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.


 


1

















 


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 


 


2

















 


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.


 


3

















 


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.


 


4

















 


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.


 


5

















 


(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 


 


6

















 


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 


 


7

















 


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

















 


(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;


 


9

















 


(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,


 


10
















 


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 


 


11

















 


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


 


12

















 


(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.


 


13

















 


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 


 


14

















 


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.


 


15

















 


(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 


 


16

















 


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

















 


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.


 


18

















 


“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).


 


19

















 


“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.


 


20

















 


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.


 


21

















 


DISCLOSURE SCHEDULE


 


None.


 


22