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LOAN AGREEMENT
THIS LOAN AGREEMENT is dated as of May __, 1998, by and between BRUNSWICK
TECHNOLOGIES, INC., a Maine corporation with a place of business in Brunswick,
Maine (hereinafter referred to as the "Borrower" or the "Debtor" or the
"Company"), and FLEET BANK OF MAINE, a Maine banking corporation with a place of
business in Portland, Maine (hereinafter called "Lender" or the "Bank").
In consideration of the mutual covenants and promises hereinafter set
forth, Borrower and Bank agree as follows:
SECTION 1. DEFINITIONS
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1.1 As used herein, unless otherwise specifically defined, the following
capitalized words and phrases shall have the following meanings:
"BANKING DAY" means any day of the week other than (a) Saturday or
Sunday or (b) any other day on which banks in the City of Portland, Maine are
not required or authorized to conduct the business of banking and, for each such
day, when used in connection with a LIBOR Loan, means a day on which deposits in
Dollars may be dealt with in the London interbank market.
"CAPITAL LEASE" means any lease of property (real, personal or mixed)
which, in accordance with GAAP, should be capitalized on the lessee's balance
sheet or for which the amount of the asset and liability hereunder if so
capitalized should be disclosed in a note to such balance sheet.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSENTS" means, in respect of any person, any permit, license or
exemption from, approval, consent of, registration or filing with any local,
state or federal governmental or regulatory agency or authority, required under
applicable law.
"CONSOLIDATED INTEREST EXPENSE" shall mean, with reference to any
period, the total interest expense (not net of interest income other than
intercompany interest that is netted out in consolidation) of the Borrower and
its Subsidiaries for such period (including, without limitation, interest
expense attributable to Capital Leases), all determined in accordance with GAAP
on a consolidated basis.
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"CONSOLIDATED TOTAL LIABILITIES" All liabilities of the Borrower and
its Subsidiaries determined on a consolidated basis in accordance with GAAP and
Indebtedness of the Borrower and its Subsidiaries, whether or not so classified.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"EUROCURRENCY RESERVE PERCENTAGE" means, for any LIBOR Interest Period
in respect of any LIBOR Loan, as of any date of determination, the aggregate of
the then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to such
LIBOR Interest Period (or if more than one such percentage is applicable, the
daily average of such percentages for those days in such LIBOR Interest Period
during which any such percentage shall be so applicable) by the Board of
Governors of the Federal Reserve System, any successor thereto, or any other
banking authority, domestic or foreign, to which Bank may be subject in respect
of eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Federal Reserve Board) or in respect of any other category
of liabilities including deposits by reference to which the interest rate on a
LIBOR Loan is determined or any category of extension of credit or other assets
that include the LIBOR Loan. For purposes hereof, such reserve requirements
shall include, without limitation, those imposed under Regulation D of the
Federal Reserve Board and the LIBOR Loan shall be deemed to constitute
Eurocurrency Liabilities subject to such reserve requirements without benefit of
credits for proration, exceptions or offsets which may be available from time to
time to any Bank under said Regulation D.
"FIFO" means the lower of standard costs or market which approximates
the first in, first out method of accounting.
"FINANCIALS" means, in respect of any period, the consolidated balance
sheet of the Borrower and Guarantors, on a consolidated basis, as at the end of
such period, and the related consolidated statement of income and consolidated
statement of cash flows for such period, each with consolidating schedules,
setting forth in comparative form the figures for the previous fiscal period,
calculated on a FIFO basis in reasonable detail in accordance with GAAP.
"GAAP" means generally accepted accounting principles consistent with
those adopted by the Financial Accounting Standards Board and its predecessor,
(a) generally, as in effect from time to time, and (b) for purposes of
determining compliance by the Borrower with its financial covenants set forth
herein, as in effect for the fiscal year ended on the Balance Sheet Date.
"GUARANTORS" means Advanced Textiles, Inc. and Brunswick Technologies
Europe Limited.
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"GUARANTY" means the unlimited and unconditional guaranty of the
Obligations executed by the Guarantors.
"INDEBTEDNESS" or "CONSOLIDATED INDEBTEDNESS" means all items (except
items of capital stock or capital paid-in surplus or retained earnings) which in
accordance with generally accepted accounting principles ("GAAP") would be
included in determining total liabilities as shown on the liability side of the
consolidated balance sheet of the Borrower and its Subsidiaries as of the date
on which such indebtedness is to be determined.
"LIBOR" means, for any LIBOR Interest Period with respect to a LIBOR
Rate Loan, the quotient (rounded upwards, if necessary, to the nearest one
sixteenth of one percent (1/16th of 1%)) of: (x) the per annum rate of interest,
determined by Bank in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) as of approximately 11:00 a.m.
(London time) two Banking Days prior to the beginning of such LIBOR Interest
Period pertaining to such LIBOR Rate Loan, appearing on Page 3750 of the
Telerate Service (or any successor or substitute page of such Service, or any
successor to or substitute for such Service providing rate quotations comparable
to those currently provided on such page of such Service, as determined by Bank
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) as the rate in the
London interbank market for dollar deposits in immediately available funds with
a maturity comparable to such LIBOR Interest Period DIVIDED BY (y) a number
equal to 1.00 MINUS the Eurocurrency Reserve Percentage. In the event that such
rate quotation is not available for any reason, then the rate (for purposes of
clause (x) hereof) shall be the rate, determined by Bank as of approximately
11:00 a.m. (London time) two Banking Days prior to the beginning of such LIBOR
Interest Period pertaining to such LIBOR Rate Loan, to be the average (rounded
upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of
1%)) of the per annum rates at which dollar deposits in immediately available
funds in an amount comparable to such LIBOR Rate Loan and with maturity
comparable to such LIBOR Interest Period are offered to the prime banks by
leading banks in the London interbank market. The LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Percentage.
"LIBOR INTEREST PERIOD" means for any LIBOR Loan the period commencing
on the date such Loan is made and ending on the last day of such period as
selected by the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding LIBOR
Interest Period and ending on the last day of such period as selected by the
Borrower pursuant to the provisions below. The duration of each LIBOR Interest
Period for any
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LIBOR Rate Loan shall be thirty (30) days, sixty (60) days, ninety (90) days,
one hundred twenty (120) days, one hundred fifty (150) days, one hundred eighty
(180) days or three hundred sixty (360) days, in each case as the Borrower may
select upon notice, as set forth herein, provided that if any such LIBOR
Interest Period with respect to a LIBOR Rate Loan would otherwise end on a day
that is not a Banking Day, that LIBOR Interest Period shall be extended to the
next succeeding Banking Day. Each determination by the Bank of any LIBOR
Interest Period shall, in the absence of manifest error, be conclusive and, at
the Borrower's request, the Bank shall demonstrate the basis for any such
determination. If the Borrower shall fail to give notice of a new LIBOR Loan in
accordance with the terms hereof following the end of a LIBOR Interest Period,
the Borrower shall be deemed to have requested a conversion of the affected
LIBOR Rate Loan to a Prime Rate Loan on the last day of the then current LIBOR
Interest Period with respect thereto. Any LIBOR Interest Period relating to any
LIBOR Rate Loan that would otherwise extend beyond the Maturity Date shall end
on the Maturity Date.
"LIBOR LOANS" means any Loan made by Bank to Borrower under Section 2
hereof from time to time in an amount not less than $100,000 for which interest
is to be computed on the basis of the LIBOR Rate.
"LIBOR PORTION" means the portion of any Loan specified in a LIBOR
Rate Request which is not less than $100,000 in the aggregate (and thereafter in
increments of $100,000) and which does not exceed the availability under the
revolving credit facility established under Section 2 hereof, and which as of
the date of the request has met all conditions for basing the interest on such
advance on LIBOR.
"LIBOR RATE" means for any LIBOR Loan made by Bank to Borrower
pursuant to Section 2 hereof the per annum rate of interest equal to LIBOR for
the LIBOR Interest Period for which interest is to be determined based on LIBOR
Rate plus 1.75% per annum.
"LIBOR RATE OPTION" The option granted pursuant to Section 2 of this
Loan Agreement to have interest on all or any portion of the principal amount of
a revolving credit loan based on LIBOR.
"LIBOR RATE REQUEST" means the notice in writing (or by telephonic
communication confirmed in writing on the same day as the telephonic request)
from the Borrower to the Bank requesting that interest on all or a qualified
portion of a Loan made pursuant to Section 2 hereof be based on the LIBOR Rate,
which request shall be received by 11:00 a.m. Portland, Maine time at least two
(2) Banking Days prior to the date of any proposed LIBOR Loan, which request
shall specify the first day of the LIBOR Interest Period, the proposed length of
the LIBOR Interest Period and the dollar amount
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of the LIBOR Portion (which shall not be less than $100,000), and such other
information as the Bank may require, subject in all cases to the terms and
provisions hereof.
"LIEN" as applied to the property of any person shall mean any charge,
conditional sale or other title retention agreement, lease constituting a
capital lease, lien, mortgage, pledge or other security interest or encumbrance
of any kind in respect of any property of such person, or upon the income, rents
or profits therefrom; any arrangement, express or implied under which any
property of such a person is transferred, sequestered or otherwise identified
for the purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation or priority to the payment of the general,
unsecured creditors of such person; any indebtedness for wages or indebtedness
arising for any other reason which if unpaid more than 30 days after the same
shall have become due and payable under Chapter 5 of the United States
Bankruptcy Code or any other law (whether or not the events or conditions (other
than the existence of such indebtedness or the initiation of legal proceedings
available generally to unsecured creditors) set forth in such law have occurred
and been satisfied) would be given any priority whatsoever over general
unsecured creditors of such persons; and the execution and delivery by Borrower
of, or any agreement to give any financing statement under the Uniform
Commercial Code or its equivalent or analog in any jurisdiction.
"LOAN" or "LOANS" means the loans or advances made by the Bank to the
Borrower from time to time pursuant to Section 2 hereof.
"LOAN DOCUMENTS" means this Agreement, the Note issued to evidence the
Loans, the Guaranty, and any and all instruments, documents and agreements
evidencing, governing or otherwise in any way relating to the Obligations,
whether now existing, executed contemporaneously herewith, or executed at any
time in the future, as the same may be amended, extended, renewed, restated or
otherwise modified from time to time.
"MATERIALLY ADVERSE EFFECT" means any materially adverse effect on the
financial condition or business operations of the Borrower or any material
impairment of the ability of the Borrower to perform its Obligations.
"MATURITY DATE" means the earliest of May 31, 1998 (or such other date
occurring after May 31, 1998, as Bank may, in its sole discretion, designate as
the stated Maturity Date in a writing delivered by Bank to Borrower in which
Bank states that it is extending the stated Maturity Date for purposes of this
Agreement, in which case that date shall be the Maturity Date for purposes of
this Agreement), or demand.
"NET INCOME" means the Net Income of the Borrower, calculated on a
FIFO basis in accordance with GAAP, after deduction of all of the Borrower's
expenses, taxes
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and other proper charges (after eliminating therefrom all extraordinary
non-recurring items of income).
"NOTE" or "NOTES" means the promissory note issued by the Borrower to
the Bank pursuant to Section 2, together with any and all amendments and
modifications thereto, substitutions therefor and renewals and extensions and
rearrangements thereof.
"OBLIGATIONS," as used herein, means any and all notes (including,
without limitation, the Note issued by Borrower pursuant to Section 2 hereof,
together with any amendments thereto, extensions or renewals thereof or
substitutions therefor), liabilities, advances, loans, sums due or to become due
under any letters of credit and indebtedness of Borrower to Bank of every kind,
nature and description (whether or not evidenced by any note or other
instrument, and whether or not for the payment of money), direct or indirect,
absolute or contingent, primary or secondary, joint or several, secured or
unsecured, due or to become due, now existing or hereafter arising, regardless
of how they arise or were acquired, also, including, without limitation, those
facilities listed on SCHEDULE 1.1 attached hereto, any liability of Borrower to
Bank as a guarantor or surety of the indebtedness or liabilities of others,
obligations to perform acts and refrain from taking action as well as
obligations to pay money, and all interest, fees, charges and expenses
(including reasonable attorneys' fees) paid or incurred by Bank at any time in
connection with the commitment for, preparation, execution, delivery, amendment,
review, perfection, administration and/or enforcement of this Agreement and any
other of the Loan Documents and any and all obligations of Borrower to Bank
pursuant to the Loan Documents.
"PERMITTED LIENS" are any liens, security interests and other
encumbrances permitted by Section 6.2 hereof.
"PERSON" shall mean any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any government
or any governmental agency or political subdivision thereof.
"PREPAYMENT FEE" or "PREPAYMENT PREMIUM" shall mean the payment
required in the event of any prepayment of principal on the Note prior to the
end of an applicable LIBOR Interest Period which amount shall be calculated as
follows: the latest published rate preceding the date of a prepayment for United
States Treasury Notes or Bills (Bills on a discounted basis shall be converted
to a bond equivalent) as published weekly in the Federal Reserve Statistical
Release with a maturity date closest to the expiration date of the LIBOR
Interest Period shall be subtracted from the Matched Rate (the "Matched Rate"
shall mean the rate of interest then payable on the Note for the LIBOR Interest
Period). If the result is zero or a negative number, no prepayment premium shall
be payable. If the result is a positive number, that number shall be
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multiplied by the amount of the principal balance being repaid. The resulting
amount will be divided by 360 and multiplied by the number of days remaining on
the LIBOR Interest Period. Said amount shall be reduced to present value
calculated by using the number of days remaining in the designated term and
using the above-referenced United States Treasury Note or ▇▇▇▇ rate and the
number of days remaining in the Term Note as of the date of prepayment. The
resulting amount shall be a Prepayment Premium due to the Bank on any prepayment
of the Note. Appropriate adjustments shall be made for partial prepayments.
"PRIME RATE" or "PRIME LENDING RATE" means the annual rate of interest
designated by the Bank at its main branch in Portland, Maine, from time to time,
for the internal guidance of its lending personnel, as its "Prime Lending Rate",
whether or not such rate is otherwise published. The Prime Lending Rate is
simply an indicator rate for all loans making reference thereto and is not
necessarily the lowest or most favorable rate provided by Bank to any particular
group of borrowers. The Prime Lending Rate floats upward and downward,
automatically, at the time specified in any announcement relating thereto,
without any special notice to Borrower. If the Bank shall cease designating such
a rate, for any reason, then the term "Prime Lending Rate" shall mean the rate
of interest published in the WALL STREET JOURNAL as the Prime Rate or the base
rate on corporate loans for large United States money center banks, as it may
vary from time to time.
"REQUIREMENT OF LAW" means, in respect of any person or entity, any
law, treaty, rule, regulation, the interpretation or application thereof, or
determination of an arbitrator, court, or other governmental authority, in each
case applicable to or binding upon such Person or affecting any of its property.
"SUBSIDIARY" means any corporation, association, trust, or other
business entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock, including without limitation the
Guarantors.
"TANGIBLE NET WORTH of the Borrower means, as of the date of any
determination thereof, the aggregate book value of the assets of the Borrower
and its Subsidiaries on a consolidated basis (after deduction therefrom of all
applicable reserves and allowances) minus any of the following to the extent the
same has been included in the calculation of aggregate book value (without
duplication) (i) total liabilities, (ii) any write-up in the value of assets
occurring after the date hereof, and (iii) all intangibles including, but not
limited to, investments in and loans to Subsidiaries, goodwill, leasehold
improvement, patents, trademarks and the like.
1.2 RULES OF INTERPRETATION. (a) A reference to any document or agreement
shall include such document or agreement as amended, modified or supplemented
and in effect
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from time to time in accordance with its terms and the terms of this Loan
Agreement; (b) the singular includes the plural and the plural includes the
singular; (c) a reference to any law includes any amendment or modification to
such law; (d) a reference to any Person includes its permitted successors and
assigns; (e) accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the accounting entity
to which they refer; (f) all calculations for the purposes of Section 7 hereof
shall be made in accordance with GAAP; (g) the words "include", "includes" and
"including" are not limiting; (h) all terms not specifically defined herein or
by GAAP, which terms are defined in the Uniform Commercial Code as in effect in
the State of Maine, have the meanings assigned to them therein; (i) reference to
a particular "Section" refers to that section of this Loan Agreement unless
otherwise indicated; and (j) the words "herein", "hereof", "hereunder" and words
of like import shall refer to this Agreement as a whole and not to any portion,
section or subdivision of this Agreement.
SECTION 2. REVOLVING CREDIT LOANS
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2.1 ESTABLISHMENT OF REVOLVING CREDIT FACILITY. (a) Subject to the terms
and conditions hereof, and in reliance on the representations and warranties of
the Borrower set forth herein, Bank agrees to advance to Borrower from time to
time, up to $4,000,000 under the revolving credit facility established under
this Section 2. The Borrower may borrow, repay, and prepay amounts advanced
hereunder, subject in all cases to the terms hereof.
(b) Loans (which shall be in minimum amounts of $100,000) shall be
made at such times as Borrower shall request by notice given no later than 2:00
p.m. on the day when the Loan is to be made as to any advance hereunder bearing
interest at the Prime Lending Rate, except for LIBOR Loans, which shall be
subject to all requirements of a LIBOR Rate Request.
(c) The Borrower hereby authorizes its chief financial officer,
treasurer or assistant treasurers to request advances by telephone (a
"Telephonic Advance Request"). All Telephonic Advance Requests shall be followed
by written confirmation transmitted by telecopier. Bank shall have no obligation
to inquire into the circumstances, use, purpose, disposition or application of
funds advanced pursuant to a Telephonic Advance Request and shall have no
liability relating thereto.
(d) This facility shall expire on and all amounts due hereunder shall
become due and payable on the earlier of demand or the Maturity Date.
(e) In the absence of demand by Bank, the Borrower may borrow, repay
and reborrow from time to time amounts under this line of credit through the
Maturity Date, provided that in no event shall the aggregate principal amount
outstanding
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hereunder exceed $4,000,000 (the "Revolving Credit Commitment Amount"). Any
revolving credit advance not previously repaid shall be due and payable on the
earlier of demand or the Maturity Date.
2.2 INTEREST RATE APPLICABLE ON REVOLVING CREDIT ADVANCES. (a) The rate of
interest due and payable on each advance hereunder shall be a per annum rate
equal to the Prime Lending Rate per annum unless Borrower elects a fixed rate
pricing option for such advance based on LIBOR, in which case the advance in
respect of which a fixed rate pricing option has been chosen shall bear interest
at the applicable LIBOR Rate for the LIBOR Interest Period, so selected by the
Borrower in the request for such an advance. If Borrower does not notify Bank of
an alternative interest rate option prior to the end of the applicable fixed
rate interest period, interest on the outstanding principal amount of such
advance shall convert automatically to a Prime Lending based index and accrue at
the Prime Lending Rate until an alternative rate is chosen in accordance with
the terms hereof. Interest shall be adjusted daily and calculated on the basis
of a three hundred sixty (360) day year counting the actual number of days
elapsed. The change in the rate of interest due and payable on a Loan shall be
effective on the date of any change in the Prime Lending Rate as to any advance
bearing interest at the Prime Lending Rate.
(b) Subject to the terms and conditions hereof and so long as there
exists no event of default hereunder or under the Note evidencing Loans under
this Section 2, the Borrower, in its sole discretion upon notice to the Bank in
the form required in any fixed rate request, may elect to have the principal
amount of an advance under this credit facility accrue and bear daily interest
during LIBOR Interest Period so selected in said notice at a LIBOR Rate, as
applicable. Once selected, the applicable fixed rate shall be the rate of
interest per annum paid by Borrower in respect of any such advance so designated
for the interest period so selected. Upon expiration of any such interest
period, the Borrower may select further fixed rate pricing options for the next
succeeding fixed rate interest period in accordance with the terms hereof or, in
the absence of such an election, the advance shall bear interest at the Prime
Lending Rate.
2.3 PAYMENTS OF PRINCIPAL AND INTEREST. Interest payments shall be due and
payable monthly in arrears on the first day of each month commencing on the
first such date next succeeding the date hereof and continuing thereafter on the
first day of each month so long as Loans hereunder remain available or
outstanding. Principal payments shall be repaid on the earlier of demand or on
the Maturity Date.
2.4 REVOLVING CREDIT NOTE. The Loans made by Bank pursuant to this Section
2 shall be evidenced by the execution and delivery of a revolving credit note
substantially in the form attached hereto as EXHIBIT A (the "Revolving Credit
Note"), payable to the order of the Bank, on demand, duly executed on behalf of
the Borrower, dated as of the Closing Date and in the original principal amount
of Four Million Dollars ($4,000,000). The then
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outstanding principal balance of the Revolving Credit Note shall be due and
payable on the earlier of demand or the Maturity Date.
2.5 PAYMENT OF PREPAYMENT FEE. Any loans or advances hereunder bearing
interest at the LIBOR Rate may be prepaid in full prior to the end of the
applicable LIBOR Interest Period only with the consent of the Bank and only upon
payment of the applicable Prepayment Fee, if any. Prime Lending Rate based loans
may be prepaid in part or in full without prepayment penalty.
2.6 OVERDUE PAYMENTS. In the event that the Borrower shall fail to make
any payment of the principal of, or interest on the Revolving Credit Note when
due, whether at a date fixed for the payment of any installment or prepayment
thereof, and such failure continues for more than ten (10) days, Borrower shall
pay to Bank upon demand a late fee of five percent (5%) of the overdue
installment amount. The holder of this Note also shall have the right to charge
interest on the unpaid principal balance hereof at an interest rate equal to the
sum of four percent (4%) per annum PLUS the rate of interest otherwise payable
as provided herein upon demand following, and during the continuance of a
Default or Event of Default under this Agreement or any of the Loan Documents,
but only following the expiration of any applicable period of grace without a
cure having been effected. The failure by the holder of the Revolving Credit
Note to collect any such late charge or to apply a default rate of interest on
one occasion shall not be deemed a waiver by the holder of the Note of its right
to collect late charges in any other instance involving a late payment
hereunder, or to apply a default rate of interest thereafter following any such
failure to pay.
2.7 MONTHLY STATEMENTS. After the end of each month, Bank will render to
Borrower a statement of Borrower's account activity, showing all applicable
credits and debits as of the date specified in said statement. Absent manifest
error, each statement shall be considered correct and to have been accepted by
Borrower and shall be conclusively binding upon Borrower in respect of all
charges, debits and credits of whatever nature contained therein under or
pursuant to this Agreement, and the closing balance shown therein, unless
Borrower notifies Bank in writing of any discrepancy or disagreement within
thirty (30) days from the mailing by Bank to Borrower of any such monthly
statement.
2.8 FORM AND TERMS OF PAYMENT. All payments by the Borrower of the
principal of or interest on the Revolving Credit Note and of any fee due
hereunder shall be made at the address of the Bank set forth in Section 9.1 and
shall be made in United States dollars in immediately available funds. The
Borrower hereby authorizes the Bank to charge the Borrower's deposit accounts
for the purpose of effecting all such payments. If any payment of principal of
or interest on the Revolving Credit Note shall become due on a day which is not
a Banking Day, such payment may be made on the next succeeding
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Banking Day and such extension shall be included in computing interest in
connection with such payment.
2.9 UNUSED COMMITMENT FEE. Borrower shall pay to Bank an unused commitment
fee equal to one-eighth of one percent (.125%) per annum (computed on the basis
of the actual number of days elapsed over a 360 day year) of the daily unused
portion of the Revolving Credit Commitment Amount, which amount shall be payable
quarterly in arrears on the last day of each March, June, September and December
of each year, commencing on the first of such dates next succeeding the date
hereof, and continuing until Maturity Date, whichever is earlier. The unused
commitment fee will be pro-rated for any partial calendar quarter. The unused
commitment fee provided for in this Section is in addition to any fees, balances
or charges which may be applicable to other services now or hereafter provided
to Borrower by the Bank.
2.10 INABILITY TO DETERMINE LIBOR RATE. In the event that prior to the
commencement of any LIBOR Interest Period relating to any LIBOR Rate Loan, Bank
shall determine in the exercise of its reasonable commercial judgment that
adequate and reasonable methods do not exist for ascertaining the LIBOR Rate for
such Interest Period, Bank shall forthwith give notice of such determination
(which shall be conclusive and binding on Borrower) to the Borrower. In such
event (a) any notice from Borrower requesting a LIBOR Rate for a Loan shall be
automatically withdrawn and shall be deemed a request for a Loan bearing
interest at the applicable Prime Lending Rate, and (b) each LIBOR Loan will
automatically, on the last day of the then current LIBOR Rate Interest Period,
convert to an amount accruing interest at the Prime Lending Rate per annum, and
no further LIBOR Loans will be permitted until Bank determines in the exercise
of its reasonable commercial judgment that the circumstances giving rise to such
suspension no longer exist, whereupon Bank shall so notify Borrower.
2.11 USE OF PROCEEDS. Borrower shall use the proceeds of all loans and
advances hereunder derived for working capital, and for any other uses as may be
approved in writing by the Bank from time to time.
2.12 DEMAND OBLIGATIONS. Borrower acknowledges and agrees that the
revolving credit loans are demand obligations, as defined in the Maine Uniform
Commercial Code, Section 3-108, which may be called by Lender for full and
immediate payment at any time, in Lender's sole discretion. Borrower
acknowledges and agrees that the demand nature of such obligations is not waived
by Lender or otherwise negated or affect in any way, notwithstanding any
provisions herein, in the Note evidencing such loans or elsewhere which may
indicate Lender's present willingness to accept various payments over time and
notwithstanding references in this Agreement or in the Note to Defaults or
Events of Default.
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SECTION 3. CONDITIONS OF LENDING
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3.1 INITIAL LOAN. The obligation of the Bank to make the initial Loan(s)
hereunder is subject to the following conditions:
(a) On or prior to the date of the first advance, the Bank shall have
received the Note, the Guaranty and all other Loan Documents duly completed,
executed and delivered.
(b) The receipt of a favorable opinion of counsel for the Borrower,
dated as of such date and in form and substance satisfactory to the Bank and its
counsel.
(c) A copy of the Borrower's organizational documents.
(d) All other information and documents which the Bank or its counsel
may reasonably have requested in connection with the transactions contemplated
by this Agreement, such information and documents where appropriate to be
certified by the proper officers of Borrower or governmental authorities.
3.2 CONDITIONS PRECEDENT TO ALL LOANS. On the date of each Loan hereunder
and any advance under the revolving credit facility (a) the representations and
warranties of the Borrower contained in Section 4 of this Agreement shall be
true on and as of such dates as if they had been made on such dates (except to
the extent that such representations and warranties expressly relate to an
earlier date or are affected by the consummation of transactions permitted under
this Agreement); (b) the Borrower shall be in compliance with all material terms
and provisions set forth herein on its part to be observed or performed on or
prior to such dates as well as those terms and provisions the non-compliance
with which could have a material adverse effect on the business or operations of
Borrower or the Bank's ability to recover all Obligations; (c) after giving
effect to any Loan hereunder to be made on such dates, no Event of Default, nor
any event which with the giving of notice or expiration of any applicable grace
period or both would constitute such an Event of Default, shall have occurred
and be continuing; (d) since the date of this Agreement, there shall have been
no material adverse change in the assets or liabilities or in the financial or
other condition of the Borrower or any Guarantor; and (e) upon request of the
Bank, the Borrower shall deliver to the Bank an officer's certificate in form
satisfactory to the Bank affirming compliance with the conditions of subsection
3.2 as of such. Each request for a Loan made by the Borrower hereunder shall
constitute a representation and warranty to the Bank that all of the conditions
specified in this subsection 3.2 have been satisfied as of the date of each such
Loan.
SECTION 4. REPRESENTATIONS AND WARRANTIES
------------------------------
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4.1 CORPORATE AUTHORITY. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maine and
is duly qualified and is in good standing in every other jurisdiction where it
is doing business. The execution, delivery and performance of the Loan Documents
by the Borrower and the transactions contemplated hereby and thereby (a) are
within the corporate authority of the Borrower, (b) have been duly authorized,
(c) do not conflict with or result in any breach or contravention of any laws or
regulations (including without limitation any provision of the Code applicable
to Subchapter S corporations) and (d) do not conflict with any provision of the
corporate charter or bylaws of, or any agreement or other instrument binding
upon, the Borrower. The execution and delivery of the Loan Documents will result
in valid and legally binding obligations of the Borrower enforceable against it
in accordance with the respective terms and provisions hereof and thereof.
4.2 GOVERNMENTAL APPROVALS; COMPLIANCE WITH LAWS. The execution, delivery
and performance of the Borrower's Obligations, and exercise of the Borrower's
rights under the Loan Documents, including the borrowing under this Agreement
(a) do not require any consents from third parties or any person, and (b) are
not and will not be in conflict with or prohibited or prevented by (i) any
Requirement of Law, or (ii) its corporate charter, bylaws, any resolution or any
agreement to which it is a party (including, without limitation, any agreement
evidencing the borrowing of money), in each case binding on it or affecting its
property. The Borrower is not in violation of its corporate charter, bylaws, any
resolution, instrument or agreement to which it is a party or affecting its
property, or any Requirement of Law, in a manner which could have a Materially
Adverse Effect, including, without limitation, all applicable federal and state
tax laws, ERISA and environmental laws.
4.3 TITLE TO PROPERTIES. The Borrower owns all of the assets reflected in
the consolidated balance sheet of the Borrower as of the Balance Sheet Date
(December 31, 1996) or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, except Permitted Liens. The Borrower possesses
all franchises, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict with any rights of others.
4.4 FINANCIAL STATEMENTS, ETC. There have been furnished to the Bank (a)
Borrower's audited financial statements for the fiscal year ended on December
31, 1996, and (b) its unaudited financial statements as at December 31, 1997,
certified by the treasurer of the Borrower. Such financial statements are
complete and accurate and fairly present the consolidated financial condition of
the Borrower as at the close of business on the respective dates thereof and the
results of operations for the respective periods then ended, except that the
financial statements referred to in clause (b) are subject to year-end
adjustment and are absent of footnotes.
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14
4.5 NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date, there has
occurred no materially adverse change of any kind which could have a Materially
Adverse Effect.
4.6 NO LITIGATION. There are no legal or other proceedings or
investigations of any kind pending or threatened against the Borrower before any
court, tribunal or administrative agency or board that, if adversely determined,
might, either in any case or in the aggregate, have a Materially Adverse Effect.
4.7 TAX STATUS. The Borrower(s) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (b) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings for which adequate reserves have been
established, and (c) has set aside on its books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Borrower know of no basis for any claim, except those
being contested in good faith and by appropriate proceedings and for which
adequate reserves have been established.
4.8 NO EVENT OF DEFAULT. No Default or Event of Default has occurred and
is continuing.
4.9 CERTAIN TRANSACTIONS. None of the officers, directors, or employees of
the Borrower is presently a party to any transaction with the Borrower (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
4.10 SUBSIDIARIES; AFFILIATES. The Borrower does not have any Subsidiaries,
except as disclosed in SCHEDULE 4.10 attached hereto.
SECTION 5. AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants that, until the Loan is fully and indefeasibly paid,
it will:
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15
5.1 PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause
to be paid the principal and interest on the Loans, all in accordance with the
terms thereof.
5.2 RECORDS AND ACCOUNTS. The Borrower will:
(a) keep true and accurate records and books of account in which
full, true and correct entries will be made in accordance with GAAP;
(b) maintain adequate accounts and reserves for all taxes (including
income taxes), depreciation, obsolescence and amortization of its properties,
contingencies, and other reserves; and
(c) permit the Bank to inspect any of the properties of the Borrower,
to examine the books of account of the Borrower (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances and accounts of the
Borrower with and to be advised as to the same by its officers, all at the
expense of the Borrower and at such reasonable times and intervals as the Bank
may reasonably request.
5.3 FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will
deliver to the Bank:
(a) as soon as practicable, but in any event not later than one
hundred and twenty (120) days after the end of each fiscal year of the Borrower,
Financials of the Borrower and Guarantors, on a consolidated basis, and Form 10K
Report for such fiscal year, certified (as to such Financials) without
qualification by a firm of certified public accountants chosen by the Borrower
and satisfactory to the Bank, together with a written statement from such
accountants to the effect that they have read a copy of this Loan Agreement, and
that, in making the examination necessary to said certification, they have
obtained no knowledge of any Default or Event of Default, or, if such
accountants shall have obtained knowledge of any then existing Default or Event
of Default they shall disclose in such statement any such Default or Event of
Default, PROVIDED that such accountants shall not be liable to the Banks for
failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each fiscal quarter of the Borrower,
copies of its Form 10Q Report for such quarter and unaudited Financials of the
Borrower and the Guarantors for such quarter and the portion of the fiscal year
then elapsed, together with a certification by the chief financial officer or
treasurer that the information contained in such financial reports fairly
presents the consolidated financial position of the Borrower and all
consolidated entities on the date thereof (subject to year-end adjustments);
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(c) simultaneously with the delivery of the financial statements and
reports referred to in subsections (a) and (b) above, a statement certified by
the chief financial officer or treasurer in substantially the form of EXHIBIT B
hereto and setting forth in reasonable detail computations evidencing compliance
with the covenants contained in Section 7 (if applicable) and reconciliations to
reflect changes in GAAP since the Balance Sheet Date; and
(d) from time to time such other financial data and information as
the Bank may reasonably request.
5.4 NOTICES. The Borrower will promptly notify the Bank in writing of (a)
the occurrence of any Default or Event of Default; (b) (i) any material
violation of any environmental law or of ERISA and (ii) any material inquiry,
proceeding, investigation, or other action in respect thereof which could have a
Materially Adverse Effect; and (c) any material threatened or pending litigation
or similar proceedings affecting the Borrower or any material change in any such
litigation or proceeding previously reported.
5.5 CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will
maintain its chief executive office in the United States and will do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises. The Borrower will (a) cause all of
its properties to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, and (b) cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.
5.6 TAXES. The Borrower will duly pay and discharge, or cause to be paid
and discharged, before the same shall become overdue, all taxes, assessments and
other governmental charges imposed upon it and its real properties, sale and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property, PROVIDED that any such tax,
assessment or other charge need not be paid if the validity or amount thereof
shall currently be contested in good faith by appropriate proceedings and if the
Borrower shall have set aside on its books adequate reserves with respect
thereto; and PROVIDED FURTHER that the Borrower will pay all such taxes,
assessments or other charges forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor.
5.7 COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS. The Borrower
will comply with (a) the applicable Requirements of Law, including ERISA and all
environmental laws, (b) the provisions of its charter document and bylaws, (c)
all
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agreements and instruments by which it or any of its properties may be bound and
(d) all applicable Consents. If any Consent shall become necessary or required
in order that the Borrower may fulfill any of its Obligations under any of the
Loan Documents, the Borrower will immediately take, or will cause to be taken,
all reasonable steps within the power of the Borrower to obtain such Consent and
furnish the Bank with evidence thereof.
5.8 USE OF PROCEEDS. The Borrower will not use the proceeds of the Loan
for the purpose of carrying "margin security" or "margin stock" within the
meaning of Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
5.9 FURTHER ASSURANCES. The Borrower will cooperate with the Bank and
execute such further instruments and documents as the Bank shall reasonably
request to carry out to its satisfaction the transactions contemplated by the
Loan Documents.
5.10 INSURANCE. The Borrower will maintain or cause to be maintained with
respect to all insurable properties now or hereafter owned by Borrower insurance
against loss or damage by fire, explosion or other casualty to the extent
customary, and with customary deductibles, with respect to like properties of
companies conducting similar businesses, all in form and substance reasonably
satisfactory to Bank, and will also maintain or cause to be maintained public
liability and workmen's compensation insurance (or through an individual
self-insurance trust established and operated in accordance with Maine laws)
insuring the Borrower upon the foregoing terms with respect to other hazards,
risks and liabilities to persons and property and, upon request, will furnish to
the Bank satisfactory evidence of the same.
5.11 LIABILITY FOR AND REIMBURSEMENT OF COSTS AND EXPENSES. The Borrower
will pay or reimburse the Bank, on demand, for all reasonable expenses
(including, without limitation, counsel fees and expenses) incurred or paid by
the Bank in connection with the preparation, review, interpretation and
amendment or restatement of the Loan Documents and any instrument, agreement or
document executed and delivered pursuant thereto or in connection therewith, or
with the enforcement by the Bank of its rights as against the Borrower or any
other person primarily or secondarily liable to the Bank in respect of any
Obligations of the Borrower to the Bank.
5.12 DEPOSITORY ACCOUNT. The Borrower will maintain its primary deposit
relationship with the Bank, so long as any amount remains outstanding or
available hereunder.
SECTION 6. CERTAIN NEGATIVE COVENANTS OF THE BORROWER
------------------------------------------
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The Borrower covenants and agrees that, so long as any Loan is outstanding
or available hereunder:
6.1 RESTRICTIONS ON INDEBTEDNESS. The Borrower will not create, incur,
assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than:
(a) Indebtedness to the Bank;
(b) Current liabilities of the Borrower incurred in the ordinary
course of business not incurred through (i) the borrowing of money, or (ii) the
obtaining of credit except for credit on an open account basis customarily
extended and in fact extended in connection with normal purchases of goods and
services;
(c) Indebtedness in respect of taxes, assessments or other
governmental charges and claims for labor, materials and supplies to the extent
that payment therefor shall not at the time be required to be made in accordance
with the provisions of Section 4.6;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower shall at
the time in good faith be pre-securing an appeal or proceeding for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review;
(e) Indebtedness with respect to worker's compensation awards;
(f) Indebtedness consisting of obligations in respect of deferred
compensation agreements, termination benefits and other employee benefit plans,
as each such agreement, benefit and plan is in effect on the date hereof;
(g) Unsecured and secured Indebtedness listed on SCHEDULE 6.1(G)
hereto as in effect on the date hereof and any refinancing thereof in an amount
not in excess of the amount outstanding (as to term loans) or committed (as to
revolving credit facilities) on the date hereof; or
(h) With the prior written consent of Bank, which consent may be
granted or withheld in the sole discretion of the Bank, additional unsecured
Indebtedness.
6.2 RESTRICTIONS ON LIENS. The Borrower will not (a) create or incur or
suffer to be created or incurred or to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of any kind upon any of
its property or assets of any character whether now owned or hereafter acquired,
or upon the income or profits
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therefrom; (b) transfer any of its property or assets of any character whether
now owned or hereafter acquired or the income or profits therefrom for the
purpose of subjecting the same to the payment of Indebtedness or performance of
any other obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security agreement,
device or arrangement; (d) suffer to exist for a period of more than thirty (30)
days or until past due after the same shall have been incurred any Indebtedness
or claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or (e) sell, assign, pledge or otherwise transfer any accounts,
contract rights, general intangibles, chattel paper or instruments, with or
without recourse, except in the ordinary course of business, PROVIDED that the
Borrower may create or incur or suffer to be created or incurred or to exist:
(i) liens to secure taxes, assessments and other government
charges or claims for labor, material or supplies in respect of obligations not
overdue;
(ii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(iii) liens in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 6.1(d);
(iv) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 120 days from the date
of creation thereof in respect of obligations not overdue;
(v) encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and defects and
irregularities in the title thereof, landlord's or lessor's liens under leases
to which the Borrower is a party, and other minor liens or encumbrances none of
which in the opinion of the Borrower interferes materially with the use of the
property affected in the ordinary conduct of the business of the Borrower, which
defects do not individually or in the aggregate have a Materially Adverse
Effect;
(vi) liens securing the Indebtedness permitted under Section
6.1(g) hereof;
(vii) liens in favor of the Bank securing the Indebtedness
incurred under the Loan Documents.
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6.3 (Intentionally omitted)
6.4 RESTRICTIONS ON INVESTMENTS. The Borrower will not make or permit to
exist or to remain outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America or municipalities located in the United States of America or any
agencies of either of the foregoing;
(b) certificates of deposit, bankers acceptances and time deposits of
any Bank or any other United States bank having total assets in excess of
$500,000,000;
(c) securities commonly known as "commercial paper" issued by any
corporation which is organized and existing under the laws of the United States
of America or any state thereof, if at the time of purchase, such commercial
paper has been rated and the ratings therefor are not less than "P-2" if rated
by ▇▇▇▇▇'▇ Investors Service, Inc., and not less than "A-2" if rated by Standard
& Poor's Corporation; and
(d) Investments existing on the date hereof listed on SCHEDULE 6.4
hereto.
6.5 MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
(a) The Borrower will not become party to any merger or consolidation
unless it is the surviving corporation thereof.
(b) The Borrower will not become a party to or agree to or effect any
disposition of all or substantially all of its assets (including without
limitation any sale and leaseback transaction).
6.6 NO CHANGE OF BUSINESS. The Borrower will not engage in any business
except the businesses now conducted by it and businesses reasonably related
thereto.
SECTION 7. FINANCIAL COVENANTS OF THE BORROWER.
-----------------------------------
The Borrower covenants and agrees that, so long as any Loan is outstanding:
7.1 LEVERAGE RATIO. The Borrower will not permit the ratio of Consolidated
Total Liabilities to Tangible Net Worth to exceed 1.0 to 1.0.
7.2 DEBT SERVICE COVERAGE. The Borrower will not permit the ratio of its
Debt Service Coverage Ratio for any period of four (4) consecutive fiscal
quarters (each such period, a "Measurement Period") to be less than 1.2 to 1.0
for each Measurement Period
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ending after the date hereof. For purposes of this calculation, Debt Service
Coverage Ratio shall be determined by dividing Borrower's (a) Net Income PLUS
depreciation, amortization and interest expense for the period in question by
(b) Consolidated Interest Expense PLUS the current maturities of long term debt
for the period in question.
7.3 MEASUREMENT. The leverage ratio under Section 7.1 shall be measured
quarterly based upon management prepared financial statements and annually based
on independent accountant's audited statements, and the debt service coverage
ratio under Section 7.2 shall be measured annually based on independent
accountant's audited statements.
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SECTION 8. DEFAULTS; REMEDIES
------------------
8.1 EVENTS OF DEFAULT; ACCELERATION. If any of the following events (each
an "Event of Default" or a "Default") shall occur:
(a) Demand, in the Bank's sole discretion; or
(b) The Borrower shall default in the payment of the principal of, or
any prepayments or interest on the Note, and such default shall continue for
five (5) days or default is made in respect of the payment of any other fee or
amount due hereunder or thereunder, whether at maturity, by acceleration or at a
date fixed for the payment thereof or otherwise, and such default shall continue
for five (5) days after written notice of default from Bank to Borrower; or
(c) The Borrower shall default in the performance of or compliance
with the terms and provisions of Sections 4, 5 or 6 hereof; or
(d) The Borrower shall fail to perform any other term or covenant
hereof, and such default (other than a monetary default referred to in paragraph
(a) hereof) is not rectified and cured within fifteen (15) days after notice of
default or breach by the Bank to the Borrower; or
(e) Any material representation or warranty made by the Borrower or
any other party in any Loan Document shall prove to have been false or incorrect
in any material respect when made; or
(f) The Borrower or any Guarantor shall default in any payment due on
any Indebtedness to a third party, including the Bank or in the performance or
compliance with any term of any agreement or document relating to such
Indebtedness and such default or breach is not waived by such third party,
including the Bank or cured by Borrower or such Guarantor within any applicable
cure period or otherwise prior to declaration of default hereunder by Bank,
including without limitation failure to pay amounts due under or comply with the
terms of or the occurrences of a default or event of default under any of the
loan documents described in SCHEDULE 1.1 attached hereto; or
(g) The Borrower or any Guarantor shall discontinue its business or
shall make an assignment for the benefit of creditors, or shall fail generally
to pay its debts as such debts become due, or shall apply for or consent to the
appointment of or taking possession by a trustee, receiver or liquidator (or
other similar official) of the Borrower or any Guarantor or any substantial part
of its property, or shall commence a case or have an order for relief entered
against it under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or other
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similar law, or if the Borrower or any Guarantor shall take any action looking
to the dissolution or liquidation of the Borrower or any Guarantor;
(h) A decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any Guarantor
bankrupt or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of the
Borrower or any Guarantor in an involuntary case under federal bankruptcy laws
as now or hereafter constituted;
(i) There shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive, any final
judgment not covered by insurance against the Borrower or any Guarantor that,
with other outstanding final judgments not covered by insurance, undischarged,
against the Borrower or such Guarantor, exceeds in the aggregate $100,000;
(j) Any of the Loan Documents shall be cancelled, terminated, revoked
or rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement consent or approval of the Bank, or any action
at law, suit or in equity or other legal proceeding to cancel, revoke or rescind
any of the Loan Documents shall be commenced by or on behalf of the Borrower,
any Guarantor, or any of their respective shareholders, or any court or any
other governmental or regulatory authority or agency of competent jurisdiction
shall make a determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof; or
(k) The Borrower or any Guarantor shall be enjoined, restrained or in
any way prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business and such order shall
continue in effect for more than thirty (30) days;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, either or both of the following actions may be taken,
in addition to and not in limitation of any additional remedies as may be set
forth herein or in any related Loan Documents or under applicable law: (a) the
Bank may declare the principal of and accrued interest in respect of the Note to
be forthwith due and payable, whereupon the principal, premium, if any, and
accrued interest in respect of the Note shall become forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower, together with all other amounts due
hereunder or thereunder; (b) the Bank may proceed to protect, enforce and
exercise its rights by an action at law, suit in equity or other appropriate
proceeding, including without limitation a right of set-off against any and all
deposits, accounts, certificate of deposit balances, claims or other sums at any
time credited by or due from
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the Bank to the Borrower. Notwithstanding anything to the contrary herein or in
any Loan Document, the Bank shall not be obligated to make advances to Borrower
under Section 2 hereof following any monetary default or during any cure or
grace period following such a default.
SECTION 9. RIGHTS OF SET-OFF
-----------------
(a) In addition to Bank's Liens, Borrower hereby expressly grants to
Bank the right to set-off against all deposits and other sums at any time held
or credited by or due from Bank to Borrower, in accordance with the provisions
of this Section 9. The rights of Bank under this Section 9 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off under law or equity) which Bank may have under law or by agreement.
(b) Bank is hereby authorized at any time and from time to time,
after the occurrence and during the continuation of an Event of Default, to the
fullest extent permitted by law, at its option, without notice or demand and
without liability, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, excepting, however, any fiduciary
or escrow accounts established by Borrower into which only funds of unrelated
third-parties are deposited, and provided that Borrower has informed Bank of the
nature of such accounts) at any time held, and other indebtedness at any time
owing, by Bank to or for the credit or the account of Borrower against any and
all of the Obligations now or hereafter existing under this Agreement, the Notes
and the other Loan Documents, in such order and manner as Bank may determine in
its sole discretion.
(c) Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that Bank and any holder of a participation in the Note of
which Borrower has been given prior notice may exercise rights of set off or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of Borrower in the amount
of such participation, provided that any such set-off by the holder of a
participation shall be subject to the provisions of Section 9(b).
(d) Borrower hereby grants to Bank a lien, security interest and
right of setoff as security for the Obligations, whether now existing or
hereafter arising, upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
Bank or any entity under the control of Fleet Financial Group, Inc., or in
transit to any of them. At any time after the occurrence and during the
continuation of an Event of Default, without demand or notice, Bank may set off
the same or any part thereof and apply the same to any Obligation of Borrower
regardless of the adequacy of any other collateral securing the Loan. ANY AND
ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
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ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER
OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
SECTION 10. MISCELLANEOUS
-------------
10.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be personally delivered or mailed by first class mail, postage
prepaid, as follows:
(a) If to the Bank:
Fleet Bank of Maine
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. High, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Borrower:
Brunswick Technologies, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Eaton, Peabody, Bradford & Veague, PA
Fleet Center, Exchange Street
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
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or to such other address or addresses as the party to whom such notice is
directed may have designated in writing to the other party hereto. A notice
shall be deemed to have been given upon the earlier to occur of (i) three (3)
days after the date on which it is deposited in the U.S. mails properly
addressed, first class postage prepaid, by certified or registered mail, return
receipt requested, or (ii) receipt by the party to whom such notice is directed.
10.2 CROSS DEFAULTS, ETC. It is intended, and the Borrower and the Bank
hereby agree that a default under or in respect of any Obligation issued
pursuant hereto or any Loan Documents shall constitute a default in respect of
the other Obligations of Borrower to Bank, whether now existing or hereafter
arising.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in
exercising, on the part of Bank, any right, power or privilege hereunder, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
10.4 SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of Borrower, Bank, and their respective successors and assigns.
10.5 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed and interpreted in
accordance with the laws of the State of Maine.
10.6 WAIVER. Borrower and all other parties liable herefor, whether
principal, guarantor, endorser or otherwise, hereby severally waive demand,
notice and protest, and waive all recourse to suretyship and guarantorship
defenses generally, including but not limited to any extension of time for
payment or performance which may be granted to Borrower or to any other liable
party, any modifications or amendments to this Agreement or any documents
securing payment and performance hereof, any act or omission to act by or on
behalf of Bank, any invalidity or unenforceability of security given herefor,
any release, whether intentional, unintentional, or by operation of law, or
security, any release, whether intentional, unintentional or by operation of
law, of a liable party or parties, and all other indulgences of any type which
may be granted by Bank to the Borrower or any party liable herefor, and do also
agree to pay all costs of collection of the indebtedness evidenced hereby,
including reasonable attorneys' fees which may be incurred in connection
therewith.
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10.7 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower and all terms and provisions, covenants and conditions and
agreements to be performed by the Borrower herein and in any of the other Loan
Documents shall be true and satisfied at the time of the delivery of this
Agreement and shall survive the execution and delivery of this Agreement.
10.8 ENTIRE AGREEMENT. This Agreement and the other Loan Documents,
together with the commitment letter attached hereto, contain the entire
agreement of the parties hereto and thereto with respect to the matters
discussed herein and therein. This Agreement may not be altered or amended
except by agreement in writing signed by the parties.
10.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be an original and all of which shall
constitute one agreement.
10.10 REPLACEMENT NOTES. Upon receipt of an affidavit of an officer of Bank
as to the loss, theft, destruction or mutilation of the Note or any other
security document which is not of public record, and, in the case of any such
loss, theft, destruction or mutilation, upon surrender and cancellation of such
Note or other security document. Borrower will issue, in lieu thereof, a
replacement Note or other security document in the same principal amount thereof
and otherwise of like tenor.
10.11 BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS. (a) This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, provided that
Borrower may not assign or transfer any of its interest hereunder without the
prior written consent of the Lender.
(b) Lender may make, carry or transfer loans at, to or for the
account of, any of its branch offices or the office of an affiliate of Lender.
(c) Lender may assign all or a portion of its interests, rights
and obligations under this Agreement (including all or a portion of its
commitments and the Loans at the time owing to it and the Note held by it) to
any financial institution whether as a direct assignment of all or any portion
hereof or the sale of a participation interest or interests herein.
(d) Lender may at any time pledge all or any portion of its
rights under the Loan Documents including any portion of the Note to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release Lender from its obligations under any of the Loan Documents.
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(e) Lender shall have the unrestricted right at any time or from time
to time, and without Borrower's consent, to assign all or any portion of its
respective rights and obligations hereunder to one or more banks or other
financial institutions (each, an "Assignee"), and Borrower agrees that it shall
execute, or cause to be executed, such documents, including, without limitation,
amendments to this Agreement and to any other documents, instruments and
agreements executed in connection herewith as Lender shall deem necessary to
effect the foregoing. In addition, at the request of Lender and any such
Assignee, Borrower shall issue one or more new promissory notes, as applicable,
to any such Assignee and, if Lender has retained any of its rights and
obligations hereunder following such assignment, to such Lender, which new
promissory notes shall be issued in replacement of, but not in discharge of, the
liability evidenced by the promissory note held by such Lender prior to such
assignment and shall reflect the amount of the respective commitments and loans
held by such Assignee and Lender after giving effect to such assignment. Upon
the execution and delivery of appropriate assignment documentation, amendments
and any other documentation required by Lender in connection with such
assignment, and the payment by Assignee of the purchase price agreed to by such
Lender, such Assignee shall be a party to this Agreement and shall have all of
the rights and obligations of Lender hereunder (and under any and all other
guaranties, documents, instruments and agreements executed in connection
herewith) to the extent that such rights and obligations have been assigned by
Lender pursuant to the assignment documentation between Lender and such
Assignee, and such Lender shall be released from its obligations hereunder and
thereunder to a corresponding extent.
(f) Lender shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to Borrower, to grant to one
or more banks or other financial institutions (each, a "Participant") a
participation interest in Lender's obligation to lend hereunder and/or any or
all of the Loans held by Lender hereunder. In the event of any such grant by
Lender of a participation interest to a Participant, whether or not upon notice
to Borrower, such Lender shall remain responsible for the performance of its
obligations hereunder and Borrower shall continue to deal solely and directly
with Lender in connection with such Lender's rights and obligations hereunder.
(g) The Lender may furnish any information concerning Borrower in its
possession from time to time to prospective Assignees and Participants, provided
that such Lender shall require any such prospective Assignee or Participant to
agree in writing to maintain the confidentiality of such information.
10.12 NO ORAL PROMISES. UNDER MAINE LAW, NO PROMISE, CONTRACT OR AGREEMENT
TO LEND MONEY, EXTEND CREDIT, FOREBEAR FROM COLLECTION OF A DEBT OR MAKE ANY
OTHER ACCOMMODATION FOR THE REPAYMENT OF A DEBT FOR MORE THAN $250,000 MAY BE
ENFORCED
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IN COURT AGAINST A BANK UNLESS THE PROMISE, CONTRACT OR AGREEMENT IS IN WRITING
AND SIGNED BY THE BANK. ACCORDINGLY, BORROWER CANNOT ENFORCE ANY ORAL PROMISE
UNLESS IT IS CONTAINED IN LOAN DOCUMENTS SIGNED BY THE BANK NOR CAN ANY CHANGE,
FORBEARANCE, OR OTHER ACCOMMODATION RELATING TO THE OBLIGATIONS, THE NOTES OR
ANY OTHER OF THE LOAN DOCUMENTS BE ENFORCED, UNLESS IT IS IN WRITING AND SIGNED
BY THE BANK. BORROWER ALSO UNDERSTANDS AND AGREES THAT ALL FUTURE PROMISES,
CONTRACTS OR AGREEMENTS OF THE BANK RELATING TO ANY OTHER TRANSACTION BETWEEN IT
AND THE BANK CANNOT BE ENFORCED IN COURT UNLESS THEY ARE IN WRITING AND SIGNED
BY THE BANK. BY EXECUTION OF THIS AGREEMENT AND THE NOTES, BORROWER HEREBY
ACKNOWLEDGES AND AGREES THAT THE REQUIREMENT OF A WRITING DESCRIBED IN THIS
PARAGRAPH SHALL APPLY TO THIS NOTE, THE OBLIGATIONS, THE LOAN DOCUMENTS, ANY
EXTENSION, MODIFICATION, RENEWAL, FORBEARANCE OR OTHER ACCOMMODATION RELATING
HERETO OR THERETO AND TO ANY OTHER CREDIT RELATIONSHIP BETWEEN BORROWER AND THE
BANK (WHETHER NOW EXISTING OR CREATED IN THE FUTURE), WHETHER OR NOT THE AMOUNT
INVOLVED EXCEEDS $250,000.
10.13 JURY WAIVER. BOTH BANK AND BORROWER AND THEIR SUCCESSORS KNOWINGLY,
VOLUNTARILY AND MUTUALLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING RELATING TO THE TRANSACTIONS UNDER THIS AGREEMENT, ANY ALLEGED ORAL
OR WRITTEN COMMITMENT BY THE BANK, OR ANY COLLECTION PROCEEDINGS WITH RESPECT TO
THIS AGREEMENT.
[The remainder of this page has intentionally been
left blank. The next page is the signature page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
WITNESS:
BRUNSWICK TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- ------------------------------------
Its: Chief Financial Officer
------------------------------------
FLEET BANK OF MAINE
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------- ------------------------------------
Its: Vice President
------------------------------------
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EXHIBIT/SCHEDULE INDEX
EXHIBIT NO. DESCRIPTION
---------- -----------
A $4,000,000 Revolving Loan Note
B Compliance Certificate
SCHEDULE NO. DESCRIPTION
----------- -----------
1.1 Obligations
4.10 Subsidiaries; Affiliates
6.1(g) Indebtedness
6.4 Investments