Loan Agreement - Bank of New Hampshire NA and SeaChange International Inc.
LOAN AGREEMENT
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LOAN AGREEMENT (this "Agreement") dated as of October 16, 2000, by and
between Bank of New Hampshire, N.A., a national banking association with a place
of business at 28 Main Street, Jaffrey, New Hampshire 03452 (the "Bank"), and
SeaChange International, Inc., a Delaware corporation with an address of 124
Acton Street, Maynard, Massachusetts 01754 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Bank is hereby making two loans to the Borrower of even date in
the respective amounts of Five Hundred Forty-four Thousand Dollars ($544,000.00)
and Six Hundred Fifty-six Thousand Dollars ($656,000.00) for the purposes of
financing the construction/renovation of real estate of the Borrower at 32 Mill
Street, Greenville, Hillsborough County, New Hampshire (the "Premises"); and
WHEREAS, the parties wish to set forth in writing the terms and conditions
upon which the Bank is making said loans to the Borrower;
NOW, THEREFORE, in consideration of the foregoing and of the following
mutual promises, the parties confirm and agree as follows.
SECTION 1. DEFINITIONS. The following terms as used in this Agreement shall
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have the meanings set forth below.
1.1 Architect: Any and all architects now or hereafter engaged by the
Borrower for the design of the Project.
1.2 Architect's Contracts: Any and all agreements by and between the
Borrower and the Architect for, among other things, the design of the Project.
1.3 Closing: The date on which the Bank makes and the Borrower takes the
Loans.
1.4 Collateral Assignment: The Collateral Assignment of Contracts, Plans
and Permits of even date from the Borrower to the Bank.
1.5 Construction Contract: Any and all contracts by and between the
Borrower and the Contractor for, among other things, the construction of the
Project.
1.6 Construction Term: The period commencing on the date of this Agreement
and continuing through the Conversion Date.
1.7 Contractor: Hutter Construction Corporation.
1.8 Contracts: All contracts relating to the design and construction of
the Improvements and the Project.
1.9 Conversion Date: The date upon which the $544,000.00 Note converts to
an amortizing note pursuant to Section 2.5 of this Agreement.
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1.10 Environmental Indemnity: Environmental Indemnification Agreement of
even date from the Borrower to the Bank.
1.11 Financial Statements: The most recent financial statements of the
Borrower heretofore delivered to the Bank.
1.12 Improvements: The improvements to be constructed on the Premises in
accordance with the Plans and Specifications with the proceeds of the Loans and
all personal property, fixtures and appurtenances, additions, replacements and
improvements, including site improvements and landscaping, constructed on or
existing on the Premises, now or at any time hereafter, including substitutions
therefor and the proceeds thereof.
1.13 Leases. Any and all leases with respect to the Premises to be entered
into by the Borrower as Lessor.
1.14 Lease Assignments: The Collateral Assignments of Leases and Rents of
even date from the Borrower to the Bank.
1.15 Loans: One or more advances to the Borrower by the Bank for the
purpose of construction financing in accordance with the terms, provisions and
conditions of this Agreement, in amounts as follows: (a) an amount not exceeding
Five Hundred Forty-four Thousand Dollars ($544,000.00) ("$544,000.00 Loan"), and
(b) an amount not exceeding Six Hundred Fifty-six Thousand Dollars ($656,000.00)
("$656,000.00 Loan").
1.16 Loan Documents: This Agreement, the Notes, the Mortgages, the
Collateral Assignment, the Lease Assignments, the Environmental Indemnity, and
any other documents now or hereafter executed by the Borrower or any endorser,
and delivered to the Bank, the purpose of which is to evidence or secure the
Borrower's repayment of the Loans and the performance of its obligations under
this Agreement.
1.17 Mortgages: Mortgage, Security Agreement and Fixture Filings (and
related U.C.C. Financing Statements) of even date executed by the Borrower as
mortgagor, for the benefit of the Bank as mortgagee, granting the Bank valid and
effectual first ($544,000.00) and second ($656,000.00) liens upon the Premises.
1.18 Notes: The promissory notes from the Borrower to the Bank of even
date in the respective face amounts of Five Hundred Forty-four Thousand Dollars
($544,000.00) and Six Hundred Fifty-six Thousand Dollars ($656,000.00).
1.19 Permits: All federal, state and local governmental approvals,
licenses and permits, including, without limitation, all building permits,
variances, special exceptions, zoning approvals, subdivision approvals and site
plan approvals, and all other approvals (including, without limitation, septic
system approvals, subdivision approvals, water system approvals and "site
specific" approvals) granted to the Borrower to enable the Borrower to construct
the Improvements upon the Premises and to operate the same.
1.20 Permanent Terms: The period commencing on the date immediately
following the Conversion Date and continuing through the date that is ten (10)
years from the Conversion
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Date (for the $544,000.00 Loan and through the date that is five (5) years from
the Conversion Date (for the $656,000.00 Loan.
1.21 Plans and Specifications: The plans and specifications approved by
the Bank pursuant to which the Improvements are to be constructed on the
Premises.
1.22 Premises: A certain tract or parcel of land, with the buildings and
improvements thereon and the appurtenances thereto, located at 32 Mill Street,
Greenville, Hillsborough County, New Hampshire more particularly described in
Exhibit A attached hereto and incorporated herein by reference.
1.23 Project: The Improvements as constructed on the Premises.
1.24 Schedule of Sources and Uses of Funds: The schedule of sources and
uses of funds for the construction of the Project and estimated timetable for
the construction of the Project.
1.25 Security Interest: The security interest in the Borrower's personal
property granted to the Bank by the Borrower pursuant to the Mortgage.
SECTION 2. THE LOANS.
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2.1 The Loans: Subject to the terms of this Agreement, the Borrower will
take and the Bank will make the Loans.
2.2 The Notes: To evidence its obligation to repay the Loans, the Borrower
will execute and deliver the Notes to the Bank.
2.3 Security: The Borrower's obligations to repay the Loans as evidenced
by the Notes and to perform its other obligations under the Loan Documents are
secured by: (i) the Mortgage and the lien and Security Interest granted
therein; (ii) the Collateral Assignment; (iii) the Lease Assignments, and the
collateral granted to the Bank in such documents (the "Collateral").
2.4 Use of Loan Proceeds: The proceeds of the Loans shall be utilized by
the Borrower only to construct the Project on the Premises in accordance with
the amounts set forth in the Prologue to this Agreement and the Plans and
Specifications.
2.5 Conversion to Amortizing Loan. During the Construction Term (i.e.,
until the Conversion Date), the Notes shall provide for monthly payments of
interest only; at all times following the Conversion Date ("Permanent Term"),
the Borrower shall make amortized payments of principal and interest as more
specifically set forth in the Notes. The "Conversion Date" is hereby defined as
the date upon which the full satisfaction of all of the "Conversion Conditions"
(as hereinafter defined), occurs. The "Conversion Conditions" are defined as
all of the following: (i) final lien waivers or releases from the Contractor and
each and every subcontractor and supplier of materials who has supplied goods
and/or services worth at least Two Thousand Dollars ($2,000.00) with respect to
the Project; (ii) final Certificate(s) of Occupancy issued by the Town of
Greenville with respect to the Project and the Borrower (and
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any tenants) shall have taken occupancy thereof; (iii) cash or certified funds
from the Borrower to the Bank in an amount necessary to pay all accrued and
outstanding interest and any other costs or charges outstanding under the Loans;
(iv) the Improvements shall have been constructed upon the Premises without any
mechanics' or materialmen's liens, and in strict conformity with the Plans and
Specifications; and (v) no Event of Default shall have occurred or be
continuing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
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In order to induce the Bank to make the Loans, the Borrower makes the
following representations, warranties and promises:
3.1 The execution, delivery and performance of the Loan Documents are not
in contravention of law or the terms of other documents, agreements or
undertakings to which the Borrower is a party or by which such party is bound.
No approval of any person, corporation, governmental body or other entity not
provided herewith is a prerequisite to the execution, delivery and performance
of the Loan Documents or any of the documents submitted to the Bank in
connection with the Loans, or to insure the validity or enforceability thereof.
3.2 When executed by the Borrower, the Loan Documents will constitute the
legally binding obligations of the Borrower, enforceable in accordance with
their terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally.
3.3 The construction of the Improvements upon the Premises and the use and
operation of the Improvements and the Premises does and will comply with all
applicable federal, state and local land use, environmental and other statutes,
laws and regulations and the Project has received and will receive all necessary
Permits.
3.4 Subject to any limitations stated therein or in connection therewith,
the Financial Statements, all earning statements, projections, budgets and pro
formas, cost certification documents, disbursement requests, invoices, loan
applications, mechanics' lien affidavits, financial data and all other documents
which have been or shall hereafter be furnished to the Bank to induce it to
enter into this Agreement or to continue to perform and to make disbursements
hereunder, do to the best of their knowledge and belief, or will, fairly
represent the financial condition of the Borrower and are, or will be, accurate,
true and complete in all material respects.
3.5 The Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, and fairly and
completely set forth the financial position of the Borrower as of their
respective dates. Except as previously disclosed in writing to the Bank, since
the date of the Financial Statements, there has been no significant assignment
of assets or material change or threatened change in the financial condition,
operation or business prospects of the Borrower.
3.6 There is not now pending against the Borrower, nor is there threatened,
any litigation, investigation, eminent domain or any proceedings before any
court or administrative or governmental agency, the outcome of which might
adversely affect the financial condition or the continued operation of the
Borrower or the development or operation of the Premises and Improvements other
than those listed in Schedule 3.6. There exists no unrepaired casualty with
respect to the Project.
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3.7 The Borrower is the owner of the Premises, in fee simple, and there are
no liens or encumbrances which will be prior to the respective liens of the
Mortgage and other Loan Documents, except for those acceptable to the Bank as
shown on the commitment for title insurance. The liens, security interests and
assignments created by the Loan Documents will, when granted, be valid,
effective, properly perfected and enforceable liens, security interests and
assignments.
3.8 To the Borrower's knowledge, the Premises have not been used for the
generation, treatment, storage or transportation of "hazardous waste", as that
term is defined under applicable federal and state law. In the event that the
Borrower becomes aware of the presence of any such substance on the Premises or
the Borrower becomes aware of the commencement of any state, federal, local or
private environmental or land use investigation or enforcement proceeding or
threat thereof, the Borrower will immediately provide written notice thereof to
the Bank.
3.9 To the Borrower's knowledge, the are no underground fuel storage tanks
located on the Premises.
3.10 The Premises are not located in a Flood Hazard Zone, so-called, or if
they are so located, the Borrower will procure flood insurance and will deliver
certificates for such insurance at closing.
3.11 All utility services necessary for the use and operation of the
Project are available on or at the boundary of the Premises or by unencumbered
easement and have sufficient capacity for the use and operation of the Project.
3.12 Any borrowings or payments made by the Borrower pursuant to the Loan
Agreement do not and will not render the Borrower insolvent, the Borrower is not
contemplating either the filing of a petition under any state or federal
bankruptcy or insolvency laws or the liquidating of all or a major portion of
its property, and the Borrower has no knowledge of any person contemplating the
filing of any such petition against it, including the properties and assets
reflected in its financial statement referred to herein.
3.13 No statement of fact made by or on behalf of the Borrower in this
Agreement, or in any certificate or schedule furnished to the Bank pursuant
hereto, contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained therein or herein not
misleading. There is no fact presently known to the Borrower which has not been
disclosed to the Bank which materially affects adversely, or as far as the
Borrower can foresee, will materially affect adversely, the property, business,
operations or condition (financial or otherwise) of the Borrower, the Premises
or the Improvements.
3.14 The Borrower has filed all federal, state and local tax returns
required to be filed and has paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments.
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3.15 The making of the Loans or the execution and delivery of the Loan
Documents will not subject the Bank to any claim for a brokerage commission.
3.16 The Borrower has paid in full or has made other satisfactory
arrangements for payment of all premiums for insurance policies being delivered
to the Bank.
3.17 All warranties and representations heretofore made by the Borrower to
the Bank in connection with efforts to obtain the Loans, including all
projections, budgets and pro formas, are incorporated herein by reference and
shall be deemed to be material and to have been relied upon by the Bank in
making the Loans.
3.18 The Borrower is a corporation, duly authorized and validly existing
under the laws of the State of Delaware, with powers adequate to own its
properties, and to carry on its business as presently conducted by it
(including, but not limited to, within the State of New Hampshire). The
execution, delivery and performance of the Loan Documents to which the Borrower
is a party are not in contravention of the Articles or By-laws of the Borrower,
or of any provisions of law or the terms of any documents, agreements or
undertakings to which the Borrower is a party or by which such party is bound.
SECTION 4. COVENANTS OF THE BORROWER
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A. Affirmative Covenants
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4.1 During the term of this Agreement, the Loan Documents and any
extensions, replacements or renewals thereof, the Borrower will maintain
insurance as follows:
(a) The Borrower will provide and maintain insurance in full force and
effect and will deposit all original policies with the Bank for the
following:
(i) during the course of the construction of the Improvements and any
additions or replacements to or for the Project, so-called "Builder's
Risk" insurance with extended coverage in an amount not less than the
replacement cost of all improvements upon the Premises, insuring all
work accomplished on the Premises, including equipment and materials
delivered to the Premises for incorporation into the Premises;
(ii) public liability insurance in such amount and with such coverage
as is reasonably required by the Bank including, if requested by the
Bank, liability insurance on vehicles owned or operated by the
Borrower;
(iii) worker's compensation insurance as required by statute;
(iv) from and after the Conversion Date, fire and broad form extended
coverage in an amount not less than the greater of (a) the replacement
cost of all improvements upon the Premises, or (b) the entire unpaid
balance (principal, interest, outstanding costs or charges) of the
Loans; and
(v) such other hazard insurance as the Bank may reasonably request
including, but not limited to, flood insurance (if the Premises are
located in a flood hazard zone), which flood insurance shall be in an
amount not less
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than the lesser of (A) one hundred percent (100%) of the full
replacement value of improvements on the Premises, (B) the outstanding
balance (principal and accrued interest) of the Loan, or (C) the
maximum amount of flood insurance available.
(b) All such insurance:
(i) shall be issued by companies satisfactory to the Bank and
authorized to do business in the State of New Hampshire, and shall be
satisfactory in all material respects to the Bank;
(ii) shall show the Borrower and the Bank as insured, as their
interest may appear, or, where appropriate, showing the Bank as an
additional named loss-payee and/or named insured; and
(iii) shall contain provisions providing for twenty (20) days' prior
written notice to the Bank of any intended cancellation.
(c) In the event of failure to provide insurance as herein provided, the
Bank may at its option, but without obligation to do so, and without waiving
any of its rights hereunder, provide such insurance and charge the amount to
the Borrower's Loan account.
(d) Original policies of insurance and/or insurance certificates
satisfactory to the Bank and its counsel with coverage as aforesaid shall be
delivered to and deposited with the Bank at Closing.
4.2 The Borrower shall notify the Bank in writing as soon as the Borrower
has knowledge of any default hereunder, any casualty to the Project, in whole or
in part, or of any actions, suits, eminent domain proceedings, investigations or
proceedings at law, in equity or before any governmental authority, pending or
threatened, against or affecting the Borrower or the security or involving the
validity or enforceability of the Loan Documents or the priority of the liens
created thereunder.
4.3 The Borrower agrees that, within thirty (30) days from the date real
estate taxes, or any assessments, relative to the Premises must be paid without
incurring a penalty, it will pay the same (except for such taxes or assessments
which are either paid through the tax escrow provided for in the Mortgage or
which are contested in good faith provided that adequate security is provided to
the Bank to prevent injury or loss as a result of such contest), and will
furnish to the Bank a receipted tax or assessment bill, as requested by the
Bank.
4.4 The Borrower agrees to execute any and all documents required by the
Bank to confirm the Bank's position as a first lienholder on the Premises and to
faithfully comply with the terms of this Agreement and the Loan Documents.
4.5 The Borrower shall furnish the Bank:
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(i) Within ninety (90) days after the close of each fiscal year of each
of the Borrower:
(A) a statement of members'/shareholders' equity and a statement of
cash flow of the Borrower for such fiscal year;
(B) income statements of the Borrower for such fiscal year; and
(C) balance sheets of the Borrower as of the end of such fiscal year.
All such annual statements shall be prepared in accordance with
generally accepted accounting principles, shall present fairly the financial
position and results of operations of the Borrower and shall be prepared and
audited by an independent certified public accountant selected by such
parties and acceptable to the Bank (it being acknowledged that the
Borrower's present accountant is acceptable to the Bank). The Bank shall
have the right, from time to time, to discuss the affairs of the Borrower
directly with such independent certified public accountants after notice to
the Borrower and opportunity of the Borrower to be represented at any such
discussions; and
(ii) Within ten (10) days of the filing thereof, true and complete
copies of quarterly 10-Q reports of the Borrower; and
(iii) Such other financial information as the Bank shall reasonably
request from time to time, including, but not limited to, evidence of
compliance with all financial covenants set forth in this Agreement.
4.6 The Borrower agrees to pay all costs and reasonable expenses incidental
to the Loans, the preservation of the Collateral, the collection of the Notes
and the foreclosure of the Mortgages, including, but not limited to, any
appraisals required or provided for hereunder, real estate transfer taxes, title
examination and endorsement fees, title insurance premiums, recording fees,
attorneys' fees (including those of the Bank's counsel), brokerage fees,
architectural fees and site inspection fees.
4.7 The Borrower shall put and maintain the Premises and Improvements
thereon in good repair, working order and condition, and from time to time shall
make all needful and proper repairs, renewals and replacements.
4.8 The Borrower shall promptly pay for all labor, materials, equipment and
fixtures used in connection with the construction of the Improvements and all
other costs relating to the Improvements.
4.9 The Borrower shall strictly enforce the Construction Contracts to
ensure that the Contractor is required to promptly and diligently perform all of
its obligations thereunder and in such a manner as to preserve the Bank's
security in the Premises and Improvements. No change, amendment or modification
shall be made to such contract without prior written consent of the Bank.
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4.10 No materials, equipment, fixtures or any other part of the
Improvements, or articles of personal property placed in the Improvements, shall
be purchased or installed under any security agreement or other arrangements
wherein the seller reserves or purports to reserve the right to remove or to
repossess any such items or to consider them personal property after their
incorporation into the Improvements.
4.11 The Borrower shall pay all bills when due, keep books and records in
accordance with generally accepted accounting principals, consistently applied,
and will permit a representative on behalf of the Bank to examine and audit the
books of its business. The Borrower shall inform the Bank immediately of any
litigation involving the Borrower, the adverse determination of which might
prejudice repayment of either Loan.
4.12 After the execution of this Agreement, any and all publicity releases
to newspapers of general or limited circulation or trade publications announcing
any of the financing by the Bank provided for herein shall be issued by or
subject to prior approval by the Bank. The Bank shall erect a sign upon the
Premises indicating that the Bank is the source of the financing of the
construction of the Improvements.
4.13 The Borrower shall use and operate the Project in compliance with all
applicable laws.
4.14 The Borrower shall furnish the Bank with such appraisals of the
Project as the Bank may reasonably request, from time to time, including without
limitation, an appraisal of the Project, the Improvements and the Premises
acceptable to the Bank upon completion of the Project.
4.15 The Borrower shall construct the Improvements in strict conformity
with the Plans and Specifications and shall not make any change in the Project
design or structure without the prior written approval of the Bank, which
approval shall not be unreasonably withheld.
B. Negative Covenants.
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4.16 The Borrower shall not transfer the Project, the Improvements or the
Premises, or any interest therein, to any person without the prior written
consent of the Bank, which consent shall not be unreasonably withheld.
4.17 The Borrower shall not permit any person to assume the Mortgage or any
other lien described in this Agreement.
4.18 The Borrower shall not, without the prior written consent of the Bank
(which shall not be unreasonably withheld), create, assume, incur or suffer to
be created, assumed or incurred, any mortgage, lien, pledge, attachment or
security interest or encumbrance of any kind in respect to the Premises, the
Project or the Improvements during the term of either Loan, even if the same is
subordinate to any lien given to the Bank to secure either Loan.
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4.19 The Borrower shall not sell or dispose of any of its assets except for
reasonably equivalent consideration and in the ordinary and usual course of its
business. In addition, the Borrower shall not permit the sale, transfer or
redemption of any of its membership interests without the prior, written consent
of the Bank.
4.20 The Borrower shall not enter into any Lease without obtaining the
Bank's prior, written approval thereof, such approval not to be unreasonably
withheld, conditioned or delayed, and the Borrower shall upon execution thereof
furnish a fully executed copy of each Lease entered into during the term of
either Loan.
4.21 As long as either Loan remains outstanding, at the end of each fiscal
year beginning with Fiscal Year 1999, the Borrower's Debt Service Coverage Ratio
shall be no less than 1.5:1, calculated as follows: (A) net income, plus
interest expense, plus depreciation, plus amortization expense, divided by (B)
current maturity of long-term indebtedness, plus capital lease expense. The
information set forth in the Borrower's financial statements and tax returns as
required under this Agreement shall be conclusive in determining the Borrower's
compliance with such ratio.
4.22 As long as either Loan remains outstanding, at the end of each fiscal
year beginning with Fiscal Year 1999, the Borrower's Quick Ratio shall be no
less than 1.0:1, calculated as follows: (A) cash on hand, plus accounts
receivable not more than sixty (60) days past invoice date, divided by (B)
current liabilities. The information set forth in the Borrower's financial
statements and tax returns as required under this Agreement shall be conclusive
in determining the Borrower's compliance with such ratio.
4.23 As long as either Loan remains outstanding, at the end of each fiscal
year beginning with Fiscal Year 1999, the Borrower's Tangible Net Worth shall be
no less than Thirty Million Dollars ($30,000,000.00), calculated as follows: the
Borrower's capital stock account, plus subordinated indebtedness of the
Borrower, plus the Borrower's retained earnings, plus additional paid in
capital, minus treasury stock, minus intangible assets. The information set
forth in the Borrower's financial statements and tax returns as required under
this Agreement shall be conclusive in determining the Borrower's compliance with
such ratio.
SECTION 5. CONDITIONS PRECEDENT TO THE MAKING OF THE LOANS
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The obligation of the Bank to make the Loans is subject to the satisfaction
by the Borrower or its representatives of the following conditions precedent:
5.1 The Borrower's warranties and representations as contained in Section 3
hereof shall be accurate and complete as of the date of Closing.
5.2 No Event of Default (as defined herein or in either Note or any Loan
Document) shall have occurred or be continuing.
5.3 The Borrower shall have executed and delivered all of the Loan
Documents to which it is a party.
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5.4 The Borrower shall have delivered all of the documents and materials
listed on the Closing Agenda attached hereto as Exhibit C to the Bank, all of
which must be acceptable, in both form and substance, to the Bank and its
counsel, including, but not limited to, the following:
(a) Copies of all Permits;
(b) Copies of all Contracts;
(c) Copies of the Plans and Specifications;
(d) Certificates of insurance as required by Section 4.1 hereof;
(e) Evidence that the Premises are not located in a Flood Zone, so-called,
or that the Project is covered by flood insurance acceptable to the Bank;
(f) Receipted bills for real estate taxes and other charges or assessments
against the Project;
(g) The Financial Statements;
(h) Evidence that utilities are available to the Premises and the
Improvements at the boundary of the Premises or by way of unencumbered
easement with sufficient capacity including, without limitation, such
evidence as the following utilities: (i) water, (ii) sewer, (iii)
electricity, (iv) telephone and (v) gas;
(i) A title insurance policy (ALTA Loan Policy-1970) written with a company
acceptable to the Bank, insuring that the Bank has a valid lien of record on
the Premises subject only to the Bank's prior mortgages on the Premises and
those exceptions approved by the Bank and (i) having all standard
exceptions, so-called, deleted and (ii) including such other affirmative
insurance and endorsements as may be requested by the Bank;
(j) An opinion of counsel to the Borrower in the form of Exhibit B attached
hereto and incorporated herein by reference;
(k) Satisfactory environmental site assessments by such environmental
consultants as are acceptable to the Bank regarding the presence of
hazardous waste and materials on the Premises;
(l) The Schedule of Sources and Uses of Funds; and
(m) Consents by the Architects and the Contractor to the Collateral
Assignment of Contracts, Plan and Permits.
5.5 The Borrower shall have paid all costs incurred in connection with the
Closing of the Loans including, without limitation, attorneys' fees of Bank's
counsel and title insurance premiums. To the extent that such costs are not
paid at Closing, the Borrower hereby authorizes the Bank to pay the same out of
the proceeds of the Loans.
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5.6 The Borrower shall furnish the Bank with such other documents,
opinions, certificates, evidence and other matters as may be requested by the
Bank at or prior to Closing.
SECTION 6. DISBURSEMENT OF LOAN PROCEEDS
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6.1 The obligation of the Bank to make disbursement of proceeds of the
Loans to the Borrower for purposes of construction of the Improvements (the
"Construction Disbursement") is subject to satisfaction of the following
conditions precedent on or before each disbursement to the Borrower:
(a) The warranties and representations of the Borrower as contained
in Section 3 hereof shall be accurate and complete as of the date that
the Borrower request a disbursement of Loan proceeds from the Bank
(the "Requisition Date");
(b) The Borrower shall not be in default under any of the covenants
contained in Section 4 hereof as of the Requisition Date;
(c) All conditions precedent to the making of the Loans as set forth
in Section 5 hereof shall continue to have been satisfied and the
Borrower shall have notified the Bank of any changes in the status
thereof, which changes shall have been approved by the Bank;
(d) In addition, if requested by the Bank, the Borrower shall furnish
the Bank with the following, all of which shall be acceptable, in both
form and substance, to the Bank:
(i) plans and specifications for the portion of the Improvements
to be so funded, including (but not limited to) an updated survey
of the Premises showing the location of the Improvements
constructed thereon as of the Requisition Date;
(ii) affidavits and lien waivers from the Contractor and
subcontractors and suppliers providing goods or services with a
value greater than or equal to Two Thousand Dollars ($2,000.00)
sufficient to ensure that the priority of the lien of the
Mortgages will not be subject to any mechanics' or materialmen's
liens held by such Contractor or subcontractors;
(iii) an endorsement to the title insurance policy theretofore
delivered to the Bank insuring that the Bank has a valid first
lien on the Premises up to at least the amount of Loan proceeds
the Bank has then disbursed to the Borrower (including the
requested disbursement) subject only to such matters and
exceptions as are acceptable to the Bank;
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(iv) an inspection of the Improvements constructed on the
Premises by the Bank, or its architects, engineers or other
representatives, at the Borrower's reasonable expense (to occur
within five (5) business days from date of requisition),
indicating (a) that the Improvements are being constructed in
substantial compliance with the Plans and Specifications and in a
good and workmanlike manner; (b) that the amount of loan proceeds
requested at the Requisition Date, together with amounts requested
at earlier Requisition Dates and sums contributed by the Borrower,
accurately reflect the status of the construction of the
Improvements; and (c) that the undistributed proceeds of the Loans
as of the Requisition Date will be sufficient to complete the
construction of the Improvements;
(v) the Borrower shall furnish the Bank with such other
documents, opinions, certificates, evidence and other matters as
may be requested by the Bank as conditions precedent to making the
requested disbursement; and
(e) The Loan Documents shall remain in full force and effect.
6.2 All requests for disbursements of Loan proceeds for purposes of
construction of the Improvements shall be made on AIA Forms, or forms
substantially similar to AIA forms and satisfactory to the Bank, not less than
ten (10) business days prior to the date of the requested disbursement, shall be
made on forms approved by the Bank, with such detail and with such supplementary
information as is acceptable to the Bank, and shall not be made more frequently
than once per thirty (30) day period.
6.3 The Bank will make all disbursements pursuant to this Agreement to a
commercial demand deposit account in the Borrower's name at the Bank, and the
Borrower agree to make all payments on account of the construction of the
Improvements from such account.
6.4 Upon receipt by the Bank of a disbursement request as set forth in
Section 6.2, together with satisfactory evidence that the conditions precedent
set forth in Section 6.1(i) through (v) have been satisfied, the Bank shall make
advances as construction progresses, in amounts equal to: (a) ninety percent
(90%) of expenditures for labor performed and material supplied under the
Construction Contract for construction of the Improvements in accordance with
the Plans and Specifications during the period immediately preceding the
advance, plus (b) one hundred percent (100%) of indirect construction costs
actually paid or incurred by the Borrower that have not been covered by previous
advances. Indirect construction costs shall mean those costs related to the
construction of the Improvements, other than the cost of labor and materials,
and include, but are not limited to, title insurance premiums, permit fees,
architect and engineering fees, legal fees, loan fees, taxes and interest during
construction, but do not include any profit to the Borrower or any affiliate
thereof.
6.5 In the event the Bank shall reasonably determine that the actual direct
and indirect costs to complete the construction of the Improvements will exceed
the proceeds of the Loans available for advance, the Bank may, at its option,
refuse to make or approve
13
<PAGE>
further disbursements and may require the Borrower to make a cash deposit of an
amount equal to such excess with the Bank for disbursement in accordance
herewith. The Bank may commingle such deposited amounts with its own funds and
such deposited amounts shall, if the Borrower is not in default hereunder beyond
the applicable cure period, earn interest at then market rates. No Loan proceeds
shall be advanced while amounts so deposited are available for disbursement. The
deposit requirements of this paragraph are in addition to the deposit or escrow
requirements in the Mortgage and may be required repeatedly as the Bank
reasonably determines is necessary. The Bank's waiver of this right on any
occasion shall not affect its right to impose the requirement at another time.
6.6 The making of any disbursement of any part thereof by the Bank shall
not be deemed an approval or acceptance by the Bank of work theretofore
performed or materials theretofore furnished.
6.7 The Bank's obligation to disburse proceeds of the Loans for
construction purposes shall terminate on the Conversion Date.
SECTION 7. GENERAL CONDITIONS; MISCELLANEOUS
---------------------------------
7.1 The Bank shall have the right to enter on the Premises for the purpose
of inspecting the Project at all reasonable times and upon reasonable notice
(with the exception of emergencies, in which event the Bank may enter at any
time and without any notice). However, all inspections which may be made by the
Bank or its agents are made solely to ascertain the condition of the Project and
the Borrower agrees that the Bank does not thereby assume additional
responsibilities, and agree that they will defend (with counsel reasonably
acceptable to the Bank), indemnify and hold the Bank harmless from any liability
asserted by reason of such inspections or by reason of this Agreement. The Bank
may engage independent architect/engineer consultants, to aid in the inspection
of the Project and to perform such other consulting responsibilities as may be
required. All reasonable fees and expenses incurred by such architects or
engineers shall be paid by the Borrower.
7.2 Upon discovery by the Bank of any deviation from the Plans and
Specifications or of defective or unworkmanlike labor or materials being used in
the construction of the Improvements, the Bank may immediately order stoppage of
construction and demand that any unsatisfactory work be replaced and that the
condition be corrected, whether or not any unsatisfactory work has already been
incorporated into the Improvements. After issuance of such an order in writing,
the condition shall be corrected within fifteen (15) days from the date of
stoppage by the Bank. No other work shall be done on the Improvements without
the prior written consent of the Bank unless, and until, such condition has been
fully corrected.
7.3 Except as expressly provided herein, all notices or other
communications between the Borrower and the Bank shall be in writing and shall
be hand delivered or given by registered or certified mail (return receipt
requested) at the addresses for each given in the introductory paragraph hereof,
and notices required herein shall be deemed to be given upon receipt of hand-
delivered notices or upon deposit of mailed notices with the United States Post
Office.
7.4 The Bank reserves the right to participate with another lending
institution in the funding of the Loans, which shall be at no further cost to
the Borrower.
14
<PAGE>
7.5 The Borrower shall comply with all statutory posting requirements under
NHRSA 447.
7.6 This Agreement constitutes the complete understanding between the
parties and may not be changed except by an agreement in writing signed by the
parties. If any provision of this Agreement or the application thereof to any
person or circumstance is held invalid, such invalidity shall not affect other
provisions which can be given effect without the invalid provision or
application, and to this end, the provisions of this Agreement shall be
severable.
7.7 The waiver of any of the terms and conditions hereof by the Bank shall
not be deemed to constitute a subsequent waiver of the same or any other term or
condition hereof.
7.8 At any time during construction the Bank may request (with 45 days
prior written notice) the Borrower's most recent financial statements in form
acceptable to the Bank.
7.9 The Borrower shall be solely responsible for any brokerage commission
or fee which may be claimed or payable in connection with the making of the
Loans and the Borrower shall defend (with counsel reasonably acceptable to the
Bank), indemnify and hold the Bank harmless from and against all costs and
expenses including reasonable attorneys' fees in connection with any such claim.
7.10 This Agreement shall be governed, construed and interpreted by, and in
accordance with, the laws of the State of New Hampshire. The Borrower, to the
extent that it may legally do so, hereby consents to the jurisdiction of the
courts of the State of New Hampshire and the United States District Court for
the State of New Hampshire, as well as to the jurisdiction of all courts from
which an appeal may be taken from such courts for the purpose of any suit,
action or other proceeding arising out of any of its obligations hereunder or
with respect to the transactions contemplated hereby, and expressly waives any
and all objections it may have to venue in any such courts.
7.11 If there is any conflict among the provisions of the Loan Documents,
that provision which furnishes the Bank with the most security or protection
shall apply.
7.12 The Bank alone shall be bound by the obligations imposed hereunder and
under the Loan Documents on the Bank and neither the depositors, incorporators,
trustees or directors nor any officer or agent of the Bank or any of its
affiliates or subsidiaries shall be personally liable hereunder or thereunder
and the Borrower or any other party having any rights hereunder or thereunder
shall look solely to the Bank for payment of any claim under this Agreement or
the Loan Documents.
7.13 It is understood by the parties hereto that the Bank's only
relationship to the Borrower or to the Project is that of lender and the Bank
has no obligation or responsibility for the Borrower's choices or use of
contractors, subcontractors, services and/or materials. The Borrower shall
indemnify and hold the Bank harmless from any claim of any third party arising
out of the construction, use, occupancy or possession of the Premises and the
Improvements.
15
<PAGE>
SECTION 8. EVENTS OF DEFAULT
-----------------
8.1 The occurrence of any one or more of the following events shall
constitute a default (an "Event of Default") under this Agreement:
(a) If any statement, representation or warranty made by the Borrower in the
Loan Documents or in connection therewith or any financial statement, report,
schedule, or certificate furnished by the Borrower or any of its officers or
accountants to the Bank during the term of this Agreement shall prove to have
been false or misleading when made, or subsequently becomes false or misleading,
in any material respect;
(b) Default by the Borrower in payment within ten (10) days of the due date
of any principal or interest or other amounts called for under the Loan
Documents, including the failure to make payment when due under the Notes;
(c) Default by the Borrower in the performance or observance of any of the
provisions, terms, conditions, warranties or covenants of the Loan Documents;
(d) The occurrence of an event of default not cured within any applicable
remedy period, under any other obligations of the Borrower to the Bank, whether
created prior to, concurrent with, or subsequent to obligations arising out of
the Loan Documents;
(e) The occurrence of an event of default not cured within any applicable
remedy period, under any other obligation of the Borrower for borrowed money or
under any lease in an aggregate amount of Fifty Thousand Dollars ($50,000.00) or
more;
(f) The dissolution or termination of existence (including, but not limited
to, through merger or consolidation without the Bank's prior, written consent)
of the Borrower, or a sale of all or substantially all of the assets of the
Borrower out of the ordinary course of business; provided, however, that a
merger or consolidation shall not constitute an Event of Default hereunder if
the merged or consolidated entity meets the financial covenants hereinbefore set
forth in Sections 4.21, 4.22 and 4.23 as of the date of merger/consolidation and
at the end of each fiscal year thereafter;
(g) The Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator for any of its property, (ii) admit in writing
its inability to pay its debts as they mature, (iii) make a general assignment
for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v)
file a voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization to take advantage of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or
an answer admitting the material allegations of a petition filed against it in
any proceeding under any such law or (vi) offer or enter into any composition,
extension or arrangement seeking relief or extension of its debts;
(h) In the event that proceedings shall be commenced or an order, judgment
or decree shall be entered, without the application, approval or consent of the
Borrower, in or by any court of competent jurisdiction, relating to the
bankruptcy, dissolution, liquidation, reorganization or the appointment of a
receiver, trustee or liquidator of the Borrower, of all or a substantial part of
its assets, and such proceedings, order, judgment or decree shall continue
undischarged or unstayed for a period of 60 days;
16
<PAGE>
(i) A final and unappealable judgment for the payment of money in excess of
One Hundred Thousand Dollars ($100,000.00) shall be rendered against the
Borrower and the same shall remain undischarged for a period of 30 days, during
which period execution shall not be effectively stayed;
(j) Any levy or execution upon, or judicial seizure of, any portion of any
collateral or security for either Loan;
(k) Any attachment or garnishment of, or the existence or filing of any
lien or encumbrance, other than any lien or encumbrance permitted by the Loan
Documents against any portion of any collateral or security for either Loan,
that is not removed or released within sixty (60) days after its creation;
(l) The institution of any legal action or proceedings to enforce any lien
or encumbrance upon any portion of any collateral or security for either Loan,
that is not dismissed within sixty (60) days after its institution;
(m) Title to the Premises is not satisfactory to the Bank by reason of any
lien, charge, encumbrance, title condition or exception (other than exceptions
permitted by the Bank to be contained in the title insurance policy to be issued
to the Bank in connection with the Loans);
(n) The Premises are materially injured or destroyed by fire or otherwise
which casualty is not insured, or the Premises or any portion thereof which
renders the Premises unsuitable for their intended use or which has a material
adverse effect upon the security for either Loan (as defined in the Loan
Agreement), are taken by eminent domain; or
(o) Construction of the Project (as defined in the Loan Agreement), once
commenced, shall cease for a period of sixty (60) consecutive days after a
cessation caused by weather or acts of God or other event beyond the control of
the Makers or, in any event, if the Project is not completed by January 31,
2001.
Upon the occurrence of any Event of Default (which, in the case of an event
of default listed in paragraphs (a), (c), (d), (e) or (n) remains unremedied for
a period of thirty (30) days after written notice thereof to the Borrower by the
Bank), at the election of the Bank, (i) all of the obligations of the Borrower
to the Bank, either under this Agreement or otherwise, will immediately become
due and payable without further demand, notice or protest, all of which are
hereby expressly waived; (ii) the Bank may proceed to protect and enforce its
rights, at law, in equity, or otherwise, against the Borrower and any endorser
or guarantor of the Borrower's obligations, either jointly or severally, and may
proceed to liquidate and realize upon any of its collateral in accordance with
the rights of a secured party or a mortgagee under the Uniform Commercial Code,
any other applicable law, any Loan Document, any agreement between the Borrower
and the Bank or any agreement between any guarantor or endorser of the
Borrower's obligations to the Bank; and/or (iii) the Bank's commitment to make
further loans under this Agreement or any other agreement with the Borrower will
immediately cease and terminate.
17
<PAGE>
8.2 In addition to the provisions set forth above in Section 8.1, upon the
occurrence of any one or more of the Events of Default enumerated in the Notes
or a default of any of the Borrower's obligations hereunder, in each case beyond
the applicable cure period without remedy, and at any time thereafter the Bank,
at its option, may:
(a) Exercise any or all remedies available to it under the Loan Documents
including, without limitation, the Statutory Power of Sale provided in the
Mortgage.
(b) Occupy, take possession of, and use the Premises for such period of
time as may be necessary to permit an orderly liquidation of the Premises or
the Project or of any Collateral in and to which the Bank now has or
hereafter acquires a security interest or other rights, title or interests,
whether under this Agreement, any other Loan Document or any other agreement
or document.
(c) Make such alterations, additions, improvements, renovations and repairs
to the Premises, in a commercially reasonable manner, as may in the Bank's
opinion be reasonably necessary to (i) complete the Project and the
construction of the Improvements in accordance with the Plans and
Specifications, provided that the Bank shall have the right to discontinue
at any time the work undertaken and shall be under no obligation to continue
any work on the Project; (ii) prevent the termination of any existing lease
of all, or any portion thereof; (iii) keep the same usable for the purposes
for which such Premises were used by the Bank or (iv) keep the Premises in a
safe condition. All sums expended hereunder shall be secured by the Loan
Documents, payable on demand and, until so paid by the Borrower, bear
interest at the highest rate then provided in the Notes.
(d) Collect the rents, issues and profits arising from any part of the
Premises, past due and thereafter becoming due, and apply the same in such
order of priority as the Bank deems appropriate to the payment of the costs
and expenses incurred by the Bank in collecting such rents and managing the
Premises, the indebtedness evidenced by the Notes and any other indebtedness
secured hereby. All monies advanced or expended by the Bank to collect such
rents or manage the Premises shall be secured by the Loan Documents, payable
on demand and, until so paid by the Borrower, bear interest at the highest
rate provided for in the Notes. The taking of possession of the Premises and
collection of rents by the Bank pursuant hereto shall not be construed as an
affirmation of any lease of the Premises except such leases as the Bank has
affirmed in writing, and the Bank or any other purchaser of the Premises at
foreclosure sale may (if otherwise entitled to do so) exercise the right to
terminate any such lease as though the taking of possession and collection
of rents had not occurred pursuant hereto.
(e) For the purpose of carrying out the provisions and exercising the
rights, powers and privileges granted by the Notes and this Section 8.2, the
Borrower hereby irrevocably constitutes and appoints the Bank its true and
lawful attorney-in-fact, with full power of substitution, to execute,
acknowledge and deliver any instruments and do and perform any acts which
are referred to in the Notes and this
18
<PAGE>
Section 8.2 in the name and on behalf of the Borrower. The power vested in
said attorney-in-fact is, and shall be deemed to be, coupled with an
interest and irrevocable.
(f) Upon demand or the occurrence of any of said Events of Default, the
rights, powers and privileges provided in this Section 8 and all other
remedies available to the Bank under this Agreement or under any of the Loan
Documents or at law or in equity shall be cumulative and may be exercised by
the Bank at any time and from time to time and shall not constitute a waiver
of any of the Bank's right or remedies thereunder or hereunder, whether or
not the indebtedness evidenced and secured by the Notes and the Loan
Documents shall be due and payable, and whether or not the Bank shall have
instituted any foreclosure proceedings or other action for the enforcement
of its rights under the Notes or any of the Loan Documents.
SECTION 9. COMPLETION GUARANTEE
--------------------
9.1 If for any reason whatsoever, the Borrower (i) fails or neglects to
complete construction of the Project and the Improvements contemplated by and
described in this Agreement on or before January 31, 2001, (ii) fails to
prosecute with diligence and continuity the construction of the Project and the
Improvements in accordance with this Agreement, (iii) commits or permits to
exist an Event of Default as defined in Section 8 of this Agreement, or (iv) is
unable to satisfy any condition precedent to obtaining an advance of the Loans
under this Agreement, then in any such event the Bank, in addition to the Bank's
other rights, remedies and recourse whether existing hereunder, under any Loan
Document, or otherwise, may proceed in accordance with the terms of this Section
9. Within five (5) days from the date that the Bank notifies the Borrower of
the Borrower's failure to satisfy any condition enumerated in the first part of
this Paragraph 9.1, the Borrower hereby bind itself, at its sole cost and
expense, to commence completion of construction of the Project and the
Improvements and to diligently pursue such construction in order to complete the
Project and the Improvements within the time and in the manner specified in this
Agreement. The Borrower shall pay all costs and expenses in connection with
such construction and shall indemnify and hold harmless the Bank from any and
all losses, costs, liabilities or expenses incurred in connection with such
completion.
9.2 If the Borrower shall fail to commence completion of the Project and
the Improvements and to diligently pursue such construction as provided in
Paragraph 9.1, the Bank shall have (in addition to its other remedies under this
Agreement, the Loan Documents and applicable law), the following rights and
remedies:
(a) If such failure shall occur prior to a foreclosure sale of the
Premises, the Bank shall have an immediate right to damages in an amount equal
to the Borrower's indebtedness to the Bank arising under or in connection with
the Loans, together with the right to obtain immediate judgement against the
Borrower in that amount, and the Bank may exercise all remedies available under
the laws of the State of New Hampshire for action on a matured contractual
indebtedness;
(b) If such failure occurs after a foreclosure sale of the Premises, the
Bank shall have an immediate right to damages in an amount which is equal to the
sum necessary
19
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to complete construction of the Project and the Improvements, as such sum may be
established by construction contracts, appraisals, or other competent evidence,
without any necessity of completing construction, less the sum equal to the
undisbursed balance of the Loans reduced by the amount of interest accruing
under the Notes and all expenses incurred by the Bank in connection with the
foreclosure sale and the related actions at law; and
(c) Regardless of whether such failure occurs before or after any
foreclosure sale of the Premises, the Bank shall have the right, but shall have
no obligation, to complete construction of the Project and the Improvements in
the manner specified in this Agreement by or through any agent, contractor or
subcontractor of its selection and to recover from the Borrower as damages the
amount of any and all expenditures made in connection with such completion.
SECTION 10. RSA 399-B DISCLOSURE.
--------------------
Pursuant to RSA 399-B, the Bank hereby discloses to the Borrower the
following finance and other charges which the Borrower will incur in connection
with the Loans to be made by the Bank to the Borrower on or near even date:
(a) Interest Rate Applicable to the Loans:
-------------------------------------
(i) $544,000.00 Loan: During the Construction Term, interest shall accrue at
a fixed rate equal to eight and seven-eighths percent (8.875%), based upon a
banking year of actual/360 days. Upon the full satisfaction of the Conversion
Conditions and the resultant commencement of the Permanent Term, interest shall
accrue as follows: (i) for the first five (5) years of the Permanent Term,
interest accrue at a fixed rate equal to eight and seven-eighths percent
(8.875%), based upon a banking year of actual/360 days; and (ii) for the
remaining five (5) years of the Permanent Term, interest shall accrue at an
annually adjusted rate, to be set on the fifth (5th) anniversary date of the
Conversion Date and on the corresponding day of each year thereafter at the
"Base Rate" (as that term is hereinafter defined) in effect on such date, based
upon a banking year of actual/360 days. The "Base Rate" is defined as the
interest rate per annum designated by the Bank as its "Base Rate", regardless of
whether such rate is in fact the lowest rate charged to commercial customers of
the Bank. In the event that the Base Rate is not available, the holder hereof
will provide written notice to the Borrower of a comparable index.
(ii) $656,000.00 Loan: Interest shall accrue at a fixed rate equal to
eight and seven-eighths percent (8.875%), based upon a banking year of
actual/360 days.
(b) Bank's Counsel Fees/Expenses $ 7,300.00
----------------------------
(c) Bank Commitment Fee $ 3,000.00
-------------------
(d) Title Insurance Premium $ 2,075.00
-----------------------
(e) Appraisal Fee $ 3,000.00
-------------
20
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(f) Site Assessment Fee (Review) $ 175.00
----------------------------
(g) Construction Progress Inspections $ 425.00/visit (est.)
---------------------------------
(h) Tax Monitoring/Flood Fee $ 21.00
------------------------
(i) Recording Fees (Estimate) $ 400.00
--------------------------
By its signature below, the Borrower acknowledges receipt of this
disclosure statement and receipt of copies of all documents prepared by the Bank
in connection with the Loans.
21
<PAGE>
SECTION 11. DISBURSEMENT REQUEST.
--------------------
The Borrower hereby requests disbursement of proceeds of the Loans as set
forth on Exhibit D.
SECTION 12. CONSENT TO SECURITY INTEREST.
----------------------------
Notwithstanding anything to the contrary in any loan document, the Bank
hereby consents to the blanket security interest granted by the Borrower to
Silicon Valley Bank, which were partially subordinated to the lien granted by
the Borrower to the Bank in the Mortgage.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed on their behalf, all as of the day and year first hereinbefore
written.
SeaChange International, Inc.
(the "Borrower")
------------------------ By: /s/ William Fiedler
----------------------------------
Witness William Fiedler, its duly authorized
Chief Financial Officer
Bank of New Hampshire, N.A. (the "Bank")
------------------------- By: /s/ Benjamin J. Wheeler
----------------------------------
Witness Benjamin J. Wheeler, its duly
authorized Vice President
22
<PAGE>
EXHIBIT A
---------
A certain tract or parcel of land, with the buildings thereon, situated in the
Town of Greenville, County of Hillsborough, State of New Hampshire, being and
shown on plan entitled, "Property of Granite Leather Company, Inc., Greenville,
New Hampshire, dated February 1946, Allen C. Davis, C.E., Fitchburg, Mass.,"
said plan being recorded in the Hillsborough County Registry of Deeds as Plan
No. 713, more particularly bounded and described as follows:
Beginning at the Northwest corner of the premises at an iron pipe set in the
ground, said pipe being located five (5) feet, more or less, from the bank of
the Souhegan River at land now or formerly of James C. Taft; thence
1. South 73(degrees) 32' East a distance of thirty-three (33) feet, more or
less, along said land now or formerly of Taft to an iron pipe set in the ground;
thence
2. South 16(degrees) 47' West a distance of seven and seventy-eight hundredths
(7.78) feet, more or less, to an iron pipe set in the ground; thence
3. South 60(degrees) 4' East still along said land of Taft, a distance of one
hundred seventy-one and ninety-three hundredths (171.93) feet, more or less, to
an iron pipe set in the ground, this point being the northeast corner of the
premises herein described; thence
4. South 34(degrees) 15' West a distance of one hundred seventy-six and
sixty-five hundredths (176.65) feet, more or less, to an iron pipe set in the
ground at a stone wall; thence
5. North 55(degrees) 45' West along said wall a distance of thirty-two (32)
feet to an iron pipe set in the ground; thence
6. South 35(degrees) 15' West a distance of one hundred eight and twenty-six
hundredths (108.26) feet, more or less, to an iron pipe set in the ground on the
northerly side of Mill Street; thence
7. North 58(degrees) 25' West along the northerly side of Mill Street a
distance of one hundred eight (108) feet, more or less, to a drill hole in the
sidewalk near the abutment of the bridge crossing the Souhegan River; thence
8. Northerly by the River and a distance of two hundred eighty-three (283)
feet, more or less, to the point of beginning.
TRACT II.
A certain tract of land with the buildings thereon, situated in Greenville, in
the County of Hillsborough and State of New Hampshire, bounded and described as
follows:
1
<PAGE>
Beginning at an iron pin at the southwest corner of the conveyed premises and at
other land formerly of Oil Recovery Systems, Inc.; thence running
Easterly by the Northerly line of Mill Street one hundred twenty-four and one-
fourth (124-1/4) feet, more or less, to an iron pin; thence
Northerly by land now or formerly of Joseph Robichaud or Blanchette and land now
or formerly of Taft two hundred (200) feet, more or less, to an iron pin; thence
Westerly by land now or formerly of Taft fifty-five (55) feet, more or less, to
an iron pin; thence
Southerly by land formerly of Oil Recovery Systems, Inc. one hundred sixteen
(116) feet, more or less, to an iron pin; thence
Westerly again by other land formerly of Oil Recovery Systems, Inc. thirty-two
(32) feet, more or less, to an iron pin; thence
Southerly by other land formerly of Oil Recovery Systems, Inc. one hundred eight
(108) feet, more or less, to the point of beginning.
The following parcel is excepted from the conveyance of Tracts I and II:
A certain tract or parcel of land with the buildings thereon situated on the
northerly side of Mill Street, in the Town of Greenville, County of Hillsborough
and State of New Hampshire bounded and described as follows:
Beginning at the southwesterly corner of the tract herein described at a granite
bound set in the ground on the northerly side line of Mill Street; thence
running
North 21(degrees) 28' 51" East one hundred four and twenty-nine hundredths
(104.29) feet, more or less, by land formerly of Oil Recovery Systems, Inc., to
a-granite bound set in the ground; thence turning and running
North 50(degrees) 6' 8" East eighty-eight and fifty-four hundredths (88.54)
feet, more or less; thence turning and running
North 29(degrees) 52' 13" East thirty-two and ninety-two hundredths (32.92)
feet, more or less, to a point, the last two courses being by other land
formerly of Oil Recovery Systems, Inc.; thence turning and running
South 52(degrees) 22' 47" East fifty-five (55) feet, more or less, by land now
or formerly of Taft to a point; thence turning and running
2
<PAGE>
South 21(degrees) 7' 13" West two hundred (200) feet, more or less, by land now
or formerly of Taft and by land now or formerly of Blanchette to a point on the
northerly side of Mill Street, said corner being the southwest corner of land
now or formerly of Edward L. and Helena G. Blanchette and the southeast corner
of the lot herein described; thence turning and running
North 68(degrees) 7' 28" West one hundred one and thirty-one hundredths (101.31)
feet, more or less, by the northerly side line of Mill Street to the place of
beginning.
Surveyed by Robert B. Todd, LLS 260, during December, 1983 and being shown as
Parcel B and Lot 53 on a plat entitled "Oil Recovery Systems, Inc., Lot Line
Adjustment Plat, Greenville, NH," recorded at the Hillsborough County Registry
of Deeds at Plan No. 16568, Drawer 78.
TRACT III:
A certain tract or parcel of land situated on the Northerly side of Mill Street,
in the Town of Greenville, County of Hillsborough and State of New Hampshire,
more particularly as shown on plan entitled "Oil Recovery Systems, Inc. (and
Groundwater Technology, Inc.), Property Plat, Greenville, New Hampshire, dated
December 12, 1988, surveyed by DufresneHenry, Inc.," recorded in the
Hillsborough County Registry of Deeds at Plan No. 22903, Drawer 95.
Beginning at the Southwesterly corner of the lot herein described at a point
being the northwesterly corner of land formerly of Oil Recovery Systems, Inc. on
the Easterly side of the Souhegan River; thence
Running downstream along the Easterly and Southerly side of said river
approximately Eleven hundred and forty-five (1,145) feet to a point in line with
the northerly extension of the westerly right-of-way limit of Baker Avenue;
thence turning and running
Southerly along said Westerly limit of Baker Avenue Two hundred and twenty-nine
(229) feet, more or less, to the northeasterly corner of land now or formerly of
Highland Realty, Inc.; thence turning and running
North 71(degrees) 48' 50" West one Hundred ten (110) feet, more or less, by land
now or formerly of Highland Realty, Inc. to the northwest corner of said
property; thence turning and running
South 04(degrees) 1 1' 10" West One Hundred fifty (150) feet, more or less, to
the Northwesterly corner of land now or formerly of Nolette and continuing in
the same course Seventy-five (75) feet to the southwest corner of land now or
formerly of Nolette; thence turning and running
South 71(degrees) 48' 50" East One Hundred ten (110) feet, more or less, by said
Nolette land to a point on the westerly side of Baker Avenue; thence turning and
running
South 03(degrees) 28' 34" East Twenty-one and fifty-two hundredths (21.52) feet,
more or less, by said Baker Avenue to a point being the northeasterly corner of
land now or formerly of Desrosier; thence turning and running
In a generally Westerly direction by the following courses and distances:
North 71(degrees) 48' 50" West One Hundred (100) feet, more or less, by land now
or formerly of Desrosier and land now or formerly of Pelletier to a point
North 68(degrees) 11' 46" West Sixty-two and sixty-nine hundredths (62.69) feet,
more or less, to a point
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North 71(degrees) 19' 30" West Seventy-seven and eighty-eight hundredths (77.88)
feet, more or less, to a concrete monument on the Easterly line of land, now or
formerly of Public Service Company of New Hampshire; the last two courses being
by land, now or formerly of Pelletier; thence turning and running
North 21(degrees) 20' 00" East One hundred fifty-five and ninety-six hundredths
(155.96) feet, more or less, by land now or formerly of Public Service Company
of New Hampshire to a concrete monument set in the ground; thence turning and
running
North 61(degrees) 15' 28" West Two hundred twenty-one and thirteen hundredths
(221.13) feet, more or less, by land now or formerly of Public Service Company
of New Hampshire to a concrete monument set in the ground; thence turning and
running
South 40(degrees) 03' 37" West One hundred twenty and one one-hundredths
(120.01) feet, more or less, to a point; thence turning and running
Southeasterly on a curve to the right a distance of One hundred (100) feet to an
iron pipe set in the ground on the northwesterly corner of land now or formerly
of Guay; thence turning and running
South 24(degrees) 54' 47" West One hundred twenty-three and forty hundredths
(123.40) feet, more or less, to an iron pipe on the northerly side of the
aforementioned Mill Street; thence turning and running
Westerly by said Mill Street approximately Thirteen and thirty-six hundredths
(13.36) feet, more or less, to the southeast corner of land now or formerly of
Blanchette; thence turning and running
North 24(degrees) 54' 47" East one Hundred twenty-three and forty hundredths
(123.40) feet, more or less, to an iron pipe set in the ground; thence turning
and running
'North 70(degrees) 48' 50" West Eighty and ten hundredths (80.10) feet, more or
less, by land now or; formerly of Blanchette to an iron pin set in the ground,
at land now or formerly of Crawford; thence turning and running
North 19(degrees) 18' 23" East Seventy-five and eighty hundredths (75.80) feet,
more or less, by land now or formerly of Crawford to a point; thence turning and
running
North 54(degrees) 11' 37" West Fifty-five (55) feet, more or less, by land of
said Crawford, to a point at land formerly of Oil Recovery Systems, Inc.; thence
turning and running
North 23(degrees) 05' 34" East Sixty-one and sixty-seven hundredths (61.67)
feet, more or less, to a point beginning at the northeasterly corner of land
formerly of Oil Recovery Systems, Inc.; thence turning and running
In a generally Westerly direction by the following courses and distances:
North 63(degrees) 48' 50" West One hundred seventy-one and ninety-three
hundredths (171.93) feet, more or less, to a point
North 18(degrees) 36' 30" West Seven and seventy-eight hundredths (7.78) feet,
more or less, to a point,
North 75(degrees) 21' 30" West Thirty-five (35) feet, more or less, to the place
of beginning.
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EXHIBIT B
---------
[To be printed or typed on letterhead
of Counsel to the Borrower]
_________________, 2000
Bank of New Hampshire, N.A.
194 West Street
Keene, NH 03431
Ladies/Gentlemen:
We have acted as counsel to SeaChange International, Inc., a New Hampshire
corporation (the "Borrower") in connection with the loan documents of even date
(the "Loan Documents") by and among the such parties and Bank of New Hampshire,
N.A. (the "Bank") as set forth on the Closing Agenda attached to this opinion
letter as Exhibit A.
In rendering the opinions set forth below, we have examined and relied upon
(a) the statutes of the State of New Hampshire; (b) Articles of Incorporation
and By-laws of the Borrower; (c) Resolutions of the Borrower of at or near even
date; (d) Certificate of Existence for the Borrower of at or near even date and
issued by the New Hampshire Secretary of State; and (e) the Loan Documents. In
addition, we have examined such other certificates, documents and materials and
have made such other investigation and inquiries as we have deemed necessary in
connection with this opinion.
The opinions hereinafter expressed are qualified to the extent that the
validity or enforceability of any provisions in the Loan Documents, or of any
rights granted to you pursuant thereto, may be subject to and affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights or creditors generally. Furthermore, no opinion is
expressed as to whether any provisions thereof are specifically enforceable in
equity.
Based on the foregoing, and subject to the conditions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Borrower is corporation duly organized and validly existing
under the laws of the State of Delaware, with powers adequate to
own its properties, and to carry on business as presently
conducted by it, and is qualified to do business within the State
of New Hampshire;
2. The Borrower has full power and authority to authorize the
execution and delivery of the Loan Documents to which it is a
party;
3. The Loan Documents to which the Borrower is a party have been
duly authorized by all necessary action and, when executed and
delivered by the Borrower, the Loan Documents will constitute
legal, valid and binding obligations of the Borrower enforceable
in accordance with their respective terms;
4. The execution and delivery by the Borrower of the Loan Documents
and the performance by such parties of their respective
obligations under the Loan Documents will not constitute a
default, or conflict with or violate the provisions of, the
Borrower's Certificate of Formation or Operating Agreement, or to
the
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<PAGE>
best of our knowledge, any indenture, mortgage, deed of trust,
contract, agreement, instrument, order of judgment to which
either Represented Party or any of their respective property is
now bound;
5. To the best of our knowledge, under existing law, no approval,
authorization or other action by, or filing with, any federal,
state, municipal or other governmental commission, board or
agency, is required in connection with the execution and delivery
by the Borrower of the Loan Documents, the borrowing of money
pursuant to the Loan Documents, the issuance of the Note, or the
performance of any other transaction contemplated by the Loan
Documents to be performed by Borrower;
6. There is no action, suit, proceeding or investigation pending,
or, to the best of our knowledge, threatened, against the
Borrower which if adversely determined would, in any single case
or in the aggregate, materially and adversely affect its
properties, existence, financial condition or business or
materially impair its right to carry on a its business
substantially as now conducted or as contemplated to be conducted
during the term of the Loan Documents;
7. Nothing has come to our attention to indicate that there is or
has been, up to the date hereof, any breach of any of the
presentations, warranties or agreements of the Borrower set forth
in the Loan Documents or any actual alleged occurrence or
situation in any way inconsistent therewith; and
8. To our knowledge, the Borrower's intended use of the "Premises"
described in the Mortgage as contemplated in the Loan Documents
complies with all applicable federal, state and local land use
and environmental statutes, regulations and ordinances, and the
Premises has deeded access to a publicly accepted roadway.
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EXHIBIT C
---------
$544,000.00 AND $656,000.00 COMMERCIAL LOAN
TO
SEACHANGE INTERNATIONAL, INC. (THE "BORROWER")
FROM
BANK OF NEW HAMPSHIRE (THE "BANK")
October 16, 2000
TO BE SUPPLIED BY ALFANO & BAROFF,
PROFESSIONAL ASSOCIATION FOR TAE BANK
-------------------------------------
1. Commitment Letter dated April 25, 2000.
2. Loan Agreement - to be executed by the Borrower and the Bank.
3. $544,000.00 Term Promissory Note - to be executed by the Borrower and by
the Bank.
4. $544,000.00 Mortgage, Security Agreement and Fixture Filing (first
priority) - to be executed by the Borrower (to be recorded - Hillsborough
County Registry of Deeds).
5. $544,000.00 Collateral Assignment of Leases and Rents (first priority) - to
be executed by the Borrower and the Bank (to be recorded - Hillsborough
County Registry of Deeds).
6. $656,000.00 Term Promissory Note - to be executed by the Borrower and by
the Bank.
7. $656,000.00 Mortgage, Security Agreement and Fixture Filing (second
priority) - to be executed by the Borrower (to be recorded - Hillsborough
County Registry of Deeds).
8. $656,000.00 Collateral Assignment of Leases and Rents (second priority) -
to be executed by the Borrower and the Bank (to be recorded - Hillsborough
County Registry of Deeds).
9. Collateral Assignment of Contracts, Plans and Permits - to be executed by
the Borrower and the Bank.
10. Consents to Collateral Assignment of Contracts, Plans and Permits - to be
executed by the architect and general contractor.
11. UCC-1 Financing Statements (5) - to be executed by the Borrower and the
Bank (to be filed - New Hampshire Secretary of State, Greenville Town
Clerk, Delaware Secretary of State, Massachusetts Secretary of the
Commonwealth and Maynard Town Clerk).
12. Environmental Indemnification Agreement - to be executed by the Borrower.
13. Lender's Title Insurance Policy, with standard exceptions deleted.
14. Affidavit as to Parties in Possession and Mechanics' Liens with Indemnity,
and Survey Affidavit (forms furnished by title company) - to be executed by
the Borrower.
15. For the Borrower:
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TO BE SUPPLIED BY THE BORROWER
------------------------------
(a) Articles of Incorporation (certified by the Delaware Secretary of
State);
(b) Certificate of Existence (certified by the Delaware Secretary of
State);
(c) Certificate of Qualification of Foreign Corporation (to be issued by
New Hampshire Secretary of State); and
(d) Secretary's Certificate as to (i) By-laws (with copies thereof
attached), (ii) Resolutions (with minutes thereof attached), and (iii)
Incumbency of officers.
16. Hazard and Liability Insurance Certificates relating to the Mortgaged
Premises (minimum $1,000,000.00) and the assets of the Borrower naming the
Bank as payee under a Lender's Loss Payable Endorsement, and Workmen's
Compensation Insurance Certificates.
** Financial Statements for the Borrower (separately transmitted to the Bank).
17. Legal Opinion of Counsel to Borrower, including zoning and use opinion for
the Mortgaged Premises (form of legal opinion supplied without specific
zoning/use opinion).
18. UCC-11 Search Reports on the Borrower (from all filing offices).
19. Copies of required licenses and permits, including permits for any
underground tanks and building permits.
20. Commitment Fee ($3,000.00).
21. Construction Documents:
(a) "As to be built" survey for the Premises, showing availability of
utilities to the Premises (need not be to ALTA standards if title
agent will delete general survey exception);
(b) Satisfactory contracts with general contractor and architect;
(c) Plans and specifications (architectural, structural, mechanical,
plumbing and electrical);
(d) Builder's risk policy and evidence of general contractor's worker's
compensation insurance;
(e) Cost breakdown/budget and Schedule of Sources and Uses;
(f) Minimum equity infusion as required by the Bank; and
(g) Contractor/Subcontractor list.
22. Mortgage and UCC Releases (if any).
23. Paid Tax Bills for the Mortgaged Premises.
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24. Satisfactory Environmental Site Assessment/Environmental Risk Assessment
Questionnaire for the Mortgaged Premises.
25. Satisfactory evidence that the Mortgaged Premises are not located in a
"Flood Zone" (or flood insurance).
26. Lien Waivers from all contractors and materialmen who have furnished goods
or services to the Mortgaged Premises within the past 130 days (if any).
27. Satisfactory Appraisal of the Mortgaged Premises (separately obtained by
the Bank)
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EXHIBIT D
---------
Disbursement List
-----------------
<TABLE>
<S> <C> <C>
1. Bank of New Hampshire $ 6,196.00
-Origination fee - $3,000.00
-Reimbursement of fees:
Environmental review - $175.00
Appraisal - $3,000.00
Flood cert. - $21.00
2. Alfano & Baroff, P.A. $ 7,420.00
-Legal fees/expenses - $7,300.00
-UCC filing/search fees - $120.00
3. McLane, Graf, Raulerson & Middleton $ 2,075.00
-Lender's Title Premiums
4. SeaChange International, Inc. $ 389,031.00
-Reimbursements of amounts previously
paid to Hutter Construction Corp.
5. Hutter Construction Corp. $ 655,654.00
-Progress payment on outstanding invoices
Total $1,060,376.00
</TABLE>
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Schedule 3.6
------------
SeaChange International, Inc.
Disclosure Schedule to Loan and Security Agreement
Schedule 3.6 Litigation
One of the Company's customers is subject to a lawsuit in Civil Action No. 00-
CV-195, pending in the federal courts in the Eastern District of Virginia,
whereby two named plaintiffs have made a claim of patent infringement against
the Company's customer, which claim is believed to relate at least in part to
such customer's use of the Company's products. There are no direct allegations
pending against the Company in connection with this matter. On Friday, May 19,
2000 the Company filed a motion seeking to intervene in the action between its
customer and the third party, and to transfer the case to the District Court of
Massachusetts. On June 23, 2000, the Court granted the Company's intervention
motion and deferred ruling on the issue of transfer. Also on June 23, 2000, the
Company filed its Intervenor Complaint in the action seeking, among other
things, a declaratory judgment of non-infringement, invalidity and
unenforceability regarding U.S. Patents Nos. 4,814,883 and 5,200,825. On July
20, 2000, the Company agreed to indemnify its customer for claims brought
against the customer that are related to the customer's use of the Company's
products. On July 25, 2000, the plaintiffs filed a Motion for Costs associated
with limited jurisdictional discovery against the Company. On August 7, 2000,
the Company moved to dismiss one of the two named plaintiffs for lack of
standing. On October 11, 2000, the United States District Court for the Eastern
District of Virginia held oral argument on the Company's transfer and dismissal
motions and the third parties' Motion for Costs. Rulings on the three pending
motions are expected within the next several weeks.
On June 13, 2000, the Company filed a lawsuit against one of its competitors,
nCube Corp., for patent infringement. The lawsuit alleges that nCube, with the
advent of its MediaCube-4 video server, infringes the Company's patented and
highly strategic MediaCluster technology. After a Markman hearing, nCube
admitted infringement; and on September 25, 2000, a unanimous jury found the
patent valid. The case now will move forward on damages and a motion for a
permanent injunction.
On June 14, 1999, the Company filed a complaint against an investment banker, an
investment bank and a competitor that alleges that the competitor conspired with
the investment bankers to injure the business and reputation of the Company in
the marketplace and to drive down the price of the Company's stock to benefit
them. In addition, the complaint alleges that the competitor, through its
employees, provided the investment bankers with inside information to further
these efforts. On June 14, 2000, one of the defendants in this suit filed a
counterclaim under seal against the Company seeking unspecified damages.
11