Exhibit 10.2

 

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 SINGLE DISBURSEMENT.

 

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 THEREUNDER.

 

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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

 

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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 “REIMBURSEMENT COSTS.”

 

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.

 

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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
REQUIRE.

 

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 ORGANIZATIONAL PAPERS.

 

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.

 

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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.

 

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(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 Code.

 

(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
AGREEMENT.

 

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 EFFECT.

 

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

 

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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

 

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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 request.

 

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
Borrower;

 

8

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(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;

 

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(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
such Liens;

 

(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
DEPOSITS.

 

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,

 

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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

 

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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

 

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(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 thereof); or

 

(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; or

 

(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.

 

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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

 

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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.

 

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(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 AGREEMENT, COLLECTIVELY:

 

(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

 

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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

 

17

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CIRCUMSTANCES) OF ANY OF THE OTHER PERSONS DESCRIBED ABOVE; AND ANY MEMBER OF
THE IMMEDIATE FAMILY OF ANY OF THE FOREGOING.

 

“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 GAAP.

 

“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 CONSISTENTLY APPLIED.

 

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“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 CAPACITY.

 

“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).

 

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“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.

 

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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.

 

 

CHASE CORPORATION

 

 

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

Attn:

Telephone:

508-279-1789

 

Facsimile:

508-697-6419

 

 

 

 

 

RBS CITIZENS, NATIONAL ASSOCIATION

 

 

 

 

 

 

 

 

By

 

 

 

Typed Name

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

 

 

Facsimile: 617-723-9371

 

 

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.

 

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DISCLOSURE SCHEDULE

 

None.

 

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