TERM LOAN AGREEMENT
THIS LOAN AGREEMENT (this “ Agreement ”) dated as of December 15, 2009 is by and between
RBS Citizens, National Association, successor by merger to Citizens Bank of Massachusetts, with its principal
address at 28 State Street, Boston, Massachusetts 02110 (the “ Bank ”); and Chase Corporation, a
Massachusetts corporation with its principal address at 26 Summer Street, Bridgewater, Massachusetts 02324
(the “ Borrower ”). Certain capitalized terms used herein without definition in the text where utilized are defined
in Article 12 hereof.
Whereas, the Borrower desires to obtain a $7,000,000 term loan from the Bank.
Whereas, the Bank is willing to provide such term loan as contemplated above, subject to the terms and
conditions of this Agreement.
Now therefore , the parties hereto, intending to be legally bound, and in consideration of the foregoing
and the mutual covenants contained herein, hereby agree as follows:
Section 1. Term Loan Amount and Terms
1.1 Loan Amount . Pursuant to this Agreement, the Bank agrees to provide as of the date hereof an
unsecured term loan to the Borrower in the amount of Seven Million Dollars ($7,000,000) (the “ Loan ”).to be
evidenced by a certain Term Note (the “ Note ”) of even date herewith by Borrower to the Bank in the original
principal amount of the Commitment. The Term Loan shall provide funding for the acquisition of the business of
Servi-wrap pipe coatings and Henkel Teroson Bautechnik construction waterproofing tapes private label
business carried on by Grace Construction Products Limited, a limited company incorporated in England and
Wales with company number 00614807 (the “ Target ”), as of the date of such acquisition (the “ Target
Assets ”) by Borrower.
1.2 Availability Period . The loan is available from the Bank on or about the date of this Agreement as a
1.3 Repayment Terms .
(a) The Borrower will make monthly interest and principal payments under the Loan as set forth in
the Note. The Loan shall mature three (3) years after the date of this Agreement upon which
date the entire remaining balance of the Loan, if any, shall be immediately due and payable.
(b) The Borrower may prepay the Loan in full or in part at any time. The prepayment will be
applied to the most remote payment of principal due under this Agreement.
1.4 Cross-Default . The Loan shall be cross-defaulted with all other obligations of Borrower (and its
Subsidiaries to the Bank, Bank of America, N.A., its successors and assigns (“ BoA ”) and any other lenders of
Borrower and its Subsidiaries. If, at any time during the term of this Agreement and notwithstanding the maturity
date set forth in the Note, an event of default shall exist under any of such Borrower’s obligations, Bank shall be
entitled, at Bank’s sole election, to accelerate the Note and demand full payment of any outstanding balances due
Section 2. Fees And Expenses
2.1 Loan Fee . The Borrower agrees to pay a loan fee in the amount of 0.4% of the Loan Amount. This
fee is due on the date of this Agreement.
2.2 Waiver Fee . If the Bank, at its discretion, agrees to waive or amend any terms of this Agreement, the
Borrower will, at the Bank’s option, pay the Bank a fee for each waiver or amendment in an amount advised by
the Bank at the time the Borrower requests the waiver or amendment. Nothing in this paragraph shall imply that
the Bank is obligated to agree to any waiver or amendment requested by the Borrower. The Bank may impose
additional requirements as a condition to any waiver or amendment.
2.3 Expenses . The Borrower agrees to immediately repay the Bank for expenses that include, but are not
limited to, filing, recording and search fees, appraisal fees, title report fees, and documentation fees.
2.4 Reimbursement Costs . The Borrower agrees to reimburse the Bank for any expenses it incurs in the
preparation of this Agreement and any agreement or instrument required by this Agreement. Expenses include,
but are not limited to, reasonable attorneys’ fees, including any allocated costs of the Bank’s in-house counsel to
the extent permitted by applicable law.
Section 3. Disbursements, Payments And Costs
3.1 Disbursements and Payments .
(a) Each payment by the Borrower will be made in U.S. Dollars and immediately available funds by
debit to a deposit account, as described in this Agreement or otherwise authorized by the
Borrower. For payments not made by direct debit, payments will be made by mail to the
address shown on the Borrower’s statement or at one of the Bank’s banking centers in the
United States, or by such other method as may be permitted by the Bank.
(b) The Bank may honor instructions for advances or repayments given by any one of the
individuals authorized to sign loan agreements on behalf of the Borrower, or any other individual
designated by any one of such authorized signers (each an “ Authorized Individual ”).
(c) For any payment under this Agreement made by debit to a deposit account, the Borrower will
maintain sufficient immediately available funds in the deposit account to cover each debit. If there
are insufficient immediately available funds in the deposit account on the date the Bank enters any
such debit authorized by this Agreement, the Bank may reverse the debit.
(d) Each disbursement by the Bank and each payment by the Borrower will be evidenced by
records kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to
sign one or more promissory notes.
3.2 Banking Days . Unless otherwise provided in this Agreement, a banking day is a day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close, or are in fact closed, in the
state where the Bank’s lending office is located, and, if such day relates to amounts bearing interest at an offshore
rate (if any), means any such day on which dealings in dollar deposits are conducted among banks in the offshore
dollar interbank market. All payments and disbursements which would be due on a
day which is not a banking day will be due on the next banking day. All payments received on a day which is not
a banking day will be applied to the credit on the next banking day.
3.3 Taxes . If any payments to the Bank under this Agreement are made from outside the United States,
the Borrower will not deduct any foreign taxes from any payments it makes to the Bank. If any such taxes are
imposed on any payments made by the Borrower (including payments under this paragraph), the Borrower will
pay the taxes and will also pay to the Bank, at the time interest is paid, any additional amount which the Bank
specifies by Bank Certificate as necessary to preserve the after-tax yield the Bank would have received if such
taxes had not been imposed. The Borrower will confirm that it has paid the taxes by giving the Bank official tax
receipts (or notarized copies) within thirty (30) days after the due date.
Section 4. Conditions. Before the Bank is required to extend any credit to the Borrower under the Note, it
must receive any documents and other items it may reasonably require, in form and content acceptable to the
Bank, including any items specifically listed below.
4.1 Authorizations . If the Borrower or any guarantor is anything other than a natural person, evidence that
the execution, delivery and performance by the Borrower and/or such guarantor of this Agreement and any
instrument or agreement required under this Agreement have been duly authorized.
4.2 Governing Documents . A copy of the Borrower’s and each Guarantors’ organizational documents.
4.3 Guarantees . Guarantees signed by each of the Guarantors and in forms reasonably acceptable to the
Bank (the “ Guarantees ”).
4.4 Absence of Liens . Evidence satisfactory to the Bank that there are no liens or encumbrances on assets
of the Borrower or any Guarantor except those that have been approved by the Bank in writing.
4.5 Payment of Fees . Payment of all fees and other amounts due and owing to the Bank, including without
limitation payment of all accrued and unpaid expenses incurred by the Bank as required by the paragraph entitled
4.6 Good Standing . Certificates of good standing for the Borrower and each Guarantor from its
jurisdiction of formation and from any other jurisdiction in which the Borrower or such Guarantor is required to
qualify to conduct its business.
4.7 Legal Opinion . A written opinion from Mundays LLP, the Borrower’s legal counsel, covering such
matters as the Bank may require. The terms of the opinion must be acceptable to the Bank.
4.8 Insurance . Evidence of insurance coverage, as required in the “Covenants” section of this Agreement.
4.9 Acquisition; Information to be provided to Bank . Although this Loan is unsecured, Bank is making this
Loan to provide financing for the simultaneous lien-free acquisition by a wholly-owned subsidiary of Borrower of
the Target Assets (the “ Acquisition ”). It shall therefore be a condition of the Bank advancing funds under this
Agreement that such funds shall be used for the Acquisition. Borrower shall be required to provide Bank with a
copy of the purchase agreement, copies of all proposed and then executed transfer documentation and evidence
of the completion of the Acquisition simultaneously with the execution of this Agreement.
4.10 Other Required Documentation . Submission to the Bank of the definitive purchase agreement relating
to the purchase of all of the Target Assets, together with such other documents as the Bank or its counsel may
4.11 Additional Conditions to Loan . The making of the Loan under this Agreement is conditioned upon the
following: (i) the Borrower’s representations and warranties herein shall be true and correct as of the date of the
Loan; (ii) there shall exist no Event of Default nor any event which, with notice or lapse of time or both, would
become such an Event of Default; (iii) there shall have occurred no material adverse change in the financial
condition, business or prospects of the Borrower; (iv) if it shall have so requested, the Bank shall have received a
certificate signed by the President and Secretary of the Borrower as to the foregoing; and (v) Borrower shall
have obtained the written consent of BoA to enter into this Agreement if required under the loan documents
entered into between Borrower and BoA. Its acceptance of the Loan shall constitute the Borrower’s
representation and warranty to the effect set forth in clauses (i), (ii) and (iii) above.
Section 5. Representations And Warranties. When the Borrower signs this Agreement, and until the Bank
is repaid in full, the Borrower makes the following representations and warranties. Each request for an extension
of credit constitutes a renewal of these representations and warranties as of the date of the request.
5.1 Formation . The Borrower and each Guarantor has been duly formed and existing under the laws of the
state or other jurisdiction where organized.
5.2 Authorization . This Agreement, and any instrument or agreement required hereunder, are within the
Borrower’s and the respective Guarantor’s powers, have been duly authorized, and do not conflict with any of its
5.3 Enforceable Agreement . This Agreement is a legal, valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms, and any instrument or agreement required
hereunder, when executed and delivered, will be similarly legal, valid, binding and enforceable against the
Borrower or as it may appear to be a party thereto, each Guarantor.
5.4 Good Standing . In each state in which the Borrower or any Guarantor does business, it is properly
licensed, in good standing, and, where required, in compliance with fictitious name statutes.
5.5 No Conflicts . This Agreement does not conflict with any law, agreement, or obligation by which the
Borrower or any Guarantor is bound.
5.6 Financial Information . All financial and other information that has been or will be supplied to the Bank
is sufficiently complete to give the Bank accurate knowledge of the Borrower’s consolidated and consolidating
financial condition, including all material contingent liabilities. Since the date of the most recent financial statement
provided to the Bank, there has been no material adverse change in the business condition (financial or
otherwise), operations, properties or prospects of the Borrower or its subsidiaries, individually or collectively.
5.7 Lawsuits . There is no lawsuit, tax claim or other dispute pending or threatened against the Borrower
or any Guarantor which, if lost, would impair the Borrower’s or such Guarantor’s financial condition or ability to
repay the Loan evidenced by the Note, except as have been disclosed in writing to the Bank.
5.8 Permits, Franchises . The Borrower and each Guarantor possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name rights, patent rights, copyrights,
and fictitious name rights necessary to enable it to conduct the business in which it is now engaged.
5.9 Other Obligations . Neither the Borrower nor any Guarantor is in default on any obligation for
borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument
or obligation, except as have been disclosed in writing to the Bank.
5.10 Tax Matters . Neither the Borrower nor any Guarantor has knowledge of any pending assessments or
adjustments of its income tax for any year and all taxes due have been paid, except as have been disclosed in
writing to the Bank.
5.11 No Event of Default . There is no event which is, or with notice or lapse of time or both would be, a
default under this Agreement.
5.12 Insurance . The Borrower has obtained, and maintained in effect, the insurance coverage required in
the “Covenants” section of this Agreement.
5.13 ERISA Plans .
(a) Each Plan (other than a multiemployer plan) is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each Plan has
received a favorable determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification. The Borrower
has fulfilled its obligations, if any, under the minimum funding standards of ERISA and the Code
with respect to each Plan, and has not incurred any liability with respect to any Plan under Title
IV of ERISA.
(b) There are no claims, lawsuits or actions (including by any governmental authority), and there has
been no prohibited transaction or violation of the fiduciary responsibility rules, with respect to any
Plan which has resulted or could reasonably be expected to result in a material adverse effect.
(c) With respect to any Plan subject to Title IV of ERISA:
(i) No reportable event has occurred under Section 4043(c) of ERISA for which the
PBGC requires 30-day notice.
(ii) No action by the Borrower or any ERISA Affiliate to terminate or withdraw from any
Plan has been taken and no notice of intent to terminate a Plan has been filed under
Section 4041 of ERISA.
(iii) No termination proceeding has been commenced with respect to a Plan under
Section 4042 of ERISA, and no event has occurred or condition exists which might
constitute grounds for the commencement of such a proceeding.
(d) The following terms have the meanings indicated for purposes of this Agreement:
(i) “ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
(ii) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
(iii) “ ERISA Affiliate ” means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of the
(iv) “ PBGC ” means the Pension Benefit Guaranty Corporation.
(v) “ Plan ” means a pension, profit-sharing, or stock bonus plan intended to qualify under
Section 401(a) of the Code, maintained or contributed to by the Borrower or any
ERISA Affiliate, including any multiemployer plan within the meaning of Section 4001(a)
(3) of ERISA.
5.14 Location of Borrower . The place of business of the Borrower (or, if the Borrower has more than one
place of business, its chief executive office) is located at the address listed on the signature page of this
Section 6. Affirmative Covenants. The Borrower agrees, so long as credit is available under this Agreement
and until the Bank is repaid in full:
6.1 Use of Proceeds . To use the proceeds of the Loan only for financing of the Acquisition.
6.2 Legal Existence; Qualification; Compliance . The Borrower will maintain (and will cause each
Subsidiary of the Borrower to maintain) its corporate existence and good standing in the jurisdiction of its
formation. The Borrower will qualify to do business and will remain qualified and in good standing (and the
Borrower will cause each Subsidiary of the Borrower to qualify and remain qualified and in good standing) in
each other jurisdiction where the failure so to qualify could (singly or in the aggregate with all other such failures)
have a Material Adverse Effect. The Borrower will comply in all material respects with (and will cause each
Subsidiary of the Borrower to comply with) its charter documents and by-laws. The Borrower will comply with
(and will cause each Subsidiary of the Borrower to comply with) all applicable laws, rules and regulations
(including, without limitation, ERISA and those relating to environmental protection) other than (a) laws, rules or
regulations the validity or applicability of which the Borrower or such Subsidiary shall be contesting in good faith
by proceedings which serve as a matter of law to stay the enforcement thereof and (b) those laws, rules and
regulations to failure to comply with any of which could not (singly or in the aggregate) have a Material Adverse
6.3 Maintenance of Property; Insurance . Subject to §7.8, the Borrower will maintain and preserve (and
will cause each Subsidiary of the Borrower to maintain and preserve) all of its properties in good working order
and condition, making all necessary repairs thereto and replacements thereof. The Borrower will maintain (and
will cause each of its Subsidiaries to maintain) insurance with respect to its property and business against such
liabilities, casualties and contingencies and of such types and in such amounts as shall be reasonably satisfactory
to the Bank from time to time and in any event all such insurance as may from time to time be customary for
companies conducting a business similar to that of the Borrower in similar locales.
6.4 Payment of Taxes and Charges . The Borrower will pay and discharge (and will cause each Subsidiary
of the Borrower to pay and discharge) all taxes, assessments and governmental charges or levies imposed upon it
or upon its income or property, including, without limitation, taxes, assessments, charges or levies relating to real
and personal property, franchises, income, unemployment, old age benefits, withholding, or sales or use, prior to
the date on which penalties would attach thereto, and all
lawful claims (whether for any of the foregoing or otherwise) which, if unpaid, might give rise to a lien upon any
property of the Borrower or any such Subsidiary, except any of the foregoing which is being contested in good
faith and by appropriate proceedings which serve as a matter of law to stay the enforcement thereof and for
which the Borrower has established and is maintaining adequate reserves. The Borrower will maintain in full
force and effect, and comply with the terms and conditions of, all permits, permissions and licenses necessary or
desirable for its business.
6.5 Accounts . The Borrower will maintain depository accounts with the Bank.
6.6 Conduct of Business . The Borrower will conduct, in the ordinary course, the business in which it is
presently engaged. The Borrower will not, without the prior written consent of the Bank, directly or indirectly
(itself or through any Subsidiary) enter into any other lines of business, businesses or ventures which are not
reasonably related to the business in which the Borrower is presently engaged.
6.7 Reporting Requirements . The Borrower will furnish to the Bank:
(a) Within 90 days after the end of each fiscal year of the Borrower, a copy of the annual audit
report for such fiscal year for the Borrower, including therein consolidated balance sheets of the
Borrower and Subsidiaries as at the end of such fiscal year and related consolidated statements
of income, stockholders’ equity and cash flow for the fiscal year then ended. The annual
consolidated financial statements shall be certified by independent public accountants selected by
the Borrower and reasonably acceptable to the Bank (which acceptable accountants shall include
PricewaterhouseCoopers) such certification to be in such form as is generally recognized as
“unqualified”. The Borrower will also deliver to the Bank, within 90 days following the end of
each fiscal year, an annual budget for the following year (including income statement projections)
for the Borrower, prepared by the Borrower’s management and approved by the Borrower’s
Board of Directors, such budget to be in such detail as is reasonably satisfactory to the Bank.
(b) Within 45 days after the end of each fiscal quarter of the Borrower, consolidated balance sheets
of the Borrower and Subsidiaries and related consolidated statements of income and cash flow,
unaudited but prepared in accordance with generally accepted accounting principles consistently
applied fairly presenting the financial condition of the Borrower and Subsidiaries as at the dates
thereof and for the periods covered thereby and certified as complete by the chief financial officer
of the Borrower, such balance sheets to be as at the end of such fiscal quarter and such
statements of income and cash flow to be for such fiscal quarter and for the fiscal year to date, in
each case together with a comparison to the results for the corresponding fiscal period of the
immediately prior fiscal year.
(c) At the time of delivery of each annual or quarterly report or financial statement of the Borrower,
a certificate executed by the chief financial officer of the Borrower stating that he or she has
reviewed this Agreement and the other Loan Documents and has no knowledge of any Event of
Default or, if he or she has such knowledge, specifying each such Event of Default and the nature
thereof. Each such certificate given as at the end of any fiscal quarter of the Borrower will set
forth the calculations necessary to evidence compliance with §§6.8-6.9.
(d) As soon as possible and in any event within five days after the Borrower has actual knowledge
of the occurrence of any Default or Event of Default, the statement of the
Borrower setting forth details of each such Default or Event of Default and the action which the
Borrower proposes to take with respect thereto.
(e) Promptly after receipt, a copy of all audits or reports submitted to any Company by
independent public accountants in connection with any annual special or interim audit of the
books and records of such Company prepared by such accountants and any “management letter”
prepared by such accountants.
(f) Promptly after the commencement thereof, notice of all actions, suits and proceedings before
any court or governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, to which the Borrower or any Subsidiary of the Borrower is a party.
(g) Promptly upon request, such other information respecting the financial condition, operations and
prospects of the Borrower or any Subsidiary as the Bank may from time to time reasonably
6.8 Total Liabilities to Tangible Net Worth Ratio . The Borrower shall maintain a ratio of Total Liabilities to
Tangible Net Worth not exceeding 2.00:1.00 to be tested at the end of each fiscal quarter of Borrower.
6.9 Debt Service Coverage Ratio . For the twelve month period ending on each May 31, August 31,
November 30 and February 28(29), the Borrower will not permit the ratio of Operating Cash Flow to Debt
Service to be less than 1.25:1.00.
6.10 Books and Records; Inspections . The Borrower will maintain (and will cause each of its Subsidiaries
to maintain) complete and accurate books, records and accounts which will at all time accurately and fairly reflect
all of its transactions in accordance with generally accepted accounting principles consistently applied. The
Borrower will, at any reasonable time and from time to time upon reasonable notice and during normal business
hours (and without any necessity for notice following the occurrence of an Event of Default), permit the Bank,
and any agent or representatives thereof, to examine and make copies of and take abstracts from the records and
books of account of, and visit the properties of the Borrower and its Subsidiaries, and to discuss its affairs,
finances and accounts with its officers, directors and/or independent accountants, all of whom are hereby
authorized and directed to cooperate with the Bank in carrying out the intent of this §6.10. Each financial
statement of the Borrower hereafter delivered pursuant to this Agreement will be complete and accurate and will
fairly present the financial condition of the Borrower as at the date thereof and for the periods covered thereby;
provided, as to interim statements, that footnotes and the information normally contained therein are not included
and that such statements are subject to year-end adjustments.
Section 7. Negative Covenants. Without limitation of any other covenants and agreements contained herein
or elsewhere, the Borrower agrees that so long as this Agreement remains in effect, and any obligations of the
Borrower shall be outstanding:
7.1 Indebtedness . The Borrower will not create, incur, assume or suffer to exist any Indebtedness (nor
allow any of its Subsidiaries to create, incur, assume or suffer to exist any Indebtedness), except for:
(a) Indebtedness owed to the Bank or existing Indebtedness to BoA, including without limitation
future disbursements for use for working capital, general corporate purposes, letters of credit or
capital expenditures under a certain $10,000,000 demand line of credit from BoA to the
(b) Indebtedness of the Borrower or any Subsidiary for taxes, assessments and governmental
charges or levies not yet due and payable;
(c) unsecured current liabilities of the Borrower or any Subsidiary (other than for money borrowed
or for purchase money Indebtedness with respect to fixed assets) incurred upon customary terms
in the ordinary course of business;
(d) purchase money Indebtedness (including, without limitation, Capital Lease Obligations) hereafter
incurred to equipment vendors, equipment lessor and other Persons providing purchase money
financing to the Borrower for new equipment purchased or leased by the Borrower after the date
hereof for use in the Borrower’s business; provided that the Indebtedness permitted under this
clause (d) of this §7.1 will not exceed $500,000 in the aggregate outstanding at any one time;
(e) other Indebtedness (not described in any of clauses (a)-(d) above) existing at the date hereof,
but only to the extent set forth as item 7.1 of the attached Disclosure Schedule;
(f) any guaranties or other contingent liabilities expressly permitted pursuant to §7.3; and
(g) Any Synthetic Lease, so long as the Bank has previously approved the terms thereof in writing.
7.2 Liens . The Borrower will not create, incur, assume or suffer to exist (nor allow any of its Subsidiaries
to create, incur, assume or suffer to exist) any mortgage, deed of trust, pledge, lien, security interest, or other
charge or encumbrance (including the lien or retained security title of a conditional vendor) of any nature
(collectively, “ Liens ”), upon or with respect to any of its property or assets, now owned or hereafter acquired
(including, without limitation, any trustee process affecting any account of the Borrower with the Bank), except
that the foregoing restrictions shall not apply to:
(a) Liens for taxes, assessments or governmental charges or levies on property of the Borrower or
any of its Subsidiaries if the same shall not at the time be delinquent or thereafter can be paid
without interest or penalty or are being contested in good faith and by appropriate proceedings
which serve as a matter of law to stay any enforcement thereof and as to which adequate
reserves are maintained;
(b) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ liens and other similar
Liens arising in the ordinary course of business for sums not yet due or which are being contested
in good faith and by appropriate proceedings which serve as a matter of law to stay the
enforcement thereof and as to which adequate reserves are maintained;
(c) pledges or deposits under workmen’s compensation laws, unemployment insurance, social
security, retirement benefits or similar legislation;
(d) Liens in favor of the Bank;
(e) Liens in favor of equipment vendors, equipment lessors and other Persons securing any
purchase money Indebtedness permitted by clause (d) of §7.1; provided that no such Lien will
extend to any property of the Borrower other than the specific items of equipment financed;
(f) rights of the licensee under any commercially reasonable license of technology or other
intellectual property given by the Borrower to any of the Borrower’s customers in the ordinary
course of its business;
(g) refinancings, renewals or extensions of any of the foregoing Liens; provided, however, that no
such refinanced, renewed or extended Lien at any time will extend to any property of any
property of any Borrower or any Subsidiary other than the specific assets previously subject to
(h) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary
course of business that, in the aggregate, do not in any case materially detract from the value of
the property subject thereto or materially interfere in the ordinary conduct of the business of the
Borrower or any of its Subsidiaries.
(i) other Liens existing at the date hereof, but only to the extent and with the relative priorities set
forth on item 7.2 of the attached Disclosure Schedule.
7.3 Guaranties . The Borrower will not, without the prior written consent of the Bank, assume, guarantee,
endorse or otherwise become directly or contingently liable (including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise
invest in any debtor or otherwise to assure any creditor against loss) (and will not permit any of its Subsidiaries so
to assume, guaranty or become directly or contingently liable) in connection with any indebtedness of any other
Person, except (a) guaranties by endorsement for deposit or collection in the ordinary course of business, and
(b) guaranties existing at the date hereof and described on item 7.3 of the attached Disclosure Schedule.
7.4 Loans and Advances . The Borrower will not make (and will not permit any Subsidiary to make) any
loans or advances to any Person, including, without limitation, the Borrower’s directors, officers and employees,
except (a) as described on item 7.4 of the attached Disclosure Schedule, (b) so long as no Default then exists,
Affiliate Loans, (c) advances to such directors, officers or employees with respect to expenses incurred by them
in the ordinary course of their duties and advances against salary, all of which loans and advances under this
clause (c) will not exceed, in the aggregate, $100,000 outstanding at any one time, and (d) advances for security
7.5 Subsidiaries; Acquisitions . Other than the Acquisition, which Acquisition is expressly permitted, the
Borrower will not, without the prior written consent of the Bank, make (and will not permit any Subsidiary to
make) any acquisition of all or substantially all of the stock or other Equity Interest of any other Person or of all or
substantially all of the assets of any other Person, other than, any acquisition the purchase price for which does
not exceed $1,000,000. The Borrower will not become a partner in any partnership or limited liability company.
The Borrower will promptly inform the Bank if it forms any Subsidiaries after the date of this Agreement.
7.6 Merger . The Borrower (and its Subsidiaries) will not, without the prior written consent of the Bank,
merge or consolidate with any Person, or sell, lease, transfer or otherwise dispose of (whether in one or more
transactions) any material portion of its assets (including, without limitation, any material portion of its intellectual
property), other than (a) in a sale of inventory in the ordinary course; and (b) licensing of any of its intellectual
property in the ordinary course of Borrower’s business to another Person on commercially reasonable terms.
7.7 Affiliate Transactions . Except for transactions described on item 7.7 of the attached Disclosure
Schedule, the Borrower will not, without the prior written consent of the Bank, enter into any transaction,
including, without limitation, the purchase, sale or exchange of any property or the rendering of any service, with
any Affiliate of the Borrower, except in the ordinary course and pursuant to the reasonable requirements of the
Borrower’s business and upon fair and reasonable terms no less favorable to the Borrower than would be
obtained in a comparable arms’-length transaction with any Person not an Affiliate; provided that nothing in this
§7.7 shall be deemed to restrict the payment of salary or other similar payments to any officer or director of the
Borrower at a level consistent with the salary and other payments being paid at the date of this Agreement and
heretofore disclosed in writing to the Bank, nor to prevent the hiring of additional officers at a salary level
consistent with industry practice, nor to prevent reasonable periodic increases in salary or benefits.
7.8 Change of Structure, etc . The Borrower will not change its corporate name or legal structure, nor will
the Borrower change its fiscal year or materially change its methods of financial reporting unless, in each instance,
prior written notice of such change is given to the Bank and prior to such change the Borrower enters into
amendments to this Agreement in form and substance reasonably satisfactory to the Bank in order to preserve
unimpaired the rights of the Bank and the obligations of the Borrower hereunder.
7.9 Hazardous Waste . Except as provided below, the Borrower will not dispose of or suffer or permit to
exist any hazardous material or oil on any site or vessel owned, occupied or operated by the Borrower or any
Subsidiary of the Borrower, nor shall the Borrower store (or permit any Subsidiary to store) on any site or vessel
owned, occupied or operated by the Borrower or any such Subsidiary, or transport or arrange the transport of,
any hazardous material or oil (the terms “hazardous material”, “oil” and “vessel”, respectively, being used herein
with the meanings given those terms in Mass. Gen. Laws. Ch. 21E or any comparable terms in any comparable
statute in effect in any other relevant jurisdiction). The Borrower shall provide the Bank with written notice of
(i) the intended storage or transport of any hazardous material or oil by the Borrower or any Subsidiary of the
Borrower, (ii) any potential or known release or threat of release of any hazardous material or oil at or from any
site or vessel owned, occupied or operated by the Borrower or any Subsidiary of the Borrower, and (iii) any
incurrence of any expense or loss by any government or governmental authority in connection with the
assessment, containment or removal of any hazardous material or oil for which expense or loss the Borrower or
any Subsidiary of the Borrower may be liable. Notwithstanding the foregoing, the Borrower and its Subsidiaries
may use, store and transport, and need not notify the Bank of the use, storage or transportation of, (x) oil in
reasonable quantities, as fuel for heating of their respective facilities or for vehicles or machinery used in the
ordinary course of their respective businesses and (y) hazardous materials that are solvents, cleaning agents or
other materials used in the ordinary course of the respective business operations of the Borrower and its
Subsidiaries in reasonable quantities, as long as in any case the Borrower of the Subsidiary concerned (as the
case may be) has obtained and maintains in effect any necessary governmental permits, licenses and approvals,
complies with all requirements of applicable federal, state and local law relating to such use, storage or
transportation, follows the protective and safety procedures that a prudent businessperson conducting a business
the same as or similar t o that of the Borrower or such Subsidiary (as the case may be) would follow, and
disposes of such materials (not consumed in the ordinary course) only through licensed providers of hazardous
waste removal services.
7.10 No Margin Stock . No proceeds of the Loan shall be used directly or indirectly to purchase or carry
any margin security.
7.11 Negative Pledges . The Borrower will not enter into (and will not permit any of its Subsidiaries to enter
into) any agreement, amendment or arrangement (excluding this Agreement or any other Loan Document or any
loan document with BoA) prohibiting or restricting (a) such Person from amending or otherwise modifying this
Agreement or any other Loan Document, (b) the creation or assumption of any
Liens upon its properties, revenues or assets, whether now owned or hereafter acquired or (c) the ability of any
such Person to make any payment or distribution, directly or indirectly, to the Borrower.
Section 8. Default And Remedies.
8.1 If any Events of Default (as defined below) occurs, the Bank may do one or more of the following:
declare the Borrower in default, stop making any additional credit available to the Borrower, and require the
Borrower to repay its entire debt immediately and without prior notice. If an event which, with notice or the
passage of time, will constitute an Event of Default has occurred, the Bank has no obligation to make advances or
extend additional credit under this Agreement. In addition, if any Event of Default occurs, the Bank shall have all
rights, powers and remedies available under any instruments and agreements required by or executed in
connection with this Agreement, as well as all rights and remedies available at law or in equity. If an Event of
Default occurs under the paragraph entitled “Bankruptcy,” below, with respect to the Borrower, then the entire
debt outstanding under this Agreement will automatically be due immediately.
8.2 The occurrence of any one of the following events shall constitute an event of default (each an “ Event
of Default ”) hereunder:
(a) The Borrower shall (i) fail to make any payment of interest within five (5) days of the date when
due or (ii) fail to make any payment of principal hereunder or under any obligation to the Bank on
or before the date when due; or
(b) Any representation or warranty of the Borrower contained herein shall at any time prove to have
been incorrect in any material respect when made or any representation or warranty made by the
Borrower in connection with the Loan shall at any time prove to have been incorrect in any
material respect when made; or
(c) The Borrower shall default in the performance or observance of any agreement or obligation
under §§6.2, 6.7, 6.8, 6.9 and 6.10 or any provision of Article 7 hereof; or
(d) The Borrower shall default in the performance of any other term, covenant or agreement
contained in this Agreement (ie., other than subsections 8.2(a), (b) and (c) above) and such
default shall continue unremedied for 30 days after written notice thereof shall have been given to
the Borrower unless a different cure period or no cure period is otherwise specified or if Lender
deems such default to not be reasonably susceptible to cure , or
(e) Any default on the part of the Borrower or any Subsidiary of the Borrower shall exist, and shall
remain unwaived or uncured beyond the expiration of any applicable notice and/or grace period,
under any other contract, agreement or undertaking now existing or hereafter entered into with or
for the benefit of the Bank (or any affiliate of the Bank), including without limitation, any Hedging
Obligation (as defined in Rider A to the Note); or
(f) Any other Indebtedness of the Borrower or any Subsidiary of the borrower for borrowed
money or representing the deferred purchase price of any property in excess of $500,000 in
aggregate principal amount or with respect to any instrument evidencing, guaranteeing, securing
or otherwise relating to any such Indebtedness shall have been declared to be due and payable
prior to its stated maturity or shall not have been paid at the stated maturity thereof; or
(g) The Borrower shall be dissolved or the Borrower or any Subsidiary of the Borrower shall
become insolvent or bankrupt or shall cease paying its debts as they mature or shall make an
assignment for the benefit of creditors, or a trustee, receiver or liquidator shall be appointed for
the Borrower or any Subsidiary of the Borrower or for a substantial part of the property of the
Borrower or any such Subsidiary, or bankruptcy, reorganization, arrangement, insolvency or
similar proceedings shall be instituted by or against the Borrower or any such Subsidiary under
the laws of any jurisdiction (except for an involuntary proceeding filed against the Borrower or
any Subsidiary of the Borrower which is dismissed within 90 days following the institution
(h) Any execution or similar process shall be issued or levied against any material part of the
property of the Borrower or any Subsidiary and such execution or similar process shall not be
paid, stayed, released, vacated or fully bonded within 10 days after its issue or levy; or
(i) Any final uninsured judgment in excess of $500,000 shall be entered against any Borrower or
any Subsidiary of the borrower by any court of competent jurisdiction and shall remain unpaid,
unbonded or unstayed for a period of 60 days; or
(j) The Borrower or any Subsidiary of the Borrower shall fail to meet its minimum funding
requirements under ERISA with respect to any employee benefit plan (or other class of benefit
which the PBGC has elected to insure) or any such plan shall be the subject of termination
proceedings (whether voluntary or involuntary) and there shall result from such termination
proceedings a liability of the borrower or any Subsidiary of the Borrower to the PBGC which, in
each case, in the reasonable opinion of the Bank may have material adverse effect upon the
financial condition of the Borrower or any such Subsidiary; or
(k) Any Loan Document shall for any reason (other than due to payment in full of all amounts
evidenced thereby or due to discharge in writing by the Bank) not remain in full force and effect;
(l) Any Subsidiary of the Borrower shall cease to be a direct or indirect wholly-owned Subsidiary.
Section 9. Enforcing This Agreement; Miscellaneous
9.1 Rights and Remedies on Default . Upon the occurrence of any Event of Default, in addition to any other
rights and remedies available to the Bank hereunder or otherwise, the Bank may exercise any one or more of the
following rights and remedies (all of which shall be cumulative):
(a) Declare the entire unpaid principal amount due under this Agreement and then outstanding, all
interest accrued and unpaid thereon and all other amounts payable under this Agreement, and all
other Indebtedness of the Borrower to the Bank, to be forthwith due and payable, whereupon
the same shall become forthwith due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the Borrower.
(b) Exercise all rights and remedies hereunder and under each and any other agreement with the
Bank, and exercise all other rights and remedies which the Bank may have under applicable law.
9.2 Set-off . Borrower hereby grants to Bank, a continuing lien, security interest and right of setoff as
security for all liabilities and obligations to Bank, 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 RBS Citizens, National Association or its affiliates and its successors and
assigns or in transit to any of them, At any time, without demand or notice (any such notice being expressly
waived by Borrower), Bank may setoff the same or any part thereof and apply the same to any liability or
obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral. ANY
AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS PRIOR
TO THE EXERCISE BY THE BANK OF ITS RIGHT OF SET-OFF UNDER THIS SECTION ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
9.3 GAAP . Except as otherwise stated in this Agreement, all financial information provided to the Bank
and all financial covenants will be made under generally accepted accounting principles, consistently applied.
9.4 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of
The Commonwealth of Massachusetts. To the extent that the Bank has greater rights or remedies under federal
law, whether as a national bank or otherwise, this paragraph shall not be deemed to deprive the Bank of such
rights and remedies as may be available under federal law.
9.5 Successors and Assigns . This Agreement is binding on the Borrower’s and the Bank’s successors and
assignees. The Borrower agrees that it may not assign this Agreement without the Bank’s prior consent. The
Bank may sell participations in or assign this Loan, and may exchange information about the Borrower or any
Subsidiary (including, without limitation, any information regarding any hazardous substances) with actual or
potential participants or assignees. If a participation is sold or the Loan is assigned, the purchaser will have the
right of set-off against the Borrower and any Guarantor.
9.6 Dispute Resolution Provision . This paragraph, including the subparagraphs below, is referred to as the
“Dispute Resolution Provision.” This Dispute Resolution Provision is a material inducement for the parties
entering into this agreement.
(a) This Dispute Resolution Provision concerns the resolution of any controversies or claims
between the parties, whether arising in contract, tort or by statute, including but not limited to
controversies or claims that arise out of or relate to: (i) this agreement (including any renewals,
extensions or modifications); or (ii) any document related to this agreement (collectively a “
Claim ”). For the purposes of this Dispute Resolution Provision only, the term “parties” shall
include any parent corporation, subsidiary or affiliate of the Bank involved in the servicing,
management or administration of any obligation described or evidenced by this agreement.
(b) At the request of any party to this agreement, any Claim shall be resolved by binding arbitration
in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “ Act ”). The Act will
apply even though this agreement provides that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the then-current
rules and procedures for the arbitration of financial services disputes of the American Arbitration
Association or any successor thereof (“ AAA ”), and the terms of this Dispute Resolution
Provision. In the event of any inconsistency, the terms of this Dispute
Resolution Provision shall control. If AAA is unwilling or unable to (i) serve as the provider of
arbitration or (ii) enforce any provision of this arbitration clause, the Bank may designate another
arbitration organization with similar procedures to serve as the provider of arbitration.
(d) The arbitration shall be administered by AAA and conducted, unless otherwise required by law,
in any U.S. state where real or tangible personal property collateral for this credit is located or if
there is no such collateral, in the state specified in the governing law section of this agreement. All
Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars
($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators.
All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and
close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued
within thirty (30) days of the close of the hearing. However, the arbitrator(s), upon a showing of
good cause, may extend the commencement of the hearing for up to an additional sixty (60)
days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The
arbitration award may be submitted to any court having jurisdiction to be confirmed and have
judgment entered and enforced.
(e) The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may
dismiss the arbitration on the basis that the Claim is barred. For purposes of the application of
any statutes of limitation, the service on AAA under applicable AAA rules of a notice of Claim is
the equivalent of the filing of a lawsuit. Any dispute concerning this arbitration provision or
whether a Claim is arbitrable shall be determined by the arbitrator(s), except as set forth at
subparagraph (h) of this Dispute Resolution Provision. The arbitrator(s) shall have the power to
award legal fees pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as
but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal
property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to
obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or
appointment of a receiver, or additional or supplementary remedies.
(g) The filing of a court action is not intended to constitute a waiver of the right of any party,
including the suing party, thereafter to require submittal of the Claim to arbitration.
(h) Any arbitration or trial by a judge of any Claim will take place on an individual basis without
resort to any form of class or representative action (the “ Class Action Waiver ”). Regardless
of anything else in this Dispute Resolution Provision, the validity and effect of the Class Action
Waiver may be determined only by a court and not by an arbitrator. The parties to this
Agreement acknowledge that the Class Action Waiver is material and essential to the arbitration
of any disputes between the parties and is nonseverable from the agreement to arbitrate Claims.
If the Class Action Waiver is limited, voided or found unenforceable, then the parties’ agreement
to arbitrate shall be null and void with respect to such proceeding, subject to the right to appeal
the limitation or invalidation of the Class Action Waiver. The Parties acknowledge and agree
that under no circumstances will a class action be arbitrated.
(i) By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they
may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to
limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably
and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This
waiver of jury trial shall remain in effect even if the Class Action Waiver is limited, voided or
found unenforceable. WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR
BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE
EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT
TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.
9.7 Severability; Waivers . If any part of this Agreement is not enforceable, the rest of the Agreement may
be enforced. The Bank retains all rights, even if it makes a loan after default. If the Bank waives a default, it may
enforce a later default. Any consent or waiver under this Agreement must be in writing.
9.8 Attorneys’ Fees . The Obligors shall reimburse the Bank for any reasonable costs and attorneys’ fees
incurred by the Bank in connection with the enforcement or preservation of any rights or remedies under this
Agreement and any other documents executed in connection with this Agreement, and in connection with any
amendment, waiver, “workout” or restructuring under this Agreement. In the event of a lawsuit or arbitration
proceeding, the prevailing party is entitled to recover costs and reasonable attorneys’ fees incurred in connection
with the lawsuit or arbitration proceeding, as determined by the court or arbitrator. In the event that any case is
commenced by or against any Obligor under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable attorneys’ fees incurred by the Bank
related to the preservation, protection, or enforcement of any rights of the Bank in such a case. As used in this
paragraph, “attorneys’ fees” includes the allocated costs of the Bank’s in-house counsel.
9.9 One Agreement . This Agreement and any related security or other agreements required by this
(a) represent the sum of the understandings and agreements between the Bank and the Borrower
concerning this credit;
(b) replace any prior oral or written agreements between the Bank and the Borrower concerning
this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and exclusive statement of the
terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements required by this Agreement, this
Agreement will prevail. Any reference in any related document to a “promissory note” or a “note” executed by
the Borrower and dated as of the date of this Agreement shall be deemed to refer to this Agreement, as now in
effect or as hereafter amended, renewed, or restated.
9.10 Indemnification . The Borrower will indemnify and hold the Bank harmless from any loss, liability,
damages, judgments, and costs of any kind relating to or arising directly or indirectly out of (a) this Agreement or
any document required hereunder, (b) any credit extended or committed by the Bank to the Borrower hereunder,
and (c) any litigation or proceeding related to or arising out of this Agreement, any such document, or any such
credit. This indemnity includes but is not limited to attorneys’ fees (including the allocated cost of in-house
counsel). This indemnity extends to the Bank, its parent, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys, and assigns. This
indemnity will survive repayment of the Borrower’s obligations to the Bank. All sums due to the Bank hereunder
shall be obligations of the Borrower, due and payable immediately without demand.
9.11 Notices . Unless otherwise provided in this Agreement or in another agreement between the Bank and
the Borrower, all notices required under this Agreement shall be personally delivered or sent by first class mail,
postage prepaid, or by overnight courier, to the addresses on the signature page of this Agreement, or sent by
facsimile to the fax numbers listed on the signature page, or to such other addresses as the Bank and the Obligors
may specify from time to time in writing. Notices and other communications shall be effective (i) if mailed, upon
the earlier of receipt or five (5) days after deposit in the U.S. mail, first class, postage prepaid, (ii) if telecopied,
when transmitted, or (iii) if hand-delivered, by courier or otherwise, when delivered.
9.12 Headings . Article and paragraph headings are for reference only and shall not affect the interpretation
or meaning of any provisions of this Agreement.
9.13 Counterparts . This Agreement may be executed in as many counterparts as necessary or convenient,
and by the different parties on separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same agreement.
9.14 Obligor Information; Reporting to Credit Bureaus . The Obligors authorize the Bank at any time to
verify or check any information given by any Obligor to the Bank, check the Obligors’ credit references, verify
employment, and obtain credit reports. The Borrower agrees that the Bank shall have the right at all times to
disclose and report to credit reporting agencies and credit rating agencies such information pertaining to the
Borrower and/or all guarantors as is consistent with the Bank’s policies and practices from time to time in effect.
9.15 Limitation of Interest and Other Charges . If, at any time, the rate of interest, together with all amounts
which constitute interest and which are reserved, charged or taken by the Bank as compensation for fees,
services or expenses incidental to the making, negotiating or collection of the Loan evidenced hereby, shall be
deemed by any competent court of law, governmental agency or tribunal to exceed the maximum rate of interest
permitted to be charged by the Bank to the Borrower under applicable law, then, during such time as such rate of
interest would be deemed excessive, that portion of each sum paid attributable to that portion of such interest rate
that exceeds the maximum rate of interest so permitted shall be deemed a voluntary prepayment of principal. As
used herein, the term “applicable law” shall mean the law in effect as of the date hereof; provided, however, that
in the event there is a change in the law which results in a higher permissible rate of interest, then this Agreement
shall be governed by such new law as of its effective date.
Section 10. Defined Terms. In addition to terms defined elsewhere in this Agreement, as used herein, the
following terms have the respective meanings set forth in this Section 10. Any defined term used in the plural
preceded by the definite article shall be taken to encompass all members of the relevant class. Any defined term
used in the singular preceded by “any” shall be taken to indicate any number of the members of the relevant
class. All calculations contemplated by financial terms used with respect to the Borrower and its Subsidiaries
shall be made on a consolidated basis, in accordance with GAAP and any other financial definitions not otherwise
defined herein shall have the meanings given to them under GAAP.
“ Affiliate ” Any Person which, directly or indirectly, controls or is controlled by or is under common control
with the Borrower; any officer or director of the Borrower; any Person owning of record or beneficially, directly
or indirectly, 5% or more of any class of capital stock of the Borrower or 5% or more of any class of capital
stock or other equity interest having voting power (under ordinary
circumstances) of any of the other Persons described above; and any member of the immediate family of any of
“ Bank Certificate ” A certificate signed by an officer of the Bank setting forth any additional amount required
to be paid by the Borrower to the Bank pursuant to §3.3 of this Agreement, which certificate shall be submitted
by the Bank to the Borrower in connection with each demand made at any time by the Bank upon the Borrower
with respect to any such additional amount, and each such certificate shall, save for manifest error, constitute
preemptive evidence of claim by the Bank for all or any part of any additional amount required to be paid by the
Borrower may be made before and/or after the end of the period to which such claim relates or during which
such claim has arisen and before and/or after any payment hereunder to which such claim relates. Each Bank
Certificate shall set forth in reasonable detail the basis for and the calculation of the claim to which it relates.
“ Capital Expenditures ” As to any Person for any period, the sum of all amounts which would, in accordance
with GAAP, be included as additions to property, plant and equipment and other Capital Expenditures for such
period, including, without limitation, amounts with respect to capitalized leases.
“ Capital Lease Obligations ” As to any person, the obligations of such Person or any of its Subsidiaries to
pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof; to the extent such obligations are required to be classified and accounted for
as a capital lease on a balance sheet of such Person under GAAP. For purposes of this Agreement, the amount
of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with
“ CERCLA ” The Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42,
U.S.C. Section 9601 et seq ., as amended by the Superfund Amendments and Reauthorization Act of 1986,
Pub. L. No. 99-499, 100 Stat. 1613.
“ Debt Service ” For any period, the aggregate amount of principal and interest and fees paid or required to be
paid during such period in respect of all indebtedness for borrowed money of the Borrower and its Subsidiaries.
“ Default ” Any event or circumstance which, with the passage of time or the giving of notice or both, could
become an Event of Default.
“ Earnings Before Interest and Taxes ” For any period, Net Income for such period plus taxes in respect of
income and profits paid or accrued by the Borrower and its Subsidiaries during such period and Interest Expense
to the extent deducted in calculating Net Income for such period.
“ Equity Interests ” Any and all shares, interests, participations or other equivalents (however designated) of
capital stock, partnership interests, member interests and any and all equivalent ownership interests in a Person
and any and all warrants, rights or options to purchase any of the foregoing, other than equity interests or
warrants, right or options issued in connection with the exercise by a present or former employee, officer or
director under a stock incentive plan, stock option plan or other equity-based compensation plan or arrangement.
“ ERISA ” The Employee Retirement Income Security Act of 1974, as amended.
“ GAAP ” generally accepted accounting principles in the United States as in effect from time to time
“ Guarantors ” collectively, C.I.M Industries, Inc., a New Hampshire corporation, RWA, Inc., a
Massachusetts corporation, and Capital Services of New York, Inc., a New York corporation, each of which
individually may be called a Guarantor.
“ Indebtedness ” All obligations of a Person, whether current or long-term, senior or subordinated, which in
accordance with GAAP would be included as liabilities upon such Person’s balance sheet at the date as of which
indebtedness, is to be determined, and shall also include guaranties, endorsements (other than for collection in the
ordinary course of business) or other arrangements whereby responsibility is assumed for the obligations of
others, whether by agreement to purchase or otherwise acquire the obligations of others, including any
agreement, contingent or otherwise, to furnish funds through the purchase of goods, supplies or services for the
purpose of payment of the obligations of others.
“ Interest Expense ” For any period, the aggregate amount of interest paid or required to be paid during such
period in respect of all indebtedness of the Borrower and its Subsidiaries (including imputed interest on Capital
Lease Obligations) and amortized debt discount for such period.
“ Loan Documents ” Each of this Agreement, the Note, the Guarantees and each other instrument, document
or agreement evidencing, securing, guaranteeing or relating in any way to the Loan, all whether now existing or
hereafter arising or entered into.
“ Material Adverse Effect ” A material adverse effect on (a) the business, property, operations or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of Borrower or any
Guarantor to perform its obligations under the Loan Documents to which it is a party, or (c) the validity or
enforceability of this Agreement, the Note, the Guarantees, or, taken as a whole, the other Loan Documents, or
the rights or remedies of the Bank under this Agreement, or, taken as whole, the other Loan Documents.
“ Net Income ” (or “ Net Loss ”) The book net income (or book net loss, as the case may be) of a Person for
any period, after all taxes actually paid or accrued and all expenses and other charges determined in accordance
with generally accepted accounting principles consistently applied.
“ Obligors ” Collectively, the Borrower and all Guarantors.
“ Obligations ” All indebtedness, covenants, agreements, liabilities and obligations, now existing or hereafter
arising, made by the Borrower with or for the benefit of the Bank or owed by the Borrower to the Bank in any
“ Operating Cash Flow ” For any period, Earnings Before Interest and Taxes plus depreciation and
amortization for such period, minus unfinanced Capital Expenditures, dividends and deferred compensation paid
or incurred during such period, and minus any cash taxes paid.
“ PBGC ” The Pension Benefit Guaranty Corporation or any successor thereto.
“ Person ” An individual, corporation, partnership, limited partnership, limited liability company, joint venture,
trust or unincorporated organization, or a government or any agency or political subdivision thereof.
“ Subsidiary ” Any corporation or other entity of which a Person and/or any of its Subsidiaries directly or
indirectly, owns, or has the right to control or direct the voting of fifty (50%) percent or more of the outstanding
capital stock or other ownership interest having general voting power (under ordinary circumstances).
“ Synthetic Leases ” Means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction is considered borrowed money Indebtedness for tax
purposes but is classified as an operating lease under GAAP.
“ Tangible Net Worth ” At the applicable date, the total assets of the Borrower and its Subsidiaries minus
(a) the sum of any amounts attributable to (i) goodwill, (ii) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and development expenses
except prepaid expenses, (iii) all reserves not already deducted from assets, (iv) any write-up in the book value
of assets resulting from any revaluation thereof subsequent to the date hereof, and (v) the value of any minority
interests in any companies, and (b) Total Liabilities of the Borrower and its Subsidiaries.
“ Total Liabilities ” The aggregate amount of liability of a Person determined in accordance with GAAP.
The Borrower executed this Agreement as of the date stated at the top of the first page, intending to
create an instrument executed under seal.
By /s/ Kenneth L. Dumas
Kenneth L. Dumas, Chief Financial Officer
Address where notices to
the Borrower are to be sent:
26 Summer Street
Bridgewater MA 02324
RBS CITIZENS, NATIONAL ASSOCIATION
Typed William Lingard
Title Senior Vice President
Address where notices to
the Bank are to be sent:
28 State Street
Boston, MA 02109
Attn: William Lingard, Senior Vice President
Federal law requires the “Bank” to provide the following notice. The notice is not part of the
foregoing agreement or instrument and may not be altered. Please read the notice carefully.
USA PATRIOT ACT NOTICE
Federal law requires all financial institutions to obtain, verify and record information that identifies each person
who opens an account or obtains a loan. The Bank will ask for the Borrower’s legal name, address, tax ID
number or social security number and other identifying information. The Bank may also ask for additional
information or documentation or take other actions reasonably necessary to verify the identity of the Borrower,
guarantors or other related persons.