EXHIBIT 10(v)
AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
Dated as of January 21, 2000
among
MARLTON TECHNOLOGIES, INC.
SPARKS EXHIBITS HOLDING CORPORATION
SPARKS EXHIBITS & ENVIRONMENTS CORP.
SPARKS EXHIBITS & ENVIRONMENTS, INC.
SPARKS EXHIBITS & ENVIRONMENTS, LTD.
SPARKS EXHIBITS & ENVIRONMENTS, INCORPORATED
SPARKS SCENIC LTD.
SPARKS PRODUCTIONS LTD.
DMS STORE FIXTURES LLC
collectively, the Borrowers
and
The Banks named herein
and
FIRST UNION NATIONAL BANK, as Agent
144
TABLE OF CONTENTS
Page
Article I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Certain Defined Terms.......................... 1
Section 1.2 Accounting Terms...............................12
Article II THE REVOLVING CREDIT FACILITY
Section 2.1 The Revolving Credit Commitment................13
Section 2.2 Revolving Credit Advances......................14
Section 2.3 Lending Offices; Bank Obligations..............16
Section 2.4 The Revolving Credit Notes.....................16
Section 2.5 Fees...........................................16
Section 2.6 Repayment......................................16
Section 2.7 Interest; Conversions; Continuations...........17
Section 2.8 Computation of Interest and Fees...............18
Section 2.9 Payments.......................................18
Section 2.10 Payment on Non-Business Days...................18
Section 2.11 Reimbursement to the Banks for Cost Increases
Imposed by Law.................................18
Section 2.12 Reimbursement to the Banks for Increased Costs
Due to Capital Adequacy Requirements...........19
Section 2.13 Illegality.....................................20
Section 2.14 Interest and Commissions After Event
of Default.................................... 20
Section 2.15 Special Provisions for LIBOR Loans.............20
Section 2.16 Prepayment; Funding Loss Indemnification.......20
Section 2.17 Letters of Credit..............................21
Section 2.18 Taxes..........................................23
Section 2.19 Additional Borrowers...........................24
Article III COLLATERAL
Section 3.1 Security.......................................24
Section 3.2 Financing Statements; Certificates of Title....26
Section 3.3 Landlord's Waiver..............................26
Section 3.4 Places of Business; Location of Collateral.....26
Section 3.5 Agent's Rights With Respect to Accounts,
Chattel Paper, Instruments and General
Intangibles....................................26
Section 3.6 Accounts.......................................27
Section 3.7 Equipment and Inventory........................27
Section 3.8 Condition of Inventory.........................27
Section 3.9 Expenses of the Agent..........................27
Section 3.10 Notices........................................28
Section 3.11 Insurance; Discharge of Taxes, etc.............28
Section 3.12 Waiver and Release by Borrower.................28
Section 3.13 Access to Inventory............................28
Section 3.14 Records and Reports............................28
Section 3.15 Further Assurances.............................29
Section 3.16 Application of Proceeds of Collateral..........29
Section 3.17 Continuing Collateral..........................29
Article IV CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to the Loans..............29
Section 4.2 Conditions Precedent to All Revolving Credit
Advances.......................................31
Article V REPRESENTATIONS AND WARRANTIES
Section 5.1 Existence......................................31
Section 5.2 Authorization..................................32
Section 5.3 Validity.......................................32
Section 5.4 Financial Information..........................32
Section 5.5 Litigation.....................................32
Section 5.6 Contingent Liabilities.........................32
Section 5.7 Taxes..........................................32
Section 5.8 Encumbrances...................................33
Section 5.9 Consents.......................................33
Section 5.10 ERISA..........................................33
Section 5.11 Ownership......................................33
Section 5.12 Subsidiaries and Ownership of Stock............34
Section 5.13 Margin Stock; Regulation U, Etc................34
Section 5.14 Environmental Matters..........................34
Section 5.15 Debt and Guarantees............................34
Section 5.16 Credit Arrangements............................34
Section 5.17 Licenses, Permits, Etc.........................35
Section 5.18 Compliance with Laws...........................35
Section 5.19 Labor Matters..................................35
Section 5.20 Outstanding Judgments or Orders................35
Section 5.21 No Defaults on Other Agreements................35
Section 5.22 Public Utility Holding Company Act.............35
Section 5.23 Patents........................................35
Section 5.24 Year 2000 Compliance...........................36
Section 5.25 Full Disclosure................................36
Article VI COVENANTS OF THE BORROWERS
Section 6.1 Financial Statements...........................36
Section 6.2 Insurance......................................37
Section 6.3 Taxes..........................................37
Section 6.4 Encumbrances...................................37
Section 6.5 Compliance with Laws...........................38
Section 6.6 Inspection by the Agent........................38
Section 6.7 Reports........................................39
Section 6.8 ERISA..........................................39
Section 6.9 Environmental Matters..........................41
Section 6.10 Change of Business.............................42
Section 6.11 Regulation U...................................42
Section 6.12 Disposal of Assets.............................42
Section 6.13 Loans, Investments, and Contingent Liabilities.42
Section 6.14 Maintenance of Property........................42
Section 6.15 Transactions with Affiliates and Subsidiaries..42
Section 6.16 Restriction on Acquisitions; Merger; Corporate
Structure......................................42
Section 6.17 Dividends and Distributions....................44
Section 6.18 Other Indebtedness.............................44
Section 6.19 Licenses, Permits..............................44
Section 6.20 Fiscal Year....................................44
Section 6.21 Banking Relationships..........................44
Section 6.22 Ownership of Borrowers Other than MTI..........44
Section 6.23 RICO...........................................44
Section 6.24 Minimum Net Worth..............................45
Section 6.25 Senior Funded Debt to EBITDA Ratio.............45
Section 6.26 Funded Debt to EBITDA Ratio....................45
Section 6.27 Fixed Charge Coverage Ratio....................45
Article VII DEFAULT
Section 7.1 Events of Default..............................45
Section 7.2 Termination of Revolving Commitment;
Acceleration...................................47
Section 7.3 Remedies.......................................48
Article VIII AGENCY PROVISIONS
Section 8.1 Authorization and Action.......................48
Section 8.2 Liability of Agent.............................49
Section 8.3 Rights of Agent as a Bank......................49
Section 8.4 Independent Credit Decisions...................49
Section 8.5 Indemnification................................50
Section 8.6 Successor Agent................................50
Section 8.7 Sharing of Payments, Etc.......................50
Article IX MISCELLANEOUS
Section 9.1 No Waiver; Cumulative Remedies.................51
Section 9.2 Arbitration....................................51
Section 9.3 Warrant of Attorney............................52
Section 9.4 Set-Off........................................53
Section 9.5 Amendments, Etc................................53
Section 9.6 Notices........................................53
Section 9.7 Nature of Obligations..........................54
Section 9.8 Costs and Expenses.............................54
Section 9.9 Counterparts...................................54
Section 9.10 Binding Effect.................................55
Section 9.11 Governing Law..................................55
Section 9.12 Headings.......................................55
Section 9.13 Usury..........................................55
Section 9.14 Assignments; Participations....................55
Section 9.15 Appointment of Borrower Agent..................56
Section 9.16 Survival; Indemnification......................56
Section 9.17 Entire Agreement...............................57
Schedules:
---------
2.1 Revolving Credit Commitments
3.4 Collateral Locations
5.12 Subsidiaries and Stock Ownership
5.15 Existing Debt
Exhibits:
--------
2.4 Revolving Credit Note
6.1 Compliance Certificate
AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT, dated as of
January 21, 2000, among MARLTON TECHNOLOGIES, INC., a New Jersey corporation
("MTI"), SPARKS EXHIBITS & ENVIRONMENTS CORP. f/k/a Sparks Exhibits Corp., a
Pennsylvania corporation ("SPARKS"), SPARKS EXHIBITS & ENVIRONMENTS, INC. f/k/a
Sparks Exhibits, Inc., a Georgia corporation ("EXHIBITS"), SPARKS EXHIBITS
HOLDING CORPORATION, a Delaware corporation ("SEH"), SPARKS EXHIBITS &
ENVIRONMENTS, LTD. f/k/a Sparks Exhibits, Ltd., a California corporation
("LIMITED"), SPARKS PRODUCTIONS LTD., a California corporation, SPARKS EXHIBITS
& ENVIRONMENTS, INCORPORATED f/k/a Piper Productions, Inc., a Florida
corporation ("PIPER"), DMS STORE FIXTURES LLC, a Pennsylvania limited liability
company ("DMS"), SPARKS SCENIC, LTD., a California corporation ("SCENIC") and
any other Person (as herein defined) that hereafter becomes a Borrower hereunder
pursuant to Section 2.19 (MTI, SEH, Sparks, Exhibits, Limited, Incorporated,
Piper, DMS and Scenic, and each such other Person that becomes a Borrower
hereunder pursuant to Section 2.19 are each hereinafter referred to as a
"Borrower" and collectively as the "Borrowers"); MARLTON TECHNOLOGIES, INC., as
agent for the Borrowers (in such capacity, the "Borrower Agent"); and FIRST
UNION NATIONAL BANK, a national banking association and any bank joining this
Agreement hereafter (said banks being hereinafter referred to collectively as
"Banks" and individually as a "Bank"); and FIRST UNION NATIONAL BANK, in its
capacity as agent for the Banks (the "Agent").
BACKGROUND
On December 31, 1997, certain of the Borrowers and First Union National
Bank entered into a Loan and Security Agreement pursuant to which agreement
First Union National Bank agreed to make loans to such Borrowers (such
Agreement, as amended the "Prior Agreement"). The Borrowers and First Union
National Bank wish to continue and expand this prior relationship by providing
for additional Banks. Also, the Borrowers have requested that the Banks provide
to the Borrowers a $35,000,000.00 revolving credit facility and the Banks have
agreed to provide a $30,000,000 facility to the Borrowers which may be increased
to $35,000,000, on the terms and conditions herein contained (the "Facility").
The Facility is to be used to refinance existing debt under the Prior Agreement,
finance working capital, capital expenditures and acquisitions permitted
hereunder and for other general corporate purposes.
NOW THEREFORE, the Borrowers, jointly and severally, and the Banks, and the
Agent, intending to be legally bound, agree to amend and restate the Prior
Agreement to read in full as follows:
Article I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"AAA" has the meaning given to such term in Section 9.2(A) hereof.
"Acquisition" has the meaning given to such term in Section 6.16 hereof.
"Adjusted Base Rate" means the Base Rate plus the Applicable Margin for
Base Rate Loans. The Adjusted Base Rate shall change simultaneously with each
change in the Base Rate or the Federal Funds Rate.
"Adjusted LIBOR" means the LIBOR plus the Applicable Margin.
1
"Affiliate" of a Borrower means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Borrower. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Agent" has the meaning given to such term in the introductory paragraph
hereof, and shall include any successor in such capacity.
"Agreement" means this Amended and Restated Revolving Credit and Security
Agreement, as such document may be modified, amended, refinanced, refunded,
extended or otherwise changed from time to time.
"Applicable Margin" means, in accordance with the table and text below:
Applicable Margin:
If the ratio of Senior Funded LIBOR Loans and Base
Debt to EBITDA is: Letter of Credit Fees: Rate Loans
-------------------------- ----------------------- ----------
3.75:1 or lower, but higher than 2.50% 0.50%
3.50:1 (it being acknowledged
that the maximum permitted ratio
of Senior Funded Debt to EBITDA
may never exceed the amount
permitted under Section 6.25)
3.50:1 or lower, but higher than 2.50:1 2.00% 0.00%
2.50:1 or lower, but higher than 2.00:1 1.75% -0.25%
less than or equal to 2.00:1 1.25% -0.25%
The calculation of the Applicable Margin pursuant to the above tables shall be
made quarterly, based upon the Interim Financial Statements or Financial
Statements, as applicable, of MTI and its Subsidiaries as at the last day of
each such fiscal quarter and for the fiscal period then ended. In the event that
the Applicable Margin changes, such change shall become effective for Eurodollar
Loans then existing or thereafter made, as of the first day of the fiscal
quarter immediately following the date on which such financial statements are
delivered to the Agent. In the event that such financial statements are not
delivered to the Agent on or before the date required under this Agreement, the
Applicable Margin shall be calculated as if the Funded Debt to EBITDA is greater
than 3.50:1, effective upon the last day of the fiscal quarter to which such
financial statements relate, and until such financial statements are delivered
showing that the Borrowers are entitled to a lower rate hereunder.
"Arbitration Rules" has the meaning given to such term in Section 9.2(A)
hereof.
"Bank" or "Banks" has the meaning given to such term in the introductory
paragraph hereof and shall include all successors and assigns, and lenders
joining this Agreement as a "Bank".
"Base Rate" means the rate which is at all times equal to the higher of (a)
the Prime Rate or (b) 1/2 of 1% per annum in excess of the Federal Funds Rate.
"Base Rate Loan" means a Loan to which the Adjusted Base Rate applies.
2
"Borrower," "Borrower Agent" and "Borrowers" have the meanings given to
such terms in the introductory paragraph hereof, and each shall include
successors and permitted assigns.
"Business Day" means any day other than a Saturday, Sunday, or other day
on which commercial banks in Philadelphia, Pennsylvania are authorized or
required to close under the laws of the Commonwealth of Pennsylvania; provided
that, if such term is used in connection with a borrowing of, a payment or
prepayment of principal of or interest on, or the Interest Period for, any
Eurodollar Loan or a notice by a Borrower with respect to any such borrowing,
payment, prepayment or Interest Period, "Business Day" shall include any day on
which ordinary dealings are carried out in the London interbank market in
Dollars.
"Capital Expenditures" means expenditures for fixed assets or
improvements, replacements, substitutions, or additions thereto which have a
useful life of more than one year, including assets acquired pursuant to a
Capital Lease; provided that for the purposes of this Agreement, expenditures
for exhibit product inventory purchased and capitalized for rental purposes
shall not be considered Capital Expenditures.
"Capital Lease" means a lease of any Person for real, personal or mixed
use property which, according to GAAP should be capitalized on the books of such
Person.
"Capitalization" means the Net Worth of the Borrowers on a Consolidated
basis less (i) the value of the Borrowers' Intangibles and (ii) loans and
advances to and guaranties of the indebtedness of shareholders plus (iii)
Subordinated Debt.
"Cash Equivalents" means (A) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States
maturing within one year from the date of acquisition thereof, (B) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having the highest rating obtainable from either Standard &
Poor's Ratings Group or Xxxxx'x Investors Service, Inc., (C) commercial paper
maturing no more than one year from the date of creation thereof and, at the
time of acquisition, having the highest rating obtainable from either Standard &
Poor's Corporation or Xxxxx'x Investors Service, Inc., (D) certificates of
deposit, demand accounts or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by the Bank or commercial banks organized
under the laws of the United States of America or any state thereof, each having
combined capital and surplus of not less than $500,000,000.00, and (E)
repurchase agreements and reverse repurchase agreements with securities dealers
of recognized national standing relating to any of the obligations referred to
in the foregoing clause (A); provided that the terms of such agreement comply
with the guidelines set forth in the Supervisory Policy; and further provided
that possession or control of the underlying securities is established as
provided in the Supervisory Policy.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation, and Liability Act, as amended from time to time.
"Change in Control" means the occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended "Exchange Act") other than
an "affiliate" (as such term is used in the Exchange Act) of MTI becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 40% of the total voting power
of MTI; or
3
(ii) At any time after the date hereof, individuals who at the date
hereof constitute the Board of Directors (together with any new directors
whose election by such Board of Directors or whose nomination for election
by the shareholders of MTI was approved by a vote of 66-2/3% of the
directors of MTI then still in office who were either directors at the date
hereof or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.
"Closing Date" means the first date on which all of the conditions
precedent contained in Section 4.1 are satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" has the meaning given to such term in Section 3.1 hereof.
"Commitment Fee" has the meaning given to such term in Section 2.5.
"Consideration" means "cost basis" as defined in Section 1012 of the Code.
"Consolidated" refers to the consolidation of the accounts of MTI and its
Subsidiaries in accordance with GAAP, including principles of consolidation.
"Consolidating" refers to the separation of the accounts of MTI and its
Subsidiaries in accordance with GAAP.
"Controlled Group" means a group of employers, of which any Borrower is a
member and is treated as a single employer under:
(A) ss.414(b) of the Code and the Department of the Treasury
regulations thereunder); or
(B) solely for purposes of liability under ss.412(c)(11) of the Code
and ss.302(c)(11) of ERISA and the lien under ss.412(n) of the Code and
ss.302(f) of ERISA, ss.414(c) of the Code and the Department of the
Treasury regulations thereunder; or
(C) solely for purposes of liability under ss.412(c)(11) of the Code
and ss.302(c)(11) of ERISA and the lien under ss.412(n) of the Code and
ss.302(f) of ERISA, ss.414(m) of the Code and the Department of the
Treasury regulations thereunder; or
(D) any other entity required to be aggregated with any Borrower
pursuant to ss.414(o) of the Code and the Department of the Treasury
regulations thereunder.
"Current Assets" means all assets of MTI and its Subsidiaries as of any
date that would, in accordance with GAAP, be classified as current assets
thereof on a Consolidated basis.
"Current Liabilities" means all liabilities of MTI and its Subsidiaries as
of any date that would, in accordance with GAAP, be classified as current
liabilities thereof on a Consolidated basis.
"Current Maturities" means on any date those portions of Funded Debt that
are payable on demand or within one year of such date without giving effect to
any prospective renewal or extension of such Funded Debt.
"Current Ratio" means as of any date the ratio of Current Assets to Current
Liabilities.
4
"Default Rate" means the Interest Rate set forth in Section 2.14.
"Defined Benefit Pension Plan" means a defined benefit plan (other than a
Multiemployer Plan) as defined in ss.3(35) of ERISA, subject to Title IV of
ERISA.
"Defined Contribution Plan" means an individual account plan as defined in
ss.3(34) of ERISA.
"Dispute" has the meaning given to such term in Section 9.2(A) hereof.
"Dollars" and the "$" mean lawful money of the United States of America.
"EBITDA" means for any period of four fiscal quarters of MTI, Net Income of
MTI and its Subsidiaries on a Consolidated basis for such period plus interest,
taxes, depreciation and amortization deducted in computing Net Income, minus the
non-cash earnings related to income from Affiliates or other Persons in which
MTI and/or its Subsidiaries have an Investment.
"Effective Date" means, for Eurodollar Loans, the date the Borrower Agent
designates as the date on which a Eurodollar Interest Period is to commence
pursuant to Section 2.2, 2.7(C) or 2.7(D).
"Employee Benefit Plan" has the meaning given to such term in ss.3(3) of
ERISA.
"Environmental Law" means any federal, state, or local statute, law,
ordinance, regulation, rule, standard, permit or requirement, including but not
limited to those statutes, ordinances, laws, regulations, rules, standards,
permits and requirements promulgated under the laws of the United States of
America or any other nation, concerning or relating to the protection of the
environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.
"Eurocurrency Reserve Requirement" means, for any day as applied to a
Eurodollar Loan, the aggregate of the rates (such aggregate being expressed as a
decimal) of reserve requirements in effect on such day (including, without
limitation, any basic, marginal, supplemental and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto, as now and from
time to time hereafter in effect) for eurocurrency funding (currently referred
to as "Eurocurrency liabilities" in Regulation D of such Board) maintained by a
member bank of the Federal Reserve System having deposits in an aggregate amount
at least equal to the aggregate amount of deposits held by Agent, but without
benefit of or credit for proration, exemptions, or offsets that might otherwise
be available to such member bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by such member bank against
(A) any category of liabilities which includes deposits by reference to which
the LIBOR for Eurodollar Loans is to be determined or (B) any category of
extension of credit or other assets that include Eurodollar Loans.
"Eurodollar Interest Period" means for each Eurodollar Loan a period of
time, beginning on an Effective Date, and ending on the numerically
corresponding day in the first, second, third, or sixth calendar month
thereafter (or if there is no numerically corresponding calendar day in such
calendar month, ending on the last day of such calendar month), selected by the
Borrower Agent by telephone or in writing (and if by telephone, confirmed by the
Borrower Agent promptly thereafter in writing), during which the Interest Rate
is the Adjusted LIBOR. If a Eurodollar Interest Period would otherwise end on a
day that is not a Business Day, such Eurodollar Interest Period shall be
extended to the next Business
5
Day, unless such Business Day would fall in the next calendar month, in which
event such Eurodollar Interest Period shall end on the immediately preceding
Business Day.
"Eurodollar Loan" means any Loan denominated in Dollars when and to the
extent to which the Adjusted LIBOR applies.
"Event of Default" has the meaning given to such term in Section 7.1.
"Exhibits" has the meaning given to such term in the introductory paragraph
hereof.
"Facility" has the meaning given to such term in the Background Section.
"Federal Funds Rate" means the rates shown as the Federal Funds Rate in the
Federal Reserve Statistical Release H.15 (519), Selected Interest Rates. In the
event that the Federal Reserve fails to publish such rate, "Federal Funds Rate"
shall mean the rate determined by the Bank in good faith.
"Fees" means all payments except for interest and principal which the
Borrowers are required to make to the Agent and/or the Banks hereunder and shall
include, without limitation, amounts owing in connection with any prepayment
under any Eurodollar Loan and the Commitment Fee.
"Financial Statements" means the audited Consolidated balance sheet,
statement of income, statement of cash flow and statement of changes in
stockholders' equity, together with all notes pertaining thereto, and an
unaudited Consolidating balance sheet and statements of income of MTI and its
Subsidiaries, all as at and for a designated period and all in accordance with
GAAP.
"Fixed Charges" means for any period the sum of (A) Total Debt Service,
plus (B) taxes paid in cash by the Borrowers during the relevant period, plus
(C) expenses paid by the Borrowers during such period for the rental of personal
or real property, plus (D) non-financed Capital Expenditures made by the
Borrowers during such period.
"Funded Debt" means at any time with respect to MTI and its Subsidiaries on
a Consolidated basis, without duplication, the sum of all current outstandings
under demand and overdraft facilities, plus the current portion of long term
Indebtedness and capital leases plus all Indebtedness that has a final maturity
more than one year after the date of issuance thereof (or which is convertible,
renewable or extendable into an obligation with such final maturity) including
all final and serial maturities, prepayments and sinking fund payments required
to be made within one year of the date of calculation (notwithstanding the fact
that any portion thereof may also be included in current liabilities under
GAAP).
"GAAP" means generally accepted accounting principles in the United States
in effect from time to time as promulgated in statements, opinions and
pronouncements by the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board and any successor entities, consistently
applied.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to all
governmental bodies.
"Indebtedness" means, with respect to any Person:
(a) (i) all indebtedness, obligation or liability for borrowed money
or for the deferred purchase price of property, (ii) all lease obligations
that would, in accordance with GAAP, have been or should be capitalized,
including without limitation, sale-leaseback and synthetic lease
obligations, (iii) all obligations of such Person to purchase goods,
property or services where payment for such goods,
6
property or services is required regardless of whether delivery of such
goods, property, or the performance of such services is ever made or
tendered; (iv) all obligations for the deferred purchase price of property
or services (including trade obligations other than those incurred in the
ordinary course of business and in accordance with customary terms); (v)
all current liabilities in respect of unfunded vested benefits under any
Plan; (vi) all obligations under letters of credit issued for the account
of any Person; (vii) all obligations arising under acceptance facilities;
and (viii) the notional amount of interest rate products and derivatives;
and
(b) to the extent not included in the foregoing, all indebtedness,
obligations and liabilities secured by any mortgage, pledge, lien,
conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is
subject, whether or not the Indebtedness, obligations or liabilities
secured thereby shall have been assumed by such Person;
(c) to the extent not included in the foregoing, all indebtedness,
obligations and liabilities of others which such Person has directly or
indirectly guaranteed, endorsed (other than for collection or deposit in
the ordinary course of business), discounted, sold with recourse or for
less than face value or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire or in respect of which such Person has
agreed to supply or advance funds or otherwise to become directly or
indirectly liable; and
(d) all obligations or liabilities of such Person under or pursuant to
a letter of credit, interest rate protection agreement, surety bond, or
similar obligation.
"Intangibles" means any assets which are properly classified as intangible
assets in accordance with GAAP and including, but not limited to: goodwill,
patents, tradenames, trademarks, copyrights, franchises, experimental expense,
organization expense, unamortized debt discount and expenses, the excess of
shares acquired over book value of assets, and non-compete agreements.
"Interest Period" means a Eurodollar Interest Period or any period during
which the Interest Rate is the Adjusted Base Rate, as appropriate.
"Interest Rate" means the Adjusted LIBOR, Adjusted Base Rate or Default
Rate, as appropriate.
"Interim Financial Statements" means an unaudited Consolidated balance
sheet, statement of income and statement of cash flows of MTI and its
Subsidiaries all as, at and for a designated period, all in accordance with GAAP
subject only to usual year-end adjustments and the absence of footnotes.
"Investment" means any loan or advance, or purchase or acquisition of the
securities or obligations of, any Person or the assumption of any liability of
another Person which in such case, did not arise from sales to such Person in
the ordinary course of business.
"Landlord Waiver" has the meaning given to such term in Section 3.3 hereof.
"Lending Office" means, with respect to any Bank, for each type of Loan,
the Lending Office of such Bank (or of an affiliate of such Bank) designated for
such type of Loan on the signature pages hereof or such other office of such
Bank (or of an affiliate of such Bank) as the Bank may from time to time specify
to the Borrowers and the Agent as the office at which its Loans of such type are
to be made and maintained.
"Letter of Credit" has the meaning given to such term in Section 2.17
hereof.
7
"Letter of Credit Liability" means, without duplication, at any time and in
respect of any Letter of Credit then outstanding the sum of (a) the undrawn face
amount of such Letter of Credit plus (b) the aggregate unpaid principal amount
of all Reimbursement Obligations at such time due and payable in respect of all
drawings made under such Letter of Credit.
"Liabilities" has the meaning given to such term in Section 3.1 hereof.
"LIBOR Loan" means a Eurodollar Loan.
"LIBOR" means, with respect to each Interest Period pertaining to a LIBOR
Loan, the rate per annum (rounded upward, if necessary, to the nearest 1/16 of
1%) equal to the quotient of (A) the London Interbank Offered Rate for such
Eurodollar Loan for the applicable Eurodollar Interest Period for delivery on
the first day of such Interest Period divided by (B) a number equal to 1.00
minus the Eurocurrency Reserve Requirement on the day which is two Business Days
prior to the beginning of such Interest Period.
"Loan Document(s)" means this Agreement, the Notes, the Letters of Credit,
a Subrogation and Contribution Agreement executed by each Borrower, and all
certificates, agreements, instruments, schedules and exhibits delivered or to be
delivered by the Borrowers to the Agent or the Banks in connection with this
Agreement, in each case, as amended, refinanced, extended, modified or
supplemented from time to time.
"Loans" means amounts advanced under the Facility, and shall have the same
meaning as Revolving Credit Advances.
"London Interbank Offered Rate" applicable to any elected Eurodollar
Interest Period for a Eurodollar Loan means the rate per annum (rounded upwards,
if necessary, to the nearest 1/16th of 1%) quoted at approximately 11:00 a.m.
London time, by the principal London branch of the Bank two London Business Days
prior to the first day of such Eurodollar Interest Period for the offering to
leading banks in the London interbank market of Dollar deposits in immediately
available funds for a period, and in an amount, comparable to the Eurodollar
Interest Period and principal amount of the Eurodollar Loan which shall be
outstanding during such Eurodollar Interest Period.
"Majority Banks" means at any time the Banks holding at least 51% of the
then aggregate unpaid principal amount of the Notes held by the Banks, or, if no
such principal amount is then outstanding, Banks having at least 51% of the
aggregate Commitments. Notwithstanding the foregoing, if there are two or fewer
Banks, the term "Majority Banks" shall mean all Banks.
"Margin Stock" has the same meaning that Regulation U of the Board of
Governors of the Federal Reserve System gives to that term.
"Material Adverse Effect" means any material adverse effect on:
(a) the business, condition (financial or otherwise), operations,
properties or prospects of MTI and its Subsidiaries, taken as a whole, or
(b) the ability of the Borrowers, taken as a whole, to perform their
obligations under the Loan Documents.
"Maturity Date" means, unless the Loans are earlier accelerated pursuant to
Section 7.2, the date which is the fifth (5th) anniversary of the Closing Date.
8
"Measurement Date" has the meaning given to such term in Section 6.25
hereof.
"MTI" has the meaning given to such term in the introductory paragraph
hereof.
"Multiemployer Plan" has the meaning given to such term in ss.4001(a)(3) of
ERISA.
"Net Income" means gross revenues and other proper income credits, less all
proper income charges, including taxes on income, all determined in accordance
with GAAP.
"Net Worth" means as of any date the amount by which Total Assets exceed
Total Liabilities.
"New Borrower" has the meaning given to such term in Section 2.19 hereof.
"Note(s)" means the Revolving Credit Note(s).
"Obligations" means all amounts payable to the Agent or the Banks under
this Agreement or the Notes, whether now or hereafter owing, including but not
limited to principal amounts, interest, fees, charges, indemnification
obligations, Reimbursement Obligations as to Letters of Credit, and all
obligations to reimburse Agent or any Bank for payments made by the Agent or any
Bank pursuant to interest rate protection agreements, or foreign exchange
contracts issued by any Bank for the benefit of a Borrower or Borrowers, and
including any guaranty or surety obligations of Borrowers owed to any Bank and
the undertakings of Borrowers to immediately pay to any Bank the amount of any
overdraft on any account of deposit maintained with any Bank.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" has the meaning given to such term in Section 6.16
hereof.
"Permitted Seller Debt" means Subordinated Debt that is incurred in a
Permitted Acquisition and is otherwise on terms reasonably acceptable to the
Agent and the Banks.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Plan" means (A) a Defined Benefit Pension Plan or Defined Contribution
Plan maintained for employees of a Borrower or any member of any Borrower's
Controlled Group, or (B) any other Employee Benefit Plan (other than a
Multiemployer Plan) maintained for employees of a Borrower or any member of any
Borrower's Controlled Group.
"Prime Rate" means the rate of interest for loans established and publicly
announced by the Agent at its Head Office from time to time as its prime rate;
the use of such terms shall not imply that such rate is the lowest or best rate
offered by the Agent or any of the Banks.
"Principal Payment Dates" means April 1, July 1, October 1 and January 1 in
any year.
"Prohibited Transaction" has the meaning given to such term in ss.406 of
ERISA, ss.4975(c) of the Code and any Treasury regulations issued thereunder.
9
"Properties" means any real estate owned or occupied by any Borrower or any
of its Subsidiaries or at which any Borrower or any of its Subsidiaries conducts
business operations, but excluding customer sites where the Borrowers' only
operation is the installation of exhibits.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as amended or supplemented from time to time.
"Reimbursement Obligations" shall mean, at any time, the obligations of the
Borrowers then outstanding, or that may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by the Agent in
respect of any drawings under a Letter of Credit.
"Reportable Event" has the meaning given to such term in ss.4043(b) of
ERISA.
"Revolving Credit Advances" means amounts advanced by the Agent and/or the
Banks under the revolving credit facility provided for in this Agreement and
shall have the same meaning as "Loans".
"Revolving Credit Commitment" means $30,000,000 initially, and after the
addition of another Bank or Banks under Section 2.1(B), $35,000,000 as such
amount may be reduced pursuant to Section 2.1(D) hereof.
"Revolving Credit Notes" has the meaning given to such term in Section 2.4
hereof.
"RICO" means the Racketeer Influenced and Corrupt Organization Act, as
amended by the Comprehensive Act of 1984, 18 U.S.C. ss.ss.1961-68, as amended or
supplemented from time to time.
"Senior Funded Debt" shall mean all Consolidated Funded Debt, other than
(i) Subordinated Debt and (ii) Funded Debt referred to in Section 6.16(B)(iii).
"Subordinated Debt" means any Indebtedness of the Borrowers that is
subordinated to the Obligations in accordance with a subordination agreement
acceptable to the Majority Banks in their reasonable discretion.
"Subsidiary" of any Person means any corporation or other entity, more than
50% of the voting capital stock, partnership or other ownership interests of
which is owned, directly or indirectly, by such Person and/or one or more of
such Person's other subsidiaries.
"Supervisory Policy" means the Federal Financial Institutions Examination
Council Supervisory Policy-Repurchase Agreements of Depository Institutions with
Security Dealers and Others as adopted by the Comptroller of the Currency on
October 31, 1985, as amended or supplemented from time to time.
"Total Assets" means as of any date all assets of MTI and its Subsidiaries
that would, in accordance with GAAP, be classified as assets thereof on a
Consolidated basis.
"Total Debt Service" for any period means Current Maturities as of the last
day of such period, plus interest expenses in respect of Indebtedness of
Borrowers on a Consolidated basis during such period.
"Total Liabilities" means as of any date all liabilities of MTI and its
Subsidiaries on a Consolidated basis that would, in accordance with GAAP, be
classified as liabilities thereof on a Consolidated basis.
"Total Outstanding Revolving Credit" has the meaning given to such term in
Section 2.1.
10
"Unmatured Event of Default" means and refers to any event, act or
occurrence which, with the passing of time or the giving of notice or both,
would constitute an Event of Default.
"Withdrawal Liability" has the meaning given to such term in ss.4201 of
ERISA.
SECTION 1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein, or defined herein and not specifically provided as being construed
in accordance with GAAP, shall be construed, and all financial data
submitted pursuant to this Agreement shall be prepared, in accordance with
GAAP.
Article II
THE REVOLVING CREDIT FACILITY
SECTION 2.1 THE REVOLVING CREDIT COMMITMENT.
(A) Subject to the terms and conditions set forth in this Agreement, each
Bank severally, but not jointly, agrees to make loans to any Borrower
(as directed by the Borrower Agent), from time to time up to the
amount set forth opposite such Bank's name on Schedule 2.1, attached
hereto, as amended from time to time, during the period from the date
hereof until the Maturity Date, such sums as the Borrower Agent may
request (each such advance shall be a "Revolving Credit Advance" or a
"Loan"), provided that the sum of (a) the total outstanding principal
of Revolving Credit Advances plus (b) all Letter of Credit Liabilities
(such sum is hereinafter referred to as the "Total Outstanding
Revolving Credit") shall not at any time exceed the Revolving Credit
Commitment. The Borrowers shall use Loans to refinance existing
Obligations under the Prior Agreement and for general corporate
purposes including Permitted Acquisitions and transactions expressly
permitted hereunder and for no other purposes.
(B) The parties contemplate that an additional Bank shall join this
Agreement in order to increase the Revolving Credit Commitment to
$35,000,000 (Thirty-Five Million Dollars). Such Bank shall be subject
to the prior written approval of the Agent and the Borrower Agent,
which shall not be unreasonably withheld. To the extent that
additional or different Banks become lenders hereunder, whether under
the foregoing sentence or otherwise, each such Bank shall deliver to
the Agent a joinder to the Agreement indicating the amount of its
Revolving Credit Commitment, and the Agent shall issue to all parties
hereto an amended Schedule 2.1 reflecting such joinders. In addition,
Borrowers shall issue to each such additional Bank, a Note in the
principal amount of such Bank's Revolving Credit Commitment and such
Bank shall automatically become a "Bank" hereunder and a party to this
Agreement, entitled to all rights and subject to all obligations
attributable to a Bank hereunder. To the extent necessary, the
Borrowers will issue replacement Notes to the other Banks reflecting
their new Revolving Credit Commitments and upon receipt of the
replacement Notes the Banks shall return the prior Notes.
(C) Each extension of credit under the Revolving Credit Commitment shall
be made by each Bank in the proportion which that Bank's Revolving
Credit Commitment bears to the total Revolving Credit Commitment.
Within the limits of the Revolving Credit Commitment, the Borrowers
may borrow, repay and reborrow under this Section; provided that all
of the Loans be paid in full on the Maturity Date. The Borrowers shall
pay interest on the principal amount of the Revolving Credit Advances
outstanding from time to time at the Interest Rate applicable to each
Loan in accordance with Section 2.7.
(D) The Revolving Credit Commitment shall be permanently reduced by the
sum of Three Hundred Thousand Dollars ($300,000), beginning on October
1, 2000 and continuing on the
11
last day of every calendar quarter thereafter (each, a "Mandatory
Reduction Date"), until the Revolving Credit Commitment has reached
Twenty-Five Million Dollars ($25,000,000); provided that, in the event
an additional Bank or Banks joins this Agreement pursuant to Section
2.1(B) above, on each Mandatory Reduction Date subsequent to such
joinder, the amount by which the Revolving Credit Commitment is
reduced shall be increased to $358,000 (Three Hundred and Fifty-Eight
Thousand Dollars). In addition to reductions on Mandatory Reduction
Dates, the Borrower Agent shall have the right at any time and from
time to time, upon at least three (3) Business Days prior written
notice by the Borrower Agent to the Agent, to terminate the Revolving
Credit Commitment in whole or reduce it in part, provided, however,
that: (i) the Borrowers shall simultaneously with each such reduction
pay to the Agent, for the account of the Banks (a) the amount by which
the Total Outstanding Revolving Credit exceeds the Revolving Credit
Commitment as so reduced, with such repaid principal to be applied
first against Base Rate Loans and thereafter against Eurodollar Loans
in accordance with Section 2.17(D), and (b) all accrued and unpaid
interest on the Loans so prepaid; and (ii) to the extent application
of this subsection requires a prepayment of any Eurodollar Loans prior
to the end of the applicable Interest Period(s), the Borrowers shall
pay any prepayment compensation required under Section 2.17 (whether
or not the Banks shall have actually funded a Loan with corresponding
deposits). Any partial reduction of the Revolving Credit Commitment
made at Borrower Agent's option shall be in the minimum amount of Five
Hundred Thousand Dollars ($500,000) or in multiples of Five Hundred
Thousand Dollars ($500,000) in excess thereof. Any termination or
reduction of the Revolving Credit Commitment hereunder shall be
permanent, and the Revolving Credit Commitment cannot thereafter be
restored or increased without the written consent of the Banks. Upon
the termination of the Revolving Credit Commitment in whole, the
Borrowers shall pay any accrued Commitment Fees and repay the
aggregate principal amount of the Total Outstanding Revolving Credit
together with interest thereon and any other sums due hereunder,
including, without limitation, under Section 2.17.
(E) The Borrowers may borrow, repay and reborrow under the Revolving
Credit Commitment until the Maturity Date subject to the terms and
conditions of this Agreement.
SECTION 2.2 REVOLVING CREDIT ADVANCES.
(A) Borrower Agent Request. The Borrower Agent shall notify the Agent by
telephone no later than Noon Philadelphia time the day of the
requested borrowing of each proposed Base Rate Loan, specifying the
date and amount of the proposed Base Rate Loan. The Borrower Agent
shall notify the Agent by telephone no later than Noon Philadelphia
time at least three (3) Business Days in advance of each proposed
Eurodollar Loan, specifying the date and the amount of such proposed
Loan and the length of the proposed Interest Period. The Borrower
Agent will confirm any telephonic notice of a proposed Loan the same
day by facsimile copy. Each Eurodollar Loan shall be in an amount of
Five Hundred Thousand Dollars ($500,000) or in multiples of One
Hundred Thousand Dollars ($100,000) in excess thereof. Each such
notice (whether or not actually confirmed by facsimile copy) shall
constitute a representation by all of the Borrowers that, at the time
thereof and giving effect to the Loan requested thereby, the
conditions precedent for such Loan as set forth in Section 4.2 hereof
have all been satisfied.
(B) Making Loans. Upon satisfaction of the conditions set forth herein,
the Agent shall promptly notify each Bank of each such notice. Not
later than 2:00 p.m. Philadelphia time on the date of the requested
Loan, each Bank will make available to the Agent at the Agent's
specified office in immediately available funds, such Bank's pro rata
share of such Loan. After the Agent's receipt of such funds, not later
than 4:00 p.m. on the date of such Loans and upon satisfaction of the
conditions set forth herein, the Agent shall make the requested
Advance available to the Borrower Agent (for the account of the
relevant Borrower), in the Borrower Agent's account maintained with
the Agent. The Borrowers agree to hold the Agent and Banks harmless
from any liability for any loss resulting from the Agent's reliance on
any writing, facsimile copy or telephonic notice purportedly made by
an officer of
12
the Borrower Agent, provided that the Agent has acted in good faith in
doing so. The Agent may assume that telephonic notice of a request for
a Loan is from an authorized officer of the Borrower Agent, absent
willful misconduct or gross negligence.
(C) NON-RECEIPT OF FUNDS BY AGENT.
(1) Unless the Agent shall have received notice from a Bank prior to
the date on which such Bank is to provide funds to the Agent for
a Loan to be made by such Bank that such Bank will not make
available to the Agent such funds, the Agent may assume that such
Bank has made such funds available to the Agent on the date of
such Loan in accordance with Section 2.2 and the Agent in its
sole discretion may, but shall not be obligated to, in reliance
upon such assumption, make available to the Borrowers on such
date a corresponding amount. If and to the extent such Bank shall
not have so made such funds available to the Agent, such Bank
agrees to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrowers
until the date such amount is repaid to the Agent, at the
overnight federal funds rate calculated in the manner customary
for the correction of errors among banks for three Business Days
and thereafter at the Base Rate. If such Bank shall repay to the
Agent such amount with interest upon or prior to the Agent's
demand therefor, such Bank shall be deemed to have funds
available as required under Section 2.2. If such Bank does not
pay such amount forthwith upon Agent's demand therefor, the Agent
shall promptly notify Borrowers, and Borrowers shall immediately
pay such corresponding amount to the Agent with interest thereon,
for each day from the date such amount is made available to the
Borrowers until the date such amount is repaid to the Agent, at
the rate of interest applicable at the time to such proposed
Loan.
(2) Unless the Agent shall have received notice from the Borrowers
prior to the date on which any payment is due to the Banks
hereunder that the Borrowers will not make such payment in full,
the Agent may assume that the Borrowers have made such payment in
full to the Agent on such date and the Agent in its sole
discretion may, but shall not be obligated to, in reliance upon
such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to
the extent the Borrowers shall not have so made such payment in
full to the Agent, each Bank shall repay to the Agent forthwith
on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such
amount to the Agent, at the overnight federal funds rate
calculated in the manner customary for the correction of errors
among banks for three Business Days and thereafter at the Base
Rate.
SECTION 2.3 LENDING OFFICES; BANK OBLIGATIONS. Each type of Loan shall be made
and maintained at such Bank's Lending Office for such type of Loan. The
failure of any Bank to make any requested Revolving Credit Loan to be made
by it on the date specified for such Loan shall not relieve any other Bank
of its obligation (if any) to make such Loan on such date, but no Bank
shall be responsible for the failure of any other Bank to make such Loans
to be made by such other Bank.
SECTION 2.4 THE REVOLVING CREDIT NOTES. All Loans made by each Bank under this
Agreement shall be evidenced by, and repaid with interest in accordance
with, a single promissory note of each of the Borrowers in substantially
the form of Exhibit 2.4 duly completed, in the principal amount equal to
such Bank's Commitment, dated the date of this Agreement, payable to such
Bank for the account of the applicable Lending Office and maturing as to
principal on the Maturity Date (said promissory note, as it may be
hereafter amended, renewed or extended, the "Revolving Credit Note"). Each
Bank is hereby authorized by the Borrowers to endorse on the schedule
attached to the Revolving Credit Note held by it, or on its records, the
amount of each Loan and each renewal, conversion, and payment of principal
amount received by such Bank for the account of the applicable Lending
Office on account of its Loans, which endorsement shall, in the absence of
manifest error, be conclusive as to the outstanding balance
13
of the Loans made by such Bank; provided, however, that the failure to make
such notation with respect to any Loan or renewal, conversion, or payment
shall not limit or otherwise affect the obligations of the Borrowers under
this Agreement or the Revolving Credit Note held by such Bank.
SECTION 2.5 FEES.
(A) Certain Fees. At Closing, the Borrowers shall pay to the Agent an
upfront fee for the account of the Banks in the amount of 0.15% of the
Revolving Credit Commitment. In addition, the Borrowers shall pay
certain other non-refundable fees to the Agent, all as set forth in
the letter dated on or about the date hereof, to the Borrowers from
the Agent.
(B) Commitment Fee. The Borrowers agree to pay to the Agent a
non-refundable commitment fee (the "Commitment Fee") for the ratable
benefit of the Banks computed at the rate of 1/4% per year on the
average daily unused portion of the Revolving Credit Commitment from
the date of this Agreement until the Maturity Date. Upon receipt of
any Commitment Fees, the Agent will promptly thereafter cause to be
distributed such payments to the Banks in the proportion that each
Bank's unused Commitment bears to the total of all the Banks' unused
Commitments.
SECTION 2.6 REPAYMENT. The Total Outstanding Revolving Credit shall be repaid in
full on the Maturity Date, together with all accrued but unpaid interest
and Fees. In addition, the Borrowers shall pay all amounts necessary from
time to time to reduce the aggregate outstanding Revolving Credit Advances
as the Revolving Credit Commitment is periodically reduced pursuant to
Section 2.1(D), so that the aggregate outstanding Revolving Credit Advances
never exceed the Revolving Credit Commitment.
SECTION 2.7 INTEREST; CONVERSIONS; CONTINUATIONS.
(A) Base Rate Loans. The Borrowers shall pay to the Agent, for the benefit
of the Banks, interest at the Adjusted Base Rate in arrears on the
unpaid principal amount of each Base Rate Loan from the date on which
such Base Rate Loan is advanced or converted from a Eurodollar Loan
until such principal amount has been repaid in full or converted to a
Eurodollar Loan (1) quarterly on the last day of each quarter
commencing with the last day of the first calendar quarter after this
Agreement is executed, (2) on the date of payment in full of the Total
Outstanding Revolving Credit and (3) on the Maturity Date.
(B) LIBOR Loans. The Borrowers shall pay interest in arrears on the unpaid
principal amount of each LIBOR Loan at the applicable Adjusted LIBOR,
on the last day of each Interest Period, with respect thereto and
also, in the event that the Interest Period is six (6) months in
duration, the Borrowers shall pay interest on the last day of the
third month of such Interest Period.
(C) Conversions to Eurodollar Loans. By notifying the Agent at least three
Business Days prior to an Effective Date, the Borrower Agent may
convert into a Eurodollar Loan any Base Rate Loan(s) in an aggregate
principal amount of Five Hundred Thousand Dollars ($500,000) and
multiples of One Hundred Thousand Dollars ($100,000) in excess
thereof. At the end of the applicable Eurodollar Interest Period, the
Eurodollar Loan will convert back to a Base Rate Loan unless the
Borrower Agent otherwise elects to continue or convert such Eurodollar
Loan as provided herein.
(D) Continuation of Loans. If any Loan shall be outstanding as a
Eurodollar Loan, then not later than 3:00 p.m. Philadelphia time on
the date that is three (3) Business Days prior to the last day of the
current Interest Period for such Loan, the Borrower may elect to
continue such Loan as the same type of Loan for a subsequent Interest
Period as provided in this Section 2.7(D).
14
If the Borrower Agent elects to continue any such Loan as aforesaid,
the Borrower Agent shall give notice not later than the time set forth
above, which notice shall identify the type, amount and current
Interest Period of the Loan to be continued, and the duration of the
new Interest Period for such Loan.
(E) Limitation on Number of Interest Rate Tranches. At no time shall there
be more than six (6) different Interest Periods pertaining to the
Eurodollar Loans.
(F) Notices Irrevocable. All notices given under this Section shall be
irrevocable if reasonably relied upon by the Agent and such reliance
leads to an economic loss by the Agent and/or any Bank.
SECTION 2.8 COMPUTATION OF INTEREST AND FEES. The Fees and all interest on the
Loans and other sums payable hereunder shall be computed on the basis of a
year of 360 days for the actual number of days elapsed.
SECTION 2.9 PAYMENTS.
(A) The Borrowers hereby authorize the Agent or any Bank to charge
directly any account maintained by the Borrowers or any entity
comprising the Borrowers with the Agent or any Bank for any payments
of principal of the Loans, interest and Fees, and any other amounts
owing under this Agreement or under the Note, as and when due. The
Agent or any Bank shall promptly notify the Borrower Agent (and Agent
if notice is given by a Bank) whenever any such account is so charged,
which notice shall specify the amount so charged and the obligations
hereunder to which such amount was applied. In the event that the
Borrowers maintain insufficient funds in such account(s) to meet the
Borrowers' obligations hereunder when due, the Borrowers will make all
payments of principal of the Loans, all payments of interest on the
Loans and all payments of Fees, to the Agent, for the benefit of the
Banks, not later than 1:00 P.M. Philadelphia time on the applicable
due date in immediately available funds.
(B) Any payment made after the time specified in subsection (A) shall be
deemed to have been made on the next succeeding Business Day.
(C) After the occurrence of an Event of Default, the Agent shall apply all
payments and collections received by it as follows: first, to all of
the reasonable costs and expenses incurred in connection with the
collection of such payments; second, to accrued and unpaid Fees (other
than attorneys' fees and expenses already paid pursuant to "first"
above); third, to accrued interest; fourth, to the outstanding
principal amount of the Loans; fifth, to all other amounts which shall
have come due hereunder, and sixth, to the Borrowers.
SECTION 2.10 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day, and, except
as otherwise specifically provided herein, such extension of time shall in
such case be included in the computation of payment of interest hereunder
or under the Note or the Fees, as the case may be.
SECTION 2.11 REIMBURSEMENT TO THE BANKS FOR COST INCREASES IMPOSED BY Law.
(A) If any change in existing law or regulation, any new law, change in
regulatory interpretation or change in any other factor having the
force of law shall impose or change any tax (other than taxes on
income in general), reserve, insurance, special deposit or similar
requirements or charges with respect to funds obtained by any Bank to
make or maintain any of the
15
Loans during any Interest Period, and the result is to increase the
cost to such Bank of obtaining or maintaining such funds or to reduce
the return to such Bank on the Loans, the Borrowers shall pay to such
Bank an amount sufficient to compensate such Bank in full for such
increased costs or such reduced return.
(B) A certificate of the affected Bank setting forth such amount or
amounts as shall be necessary to compensate the Bank or its holding
company as specified above shall be provided to the Agent and promptly
forwarded by the Agent to the Borrowers and shall be conclusive absent
manifest error, provided such determination is made on a reasonable
basis. The Borrowers shall pay the affected Bank the amount shown as
due on any such certificate delivered by the Bank within 10 days after
its receipt of the same.
SECTION 2.12 REIMBURSEMENT TO THE BANKS FOR INCREASED COSTS DUE TO CAPITAL
ADEQUACY REQUIREMENTS.
(A) If any law or regulation or the interpretation thereof by any court or
administrative or governmental authority charged with the
administration thereof, or compliance by any Bank with any request or
directive (whether or not having the force of law) of any such
authority, applicable from time to time, shall after the date hereof
(A) impose, modify, deem applicable or result in the application of
any capital maintenance, capital ratio or similar requirements against
loan commitments or other facilities made by such Bank and the result
thereof shall be to impose upon such Bank a fee or a requirement to
increase any capital requirement applicable as a result of the making
or maintenance of the Loans (which imposition of or increase in
capital requirements may be determined by such Bank's allocation of
the aggregate of such capital impositions or increases), or subject
such Bank to any tax, duty or other charge with respect to the Loans,
such Bank's Note, or its obligation to advance under the Revolving
Credit Commitment, or change the basis of taxation of payments to such
Bank of the principal of or interest on the Loans or any other amounts
due under this Agreement in respect of the Loans or its obligation to
advance under the Revolving Credit Commitment (including the
imposition of any tax not previously in effect on the net income of
such Bank imposed by any jurisdiction in which such Bank is obligated
to pay taxes), then, upon demand by such Bank or the Agent, the
Borrowers shall immediately pay to the Bank from time to time as
specified by such Bank, such additional amounts or fees which shall be
sufficient to compensate such Bank for such impositions of or
increases in capital requirements or taxes from the date of such
change.
(B) A certificate of the affected Bank setting forth such amount or
amounts as shall be necessary to compensate the Bank or its holding
company as specified above shall be provided to the Agent and promptly
forwarded by the Agent to the Borrowers and shall be conclusive absent
manifest error, provided such determination is made on a reasonable
basis. The Borrowers shall pay the affected Bank the amount shown as
due on any such certificate delivered by the Bank within 10 days after
its receipt of the same.
(C) Failure on the part of a Bank to demand compensation for increased
costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period after the date hereof
shall not constitute a waiver of the Bank's right to demand
compensation with respect to such period or any other period during
the term of this Agreement provided that such demand is made prior to
repayment of all credit extended by the Banks under this Agreement.
SECTION 2.13 ILLEGALITY. Notwithstanding any other provision in this Agreement,
if the adoption of any applicable law, rule, or regulation, or any change
therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank, or
16
comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its lending office) with any request
or directive (whether or not having the force of law) of any such
authority, central bank, or comparable agency shall make it unlawful or
impossible for such Bank (or its lending office) to honor its obligation to
make or maintain LIBOR Loans, then upon notice to the Borrowers by the
Agent at the request of such Bank such obligation shall be suspended until
such time as the applicable Bank may again make and maintain LIBOR Loans of
such type (and until such time, any Loans that are outstanding as LIBOR
Loans shall, upon the request of the Agent at the request of such Bank, be
automatically converted into Base Rate Loans and the Borrowers shall not be
required to pay any compensation due under Section 2.16 in connection
therewith).
SECTION 2.14 INTEREST AND COMMISSIONS AFTER EVENT OF DEFAULT. After the
occurrence of any Event of Default, the Agent shall have the right upon
notice to the Borrower Agent to change the Interest Rate on all Loans and
other amounts advanced and/or owing hereunder to be the applicable Interest
Rate plus three percent (3%) (the "Default Rate"), effective upon the
giving of such notice.
SECTION 2.15 SPECIAL PROVISIONS FOR LIBOR LOANS.
(A) Unavailability of Funds and Indeterminate Interest Rates. If on or
before any Effective Date for a Eurodollar Loan the Agent determines
in good faith that no adequate means exists to determine the LIBOR for
such Interest Period, then the Agent shall so notify the Borrowers on
or before the Effective Date and the Borrowers shall have one (1)
Business Day after notice to withdraw their request for such Loan. If
the Borrowers do not withdraw such request, such Loan shall bear
interest (following the expiration of the then applicable Interest
Period, if any) at the rates from time to time applicable to Base Rate
Loans. Until such notice from the Agent has been withdrawn, no further
Eurodollar Loans shall be made, nor shall the Borrowers have the right
to convert a Base Rate Loan to a Eurodollar Loan.
(B) Discretion of the Agent as to Manner of Funding. Notwithstanding any
other provision of this Agreement, the Agent on behalf of the Banks
may fund or maintain its funding of all or any part of the Loans in
any legal manner it chooses and such manner of funding shall not in
any way relieve the Borrowers of their obligations to pay prepayment
compensation in the event of a prepayment as set forth in Section 2.16
hereof.
SECTION 2.16 PREPAYMENT; FUNDING LOSS INDEMNIFICATION.
(A) The Borrowers may prepay Base Rate Loans in whole or in part at any
time and from time to time, without premium or penalty.
(B) The Borrowers shall pay to the Agent, upon the request of any Bank(s),
such amount or amounts as shall be sufficient to compensate the Banks
for any loss, cost or expense (including, without limitation, costs or
losses associated with prepaying or redeploying deposits (whether or
not the Banks shall have actually funded a Loan with corresponding
deposits)) which the Agent determines is attributable to:
(1) any payment, prepayment, conversion or continuation of a LIBOR
Loan made by the Bank on a date other than the last day of an
Interest Period for such Loan (whether by reason of acceleration
or otherwise); or
(2) any failure by the Borrowers to borrow, convert into or continue
a LIBOR Loan to be made, converted into or continued by the Agent
on behalf of the Banks on the date specified therefor pursuant to
the Borrower Agent's prior election.
17
A determination of the Agent as to the amounts payable pursuant to
this Section 2.16(B) shall be conclusive if made on a reasonable basis
and in good faith.
(C) Provided that the Borrowers have not given the Agent written
instructions to the contrary, the Bank shall apply any voluntary
principal prepayment first, to repayment of the Base Rate Loans then
outstanding, and second, to repayment of any LIBOR Loans in such a
manner as to minimize the Borrowers' obligation to pay prepayment
compensation under this Section 2.16.
SECTION 2.17 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, the Revolving Credit Commitment may be utilized, upon the
request of the Borrower Agent, in addition to the Revolving Credit Advances
provided for by Section 2.1, by the issuance by the Agent of letters of
credit (collectively, "Letters of Credit") for account of the Borrowers up
to a maximum aggregate stated amount of $5,000,000 at any one time
outstanding, provided that no Letter of Credit shall be requested by the
Borrowers if the total of outstanding Revolving Credit Loans and Letters of
Credit (including the Letter of Credit being requested) would exceed the
aggregate Revolving Credit Commitment. Each Letter of Credit shall provide
that drafts drawn under it shall be payable at sight and shall expire
before the Maturity Date and not more than 364 days after issuance. Letters
of Credit under the Prior Agreement shall be deemed to be Letters of Credit
under this Agreement. The following additional provisions shall apply to
Letters of Credit:
(A) The Agent may decline to issue any Letter of Credit which it
reasonably believes to be in violation of applicable laws or
regulations or the use of which it determines to be unacceptable in
its reasonable judgment. Upon issuance of each Letter of Credit, the
Agent will promptly notify the Banks thereof, and each Bank shall
immediately and automatically acquire (without the need for the
execution of any document or other act) a pro-rata risk participation
in the Letter of Credit based on its respective Commitment.
(B) The Borrower Agent shall give the Agent at least three (3) Business
Days irrevocable prior notice (effective upon receipt) specifying the
Business Day each Letter of Credit is to be issued and the account
party or parties therefor and describing in reasonable detail the
proposed terms of such Letter of Credit (including the beneficiary
thereof) and the nature of the transactions or obligations proposed to
be supported thereby (including whether such Letter of Credit is to be
a commercial letter of credit or a standby letter of credit).
(C) On each day during the period commencing with the issuance by the
Agent of any Letter of Credit and until such Letter of Credit shall
have expired or been terminated, the Commitment shall be deemed to be
utilized for all purposes of this Agreement in an amount equal to the
then undrawn face amount of such Letter of Credit.
(D) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Agent shall
promptly notify the Borrower Agent of the amount to be paid by the
Agent as a result of such demand and the date on which payment is to
be made by the Agent to such beneficiary in respect of such demand,
provided that, failure to so notify shall not affect the Borrower's
obligations hereunder. Notwithstanding the identity of the account
party of any Letter of Credit, the Borrowers hereby jointly and
severally and unconditionally agree to pay and reimburse the Agent for
the amount of each demand for payment under such Letter of Credit that
is in compliance with the provisions of such Letter of Credit at or
prior to the date on which payment is to be made by the Agent to the
beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind.
(E) Forthwith upon its receipt of a notice referred to in paragraph (D) of
this Section 2.17, the Borrower Agent shall advise the Agent whether
or not a Borrower intends to borrow
18
hereunder to finance its obligation to reimburse the Agent for the
amount of the related demand for payment and, if it does, submit a
notice of such borrowing as provided in Section 2.2. If the Borrowers
do not borrow nor reimburse the Agent for the amount of the related
demand for payment, each Bank shall pay to the Agent a pro rata share
of the amount of the demand for payment, based on each Bank's pro rata
share of the Revolving Credit Commitment.
(F) The Borrowers shall pay to the Agent a Letter of Credit fee equal to
the Applicable Margin per annum multiplied by the face amount of such
Letter of Credit on the date any Letter of Credit is issued or renewed
(calculated as of the date of such issuance or renewal). The Letter of
Credit fee shall be allocated as follows: first, 0.125% per annum of
the face amount of such Letter of Credit shall be paid to the Agent,
and the remaining amount of the Letter of Credit fee shall be
allocated among the Banks according to their relative pro rata portion
of the Revolving Credit Commitment. In addition, the Borrowers shall
pay to the Agent all commissions, charges, costs and expenses in the
amounts customarily charged by the Agent from time to time in like
circumstances with respect to the issuance of each Letter of Credit
and drawings and other transactions relating thereto.
(G) The issuance by the Agent of each Letter of Credit shall, in addition
to the conditions precedent to the making of a Loan set forth in
Article IV hereof, be subject to the conditions precedent that (i)
such Letter of Credit shall be in such form, contain such terms and
support such transactions as shall be reasonably satisfactory to the
Agent consistent with its then current practices and procedures with
respect to letters of credit of the same type and (ii) the account
party on such Letter of Credit shall have executed and delivered such
applications, agreements and other instruments relating to such Letter
of Credit as the Agent shall have reasonably requested consistent with
its then current practices and procedures with respect to letters of
credit of the same type, provided that in the event of any conflict
between any such application, agreement or other instrument and the
provisions of this Agreement, the provisions of this Agreement shall
control.
(H) The issuance by the Agent of any modification, amendment, or
supplement to any Letter of Credit hereunder shall be subject to the
same conditions applicable under this Section 2.17 to the issuance of
new Letters of Credit.
(I) The Borrowers hereby jointly and severally indemnify and hold harmless
the Agent and Banks from and against any and all claims and damages,
losses, liabilities, costs or expenses that the Agent or Banks may
incur (or that may be claimed against the Agent or Banks by any Person
whatsoever) by reason of or in connection with the execution and
delivery or transfer of or payment or refusal to pay by the Agent and
Banks under any Letter of Credit, other than such amounts arising due
to the Agent's or any Bank's gross negligence or willful misconduct.
SECTION 2.18 TAXES.
(A) All payment by any of the Borrowers of principal of, and interest on,
the Loans and all other amounts payable hereunder shall be made free
and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any
taxing authority, United States or foreign, but excluding franchise
taxes and taxes imposed on or measured by any Bank's net income or
receipts (such non-excluded items being called "Taxes"). In the event
that any withholding or deduction from any payment to be made by a
Borrower hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrowers jointly and
severally agree to:
(1) Pay directly to the relevant authority the full amount required
to be so withheld or deducted;
19
(2) Promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment
to such authority; and
(3) Pay to the Agent for the account of the Banks such additional
amount or amounts as is necessary to ensure that the net amount
actually received by each Bank will equal the full amount such
Bank would have received had no such withholding or deduction
been required.
(B) If any Taxes are directly asserted against the Agent or any Bank with
respect to any payment received by the Agent or such Bank hereunder,
the Agent or such Bank may pay such Taxes and the Borrowers jointly
and severally agree to promptly pay such additional amounts (including
any penalties, interest or expenses) as are necessary in order that
the net amount received by such Person after the payment of such Taxes
(including any Taxes on such additional amount) shall equal the amount
such Person would have received had not such Taxes been asserted. A
certificate of the affected Bank setting forth such amount or amounts
as shall be necessary to compensate the Bank or its holding company as
specified above shall be provided to the Agent and promptly forwarded
by the Agent to the Borrowers and shall be conclusive absent manifest
error, provided such determination is made on a reasonable basis. The
Borrowers shall pay the affected Bank the amount shown as due on any
such certificate delivered by the Bank within 10 days after its
receipt of the same.
(C) The Borrowers jointly and severally shall indemnify the Agent and the
Banks for any incremental Taxes, interest or penalties that may become
payable by any Bank as a result of any failure by any Borrower to pay
any Taxes when due to the appropriate taxing authority or to remit to
the Agent, for the account of the respective Banks, the required
receipts or other required documentary evidence.
SECTION 2.19 ADDITIONAL BORROWERS. Any Subsidiary of a Borrower shall, unless
otherwise specifically agreed to in writing by the Agent, immediately upon
becoming a Subsidiary of a Borrower become a Borrower hereunder ("New
Borrower") and be jointly and severally obligated with each other Borrower
under this Agreement with respect to all of the obligations under this
Agreement stated to be obligations of the Borrower; and MTI shall cause
each New Borrower to execute and deliver to the Agent (i) an instrument in
form and substance reasonably satisfactory to the Agent pursuant to which
each New Borrower agrees to assume all of the obligations of a "Borrower"
under this Agreement, and (ii) such other documents as the Agent may
reasonably request, including, without limitation, UCC-1 financing
statements. The right of the New Borrower to receive the proceeds of a Loan
hereunder shall be subject to the delivery to the Agent of such proof of
corporate action, incumbency of officers, opinions of counsel and other
documents as are consistent with those delivered by each Borrower
originally signatory hereto pursuant to Section 4.1 as well as such other
information or documents as the Agent shall reasonably request.
Article III
COLLATERAL
SECTION 3.1 SECURITY. As security for the payment of all Obligations of
Borrowers to the Agent or Banks, each of the Borrowers hereby grant to the
Agent, for the benefit of the Banks, a security interest in and lien upon
all of the following property (the "Collateral"):
(A) All of the Borrowers' existing and future accounts, contract rights,
chattel paper, instruments and documents and all other rights to the
payment of money whether or not yet earned, for services rendered or
goods sold, consigned, leased or furnished by the Borrowers or
otherwise, and all products and proceeds of any of the foregoing.
20
(B) All of the Borrowers' present and future inventory (including, but not
limited to, goods held for sale or lease or furnished or to be
furnished under contracts for service, raw materials, work-in-process,
finished goods and goods used or consumed in the Borrowers' business)
whether owned, consigned or held on consignment (to the extent
permitted by such consignment), together with all of the Borrowers'
merchandise, component materials, supplies, packing, packaging and
shipping materials, and all returned, rejected or repossessed goods
sold, consigned, leased or otherwise furnished by the Borrowers and
all products and proceeds of any of the foregoing.
(C) All of the Borrowers' present and future general intangibles
(including, but not limited to, manufacturing and processing rights,
designs, patent rights and applications therefor, trademarks and
registration or applications therefor, tradenames, brand names, logos,
inventions, copyrights and all applications and registrations
therefor) software and computer programs, license rights, royalties,
trade secrets, methods, processes, know-how, formulas, drawings,
specifications, descriptions, label designs, plans, blueprints,
patterns and all memoranda, notes and records with respect to any
research and development, and all products and proceeds of any of the
foregoing.
(D) All of the Borrowers' present and future machinery, equipment,
furniture, fixtures, tools, dies, jigs, molds and other articles of
tangible personal property of every type, together with all parts,
substitutions, accretions, accessions, attachments, accessories,
additions, components and replacements thereof, and all manuals of
operation, maintenance or repair, and all products and proceeds of any
of the foregoing.
(E) All of the Borrowers' present and future general ledger sheets, files,
records, books of account, invoices, bills, certificates or documents
of ownership, bills of sale, business papers, correspondence, credit
files, tapes, cards, computer runs and all other data and data storage
systems whether in the possession of the Borrowers or any service
bureau.
(F) Borrowers' interest as tenant under that certain Lease for the
premises located at 0000 Xxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
dated May 17, 1999, and under any lease for any location, in any case
as amended or replaced, except to the extent that this clause violates
any such lease and no waiver or consent is obtained.
(G) All deposits, funds, instruments, documents, policies and certificates
of insurance, securities, chattel paper and other assets of the
Borrowers or in which any of the entities comprising the Borrowers has
an interest and all proceeds thereof, now or at any time hereafter on
deposit with or in the possession or control of any Bank or owing by
any Bank to the Borrowers or in transit by mail or carrier to such
Bank or in the possession of any other Person acting on such Bank's
behalf, without regard to whether such Bank received the same in
pledge, for safekeeping, as agent for collection or otherwise, or
whether such Bank has conditionally released the same, and in all
assets of the Borrowers in which such Bank now has or may at any time
hereafter obtain a lien, mortgage, or security interest for any
reason.
The above-described security interests shall not be rendered void
by the fact that no Obligations exist as of any particular date, but
shall continue in full force and effect until the filing of
termination statements signed by the Agent with respect to the
Collateral. Upon payment of all Obligations and termination of the
Revolving Credit Commitment, at the Borrowers' cost and expense, the
Agent will execute and deliver to the Borrowers such termination
statements as may be needed to terminate the Agent's security interest
in the Collateral.
SECTION 3.2 FINANCING STATEMENTS; CERTIFICATES OF TITLE. The Borrowers will join
with the Agent in executing such financing statements and continuation
statements (in form satisfactory to Agent) under the Uniform Commercial
Code as the Agent may specify, and will pay the cost of filing the
21
same in such public offices as the Agent shall designate. The Borrowers
shall have noted on the certificate of title of any Collateral the liens
created hereby and shall deliver to the Agent the originals of each such
Certificate of Title. Each Borrower agrees to take whatever action the
Agent reasonably requests to perfect and to continue perfection of the
Agent's security interest in the Collateral.
SECTION 3.3 LANDLORD'S WAIVER. Each Borrower shall use its best efforts to cause
the owners of the locations identified on Schedule 3.4 and/or identified in
Section 3.1(F) to execute and deliver to the Agent an instrument (in form
satisfactory to the Agent) by which each such owner waives its right to
distrain on any of the Collateral, and by which such owner grants to the
Agent the right (but not the obligation) to cure any default by any
Borrower under the applicable lease (each, a "Landlord's Waiver").
SECTION 3.4 PLACES OF BUSINESS; LOCATION OF COLLATERAL.
(A) Each Borrower represents that the properties listed on Schedule 3.4
attached hereto serves as such Borrower's chief place of business,
chief executive office, and the place where it keeps its books and
records, and substantially all of the equipment or inventory serving
as Collateral hereunder.
(B) Each Borrower will notify the Agent at least thirty (30) days prior to
(1) any change in the location of the chief place of business or chief
executive office of such Borrower, (2) any change in the place where
such Borrower keeps its equipment and/or inventory or its books and
records, (3) the establishment of any new or the discontinuance of any
existing place of business, and (4) the establishment of any new or
the discontinuance of any location where inventory, equipment or books
and records are kept.
(C) No Borrower will permit its equipment to be removed from its current
location or any of its inventory serving as Collateral to be so
removed without the Agent's prior consent, except for sales of
inventory in the ordinary course of business.
SECTION 3.5 AGENT'S RIGHTS WITH RESPECT TO ACCOUNTS, CHATTEL PAPER, INSTRUMENTS
AND GENERAL INTANGIBLES. With respect to any account, chattel paper,
instrument and general intangible that is Collateral hereunder, the Agent
for the benefit of the Banks shall have the right at any time and from time
to time, without notice to the Borrowers, to: (A) if there then exists an
Unmatured Event of Default or Event of Default, endorse in the name of any
Borrower all proceeds of the accounts, chattel paper, instruments and
general intangibles payable to such Borrower that come to the Bank; (B)
upon the occurrence of an Unmatured Event of Default or an Event of Default
and during the continuance thereof, notify purchasers under the Borrower's
accounts, chattel paper, instruments and general intangibles that such
accounts, chattel paper, instruments and general intangibles have been
assigned to the Agent for the account of the Banks, (C) upon the occurrence
of an Event of Default, and during the continuance thereof, compromise,
extend, or renew any account, chattel paper, instrument or general
intangible of any Borrower or deal with the Borrower's accounts, chattel
paper, instruments and general intangibles as the Agent may reasonably deem
advisable; (D) whether or not there then exists an Unmatured Event of
Default, to make exchanges, substitutions, or surrenders of Collateral; and
(E) if there exists an Event of Default, take control of any cash or
non-cash proceeds of any account, chattel paper, instrument, and/or general
intangibles which funds shall then be applied to the Loans pursuant hereto.
SECTION 3.6 ACCOUNTS. With respect to each account:
(A) each Borrower represents that: (1) such account is not evidenced by a
judgment, an instrument or chattel paper or secured by a letter of
credit (except (a) such judgment as has been assigned, (b) such
instrument or chattel paper as has been endorsed and delivered to the
22
Agent and (c) such letter of credit as has been assigned and delivered
to the Agent) and represents a bona fide completed transaction; (2)
the amount shown on such Borrower's books and records and on any list,
invoice or statement furnished to the Bank is owing to such Borrower;
(3) the title of such Borrower to the account is absolute; (4) the
account has not been transferred to any other person, and, at the time
such account is created, no person except the Borrowers have any claim
thereto or; (5) no partial payment against any account has been made
by anyone; and (6) no material set-off or counter-claim to such
account exists, and no agreement has been made with any person under
which any material deduction or discount may be claimed.
(B) Each Borrower will immediately notify the Agent if any material
account arises out of contracts with the United States or any
department, agency or instrumentality thereof, furnish the Agent with
copies of each such contract and execute any instruments and take any
steps reasonably required by the Agent in order that all moneys due
and to become due under any such contract shall be assigned to the
Agent for the account of the Banks and notice given under the Federal
Assignment of Claims Act.
SECTION 3.7 EQUIPMENT AND INVENTORY. Each Borrower represents, warrants and
agrees that except for leased equipment (A) such Borrower is the absolute
owner of its inventory and equipment, subject only to the security
interests created hereby and those permitted under Section 6.4(A); and (B)
each Borrower will sell its inventory only in the ordinary course of
business; and (C) if any inventory is or becomes represented by a document,
the Agent may require that such document be in such form as to permit the
Agent or anyone to whom the Agent may negotiate the same to obtain delivery
to it of the inventory represented thereby.
SECTION 3.8 CONDITION OF INVENTORY. Each Borrower will immediately notify the
Bank of any event of deterioration, loss or depreciation of value of any
substantial portion of its inventory and the amount of such deterioration,
loss or depreciation.
SECTION 3.9 EXPENSES OF THE AGENT. The Borrowers will reimburse the Agent on
demand for all reasonable expenses (including the reasonable fees and
expenses of legal counsel for the Agent) in connection with the enforcement
of the Banks' rights to take possession of the Collateral and the proceeds
thereof and to hold, collect, render in compliance with applicable
environmental laws and regulations, prepare for sale, sell and dispose of
the Collateral.
SECTION 3.10 NOTICES. If notice of sale, disposition or other intended action by
the Agent with respect to the Collateral is required by the Uniform
Commercial Code or other applicable law, any notice thereof sent to the
Borrower Agent at its address specified herein or such other address of
Borrower Agent as may from time to time be shown on the records of the
Agent at least five (5) days prior to such action, shall constitute
reasonable notice to the Borrowers.
SECTION 3.11 INSURANCE; DISCHARGE OF TAXES, ETC. The Agent shall have the right
at any time and from time to time, with or without notice to the Borrowers,
if the Borrowers fail to do so, (A) obtain insurance covering any of the
Collateral, (B) discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on any of the Collateral and (C)
pay for the maintenance and preservation of any of the Collateral. The
Borrowers will reimburse the Agent, on demand, with interest at the Base
Rate for any payment the Agent makes, or any expense the Agent incurs under
this authorization. Each Borrower assigns to the Agent, for the account of
the Banks, all right to receive the proceeds of insurance covering the
Collateral, directs any insurer to pay all such proceeds directly to the
Agent, for the account of the Banks, and authorizes the Agent to endorse in
the name of the Borrowers any draft for such proceeds provided that until
the occurrence of an Unmatured Event of Default, the Agent agrees to
promptly endorse and deliver any proceeds of insurance to the Borrower
Agent.
23
SECTION 3.12 WAIVER AND RELEASE BY BORROWER. Each Borrower (A) waives protest of
all commercial paper at any time held by the Agent on which such Borrower
is in any way liable, notice of nonpayment at maturity of any and all
accounts of such Borrower and, except where required hereby or by law,
notice of action taken by the Agent, and (B) releases the Agent and the
Banks from all claims for loss or damage caused by any failure to collect
any account or by any act or omission on the part of the Agent or its
officers, agents and employees, except gross negligence and willful
misconduct.
SECTION 3.13 ACCESS TO INVENTORY. The Borrowers shall permit the Agent's
representatives to have access to their respective inventory from time to
time, as requested by the Agent, for purposes of audit, examination,
inspection, and appraisal thereof and verification of Borrower's records
pertaining thereto. Except after the occurrence of an Unmatured Event of
Default or an Event of Default, the Agent shall give the Borrowers at least
same day telephone notice before exercising the rights granted in the
preceding sentence and such rights shall be exercised during normal
business hours. Upon demand by the Agent, after the occurrence and during
the continuation of an Event of Default, each Borrower shall assemble its
inventory which constitutes Collateral hereunder and make it available to
the Agent at such Borrower's place of business. At the request of the
Agent, after the occurrence and during the continuance of an Event of
Default, each Borrower shall provide warehousing space in its own premises
to the Agent for the purpose of taking inventory into the custody of the
Agent without removal thereof from such premises and will erect such
structures and post such signs as the Agent may require in order to place
such inventory under the exclusive control of the Agent.
SECTION 3.14 RECORDS AND REPORTS. Each Borrower shall keep accurate and complete
records of its accounts (and the collection thereof), general intangibles,
chattel paper, instruments, documents and inventory and furnish the Agent
such information about its accounts, general intangibles, chattel paper,
instruments, documents, and inventory as the Agent may reasonably request.
SECTION 3.15 FURTHER ASSURANCES. From time to time each Borrower will execute
and deliver to the Agent such additional instruments as Agent may
reasonably request to effectuate the purposes of this Agreement and to
assure to the Agent, as secured party, a first priority, perfected security
interest in the Collateral. Each Borrower hereby irrevocably appoints the
Agent as such Borrower's attorney-in-fact (A) to take any action the Agent
deems reasonably necessary to perfect or maintain perfection of any
security interest granted to the Agent herein or in connection herewith,
including the execution of any document on such Borrower's behalf, and (B)
to take any other action to effectuate the rights granted in this Article
III, which power of attorney is coupled with an interest and irrevocable
until all of the Liabilities are paid in full. Until all of the Obligations
are paid in full, the Agent may, at any time and from time to time, send to
any account debtor under any account a verification form, make such calls
or otherwise contact such account debtors of any Borrower as are necessary
or desirable, in the Agent's reasonable discretion, to verify accounts,
instruments, chattel paper and/or general intangibles that are Collateral
and the balance due.
SECTION 3.16 APPLICATION OF PROCEEDS OF COLLATERAL. Following an Event of
Default all proceeds of Collateral shall be applied in accordance with
Section 2.9(C) hereof.
SECTION 3.17 CONTINUING COLLATERAL. The Agent shall be under no obligation to
proceed first against any part of the Collateral before proceeding against
any other part of the Collateral. It is expressly agreed that all of the
Collateral stands as equal security for all Liabilities and the Agent shall
have the right to proceed against or sell any and/or all of the Collateral
in any order, or simultaneously, as it, in its sole discretion, shall
determine.
24
Article IV
CONDITIONS OF LENDING
SECTION 4.1 CONDITIONS PRECEDENT TO THE LOANS. The obligation of each Bank to
make the initial Revolving Credit Advances and the obligation of the Agent
to issue any Letter of Credit is subject to the Agent having received, on
or before the day on which such Loans are to be made, all of the following
which shall be in form and substance satisfactory to the Agent and its
counsel and (except for the Notes) in sufficient copies for each Bank:
(A) A copy, certified in writing as of the date hereof by the Secretary or
Assistant Secretary of each Borrower, of (1) resolutions of the Board
of Directors of such Borrower evidencing approval of this Agreement
and the Notes and other matters contemplated hereby and (2) each
document evidencing any other necessary corporate action and any
required approvals from governmental authorities for each Borrower
with respect to this Agreement or the Notes;
(B) Favorable opinions of counsel for each Borrower acceptable to the
Agent dated the date hereof in form and substance reasonably
satisfactory to the Agent;
(C) A certificate dated the date hereof by the Secretary or an Assistant
Secretary of each Borrower as to the names and signatures of the
officers of such Borrower authorized to sign this Agreement, the Notes
and the other documents or certificates of such Borrower to be
executed and delivered pursuant hereto. The Banks may conclusively
rely on, and shall be protected in acting upon, such certificate until
it shall receive a further certificate by the Secretary or an
Assistant Secretary of such Borrower amending the prior certificate;
(D) This Agreement duly executed by the Borrowers;
(E) The Notes duly executed by the Borrowers;
(F) Payment by the Borrowers of all Fees then due;
(G) Copies of the Bylaws of each Borrower, certified as true, correct and
complete by such Borrower's Secretary or Assistant Secretary on behalf
of such Borrower;
(H) With respect to each Borrower, certificates dated within thirty (30)
days of the date hereof for United States jurisdictions and, as the
Agent may require, for jurisdictions outside the United States, issued
by the Secretary of State (or similar official) of each jurisdiction
in which such Borrower is incorporated or is qualified to do business,
stating that such Borrower is a corporation duly incorporated or
authorized to do business, as the case may be, and in good standing
under the laws of such jurisdiction;
(I) For each Borrower, a certificate dated the date of this Agreement and
executed by the chief executive officer, in each case on behalf of
such Borrower, confirming that (1) no Event of Default or Unmatured
Event of Default has occurred or is continuing as of the Closing Date,
(2) each of the representations and warranties made in this Agreement
by such entity are true and correct in all material respects as of the
date of this Agreement and of the Closing Date (or, to the extent any
such representation or warranty expressly relates to a specific date,
as of such specific date), (3) such entity has fully performed each
and every covenant to be performed by such Borrower on or prior to the
Closing Date and, for covenants contained in Sections 6.24 through
6.27, computations demonstrating compliance with such covenants, (4)
that each Borrower is "solvent" (as defined in such certificate) after
25
giving effect to these transactions, and (5) such entity has satisfied
each of the conditions set forth in this Article IV (to the extent
required to be satisfied by such entity on or prior to the Closing
Date).
(J) The results of Uniform Commercial Code, judgment, and bankruptcy
searches of the jurisdictions listed in Schedule 3.4 showing no Liens
or judgments against any Borrower or any of their assets which would
violate Section 6.4; and;
(K) A certificate of insurance evidencing property insurance, business
interruption coverage insurance, and workmen's compensation and
commercial general liability insurance, providing such level of
coverage and otherwise in form and substances reasonably satisfactory
to Agent.
Each policy of insurance must be issued by an insurance company
reasonably satisfactory to the Agent, must not be in arrears as to the
payment of premiums, and must provide that it will not be terminated
without at least thirty (30) days prior written notice to the Agent
and must name Agent as mortgagee/loss payee for the account of the
Banks;
(L) Financial statements for the year ended December 31, 1998, Interim
Financial Statements as of September 30, 1999, and copies of all
reports delivered to the Securities and Exchange Commission;
(M) Financial projections prepared by MTI for the next succeeding three
(3) years reasonably acceptable to the Banks;
(N) UCC-1 financing statements for all jurisdictions requested by the
Agent;
(O) UCC-3 termination statements from parties holding liens which are not
permitted in accordance herewith;
(P) The Landlord's Waivers and waivers from mortgagees of the landlords;
(Q) A Subrogation and Contribution Agreement executed by each Borrower;
and
(R) such other documents as may be reasonably requested by the Agent, the
Banks or its or their counsel.
SECTION 4.2 CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT ADVANCES. The
obligation of each Bank to disburse each Loan is subject to the further
conditions precedent that:
(A) The representations and warranties contained herein shall be accurate
on and as of the date of such disbursement as though made on and as of
such date (or, to the extent any such representation or warranty
expressly relates to a specific date, as of such specific date) except
for changes permitted hereby or in writing by the Agent for the
account of the Banks; and
(B) No Event of Default or Unmatured Event of Default shall have occurred
and be continuing or will result from the making of such disbursement
or selection.
26
Article V
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Agent and each Bank as follows:
SECTION 5.1 EXISTENCE. Each Borrower is a corporation or limited liability
company duly organized, validly existing and in good standing under the
laws of its state or other jurisdiction of organization. Each Borrower has
all requisite power and authority, corporate and otherwise, to conduct its
business and to own its properties and is duly qualified as a foreign
corporation or limited liability company in good standing in all
jurisdictions in which its failure so to qualify could reasonably be
expected to have a Material Adverse Effect.
SECTION 5.2 AUTHORIZATION. The execution, delivery and performance by each
Borrower of each Loan Document has been duly authorized by all necessary
corporate or other limited liability company action, and does not and will
not violate any current provision of any government regulation or statute,
or of the charter or by-laws or other organizational documents of such
Borrower or result in a breach of or constitute a default under any
instrument or other material agreement to which such Borrower is a party or
by which it or its properties are bound or affected, except for any such
breach or default that would not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 5.3 VALIDITY. Each Loan Document constitutes, valid and legally binding
obligations of such Borrower, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights generally and subject to the availability of equitable remedies.
SECTION 5.4 FINANCIAL INFORMATION. The Consolidated balance sheet and statements
of cash flows, income and changes in Shareholder's equity of MTI and its
Subsidiaries as of and for the year ended December 31, 1998 audited by
Coopers & Xxxxxxx, and Interim Financial Statements for the period ended
September 30, 1999, copies of all of which have been furnished to the
Banks, are accurate, and present fairly the financial positions, the
results of operations and cash flows at such dates and for the periods
ended on such dates, all in accordance with GAAP. Since December 31, 1998
there has been no material adverse change to the financial condition,
business operations or prospects of MTI and its Subsidiaries taken as a
whole either in such financial positions or in such results of operations
except to the extent, if any, reflected in the Interim Financial Statements
dated September 30, 1999 or MTI's Form 10-Q's filed with respect to the
fiscal quarters ending March 31, June 30 and September 30, 1999.
SECTION 5.5 LITIGATION. There are no actions, suits or proceedings pending or,
to the knowledge of the Borrowers, threatened against any Borrower, or any
of their respective properties before any court or governmental department,
commission, board, bureau, agency or instrumentality (domestic or foreign)
which if adversely determined could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
SECTION 5.6 CONTINGENT LIABILITIES. There are on the date hereof no suretyship
agreements, guarantees or other contingent liabilities of any Borrower in
respect of any Indebtedness or any other material contingent liabilities
known to any Borrower other than (A) guarantees and other contingent
liabilities that are disclosed in the financial statements mentioned in
Section 5.4 or in the September 30, 1999 Report 10-Q previously filed with
the SEC or in Schedule 5.15, and (B) the joint and several obligations of
the Borrowers hereunder.
27
SECTION 5.7 TAXES. Each Borrower has filed all tax returns and reports required
to be filed before the date of this Agreement and has paid all taxes,
assessments and charges imposed upon it or its property, or that it is
required to withhold and pay over, to the extent that they were required to
be paid before the date of this Agreement except where an extension for
filing is available and such Borrower has taken the necessary steps to
qualify for such extension, where such taxes, assessments or charges are
being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained in accordance with GAAP or where a
failure to pay such taxes, assessments or charges or file such returns or
reports would not reasonably be expected to have a Material Adverse Effect.
SECTION 5.8 ENCUMBRANCES. Except as disclosed in the lien searches conducted
pursuant hereto, or permitted pursuant to Section 6.4, none of the
properties or assets of any Borrower are subject to any lien, encumbrance
or security interest.
SECTION 5.9 CONSENTS. No authorization, consent, approval, license, exemption by
or filing or registration with any court or governmental department,
commission, board (including the Board of Governors of the Federal Reserve
System), bureau, agency or instrumentality, domestic or foreign, is or will
be necessary for the valid execution, delivery or performance by any
Borrower of this Agreement or the Notes. Each Borrower has obtained all
Governmental Approvals necessary for the conduct of such Borrower's
business, and the conduct of such Borrower's business is not and has not
been in violation of any such Governmental Approval or any applicable
federal or state law, rule or regulation, except for any Governmental
Approval which if not obtained, or any violation which if having occurred,
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
SECTION 5.10 ERISA. All Defined Benefit Pension Plans and Defined Contribution
Plans maintained by any of the Borrowers and the members of their
Controlled Group meet the minimum funding standards of ss.412 of the Code,
the regulations thereunder and ss.302 of ERISA without regard to any
funding waiver. No Prohibited Transaction that would have a Material
Adverse Effect has occurred with respect to any Plan. No Reportable Event
that would have a Material Adverse Effect has occurred with respect to any
Defined Benefit Pension Plan. No trust was established in connection with
any such Defined Benefit Pension Plan pursuant to ss.4049 of ERISA (as in
effect on December 17, 1987) and no liabilities have been asserted against
any Borrower or any member of its Controlled Group in connection with any
such Defined Benefit Pension Plan by the PBGC or by a trustee appointed
pursuant to ss.4042(b) or (c) of ERISA, and no lien has been attached and
neither the PBGC nor the Internal Revenue Service has threatened to attach
a lien on any property of any Borrower or any member of its Controlled
Group as a result of any failure to comply with the Code or the Treasury
regulations thereunder or ERISA. All Plans maintained by any Borrower or
any Subsidiary of any Borrower comply (A) in operation with the applicable
requirements of the Code and the regulations thereunder and ERISA, and (B)
in form with those requirements of the Code and the regulations thereunder
and ERISA which must be met and reflected in Plan documents on the date
hereof, except where the failure so to comply would not have a Material
Adverse Effect. No Borrower or any member of its Controlled Group has
incurred any Withdrawal Liabilities that would have a Material Adverse
Effect.
SECTION 5.11 OWNERSHIP. The Borrowers have title to, or valid leasehold
interests in, all of their properties and assets, real and personal,
including the properties and assets and leasehold interests reflected on
the financial statements referred to in Section 5.4 hereof except for (A)
properties and assets reflected therein and disposed of as inventory in the
ordinary course of business and (B) other property reflected therein, the
disposal of which (individually or in the aggregate) would not reasonably
be expected to have a Material Adverse Effect.
SECTION 5.12 SUBSIDIARIES AND OWNERSHIP OF STOCK. Schedule 5.12 is a complete
and accurate list of the entities comprising the Borrowers, and shows (A)
the jurisdiction of incorporation or
28
organization of each such entity, (B) any Person owning more than 5% of the
outstanding stock of MTI, and (C) the chief executive office of each
Borrower. All of the outstanding capital stock or other ownership interests
of each Borrower has been validly issued and is fully paid and
nonassessable. MTI owns directly or indirectly all of the outstanding
capital stock of the other Borrowers, free and clear of all liens, claims
or encumbrances. No Borrower has any Subsidiaries except for those Persons
shown on Schedule 5.12.
SECTION 5.13 MARGIN STOCK; REGULATION U, ETC. No Borrower engages in the
business of making loans for the purchase of Margin Stock. The Loans will
not constitute a violation of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System. No part of the proceeds of the
Loans will be used for any purposes which violate or are inconsistent with
the provisions of any of such regulations.
SECTION 5.14 ENVIRONMENTAL MATTERS. Each Borrower is in possession of and in
compliance with all required permits and Environmental Laws relating to the
discharge or release of liquids, gases or solids into the air, water, and
soil, except for any such permit that, if not obtained, would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. No Borrower refines, processes, generates, stores,
recycles, transports, disposes of, or releases into the environment any
"hazardous substance" as that term is defined under Section 101(14) of
CERCLA or any hazardous or toxic substances as those terms are defined by
the provisions of any state or local environmental statute or regulation,
except to the extent such Borrower does so in material compliance with all
applicable Environmental Laws. No Borrower has received: (A) written or, to
its knowledge, oral notice from any governmental agency that it is a
potentially responsible party in any proceeding under CERCLA or any similar
state or local environmental statute or regulation, or (B) any written or,
to its knowledge oral, notice of violation, citation, complaint, request
for information, order, directive, compliance schedule, notice of claim,
proceeding or litigation from any party concerning such entity's compliance
with any Environmental Law which is presently outstanding or unresolved,
except for any notice or other communication relating to any such
non-compliance or proceeding that could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
SECTION 5.15 DEBT AND GUARANTEES. Except as set forth in Schedule 5.15 hereto,
no Borrower has guaranteed the payment or performance of the debts or
obligations of any other Person except for the guaranty of checks or other
documents for collection in the ordinary course of business or as disclosed
pursuant to Section 5.16 hereof.
SECTION 5.16 CREDIT ARRANGEMENTS. There are no credit agreements, indentures,
securities, purchase agreements, guaranties, capital leases, and other
investments, agreements and arrangements presently in effect providing for
or relating to extensions of credit for Funded Debt (including agreements
and arrangements for the issuance of any letters of credit or for
acceptance financing) in respect of which any Borrower is in any manner
directly or contingently obligated, excluding therefrom any single
agreement relating to the purchase of the machinery, equipment, goods and
supplies made in the ordinary course of business of less than Two Hundred
Fifty Thousand ($250,000); and the maximum principal or face amount of the
credit in question as of the date hereof is therein correctly stated.
SECTION 5.17 LICENSES, PERMITS, ETC. Each Borrower is in possession of and
operating in compliance with all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders required
for the conduct of its business now conducted, and all of them are valid
and in full force and effect, except to the extent the failure to possess
or be in compliance with any of the foregoing, or for any of the foregoing
not to be valid and in full force and effect, could not reasonably be
expected to have, either individually or in the aggregate, a Material
Adverse Effect.
29
SECTION 5.18 COMPLIANCE WITH LAWS. Each Borrower is in compliance with all laws,
rules, regulations, and orders of all Federal, state and governmental
agencies and courts (domestic and foreign) which are applicable to it, to
the conduct of its business, or to the ownership and use of its properties,
except for any such non-compliances that could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse
Effect.
SECTION 5.19 LABOR MATTERS. There are no existing, or to the best of the
Borrowers' knowledge threatened or contemplated, strikes, slowdowns,
picketing or work stoppages by any employees against any Borrower, any
lockouts by any Borrower of any of its employees or any other occurrence,
event or condition of a similar character affecting or which may affect any
Borrower that could reasonably be expected to have a Material Adverse
Effect.
SECTION 5.20 OUTSTANDING JUDGMENTS OR ORDERS. Each Borrower has satisfied all
judgments against it that could reasonably be expected to have a Material
Adverse Effect and no Borrower is in default with respect to any judgment,
writ, injunction, decree, material rule or regulation of any court,
arbitrator or commission, board bureau, agency or instrumentality, domestic
or foreign that could reasonably be expected to have a Material Adverse
Effect.
SECTION 5.21 NO DEFAULTS ON OTHER AGREEMENTS. No Borrower is in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a
party, except for any such default that could not reasonably be expected to
have a Material Adverse Effect.
SECTION 5.22 PUBLIC UTILITY HOLDING COMPANY ACT. No Borrower is a public utility
holding company within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 5.23 PATENTS. Each Borrower's trademarks, servicemarks and patents
needed for its operations are valid and enforceable on the date hereof.
SECTION 5.24 YEAR 2000 COMPLIANCE.
(A) All material computer software (owned or leased) of MTI and its
Subsidiaries is and shall remain "Year 2000 Compliant" (as hereinafter
defined).
(B) For purposes of this Agreement, "Year 2000 Compliant" shall mean (i)
all such software shall operate without errors in the recognition,
calculation and processing of date data relating to century
recognition, leap years, single and multi-century formulae, date
values and interfaces of date-related functionalities; (ii) all date
processing shall be conducted in a four-digit year format and all date
sorting that includes a "year field" or "year category" shall be based
upon a four-digit year format; and (iii) any date arithmetic programs
or calculators in the software shall operate in accordance with the
related user documentation in the Year 2000, and the years following,
without degrading functionality or performance.
SECTION 5.25 FULL DISCLOSURE. No representation or warranty by any Borrower in
this Agreement and no information in any statement, certificate, schedule
or other document furnished or to be furnished to the Agent or any Bank
pursuant hereto, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading. Except as
disclosed in this Agreement and the Schedules attached hereto, there is no
fact known to any Borrower which on the date hereof it has not disclosed to
the Agent or any Bank in writing which has had, or could reasonably be
expected to have, a Material Adverse Effect.
30
Article VI
COVENANTS OF THE BORROWERS
So long as any amount due Agent or any Bank hereunder remains outstanding,
or any Bank shall have any Commitment hereunder, unless the Agent and each Bank
shall otherwise consent in writing, each Borrower agrees that:
SECTION 6.1 FINANCIAL STATEMENTS.
(A) The Borrowers will furnish to the Agent not later than ninety (90)
days after the end of each year, Financial Statements as of and for
the twelve (12) months ending the last day of such year, the
Consolidated statements therein contained to be audited and
unqualifiedly certified by Coopers & Xxxxxxx or other independent
certified public accountants of nationally recognized standing or
otherwise reasonably satisfactory to the Bank.
(B) In addition, the Borrowers will furnish to the Agent, within 45 days
of the close of each fiscal quarter other than the last fiscal quarter
of each fiscal year, Interim Financial Statements for such fiscal
quarter and for the portion of the fiscal year then ended.
(C) With all Financial Statements and Interim Financial Statements, the
Borrowers will provide to the Agent a certificate of the chief
financial officer of MTI, which certificate shall state that such
Financial Statements or Interim Financial Statements are complete and
correct in all material respects and prepared in accordance with GAAP,
subject only to usual year-end adjustments and the absence of
footnotes in the case of Interim Financial Statements. The Borrowers
shall furnish to the Agent together with all Financial Statements and
Interim Financial Statements, a certificate executed by the chief
financial officer of MTI, which certificate shall include all
calculations (in reasonable detail) necessary to determine compliance
with Sections 6.24, 6.25, 6.26, and 6.27 (as appropriate for each
Financial Statement or Interim Financial Statement), which shall state
that the signer has reviewed the terms of this Agreement and has made,
or caused to be made under his supervision, a review in reasonable
detail of the transactions and condition of the Borrowers during the
accounting period covered by such Financial Statements or Interim
Financial Statements and that such review has not disclosed the
existence during or at the end of such accounting period, and does not
have knowledge of the existence as at the date of the certificate, of
any condition or event which constitutes an Event of Default or
Unmatured Event of Default or if any such condition or event existed
or exists, specifying the nature and period of existence thereof and
what action(s) the Borrowers have taken, are taking and propose to
take with respect thereto. A compliance certificate substantially in
the form of Exhibit 6.1 hereto executed by the chief financial officer
of MTI shall be delivered to the Agent at the same time as all
Financial Statements and Interim Financial Statements are delivered
hereunder.
(D) Promptly upon receipt thereof, the Borrowers shall deliver to the
Agent copies of any management letters or other reports submitted to
the Borrowers by independent certified public accountants in
connection with the examination of the Financial Statements.
SECTION 6.2 INSURANCE. Each Borrower will maintain insurance with financially
sound and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which
such Borrower operates or owns such properties. The Agent shall be named as
mortgagee/loss payee pursuant to an endorsement to such policies, but,
until the occurrence of an Unmatured Event of Default or Event of Default,
the Agent shall promptly endorse and/or return any proceeds of insurance to
the Borrower Agent.
31
SECTION 6.3 TAXES. Each Borrower will pay all taxes, assessments and charges
imposed upon it or its property or that it is required to withhold and pay
over when due, except where such taxes, assessments and charges are
contested in good faith and where adequate reserves have been set aside in
accordance with GAAP, or where the failure to pay such taxes, assessments
or charges when due could not reasonably be expected to cause, individually
or in the aggregate, a Material Adverse Effect.
SECTION 6.4 ENCUMBRANCES.
(A) No Borrower will create, incur, assume or suffer to exist any
mortgage, pledge, lien, security interest or other encumbrance of any
kind ("Lien") upon or in, any of its property or assets, including,
without limitation, patents, trademarks, copyrights or any other
general intangible except for (1) liens for taxes not yet delinquent
or being contested in good faith and by appropriate proceedings, (2)
liens solely securing the performance of bids, tender contracts,
surety and appeal bonds, or similar obligations, arising in the
ordinary course of business, provided that the Borrowers remain in
compliance with the terms of such obligations, (3) liens in connection
with workmen's or worker's compensation, unemployment insurance or
other social security obligations, (4) mechanic's, materialman's,
landlord's, carrier's, or other similar liens arising in the ordinary
course of business with respect to obligations that are not due, or
which are being contested diligently, in good faith and by appropriate
proceedings, provided that (a) such proceedings have the effect of
staying execution on such liens, and (b) adequate reserves have been
set aside or the obligation being contested has been bonded against,
(5) the encumbrances disclosed pursuant to Section 5.8 hereof; and (6)
purchase money liens on any asset hereinafter acquired including the
assumption of any such lien on assets existing at the time of such
acquisition or at the time of acquisition of the owner of such assets,
any lien incurred in connection with any conditional sale or other
title retention agreement, a capital lease, or construction loans or
permanent financing for new construction; provided that (a) any
property subject to any of the foregoing is acquired by a Borrower in
the ordinary course of its business and the lien on any such property
is created contemporaneously with such acquisition or in accordance
with the construction financing or permanent financing of a newly
constructed facility or is assumed in connection with such
acquisition; (b) the obligation secured by any lien so created,
assumed or existing shall not exceed one hundred percent (100%) of the
lesser of cost or fair market value as of the time of acquisition of
the property covered thereby to the Borrower acquiring the same; (c)
each such lien shall attach only to the asset so acquired and fixed
improvements thereon; and (d) the obligation so secured shall not
exceed in any case Five Hundred Thousand Dollars ($500,000) or in the
aggregate Two and one-half Million Dollars ($2,500,000) at any one
time outstanding.
(B) No Borrower will agree with any Person to restrict its ability to
grant mortgages, pledges, liens, or other encumbrances upon, or
security interests in, any of its property or assets to the Agent
and/or the Banks.
(C) No Lien on any asset or property of any Borrower shall be of equal or
higher priority than the Liens of the Agent hereunder, except Liens
expressly permitted under Section 6.4(A) (6) above and except to the
extent that Liens expressly permitted under Section 6.4(A)(1) - (5)
may be granted statutory priority irrespective of the chronological
order of perfection.
SECTION 6.5 COMPLIANCE WITH LAWS. Each Borrower will comply with all laws and
regulations applicable to it in the operation of its business, except to
the extent any such non-compliance could not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.
SECTION 6.6 INSPECTION BY THE AGENT. Each Borrower will permit representatives
of the Agent, at the request of any Bank to inspect the property and books
and records of such Borrower and to make extracts therefrom and to discuss
the affairs of each Borrower with its officers, directors, employees and
accountants at all reasonable times during normal business hours and,
except after the occurrence of an
32
Event of Default, upon reasonable prior notice from the Agent. After the
occurrence and during the continuance of an Event of Default, the Borrowers
agree to reimburse the Agent for all reasonable out-of-pocket costs and
expenses incurred in connection with any such inspection.
SECTION 6.7 REPORTS. The Borrowers will furnish to the Agent:
(A) As soon as possible after any Borrower has knowledge of the occurrence
of any Event of Default or Unmatured Event of Default, a written
statement by the chief executive or chief financial officer of such
Borrower on behalf of such Borrower setting forth details of such
Event of Default or Unmatured Event of Default, stating whether or not
the same is continuing and, if so, the action(s) that such Borrower
proposes to take with respect thereto;
(B) Immediately after receiving notice thereof, notice in writing of all
actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign if an adverse result thereof could reasonably be
expected to have a Material Adverse Effect;
(C) As soon as practicable after any Borrower has knowledge of the
occurrence of a change in the business, properties or the operations
and condition (financial or otherwise) of such Borrower that such
Borrower considers could reasonably be expected to have a Material
Adverse Effect, a statement by such officer setting forth details of
such change and the action(s) that the Borrowers propose to take with
respect thereto;
(D) Simultaneously with the filing thereof, the Borrowers shall deliver to
the Agent copies of all notices required by law or regulation to be
filed, and all reports, registrations and requests for interpretive
letters or rulings filed, with the Securities and Exchange Commission;
(E) Annually, within 90 days after the end of each Fiscal Year of MTI, the
Borrowers will furnish to the Agent an annual operating budget for MTI
and its subsidiaries on a Consolidated Basis; and
(F) Such other information respecting the business, properties, condition
and operations (financial or otherwise) of each Borrower as the Agent
may at any time and from time to time reasonably request be furnished
to it.
SECTION 6.8 ERISA.
(A) Each Borrower and all of its Subsidiaries will comply in all material
respects with the applicable provisions of ERISA and the Code and the
regulations thereunder with respect to any Plan except where the
failure to so comply could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(B) Each Borrower will cause to be made all contributions required to
avoid any accumulated funding deficiency (as defined in ss.412(a) of
the Code and the regulations thereunder and ss.302(a) of ERISA) with
respect to any pension plan (as defined in ss.3(2) of ERISA) which is
subject to Part 3 of Subtitle B of Title I of ERISA or Section 412 of
the Code and the regulations thereunder and which is maintained by a
Borrower or any member of its Controlled Group.
(C) As soon as practicable (and in any event within five days) after any
Borrower has reason to know (1) that any Reportable Event has occurred
with respect to any Defined Benefit Pension Plan maintained by a
Borrower or any member of its Controlled Group, (2) that any Defined
33
Benefit Pension Plan maintained by a Borrower or any member of its
Controlled Group is to be terminated in a "distress termination"
(within the meaning of ss.4041(c) of ERISA), (3) that the PBGC has
instituted or will institute proceedings under Title IV of ERISA to
terminate any Defined Benefit Pension Plan maintained by a Borrower or
any member of its Controlled Group, (4) that a Borrower has incurred
Withdrawal Liability from a Multiemployer Plan maintained by it or any
member of its Controlled Group which is likely to have a Material
Adverse Effect, or (5) that any Multiemployer Plan to which a Borrower
or any member of its Controlled Group has made contributions is in
"reorganization" (within the meaning of ss.4241 of ERISA), such
Borrower will furnish a statement to the Agent setting forth the
details of such Reportable Event, distress termination, termination
proceedings, Withdrawal Liability, or "reorganization" (within the
meaning of ss.4241 of ERISA), and the action that the Borrowers
propose to take with respect thereto, together with a copy of any
notice of such Reportable Event or distress termination given to the
PBGC, or a copy of any notice of termination proceedings, Withdrawal
Liability, or Reorganization received by a Borrower or any member of
its Controlled Group.
(D) Each Borrower will furnish to the Agent as soon as possible after
receipt thereof a copy of any notice that a Borrower or any member of
its Controlled Group receives from the PBGC, the Internal Revenue
Service, the Department of Labor, any other governmental entity or
from the sponsor of any Multiemployer Plan that sets forth or proposes
any action to be taken or determination made by the PBGC, the Internal
Revenue Service, the Department of Labor, any other governmental
entity or the sponsor of any Multiemployer Plan with respect to any
Plan or Multiemployer Plan, which is likely to have a Material Adverse
Effect.
(E) Each Borrower will promptly notify the Agent of any material taxes,
penalties, interest charges and other financial obligations that have
been assessed or otherwise imposed, or that such Borrower has reason
to believe may be assessed or otherwise imposed, against any Borrower
or any member of its Controlled Group by the Internal Revenue Service,
the PBGC, the Department of Labor or any other governmental entity
with respect to any Plan or Multiemployer Plan, that is likely to have
a Material Adverse Effect.
(F) Each Borrower will promptly notify the Agent of the adoption of any
Plan or any obligation to contribute to any Multiemployer Plan by any
Borrower or any member of its Controlled Group if the potential
liability thereunder is likely to have a Material Adverse Effect.
(G) No Borrower will withdraw, or permit any member of its Controlled
Group to withdraw, from any Multiemployer Plan to which any of them
now or hereafter contribute if the Withdrawal Liability which would
thereupon be incurred and the payments thereupon required over the
time period required could have a Material Adverse Effect.
(H) No Borrower will fail to make required minimum contributions, or
permit any member of its Controlled Group to fail to make required
minimum contributions with respect to a Defined Benefit Pension Plan,
resulting in a lien (as provided in the Code or ss.302(f) of ERISA)
against any Borrower or any member of its Controlled Group.
(I) No Borrower will permit the adoption of a plan amendment which results
in significant underfunding (as defined in ss.307 of ERISA) of a
Defined Benefit Pension Plan which requires such Borrower or any
member of its Controlled Group to provide security.
(J) Without the written consent of the Agent, Borrower will not acquire or
permit the acquisition by any other member of its Controlled Group of
any trade or business which maintains a Defined Benefit Plan (1) with
any "amount of unfunded benefit liabilities" (as defined in
ss.4001(a)(18) of ERISA) if the potential liability from the
termination of such Plan is likely to have a Material Adverse
34
Effect, or (2) with any "accumulated funding deficiency" (as defined
in ss.412(a) of the Code), whether or not waived.
SECTION 6.9 ENVIRONMENTAL MATTERS.
(A) Each Borrower will obtain and comply with all required permits,
licenses, registrations, and approvals relating to the discharge or
release of liquids, gases or solids into the environment; and to the
extent that such are applicable to the operation of its business, each
Borrower will comply with all laws, rules, regulations and
governmental orders and directives relating to the generation,
treatment, storage, transportation, disposal and release into the
environment and cleanup of any "hazardous substance" as that term is
defined under Section 101(14) of CERCLA, or any hazardous or toxic
substances as defined by the provisions of any state or local
environmental statute or regulation at all premises owned or operated
by such Borrower; in each case, to the extent non-compliance therewith
could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
(B) Each Borrower will notify the Agent in writing of the receipt by it of
(1) any written notice from any governmental agency that it is a
potentially responsible party in any proceeding under CERCLA or any
similar state or local environmental statute or regulation, (2) any
written notice of any claim, proceeding, litigation, order, directive,
citation, or request for information concerning its compliance with
the Environmental Laws, (3) written notice of any alleged violation of
the Environmental Laws, or (4) any information known to it concerning
any potentially materially adverse environmental condition on, above,
or beneath its premises, including but not limited to any spilling,
leaking, discharge, release, or threat of release of any hazardous or
toxic waste or substance; in each case, to the extent such notice or
information relates to an event or circumstance that has had, or could
reasonably be expected to have, a Material Adverse Effect.
SECTION 6.10 CHANGE OF BUSINESS. No Borrower will make any material change in
the lines of business as conducted by it at the date hereof, meaning no
Borrower will enter into any new business unrelated to that conducted by it
at the date hereof.
SECTION 6.11 REGULATION U. No Borrower will: (A) use the proceeds of the Loan to
purchase or carry any Margin Stock; (B) engage in the business of making
loans for the purchase of Margin Stock; or (C) purchase or carry Margin
Stock in a manner that would result in a violation of Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System.
SECTION 6.12 DISPOSAL OF ASSETS. No Borrower will dispose of any asset except
for the sale of inventory in the ordinary course of business and the sale
or other disposition of obsolete or worn-out equipment except where there
is no Material Adverse Effect.
SECTION 6.13 LOANS, INVESTMENTS, AND CONTINGENT LIABILITIES. No Borrower will
(A) become liable for the obligation of anyone except by endorsement of
negotiable instruments for deposit or collection in the usual course of
business and except for the joint and several obligations of the Borrowers
hereunder, or (B) make any loan or Investment except for (1) Investments in
cash or Cash Equivalents, (2) loans or Investments in Borrowers, (3)
Investments permitted by Section 6.16, provided that to the extent the
Investment constitutes a Permitted Acquisition of securities, the
Subsidiary thereby acquired becomes a Borrower hereunder in accordance with
Section 2.19 hereof, and (4) Investments in Affiliates (other than
Borrowers) or other Persons in which MTI or its Subsidiaries have an
interest of not more than $2,500,000 in the aggregate on or prior to the
date hereof and an additional $2,000,000 in the aggregate thereafter.
35
SECTION 6.14 MAINTENANCE OF PROPERTY. Each Borrower will maintain all of its
property in good condition and repair, ordinary wear and tear excepted, and
keep all of its patents, trademarks, copyrights, licenses, and permits
which are of more than nominal value in full force and effect.
SECTION 6.15 TRANSACTIONS WITH AFFILIATES AND SUBSIDIARIES. No Borrower will
enter into any transaction with any officer, director or shareholder of any
Borrower or any Affiliate or Subsidiary of any Borrower for less than full
value or on terms or conditions less favorable to such Borrower in any
material respect than could be obtained in an arm's length transaction with
a third party.
SECTION 6.16 RESTRICTION ON ACQUISITIONS; MERGER; CORPORATE STRUCTURE.
(A) General Prohibition. No Borrower shall create or acquire, or permit a
Subsidiary to create or acquire, any new Subsidiary, or acquire, or
permit a Subsidiary to acquire, all or a substantial portion of the
assets or securities of any other Person, or assume or agree, or
permit a Subsidiary to assume or agree, to merge or consolidate with
any Person or discharge the liabilities or obligations of any other
Person, or agree or permit a Subsidiary to agree to do any of the
foregoing (any such transaction, an "Acquisition"); except that, so
long as no Unmatured Default or Event of Default exists or would
result therefrom:
(i) any Borrower may merge with one or more other Borrowers, any
Borrower may consolidate with one or more other Borrowers or may
merge or consolidate with one or more Subsidiaries of any
Borrower, if, in any such case, the resulting or surviving
corporation (if not already a Borrower) becomes a Borrower,
provided that if such merger or consolidation involves MTI, MTI
shall be the resulting or surviving corporation;
(ii) any Subsidiary of a Borrower may merge or consolidate with one or
more other Subsidiaries of a Borrower; and
(iii) any Borrower or Subsidiary of any Borrower may engage in one or
more Permitted Acquisitions under subsection (B) below.
(B) Permitted Acquisitions. For the purposes hereof, an Acquisition shall
be deemed a "Permitted Acquisition" if:
(i) the Banks receive, at least thirty (30) Business Days prior to
the consummation of such proposed Acquisition, written notice
thereof and information and documents sufficient to show that the
Acquisition is a Permitted Acquisition;
(ii) no Default or Event of Default is in existence at the time of the
consummation of such Acquisition or would exist after giving
effect thereto, and MTI shall deliver to the Banks a certificate
signed by its chief executive officer, its chief financial
officer or its treasurer stating that such condition precedent
has been fulfilled;
(iii) in furtherance and not in limitation of (ii) above, any
Indebtedness incurred in the Acquisition to the Seller or one of
its Affiliates does not constitute a Default or Event of Default
under the requirements of Section 6.26;
(iv) within five (5) Business Days after such Acquisition, MTI shall
deliver to the Agent such updated Schedules to this Agreement as
may be required to make such schedules accurate in light of such
Acquisition;
36
(v) any Subsidiary division or business created or acquired as a
result of such Acquisition shall be in compliance with Section
6.10 and all other representations and covenants herein, and any
such Subsidiary shall have become a Borrower under this Agreement
and under the Notes and the other Loan Documents, the Banks shall
have received the documents described in Section 2.19 of this
Agreement with respect to such new Subsidiary and the Agent for
the benefit of the Banks shall have a perfected security interest
and mortgage (having first priority, subject only to the
exceptions permitted under Section 6.4(C) above) in all assets
and securities acquired by MTI in the Acquisition directly or
indirectly; and
(vi) if the total Consideration in any Acquisition is to exceed Five
Million Dollars ($5,000,000) or if the aggregate amount of
Consideration with respect to all Acquisitions consummated after
the Closing Date is to exceed $10,000,000 during any fiscal year
then, in addition:
(1) MTI shall deliver to the Agent a certificate signed by its
chief executive officer, its chief financial officer, or its
treasurer, including projections incorporating pro forma
EBITDA of the Person(s) or business(es) being acquired and
the Borrowers, as though such Acquisition had occurred,
certifying as to such officer's good faith belief that the
financial covenants contained herein will continue to be met
for the first four (4) full fiscal quarters following the
consummation of such Acquisition, to which shall be attached
computations as to such financial covenants in form and
substance reasonably satisfactory to the Agent; and
(2) The Borrowers shall deliver whatever information and/or
document the Agent or any Bank may request, in its sole
discretion, regarding the proposed transaction, and the
Majority Banks shall determine, in their sole discretion,
whether the proposed Acquisition may be consummated.
SECTION 6.17 DIVIDENDS AND DISTRIBUTIONS. No Borrower shall be entitled to make
or declare dividends upon any of its capital stock or return any capital to
any of its shareholders (except to a Borrower), or make or declare any
other payment or distribution to its shareholders (including those relating
to share repurchases or redemptions) (except to a Borrower) in their
capacity as such, except that MTI may repurchase its shares of capital
stock if the aggregate consideration therefor, after the date of this
Agreement, does not exceed $1,000,000.
SECTION 6.18 OTHER INDEBTEDNESS. No Borrower will incur or otherwise permit to
exist any Indebtedness, whether as borrower or guarantor, except (A)
Indebtedness incurred hereunder, (B) Indebtedness listed on Schedule 5.16
existing as of the date hereof, (C) purchase money Indebtedness permitted
under Section 6.4(A)(6), and (D) Permitted Seller Debt and Indebtedness
incurred in accordance with Section 6.16(B)(iii).
SECTION 6.19 LICENSES, PERMITS. Each Borrower will maintain the validity, force
and effect of, and operate in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and
orders required for the conduct of its businesses, except to the extent
non-compliance with the foregoing could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
SECTION 6.20 FISCAL YEAR. Each Borrower shall maintain a fiscal year ending on
December 31.
SECTION 6.21 BANKING RELATIONSHIPS. The Borrowers shall maintain the Agent as
their principal bank of deposit and account.
SECTION 6.22 OWNERSHIP OF BORROWERS OTHER THAN MTI. MTI will at all times
directly or indirectly own 100% of the capital stock of the Borrowers in
existence on the Closing Date.
37
SECTION 6.23 RICO. No Borrower shall engage in any conduct or take or fail to
take any action which will, or would, under the facts and circumstances
relative thereto, violate RICO.
SECTION 6.24 MINIMUM NET WORTH. MTI will maintain at the end of each fiscal
quarter, commencing the fiscal quarter ending December 31, 1999,
consolidated Net Worth in an amount not less than $29,000,000 plus 50% of
MTI's cumulative consolidated net income for the fiscal year ending
December 31, 2000 and each fiscal year thereafter. For purposes of
determining the required minimum as aforesaid (a) cumulative consolidated
net income shall include consolidated net income for entire fiscal years
only and shall be determined by reference to the financial statements
delivered under Section 6.1, and (b) a consolidated net loss during any
period shall be deemed to be consolidated net income in the amount of zero.
SECTION 6.25 SENIOR FUNDED DEBT TO EBITDA RATIO. Except as permitted below, the
Borrowers will not permit the ratio of Senior Funded Debt, determined as of
the last day (a "Measurement Date") of each period of four consecutive
fiscal quarters of MTI, to EBITDA for such period to be greater than
3.50:1.00. Notwithstanding the foregoing, if the Majority Banks so permit
in writing, in their sole discretion, the Borrowers may permit the ratio of
Senior Funded Debt to EBITDA to be greater than 3.50:1.00 (but not greater
than 3.75:1.00) as of the four consecutive Measurement Dates immediately
following a Permitted Acquisition.
SECTION 6.26 FUNDED DEBT TO EBITDA RATIO. The Borrowers will not permit the
ratio of Funded Debt, determined as of the last day of each period of four
consecutive fiscal quarters of MTI, to EBITDA for such period to be greater
than 5.00:1.00.
SECTION 6.27 FIXED CHARGE COVERAGE RATIO. MTI and its Subsidiaries, on a
consolidated basis, shall not allow the ratio of EBITDA plus expenses for
the rental of real or personal property to Fixed Charges, to be less than
1.1:1.0 for any period of four consecutive fiscal quarters.
Article VII
DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. Each of the following shall be an event of
default ("Event of Default"):
(A) (i) if the Borrowers shall fail to pay when due any principal of the
Loans or any interest on the Loans, or (ii) if the Borrower shall fail
to pay any Fee or any other amount owing hereunder within 3 Business
Days of written notice by facsimile or overnight mail by the Agent to
the Borrower Agent;
(B) if any representation or warranty made or deemed made by any of the
Borrowers in this Agreement, or in any certificate, agreement,
instrument, statement or report required hereby or made, or delivered
or deemed delivered pursuant hereto or in connection herewith, shall
prove to have been incorrect in any material respect as of the date on
which it is made, deemed made or reaffirmed;
(C) (i) if any Borrower (1) shall fail to pay any Indebtedness in a
principal amount of $250,000 or greater owing by it, or any interest
or premium thereon, when due, whether such Indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by
demand or otherwise, or (2) shall fail to perform any term, covenant
or agreement on its part to be performed under any agreement or
instrument evidencing or securing or relating to any such
38
Indebtedness when required to be performed and such defaults shall
permit the holder of such Indebtedness to accelerate the repayment of
such Indebtedness and shall not be cured within any applicable grace
period; or (ii) there shall occur any material breach or violation of
any agreement or instrument relating to an Acquisition to which any
Borrower is bound, or any Borrower shall incur any material cost,
penalty or obligation under any such agreement or instrument;
(D) if any Borrower is adjudicated a bankrupt or insolvent or the
equivalent under any law or admits in writing its inability generally
to pay its debts as they mature, or makes an assignment for the
benefit of its creditors; or if any Borrower shall apply for or
consent to the appointment of any receiver, trustee, or similar
officer or the equivalent under any law for such applicant or for all
or any substantial part of its property; or such receiver, trustee or
similar officer or the equivalent under any law shall be appointed
without the application or consent of such party and shall continue
undischarged or unstayed for a period of 90 days; or if any Borrower
shall institute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding
relating to it under the laws of any jurisdiction; or if any such
proceeding shall be instituted (by petition, application or otherwise)
against any Borrower and an order for relief or similar remedy shall
be entered in such proceeding or such proceeding shall remain
undismissed for a period of 90 days; or if any Borrower suspends its
operations or becomes unable to pay its debts as they mature or calls
a meeting of creditors for the purpose of debt restructuring or
dissolves or otherwise terminates its existence; provided that, the
occurrence of any of the foregoing events with respect to any Borrower
other than MTI, SEH, or Sparks shall not constitute an Event of
Default if (1) such occurrence does not have a Material Adverse Effect
on the financial condition or business operations of any of the other
Borrowers or all of the other Borrowers on a Consolidated basis, (2)
such occurrence does not materially and adversely effect the
collateral position of the Banks or the Collateral, (3) no other
Borrower is consolidated in or otherwise made a party to such
proceeding, and (4) the aggregate of the revenues and assets of all
Borrowers with respect to which one or more of such events has
occurred after the date of this Agreement shall not exceed,
cumulatively, ten percent (10%) of the total Consolidated revenues and
assets, respectively, of all Borrowers (the measurement dates for such
calculation being the date of each such event);
(E) if (1) any Reportable Event, or any failure of compliance required by
Section 6.8 hereof, that creates a reasonable likelihood of the
termination of any Defined Benefit Pension Plan maintained by any
Borrower or any member of its Controlled Group, or of the appointment
by the appropriate United States District Court of a trustee to
administer any such Plan has occurred and is continuing 30 days after
written notice to such effect is given to the Borrowers by the Agent
or any Bank, or (2) any Borrower or any member of its Controlled Group
withdraws from any Defined Benefit Pension Plan for which it was a
substantial employer as defined by ss.4001(a)(2) and within the
meaning of ss.4063(b) of ERISA or from any Multiemployer Plan and the
liability for such withdrawal exceeds $500,000, or (3) the plan
administrator of any Defined Benefit Pension Plan maintained by any
Borrower or any member of its Controlled Group files with the PBGC a
notice of intention to terminate such Plan in a "distress termination"
(as defined in ss.4041(c) of ERISA), or (4) the PBGC institutes
proceedings to terminate any such Plan or to appoint a trustee to
administer any such Plan, and if, in any of the cases described in the
foregoing clauses (1) to (4);
(F) if the Borrowers shall fail to perform or observe when due any term,
covenant or agreement contained herein and such failure (other than a
failure which otherwise constitutes an Event of Default under this
Section 7.1 or is a violation of Sections 6.24, 6.25, 6.26 or 6.27) is
not cured within a period of thirty (30) days from the date the
Borrower Agent first became aware of such failure, whether by written
notice from the Agent or any Bank or otherwise, or has not been cured
within a period of five (5) days from the date that the Agent or any
Bank gives the Borrower Agent notice of such default;
39
(G) if there is a Change in Control not approved in advance and in writing
by the Majority Banks;
(H) if any two of the three officers of MTI presently serving in the
capacities of Chief Executive Officer, Executive Officer or Chief
Financial Officer shall (a) voluntary resign or (b) shall be
discharged or otherwise involuntarily cease to serve in such position
and shall not be replaced within thirty (30) days with a replacement
reasonably acceptable to the Bank;
(I) if a judgment of Five Hundred Thousand Dollars ($500,000) or more is
entered against any Borrower and is not satisfied or bonded within
thirty (30) days;
(J) this Agreement, any of the Notes, the Subrogation and Contribution
Agreement or any other material Loan Document executed pursuant hereto
is found to be unenforceable or its enforceability is contested in any
way by a Borrower; provided that, the occurrence of any of the
foregoing events with respect to any Borrower other than MTI, SEH, or
Sparks shall not constitute an Event of Default if (1) such occurrence
does not have a Material Adverse Effect on the financial condition or
business operations of any of the other Borrowers or all of the other
Borrowers on a Consolidated basis, (2) such occurrence does not
materially and adversely affect the collateral position of the Banks
or the Collateral, (3) no other Borrower is consolidated in or
otherwise made a party to any related proceeding, and (4) the
aggregate of the revenues and assets of all Borrowers with respect to
which one or more of such events has occurred after the date of this
Agreement shall not exceed, cumulatively, ten percent (10%) of the
total Consolidated revenues and assets, respectively, of all Borrowers
(the measurement dates for such calculation being the date of each
such event); or
(K) if there shall be a violation or breach under any of Sections 6.24,
6.25, 6.26 or 6.27.
SECTION 7.2 TERMINATION OF REVOLVING COMMITMENT; ACCELERATION. If any Event of
Default shall occur and be continuing, the Agent may at its option and
shall, upon being so directed by the Majority Banks, declare the
Commitments to be terminated and the outstanding Notes and all interest
thereon and all other amounts payable under this Agreement to be
immediately due and payable and require the Borrowers to (and the Borrowers
shall) immediately and fully collateralize each outstanding Letter of
Credit with cash deposited with the Agent in the full amount of the
aggregate outstanding amounts thereof; provided that immediately and
automatically upon the happening of a Default specified in Section 7.1(D),
the Commitments shall terminate, the outstanding Notes and all interest
thereon and all other amounts payable under this Agreement shall be
immediately due and payable and the aforesaid cash collateralization shall
be immediately required without declaration or other notice to the
Borrowers, and the Borrowers shall immediately make all such payments to
the Agent for the ratable benefit of the Banks. Thereupon, the Agent shall
notify the Borrowers of the accrual of interest at the Default Rate, and
the Agent and the Banks shall have all of the rights and remedies available
under the Loan Documents or otherwise at law or in equity. The Borrowers
expressly waive any presentment, demand, protest or further notice of any
kind.
SECTION 7.3 REMEDIES.
(A) Upon the occurrence and during the continuance of any one or more
Events of Default, the Agent for the account of the Banks may proceed
to protect and enforce its rights under this Agreement, the Notes
and/or any other document executed pursuant hereto by exercising such
remedies as are available to the Agent or any Bank in respect thereof
under applicable law, either by suit in equity or by action at law, or
both, whether for specific performance of any provision contained in
40
this Agreement, the Notes or the other Loan Documents or in aid of the
exercise of any power granted in this Agreement, the Notes or the
other Loan Documents.
(B) Upon the occurrence and during the continuance of any one or more
Events of Default, the Agent for the account of the Banks, in addition
to all the other rights and remedies herein contained, shall be
entitled to exercise any and all rights available to it in law or
equity.
Article VIII
AGENCY PROVISIONS
SECTION 8.1 AUTHORIZATION AND ACTION. Each Bank hereby irrevocably appoints and
authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as
are delegated to the Agent by the terms hereof, together with such powers
as are reasonably incidental thereto. The duties of the Agent shall be
mechanical and administrative in nature and the Agent shall not by reason
of this Agreement be a trustee or fiduciary for any Bank. The Agent shall
have no duties or responsibilities except those expressly set forth in the
Loan Documents. As to any matters not expressly provided for by this
Agreement or the other Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks, and
such instructions shall be binding upon all Banks and all holders of Notes;
provided, however, that the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement or the other Loan Documents or applicable law. Whenever the Agent
shall receive any notice, financial information or other written material
from any Borrower relating to or in connection with any of the Loan
Documents, any such oral notification of a material nature shall be
promptly relayed to the Banks, and copies of any such written notice,
information or other material shall be promptly provided to the Banks.
SECTION 8.2 LIABILITY OF AGENT. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to any Bank for any action
taken or omitted to be taken by it or them under or in connection with any
Loan Documents in the absence of its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing,
the Agent (a) may treat the payee of any Note as the holder thereof until
the Agent receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to the Agent; (b) may consult
with legal counsel (including counsel for the Borrowers), independent
public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties or representations
made in or in connection with any Loan Document; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of any Loan Document on the part of
the Borrowers or any other Person or to inspect the property (including the
books and records) of the Borrowers; (e) shall not be responsible to any
Bank for the due execution, legality, validity, enforceability,
genuineness, perfection, sufficiency or value of any of the Loan Documents
or any other instrument or document furnished pursuant thereto; and (f)
shall incur no liability under or in respect of any Loan Document by acting
upon any notice, consent, certificate or other instrument or writing (which
may be by telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper party or parties.
SECTION 8.3 RIGHTS OF AGENT AS A BANK. With respect to its Commitment, the Loans
made by it and the Note issued to it, the Agent shall have the same rights
and powers under the Loan Documents as any other Bank and may exercise the
same as though it were not the Agent; and the term "Bank" or
41
"Banks" shall, unless otherwise expressly indicated, include the Agent in
its individual capacity. The Agent, each Bank and their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, any
Borrower, any of the Subsidiaries and any Person who may do business with
or own securities of any Borrower or any Subsidiary, all as if the Agent
were not the Agent and without any duty on the part of the Agent or any
Bank to account therefor to the Banks or the Agent as the case may be.
SECTION 8.4 INDEPENDENT CREDIT DECISIONS. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and
based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each
Bank also acknowledges that it will, independently and without reliance
upon the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan
Documents. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent under the
terms of any of the Loan Documents, the Agent shall have no duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of any Borrower or
any Subsidiary (or any of their Affiliates) which may come into the
possession of the Agent or any of its Affiliates.
SECTION 8.5 INDEMNIFICATION. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Borrowers), ratably according to the
respective amounts of their Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Agent in any
way relating to or arising out of any of the Loan Documents or any action
taken or omitted by the Agent under any of the Loan Documents, provided
that no Bank shall be liable for any portion of any of the foregoing
resulting from the Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent (to
the extent not reimbursed by the Borrowers) promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, administration,
or enforcement of, or legal advice in respect of rights or responsibilities
under, any of the Loan Documents. The Agent shall confer with the Banks
prior to retaining outside counsel in connection with this Agreement and
shall not retain counsel with whom any Bank demonstrates an actual or
potential conflict of interest of a material nature without such Bank's
written consent.
SECTION 8.6 SUCCESSOR AGENT. The Agent may resign at any time by giving at least
30 days prior written notice thereof to the Banks and the Borrowers and may
be removed at any time with or without cause by the Majority Banks. Upon
any such resignation or removal, the Borrowers shall have the right, with
the approval of the Banks, to appoint a successor Agent. If no successor
Agent shall have been so appointed and accepted such appointment, within 21
days after the retiring Agent's giving of notice of resignation or the
Majority Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$500 million. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under any of the Loan Documents.
SECTION 8.7 SHARING OF PAYMENTS, ETC. If any Bank shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Notes or other obligations of
Borrowers held by all the Banks, such Bank shall purchase from the other
42
Banks such participations in the Notes or other obligations held by them as
shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and each Bank shall
repay to the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable share
(according to the proportion of (a) the amount of such Bank's required
repayment to (b) the total amount so recovered from the purchasing Bank) of
any interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. The Borrowers agree that any Bank
so purchasing a participation from another Bank pursuant to this Section
may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation
as fully as if such Bank were the direct creditor of the Borrowers in the
amount of such participation
.
Article IX
MISCELLANEOUS
SECTION 9.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of
the Agent for the account of the Banks in exercising any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy hereunder. No waiver of any right, power, remedy, privilege or
prerogative of the Agent or any Bank hereunder shall be effective unless
the same shall be in writing and signed by the Agent or applicable (as the
case may be) Bank. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.2 ARBITRATION.
(A) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy
arising out of, or relating to the Loan Documents between the parties
(a "Dispute") hereto shall be resolved by binding arbitration
conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") and, where applicable, the
Supplementary Rules for Large Complex Disputes, of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act.
Disputes may include, without limitation, tort claims, counterclaims,
a dispute as to whether a matter is subject to arbitration, claims
brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court
having jurisdiction. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to swap
agreements.
(B) All arbitration hearings shall be conducted in the city of
Philadelphia, Commonwealth of Pennsylvania unless otherwise agreed by
all parties to such arbitration. A hearing shall begin within 90 days
of demand for arbitration and all hearings shall conclude within 120
days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then for no more
than a total of 60 days. At the administrative conference conducted by
the AAA, the parties and the AAA shall determine how to ensure that
the hearing is started and completed on sequential hearing days.
Potential arbitrators shall be informed of the anticipated length of
the hearing and they shall not be subject to appointment unless they
agree to abide by the parties' intent that, absent exigent
circumstances, the hearing be conducted on sequential days. The
expedited procedures set forth in Rule 51 et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00.
Arbitrators shall be licensed attorneys selected from the Commercial
Financial Dispute Arbitration Panel of the AAA. The parties do not
waive applicable Federal or state substantive law except as provided
herein. The award of the arbitrator(s) shall be accompanied by a
statement of the reasons upon which such award is based.
43
(C) In any arbitration hereunder, the arbitrator shall decide (by
documents only or with a hearing, at the arbitrators' discretion) any
pre-hearing motions which are substantially similar to pre-hearing
motions to dismiss for failure to state a claim or motions for summary
adjudication.
(D) Discovery shall be limited to the prehearing exchange of all documents
which each party intends to introduce at the hearing and any expert
reports prepared by an expert who will testify at the hearing.
(E) Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that
any party may exercise before or after an arbitration proceeding is
brought. The parties shall have the right to proceed in any court of
proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against
any real or personal property or other security by exercising a power
of sale or under applicable law by judicial foreclosure including a
proceeding to confirm the sales; (ii) all rights of self-help
including peaceful occupation of real property and collection of
rents, set-off, and peaceful possession of personal property; (iii)
obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of
receiver and filing of involuntary bankruptcy proceedings; and (iv)
when applicable, a judgment by confession of judgment. Any claim or
controversy with regard to any party's entitlement to such remedies is
a Dispute.
(F) The parties agree that they shall not have a remedy of punitive,
exemplary, special or consequential damages against other parties in
any Dispute and hereby waive any right or claim to punitive,
exemplary, special or consequential damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute
is resolved by arbitration or judicially.
SECTION 9.3 WARRANT OF ATTORNEY. EACH BORROWER HEREBY IRREVOCABLY AUTHORIZES AND
EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR CLERK OF ANY
COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE AT ANY
TIME AFTER AN EVENT OF DEFAULT HEREUNDER TO APPEAR FOR AND CONFESS JUDGMENT
AGAINST ANY AND ALL BORROWERS FOR THE UNPAID PRINCIPAL BALANCE OF THE NOTES
TOGETHER WITH ANY CHARGES DUE HEREUNDER OR THEREUNDER, ALL INTEREST ACCRUED
THEREON, AND ALL OTHER SUMS DUE HEREUNDER OR THEREUNDER, TOGETHER WITH
REASONABLE ATTORNEYS FEES AND ALL COSTS OF SUIT OR OTHER EXPENSES INCURRED.
IF A COPY OF THIS WARRANT OF ATTORNEY, VERIFIED BY AFFIDAVIT SHALL BE FILED
IN ANY PROCEEDING, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL COPY OF
THIS AGREEMENT AS WARRANT OF ATTORNEY.
SECTION 9.4 SET-OFF. Upon an Event of Default, the Agent and each Bank shall
have a right of set-off against all property of each Borrower now or at any
time in the possession of the Agent or such Bank in any capacity whatever,
including, but not limited to, any such Borrower's interest in any deposit
account.
SECTION 9.5 AMENDMENTS, ETC. No amendment, modification, termination, or waiver
of any provision of any Loan Document to which any Borrower is a party, nor
consent to any departure by any Borrower from any Loan Document to which it
is a party, shall in any event be effective unless the same shall be in
writing and signed by the Majority Banks, and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given, provided, however, that no amendment, waiver or
consent, shall, unless in writing and signed by all Banks, do any of the
following: (a) waive any of the conditions precedent specified in Article
IV; (b) increase the Revolving Credit Commitments of the Banks or subject
the Banks to any additional obligations; (c) reduce the principal of, or
interest on, the Notes or any fees hereunder; (d) postpone any date fixed
for any payment of
44
principal of, or interest on, the Notes or any fees hereunder; (e) change
the percentage of the Revolving Credit Commitments or of the aggregate
unpaid principal amount of the Notes which shall be required for the Banks
or any of them to take any action hereunder; (f) release any Borrower from
its obligations hereunder; or (g) amend, waive or modify this Section or
the definition of "Majority Banks," provided that, no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Banks required above to take such action, affect the rights or duties of
the Agent under any of the Loan Documents.
SECTION 9.6 NOTICES. Unless this Agreement specifically provides otherwise, all
notices, requests, demands and other communications that this Agreement
requires or permits the Borrowers to give to the Agent or Banks or the
Agent or any Bank to give to the Borrowers shall be in writing (including
telecopy) and shall be given to the Agent, the Bank(s) or the Borrower
Agent, as the case may be, at their respective address or telecopy number
specified on the signature pages of this Agreement or at such other address
or telecopy number as shall be designated by such party in a notice to each
other complying with the terms of this Section. Unless this Agreement
specifically provides otherwise, all notices, requests, demands and other
communications provided for hereunder shall be effective (A) if given by
mail, three days after placing in the United States mail, postage prepaid,
certified mail, return receipt requested, (B) if given by telecopy, when
such telecopy is transmitted to the aforesaid telecopy number and the
appropriate confirmation of receipt is received by the sender or (C) if
given by any other means, when delivered to the carrier with postage
prepaid to the aforesaid address(es); provided, however, that notices from
the Borrower Agent to the Agent pursuant to any of the provisions of
Article II hereof shall not be effective until received by the Agent. The
Agent and each Bank shall be entitled to rely on any notice, oral or
written, received by it from the Borrower Agent as if such notice were
delivered by all of the Borrowers. Although the Borrower Agent is obligated
to follow any telephonic notice made to select an Interest Rate and/or
Interest Period with written confirmation, the Agent shall be entitled to
rely on such telephonic notice whether or not the Borrower Agent thereafter
confirms in writing, as if the Borrower Agent did, in fact, confirm in
writing.
SECTION 9.7 NATURE OF OBLIGATIONS.
(A) Nothing contained in this Agreement, and no action taken by the Agent
or any Bank pursuant hereto, shall be deemed to create a partnership,
association, joint venture or other entity with the Borrowers. The
obligations of each Borrower under this Agreement and the Notes are
joint and several.
(B) The joint and several obligations of each Borrower hereunder shall be
absolute and unconditional irrespective of: (i) any lack of validity
or enforceability of the Agreement or the Notes against any other
Borrower; (ii) any change in the time, manner or place of payment of,
or in any other term in respect of, all or any of the obligations of
any other Borrower hereunder, or any other amendment or waiver of or
consent to any departure from any provision of this Agreement or the
Notes with respect to any other Borrower; or (iii) any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, any Borrower in respect of the obligations of the
Borrowers hereunder.
(C) Each Borrower hereby irrevocably agrees for the benefit of the Agent
and the Banks and the other Borrowers that it will not exercise any
rights which it may have or acquire against such other Borrower by way
of subrogation or otherwise arising from payments under this Agreement
or the Notes; until all amounts due to the Bank hereunder and under
the Notes are paid in full and the Revolving Credit Commitment
terminates or expires and no Letter of Credit Liabilities shall be
outstanding or otherwise exist.
45
SECTION 9.8 COSTS AND EXPENSES. The Borrowers agree to pay on demand (A) all
reasonable, out-of-pocket costs and expenses of the Agent in connection
with the preparation, negotiation, printing, execution and delivery of this
Agreement, the Notes and the other documents executed pursuant hereto
(including and limited to the reasonable fees and out-of-pocket expenses of
counsel for the Agent, such fees of the Agent's counsel for the first draft
of this Agreement not to exceed Four Thousand Dollars ($4,000) , (B) all
reasonable, out-of-pocket costs and expenses of the Agent in connection
with the amendment, waiver and administration of this Agreement, the Notes
or any other documents executed pursuant hereto, and (C) all reasonable
costs and expenses, if any, of the Agent and the Banks in connection with
the enforcement against the Borrowers of this Agreement, the Notes or any
other documents executed pursuant hereto (including without limitation the
reasonable fees and out-of-pocket expenses of counsel with respect thereto
of the Bank).
SECTION 9.9 COUNTERPARTS. This Agreement and any amendments thereto may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
SECTION 9.10 BINDING EFFECT. This Agreement shall become effective when it has
been executed by the Borrowers, the Agent and the Banks. It shall
thereafter be binding upon and inure to the benefit of the Borrowers, the
Agent and the Banks and their respective successors and assigns except that
no Borrower shall have the right to assign any of its rights or obligations
hereunder or any interest herein.
SECTION 9.11 GOVERNING LAW. This Agreement, the Notes and the other documents
executed pursuant hereto shall be governed in all respects by the law of
the Commonwealth of Pennsylvania and for all purposes shall be construed in
accordance with the law of the Commonwealth of Pennsylvania. Subject to
Section 9.2, the parties acknowledge the non-exclusive jurisdiction of the
federal and state courts located within Philadelphia County in the
Commonwealth of Pennsylvania over controversies arising from or relating to
this Agreement.
SECTION 9.12 HEADINGS. Article and Section headings used in this Agreement are
for convenience only and shall not affect the construction of this
Agreement.
SECTION 9.13 USURY. Nothing herein contained, contained in the Notes or
contained in any other document executed pursuant hereto, nor any
transaction related hereto or thereto, shall be construed or shall so
operate either presently or prospectively to require the Borrowers (i) to
pay interest at a rate greater than is now lawful in such case to contract
for, but shall require payment of interest only to the extent of such
lawful rate, or (ii) to make any payment or do any act contrary to law, but
if any provision herein or therein contained shall otherwise so operate to
invalidate such document, in whole or in part, then such provision only
shall be held for naught as though not herein or therein contained and the
remainder of such document shall remain operative and in full force and
effect. Any interest paid in excess of the lawful rate shall be refunded to
the Borrowers. Such refund shall be made by application of the excessive
amount of interest paid against any sums outstanding under this Agreement
and shall be applied in such order as the Agent may determine. If the
excessive amount of interest paid exceeds the sums outstanding hereunder,
the portion exceeding the said sums outstanding shall be refunded in cash
by the Banks. Any such crediting or refund shall not cure or waive any
Unmatured Default or Event of Default by the Borrowers hereunder or under
the Notes. The Borrowers agree, however, that in determining whether or not
any interest payable exceeds the highest rate permitted by law, any
non-principal payment (except payments specifically stated in this
Agreement to be "interest") shall be deemed, to the extent permitted by
law, to be an expense, fee, premium, or penalty rather than interest.
46
SECTION 9.14 ASSIGNMENTS; PARTICIPATIONS. The Borrowers acknowledge and agree
that any Bank may at any time:
(A) assign or transfer any of its rights or obligations under this
Agreement in a transaction intended solely as a source of funding, to
a Federal Reserve Bank, without the consent of or notice to MTI or the
Agent;
(B) sell participations in the Loans outstanding hereunder to another
financial institution (after providing written notice to MTI regarding
such sale at least five (5) days prior thereto), but in the event of
any such participation, no party to this Agreement shall have any
obligations or responsibilities to such participant other than its
obligations or responsibilities to the seller of such participation,
and no participation shall relieve any party of its obligations and
duties hereunder, provided that, any agreement pursuant to which any
Bank may grant a participation shall not limit such Bank's ability to
agree to any modification, amendment or waiver of the Loan Documents
without the consent of the participant except to the extent such
modification, amendment or waiver would change the amount of the
Commitments, reduce the principal of or rate of interest on the Loans
or related fees or postpone the date fixed for any payment of
principal of or interest on the Loans or related fees;
(C) assign all or any portion of its rights under the Loans and its
Commitment in minimum amounts of $5,000,000 either (A) to an Affiliate
of such Bank, or (B) with the prior written consent of the Agent,
which shall not be unreasonably withheld or delayed, together with the
payment by such Bank to the Agent of a $3,500 transfer fee, and,
except after the occurrence of an Event of Default, with the prior
written consent of MTI, which shall not be unreasonably withheld or
delayed. Promptly upon any such assignment described in (A) or (B)
above, the assignee shall execute a joinder to this Agreement in form
satisfactory to the Agent, agreeing to be bound by the terms and
conditions of this Agreement, and then shall be deemed a Bank for all
purposes hereunder, and the Borrowers shall execute and deliver new
Notes and such other documents as may be appropriate to reflect such
assignment; and
(D) share credit information on the Borrowers with prospective and actual
participants and assignees.
SECTION 9.15 APPOINTMENT OF BORROWER AGENT. Each Borrower hereby irrevocably
appoints and authorizes MTI to act as its agent hereunder and under the
Notes with such powers as are specifically delegated to the Borrower Agent
by the terms of this Agreement and the Notes, including, without
limitation, the power to receive notice on behalf of all of the Borrowers,
together with such other powers as are reasonably incidental thereto.
SECTION 9.16 SURVIVAL; INDEMNIFICATION.
(A) The obligations of the Borrowers under Sections 2.11, 2.12, 2.17,
2.18, 9.7 and 9.15 shall survive the repayment of the Loans.
(B) If after receipt of any payment of all or any part of the amounts
outstanding hereunder or under the Notes, the Agent or any Bank is for
any reason compelled to return such payment to any Person because such
payment is determined to be void or voidable as a preference, an
impermissible setoff, or a diversion of trust funds, or for any other
reason, this Agreement and the Notes shall continue in full force and
the Borrowers shall be liable, and shall indemnify and hold the Agent
and each Bank harmless for, the amount of such payment returned and
any fees and expenses incurred in enforcing this indemnity provision.
The provisions of this Section shall be and remain effective
notwithstanding any contrary action which may have been taken by the
Agent or any Bank in
47
reliance upon such payment, and any such contrary action so taken
shall be without prejudice to the Agent's or any Bank's rights under
this Agreement and the Notes and shall be deemed to have been
conditioned upon such payment having become final and irrevocable. The
provisions of this Section shall survive the termination of the
Agreement and the Notes.
(C) Each Borrower hereby jointly and severally indemnifies and holds
harmless the Agent, each Bank and all of their affiliates,
subsidiaries, successors, assigns, officers, directors, attorneys,
shareholders, employees and agents ("Indemnified Parties") from any
and all liability, damages, costs, claims, losses, suits, actions,
legal or administrative proceedings, interest, expenses, reasonable
attorneys' fees (including any such fees and expenses incurred in
investigating, evaluating or defending such claims or in enforcing
this indemnity provision), and reasonable consultants' fees and expert
witness fees incurred by any of them caused by, relating to, arising
out of or resulting from or in any way connected with this Agreement
or the Notes and any transaction contemplated herein or therein,
exclusive of any of the forgoing resulting from any act or omission
amounting to willful misconduct or gross negligence by any beneficiary
of this indemnity.
(D) Each Borrower hereby jointly and severally indemnifies, defends and
holds harmless the Indemnified Parties, from and against any and all
liability, damages, costs, claims, losses, suits, actions, legal or
administrative proceedings, interest, expenses, reasonable attorneys'
fees (including any such fees and expenses incurred in investigating,
evaluating, or defending such claims or in enforcing this indemnity
provision), and reasonable consultants' fees and expert witness fees
incurred by any of them caused by, relating to, arising out of or
resulting from or in any way connected with (1) any liability or any
claims relating to the Environmental Laws or the environmental
condition of the properties; (2) the presence of any hazardous
substance on, about, beneath or arising from any Properties, (3) the
failure of any Borrower, any Subsidiary thereof, any past or present
occupant, or any future occupant that controls, is controlled by, or
is under common control with any Borrower, of any Property (whether
owner, tenant, subtenant or any other occupant) to comply with the
Environmental Laws; or (4) the untruth or breach of any of the
representations or warranties contained herein relating to the
Environmental Laws, provided, however, that the Borrowers shall not be
required to indemnify any Indemnified Party to the extent the
liability resulted from or arose out of the gross negligence or
willful or reckless act or omission of that Indemnified Party.
SECTION 9.17 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
attached hereto, the Note, the Subrogation and Contribution Agreement and
the other documents executed pursuant hereto constitute the entire
understanding among the parties with respect to the subject matter hereof
and supersede any and all contemporaneous and prior agreements between the
parties hereto with respect to the subject matter hereof and thereof.
WAIVER OF JURY TRIAL. BORROWERS AND THE BANKS HEREBY WAIVE TRIAL BY
JURY IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP EVIDENCED HEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS TO ENTER INTO THIS
AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
48
SIGNATURE CONTINUED FROM THE PREVIOUS PAGE
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound, have caused this Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
MARLTON TECHNOLOGIES, INC.,
a New Jersey corporation
SPARKS EXHIBITS & ENVIRONMENTS CORP.
(formerly Sparks Exhibits Corp.),
a Pennsylvania corporation
SPARKS EXHIBITS & ENVIRONMENTS, INC.
(formerly Sparks Exhibits, Inc.),
a Georgia corporation
SPARKS EXHIBITS & ENVIRONMENTS, LTD.
(formerly Sparks Exhibits, Ltd.),
a California corporation
SPARKS EXHIBITS & ENVIRONMENTS INCORPORATED
(formerly Piper Productions, Inc.),
a Florida corporation
SPARKS SCENIC, LTD.,
a California corporation
SPARKS PRODUCTIONS LTD.,
a California corporation
SPARKS EXHIBITS HOLDING
CORPORATION, a Delaware Address:
corporation -------
0000 Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
By:
Xxxxxx X. Xxxxxxxx, CEO
DMS STORE FIXTURES LLC
(formerly DMS Store Fixtures Corp.),
a Pennsylvania corporation
By:
Xxxxxx X. Xxxxxxxx, Manager
49
[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]
FIRST UNION NATIONAL BANK 000 X. Xxxxx Xxxxxx
(for itself and as Agent) Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
By: ______________________
Name: AND
---
Title:
First Union National Bank
0000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
50
Schedule 2.1
Revolving Credit Commitments
First Union National Bank $30,000,000
Total $30,000,000
51
Schedule 3.4
Collateral Locations
52
Schedule 5.12
Subsidiaries and Stock Ownership
53
Schedule 5.15
Existing Debt
54
Exhibit 2.4
Revolving Credit Note
$__,000,000.00 January __, 2000
FOR VALUE RECEIVED, the undersigned, (collectively the "Borrowers"), hereby
jointly and severally promise to pay to the order of
______________________________ (the "Bank"), by remittances to the Agent in
accordance with the Agreement (defined below), the principal amount of
_______________ Million Dollars ($__,000,000.00), or such lesser amount as may
be advanced by the Bank, in lawful money of the United States of America in
immediately available funds, payable at the times, in the manner, and at the
interest rates specified in the Agreement.
This Note arises out of that certain Amended and Restated Revolving Credit
and Security Agreement dated as of January 21, 2000 among the Borrowers, First
Union National Bank, as Agent and the Banks (as amended, the "Agreement") and is
subject in all respects to the terms of the Agreement. This Revolving Credit
Note is one of the "Revolving Credit Notes" as defined in the Agreement.
Terms used herein which are defined in the Agreement shall have their
defined meanings when used herein. The Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events and also for prepayments on account of principal hereof
prior to the maturity of this Note upon the terms and conditions specified in
the Agreement. This Note is secured by the Agreement, reference to which is
hereby made for a description of the Collateral provided for therein and the
rights of the Borrowers and the Bank with respect to such Collateral.
The Borrowers hereby waive presentment, demand for payment, notice of
dishonor or acceleration, protest and notice of protest, and any and all other
notices or demands in connection with the delivery, acceptance, performance,
default or enforcement of this Note, excepting any notice requirements set forth
in the Agreement.
JURISDICTION AND VENUE. IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR THE
RELATIONSHIP EVIDENCED HEREBY, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE COUNTIES
OF PHILADELPHIA, XXXXXXXXXX OR BUCKS IN THE COMMONWEALTH OF PENNSYLVANIA AND
AGREE NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR
MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH COUNTY. THE BORROWER
AGREES THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON
IT BY MAILING A COPY THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
BORROWER.
WAIVER OF JURY TRIAL. BORROWERS HEREBY WAIVE, AND THE BANKS BY THEIR
ACCEPTANCE HEREOF THEREBY WAIVE, TRIAL BY JURY IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE OR THE
RELATIONSHIP EVIDENCED HEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
BANKS TO ACCEPT AND RELY UPON THIS NOTE.
This Note shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania.
55
IN WITNESS WHEREOF, the Borrowers, intending to be legally bound, have
executed and delivered this Note on the date first above written.
MARLTON TECHNOLOGIES, INC.,
a New Jersey corporation
SPARKS EXHIBITS & ENVIRONMENTS CORP.
(formerly Sparks Exhibits Corp.),
a Pennsylvania corporation
SPARKS EXHIBITS & ENVIRONMENTS, INC.
(formerly Sparks Exhibits, Inc.),
a Georgia corporation
SPARKS EXHIBITS & ENVIRONMENTS, LTD.
(formerly Sparks Exhibits, Ltd.),
a California corporation
SPARKS EXHIBITS & ENVIRONMENTS INCORPORATED
(formerly Piper Productions, Inc.),
a Florida corporation
SPARKS SCENIC, LTD., a California corporation
SPARKS PRODUCTIONS LTD., a California corporation
SPARKS EXHIBITS HOLDING CORPORATION, a
Delaware corporation
By:______________________________________
Xxxxxx X. Xxxxxxxx, CEO
DMS STORE FIXTURES LLC (formerly DMS Store
Fixtures Corp.), a Pennsylvania corporation
By:______________________________________
Xxxxxx X. Xxxxxxxx, Manager
56
Exhibit 6.1
Compliance Certificate
To be in the form used in connection with the 12/31/97 Credit
Agreement, with any changes necessary to reflect
new financial covenants.
57
