for relief shall
be entered in any such proceeding, or Mortgagor, any endorser or guarantor of
the Note, or any signatory to any other instrument securing the Note, shall
acquiesce to the entry of an order for relief in any such proceeding; (d) the
filing of any petition or application commencing any proceeding against
Mortgagor, any guarantor or endorser of the Note, or any signatory to any other
instrument securing the Note, under any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or similar law of any
jurisdiction, now or hereafter in effect, where such
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<PAGE> 23
petition or application is not dismissed within thirty (30) days after the date
such petition or application was filed, or where such proceeding is not
dismissed or stayed within thirty (30) days after the date such proceeding was
commenced; (e) the Security or any part thereof or any interest therein, or any
legal or beneficial interest in Mortgagor, shall be transferred in violation of
Paragraph 9 hereof or Mortgagor shall cause or permit a change in its name,
place of business or chief executive office in violation of the provisions of
Paragraph 9(d) hereof; (f) any security interest, lien or other encumbrance or
financing statement shall be created on the Security or any part thereof by
operation of law or otherwise in violation of the requirements of Paragraph 9
hereof; (9) any default shall occur under any other mortgage which Mortgagor has
not cured or is not proceeding with diligence to cure pursuant to the terms of
such other mortgage or any other encumbrance or lien of any kind on the Security
or any part thereof, or any foreclosure thereof shall be commenced; (h) any levy
or sale upon execution or other proceedings of any nature shall occur whereby
Mortgagor shall be deprived of its title or right of possession to the Security
or any part thereof; (i) any license or permit to operate the business conducted
on the Mortgaged Property by Mortgagor is suspended or revoked and such
suspension or revocation is not terminated within thirty (30) days; (j)
Mortgagor shall default under Paragraph 4 hereof relating to insurance, under
Paragraph 7 hereof relating to Impositions, under Paragraph 13 hereof relating
to leases or under Paragraph 15 hereof relating to Environmental Laws and
Hazardous Materials; (k) the answers on the Environmental Certificate become
untrue; (l) the Mortgaged Property or any part thereof shall be abandoned by
Mortgagor; (m) any statement, representation or warranty made herein, in
connection with the application for the Loan, in any supporting financial
statement or in any other Loan Document by Mortgagor, any endorser or guarantor
of the Note, or any signatory to any other instrument securing the Note shall
prove to have been false, misleading or erroneous in any material respect when
made; (n) Mortgagor, as lessor or assignor, shall fail to observe, comply with,
adhere to or perform any agreement of Mortgagor in any lease relating to the
Mortgaged Property or any assignment thereof; (o) the Mortgaged Property or any
other property owned or operated by Mortgagor becomes subject to any claim,
notice or action under the Environmental Laws described in Paragraph 15 hereof;
(p) the death or adjudicated incompetence of Mortgagor (or any beneficial owner
of Mortgagor), any endorser or guarantor of the Note, or any signatory to any
other instrument securing the Note and if any of the Mortgagor, its beneficiary,
or any such signatory, any endorser or guarantor is a partnership, the death or
adjudicated incompetence of any partner; or (q) any default in the performance
or observance of any other provision hereof or in any of the Loan Documents
shall occur.
21. Remedies. While any Event of Default exists hereunder, Mortgagee may,
at its option and without notice, exercise any or all of the following remedies:
(a) apply to the indebtedness secured hereby any sums then held or thereafter
received by Mortgagee including, without limitation, any insurance proceeds,
condemnation awards and reserve funds held for payment of Impositions, insurance
premiums and ground rents;
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(b) declare all indebtedness secured hereby to be immediately due and payable
and the same shall thereupon become immediately due and payable without any
presentment, demand, protest or notice of any kind;
(c) take possession of the Security and use, operate, manage and control the
same and conduct the business thereof and collect the income therefrom all to
the extent and on such terms and conditions as Mortgagee shall, in its judgment,
determine to be appropriate for the maintenance and preservation of the Security
or of the value thereof, such determination to be conclusive in the absence of
bad faith. Without limiting the generality of the foregoing, Mortgagee may take
any one or more of the following actions: (1) use and operate the Mortgaged
Property itself or through a subsidiary or affiliate, or hire a professional
property manager at Mortgagor's expense to do the same; (2) receive, collect,
compromise and settle any or all accounts receivables, accounts or contract
rights arising from or relating to the Mortgaged Property or any business
conducted thereon, and Mortgagor hereby irrevocably appoints Mortgagee its true
and lawful attorney-in-fact, which shall be deemed to be coupled with an
interest (and which power of attorney shall not be affected by subsequent
disability or incapacity of the principal), to take all action in its name for
such purposes, including, without limitation, the right to request delivery of
mail and endorse checks and drafts with the name of Mortgagor to the same extent
as Mortgagor itself shall be entitled to endorse; take possession of, use and
consume all inventory; use the name and good will of any business conducted by
Mortgagor on the Mortgaged Property; care for and exercise all rights with
respect to all tenants, occupants or customers; and possess and use the books
and records showing the operation of the Mortgaged Property or any business
previously conducted by Mortgagor on the Mortgaged Property; (3) apply any
amounts received by Mortgagor in connection with the Assignments to the payment
of the indebtedness and to the expenses of leasing, operating, maintaining and
managing the Mortgaged Property, as more fully described in the Assignments; (4)
lease the Mortgaged Property or any portion thereof for itself as Mortgagee and
as Mortgagor's attorney-in-fact so that any such lease shall bind both Mortgagor
and Mortgagee in accordance with its terms notwithstanding any foreclosure or
redemption; (5) from time to time at the expense of Mortgagor make all such
repairs, replacements, alterations, additions and improvements to the Mortgaged
Property as Mortgagee may deem proper; and (6) pay and incur all expenses
necessary or deemed by it appropriate for operating the Mortgaged Property and
the conduct of any then existing business thereon including, without limitation,
Impositions, insurance, wages of employees connected with the Mortgaged Property
or the business conducted thereon, charges and reasonable compensation for
services of Mortgagee, its attorneys and accountants and all other persons
engaged or employed in connection with the Mortgaged Property or any business
conducted thereon and, in addition, Mortgagee, at its option, may make payments
or incur liability with respect to obligations arising prior to the date it
takes possession. All activities of Mortgagee hereunder shall be undertaken by
Mortgagee as mortgagee-in-possession for the maintenance and preservation of its
collateral and not as successor to any business or activities of Mortgagor, and
Mortgagee shall be without any liability, charge or obligation therefor to
Mortgagor.
18
<PAGE> 25
(d) seek the appointment of a receiver for all or any part of the Mortgaged
Property. Mortgagor hereby consents to such appointment and waives any and all
defenses to such appointment;
(e) sell all or any portion or portions of the Security pursuant to the
provisions of Paragraph 22 hereof;
(f) without taking possession of the Mortgaged Property, sue for or otherwise
collect and receive all earnings, revenues, issues, profits, rents and other
income otherwise payable to Mortgagor pursuant to all present and future leases
of space in the Mortgaged Property; or
(g) take such other action as may legally be available to Mortgagee to protect
its interest in the Security and to collect the indebtedness due it.
22. Statutory Condition and Statutory Power of Sale. This instrument is
upon the STATUTORY CONDITION and upon the further condition that all covenants
and agreements of Mortgagor contained herein, in the Note and in the other Loan
Documents shall be kept and fully performed, and upon any breach of such
covenants and agreements or if an Event of Default shall exist hereunder
Mortgagee shall have, as to the Real Property, the STATUTORY POWER OF SALE, and
as to all other portions of the Security, all the remedies of a secured party
under the Uniform Commercial Code.
In exercising its power of sale under this instrument Mortgagee may
sell the personal property or any part thereof, either separately from or
together with the Real Property or any part thereof, either as one unit or
separately as Mortgagee may in its discretion elect, and may sell the Mortgaged
Property as a whole or in separate parts as Mortgagee may in its discretion
elect Mortgagor hereby waiving, on behalf of itself and its successors and
assigns, the application of any doctrine of marshalling. In case Mortgagee
elects to sell the Mortgaged Property in parts or parcels, said sales may be
held from time to time, and the power shall not be exhausted until all of the
Mortgaged Property not previously sold shall have been sold. In the event of any
separate sale of personal property, Mortgagee will give to Mortgagor reasonable
notice of the time and place of any public sale or of the time after which any
private sale or other intended disposition thereof is to be made, and such
requirement of reasonable notice shall be met if such notice is mailed postage
prepaid to the address of Mortgagor set forth at the beginning of this
instrument at least ten (10) days before the time of the sale or other
disposition.
23. Indemnification. Mortgagor hereby covenants and agrees
unconditionally and absolutely to indemnify and save harmless Mortgagee, its
officers, directors, shareholders, employees, agents and attorneys against all
damages, losses, liabilities, obligation, claims, litigation, demands or
defenses, judgments, suits, proceedings, fines, penalties, costs, disbursements
and expenses of any kind or nature whatsoever which may at any time be imposed
upon, incurred by or asserted or awarded against Mortgagee and arising from the
following matters, whether any such matters arise before or after foreclosure of
this Mortgage and Security Agreement ( or deed in lieu thereof or similar
actions to the same effect):
(a) Fraud, misrepresentation and waste.
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<PAGE> 26
(b) Any rents, issues or profits from the Security collected more than one (1)
month in advance of their due dates.
(c) Any misapplication of Loan proceeds, rents, issues or profits, security
deposits and any other payments from tenants or occupants of the Mortgaged
Property (including, without limitation, lease termination fees) insurance
proceeds, condemnation awards, or other sums of a similar nature.
(d) Any wrongful act of the Mortgagor the apparent purpose of which is to
deprive the Mortgagee of any of its Security.
(e) Liability under environmental covenants, conditions and indemnities
contained in the Mortgage.
(f) Rents or other income from the Security which are not first applied to
repayment of the Loan or to the normal operating expenses of the Mortgaged
Property.
(g) Personalty or fixtures removed or allowed to be removed by Mortgagor and not
replaced by items of equal or greater value than the personalty or fixtures so
removed.
(h) An amount equal to the sum of all payments made by Mortgagor to any junior
lienholders during any period in which a monetary default exists under the Loan
Documents.
(i) Failure to pay taxes or assessments prior to delinquency or to pay charges
for labor, materials or other charges which may become liens on any portion of
the Security and any sums expended by Mortgagee in the performance of or
compliance with the obligations of Mortgagor under the Loan Documents,
including, without limitation, sums expended to pay taxes or assessments or
hazard insurance premiums or bills for utilities or other services or products
for the benefit of the Security.
(j) The cost of compliance with all federal, state and local laws and
regulations, as well as the cost of investigating any action or charge
thereunder, and/or damages suffered by Mortgagee as a result of failure of
Mortgagor to pay or comply with any of the foregoing laws and regulations.
(k) Tortious or other acts or omissions of Mortgagor giving rise to claims
against Mortgagee, including, without limitation, claims by tenants for damages
of offsets.
(l) Attorneys' fees, court costs and other expenses incurred by
Mortgagee in connection with enforcement of Mortgagor's indemnity as set forth
herein.
This indemnity shall survive any foreclosure of this Mortgage and
Security Agreement, the taking of a deed in lie thereof, or any other discharge
of the obligations of the Mortgagor hereunder or a transfer of the Mortgaged
Property, even if the indebtedness secured hereby is satisfied in full.
Mortgagor agrees that the indemnification granted herein may be enforced by
Mortgagee without resorting to or exhausting any other security or collateral or
without first having recourse to the Note or the Mortgaged Property covered by
this Mortgage and Security Agreement through foreclosure proceedings or
otherwise; provided, however, that nothing herein contained shall prevent
Mortgagee from suing on the Note or foreclosing this Mortgage and Security
Agreement or from exercising any other rights under the Loan Documents.
24. Use of Proceeds. Mortgagor agrees that no part of the proceeds of
the Loan will be used for the purpose, whether immediate, incidental or
ultimate, or "purchasing" or "carrying" any "margin stock," as such terms are
defined in Regulation G (12 C.F.R.
20
<PAGE> 27
Part 207) of the Board of Governors of the Federal Reserve System or for the
purpose of reducing or retiring any indebtedness which was originally incurred
for any such purpose.
25. Effect of Sale. Forbearance, Extension. etc. No sale of the
Security, nor forbearance on the part of Mortgagee, and no extension whether
oral or in writing of the time for the payment of the whole or any part of the
debt hereby secured or any other indulgence given by Mortgagee to any persons
other than Mortgagor, shall operate to release or in any manner affect the
original liability of Mortgagor, notice of any such extensions or indulgences
being waived. In the case of foreclosure sale Mortgagee shall be entitled to
retain one percent of the purchase money in addition to the costs, charges and
expenses allowed under the Statutory Power of Sale; and if surplus proceeds are
realized from a foreclosure sale, Mortgagee shall not be liable for any interest
thereon pending distribution of such proceeds by Mortgagee.
26. No Liability of Mortgagee. Nothing in this instrument shall be
construed as obligating Mortgagee to take any action or incur any liability with
respect to the Security or any business conducted on the Mortgaged Property, and
all options given to Mortgagee are for its exclusive benefit and may be
exercised in its sole discretion.
27. Severability. If any of the provisions of this instrument is held
to be invalid, illegal or unenforceable by a court of competent jurisdiction,
the other provisions hereof shall be liberally construed in order to effect the
provisions and intent hereof. In the event the payments required to be made
hereunder or pursuant to any other Loan Document, whether such payments are
characterized as interest or otherwise, shall at any time exceed the limits
permitted by any law governing usury or any other law applicable to the Loan
which this Mortgage and Security Agreement secures, all such excess sums paid
by Mortgagor for the period in question shall, without further agreement or
notice between or by any party hereto, be applied to the principal balance of
the Note as a prepayment thereof without premium.
28. Effect of Consent and Waivers. No consent or waiver, express or
implied, by Mortgagee to or of any default by Mortgagor shall be construed as a
consent or waiver to or of any other default. No waiver of any default or other
indulgence shall be effective unless expressed in writing by Mortgagee.
29. Notices. Any demand, notice or request by either party to the other
shall be in writing and hand delivered to the party intended to receive the
same or mailed by registered or certified mail, return receipt requested, with a
reference to Loan No. 6516959 GB addressed to that party at the address of such
party set forth at the beginning of this instrument or at such other address as
may be set forth in a notice delivered or mailed as herein provided. Such
demand, notice or request shall be deemed given when so hand delivered, or if so
mailed, when deposited with the U.S. Postal Service according to the postmark of
the U.S. Postal Service.
30. Successors and Assigns; Miscellaneous. The terms, provisions,
covenants and conditions hereof shall be binding upon Mortgagor and its
successors and assigns and shall inure to the benefit of Mortgagee and its
successors and assigns. All references in this Mortgage and Security Agreement
to Mortgagor and Mortgagee shall be deemed to include all such successors and
assigns, respectively. Whenever used, the singular number shall include the
plural, the plural
22
<PAGE> 28
the singular, and the use of any gender shall be applicable to all genders. The
captions contained herein are used only as a matter of convenience and are not
to be considered as part of this Mortgage and Security Agreement or to be used
in determining the intent of the parties to it.
31. Governing Law. This Mortgage and Security Agreement has been
executed and delivered in the Commonwealth of Massachusetts and is to be
construed and enforced according to and governed by the laws of the Commonwealth
of Massachusetts.
32. Modification Procedure. Neither this Mortgage and Security
Agreement nor any other Loan Document may be modified except by an instrument in
writing executed by both parties to this Mortgage and Security Agreement.
EXECUTED AS A SEALED INSTRUMENT this 30th day of June, 1997.
MORTGAGOR:
BTU International, Inc.
By:
Thomas P. Kealy
Its Vice President
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss.
June 30, 1997
Then personally appeared the above-named Thomas P. Kealy, Vice
President of BTU International, Inc., and acknowledged the foregoing instrument
to be the free act and deed of the said BTU International, Inc., before me
Notary Public
My commission expires:
22
<PAGE> 29
Exhibit A
Legal Description of the Premises
That certain parcel of land with all buildings and improvements thereon
situated on the easterly side of Esquire Road in the Town of Billerica, County
of Middlesex, Commonwealth of Massachusetts, and is bounded and described as
follows:
Beginning at the northwesterly corner of the herein described parcel in
the easterly street line of Esquire Road, which is also the southwesterly corner
of Lot B, as shown on a plan entitled "Subdivision Plan of Land in Billerica,
Mass., Scale: 1" = 50', June 7,1985, prepared for B.T.U. Engineering Corp.,
prepared by Allen & Demurjian, Inc., Engineers & Land Surveyors, Boston, Mass.
Thence running N-66(Degree)-19'-59" -E bounding northwesterly on
aforesaid Lot B for a distance of six hundred thirty-seven and fifty hundredths
(637.50') feet to Route 3, as shown on 1953 State Highway Layout, for a common
comer with Lots A and B on aforementioned Subdivision Plan;
Thence running generally southerly along said State Highway Layout
curving to the left along the arc of a curve having a radius of ten thousand two
hundred fifty and no hundredths (10,250.00') feet for an arc distance of five
hundred twenty-seven and seventy-one hundredths (527.71') feet to land now or
formerly belonging to J. Howard & Gertrude Beck, Trustees of Chairmar Realty
Trust for a corner;
Thence running S-71(Degree)-56'-05"-W for a distance of fifty-five and
seventy-six hundredths (55.76') feet to an angle;
Thence running S-76-02'47"-W for a distance of eighty-nine and
fifty-one hundredths (89.51') feet to an angle;
Thence running S-62(Degree)-12'-03-W for a distance of thirty-five and
ninety hundredths (35.90') feet to an angle;
Thence running S-48(Degree)-26'49"'-W for a distance of thirty-six
and seventy-one hundredths (36.71') feet to an angle;
Thence running S-41(Degree)48'-03"-W for a distance of ninety-one and
forty-eight hundredths (91.48') feet to an angle;
Thence running S-37(Degree) -56'-51"-W for a distance of one hundred
twenty-three and eighty-three hundredths (123.83') feet to Esquire Road for a
corner;
The test six (6) courses bounding southerly on aforesaid Chairmar
Realty Trust land;
Thence running N-53(Degree)-03'-33-W along Esquire Road for a distance
of one hundred ninety-eight and fifty-two hundredths (198.52') feet to a point
of curve;
Thence turning and running generally northwesterly along Esquire Road
curving to the right along the arc of a curve having a radius of two hundred
fifty-seven and ninety-seven hundredths (257.97') feet for an arc distance of
one hundred forty-two and five hundredths (142.05') feet to a stone bound for a
point of tangency,
Thence running N-21(Degree)-30'-34'-W along Esquire Road for a distance
of two hundred ninety and eighty-one hundredths (296.81') feet to the point and
place of beginning.
Said parcel contains 304,412 square feet or 6.99 acres.
23
<PAGE> 30
Being Lot C as shown on Plan entitled "Subdivision Plan of Land in
Billerica Mass. prepared for B.T.U. Engineering Corp. and prepared by Allen &
Demurjian, Inc. dated July, 1985 and recorded with said Deeds on August 26, 1985
in Plan Book 149, Page 109.
A portion of the above described Lot C is shown as Lot 3 on Land Court
Plan 41191 B filed with the Land Court on March 2, 1992.
24
<PAGE> 31
Exhibit B
Permitted Encumbrances
1. Easement to Massachusetts Electric Company and New England Telephone
and Telegraph Company dated April 29, 1975 recorded in Book 2171, Page
650 and 651.
2. Easement to Massachusetts Electric Company and New England Telephone
and Telegraph Company dated October 11, 1979, recorded in Book 2392,
Page 565 and 566.
3. Rights of J. Raymond Brown under an Agreement dated October 10, 1979 as
disclosed in a Deed from Graham Builders, Inc., to BTU Engineering
Corporation dated December 2, 1979 recorded in Book 2412, Page 273 to
cut and remove timber.
4. Rights of Joseph Steams to pass and repass over lot referred to in Land
Court Case No.41191.
5. Notice of Variance (Case No. 208), recorded in Book 1990, Page 272.
6. Terms and provisions of Certificate of Approval by Town of Billerica
Planning Board recorded in Book 2389, Page 28.
7. Order of Conditions by Billerica Conservation Commission dated November
17, 1982 recorded in Book 2581, Page 607 and Book 2574, page 427,
affected by Certificate of Compliance dated August 14, 1985 and
recorded on August 26, 1985 as instrument No. 34102.
25
<PAGE> 1
EXHIBIT 10.43
================================================================================
CREDIT AGREEMENT
BETWEEN
BTU INTERNATIONAL, INC.
AND
USTRUST
================================================================================
DATED AS OF SEPTEMBER 5, 1997
================================================================================
<PAGE> 2
CREDIT AGREEMENT..............................................................1
ARTICLE 1. - DEFINITIONS.....................................................1
1.1. DEFINED TERMS............................................................1
1.2. ACCOUNTING AND BANKING TERMS.............................................1
ARTICLE 2. - LOANS AND LETTERS OF CREDIT......................................1
2.1. REVOLVING CREDIT COMMITMENT..............................................1
2.2. PROCEDURE FOR REVOLVING CREDIT BORROWINGS................................1
2.3. INTEREST ON REVOLVING CREDIT LOANS.......................................2
2.4. PREPAYMENT OF EURODOLLAR LOANS...........................................3
2.5. MANDATORY PREPAYMENT.....................................................4
2.6. REVOLVING CREDIT NOTE....................................................4
2.7. REVOLVING CREDIT LOAN PROCEEDS...........................................4
2.8. LETTERS OF CREDIT........................................................4
2.9. CALCULATION OF INTEREST..................................................5
2.10. DEFAULT RATE............................................................5
2.11. INTEREST LIMITATION.....................................................5
2.12. LATE PAYMENT CHARGE.....................................................6
2.13. PAYMENTS................................................................6
2.14. TERMINATION OF CREDIT COMMITMENTS.......................................6
2.15. COMMITMENT FEE..........................................................6
ARTICLE 3. - REPRESENTATIONS AND WARRANTIES...................................6
3.1. FINANCIAL CONDITION......................................................7
3.2. NO CHANGE................................................................7
3.3. ORGANIZATION, EXISTENCE, GOOD STANDING...................................7
3.4. SUBSIDIARIES; CAPITALIZATION.............................................7
3.5. POWER AND AUTHORITY......................................................7
3.6. LEGAL, VALID, BINDING OBLIGATION.........................................8
3.7. CONSENTS.................................................................8
3.8. NO LEGAL BAR.............................................................8
3.9. NO LITIGATION............................................................8
3.10. NO DEFAULT..............................................................8
3.11. ASSETS, NO LIENS; INTELLECTUAL PROPERTY.................................9
3.12. NO BURDENSOME RESTRICTIONS..............................................9
3.13. TAXES...................................................................9
3.14. REGULATION U, ETC.......................................................9
3.15. ERISA...................................................................9
3.16. INVESTMENT COMPANY ACT, ETC............................................10
3.17. INDEBTEDNESS...........................................................10
3.18. CONTINGENT LIABILITIES.................................................10
3.19. CHIEF PLACE OF BUSINESS................................................10
3.20. LAWS INCLUDING ENVIRONMENTAL AND SAFETY MATTERS........................10
3.21. NEGATIVE PLEDGES.......................................................11
3.22. FULL DISCLOSURE........................................................11
ARTICLE 4. - AFFIRMATIVE COVENANTS...........................................11
4.1. FINANCIAL STATEMENTS AND OTHER DOCUMENTS................................11
4.2. EXISTENCE; COMPLIANCE WITH LAWS; ETC....................................12
4.3. MAINTAIN PROPERTY.......................................................12
4.4. INSURANCE...............................................................13
4.5. RECORDKEEPING; RIGHTS OF INSPECTION.....................................13
-i-
<PAGE> 3
4.6. NOTICE OF MATERIAL EVENTS...............................................13
4.7. DEPOSIT ACCOUNTS........................................................14
4.8. NOTICE OF ACQUISITIONS..................................................14
ARTICLE 5. - NEGATIVE COVENANTS..............................................14
5.1. INDEBTEDNESS............................................................14
5.2. CONTINGENT LIABILITIES..................................................15
5.3. LIMITATION ON LIENS.....................................................15
5.4. PROHIBITION OF FUNDAMENTAL CHANGES......................................16
5.5. FINANCIAL MEASUREMENTS..................................................17
5.6. TRANSACTIONS WITH AFFILIATES............................................17
5.7. NEGATIVE PLEDGE.........................................................17
ARTICLE 6. - CONDITIONS PRECEDENT............................................17
6.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT...............................17
LOAN DOCUMENTS:..............................................................18
CORPORATE DOCUMENTS:.........................................................18
MISCELLANEOUS DOCUMENTS:.....................................................18
6.2. CONDITIONS OF ALL REVOLVING CREDIT LOANS AND LETTERS OF CREDIT..........19
ARTICLE 7. - EVENTS OF DEFAULT...............................................20
7.1. EVENTS OF DEFAULT.......................................................20
7.2. LENDER'S REMEDIES.......................................................22
7.3. CROSS DEFAULT...........................................................22
7.4. SETOFF..................................................................22
ARTICLE 8. - MISCELLANEOUS...................................................23
8.1. NOTICES.................................................................23
8.2. NO WAIVER OF RIGHTS.....................................................24
8.3. CUMULATIVE REMEDIES.....................................................24
8.4. SUCCESSORS..............................................................24
8.5. GOVERNING LAW...........................................................24
8.6. SUBMISSION TO JURISDICTION; WAIVER OF TRIAL BY JURY.....................24
8.7. COMPLETE AGREEMENT, AMENDMENTS..........................................25
8.8. EXPENSES................................................................25
8.9. INDEMNIFICATION.........................................................25
8.10. CHANGE IN LAWS.........................................................26
8.11. SURVIVAL OF AGREEMENTS.................................................26
8.12. SEVERABILITY...........................................................26
8.13. DESCRIPTIVE HEADINGS...................................................26
8.14. COUNTERPARTS...........................................................26
SCHEDULE I....................................................................1
-ii-
<PAGE> 4
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of September 5, 1997 between BTU
International, Inc., a Delaware corporation ("Borrower"), and USTRUST, a
Massachusetts trust company ("Lender").
WHEREAS, Borrower has requested that Lender provide it with a revolving
line of credit;
WHEREAS, Lender is willing, on the terms and subject to the conditions
in this Agreement, to make the revolving line of credit available to Borrower;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are acknowledged, Lender and Borrower agree as follows.
ARTICLE 1. - DEFINITIONS
1.1. DEFINED TERMS. The capitalized terms, as used in this
Agreement, shall have the meanings as set forth on Schedule I hereto.
1.2. ACCOUNTING AND BANKING TERMS. All accounting and banking terms
not specifically defined herein shall be construed, in the case of accounting
terms, in accordance with GAAP consistently applied and, in the case of banking
terms, in accordance with general practice among commercial banks in Boston,
Massachusetts.
ARTICLE 2. - LOANS AND STANDBY LETTERS OF CREDIT
2.1. REVOLVING CREDIT COMMITMENT. Subject to the terms and
conditions hereof, Lender agrees to make Revolving Credit Loans to Borrower from
time to time during the Commitment Period, provided, however, that the aggregate
principal amount of all outstanding Revolving Credit Loans plus the face amount
of all outstanding Letters of Credit does not exceed the Revolving Credit Limit.
The Revolving Credit Loans may be repaid by Borrower at any time, without
penalty or premium (except as provided in Section 2.4(a)) and reborrowed only
during the Commitment Period, and shall be due and payable on the Termination
Date.
2.2. PROCEDURE FOR REVOLVING CREDIT BORROWINGS. Subject to the
terms and conditions hereof, Borrower may borrow under the Revolving Credit
Commitment during the Revolving Credit Commitment Period on any Business Day.
Borrower may request Revolving Credit Loans, from time to time, by submitting
irrevocable Loan requests in such form and manner as Lender may require or
permit (including, without limitation, telephone requests), specifying the
amount to be borrowed, whether the borrowing will be at the Base Rate or the
Eurodollar Rate, the Interest Period, if a Eurodollar Loan is requested, the
requested Borrowing Date, the manner in which Borrower would like the proceeds
of such Loan disbursed and a certification that the Borrower is in compliance
with this Loan Agreement immediately before and after giving effect to the
making of such Loan. If such Revolving Credit Loan request is for a Base Rate
Revolving Credit Loan and is properly made and received by Lender prior to 12:00
noon (Eastern Time) on a Business
-1-
<PAGE> 5
Day, requesting a Revolving Credit Loan on that Business Day, Lender shall make
such Revolving Credit Loan on the same Business Day. If, however, such Revolving
Credit Loan request is received by Lender after 12:00 noon (Eastern Time) on a
Business Day, Lender shall make the Revolving Credit Loan not later than the
next Business Day. Revolving Credit Loans bearing interest at the Eurodollar
Rate will be made on the second Business Day following receipt of the borrowing
request by Lender. Lender may require telephone requests to be confirmed
promptly in writing and Borrower shall indemnify and hold Lender harmless for
any action, including the making of any advance or any loss or expenses taken or
incurred by Lender in reliance upon any such telephone request. Each borrowing
pursuant to the Revolving Credit Commitment shall be in the amount not less than
$25,000 provided that in any event any such borrowing, together with the
aggregate principal amount of the Revolving Credit Loans and Letters of Credit
then outstanding, shall not exceed the Revolving Credit Limit. Except as
otherwise requested, the proceeds of all Revolving Credit Loans will be made
available to Borrower by Lender by crediting Borrower's deposit account with
Lender or such other account of Borrower at Lender as Borrower may specify.
2.3. INTEREST ON REVOLVING CREDIT LOANS.
(a) INTEREST RATE. The Borrower shall pay interest on the unpaid
principal amount of each Revolving Credit Loan outstanding at any time, and from
time to time, for the period from the Borrowing Date at a fluctuating rate per
annum equal to one of the following rates as elected by Borrower: (i) the Base
Rate, or (ii) the Eurodollar Rate.
(b) EURODOLLAR LOAN NOTICE. To borrow at the Eurodollar Rate, the
Borrower must submit a Eurodollar Loan Notice to Lender prior to 11:00 a.m.
(Eastern Time) on a Business Day at least two (2) Business Days prior to the
commencement of the Interest Period for such Eurodollar Rate borrowing. Each
Eurodollar Loan shall be for an Interest Period of one (1), two (2), three (3),
six (6) or twelve (12) calendar months and shall, upon expiration of the
Interest Period applicable to such Eurodollar Loan, be continued as a Base Rate
Revolving Credit Loan unless Borrower shall have timely provided a Eurodollar
Loan Notice prior to the expiration of such Interest Period. All Eurodollar
Loans shall be subject to prepayment only as provided in Section 2.4.
(c) CONVERSION OF REVOLVING CREDIT LOANS. Provided that no Event
of Default has occurred and is continuing the Borrower may, on any Business Day,
convert any outstanding Base Rate Revolving Credit Loan to a Eurodollar Loan in
the same aggregate principal amount and convert a Eurodollar Loan to a Base Rate
Revolving Credit Loan only on the last Business Day of the then current Interest
Period applicable to such Eurodollar Loan. If the Borrower desires to convert a
Revolving Credit Loan, it shall give the Lender not less than two (2) Business
Days' prior written notice, specifying the date of such conversion and the
amount to be converted and if the conversion is from a Base Rate Revolving
Credit Loan to a Eurodollar Loan, the duration of the first Interest Period
therefor.
-2-
<PAGE> 6
PAYMENT OF INTEREST. Interest on all Revolving Credit Loans shall be
payable in arrears on the first (1st) Business Day of each month commencing on
the first such day to occur after the date of this Agreement, and monthly
thereafter until the Revolving Credit Loans are fully paid.
2.4. PREPAYMENT OF EURODOLLAR LOANS. (a) MAKE-WHOLE PAYMENTS. The
Borrower shall pay to Lender on demand such amount or amounts as shall, in the
conclusive judgment of Lender (in the absence of manifest error), compensate
Lender for any loss, cost or expense sustained or incurred by the Lender as a
result of (i) any payment or prepayment of any Eurodollar Loan required or
permitted under this Agreement, if such Eurodollar Loan is prepaid other than on
the last day of the Interest Period for such Eurodollar Loan, (ii) the
conversion, for any reason whatsoever, whether voluntary or involuntary, of any
Eurodollar Loan to a Base Rate Revolving Credit Loan on a date other than the
last day of the applicable Interest Period, or (iii) in the event that after the
Borrower delivers a Eurodollar Loan Notice under Section 2.3(b) in respect of a
Eurodollar Loan, such Eurodollar Loan is not made on the first day of the
Interest Period specified in such notice of borrowing for any reason other than
a breach by the Lender of its obligations hereunder. Such amounts payable by
Borrower shall compensate Lender for any loss or expense incurred or sustained
by Lender including, without limitation, any interest or other amounts payable
by the Lender to other financial institutions in order to make or maintain such
Eurodollar Loan. In the event any such amount is payable by Borrower, the Lender
shall deliver to the Borrower from time to time one or more certificates setting
forth the amount due as determined by the Lender, which certificate shall be
conclusive and binding on Borrower, absent manifest error.
(b) LIMITATIONS ON EURODOLLAR LOANS. (i) In the event the Lender
determines that by reason of circumstances affecting the inter-bank Eurodollar
market, adequate and reasonable means do not exist for determining the LIBOR
Rate or Eurodollar deposits in the relevant amount and for the relevant maturity
are not available to Lender in the inter-bank Eurodollar market, with respect to
a proposed Eurodollar Loan, Lender shall give the Borrower prompt notice of such
determination. If such notice is given, then (A) any requested Eurodollar Loan
shall be made as a Base Rate Revolving Credit Loan, unless the Borrower gives
Lender one Business Day's prior written notice that its request for such
borrowing is cancelled; (B) any Revolving Credit Loan which was to have been
converted to a Eurodollar Loan shall be continued as a Base Rate Revolving
Credit Loan; and (C) any outstanding Eurodollar Loan shall, upon the expiration
of the applicable Interest Period, be converted to a Base Rate Revolving Credit
Loan. Until such notice has been withdrawn, Lender shall have no obligation to
make Eurodollar Loans or maintain outstanding Eurodollar Loans and the Borrower
shall not have the right to convert Base Rate Revolving Credit Loans to
Eurodollar Loans.
(ii) Notwithstanding any other provisions of this Agreement,
if, after the date of this Agreement, any applicable law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for Lender to make or maintain any Eurodollar
Loans, the obligation of Lender hereunder to make or maintain such Eurodollar
Loans shall forthwith be suspended for the duration of such illegality and the
Borrower shall, if any Eurodollar Loan is outstanding promptly, upon request
from Lender, prepay such advance or convert such Eurodollar Loan to a Base Rate
Revolving Credit Loan. If any such payment is
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made on a day that is not the last Business Day of the then current Interest
Period applicable to such Eurodollar Loan, the Borrower shall pay Lender, upon
Lender's request, the amounts required under Section 2.4(a).
2.5. MANDATORY PREPAYMENT. If at any time the aggregate unpaid
principal amount of the Revolving Credit Loans and Letters of Credit exceeds the
amount of the Revolving Credit Limit, Borrower shall immediately prepay, without
premium or penalty (except for any amount due under Section 2.4(a)), an amount
at least equal to such excess, together with accrued interest on the amount
prepaid to the date of prepayment.
2.6. REVOLVING CREDIT NOTE. The Revolving Credit Loans shall be
evidenced by the Revolving Credit Note. Lender shall maintain records of each
(i) Revolving Credit Loan and (ii) payment or prepayment of principal and shall
furnish periodic reports to Borrower showing the outstanding principal balance
of the Revolving Credit Loans. The Lender's records shall constitute PRIMA FACIE
evidence of the accuracy of the information recorded therein and in the event
that Borrower fails to object, within thirty (30) days of receipt of Lender's
periodic reports to Borrower with respect to Revolving Credit Loans, the
information in such reports shall be conclusive and binding as against Borrower;
PROVIDED, HOWEVER, that any failure by Lender to maintain such records or
furnish such reports shall not affect the obligations of Borrower under the
Revolving Credit Note or this Agreement.
2.7. REVOLVING CREDIT LOAN PROCEEDS. Borrower shall use the
proceeds of the Revolving Credit Loans for its working capital purposes, to
support Letters of Credit, for the acquisition of equipment and other assets to
be used in its business and for the acquisition of substantially all of the
assets or capital stock of another Person or Persons pursuant to an Authorized
Acquisition.
2.8. LETTERS OF CREDIT.
(a) Subject to, and upon the terms and conditions contained
herein, at the request of Borrower and upon Borrower submitting a
completed application therefore and other documents required by Lender,
Lender agrees to provide Letters of Credit for the account of Borrower
containing terms and conditions acceptable to Lender. Any payments made
by Lender in connection with the Letters of Credit shall constitute
additional Base Rate Revolving Credit Loans to Borrower pursuant to
Section 2.1.
(b) Borrower shall pay to Lender a fee equal to five eighths
of one percent (5/8 of 1.0%) per annum on the face amount of all
Letters of Credit issued by Lender, which fee shall be paid in full
upon issuance of each such Letter of Credit and on the anniversary of
each such issuance. Borrower shall also pay to Lender on demand all
opening, amendment, drawing and other administrative fees charged by
Lender from time to time on Letters of Credit.
(c) The amount of all outstanding Letters of Credit and all
other commitments and obligations made or incurred by Lender in
connection therewith shall not at any
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time exceed the Revolving Credit Line less the outstanding principal
balance of all then outstanding Revolving Credit Loans.
(d) Borrower shall indemnify and hold Lender harmless from and
against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letters of Credit and
any documents, drafts or acceptances relating thereto, including, but not
limited to, any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any beneficiary or correspondent with respect to any Letters
of Credit. Borrower assumes all risks with respect to the acts or omissions of
the drawer under or beneficiary of any Letters of Credit. Borrower assumes all
risks for, and agrees to pay, all foreign, Federal, state and local taxes,
duties and levies relating to any Letters of Credit or any documents, drafts or
acceptances thereunder. Borrower hereby releases and holds Lender harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, by any correspondent or otherwise with respect to or relating to any
Letters of Credit. The provisions of this Section 2.8(d) shall survive the
payment of Obligations and the termination of this Agreement.
(e) Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Lender in any
manner. Borrower shall be bound by any interpretation made in good faith by
Lender, or any correspondent under or in connection with any Letters of Credit
or any documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of Borrower.
2.9. CALCULATION OF INTEREST. Interest and fees shall be calculated
on the basis of a 360-day year for the actual days elapsed, from and including
the date of such Loan to but excluding the date of any repayment. Any change in
rate resulting from a change in the Base Rate shall become effective as of the
day on which such change in the Base Rate becomes effective.
2.10. DEFAULT RATE. Notwithstanding anything to the contrary
contained herein, after maturity (whether at the stated maturity, upon an Event
of Default or otherwise), interest shall be payable on the unpaid principal
balance and on all other obligations of the Borrower to the Lender at a rate
that is two percent (2%) in excess of the rate that is otherwise payable, until
fully paid. If the maturity is a result of an Event of Default, the interest
rate shall revert to the pre-default rate on the first Business Day after such
Event of Default is cured to the satisfaction of the Lender, provided that no
other Event of Default or event or change having a Material Adverse Effect has
occurred.
2.11. INTEREST LIMITATION. No provision of this Agreement or the
Notes shall require the payment, or permit the collection, of interest in excess
of the highest rate permitted by applicable law. To the extent that any interest
received by Lender exceeds the maximum amount permitted, such payment shall be
credited to unpaid principal, PROVIDED, however, that any excess amount
remaining after full payment of principal shall be refunded to Borrower.
2.12. LATE PAYMENT CHARGE. Any payment of principal or interest not
paid within fifteen (15) days after the date such payment is due shall be
subject to a late charge equal to five percent (5%) of the amount overdue.
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2.13. PAYMENTS. All payments (including prepayments) made by
Borrower hereunder or under the Revolving Credit Note shall be made in
immediately available funds not later than 1:00 p.m., (Eastern time), on the due
date at Lender's office located at 40 Court Street, Boston, Massachusetts 02108
(or at such other office as Lender may specify to Borrower in writing). If any
payment becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension. All payments shall be made without setoff or counterclaim
and free and clear of, and without deduction for, any charge of any kind. All
payments received by Lender after 1:00 p.m. on any Business Day shall not be
deemed received until the next Business Day. On the date any payment of
principal or interest is due on account of the Loans, Lender may, but shall not
be obligated to, effect payment by debiting Borrower's deposit accounts with
Lender in an amount equal to all or any portion of such payment due.
2.14. TERMINATION OF CREDIT COMMITMENTS. The Revolving Credit
Commitment and Letter of Credit Commitment are coterminous and may not be
terminated separately by the Borrower. To terminate the Credit Commitments,
Borrower shall give Lender not less than five (5) Business Days prior written
notice and on the termination date prepay in full all Loans together with
accrued interest, fees, and charges thereon to the date of prepayment and either
cause the return of the outstanding Letters of Credit to the Lender or furnish
cash collateral to the Lender in amount deemed sufficient by Lender to pay all
liabilities relating to all outstanding Letters of Credit in full. The Credit
Commitments may be terminated by Lender during the existence of an Event of
Default or automatically as set forth in Article 7.
2.15. COMMITMENT FEE. Borrower agrees to pay to Lender for the first
year of the Commitment Period a commitment fee equal to one eighth of one
percent (1/8%) of $6,000,000 ($7,500 at closing), which shall be due and payable
and fully earned on the date hereof. On each anniversary of the date hereof,
Borrower shall pay to the Lender a commitment fee equal to one eighth of one
percent (1/8%) of $6,000,000 plus one sixteenth of one percent (1/16%) of
$8,000,000, which shall be due and payable and fully earned on each anniversary
of the date hereof while this Agreement is in effect.
ARTICLE 3. - REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the
Revolving Credit Loans and to issue Letters of Credit, Borrower represents and
warrants to Lender, except as otherwise set forth in the disclosure schedule
attached hereto and made a part hereof (the "Disclosure Schedule"), that:
3.1. FINANCIAL CONDITION.
(a) The Financial Statements previously delivered to Lender
and attached to the Disclosure Schedule present fairly the financial position of
Borrower and its Subsidiaries on a consolidated basis as of the dates thereof
and its and their results of operations, shareholders'
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equity and cash flows for the periods then ended. All Financial Statements and
information, including any related schedules and notes, and any other financial
information or statements furnished in accordance herewith, have been prepared
in accordance with GAAP, except as otherwise disclosed therein, subject only in
the case of unaudited interim Financial Statements to normal year-end audit
adjustments and the absence of footnotes. In the case of each Revolving Credit
Loan and Letter of Credit, the representations and warranties in this Section
shall be deemed to have been made in respect of the then most recent Financial
Statements of Borrower furnished to Lender.
(b) The Borrower is Solvent.
3.2. NO CHANGE. There has been no Material Adverse Change since the
Financial Statements dated as of December 31, 1996.
3.3. ORGANIZATION, EXISTENCE, GOOD STANDING. Borrower (i) is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Delaware, (ii) has obtained all licenses, permits, approvals and
consents and has filed all registrations necessary for the lawful operation of
its business, (iii) has the corporate power and authority and the legal right to
own, lease and operate its property and to conduct the business in which it is
currently engaged, and (iv) is duly qualified to do business and is in good
standing as a foreign corporation under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect. The Disclosure Schedule lists all states
where Borrower is qualified or authorized as a foreign corporation.
3.4. SUBSIDIARIES; CAPITALIZATION. Except as set forth on the
Disclosure Schedule, Borrower has no Subsidiaries or Investments in any other
Person on the Initial Borrowing Date. The authorized capitalization and the
number of shares of each class of capital stock issued and outstanding of
Borrower as of August 7, 1997 is set forth in the Borrower's Form 10-Q for the
quarter ended June 29, 1997, a true and correct copy of which has been delivered
to Lender. All outstanding shares of Borrower's stock have been duly authorized,
validly issued, and are fully paid and non-assessable.
3.5. POWER AND AUTHORITY. Borrower has (i) full corporate power,
authority and legal right to execute, deliver and perform its obligations under
the Loan Documents to which it is a party and to borrow hereunder, (ii) taken
all necessary actions to authorize the execution, delivery and performance by it
of each Loan Document to which it is a party and to authorize its borrowings
hereunder, and (iii) caused to be duly executed and delivered on behalf of the
Borrower each of the Loan Documents to which Borrower is a party.
3.6. LEGAL, VALID, BINDING OBLIGATION. Each of the Loan Documents and
each agreement, certificate, document, instrument or other paper delivered
pursuant thereto, to which Borrower is a party, constitutes the legal, valid,
and binding obligation of Borrower enforceable against Borrower in accordance
with its terms.
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3.7. CONSENTS. No consent, permit, license, approval or authorization
of, or registration, declaration or filing with or notice to, any governmental
authority, bureau or agency or any other Person is required in connection with
the execution, delivery or performance by Borrower, or the validity or
enforceability against Borrower, of any Loan Document to which it is a party,
except for the consents and approvals set forth on the Disclosure Schedule and
which have been obtained.
3.8. NO LEGAL BAR. The execution, delivery and performance by
Borrower of the Loan Documents, and each agreement, certificate, document,
instrument or other paper delivered pursuant thereto, to which Borrower is a
party, does not and will not conflict with or cause a breach of any provision of
any existing law, rule or regulation, order, judgment, award or decree of any
court, arbitrator or governmental authority, bureau or agency, or of the charter
documents or Bylaws of, or any security issued by, Borrower or of any material
mortgage, deed or trust, indenture, lease, contract or other agreement or
undertaking to which Borrower is a party or by which any of its properties may
be bound, and will not result in the creation or imposition of any Lien on any
of its revenues or properties.
3.9. NO LITIGATION. Except as set forth on the Disclosure Schedule,
no litigation, investigation or other proceeding of or before any court,
arbitrator or governmental authority is currently pending nor, to the knowledge
of Borrower, threatened against Borrower or its properties or revenues or
Borrower's Subsidiaries which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
3.10. NO DEFAULT. Neither Borrower nor any of its Subsidiaries is in
default in any respect, which could reasonably be expected to have a Material
Adverse Effect, in the payment or performance of any of its obligations for
monies borrowed or under any mortgage, deed of trust, indenture, lease, contract
or other agreement or undertaking to which it is a party or by which it or any
of its property may be bound or affected including, without limitation, under
the Hancock Mortgage Documents and no Default or Event of Default has occurred
and is continuing. Neither Borrower nor any of its Subsidiaries is in default
under any order, award or decree of any court, arbitrator or governmental
authority binding upon or affecting it or by which any of its property may be
bound or affected, and no such order, award or decree has or could reasonably be
expected to have a Material Adverse Effect.
3.11. ASSETS, NO LIENS; INTELLECTUAL PROPERTY. Borrower has good and
marketable title to, or valid leasehold interest in, all of its real property
and good title to all its personal property, including assets carried on its
books and reflected in the Financial Statements, subject to no Liens except for
(i) Liens described in the Disclosure Schedule and permitted under Section
5.3(f) hereof, and (ii) assets sold or otherwise disposed of in the ordinary
course of its business. Borrower owns or licenses all Intellectual Property
necessary for the conduct of its business and no claims, suit or proceedings are
pending or threatened which would reasonably be expected to impair in any
material respect Borrower's rights in any such Intellectual Property.
3.12. NO BURDENSOME RESTRICTIONS. Neither Borrower nor any of its
Subsidiaries is a party to or bound by any contract, agreement or instrument or
subject to any corporate restriction
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(including any restriction set forth in its Articles of Organization or Bylaws)
that would have a Material Adverse Effect.
3.13. TAXES. All federal, state, local and other tax reports and
returns which are required to be filed by Borrower have been filed, except where
extensions have been properly obtained, and Borrower has paid or made adequate
provision for all taxes, interest and penalties shown to be due and payable on
such returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on its or any of its property by
any governmental authority, including, without limitation, all payroll
withholding taxes, have been paid and no tax liens have been filed and no claims
are being asserted with respect to any such taxes, fees or other charges.
3.14. REGULATION U, ETC. Neither Borrower nor any of its Subsidiaries
is engaged and will not engage, principally or as one of its important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" (within the respective meanings of each of the
quoted terms under Regulations U, T, G or X of the Board of Governors of the
Federal Reserve System and any successors thereto as now and from time to time
hereafter in effect), and no part of the proceeds of any Loan hereunder will be
used for "purchasing" or "carrying" any "margin stock" as so defined or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation U or Regulation G of the Federal Reserve Board.
3.15. ERISA. The Borrower, all Commonly Controlled Entities, and all
their Plans are and have been in substantial compliance with the provisions of
ERISA, the qualification requirements of IRC Section 401(a), and the published
interpretations thereunder. No notice of intent to terminate a Plan has been
filed under Section 4041 of ERISA, nor has any Plan been terminated under
Section 4041(e) of ERISA which resulted in substantial liability to Borrower or
any of its Commonly Controlled Entities. The PBGC has not instituted proceedings
to terminate, or appoint a trustee to administer, a Plan and no event has
occurred or condition exists which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan. Neither Borrower nor any Commonly Controlled Entities would be liable
for any amount pursuant to Sections 4063 or 4064 of ERISA if all Plans
terminated as of the most recent valuation dates of such Plans. Neither Borrower
nor any Commonly Controlled Entities have: withdrawn from a Multiemployer Plan
during a plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; or failed to make a payment to a Plan required
under Section 302(f)(1) of ERISA such that security would have to be provided
pursuant to Section 307 of ERISA. No lien upon the assets of Borrower has arisen
with respect to a Plan. To the best knowledge of Borrower, no prohibited
transaction or Reportable Event has occurred with respect to a Plan. Borrower
and each Commonly Controlled Entities have made all contributions required to be
made by them to any Plan or Multiemployer Plan when due. There is no accumulated
funding deficiency in any Plan, whether or not waived.
3.16. INVESTMENT COMPANY ACT, ETC. Borrower is not an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, or a company "controlled" (within the meaning of such Investment
Company Act) by such an "investment company". Borrower is not subject to
regulation under the Public Utility Holding Company Act
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of 1935, the Federal Power Act, the Interstate Commerce Act or to any other
federal or state statute or regulation limiting its ability to incur
indebtedness for money borrowed. Borrower is in all material respects in
compliance with the reporting requirements of the Securities Exchange Act of
1934, as amended.
3.17. INDEBTEDNESS. Borrower and its Subsidiaries have no Indebtedness
of any type except Indebtedness incurred under this Agreement and that which is
permitted under Section 5.1 of this Agreement.
3.18. CONTINGENT LIABILITIES. Except as set forth in the notes to the
Financial Statements, Borrower and its Subsidiaries have no material Contingent
Liabilities.
3.19. CHIEF PLACE OF BUSINESS. As of the date hereof the chief
executive office of Borrower is located at 23 Esquire Road, North Billerica,
Massachusetts.
3.20. LAWS INCLUDING ENVIRONMENTAL AND SAFETY MATTERS. Borrower and
its Subsidiaries are in compliance in all material respects with all laws, rules
and regulations, orders of court or other governmental bodies, applicable to it
including, without limitation, all environmental, health and safety statutes and
regulations and specifically the Federal Resource Conservation and Recovery Act,
the Federal Comprehensive Environmental Response, Compensation and Liability
Act, the Federal Clean Water Act, the Clean Air Act, the requirements and
regulations of the Nuclear Regulatory Commission, and the Federal Occupational
Safety and Health Act. Borrower is not subject to any judicial or administrative
proceedings alleging the violation of any applicable law or regulation which
could reasonably be expected to have a Material Adverse Effect. Except as set
forth in the Disclosure Schedule, Borrower is not the subject of any federal,
state or local investigation regarding, among other matters, the release of any
Hazardous Material into the environment, the results of which could reasonably
be expected to have a Material Adverse Effect. Except as set forth in the
Disclosure Schedule, Borrower has not filed any notice under any applicable law
indicating past or present treatment, storage, disposal, generation,
transportation or reporting a spill or release into the environment of any
Hazardous Material which could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the Disclosure Schedule, Borrower has not placed
or disposed of, used, generated or transported any Hazardous Material in
violation of any applicable law or regulation, upon or over any real property
owned or leased by Borrower and Borrower has no knowledge of such Hazardous
Material on such real property.
3.21. NEGATIVE PLEDGES. Except as set forth in the Disclosure Schedule
or pursuant to the Liens permitted under Section 5.3(e) relating to the assets
subject to such Liens, neither Borrower nor any of its Subsidiaries is a party
to or bound by any agreement, indenture, or other instrument which prohibits the
creation, incurrence or allowance to exist of any mortgage, deed of trust,
pledge, lien, security interest or other encumbrance or conveyance upon any of
Borrower's property.
3.22. FULL DISCLOSURE. The Financial Statements referred to in Section
3.1, the Disclosure Schedule, nor any of the Loan Documents or any list,
certificate, written statement,
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instrument, paper or other information furnished by Borrower to Lender in
connection with the Loan Documents, taken as whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements contained therein and herein, in light of the circumstances
in which they are made, not misleading.
ARTICLE 4. - AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving Credit
Commitment and Letter of Credit Commitment remain in effect, the Revolving
Credit Note remains outstanding and unpaid, in whole or in part, or any other
amount is owing to Lender hereunder:
4.1. FINANCIAL STATEMENTS AND OTHER DOCUMENTS. Borrower shall furnish
or cause to be furnished to Lender:
(a) ANNUAL STATEMENTS. As soon as available, but in any event
not later than one hundred twenty (120) days after the last day of each fiscal
year of Borrower, audited Financial Statements of Borrower for such fiscal year,
as prepared by the Borrower's independent accounting firm, together with the
audit report of such independent accounting firm which shall not be qualified in
any manner (except for a qualification for a change in accounting principles in
which the accounting firm concurs) together with a copy of the Borrower's
operating statement budget for its next fiscal year;
(b) QUARTERLY STATEMENTS. As soon as available, but in any event
not later than sixty (60) days after the last day of each of the first three
fiscal quarters of each fiscal year of Borrower, Financial Statements internally
prepared by management of Borrower for such quarter and a Compliance Certificate
as of the end of such fiscal quarter;
(c) MANAGEMENT LETTER. As soon as available, but in any event
not later than one hundred fifty (150) days after the last day of each fiscal
year of Borrower, copies of any written recommendations concerning the
management, finances, financial controls, or operations of Borrower received
from Borrower's independent public accountants;
(d) SEC REPORTS. Promptly after sending or filing thereof with
the Securities and Exchange Commission ("SEC"), true and complete copies of all
reports, registration statements, proxy statements, notices and other documents
filed or sent to the SEC, any national securities exchange, or the National
Association of Securities Dealers, Inc.; and
(e) OTHER INFORMATION. Such other financial and other
information concerning the affairs of Borrower as Lender may from time to time
reasonably request.
4.2. EXISTENCE; COMPLIANCE WITH LAWS; ETC. Borrower shall:
(a) CORPORATE EXISTENCE. Preserve and keep in full force and
effect its corporate existence and all franchises, licenses and permits material
to the proper conduct of its business;
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(b) COMPLIANCE WITH APPLICABLE LAWS. Comply and cause its
Subsidiaries to comply with all applicable laws and duly observe all valid
requirements of governmental authorities the breach of which could reasonably be
expected to have a Material Adverse Effect, except when contested with due
diligence, in good faith and in proper proceedings. Without limitation of the
foregoing, Borrower shall file or cause to be filed all tax returns and reports
which are required by law to be filed by it, and pay and discharge, or cause to
be paid and discharged, when due, all taxes, assessments and other governmental
charges and levies imposed upon it or any of its property or any part thereof,
or upon the income or profits therefrom, including, without limitation, payroll
withholding taxes, as well as all claims for labor, materials or supplies which,
if unpaid, might become a Lien upon any of its property (unless and to the
extent only that any such item is being contested in good faith by appropriate
proceedings and adequate reserves have been set aside with respect thereto in
conformity with GAAP). Borrower shall also pay all of its other Indebtedness and
obligations promptly and in accordance with normal terms and trade practices.
4.3. MAINTAIN PROPERTY. Borrower shall keep and maintain all property
useful and necessary in its business in good operating condition and repair,
ordinary wear and tear excepted; PROVIDED, HOWEVER, that nothing in this Section
shall prohibit any sale or other disposition of property by Borrower otherwise
permitted hereunder or under the Loan Documents.
4.4. INSURANCE. Borrower shall keep adequately insured by financially
sound and responsible insurers (a) all property owned or leased by it and all
property of an insurable nature, such insurance to be in at least such amounts
and covering loss or damage from at least such risks and hazards (including,
without limitation, business interruption insurance and use and occupancy
insurance) as are usually insured against in the same geographic areas by
companies engaged in similar businesses and reasonably acceptable to Lender, and
(b) all liabilities of Borrower for damage to property, death or bodily injury,
including without limitation product liability insurance, insurance required
under all applicable workmen's compensation laws, and insurance for such
liabilities resulting from, caused by or arising out of any product sold by any
predecessor of Borrower or by Borrower, all such insurance to be in at least
such amounts as are usually insurance against by companies engaged in the same
or similar businesses and reasonably acceptable to Lender.
4.5. RECORDKEEPING; RIGHTS OF INSPECTION. Borrower shall (i) keep
proper books of record and account in which full, true and correct entries, in
conformity with GAAP, are made of all dealings and transactions in relation to
its property, business and activities; (ii) permit Persons authorized by Lender
to visit and inspect its property, to inspect its books of record and account
and to make photocopies thereof, to review its accounts and to discuss the
affairs, finances and accounts of Borrower with its officers and independent
public accountants, all upon reasonable notice and at such times during normal
business hours and as often as Lender may reasonably request; and (iii) permit
Lender to perform field examinations and audits of such books and records of
account. Prior to an Event of Default hereunder, Borrower shall pay not more
than $1500 per year for field examinations and audits conducted by Lender each
year. Upon and during
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the continuance of an Event of Default hereunder, Borrower shall pay all of
Lender's reasonable expenses for each such field examination and audit, without
regard to the foregoing limit.
4.6. NOTICE OF MATERIAL EVENTS. Borrower will, promptly upon any
officer of Borrower obtaining knowledge thereof, give notice to Lender of (i)
any Default or Event of Default; (ii) any material casualty, loss or
depreciation to any inventory or other property of Borrower or any other force
majeure, or any litigation, investigation or other proceeding against or
involving Borrower the result of any of which might have a Material Adverse
Effect; (iii) any litigation, investigation, other proceeding or dispute
affecting Borrower (A) which relates, in whole or in part, to any of the
transactions contemplated by any of the Loan Documents, (B) which involves an
amount in excess of Two Hundred Fifty Thousand Dollars ($250,000), or (C) which
may exist between Borrower and any governmental body; (iv) any Reportable Event
in respect of any Plan or any other event or change in a Plan which might have a
Material Adverse Effect or (v) any release of any Hazardous Materials at any
location owned or leased by Borrower or any investigation or proceeding by any
governmental body alleging or relating to the violation by Borrower of any
environmental law or regulation. Borrower will furnish to Lender from time to
time all information which Lender shall reasonably request with respect to the
status of any litigation, investigation, other proceeding or dispute to which
Borrower is a party.
4.7. DEPOSIT ACCOUNTS. Borrower shall maintain with Lender deposit
accounts or accounts to be used as its principal depository and operating
account(s) and utilize the cash management services of Lender to be provided by
Lender at competitive rates.
4.8. NOTICE OF ACQUISITIONS. Borrower shall provide Lender with prior
written notice of any acquisition of substantially all of the assets or stock of
another Person or Persons using the proceeds of the Revolving Credit Loans,
together with pro forma financial information that reasonably demonstrates that
after making the proposed acquisition the Borrower will remain in compliance
with the financial covenants set forth in Section 5.5 (an "Authorized
Acquisition").
ARTICLE 5. - NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as the Revolving Credit
Commitment and Letter of Credit Commitment remains in effect, the Revolving
Credit Note remains outstanding and unpaid, in whole or in part, or any other
amount is owing Lender hereunder, Borrower will not, directly or indirectly, and
Borrower will not permit any of its Subsidiaries to:
5.1. INDEBTEDNESS. Create, incur, assume or allow to exist any
Indebtedness, except:
(a) LOAN DOCUMENT INDEBTEDNESS. Indebtedness evidenced by the
Notes and any other Indebtedness owing to or held by Lender arising under any of
the Loan Documents;
(b) DISCLOSED INDEBTEDNESS. Indebtedness of Borrower existing on
the Initial Borrowing Date and disclosed in the Disclosure Schedule; PROVIDED,
HOWEVER, that none of such Indebtedness shall be renewed, extended or otherwise
modified in any material respect; PROVIDED,
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FURTHER, that such Indebtedness may be extended by Borrower on substantially the
same terms and conditions;
(c) UNSECURED CURRENT LIABILITIES. Unsecured current liabilities
(not the result of borrowing) incurred in the ordinary course of business which
are not evidenced by notes or instruments and which are not more than sixty (60)
days overdue from the original due dates thereof (unless and to the extent only
that any such liability is contested by Borrower in good faith by appropriate
proceedings and adequate reserves have been set aside with respect thereto in
accordance with GAAP);
(d) CAPITAL LEASES. Capital Leases incurred by Borrower for the
lease of Capital Equipment (and Borrower agrees to furnish copies of the
documentation for its outstanding Capital Leases to Lender upon reasonable
request);
(e) INTERCOMPANY OBLIGATIONS. Indebtedness of any wholly owned
Subsidiary to Borrower;
(f) APPEALED JUDGMENTS. Judgments or awards which have been in
force for less than the applicable appeal period so long as execution is not
levied or in respect of which Borrower shall at all times be prosecuting an
appeal in good faith and a stay of execution has been obtained pending appeal;
(g) PRODUCT WARRANTIES. Product warranties issued in the order
any course of Borrower's business;
(h) AUTHORIZED ACQUISITIONS INDEBTEDNESS. Indebtedness assumed
after the date of this Agreement in connection with Authorized Acquisitions
provided that Borrower agrees to use its commercially reasonable efforts to
cause all such Indebtedness to be refinanced by the Lender in connection with
the Authorized Acquisition and, in any event, such Indebtedness (other than
Permitted Acquisition Indebtedness) shall be repaid on or before ninety (90)
days following the closing thereof and, unless the Lender otherwise agrees in
writing, Permitted Acquisition Indebtedness. For purposes hereof, Permitted
Acquisition Indebtedness shall mean existing Indebtedness to be assumed by the
Borrower or any Subsidiary of Borrower in connection with Authorized
Acquisitions in respect of specific items of Capital Equipment (including
Capital Lease Obligations) or specific parcels of real property but Permitted
Acquisition Indebtedness shall not include unsecured Indebtedness and
Indebtedness secured by "all assets" Liens or Liens on accounts receivable,
inventory and/or general intangibles acquired by Borrower or any Subsidiary of
Borrower; and;
(i) APPROVED INDEBTEDNESS. Indebtedness for borrowed money
incurred after the Initial Borrowing Date with prior notice to and the written
consent of Lender.
5.2. CONTINGENT LIABILITIES. Except for Contingent Liabilities
existing on the Initial Borrowing Date and disclosed on the Financial Statements
or Disclosure Schedule, create, incur, assume or allow to exist any Contingent
Liabilities.
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5.3. LIMITATION ON LIENS. Create, incur, assume or allow to exist,
any Lien upon any of its property, income or profits, whether now owned or held
or hereafter acquired, including attachment, levy, garnishment or other judicial
process relating to such property, except:
(a) TAXES. Liens for taxes not yet due.
(b) CARRIER'S; WAREHOUSEMEN'S; MECHANICS' ETC. Carriers',
warehousemen's, mechanics', landlords', materialmen's, repairmen's, workmen's or
other like Liens arising in the ordinary course of business with respect to
obligations which are not yet due.
(c) SOCIAL SECURITY. Pledges, deposits in connection with
workers' compensation, unemployment insurance and other social security
legislation made in the ordinary course of business;
(d) EASEMENTS, RESTRICTIONS, ETC. Easements, rights of way,
covenants, consents, reservations, encroachments, variations, and other
restrictions of record, with respect to Borrower's real property which do not
interfere materially with the conduct of Borrower's businesses, and do not
detract materially from the value of such property or impair Borrower's use
thereof;
(e) CAPITAL LEASES. Liens incurred in respect of Capital Leases
or operating leases permitted under Section 5.1(d); PROVIDED HOWEVER, that the
Lien granted in respect of any Capital Lease or operating lease shall only cover
the Capital Equipment subject to such lease and secure the Indebtedness incurred
in respect of the purchase thereof and so long as such Indebtedness is only
secured by such Lien;
(f) DISCLOSED LIENS. Liens existing on the Initial Borrowing
Date, disclosed in the Disclosure Schedule; and
(g) AUTHORIZED ACQUISITIONS. Liens securing Permitted
Acquisition Indebtedness permitted under Section 5.2(h) in respect of (i)
specific items of Capital Equipment (including Capital Lease Obligations) or
specific parcels of real property acquired by Borrower in connection with an
Authorized Acquisition or (ii) Liens on substantially all the assets or on the
accounts receivable, inventory and/or general intangibles of a Person or Persons
to be acquired in connection with an Authorized Acquisition provided that any
such Person or Persons become a Subsidiary of Borrower as a result of the
Authorized Acquisition (so that the Liens do not attach to any of the assets of
the Borrower) and the Indebtedness securing such Liens is repaid and such Liens
are released on or before ninety (90) days following the closing of the
Authorized Acquisition.
5.4. PROHIBITION OF FUNDAMENTAL CHANGES. (a) Enter into any
transaction of merger or consolidation or amalgamation unless as a result of
such transaction Borrower is the surviving corporation; (b) liquidate, wind-up
or dissolve itself (or allow any such liquidation or dissolution); (c) convey,
sell, issue, exchange, lease, assign, transfer or otherwise dispose of all or
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<PAGE> 19
any material portion of its business or property (other than sales of inventory
in the ordinary course of business and obsolete equipment or equipment no longer
used or useful in the business of Borrower (but not equipment securing Equipment
Loans); (d) make any Investment in or purchase, lease or otherwise acquire all
or any material portion of the business or property of any other Person except
in connection with an Authorized Acquisition; (e) make any Investment in or loan
or other advances of money to any Person, except for (i) loans and advances (1)
for salary, travel advances, advances against commissions and similar advances
in the ordinary course of business, (2) to Borrower's wholly owned Subsidiaries
and branches existing on the Initial Borrowing Date in accordance with
Borrower's past practices and (3) to wholly owned Subsidiaries of Borrower
incorporated and branches of Borrower organized after the Initial Borrowing
Date, in an aggregate amount not to exceed $1,000,000 at any time and (ii)
Investments in Cash Equivalents, to any Person; (f) change its name or the
location of its chief executive office except on ten (10) Business Days prior
written notice to Lender; or (g) Investments in wholly owned Subsidiaries of
Borrower that are created for the purpose of becoming partners in joint ventures
established by Borrower in an aggregate amount not to exceed $1,000,000.
5.5. FINANCIAL MEASUREMENTS.
(a) CURRENT RATIO. Allow the ratio of Borrower's Current Assets
to Current Liabilities to be less than 1.75 to 1.00 at any time.
(b) RATIO OF NET WORTH TO SENIOR INDEBTEDNESS. Allow the Net
Worth of Borrower at any time to be less than one and one half (1.5) times the
outstanding amount of all Senior Indebtedness of Borrower.
(c) RATIO OF TOTAL LIABILITIES TO NET WORTH. Allow the ratio of
(i) Total Liabilities to (ii) Net Worth of Borrower at any time, to be greater
than 1.25 to 1.00.
(d) DEBT SERVICE COVERAGE RATIO. Allow the ratio of (i) EBITDA
of Borrower minus unfinanced Capital Expenditures minus Dividends and
Distributions, to (ii) Borrower's interest expense plus Current Maturities of
Long Term Debt, calculated retrospectively for the period of the immediately
preceding four fiscal quarters, to be less than 1.20 to 1.00 on the last day of
any fiscal quarter, provided that for purposes of determining the Debt Service
Coverage Ratio unfinanced Capital Expenditures shall not be deducted from the
numerator of the ratio until such time as Loans are outstanding under this
Agreement..
5.6. TRANSACTIONS WITH AFFILIATES. Enter into or be a party to any
agreement or transaction with any Affiliate, except in the ordinary course and
pursuant to reasonable requirements of Borrower's business and upon fair and
reasonable terms and conditions which are fully disclosed to Lender and are no
less favorable to Borrower than would obtain in a comparable arm's length
transaction with a Person not an Affiliate of Borrower.
5.7. NEGATIVE PLEDGE. Except as set forth in the Disclosure Schedule
or pursuant to the Liens permitted under Section 5.3(e), directly or indirectly,
enter into any agreement,
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<PAGE> 20
indenture, or other instrument which prohibits the creation, incurrence or
allowance to exist of any mortgage, deed of trust, pledge, lien, security
interest or other encumbrance or conveyance upon any of Borrower's property.
ARTICLE 6. - CONDITIONS PRECEDENT
6.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Lender to make any Revolving Credit Loan and issue Letters of Credit on the
Initial Borrowing Date is subject to the satisfaction of the condition precedent
that Lender shall have received on or before such date, the following items in
form and substance satisfactory to Lender and its counsel executed where
appropriate by a duly authorized officer of Borrower.
LOAN DOCUMENTS:
(a) CREDIT AGREEMENT. This Agreement;
(b) REVOLVING CREDIT NOTE. The Revolving Credit Note;
(c) COMPLIANCE CERTIFICATE. A Compliance Certificate;
CORPORATE DOCUMENTS:
(d) CORPORATE RESOLUTIONS. Copies of resolutions of the Board of
Directors (and, if necessary, the Stockholders) of Borrower, authorizing the
execution, delivery and performance of the Loan Documents to which Borrower is a
party, and the transactions contemplated thereby, certified as of the Initial
Borrowing Date by the Secretary or Assistant Secretary of Borrower (which
certificate shall state that such resolutions have not been amended, modified,
revoked or rescinded as of such date);
(e) CORPORATE INCUMBENCY CERTIFICATE. Certificate of the
Secretary or Assistant Secretary of Borrower, dated as of the Initial Borrowing
Date, certifying the names and titles of the officers authorized to execute the
Loan Documents to which Borrower is a party and any other documents related to
any thereof, together with specimen signatures of such officers;
(f) CHARTER DOCUMENTS. Copies of (i) the charter documents and
all amendments thereto of Borrower, currently certified by the relevant
governmental filing authority, and (ii) the By-Laws of Borrower certified as of
the Initial Borrowing Date by the Secretary or Assistant Secretary of the
Borrower;
(g) LEGAL GOOD STANDING CERTIFICATES. For Borrower, a
certificate of legal existence and good standing issued by the Secretary of
State of the State of Delaware, and a certificate of foreign qualification and
good standing issued by the Secretary of State of each state of foreign
qualification or authorization, all of which shall be dated currently;
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(h) TAX GOOD STANDING CERTIFICATES. For Borrower, a certificate
of good tax standing currently dated from each jurisdiction in which such party
is obliged to file tax returns and pay taxes (or, to the extent any such
certificates are unobtainable, because it is not the practice of the taxing
authority to issue such certificate, or because of time delays in the issuance
of such certificate attributable to such taxing authority, a letter from
Borrower's chief financial officer setting forth the nature of the tax
obligation and the relevant jurisdiction, and certifying that all required
returns have been duly filed and all required taxes shown thereon paid;
MISCELLANEOUS DOCUMENTS:
(i) LEGAL OPINION. A written opinion of counsel for Borrower in
form and content satisfactory to Lender, dated the Initial Borrowing Date,
addressed to Lender and covering such matters related to the Borrower and the
transactions contemplated hereby as Lender may request;
(j) LIEN SEARCH. Search reports certified by a party acceptable
to Lender, dated a date reasonably close to the Initial Borrowing Date,
confirming the absence of any security interests, tax liens or other Liens made
against Borrower, or any of its assets, wherever located;
(k) CONSENTS. Copies of all consents or approvals of any Person
that may be required in connection with the transactions contemplated by the
Loan Documents;
(l) FEES. Payment of the estimated fees and disbursements of
Lender's counsel in connection with the Loan Documents and the transactions
contemplated hereby; and
(m) CASUALTY AND LIABILITY INSURANCE. Certificates of insurance
or cover notes in respect of insurance required by the provisions of Section 4.4
of this Agreement;
(n) HANCOCK MORTGAGE DOCUMENTS. A satisfactory review by Lender
and its counsel of the Hancock Mortgage Documents and a Certificate of the Chief
Executive Officer or Chief Financial Officer of Borrower relating to the Hancock
Mortgage Documents and confirming that no defaults or events of default have
occurred thereunder; and
(o) DISBURSEMENT INSTRUCTIONS. The Borrower's instructions for
wire transfer of the proceeds of its initial borrowing.
6.2. CONDITIONS OF ALL REVOLVING CREDIT LOANS AND LETTERS OF CREDIT.
The Lender's obligation to make any Revolving Credit Loan and to issue Standard
Letters of Credit is subject to the fulfillment of the following additional
conditions precedent:
(a) REPRESENTATIONS. The representations and warranties made by
any party to any Loan Document (other than Lender) in any Loan Document or in
any certificate, document or financial or other statement furnished at any time
under or in connection therewith shall be true
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<PAGE> 22
and correct in all material respects on and as of the Borrowing Date for such
Loan as if made on and as of such date;
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on the Borrowing Date for such Loan either before or
after giving effect to the Loan made on such date;
(c) CREDIT LIMIT COMPLIANCE. The aggregate unpaid principal
amount of the Revolving Credit Loans and Letters of Credit outstanding on any
Borrowing Date shall not exceed the Revolving Credit Limit on such date;
(d) ADDITIONAL MATTERS. Lender shall have received such other
documents, statements, certificates, information and evidence including a
Compliance Certificate as Lender may reasonably request. All documents and legal
matters in connection with the transactions contemplated by this Agreement shall
be reasonably satisfactory in form and content to Lender and its counsel, and
all actions required to be taken on or before the Borrowing Date for such Loan
shall have been taken.
Each request for a Revolving Credit Loan by Borrower hereunder shall constitute
a representation and warranty by Borrower as of the date of such request or
application that the conditions contained in paragraphs (a) through (c) of this
Section 6.2 have been satisfied.
ARTICLE 7. - EVENTS OF DEFAULT
7.1. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default:
(a) FAILURE OF PAYMENT. If Borrower fails to pay any principal
or other amount due, under this Agreement or with respect to any Loan on the
date due (whether on a scheduled payment date or otherwise) and in the manner
provided herein or if Borrower fails to pay any interest with respect to any
Loan within two (2) days of the date due and in the manner provided herein;
(b) MISSTATEMENTS. If any representation, warranty or other
statement made herein or in any other Loan Document or otherwise in writing by
or on behalf of Borrower in connection herewith proves to be or to have been
incorrect or misleading in any material respect as of the date at which it is
made or deemed to be made;
(c) PERFORMANCE OF OTHER COVENANTS. If Borrower defaults in the
due performance or observance of (i) any covenant contained in Sections 4.1(a),
4.1(b), 4.1(d), or, 5.1 through and including 5.5 or (ii) any other covenant,
condition or provision to be performed or observed by it under any of the Loan
Documents (other than a covenant default the performance or observance of which
is dealt with specifically elsewhere in this Section 7.1) and the breach of such
other provision is not cured to Lender's satisfaction within thirty (30) days
after the sooner
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<PAGE> 23
to occur of Borrower's receipt of notice of such breach from Lender or the date
on which such failure or neglect first becomes known to any officer of Borrower.
(d) OTHER OBLIGATIONS. If Borrower defaults, which default
continues after any applicable grace or cure period, in any payment of principal
of or interest on any Indebtedness for borrowed money in excess of $500,000
including, without limitation, the Indebtedness of Borrower owing to Hancock or
any other default occurs with respect to any Indebtedness for borrowed money
giving the holder thereof the right to accelerate the payment thereof or require
such Indebtedness to be paid before its stated maturity or before any regularly
scheduled date of prepayment; provided, however, that the failure of Borrower to
pay any amount due under any Capital Lease or obligation for the deferred
purchase price of property or services shall not be deemed an Event of Default
hereunder so long as Borrower is contesting such payment in good faith by
appropriate proceedings and adequate reserves have been set aside with respect
thereto in conformity with GAAP);
(e) JUDGMENTS. If Borrower permits any judgment against it in
excess of $500,000 to remain undischarged for a period of more than thirty (30)
days unless during such period such judgment is effectively stayed or bonded, on
appeal or otherwise;
(f) LEVY, ATTACHMENTS. If any levy in excess of $500,000 (not
discharged within thirty (30) days), seizure, attachment, execution or similar
process shall be issued on any of the Borrower's cash, accounts or any material
property;
(g) VOLUNTARY BANKRUPTCY. If Borrower (a) commences a voluntary
case under the Bankruptcy Code (as now or hereafter in effect); or (b) files a
petition or commences any case, proceeding, or action in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up, arrangement, composition,
readjustment of its debts or any other relief under any other bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or similar act or law of any jurisdiction, now or hereafter
existing; or (c) takes any action indicating its consent to, approval of, or
acquiescence in, any such case, proceeding or other action; or (d) applies for a
receiver, trustee or custodian of it or for all or a substantial part of its
property; or (e) makes an assignment for the benefit of creditors; or (f) is
unable to pay its debts as they mature or admits in writing such inability; or
(g) is adjudicated insolvent or bankrupt;
(h) INVOLUNTARY BANKRUPTCY. (a) If there is commenced against
Borrower (i) an involuntary case under the Bankruptcy Code (as now or hereafter
in effect); or (ii) any case or proceeding or any other action in bankruptcy or
seeking reorganization, liquidation, dissolution, winding-up, arrangement,
composition, readjustment of its debts or any other relief under any other
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or similar act or law of any jurisdiction, now
or hereafter existing, or seeking appointment of a receiver, trustee or
custodian of Borrower or for all or a substantial part of its property, and any
of the foregoing cases, proceedings, or actions is not dismissed within sixty
(60) days; or (b) if an order, judgment or decree approving any of the foregoing
is entered or a warrant of attachment, execution or similar process against any
substantial part of the property of
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Borrower is issued, and such order, judgment, decree, warrant, execution or
similar process is not vacated or stayed within sixty (60) days; or (c) if an
order for relief under the Bankruptcy Code (as now or hereafter in effect) is
entered against Borrower; or
(i) CRIMINAL PROCEEDINGS. If there is an indictment of Borrower
under any criminal statute, or commencement of criminal proceedings against
Borrower, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of any property of Borrower with a fair
market value in excess of $500,000; or
(j) NO CHANGE IN CONTROL OF BORROWER. Any change in control of
Borrower such that a "person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended) that is not as
of the date of this Agreement the "beneficial owner" (as defined in Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of 5% or more of the total
voting power of all classes of stock outstanding of Borrower entitled to vote in
the election of directors of Borrowers becomes the beneficial owner of 34% or
more of such stock; provided that so long as such Change in Control is not
reasonably likely to constitute a Material Adverse Change, Borrower shall have
forty-five (45) days from the date of occurrence of any such Change in Control
to effect a cure thereof reasonably satisfactory to the Lender.
7.2. LENDER'S REMEDIES. Upon the occurrence of any such Event of
Default, Lender may, at Lender's option, immediately exercise one or more of the
following rights: (a) declare all obligations of Lender to Borrower, including,
without limitation, the Revolving Credit Commitment, and Letter of Credit
Commitment to be terminated, whereupon such commitments shall immediately
terminate; and (b) declare all obligations of Borrower to Lender, including,
without limitation, the Loans and all other amounts owing under this Agreement,
the Revolving Credit Note and the Letters of Credit to be immediately due and
payable, whereupon they shall immediately become due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; PROVIDED, however, that upon the occurrence of any such Event
of Default specified in Sections 7.1(g) or 7.1(h) (a) the Revolving Credit
Commitment and Letter of Credit Commitment shall immediately terminate; and (b)
all obligations of Borrower to Lender, including, without limitation, all
Revolving Credit Loans, Letters of Credit and all other amounts owing under this
Agreement, the Revolving Credit Note and the Letters of Credit shall immediately
become due and payable without presentment, further demand, protest or notice of
any kind, all of which are hereby expressly waived.
7.3. CROSS DEFAULT. It is agreed by Borrower that any Event of
Default under this Agreement will constitute an event of default under all of
the Loan Documents and all other agreements and evidences of Indebtedness
between Borrower and Lender, whether now existing or hereafter executed and
whether or not such is an event of default therein.
7.4. SETOFF. In addition to any rights and remedies of Lender
provided by law, Lender shall have the right, (a) upon and during the
continuance of an Event of Default pursuant to Section 7.1(a), or (b) upon the
Lender electing to accelerate the Obligations pursuant to Section 7.2, or (c) at
any time, whether or not an Event of Default has occurred and is continuing, in
the event of any attachment, trustee process, garnishment, or other levy or lien
is, or is sought to be
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<PAGE> 25
imposed, on any cash or deposit and investment accounts of Borrower, and without
prior notice to Borrower, any such notice being expressly waived by Borrower to
the extent permitted by applicable law, and regardless of the adequacy of any
collateral, to set off and apply against any indebtedness, whether matured or
unmatured, of Borrower to Lender, any amount owing or otherwise available under
any applicable agreement or contract (including without limitation all deposits
maintained at Lender, whether general or special, time or demand, provisional or
final, joint or otherwise but excluding payroll accounts) from Lender to
Borrower, and such right of setoff may be exercised by Lender against Borrower
or against any bankruptcy trustee, debtor-in-possession, assignee for the
benefit of creditors, receiver, or execution, judgment or attachment creditor of
Borrower, or against anyone else claiming through or against Borrower or such
Person.
ARTICLE 8. - MISCELLANEOUS
8.1. NOTICES. Except as otherwise specified herein, all notices to or
upon the parties hereto shall be in writing (including teletransmissions), shall
be given or made to the party to which such notice is required or permitted to
be given or made under this Agreement at the address or telex or telecopier
number set forth below or at such other address or telex or telecopier number as
any party hereto may hereafter specify to the others in writing, and (unless
otherwise specified herein) shall be deemed delivered on receipt, if
teletransmitted or delivered by hand, or three (3) Business Days after mailing,
and all mailed notices shall be by registered or certified mail, postage
prepaid:
IF TO BORROWER TO
BTU International, Inc.
23 Esquire Road
North Billerica, MA 01862
Attention: President
(Facsimile No. (508) 667-3377)
WITH A COPY TO
Peter H. Dodson, Esq.
Ropes & Gray
One International Place
Boston, MA 02110
(Facsimile No. (617) 951-7050)
IF TO LENDER TO
USTRUST
30 Court Street
Boston, MA 02108
Attention: John Bukala, Vice President
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<PAGE> 26
(Facsimile No. (617) 932-2849)
WITH A COPY TO
Jeffery L. Keffer, Esquire
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, MA 02111
(Facsimile No. (617) 856-8201)
8.2. NO WAIVER OF RIGHTS. No failure to exercise nor any delay in
exercising, on the part of Lender, any right, remedy, power or privilege under
the Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power, or privilege operate as a waiver
of any further or complete exercise thereof. No waiver shall be effective unless
in writing. No waiver or condonation of any breach on one occasion shall be
deemed a waiver or condonation on any other occasion.
8.3. CUMULATIVE REMEDIES. Each of the Loan Documents and the
obligations of Borrower thereunder are in addition to and not in substitution
for any other obligations or security interests now or hereafter held by Lender
and shall not operate as a merger of any contract or debt or suspend the
fulfillment of or affect the rights, remedies, powers, or privileges of Lender
in respect of any obligation or other security interest held by it for the
fulfillment thereof. The rights and remedies provided in the Loan Documents are
cumulative and not exclusive of any other rights or remedies provided by law.
8.4. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of Borrower, Lender and all future holders of the Notes, and their
respective successors and assigns, except that Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of Lender. Borrower acknowledges that Lender may, from time to time, sell
participation interests in the Loans and Borrower's other obligations hereunder,
to third parties, on such terms and conditions as Lender may determine, and
Borrower specifically consents thereto; provided that so long as no Event of
Default has occurred and is continuing, Lender shall retain at least a majority
interest in the Loans; and provided further that Lender may from time to time at
any time pledge the Loans to federal government agencies in accordance with
applicable banking laws and regulations. Lender may also from time to time
assign its rights and delegate its obligations, including its obligation to make
part or all of the Loans or grant part or all of any other financial
accommodation under this Agreement, in which event Borrower shall only have
recourse to the assignee for the performance of Lender's obligations that have
been so delegated. For these purposes Lender may disclose to an intended or
actual participant or assignee all or any information supplied to Lender by or
on behalf of Borrower.
8.5. GOVERNING LAW. This Agreement, the Notes and other Loan
Documents shall be governed by, and construed and interpreted in accordance
with, the laws of the Commonwealth of Massachusetts.
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8.6. SUBMISSION TO JURISDICTION; WAIVER OF TRIAL BY JURY.
(a) For purposes of any action or proceeding involving the Loan
Documents or any other agreement or document referred to therein, Borrower
hereby submits to the jurisdiction of all federal and state courts located in
the Commonwealth of Massachusetts and consents that any order, process, notice
of motion or other application to or by any of said courts or a judge thereof
may be served within or without such court's jurisdiction by registered mail or
by Personal service, PROVIDED a reasonable time for appearance is allowed (but
not less than the time otherwise afforded by any law or rule).
(b) THE BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW) (i) ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT OR DOCUMENT
REFERRED TO HEREIN OR THEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY; and (ii) ANY RIGHT TO CONTEST THE
APPROPRIATENESS OF ANY ACTION BROUGHT WITHIN THE JURISDICTION MENTIONED IN
PARAGRAPH (a) OF THIS SECTION BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE, OR FORUM NON CONVENIENS.
8.7. COMPLETE AGREEMENT, AMENDMENTS. This Agreement, together with
the Notes and other Loan Documents contains the entire agreement between the
parties with respect to the transactions contemplated hereby, and supersede all
negotiations, presentations, warranties, commitments, offers, contracts and
writings prior to the date hereof relating to the subject matter. This Agreement
may only be amended, modified, waived, discharged or terminated by a writing
signed by the party to be charged with such amendment, modification, waiver,
discharge or termination.
8.8. EXPENSES. The Borrower shall pay on demand, regardless of
whether any Default or Event of Default has occurred or whether any proceeding
to enforce any Loan Document has been commenced, all out-of-pocket expenses
(including, without limitation, the reasonable fees and disbursements of counsel
to Lender) incurred by Lender in connection with (a) the negotiation,
preparation, administration, filing or recording of the Loan Documents, and any
future requests for amendments or waivers of the Loan Documents (whether or not
the transactions contemplated thereby shall be consummated), (b) the collection
of the Loans and any and all other obligations of Borrower to Lender whether now
existing or hereafter arising, or with the preservation, exercise or enforcement
of Lender's rights and remedies under or in connection with the Loan Documents,
including, without limitation, any and all expenses incurred by Lender in or in
connection with any case commenced by or against Borrower under the Bankruptcy
Code, and (c) any claim or liability for any stamp, excise or other similar
taxes and any penalties or interest with respect thereto that may be levied,
collected, withheld or assessed by any jurisdiction in connection with the
execution and delivery of the Loan Documents or any modification thereof. This
covenant shall survive payment of the Loans and termination of this
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Agreement. Borrower hereby authorizes Lender to make Loans to pay any amount
owed by Borrower under this Section if Borrower fails to pay such amount
promptly after demand.
8.9. INDEMNIFICATION. Borrower agrees to indemnify and hold Lender
harmless from and against any and all loss, liability, obligations, damages,
penalties, judgments, actions, claims, costs and expenses (including, without
limitation, attorneys' fees and disbursements) now or in the future incurred by
or asserted against Lender by any Person arising out of or in connection with
any past, present, or future action or inaction by Lender or Borrower in
connection with any Loan Document, or any transaction contemplated thereby,
except any action or inaction arising out of Lender's gross negligence or
willful misconduct.
8.10. CHANGE IN LAWS. If while any Loan is outstanding, any law,
executive order or regulation is enforced, adopted or interpreted which is
applicable generally to national bank associations in the United States of
America so as to affect any of Borrower's obligations or the compensation to
Lender in respect of any Eurodollar Loan or the cost to Lender of making any
Eurodollar Loan, Lender shall notify Borrower thereof in writing and Borrower
shall, promptly upon Lender's request, reimburse or indemnify Lender, with
respect thereto so that Lender shall be in the same position as if there had
been no such enforcement, adoption or interpretation. The foregoing agreement of
Borrower to reimburse or indemnify Lender shall apply in (but shall not be
limited to) the case of an imposition of or change in reserve, capital
maintenance or other similar requirements or in United States interest
equalization taxes or other excise or similar taxes or monetary restraints,
except a change in tax on the net income of Lender.
8.11. SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making of Loans and the execution and delivery
to Lender of the Notes and shall continue in full force and effect so long as
the Notes is outstanding and unpaid or this Agreement remains in effect. All
agreements, obligations and liabilities of Borrower under this Agreement
concerning the payment of money to Lender, other than the obligation to pay
principal of and interest on Loans, shall survive the payment in full of Loans,
the Revolving Credit Note and Letters of Credit and termination of this
Agreement.
8.12. SEVERABILITY. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.13. DESCRIPTIVE HEADINGS. The Table of Contents and the captions in
this Agreement are for convenience of reference only and shall not define or
limit the provisions hereof.
8.14. COUNTERPARTS. This Agreement may be executed by one or more of
the parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
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<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their respective duly authorized officers as of the date
first written above.
WITNESS: BTU INTERNATIONAL, INC.
____________________________ By: ____________________________
Name:
Title:
USTRUST
_____________________________ By: ____________________________
Name:
Title:
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<PAGE> 30
SCHEDULE I
DEFINITIONS
"AFFILIATE" - as to any Person (a) any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any other Person who is an officer or director of such
Person, or (c) any Person described in clause (a) above (other than any
Subsidiary all of the capital stock of which is owned by Borrower).
"AUTHORIZED ACQUISITION" - has the meaning given such term in Section
4.8 hereof.
"BANKRUPTCY CODE" - The Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. ss.ss.101, ET SEQ.
"BASE RATE" - for any day the rate on such day announced by Lender as
its Base Rate. The Base Rate is a reference rate and does not necessarily
represent the lowest or best rate charged to any customer.
"BASE RATE REVOLVING CREDIT LOAN" - a Revolving Credit Loan bearing
interest at the Base Rate.
"BORROWING DATE" - the Business Day on which any Loan is made.
"BUSINESS DAY" - any day on which commercial banks are open for domestic
and international business, including dealing in dollar deposits in Boston,
Massachusetts, and if the applicable Business Day relates to a Eurodollar Loan,
any London Banking Day.
"CAPITAL EQUIPMENT" - equipment that in accordance with GAAP is required
or permitted to be depreciated or amortized on Borrower's balance sheet.
"CAPITAL EXPENDITURES" - for any period, the sum of (i) all expenditures
that, in accordance with GAAP, are required to be included in land, property,
plant or equipment or similar fixed asset account (whether involving real or
personal property) and (ii) Capital Lease Obligations incurred during such
period (excluding renewals of Capital Leases).
"CAPITAL LEASE" - any capital lease, conditional sales contract or other
title retention agreement relating to the acquisition of Capital Equipment.
"CAPITAL LEASE OBLIGATIONS" - the aggregate capitalized amount of the
obligations of Borrower under all Capital Leases.
"CASH EQUIVALENTS" - (a) securities with maturities of 180 days or less
from the date of acquisition issued or fully guaranteed or insured as to payment
of principal and interest by the United States or any agency thereof, (b)
certificates of deposit with maturities of 365 days or less
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from the date of acquisition issued by Lender or any domestic commercial bank
having capital and surplus reasonably acceptable to Lender and (c) commercial
paper of a domestic issuer rated at least either A-2 by Standard & Poor's or B-2
by Moody's Investors Service with maturities of 180 days or less from the date
of acquisition.
"COBRA" - the Consolidated Omnibus Budget Reconciliatory Act of 1985, as
amended, including the sections of the IRC affected by it and all regulations
promulgated under such Act or the IRC.
"COLLATERAL" - has the meaning given such term in the Security
Agreement.
"COMMITMENT PERIOD" - the period from and including the Initial
Borrowing Date to and including the Termination Date.
"COMMONLY CONTROLLED ENTITY" - an entity, whether or not incorporated,
which is under common control with Borrower within the meaning of Section 414(b)
or (c) of the IRC.
"COMPLIANCE CERTIFICATE" - a compliance certificate in the form of
EXHIBIT B, duly completed and executed by the President or chief financial
officer of Borrower, certifying, as of any date, that the conditions set forth
in Section 6.2 to the making of Revolving Credit Loans and the issuance of
Letters of Credit have been satisfied.
"CONTINGENT LIABILITY" - any obligation of Borrower guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly; PROVIDED, HOWEVER, that the term
Contingent Liability shall not include endorsements of negotiable instruments in
the ordinary course of business, product warranties issued in ordinary course of
business, and Borrower's guaranties of its wholly owned Subsidiaries'
obligations for leases and equipment purchases incurred in the ordinary course
of business.
"CREDIT COMMITMENTS" - the Revolving Credit Commitment and Letter of
Credit Commitment.
"CURRENT ASSETS" - current assets, as determined in accordance with
GAAP.
"CURRENT LIABILITIES" - current liabilities, as determined in accordance
with GAAP.
"CURRENT MATURITIES OF LONG TERM DEBT" - the current maturity of long
term Indebtedness paid during the applicable period including, but not limited
to, amounts required to be paid during such period under Capital Leases.
"DEFAULT" - any event specified in Article 7, whether or not any
requirement for the giving of notice or lapse of time or any other condition has
been satisfied.
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"DIVIDENDS" means, for any applicable period, the aggregate of all
amounts paid or payable (without duplication) as dividends (exclusive of
dividends payable solely in capital stock of Borrower), distributions or owner
withdrawals with respect to Borrower's shares of capital stock, whether now or
hereafter outstanding and includes any purchase, redemption or other retirement
of any shares of the Borrower's stock, directly or indirectly.
"DOLLARS" and "$" - lawful money of the United States. Any reference to
payment means payment in immediately available Dollar funds.
"EBITDA" - for any period, Borrower's Earnings before the payment of
interest and income tax plus depreciation and amortization, all as determined in
accordance with GAAP provided that any one time charges and write-offs resulting
from an Authorized Acquisition shall be excluded from such calculation.
"ERISA" - the Employee Retirement Income Security Act of 1974, as
amended from time to time, including all regulations promulgated under such Act.
"EARNINGS" - for any period, the net income from continuing operations
(or deficit) of the Borrower determined in accordance with GAAP excluding all
extraordinary and nonrecurring gains. Any gain realized by Borrower from the
sale or other disposition of BTI or Borrower's Investment in BTI shall not be
included in the calculation of Earnings.
"EURODOLLAR LOAN NOTICE" - Borrower's notice given pursuant to Section
2.3 that Borrower elects to borrow a Revolving Credit Loan and pay interest at
the applicable Eurodollar Rate thereon or convert an outstanding Revolving
Credit Loan to a Eurodollar Loan and specifying the applicable Interest Period
therefor.
"EURODOLLAR LOANS" - Revolving Credit Loans bearing interest at the
Eurodollar Rate.
"EURODOLLAR RATE" - the LIBOR Rate plus 125 basis points.
"EVENT OF DEFAULT" - any event specified in Article 7, PROVIDED that any
requirement for the giving of notice or lapse of time or any other condition has
been satisfied.
"FINANCIAL STATEMENTS" - financial statements of Borrower and its
Subsidiaries, on a consolidated basis, prepared on a consistent basis in
accordance with GAAP (except for changes in GAAP with which such accountants
concur) and containing balance sheets, statements of income and retained
earnings and statements of cash flow. Financial Statements for a fiscal year
shall contain an audit report without qualification (except for nonmaterial
qualifications) by independent certified public accountants selected by Borrower
and acceptable to Lender. Financial Statements for a quarter shall be certified
by the chief financial officer of Borrower as prepared in accordance with GAAP
except for year-end adjustments and except that such interim statements need not
contain footnotes.
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"GAAP" - those generally accepted accounting principles set forth in
Statements of the Financial Accounting Standards Board and in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants or which have other substantial authoritative support in the United
States and are applicable in the circumstances, as applied on a consistent
basis. As used in the preceding sentence "consistent basis" shall mean that the
accounting principles observed in the current period are comparable in all
material respects to those applied in the preceding period.
"HANCOCK MORTGAGE DOCUMENTS - the Promissory Note, Loan Agreement,
Mortgage and other agreements and instruments between Borrower and John Hancock
Mutual Life Insurance Company ("Hancock") in respect of the mortgage loan
furnished by Hancock to Borrower which mortgage loan was in the outstanding
principal amount of [$6,297,531.31] on [September 30, 1994] as such may be
amended, supplemented, or otherwise modified, from time to time.
"HAZARDOUS MATERIAL" - any hazardous waste, toxic substance hazardous
chemical, radioactive material, hazardous material, oil or gasoline, under any
applicable federal or state statute, county or municipal law or ordinance,
including (without limitation) any substance defined as a "hazardous substance"
or "toxic substance" (or comparable term) in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C. 9601, ET SEQ.),
the Hazardous Materials Transportation Act (49 U.S.C. 1802), or the Resource
Conservation and Recovery Act (42 U.S.C. 6901, ET SEQ.).
"INDEBTEDNESS" - with respect to any Person, any item that would
properly be included as a liability on the liability side of a balance sheet of
such Person as of any date as of which Indebtedness is to be determined and
includes (but is not limited to) (a) all obligations for borrowed money
including all Loans, (b) all obligations evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations to pay the deferred purchase
price of property or services, (d) all Capital Lease Obligations and (e) all
obligations in respect of advances made or to be made under Letters of Credit
issued for such Person's account and in respect of acceptances of drafts drawn
by such Person.
"INITIAL BORROWING DATE" - the first to occur of the date that the first
Loan is made or first Letter of Credit is issued under this Agreement.
"INTELLECTUAL PROPERTY" - shall mean "Intellectual Property," as defined
in Section 101(60) of the Bankruptcy Code, now or hereafter owned by Borrower,
together with all of the following property now or hereafter owned by Borrower:
all domestic and foreign patents and patent applications; inventions,
discoveries and improvements, whether or not patentable; trademarks, trademark
applications and registrations; service marks, service mark applications and
registrations; copyrights, copyright applications and registrations; all
licenses therefor; trade secrets and all other proprietary information.
"INTEREST PERIOD" - (a) with respect to Eurodollar Loans, a one (1), two
(2), three (3), six (6) or twelve (12) calendar month period as selected by
Borrower pursuant to this Agreement. Each Interest Period shall commence on the
date such Loan is made or the date of a subsequent interest
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<PAGE> 34
rate election, as the case may be, and shall end on the corresponding date one
(1), two (2), three (3), six (6) or twelve (12) calendar months later, as
selected by the Borrower, provided, that:
(i) any Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next preceding or succeeding Business Day
as is the Lender's custom in the inter-bank Eurodollar market to which such Loan
relates;
(ii) each Interest Period which commences before and would
otherwise end after April 30, 2002, shall end on April 30, 2002; and
(iii) any Interest Period which begins on a day for which there
is no numerically corresponding day in the calendar month during which such
Interest Period is to end, shall (subject to clause (i) above) end on the last
day of such calendar month.
(b) with respect to Revolving Credit Loans bearing interest at the
Base Rate, successive periods of one day each.
"INVESTMENT" - any transfers of property to, contribution to capital of,
acquisition of stock, other securities or evidences of indebtedness of,
acquisition of businesses or acquisition of property of any Person, other than
in the ordinary course of business.
"IRC" - the Internal Revenue Code of 1986, as amended from time to time
and including all regulations promulgated thereunder.
"LETTER OF CREDIT" - a letter of credit issued by Lender pursuant to
Section 2.8 for the account of Borrower.
"LETTER OF CREDIT COMMITMENT" - the commitment of the Lender to issue
Letters of Credit pursuant to Section 2.8 hereof.
"LIBOR RATE" - the rate quoted by the Lender two (2) Business Days prior
to an Interest Period for the offering by prime commercial banks to other prime
commercial banks in the interbank Eurodollar market of dollar deposit for a
period equal to the Interest Period and in an amount equal to the requested
advance. The LIBOR Rate shall be increased by the marginal reserve percentages
as prescribed by the Board of Governors of the Federal Reserve System for
determining the reserve requirements for the Lender for Eurodollar deposits
having a maturity equal to the Interest Period.
"LIABILITY" - any liability which the Lender could incur for obligations
for the term of a Fixed Rate Equipment Loan selected in an amount equal to such
portion or all of the principal amount of the Equipment Loan for which the Fixed
Rate is offered and selected. The choice of which Liabilities to use in
determining the Fixed Rate shall be made by Lender in its sole and absolute
discretion. Lender shall not be obligated to incur the particular Liability on
which the Fixed Rate is based, but may do so in its sole and absolute
discretion.
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"LIEN" - any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, encumbrance (including, without limitation, any easement,
right-of-way, zoning or similar restriction or title defect), lien (statutory or
other) or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC or comparable law of any jurisdiction).
"LOAN" - any Revolving Credit Loan.
"LOAN DOCUMENTS" - this Agreement, the Revolving Credit Note, any
application for a Letter of Credit and all other instruments and documents
executed in connection with the indebtedness covered hereby and thereby.
"LONDON BANKING DAY" shall mean any day in which dealings in deposits in
Dollars are transacted in the London interbank market.
"MATERIAL ADVERSE CHANGE" means a material adverse change, as reasonably
determined by the Lender, in the property, business, operations, or financial
condition, of Borrower and its Subsidiaries (taken as a whole).
"MATERIAL ADVERSE EFFECT" - means a material adverse effect, as
reasonably determined by the Lender, on (a) the property, business, operations,
or financial condition, of Borrower and its Subsidiaries (taken as a whole); or
(b) the validity or enforceability of any of the Loan Documents.
"MULTIEMPLOYER PLAN" - a Plan which is a multiemployer plan as defined
in Section 3(37)(A) of ERISA or Section 414(f) of the IRC.
"NET WORTH" - at any date, in accordance with GAAP (except as otherwise
provided below), the (a)(i) shareholders equity of Borrower, plus (ii)
additional paid-in-capital, plus or minus (iii) Borrower's cumulative
translation adjustment, plus or minus (iv) Borrower's retained Earnings, and
less (b) Borrower's treasury stock.
"PBGC" - the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERSON" - an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"PLAN" - any pension plan, as defined in Section 3(2) of ERISA and any
welfare plan, as defined in Section 3(1) of ERISA, which is sponsored,
maintained or contributed to by Borrower or any Commonly Controlled Entity, or
in respect of which Borrower or a Commonly Controlled Entity is an "employer" as
defined in Section 3(5) of ERISA.
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"PERMITTED ACQUISITION INDEBTEDNESS" - has the meaning given such term
in Section 5.1(h) hereof.
"REPORTABLE EVENT" - any of the events set forth in Section 4043(b) of
ERISA.
"REVOLVING CREDIT COMMITMENT" - the commitment by the Lender to make
Revolving Credit Loans pursuant to Section 2.1.
"REVOLVING CREDIT LIMIT" - as of any date, the amount of Fourteen
Million Dollars ($14,000,000.00).
"REVOLVING CREDIT LOAN" - any loan made pursuant to Section 2.1.
"REVOLVING CREDIT NOTE" - a promissory note of Borrower made to evidence
the Revolving Credit Loans, in the form of EXHIBIT A, as it may be amended,
supplemented or otherwise modified, from time to time.
"SENIOR INDEBTEDNESS" - means all Indebtedness for borrowed money
including obligations under Letters of Credit of the Borrower and its
Subsidiaries excluding the Indebtedness arising under the Hancock Mortgage
Documents, Capital Lease Obligations and Permitted Acquisition Indebtedness.
"SOLVENT" - as to any Person, such Person (i) owns Property the fair
market value of which is greater than the amount required to pay all such
Liabilities, (ii) owns Property the present fair salable value of which is
greater than the amount that will be required to pay the probable liability of
such Person on its existing Indebtedness as such becomes absolute and matured,
(iii) is able to pay all its Indebtedness as such Indebtedness matures and (iv)
has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage.
"SUBSIDIARY" - with respect to any Person, any corporation, partnership,
trust or other organization, whether or not incorporated, the majority of the
voting stock or voting rights of which is owned or controlled, directly or
indirectly, by such Person.
"TERMINATION DATE" - the earlier of (a) April 30, 2002, and (b) the date
the Lender's commitment to make Loans is terminated pursuant to Section 7.2 of
Article 7.
"TOTAL LIABILITIES" - with respect to the Borrower shall mean all
Indebtedness of the Borrower.
"TREASURY RATE" - as of the date of any calculation or determination,
the latest published rate for United States Treasury Notes or Bills (but the
rate on Bills issued on a discounted basis shall be converted to a bond
equivalent) as published weekly in the Federal Reserve Statistical Release
H.15(519) of Selected Interest Rates in an amount which approximates (as
determined by Lender)
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<PAGE> 37
in the case of a prepayment the amount prepaid and with a maturity closest to
the original maturity of the Equipment Loan which is prepaid in whole or in
part.
"TITLE IV PLAN" - any Plan that is covered by Title IV of ERISA.
"UCC" - the Uniform Commercial Code as it may from time to time be in
effect in the Commonwealth of Massachusetts.
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<PAGE> 38
EXHIBIT A
REVOLVING CREDIT NOTE
$14,000,000.00 Boston, Massachusetts
September 5, 1997
FOR VALUE RECEIVED, the undersigned, BTU International, Inc., a Delaware
corporation, with a principal place of business at 23 Esquire Road, North
Billerica, Massachusetts 01863 (the "Maker"), hereby promises to pay to the
order of USTrust ., a Massachusetts trust company, having an address at 30 Court
Street, Boston, Massachusetts 02108 (the "Lender"), the sum of FOURTEEN MILLION
AND 00/100 DOLLARS ($14,000,000.00), or so much as may have been advanced to the
Maker, as provided under that certain Credit Agreement dated as of September 5,
1997, by and between Maker and Lender, as the same may be amended from time to
time (the "Agreement"), together with interest on the unpaid principal amount
from time to time outstanding at (i) the Base Rate, or (ii) the Eurodollar Rate,
as the Borrower may elect pursuant to the terms of the Agreement. Interest shall
be payable in arrears on the first Business Day of each month commencing on the
first such date to occur after date hereof. The entire balance of principal,
accrued interest, and other fees and charges shall be due and payable on April
30, 2002 except as otherwise provided in the Agreement.
After maturity (whether by acceleration after default or otherwise),
interest shall be payable on the unpaid principal balance from time to time
outstanding at a rate in excess of the rate that is otherwise payable, that is
two percent (2%) until fully paid. Any payment hereunder not paid within fifteen
(15) days after the date such payment is due shall be subject to a late fee
equal to five percent (5%) of the amount overdue.
"Base Rate" means for any day the rate on such day announced by Lender
as its Base Rate. Any change in rate resulting from a change in the Base Rate
shall become effective as of the day on which such charge in the Base Rate
becomes effective. "Eurodollar Rate" means the LIBOR Rate (as defined in the
Agreement) plus 125 basis points.
"Business Day", means any day on which commercial banks are open for
domestic and international business, including dealing on dollar deposits in,
Boston, Massachusetts and, if the applicable Business Day relates to a
Eurodollar Loan, any London Banking Day. If any day on which a payment on a
Revolving Credit Loan is due is not a Business Day, then the payment shall be
due on the next day following which is a Business Day, unless, with respect to
such Revolving Credit Loan, the effect would be to make the payment due in the
next calendar month, in which event such payment shall be due on the next
preceding day which is a Business Day.
Interest and fees shall be calculated on the basis of a 360-day year for
the actual days elapsed, from and including the date of such Revolving Credit
Loan to but excluding the date of any repayment. Revolving Credit Loans bearing
interest at the Base Rate may be prepaid in whole or in part, without premium or
penalty, at any time. Revolving Credit Loans bearing interest at the
<PAGE> 39
Eurodollar Rate may be prepaid only upon payment of any amount due under Section
2.4 of the Agreement.
This Note evidences borrowings under the Agreement and, except as provided in
the Agreement, is secured by and entitled to all benefits of the provisions of
the Agreement, and other Loan Documents, as defined therein. All capitalized
terms not specifically defined herein shall have the same meanings as in the
Agreement.
If an Event of Default shall occur, the entire unpaid balance of principal,
accrued interest, and any and all other fees and charges may become, or may be
declared, immediately due and payable in the manner and with the effect provided
in the Credit Agreement.
Maker also agrees to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and expenses incurred, or which may be incurred, by
the Lender in connection with the negotiation, documentation, administration,
and enforcement of this Note and the Loan Documents.
The Maker and all guarantors and endorsers hereby waive presentment, demand,
notice, protest, and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and assent to
extensions of the time of payment or forbearance or other indulgence without
notice.
This instrument shall be governed by Massachusetts law. For purposes of any
action or proceeding involving this note, Maker hereby expressly submits to the
jurisdiction of all federal and state courts located in the Commonwealth of
Massachusetts and consents that any order, process, notice of motion or other
application to or by any of said courts or a judge thereof may be served within
or without such court's jurisdiction by registered mail or by personal service,
PROVIDED a reasonable time for appearance is allowed (but not less than the time
otherwise afforded by any law or rule), and waives any right to contest the
appropriateness of any action brought in any such court based upon lack of
personal jurisdiction, improper venue or FORUM NON CONVENIENS. MAKER AND LENDER
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE EXTENT
PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS NOTE AND AGREES THAT ANY SUCH DISPUTE
SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
Executed as an instrument under seal as of the date first above written.
WITNESS: BTU INTERNATIONAL
______________________ By: ___________________________
Name:
Title:
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<PAGE> 40
EXHIBIT B
COMPLIANCE CERTIFICATE
The undersigned hereby certifies pursuant to that certain Credit
Agreement (the "Agreement") dated September 5, 1997 between BTU International,
Inc. ("Borrower") and USTrust ("Lender"), as follows as of this date. The
capitalized terms as used herein shall have the meanings given to them in the
Agreement.
(a). To the best knowledge of the undersigned, the representations and
warranties made by Borrower in the Agreement and other Loan Documents and in
each certificate, document or financial or other written statement furnished at
any time under or in connection therewith, are and remain true and correct in
all material respects.
(b). No Event of Default described in the Agreement has occurred and is
continuing.
(c). There has occurred no Material Adverse Change since December 31,
1996 other than as disclosed to Lender.
(d). The undersigned represents and warrants to the Lender that the
financial covenant calculations shown on the attached Schedule A are true and
accurate as of the date hereof.
Executed as of _________, 1997.
BTU INTERNATIONAL, INC.
-----------------------------------
Name:
Title: Chief Financial Officer
<PAGE> 41
SCHEDULE A
Section 5.5(a) Current Ratio Actual: __________________
Minimum: 1.75:1.00
Compliance Yes _____ No _____
Section 5.5 Ratio of Net Worth Actual: __________________
to Senior Indebtedness Minimum: 1.50:1.00
Compliance Yes _____ No _____
Section 5.5(c) Ratio of Total Liabilities Actual: __________________
to Net Worth Maximum: 1.25:1.00
Compliance Yes _____ No _____
Section 5.5(d) Debt Service Actual: __________________
Coverage Ratio Minimum: 1.20:1.00
Compliance Yes _____ No _____
-2-
<PAGE> 42
REVOLVING CREDIT NOTE
$14,000,000.00 Boston, Massachusetts
September 5, 1997
FOR VALUE RECEIVED, the undersigned, BTU International, Inc., a Delaware
corporation, with a principal place of business at 23 Esquire Road, North
Billerica, Massachusetts 01863 (the "Maker"), hereby promises to pay to the
order of USTrust ., a Massachusetts trust company, having an address at 30 Court
Street, Boston, Massachusetts 02108 (the "Lender"), the sum of FOURTEEN MILLION
AND 00/100 DOLLARS ($14,000,000.00), or so much as may have been advanced to the
Maker, as provided under that certain Credit Agreement dated as of September 5,
1997, by and between Maker and Lender, as the same may be amended from time to
time (the "Agreement"), together with interest on the unpaid principal amount
from time to time outstanding at (i) the Base Rate, or (ii) the Eurodollar Rate,
as the Borrower may elect pursuant to the terms of the Agreement. Interest shall
be payable in arrears on the first Business Day of each month commencing on the
first such date to occur after date hereof. The entire balance of principal,
accrued interest, and other fees and charges shall be due and payable on April
30, 2002 except as otherwise provided in the Agreement.
After maturity (whether by acceleration after default or otherwise),
interest shall be payable on the unpaid principal balance from time to time
outstanding at a rate in excess of the rate that is otherwise payable, that is
two percent (2%) until fully paid. Any payment hereunder not paid within fifteen
(15) days after the date such payment is due shall be subject to a late fee
equal to five percent (5%) of the amount overdue.
"Base Rate" means for any day the rate on such day announced by Lender as
its Base Rate. Any change in rate resulting from a change in the Base Rate shall
become effective as of the day on which such charge in the Base Rate becomes
effective. "Eurodollar Rate" means the LIBOR Rate (as defined in the Agreement)
plus 125 basis points.
"Business Day", means any day on which commercial banks are open for
domestic and international business, including dealing on dollar deposits in,
Boston, Massachusetts and, if the applicable Business Day relates to a
Eurodollar Loan, any London Banking Day. If any day on which a payment on a
Revolving Credit Loan is due is not a Business Day, then the payment shall be
due on the next day following which is a Business Day, unless, with respect to
such Revolving Credit Loan, the effect would be to make the payment due in the
next calendar month, in which event such payment shall be due on the next
preceding day which is a Business Day.
Interest and fees shall be calculated on the basis of a 360-day year for the
actual days elapsed, from and including the date of such Revolving Credit Loan
to but excluding the date of any repayment. Revolving Credit Loans bearing
interest at the Base Rate may be prepaid in whole or in part, without premium or
penalty, at any time. Revolving Credit Loans bearing interest at the Eurodollar
Rate may be prepaid only upon payment of any amount due under Section 2.4 of the
Agreement.
<PAGE> 43
This Note evidences borrowings under the Agreement and, except as provided in
the Agreement, is secured by and entitled to all benefits of the provisions of
the Agreement, and other Loan Documents, as defined therein. All capitalized
terms not specifically defined herein shall have the same meanings as in the
Agreement.
If an Event of Default shall occur, the entire unpaid balance of principal,
accrued interest, and any and all other fees and charges may become, or may be
declared, immediately due and payable in the manner and with the effect provided
in the Credit Agreement.
Maker also agrees to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and expenses incurred, or which may be incurred, by
the Lender in connection with the negotiation, documentation, administration,
and enforcement of this Note and the Loan Documents.
The Maker and all guarantors and endorsers hereby waive presentment, demand,
notice, protest, and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and assent to
extensions of the time of payment or forbearance or other indulgence without
notice.
This instrument shall be governed by Massachusetts law. For purposes of any
action or proceeding involving this note, Maker hereby expressly submits to the
jurisdiction of all federal and state courts located in the Commonwealth of
Massachusetts and consents that any order, process, notice of motion or other
application to or by any of said courts or a judge thereof may be served within
or without such court's jurisdiction by registered mail or by personal service,
PROVIDED a reasonable time for appearance is allowed (but not less than the time
otherwise afforded by any law or rule), and waives any right to contest the
appropriateness of any action brought in any such court based upon lack of
personal jurisdiction, improper venue or FORUM NON CONVENIENS. MAKER AND LENDER
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE EXTENT
PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS NOTE AND AGREES THAT ANY SUCH DISPUTE
SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
Executed as an instrument under seal as of the date first above written.
WITNESS: BTU INTERNATIONAL
______________________ By: ___________________________
Name:
Title:
-2-
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