EXHIBIT 10.1
MPD TECHNOLOGIES, INC.
LOAN AND SECURITY AGREEMENT
As of: February 13, 1997
$13,000,000
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY
(AS LENDER AND AS AGENT)
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of February
13, 1997, by and among MPD TECHNOLOGIES, INC., a New York
corporation with its chief executive office and principal place of
business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("Borrower"), the various financial institutions which are now or
which become a party hereto (each a "Lender" and collectively, the
"Lenders") and IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY a New York banking
corporation as agent for the Lenders (IBJS, in such capacity, the
"Agent") with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
In consideration of the mutual covenants and undertakings
herein contained, Borrower, Lenders and Agent hereby agree as
follows:
SECTION 1. GENERAL DEFINITIONS
1.1 Defined Terms. When used herein, the following
terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice
versa):
Accounts - all accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter created
or acquired by Borrower or in which Borrower now has or hereafter
acquires any interest.
Account Debtor - any Person who is or may become
obligated under or on account of an Account.
Affiliate - a Person (other than a Subsidiary): (i)
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with,
Borrower; (ii) which beneficially owns or holds 20% or more of any
class of the Voting Stock of Borrower; or (iii) 20% or more of the
Voting Stock (or in the case of a Person which is not a corpora-
tion, 20% or more of the equity interest) of which is beneficially
owned or held by Borrower or a Subsidiary of Borrower. For
purposes hereof, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership
of Voting Stock, by contract or otherwise.
Agreement - as defined in the preamble hereof.
Alternate Base Rate - for any day, a rate per annum
equal to the higher of (i) the Base Rate in effect on such day and
(ii) the Federal Funds Rate in effect on such day plus 1/2 of 1%.
Base Rate - the base commercial lending rate of IBJS as
publicly announced to be in effect from time to time, such rate to
be adjusted automatically, without notice, on the effective date of
any change in such rate. This rate of interest is determined from
time to time by IBJS as a means of pricing some loans to its
customers and is neither tied to any external rate of interest or
index nor does it necessarily reflect the lowest rate of interest
actually charged by IBJS to any particular class or category of
customers of IBJS.
Borrowing Base - as at any date of determination thereof,
an amount equal to the lesser of:
(a) Maximum Revolving Amount minus the L/C Reserve;
or
(b) an amount equal to:
(i) eighty-five percent (85%) (or such lesser
percentage as Agent may reasonably determine from time to
time) of the net amount of Eligible Accounts outstanding
at such date;
PLUS
(ii) the lesser of (a) $6,000,000 or (b) the sum of
(w) forty percent (40%) (or such lesser percentage as
Agent may reasonably determine from time to time) of the
value of Eligible Inventory consisting of raw materials
plus (x) forty percent (40%) (or such lesser percentage
as Agent may reasonably determine from time to time) of
the value of Eligible Inventory consisting of work-in-
process that is supported by purchase orders;
MINUS (subtract from the sum
of clauses (i)and (ii) above)
(iii) Special Reserves and the L/C Reserve.
For purposes hereof, the net amount of Eligible Accounts
at any time shall be the face amount of such Eligible Accounts less
any and all returns, discounts, (which may, at Agent's option, be
calculated on shortest terms), credits, allowances or excise taxes
of any nature at any time issued, owing, claimed by Account
Debtors, granted, outstanding or payable in connection with such
Accounts at such time.
Business Day - a day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such
state are closed.
Capital Expenditures - expenditures made and liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a
useful life of more than one year, including the direct or indirect
acquisition of such assets by way of increased product or service
charges, offset items or otherwise and the principal portion of
payments with respect to Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness
represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with
GAAP, and the amount of such Indebtedness shall be the capitalized
amount of such obligations determined in accordance with GAAP.
CERCLA - the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
9601 et seq.
Change of Ownership - the occurrence of one or more of
the following events:
(a) Charterhouse Equity Partners, L.P. shall cease to
own (directly or indirectly) at least forty percent (40%) of the
issued and outstanding Voting Stock of MPDI other than a decrease
in ownership to an amount not less than twenty percent (20%) which
occurs solely as a result of a secondary public offering of the
Voting Stock of MPDI; and
(b) MPDI shall cease to own one hundred percent (100%)
of the issued and outstanding capital stock of Borrower.
Closing Date - the date on which all of the conditions
precedent in Section 10 are satisfied.
Code - the Uniform Commercial Code as adopted and in
force in the State of New York, as from time to time in effect.
Collateral - all of the Property and interests in
Property described in Section 4 hereof, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Commitment Percentage - of any Lender, the percentage set
forth below such Lender's name on the signature page hereof as same
may be adjusted upon any assignment by a Lender pursuant to Section
13.7(B) hereof.
Commitment Transfer Supplement - a document in the form
of Exhibit 13.7 hereto, properly completed and otherwise in form
and substance satisfactory to Agent by which the Purchasing Lender
purchases and assumes a portion of the obligation of Lenders to
make Loans under this Agreement.
Consolidated Basis - the consolidation in accordance with
GAAP of the accounts or other items as to which such terms apply.
Contract Year - any successive twelve month period
subsequent to the Closing Date.
Current Assets - at any date means the amount at which
all of the current assets of a Person would be properly classified
as current assets on a balance sheet at such date in accordance
with GAAP except that amounts due from Affiliates and investments
in Affiliates shall be excluded therefrom.
Default - an event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both,
become an Event of Default.
Default Rate - as defined in Section 3.1(B) of this
Agreement.
Defaulting Lender - shall have the meaning set forth in
Section 2.17(A) hereof.
Distribution - (a) the declaration or payment of any
dividend or distribution on or in respect of any shares of any
class of capital stock of Borrower, other than dividends or
distributions payable solely in shares of common stock of Borrower,
(b) the purchase, redemption, or other retirement of any shares of
any class of capital stock of Borrower, or any warrant or option
relating to, or right to acquire, any such shares, directly or
indirectly, (c) the return of capital by Borrower to any of its
shareholders as such, or (d) any other distribution on or in
respect of any other shares of any class of capital stock of
Borrower.
Dollar - and the sign "$" shall mean lawful money of the
United States of America.
Dominion Account - a special account of Agent established
by Borrower pursuant to this Agreement at such bank selected by
Borrower, but acceptable to Agent in its sole discretion, and over
which Agent shall have sole and exclusive access and control for
withdrawal purposes.
Earnings Before Interest and Taxes - for any period, the
sum of (i) Borrower's net income (or loss) of Borrower for such
period, plus (ii) all interest expense of Borrower for such period,
plus (iii) all charges against Borrower's income for such period
for federal, state and local taxes.
EBITDA - for any period, the sum of (i) Earnings Before
Interest and Taxes for such period plus (ii) depreciation expenses
for such period, plus (iii) amortization expenses for such period.
Eligible Account - an Account arising in the ordinary
course of Borrower's business from the sale of goods or rendition
of services which Agent, in its reasonable credit judgment, deems
to be an Eligible Account. Without limiting the generality of the
foregoing, no Account shall be an Eligible Account if: (i) it
arises out of a sale made by Borrower to a Subsidiary or an
Affiliate of Borrower or to a Person controlled by an Affiliate of
Borrower; or (ii) it is due or unpaid more than (a) ninety (90)
days after the original invoice date if no due date was specified
or (b) the earlier of (1) sixty (60) days after the due date
specified in the original invoice or (2) one hundred-twenty (120)
days after the invoice date of such dated original invoice
provided, however, that Revolving Credit Loans against such
Accounts shall not exceed $1,000,000 at any time or from time to
time; or (iii) fifty percent (50%) or more of the Accounts from the
Account Debtor are not deemed Eligible Accounts hereunder; or (iv)
any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached; or (v)
the Account Debtor is also Borrower's creditor or supplier, or has
disputed liability with respect to such Account, or has made any
claim with respect to any other Account due from such Account
Debtor to Borrower, or the Account otherwise is or may become
subject to any right of setoff by the Account Debtor, to the extent
of any offset, dispute or claim; or (vi) the Account Debtor has
commenced a voluntary case under the federal bankruptcy laws, as
now constituted or hereafter amended, or made an assignment for the
benefit of creditors, or a decree or order for relief has been
entered by a court having jurisdiction in the premises in respect
of the Account Debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any
other petition or other application for relief under the federal
bankruptcy laws has been filed against the Account Debtor, or if
the Account Debtor has failed, suspended business, ceased to be
Solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; or (vii) it arises
from a sale to an Account Debtor outside the United States, unless
either the sale is on letter of credit, guaranty or acceptance
terms, in each case acceptable to Agent in its reasonable
discretion or if such sale is not on letter of credit terms, Agent
agrees in its sole and absolute discretion that such Account shall
be an Eligible Account provided, however, that only forty percent
(40%) of such sales at any time shall be deemed Eligible Accounts
for the purpose of calculating the Borrowing Base; or (viii) it
arises from a sale to the Account Debtor on a ▇▇▇▇-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or
any other repurchase or return basis; or (ix) Agent believes, in
its reasonable judgment, that collection of such Account is
insecure or that payment thereof is doubtful or will be delayed by
reason of the Account Debtor's financial condition; or (x) the
Account Debtor is the United States of America or any department,
agency or instrumentality thereof, unless Borrower assigns its
right to payment of such Account to Agent, so as to comply with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section
203 et seq.); or (xi) the Account is subject to a Lien other than
a Permitted Lien; or (xii) the goods giving rise to such Account
have not been delivered to and accepted by the Account Debtor or
the services giving rise to such Account have not been performed by
Borrower and accepted by the Account Debtor or the Account
otherwise does not represent a final sale; or (xiii) the total
unpaid Accounts of the Account Debtor exceed a credit limit
determined by Agent, in its reasonable discretion, to the extent
such Account exceeds such limit; or (xiv) the Account is evidenced
by chattel paper or an instrument of any kind, or has been reduced
to judgment; or (xv) Borrower has made any agreement with the
Account Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for
prompt payment and which discounts or allowances are reflected in
the calculation of the face value of each invoice related to such
Account; or (xvi) Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof; or (xvii) the Account
arises from a retail sale of goods to a Person who is purchasing
same primarily for personal, family or household purposes.
Eligible Inventory - such Inventory of Borrower (other
than packaging materials and supplies) which Agent, in the exercise
of its reasonable credit judgment, deems to be Eligible Inventory
(less Inventory Reserves). Without limiting the generality of the
foregoing, no Inventory shall be Eligible Inventory unless, in
Agent's reasonable opinion, it (i) is raw materials, work-in-
process or finished goods, (ii) is in good, new and saleable
condition, (iii) is not obsolete or unmerchantable, (iv) meets all
standards imposed by any governmental agency or authority, (v)
conforms in all respects to the warranties and representations set
forth in Section 6.1 hereof, (vi) is at all times subject to
Agent's duly perfected, first priority security interest and no
other Lien except a Permitted Lien and (vii) is situated at a
location in compliance with Section 4.6 hereof and is not in
transit.
Environmental Complaint - as defined in Section 9.1(Q) of
this Agreement.
Environmental Laws - all federal, state and local laws,
rules, regulations, ordinances, programs, permits, guidances,
orders and consent decrees relating to health, safety and
environmental matters, including, but not limited to, the Resource
Conservation and Recovery Act; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980; the Toxic
Substances Control Act, as amended; the Clean Water Act; the River
and Harbor Act; the Water Pollution Control Act; the Marine
Protection Research and Santuanes Act; the Deep-Water Act; the
Superfund Amendments and Reauthorization Act of 1986; the Federal
Insecticide, Fungicide and Rodenticide Act; the Mineral Lands and
Leasing Act; the Surface Mining Control and Reclamation Act; state
and federal superlien and environmental cleanup programs and laws;
and U.S. Department of Transportation regulations.
Equipment - all machinery, apparatus, equipment,
fittings, furniture, fixtures (other than fixtures which are
subject to a mortgage lien of SCIDA and which do not constitute
machinery and equipment which are used in Borrower's business),
motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's
operations and owned by Borrower or in which Borrower has an
interest, whether now owned or hereafter acquired by Borrower and
wherever located, and all parts, accessories and special tools and
all increases and accessions thereto and substitutions and
replacements therefor.
ERISA - the Employee Retirement Income Security Act of
1974 and all rules and regulations from time to time promulgated
thereunder.
ERISA Affiliate - each trade or business (whether or not
incorporated) which, together with Borrower, would be treated as a
single employer under Section 4001(a)(14) of ERISA or IRC Section
414(b), (c), (m), (n) or (o), as applicable.
Event of Default - as defined in Section 11.1 of this
Agreement.
Excess Availability - as of the Closing Date, the
Borrowing Base minus the sum of (i) outstanding Revolving Credit
Loans plus (ii) all trade indebtedness of Borrower outstanding
beyond sixty (60) days plus (iii) fees and expenses for which
Borrower is liable but which have not been paid or charged to
Borrower's Account.
Federal Funds Rate - for any day, the weighted average of
the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or if such day is not a Business Day, for
the next preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day which is a
Business Day, the average of quotations for such day on such
transactions received by IBJS from three Federal funds brokers of
recognized standing selected by IBJS.
Fixed Charge Coverage - with respect to a particular
period, the ratio of (a) EBITDA minus the sum of (i) (a)
Capitalized Expenditures made during the three (3) month period
ending March 31, 1997 in excess of $375,000; (b) Capital
Expenditures made during the six (6) month period ending June 30,
1997 in excess of $750,000; (c) Capital Expenditures made during
the nine (9) month period ending September 30, 1997 in excess of
$1,125,000; (d) Capital Expenditures made during the twelve (12)
month period ending December 31, 1997 and for each fiscal quarter
thereafter for the twelve (12) month period then ended in excess of
$1,500,000 and (ii) taxes paid during such period to (b) all cash
expended to make interest and scheduled principal payments on
Indebtedness (including, without limitation, capitalized leases)
during such period.
GAAP - generally accepted accounting principles in the
United States of America in effect from time to time.
General Intangibles - all general intangibles of
Borrower, whether now owned or hereafter created or acquired by
Borrower, including, without limitation, all chooses in action,
causes of action, corporate or other business records, deposit
accounts, inventions, designs, patents, patent applications,
trademarks, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, tax refund
claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to Borrower to
secure payment of any of the Accounts by an Account Debtor, all
rights to indemnification and all other intangible property of
every kind and nature (other than Accounts).
Guarantor - MPDI and any other Person who may hereafter
guarantee payment or performance of the whole or any part of the
Obligations.
Guaranty Agreements - each of the Guaranty Agreements
which are to be executed by any Guarantor in form and substance
satisfactory to Agent.
Hazardous Discharge - as defined in Section 9.1(Q)
hereof.
Hazardous Substance - without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea
formaldehyde foam insulation, polychorinated biphenyls, petroleum
and petroleum products, methane, hazardous materials, hazardous
wastes, hazardous or toxic substances as defined in CERCLA, the
Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), RCRA or any other applicable Environmental
Law and in the regulations adopted pursuant thereto.
Hazardous Wastes - all hazardous waste materials subject
to regulation under CERCLA, RCRA or similar applicable state law,
and any other applicable Federal and state environmental laws now
in force or hereafter enacted relating to hazardous waste disposal.
Indebtedness - as applied to a Person means, without
duplication (i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation,
Capitalized Lease Obligations, (ii) all obligations of other
Persons which such Person has guaranteed and (iii) in the case of
Borrower (without duplication), the Obligations.
Inventory - shall mean and include as to Borrower's
inventory, whether now owned or hereafter acquired by Borrower,
including, but not limited to, all goods intended for sale or lease
by Borrower, or for display or demonstration; all work in process;
all raw materials and other materials and supplies of every nature
and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling,
leasing or furnishing of such goods or otherwise used or consumed
in Borrower's business; and all documents evidencing and General
Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by Borrower.
Inventory Reserve - at any time an amount equal to the
aggregate sum of progress payments which have been made to Borrower
by the United States or any department, agency or instrumentality
("Government") thereof, for the purpose of acquiring Inventory by
Borrower in connection with the performance of its contractual
obligations with the Government.
Issuing Bank - as defined in Section 2.10 hereof.
LC Amount - at any time, the aggregate undrawn face
amount of all Letters of Credit then outstanding.
Lender and Lenders - as defined in the introductory
paragraph hereof and shall include each Person which is a
Purchasing Lender.
Letter of Credit - any letter of credit issued by Agent
or any of Agent's Affiliates or any Issuing Bank for the account of
Borrower.
LC Reserve - at any time, an amount equal to the LC
Amount.
Lien - any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute
or contract, and including, but not limited to, the security
interest, security title or lien arising from a security agreement,
mortgage, deed of trust, deed to secure debt, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of
this Agreement, Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan Account - the loan account, with respect to
Borrower, established on the books of Agent pursuant to Section 2.5
hereof.
Loan Documents - this Agreement, the Other Agreements and
the Security Documents.
Loans - all loans and advances made by Lenders pursuant
to this Agreement, including, without limitation, all Revolving
Credit Loans and the Term Loan.
Maximum Revolving Amount - Ten Million Three Hundred
Thousand Dollars ($10,300,000).
Money Borrowed - as applied to Indebtedness, means (i)
Indebtedness for borrowed money; (ii) Indebtedness, whether or not
in any such case the same was for borrowed money, (A) which is
represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced
by bonds, debentures, notes or similar instruments, or (C) upon
which interest charges are customarily paid (other than accounts
payable) or that was issued or assumed as full or partial payment
for Property; (iii) Indebtedness that constitutes a Capitalized
Lease Obligation; and (iv) Indebtedness under any guaranty of
obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof.
MPDI - Microwave Power Devices, Inc. (f/k/a MPD Holdings,
Inc.), a Delaware Corporation which owns one hundred percent (100%)
of the outstanding shares of the capital stock of Borrower.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Notes - the Term Note and the Revolving Credit Note.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing, arising, due
or payable from Borrower to Agent or Lenders of any kind or nature,
present or future, whether or not evidenced by any note, guaranty,
or other instrument, whether arising under this Agreement or any of
the other Loan Documents or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, attorney's fees
and any other sums chargeable to Borrower under any of the Loan
Documents.
Original Term - as defined in Section 3.2 of this
Agreement.
OSHA - the Occupational Safety and Health Act, and all
rules and regulations from time to time promulgated thereunder.
Other Agreements - any and all agreements, instruments
and documents (other than this Agreement and the Security
Documents), heretofore, now or hereafter executed by Borrower and
delivered to Agent and/or any Lender in respect to the transactions
contemplated by this Agreement, including, without limitation, the
Notes.
Participant - each Person who shall be granted the right
by any Lender to participate in any of the Loans and who shall
enter into a participation agreement in form and substance
satisfactory to such Lender.
Payment Office - initially, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrower and to each Lender to
be the Payment Office.
PBGC - the Pension Benefit Guaranty Corporation or any
successor agency.
Permitted Liens - any Lien of a kind specified in
subparagraphs (i) through (x) of Section 9.2(H) of this Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with
the principal amount of all other such Indebtedness and Capitalized
Lease Obligations of Borrower at the time outstanding, does not
exceed either (a) $2,000,000 in any fiscal year or (b) $5,000,000
in the aggregate during the Original Term. For the purposes of
this definition, (i) the principal amount of any Purchase Money
Indebtedness consisting of capitalized leases shall be computed as
a Capitalized Lease Obligation, and (ii) any renewals, extensions
or refinancings, of Purchase Money Indebtedness shall not be
computed in the limitation set forth above.
Person - an individual, partnership, corporation, joint
stock company, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter
maintained for employees of Borrower that is covered by Title IV of
ERISA.
Prepayment Date - as defined in Section 3.3 hereof.
Prepayment Fee - as defined in Section 3.3 hereof.
Prohibited Transaction - any transaction described in
Section 406 of ERISA which is not exempt by reason of Section 408
of ERISA, and any transaction described in Section 4975(c) of the
IRC which is not exempt by reason of Sections 4975(c)(2) or (d) of
the IRC, and which could result in any excise tax, fine, penalty or
other liability being imposed on Borrower.
Projections - MPDI's and Borrower's forecasted
consolidated (a) balance sheets, (b) profit and loss statements and
(c) cash flow statements, all prepared on a consistent basis with
MPDI's and Borrower's historical financial statements, together
with appropriate supporting details and a statement of underlying
assumptions.
Property - any interest in any kind of property or asset,
whether personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i)
Indebtedness for the payment of all or any part of the purchase
price of any fixed assets, (ii) any Indebtedness (other than the
obligations) incurred at the time of or within ten (10) days prior
to or after the acquisition of any fixed assets for the purpose of
financing all or any part of the purchase price thereof, and (iii)
any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which
secure Purchase Money Indebtedness, but only if such Lien shall at
all times be confined solely to the fixed assets the purchase price
of which was financed through the incurrence of the Purchase Money
Indebtedness secured by such Lien.
Purchasing Lender - as defined in Section 13.7(C) hereof.
Real Property - all of Borrower's right, title and
interest in and to the premises located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
Rentals - as defined in Section 9.2(W) of this Agreement.
Renewal Terms - as defined in Section 3.2 of this
Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Required Lenders - Lenders holding at least fifty one
percent (51%) of the Loans as of the most recent Settlement Date
and, if no Loans are then outstanding, Lenders holding at least
fifty one percent (51%) of the Commitment Percentages.
Restricted Investment - any investment in cash or by
delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by loan,
advance or capital contribution, or otherwise, or in any Property
except the following: (i) investments in one or more Subsidiaries
of Borrower; (ii) Property to be used in the ordinary course of
business; (iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries; (iv) investments in direct obligations, or in money
market funds which invest in direct obligations, of the United
States of America, or any agency thereof or obligations guaranteed
by the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof; (v)
investments in certificates of deposit maturing within one year
from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000; and (vi) investments in commercial paper given the
highest rating by a national credit rating agency and maturing not
more than two hundred seventy (270) days from the date of creation
thereof.
Revolving Credit Loan - a Loan made by Lenders as
provided in Section 2.1 of this Agreement.
Revolving Credit Note - the secured promissory note to be
executed by Borrower on the Closing Date to evidence the Revolving
Credit Loan, which shall be in the form of Exhibit 2.1 attached
hereto.
SCIDA - Suffolk County Industrial Development Agency.
Security - shall have the same meaning as in Section 2(l)
of the Securities Act of 1933, as amended.
Security Documents - the Guaranty Agreements and all
other instruments and agreements now or at any time hereafter
securing the whole or any part of the Obligations.
Settlement Date - the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in
which case it shall be the next succeeding Business Day.
Solvent - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to
pay all of such Person's Indebtedness (including contingent debts),
(ii) is able to pay all of its Indebtedness as such Indebtedness
matures and (iii) has capital sufficient to carry on its business
and transactions and all business and transactions in which it is
about to engage.
Special Reserves - as defined in Section 2.1(A) of this
Agreement.
Subsidiary - any corporation of which a Person owns,
directly or indirectly through one or more intermediaries, more
than 50% of the Voting Stock at the time of determination.
Term Loan - the loan made by Lenders as provided in
Section 2.3 of this Agreement.
Term Note - the secured promissory note to be executed by
Borrower on the Closing Date to evidence the Term Loan, which shall
be in the form of Exhibit 2.3 attached hereto.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).
Week - the time period commencing with the opening of
business on a Wednesday and ending on the end of business the
following Tuesday.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP consistent with that applied in preparation of the financial
statements referred to in Section 9.1(K), and all financial data
pursuant to the Agreement shall be prepared in accordance with such
principles. All financial terms and the calculation of the
Borrower's compliance with all financial covenants herein contained
shall include only the accounts of MPDI (exclusive of any
Subsidiary of MPDI other than the Borrower) and Borrower and its
Subsidiaries.
1.3 Other Terms. All other terms contained in this
Agreement shall have, when the context so indicates, the meanings
provided for by the Code to the extent the same are used or defined
therein.
1.4 Certain Matters of Construction. The terms
"herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. The section titles, table of contents
and list of exhibits appear as a matter of convenience only and
shall not affect the interpretation of this Agreement. All
references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. All
references to any instruments or agreements, including, without
limitation, references to any of the Loan Documents shall include
any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
SECTION 2. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance
upon the representations and warranties made in, this Agreement and
the other Loan Documents, Lenders agree to make a total credit
facility of up to THIRTEEN MILLION AND XX/100 DOLLARS
($13,000,000.00) available upon Borrower's request therefor, as
follows:
2.1 Revolving Credit Loans.
(A) Subject to all the terms and conditions of this
Agreement, each Lender, severally and not jointly agrees, so long
as no Default or Event of Default exists, to make Revolving Credit
Loans to Borrower from time to time, as requested by Borrower in
accordance with the terms of Section 2.2 hereof, in amounts
determined by Agent in its reasonable discretion, up to a maximum
principal amount at any time outstanding equal to such Lender's
Commitment Percentage of the Borrowing Base at such time. It is
expressly understood and agreed that Lenders may use the Borrowing
Base as a maximum ceiling on Revolving Credit Loans outstanding to
Borrower at any time. If the unpaid balance of the Revolving
Credit Loans should exceed the Borrowing Base or any other
limitation set forth in this Agreement, such Revolving Credit Loans
(1) shall nevertheless constitute Obligations that are secured by
the Collateral and entitled to all the benefits thereof and (2)
shall, with respect to such excess, be immediately due and payable
upon demand by Agent or Lenders. In no event shall the Borrower be
authorized to request a Loan at any time that there exists a
Default or an Event of Default. Notwithstanding the foregoing
provisions of this Section 2.1(A), Agent shall have the right to
establish reserves in such amounts, and with respect to such
matters, as Agent shall reasonably deem necessary or appropriate,
against the amount of Revolving Credit Loans which Borrower may
otherwise request under this Section 2.1(A), including, without
limitation, with respect to (i) price adjustments, damages,
unearned discounts, returned products or other matters for which
credit memoranda are issued in the ordinary course of Borrower's
business; (ii) shrinkage, spoilage and obsolescence of Inventory;
(iii) slow moving Inventory; (iv) other sums chargeable against
Borrower's Loan Account as Revolving Credit Loans under any section
of this Agreement; and (v) such other matters, events, conditions
or contingencies as to which Agent, in its reasonable credit
judgment determines reserves should be established from time to
time hereunder ("Special Reserves").
(B) The Revolving Credit Loans shall be used solely
to (i) repay existing indebtedness owed to Fleet Capital
Corporation, (ii) pay fees and expenses relating to this
transaction and (iii) to provide for its working capital needs.
(C) Borrower's obligation to repay the Revolving
Credit Loans shall be evidenced by the Revolving Credit Note.
2.2 Manner of Borrowing Revolving Credit Loans.
Borrowings under the credit facility established pursuant to
Section 2.1 shall be as follows:
(A) A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i)
Borrower may give Agent notice of its intention to borrow, in which
notice Borrower shall specify the amount of the proposed borrowing
and the proposed borrowing date; (ii) the becoming due of any
amount required to be paid under this Agreement as interest shall
be deemed irrevocably to be a request for a Revolving Credit Loan
on the due date in the amount required to pay such interest; and
(iii) the becoming due of any other Obligations shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due
date in the amount then so due;
(B) Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of each Revolving Credit Loan requested, or
deemed to be requested, pursuant to this Section 2.2 as follows:
(i) the proceeds of each Revolving Credit Loan requested under
Section 2.2(A)(i) shall be disbursed by Agent in lawful money of
the United States of America in immediately available funds, by
wire transfer to such bank account as may be agreed upon by
Borrower and Agent from time to time, if such borrowing request is
received by 11:00 a.m. New York time on the same Business Day and
if received later than 11:00 a.m. New York time on the next
succeeding Business Day; and (ii) the proceeds of each Revolving
Credit Loan requested under Section 2.2(A)(ii) or (iii) shall be
disbursed by Agent by way of direct payment of the relevant
Obligation.
2.3 Term Loan. Subject to the terms and conditions set
forth herein, each Lender, severally and not jointly, will make a
term loan to Borrower in the sum equal to such Lender's Commitment
Percentage of $2,700,000 ("Term Loan"). The Term Loan shall be
advanced on the Closing Date and shall be, with respect to
principal, payable as follows, subject to acceleration upon the
occurrence of an Event of Default hereunder or termination of this
Agreement: $50,000 on the first day of each month commencing with
April, 1997 with the outstanding principal balance due on the last
day of the Term and shall otherwise be evidenced by and subject to
the terms and conditions set forth in a secured promissory note in
substantially the form of the note attached hereto as Exhibit 2.3
("Term Note").
2.4 All Loans to Constitute One Obligation. All Loans
to Borrower shall constitute one general obligation of Borrower,
and shall be secured by Agent's security interest in and Lien upon
all of the Collateral, and by all other security interests and
Liens heretofore, now or at any time or times hereafter granted by
Borrower to Agent for the benefit of Lenders.
2.5 Loan Account. Agent shall enter each Revolving
Credit Loan as a debit to the Loan Account and shall also record in
the Loan Account all payments made by Borrower on Revolving Credit
Loans and all proceeds of Collateral which are finally paid to
Agent or Lenders, and may record therein, in accordance with
customary accounting practice, all charges and expenses properly
chargeable to Borrower hereunder.
2.6 Letters of Credit. Agent agrees, for so long as no
Default or Event of Default exists and if requested by Borrower to
issue its, or cause to be issued by any bank reasonably acceptable
to Agent, Letters of Credit for the account of Borrower provided
that the LC Amount at any time shall not exceed $500,000.00. No
Letter of Credit may have an expiration date that is after the last
day of the Original Term or the then applicable Renewal Term unless
expressly consented to by Agent. Any amounts paid by Agent in
connection with any Letter of Credit shall be treated as Revolving
Credit Loans, shall be secured by all of the Collateral and shall
bear interest and be payable at the same rate and in the same
manner as Revolving Credit Loans.
2.7 Request for Letter of Credit. Borrower may request
Agent to issue or cause to be issued a Letter of Credit by
delivering to Agent the applicable letter of credit application
(the "Letter of Credit Application"), completed to the reasonable
satisfaction of Agent and such other certificates, documents and
other papers and information as Agent may reasonably request.
2.8 Description of Letters of Credit. Each Letter of
Credit shall, among other things, (i) provide for the payment of
sight or time drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the
documents described therein and (ii) have an expiry date occurring
not later than the earlier of (1) the last day of the Original Term
or any Renewal Term or (2) 12 months after such Letter of Credit's
date of issuance, except as otherwise expressly agreed to by Agent.
Each Letter of Credit Application and each Letter of Credit shall
be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments or revision thereof and, to
the extent not inconsistent therewith, the laws of the State of New
York.
2.9 Indemnification. In connection with the issuance or
creation of any Letter of Credit, Borrower hereby indemnifies,
saves and holds Agent and each Lender harmless from any loss, cost,
expense or liability, including, without limitation, payments made
by Agent or any Lender, and expenses and reasonable attorneys' fees
incurred by Agent or any Lender arising out of, or in connection
with any Letter of Credit to be issued or created for Borrower
except to the extent any loss, cost, expense or liability is
attributable to Agent's or such Lender's gross negligence or
willful misconduct or that of its correspondents. Borrower shall
be bound by Agent's or any "Issuing Bank's" regulations and good
faith interpretations of any Letter of Credit issued or created for
Borrower's account, although this interpretation may be different
from Borrower's own, and neither Agent nor any Lender, nor the
Issuing Bank, nor any of its correspondents shall be liable for any
error, negligence and/or mistakes, whether of omission or
commission, in following Borrower's instructions or those contained
in any Letter of Credit of any modifications, amendments or
supplements thereto or in creating or paying any Letter of Credit
except for Agent's or any Lender's gross negligence or willful
misconduct or that of its correspondents.
2.10 Agent's Instructions. Borrower shall authorize
and direct any bank which issues a Letter of Credit (an "Issuing
Bank") to name Borrower as the "Account Party" therein and to
deliver to Agent, with a copy to Borrower, all instruments,
documents, and other writings and property received by the Issuing
Bank pursuant to the Letter of Credit or in connection with any
acceptance and to accept and rely upon Agent's instructions and
agreements with respect to all matters arising in connection with
the Letter of Credit, the Letter of Credit Application therefor or
any acceptance thereof.
2.11 Disbursements. Agent will notify Borrower promptly
of any presentment for payment under a Letter of Credit, following
receipt by it of notification from the Issuing Bank of such
presentment, together with notice of the date such payment was
made. All disbursements shall be deemed irrevocably to be a
request by Borrower for a Revolving Credit Loan on the date such
disbursement was made.
2.12 Reimbursement Obligation. Borrower's obligation to
reimburse Agent and Lenders under Subsection 2.11 shall be absolute
and unconditional under any and all circumstances and irrespective
of any setoff, counterclaim or defense to payment which Borrower
may have against Agent or any Lender, the Issuing Bank or the
beneficiary of the Letter of Credit, including, without limitation,
any defense based upon any draft, demand or certificate or other
document presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient, the failure of any
disbursement or payment by the Issuing Bank under the Letter of
Credit ("Bank Payment") to conform to the terms of the Letter of
Credit (if, in the Issuing Bank's good faith opinion such
disbursement or Bank Payment is determined to be appropriate and
other than as a consequence of Agent's, any Lender's or the Issuing
Bank's gross negligence or willful misconduct) or any non-
application or misapplication by the beneficiary of the proceeds of
such disbursement or Bank Payment or the legality, validity, form,
regularity or enforceability of the Letter of Credit.
2.13 Cash Collateral. Upon the occurrence and during the
continuation of any Event of Default and with respect to any
Letters of Credit which expire subsequent to the last day of the
Original Term or any Renewal Term, at the option of Agent, Borrower
will pay to Agent, cash in an amount equal to the undrawn face
amount of the Letters of Credit. Such cash shall be held by Agent
in a cash collateral account (the "Cash Collateral Account"). The
Cash Collateral Account shall be maintained at a bank designated by
Agent, which shall be any domestic commercial bank having capital
and surplus in excess of $100,000,000 in the name of Agent as
secured party, and shall be under the sole dominion and control of
Agent and subject to the terms of this Subsection 2.13. Borrower
hereby pledges and grants to Agent for the ratable benefit of
Lenders a security interest in, all such cash and other amounts
held in the Cash Collateral Account from time to time and all
earnings thereof and proceeds thereon, as security for the payment
of all Obligations. Interest and earnings on the Cash Collateral
Account shall be the property of Borrower but shall be held in the
Cash Collateral Account as Collateral, provided that Agent shall
release from the Cash Collateral Account and return to Borrower any
funds remaining in the Cash Collateral Account upon indefeasible
satisfaction in full of the Obligations. At such time when all
Events of Default shall have been cured or waived, Agent shall
return any monies then remaining in the Cash Collateral Account.
If at any time, and from time to time, the aggregate amount of the
Cash Collateral Account exceeds the maximum liability, fixed or
contingent, of Agent with respect to the aggregate face amount of
all Letters of Credit then issued and outstanding, Agent shall
return any excess to Borrower.
2.14 Waiver of Liability. Borrower shall assume all
risks of the acts, omissions or misuse of any Letter of Credit by
the beneficiary thereof. Neither Agent, any Lender nor any Issuing
Bank (except in the event of its own gross negligence or willful
misconduct) shall be responsible for:
(i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of the Letter of Credit or
any document submitted by any party in connection with
the application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any instrument
transferring or assigning or purporting to transfer or
assign the Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which
may prove to be invalid or ineffective for any reason;
(iii) errors, omissions, interruptions or
delays in transmission or delivery of any messages by
mail, cable, telegraph, telex or otherwise; or
(iv) any loss or delay in the transmission or
otherwise of any document or draft required in order to
make a disbursement.
None of the foregoing shall affect, impair or prevent the vesting
of any of the rights or powers granted Agent hereunder. In
furtherance, and not in limitation or derogation of any of the
foregoing, any action taken or omitted to be taken by the Issuing
Bank, or Agent in good faith in the absence of gross negligence or
willful misconduct, shall be binding upon Borrower and shall not
put the Issuing Bank, or Agent, as the case may be, under any
resulting liability therefor.
2.15 Lenders' Reimbursement Obligations. Each Lender
shall to the extent of the percentage amount equal to the product
of such Lender's Commitment Percentage times the aggregate amount
of all unreimbursed reimbursement obligations arising from
disbursements made or obligations incurred with respect to the
Letters of Credit be deemed to have irrevocably purchased an
undivided participation in each such unreimbursed reimbursement
obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Credit Loans exceeds or would
exceed, with the making of such disbursement, the lesser of the
Maximum Revolving Amount or the Borrowing Base, and such
disbursement is not reimbursed by Borrower within two (2) Business
Days, Agent shall promptly notify each Lender and upon Agent's
demand each Lender shall pay to Agent such Lender's proportionate
share of such unreimbursed disbursement together with such Lender's
proportionate share of Agent's unreimbursed costs and expenses
relating to such unreimbursed disbursement. Upon receipt by Agent
of a repayment from Borrower of any amount disbursed by Agent for
which Agent had already been reimbursed by Lenders, Agent shall
deliver to each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue
until the last to occur of any of the following events: (A) Agent
ceases to be obligated to issue Letters of Credit hereunder; (B) no
Letter of Credit issued hereunder remains outstanding and
uncancelled or (C) all Persons (other than Borrower) have been
fully reimbursed for all payments made under or relating to Letters
of Credit.
2.16 Manner of Borrowing and Payment.
(A) Each borrowing of Revolving Credit Loans shall
be advanced according to the Commitment Percentages of Lenders.
The Term Loan shall be advanced according to the Commitment
Percentages of Lenders.
1. Each payment (including each prepayment) by
Borrower on account of the principal of and interest on the
Revolving Credit Note, shall be applied to the Revolving Credit
Loans pro rata according to the Commitment Percentages of Lenders.
Each payment (including each prepayment) by Borrower on account of
the principal of and interest on the Term Note, shall be made from
or to, or applied to that portion of the Term Loan evidenced by the
Term Note pro rata according to the Commitment Percentages of
Lenders. Except as expressly provided herein, all payments
(including prepayments) to be made by Borrower on account of
principal, interest and fees shall be made without set-off or
counterclaim and shall be made to Agent on behalf of Lenders to the
Payment Office, in each case on or prior to 1:00 P.M., New York
time, in Dollars and in immediately available funds.
(C) Notwithstanding anything to the contrary
contained in Sections 2.16(A) and (B) hereof, commencing with the
first Business Day following the Closing Date, each borrowing of
Revolving Credit Loans shall be advanced by Agent and each payment
by Borrower on account of Revolving Credit Loans shall be applied
first to those Revolving Credit Loans made by Agent. On or before
1:00 P.M., New York time, on each Settlement Date commencing with
the first Settlement Date following the Closing Date, Agent and
Lenders shall make certain payments as follows: (I) if the
aggregate amount of new Revolving Credit Loans made by Agent during
the preceding Week exceeds the aggregate amount of repayments
applied to outstanding Revolving Credit Loans during such preceding
Week, then each Lender shall provide Agent with funds in an amount
equal to its Commitment Percentage of the difference between (w)
such Revolving Credit Loans and (x) such repayments and (II) if the
aggregate amount of repayments applied to outstanding Revolving
Credit Loans during such Week exceeds the aggregate amount of new
Revolving Credit Loans made during such Week, then Agent shall
provide each Lender with its Commitment Percentage of the
difference between (y) such repayments and (z) such Revolving
Credit Loans.
(II) Each Lender shall be entitled to earn
interest at the applicable interest rate on outstanding Loans which
it has funded.
(III) Promptly following each Settlement
Date, Agent shall submit to each Lender a certificate with respect
to payments received and Loans made during the Week immediately
preceding such Settlement Date. Such certificate of Agent shall be
conclusive in the absence of manifest error.
(D) If any Lender or Participant (a "benefitted
Lender") shall at any time receive any payment of all or part of
its Loans, or interest thereon, or receive any Collateral in
respect thereof (whether voluntarily or involuntarily or by set-
off) in a greater proportion than any such payment to and
Collateral received by any other Lender, if any, in respect of such
other Lender's Loans, or interest thereon, and such greater
proportionate payment or receipt of Collateral is not expressly
permitted hereunder, such benefitted Lender shall purchase for cash
from the other Lenders a participation in such portion of each such
other Lender's Loans, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall
be necessary to cause such benefitted Lender to share the excess
payment or benefits of such Collateral or proceeds ratably with
each of Lenders; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a
portion of another Lender's Loans may exercise all rights of
payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct
holder of such portion.
(E) Unless Agent shall have been notified by
telephone, confirmed in writing, by any Lender that such Lender
will not make the amount which would constitute its Commitment
Percentage of the Loans available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount
available to Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly
notify Borrower of its receipt of any such notice from a Lender.
If such amount is made available to Agent on a date after a
Settlement Date, such Lender shall pay to Agent on demand an amount
equal to the product of (i) the daily average Federal Funds Rate
(computed on the basis of a year of 360 days) during such period as
quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate
of Agent submitted to any Lender with respect to any amounts owing
under this paragraph (e) shall be conclusive, in the absence of
manifest error. If such amount is not in fact made available to
Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount,
with interest thereon at the rate per annum then applicable to
Revolving Credit Loans hereunder, on demand from Borrower;
provided, however, that Agent's right to such recovery shall not
prejudice or otherwise adversely affect Borrower's rights (if any)
against such Lender.
2.17. Defaulting Lender.
(A) Notwithstanding anything to the contrary
contained herein, in the event any Lender (x) has refused (which
refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Loan or
(y) notifies either Agent or Borrower that it does not intend to
make available its portion of any Loan (if the actual refusal would
constitute a breach by such Lender of its obligations under this
Agreement) (each, a "Lender Default"), all rights and obligations
hereunder of such Lender (a "Defaulting Lender") as to which a
Lender Default is in effect and of the other parties hereto shall
be modified to the extent of the express provisions of this Section
2.16 while such Lender Default remains in effect.
(B) Loans shall be incurred pro rata from Lenders
(the "Non-Defaulting Lenders") which are not Defaulting Lenders
based on their respective Commitment Percentages, and no Commitment
Percentage of any Lender or any pro rata share of any Loans
required to be advanced by any Lender shall be increased as a
result of such Lender Default. Amounts received in respect of
principal of any type of Loans shall be applied to reduce the
applicable Loans of each Lender pro rata based on the aggregate of
the outstanding Loans of that type of all Lenders at the time of
such application; provided, that, such amount shall not be applied
to any Loans of a Defaulting Lender at any time when, and to the
extent that, the aggregate amount of Loans of any Non-Defaulting
Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Loans then outstanding.
(C) A Defaulting Lender shall not be entitled to
give instructions to Agent or to approve, disapprove, consent to or
vote on any matters relating to this Agreement and the Loan
Documents. All amendments, waivers and other modifications of this
Agreement and the Loan Documents may be made without regard to a
Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Loans outstanding.
(D) Other than as expressly set forth in this
Section 2.17, the rights and obligations of a Defaulting Lender
(including the obligation to indemnify Agent) and the other parties
hereto shall remain unchanged. Nothing in this Section 2.17 shall
be deemed to release any Defaulting Lender from its obligations
under this Agreement and the Loan Documents, shall alter such
obligations, shall operate as a waiver of any default by such
Defaulting Lender hereunder, or shall prejudice any rights which
Borrower, Agent or any Lender may have against any Defaulting
Lender as a result of any default by such Defaulting Lender
hereunder.
(E) In the event a Defaulting Lender retroactively
cures to the satisfaction of Agent the breach which caused a Lender
to become a Defaulting Lender, such Defaulting Lender shall no
longer be a Defaulting Lender and shall be treated as a Lender
under this Agreement.
SECTION 3. INTEREST, FEES, TERM AND REPAYMENT
3.1 Interest, Fees and Charges.
(A) Interest. Borrower shall pay interest
hereunder in arrears on the first day of each month and with
respect to (a) the principal amount of Term Loan, at a fluctuating
rate per annum equal to the Alternate Base Rate plus one and one-
quarter percent (1.25%) and (b) the principal amount of the
Revolving Loans outstanding at the end of each day, at a
fluctuating rate per annum equal to the Alternate Base Rate plus
one percent (1.00%). After the date hereof, the foregoing rates of
interest shall be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Alternate Base
Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Alternate Base Rate
becomes effective. The Alternate Base Rate in effect on the date
hereof shall be the Alternate Base Rate effective as of the opening
of business on the date hereof, but if this Agreement is executed
on a day that is not a Business Day, the Alternate Base Rate in
effect on the date hereof shall be the Alternate Base Rate
effective as of the opening of business on the last Business Day
immediately preceding the date hereof.
So long as no Default or Event of Default shall be
in existence, the applicable interest rate shall be reduced by one-
half of one percent (.50%) at such time as the annual financial
statements for the fiscal year ending December 31, 1997 are
delivered to Agent in accordance with the provisions of Section
9.1(K) hereof, if such statements show that (a) Borrower is in
compliance with all of the covenants set forth herein and (b)
Borrower's net income from operations at the end of such fiscal
year was greater than $25,000.
(B) Default Rate of Interest. Upon and after the
occurrence of an Event of Default, and during the continuation
thereof, the principal amount of the Obligations shall bear
interest, calculated daily (computed on the actual days elapsed
over a year of 360 days), at a fluctuating rate per annum equal to
one percent (1.00%) above the interest rate then in effect with
respect to all Loans (the "Default Rate").
(C) Closing Fee. Upon the execution of this
Agreement, Borrower shall pay to Agent a closing fee of $65,000
less that portion of the deposit fee and commitment fee of $50,000
heretofore paid by Borrower to Agent remaining after application of
such fee to out of pocket expenses.
(D) Unused Facility Fee. Borrower shall pay an
unused facility fee at the rate of one-quarter of one percent
(1/4%) per annum on the difference between (a) the Maximum
Revolving Amount and (b) the average daily unpaid balance of the
Loans, payable to Agent for the ratable benefit of Lenders
quarterly in arrears, commencing on the first day of the calendar
quarter following the calendar quarter in which the Closing Date
occurs. For purposes of calculating Borrower's payment hereunder,
the average outstanding balance of LC Amounts shall be added to the
outstanding balance of all Loans for such period.
(E) Collateral Evaluation Fee. Borrower shall pay
Agent a collateral evaluation fee equal to $1,500.00 per month
commencing on the first day of the month following the Closing Date
and on the first day of each month thereafter during the Term. The
collateral evaluation fee shall be deemed earned in full on the
date when same is due and payable hereunder and shall not be
subject to rebate or proration upon termination of this Agreement
for any reason.
(F) Collateral Monitoring Fee. Borrower shall pay
to Agent on the first day of each month following any month in
which Agent performs any collateral monitoring - namely any field
examination, collateral analysis or other business analysis, the
need for which is to be determined by Agent and which monitoring is
undertaken by Agent or for Agent's benefit - a collateral
monitoring fee in an amount equal to $600.00 per day for each
person employed to perform such monitoring, plus all costs and
disbursements incurred by Agent in the performance of such
examination or analysis; provided, however, so long as no Event of
Default shall have occurred, (i) Agent shall only conduct any such
collateral monitoring four (4) times during any Contract Year and
(ii) the maximum amount of such collateral monitoring fees during
any Contract Year shall not exceed $18,000.
(G) Computation of Interest and Fees. Interest and
fees hereunder shall be computed on the basis of a year of 360 days
and for the actual number of days elapsed. If any payment to be
made hereunder becomes due and payable on a day other than a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at
the applicable interest rate during such extension.
(H) Capital Adequacy Charge. In the event that
Agent or any Lender shall have determined that the adoption of any
law, rule or regulation regarding capital adequacy, or any change
therein or in the interpretation or application thereof or
compliance by Agent or any Lender with any request or directive
regarding capital adequacy (whether or not having the force of law)
from any central bank or governmental authority, does or shall have
the effect of reducing the rate of return on Agent's or any
Lender's capital as a consequence of its obligations hereunder to
a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount deemed by Agent or such Lender, in
their reasonable discretion, to be material, then from time to
time, after submission by Agent to Borrower of a written demand
therefor, the Borrower shall pay to Agent or such Lender such
additional amount or amounts as will compensate Agent or such
Lender.
(I) Letter of Credit. Borrower shall pay to Agent
for the ratable benefit of Lenders:
(I) for standby Letters of Credit, 2.00% per
annum of the aggregate face amount of such Letters of Credit
outstanding from time to time during the term of this Agreement,
plus all normal and customary charges associated with the issuance
thereof, which fees and charges shall be due and payable in arrears
on the first Business Day of each month and shall not be subject to
rebate or proration upon the termination of this Agreement for any
reason; and
(II) for commercial documentary Letters of
Credit, a fee equal to 2.00% per annum of the face amount of each
such Letter of Credit plus the normal and customary charges
associated with the issuance and administration of each such Letter
of Credit which fees and charges shall be fully earned upon
issuance, renewal or extension (as the case may be) of each such
Letter of Credit, shall be due and payable in arrears on the first
Business Day of each month, and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.
3.2 Term of Agreement. Subject to Agent's and Lenders'
right to cease making Loans to Borrower at any time upon or after
the occurrence of Default or Event of Default, this Agreement shall
be in effect from the date hereof, through and including February
12, 2000 (the "Original Term"), and this Agreement shall
automatically renew itself for one (1) year periods thereafter (the
"Renewal Terms"), unless terminated as provided in Section 3.3
hereof.
3.3 Termination.
(A) Upon at least ninety (90) days prior written
notice to Agent, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be
effective until Borrower has paid all of the Obligations in
immediately available funds and all Letter of Credit have expired
or have been cash collateralized to Agent's satisfaction as
provided pursuant to Section 2.13 hereof.
(B) Agent or Borrower, may terminate this Agreement
upon one hundred twenty (120) days prior written notice prior to
the expiration of the Original Term or any Renewal Terms, and Agent
may terminate this Agreement without notice upon or after the
occurrence of an Event of Default.
(C) At the effective date of any such termination
by Borrower (the "Prepayment Date"), Borrower shall pay to Agent
(in addition to the then outstanding principal, accrued interest
and other charges owing under the terms of this Agreement and any
of the other Loan Documents), as liquidated damages for the loss of
the bargain and not as a penalty, an amount equal to (the
"Prepayment Fee") (a) one percent (1.00%) of the Maximum Revolving
Amount plus the outstanding principal balance of the Term Loan if
the Prepayment Date occurs from the Closing Date to and including
the date immediately preceding the first anniversary of the Closing
Date and (y) one half of one percent (.50%) of the Maximum
Revolving Amount plus the outstanding principal balance of the Term
Loan if the Prepayment Date occurs on or after the first
anniversary of the Closing Date to and including the date
immediately preceding the second anniversary of the Closing Date.
If termination occurs at any time following the second anniversary
of the Closing Date no termination charge shall be payable.
Notwithstanding the foregoing, if Borrower proposes to make a
corporate acquisition which has been approved by the board of
directors of Borrower and Agent or any Lender either declines to
finance, or participate in the financing of, such acquisition on
terms which are then "prevailing market terms", and Borrower
terminates this Agreement solely for such reason, the applicable
Prepayment Fee to which such Lender would otherwise be entitled
shall be reduced by fifty percent (50%).
(D) All of the Obligations including, without
limitation, the Term Loan, shall be forthwith due and payable upon
any termination of this Agreement.
(E) Except as otherwise expressly provided for in
this Agreement or the other Loan Documents, no termination or
cancellation (regardless of cause or procedure) of this Agreement
or any of the other Loan Documents shall in any way affect or
impair the rights, powers, or privileges of Agent or any Lender or
obligations, duties, rights, and liabilities of Borrower or Agent
or any Lender in any way relating to (i) any transaction or event
occurring prior to such termination or cancellation or (ii) any of
the undertakings, agreements, covenants, warranties or
representations of Borrower contained in this Agreement or any of
the other Loan Documents. All such undertakings, agreements,
covenants, warranties and representations of Borrower shall survive
such termination or cancellation and Agent and Lenders shall retain
their Liens in the Collateral and all of its rights and remedies
under this Agreement and the other Loan Documents notwithstanding
such termination or cancellation, until all of the Obligations have
been paid in full, in immediately available funds.
(F) It is understood that Borrower may elect to
terminate this Agreement in its entirety only; no section or
lending facility may be terminated singly.
3.4 Payments. Except where evidenced by notes or other
instruments issued or made by Borrower to Agent specifically
containing payment provisions which are in conflict with this
Section 3.4 (in which event the conflicting provisions of said
notes or other instruments shall govern and control), that portion
of the Obligations consisting of:
(A) Principal, payable on account of Revolving
Credit Loans made by Agent to Borrower pursuant to Section 2.1 of
this Agreement, shall be payable by Borrower to Agent immediately
upon the earliest of (i) the receipt by Agent or Borrower of any
proceeds of any of the Collateral, to the extent of said proceeds,
(ii) the occurrence of an Event of Default in consequence of which
Agent elects to accelerate the maturity and payment of such Loans,
or (iii) termination of this Agreement pursuant to Section 3.3
hereof; provided, however, that if the principal balance of
Revolving Credit Loans outstanding at any time shall exceed the
Borrowing Base at such time, Borrower shall, on demand, repay the
Revolving Credit Loans in an amount sufficient to reduce the
aggregate unpaid principal amount of such Revolving Credit Loans by
an amount equal to such excess;
(B) Interest accrued on the Loans shall be due on
the earliest of (i) the first day of each month (for the
immediately preceding month), computed through the last calendar
day of the preceding month, (ii) the occurrence of an Event of
Default in consequence of which Agent elects to accelerate the
maturity and payment of the Obligations or (iii) termination of
this Agreement pursuant to Section 3.3 hereof; provided, however,
that Borrower hereby irrevocably authorizes Agent, in Agent's sole
discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient
each month to pay all interest accrued on the Obligations during
the immediately preceding month;
(C) Costs, fees and expenses payable pursuant to
this Agreement shall be payable by Borrower, on demand, to Agent or
to any other Person designated by Agent in writing; and
(D) The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Agent as
and when provided in this Agreement, the Other Agreements or the
Security Documents.
3.5 Application of Payments and Collections. Borrower
irrevocably waives the right to direct the application of any and
all payments and collections at any time or times hereafter
received by Agent from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and
collections received at any time or times hereafter by Agent or its
agent against the Obligations, in such manner as Agent may
reasonably deem advisable, notwithstanding any entry by Agent upon
any of its books and records. If as the result of collections of
Accounts as authorized by Section 5.4 hereof a credit balance
exists in the Loan Account of Borrower, such credit balance shall
not accrue interest in favor of Borrower, but shall be available to
Borrower at any time or times for so long as no Default or Event of
Default exists. In no event shall such credit balance be applied
or be deemed to have been applied as a prepayment of the Term Loan
unless so requested by Borrower, but Agent may offset such credit
balance against the Obligations upon or after the occurrence of an
Event of Default.
3.6 Statements of Account. Agent will account to
Borrower monthly with a statement of Loans, charges and payments
made pursuant to this Agreement, and such account rendered by Agent
shall be deemed final, binding and conclusive upon Borrower unless
Agent is notified by Borrower in writing to the contrary within
ninety (90) days after the date each account is mailed to Borrower.
Such notice shall only be deemed an objection to those items
specifically objected to therein.
SECTION 4. COLLATERAL: GENERAL TERMS
4.1 Security Interest in Collateral. To secure the
prompt payment and performance to Agent and Lenders of the
Obligations, Borrower hereby assigns, pledges and grants to Agent
for the ratable benefit of Lenders a continuing security interest
in and Lien upon all of Borrower's assets (other than Real
Property), including all of the following Property and interests in
Property of Borrower, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located:
(A) Accounts;
(B) Inventory;
(C) Equipment;
(D) General Intangibles;
(E) All monies and other Property of any kind, now
or at any time or times hereafter, in the possession or under the
control of Agent, any Lender or a bailee of Agent or any Lender;
(F) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (A), (B),
(C), (D) and (E) above, including, without limitation, proceeds of
and unearned premiums with respect to insurance policies insuring
any of the Collateral; and
(G) All books and records (including, without
limitation, customer lists, credit files, computer programs, print-
outs, and other computer materials and records) of Borrower
pertaining to any of (A), (B), (C), (D), (E) or (F) above.
4.2 Representations, Warranties and Covenants. To
induce Agent and Lenders to enter into this Agreement, Borrower
represents, warrants, and covenants to Agent and Lenders:
(A) The Collateral is now and, so long as any
Obligations are outstanding, will continue to be owned solely by
the Borrower. No other Person has or will have any right, title,
interest, claim, or Lien therein, thereon or thereto other than a
Permitted Lien.
(B) Except as specifically consented to in writing
by Agent, the Liens granted to Agent for the ratable benefit of
Lenders shall be first and prior on the Collateral and as to the
Accounts and proceeds, including insurance proceeds, resulting from
the sale, disposition, or loss thereof. No further action need be
taken to perfect the Liens granted to Agent, other than the filing
of continuation statements under the Code or other applicable law,
continued possession by Agent of that portion of the Collateral
constituting instruments or documents and the processing of Lien
notations on motor vehicle title certificates.
(C) All goods evidenced by the Collateral
constituting chattel paper, documents or instruments, the
possession of which has been given to Agent for the ratable benefit
of Lenders, are owned by Borrower and the same are free and clear
of any prior Lien. Borrower further warrants and guarantees the
value, quantities, sound condition, grades and qualities of the
goods and services described therein. Borrower shall pay and
discharge when due all taxes, levies, and other charges upon said
Collateral and upon the goods evidenced by any documents
constituting Collateral and shall defend Agent and Lenders against
and save them harmless from all claims of any Person with respect
to the Collateral. This indemnity shall include reasonable
attorneys' fees and legal expenses.
4.3 Lien Perfection. To execute the financing
statements provided for by the Code together with any and all other
instruments, assignments or documents and shall take such other
action as may be required to perfect or to continue the perfection
of Agent's and Lenders' security interest in the Collateral,
including, without limitation, the execution at Agent's request for
all documents deemed necessary by Agent to cause Agent's and
Lenders' Lien to be noted on any motor vehicle title certificates
for motor vehicles forming a part of the Collateral. Unless
prohibited by applicable law, Borrower hereby authorizes Agent to
execute and file any such financing statement on Borrower's behalf.
The parties agree that a carbon, photographic or other reproduction
of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof.
4.4 Location of Collateral. All Collateral, other than
Inventory in transit, will at all times be kept by Borrower at one
or more of the business locations set forth in Schedule 4.4 and
shall not, without the prior written approval of Agent, be moved
therefrom except, prior to an Event of Default for (A) sales of
Inventory in the ordinary course of business; (B) the storage of
Inventory at locations within the continental United States other
than those shown on Schedule 4.4 if (i) Borrower gives Agent
written notice of the new storage location at least thirty (30)
days prior to storing Inventory at such location, (ii) Agent's and
Lenders' security interest in such Inventory is and continues to be
a duly perfected, first priority Lien thereon, (iii) neither
Borrower's nor Agent's right of entry upon the premises where such
Inventory is stored, or its right to remove the Inventory
therefrom, is in any way restricted, (iv) the owner of such
premises agrees with Agent not to assert any landlord's, bailee's
or other Lien in respect of the Inventory for unpaid rent or
storage charges except as otherwise provided herein and (v) all
negotiable documents and receipts in respect of any Collateral
maintained at such premises are promptly delivered to Agent; (C)
temporary transfers (for a period not to exceed three (3) months in
any event) of Equipment from a location set forth on Schedule 4.4
to another location if done for the limited purpose of repairing,
refurbishing or overhauling such Equipment in the ordinary course
of Borrower's business and (D) removals in connection with
dispositions of Equipment that are authorized by Section 7.4
hereof.
4.5 Insurance of Collateral. To maintain and pay for
insurance upon all Collateral wherever located, in storage or in
transit in vehicles, including goods evidenced by documents,
covering casualty, hazard, public liability and such other risks
and in such amounts and with such insurance companies as shall be
reasonably satisfactory to Agent to insure Agent's and Lenders'
interest in the Collateral. Borrower shall deliver the originals
of such policies to Agent with satisfactory lender's loss payable
endorsements naming Agent loss payee. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give
not less than twenty (20) days prior written notice to Agent in the
event of cancellation of the policy for any reason whatsoever and
a clause that the interest of Agent shall not be impaired or
invalidated by any act or neglect of Borrower or owner of the
Property nor by the occupation of the premises for purposes more
hazardous than are permitted by said policy. If Borrower fails to
provide and pay for such insurance, Agent may, at Borrower's
expense, procure the same, but shall not be required to do so.
Borrower agrees to deliver to Agent, promptly as rendered, true
copies of all reports made in any reporting forms to insurance
companies. Borrower shall (a) keep all of its insurance properties
and properties in which the Borrower has an interest insured
against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to Borrower's including,
without limitation, business interruption insurance; (b) maintain
a bond in such amounts, if any, as is customary in the case of
companies engaged in businesses similar to Borrower's insuring
against larceny, embezzlement or other criminal misappropriation of
insured's officers and employees who may either singly or jointly
with others at any time have access to the assets or funds of
Borrower either directly or through authority to draw upon such
funds or to direct generally the disposition of such assets; (c)
maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (d)
maintain all such workmen's compensation or similar insurance as
may be required under the laws of any state or jurisdiction in
which Borrower is engaged in business; and (e) furnish Agent with
(i) copies of all policies and evidence of the maintenance of such
policies by the renewal thereof at least fifteen (15) days before
any expiration date, and (ii) appropriate loss payable endorsements
in form and substance reasonably satisfactory to the Agent, naming
Agent as loss payee as its interest may appear or as a co-insured,
as the case may be, with respect to all insurance coverage referred
to above, and providing (A) that all proceeds thereunder shall be
payable to the Agent, (B) no such insurance shall be affected by
any act or neglect of the insured or owner of the property
described in such policy and (C) that such policy and loss payable
clauses may not be cancelled, amended or terminated unless at least
twenty (20) days' prior written notice is given to the Agent. In
the event of any loss thereunder, the carriers named therein hereby
are directed by the Agent and Borrower to make payment for such
loss to the Agent and not to Borrower and the Agent jointly. If
any insurance losses are paid by check, draft or other instrument
payable to Borrower and the Agent jointly, the Agent may endorse
Borrower's name thereon and do such other things as the Agent may
deem advisable to reduce the same to cash. The Agent is hereby
authorized to adjust and compromise claims under insurance coverage
referred to in clauses (a) and (b) above following the occurrence
and during the continuation of an Event of Default. All loss
recoveries received by Agent upon any such insurance shall be
applied to the Obligations, in such order as Agent in its
reasonable discretion shall determine; provided, however, all loss
recoveries received by Agent in an aggregate amount less than
$150,000 shall be made available to Borrower for the sole purpose
of rebuilding and/or replacing the Property which suffered such
casualty loss. Any surplus in insurance recoveries, in excess of
the then outstanding Obligations, shall be paid by the Agent to
Borrower or applied as may be otherwise required by law. If all
Obligations hereunder are required to be repaid as a result of any
casualty, any deficiency thereon shall be paid by Borrower to
Agent, on demand.
4.6 Protection of Collateral. All insurance expenses
and all expenses of protecting, storing, warehousing, insuring,
handling, maintaining and shipping the Collateral, any and all
excise, property, sales, and use taxes imposed by any state,
federal, or local authority on any of the Collateral or in respect
of the sale thereof shall be borne and paid by Borrower. If
Borrower fails to promptly pay any portion thereof when due, Agent
may, at its option, but shall not be required to, pay the same and
charge Borrower's Loan Account therefor. Borrower agrees to
reimburse Agent promptly therefor with interest accruing thereon
daily at the Default Rate provided in this Agreement. All sums so
paid or incurred by Agent for any of the foregoing and all costs
and expenses (including attorneys' fees, legal expenses and court
costs) which Agent may incur in enforcing or protecting its Lien on
or rights and interest in the Collateral or any of its rights or
remedies under this or any other agreement between the parties
hereto or in respect of any of the transactions to be had hereunder
until paid by Borrower to Agent with interest at the Default Rate,
shall be considered Obligations owing by Borrower to Agent
hereunder. Such Obligations shall be secured by all Collateral and
by any and all other collateral, security, assets, reserves, or
funds of Borrower in or coming into the hands or inuring to the
benefit of Agent and Lenders. Agent shall not be liable or
responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto (except for reasonable care in
the custody thereof while any Collateral is in Agent's actual
possession) or for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency, or
other person whomsoever, but the same shall be at Borrower's sole
risk.
SECTION 5. PROVISIONS RELATING TO ACCOUNTS
5.1 Representations, Warranties and Covenants. With
respect to all Accounts, Borrower represents and warrants to Agent
and Lenders that Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by
Borrower with respect to any Account or Accounts, and, unless
otherwise indicated in writing to Agent, that with respect to each
Account:
(A) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(B) It arises out of a completed, bona fide sale
and delivery of goods or rendition of services by Borrower in the
ordinary course of its business and in accordance with the terms
and conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between
Borrower and the Account Debtor;
(C) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale or rendition of
services, a copy of which has been furnished or is available to
Agent;
(D) Such Account, and Agent's and Lenders' security
interest therein, is not, and will not be in the future, subject to
any offset, Lien, deduction, defense, dispute, counterclaim or any
other adverse condition except for disputes resulting in returned
goods where the amount in controversy is deemed by Agent to be
immaterial, and each such Account is absolutely owing to Borrower
and is not contingent in any respect or for any reason;
(E) Borrower has not made any agreement with any
Account Debtor thereunder for any deduction therefrom, except
discounts or allowances which are granted by Borrower in the
ordinary course of its business for prompt payment and which are
reflected in the calculation of the net amount of each respective
invoice related thereto;
(F) There are no facts, events or occurrences which
in any way impair the validity or enforceability thereof or tend to
reduce the amount payable thereunder from the face amount of the
invoice and statements delivered to Agent with respect thereto;
(G) To the best of Borrower's knowledge, the
Account Debtor thereunder (i) had the capacity to contract at the
time any contract or other document giving rise to the Account was
executed and (ii) such Account Debtor is Solvent; and
(H) Borrower does not have any knowledge of any
fact or circumstance which would impair the validity or
collectability of the Account, and to the best of Borrower's
knowledge there are no proceedings or actions which are threatened
or pending against any Account Debtor thereunder which might result
in any material adverse change in such Account Debtor's financial
condition or the collectability of such Account.
5.2 Schedules. Borrower shall Deliver to Agent on or
before the twentieth day (20th) day of each month as and for the
prior month (a) accounts receivable ageings and (b) accounts
payable schedules. In addition, Borrower will deliver to Agent at
such intervals as Agent may require: (i) confirmatory assignment
schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents
and/or information regarding the Collateral as Agent may require
including, without limitation, trial balances and test
verifications. Agent shall have the right to confirm and verify
all Accounts by any manner and through any medium it considers
advisable and do whatever it may deem reasonably necessary to
protect its interests hereunder. The items to be provided under
this Section are to be in form satisfactory to Agent and executed
by Borrower and delivered to Agent from time to time solely for
Agent's convenience in maintaining records of the Collateral, and
Borrower's failure to deliver any of such items to Agent shall not
affect, terminate, modify or otherwise limit Agent's and Lenders'
Lien with respect to the Collateral.
5.3 Administration of Accounts.
(A) Upon the granting of any discounts, allowances
or credits by Borrower that are not shown on the face of the
invoice for the Account involved, Borrower shall promptly report
such discounts, allowances or credits, as the case may be, to Agent
and in no event later than the time of its submission to Agent of
the next schedules as provided in Section 5.2. Upon and after the
occurrence of an Event of Default, Agent shall have the right to
settle or adjust all disputes and claims directly with the Account
Debtor and to compromise the amount or extend the time for payment
of the Accounts upon such terms and conditions as Agent may deem
advisable, and to charge the deficiencies, costs and expenses
thereof, including attorney's fees, to Borrower.
(B) If an Account includes a charge for any tax
payable to any governmental taxing authority, Agent is authorized,
in its sole discretion, to pay the amount thereof to the proper
taxing authority for the account of Borrower and to charge the Loan
Account of Borrower therefor. Borrower shall notify Agent if any
Account includes any tax due to any governmental taxing authority
and, in the absence of such notice, Agent shall have the right to
retain the full proceeds of the Account and shall not be liable for
any taxes to any governmental taxing authority that may be due by
Borrower by reason of the sale and delivery creating the Account.
(C) Whether or not a Default or an Event of Default
has occurred, any of Agent's officers, employees or agents shall
have the right, at any time or times hereafter, in the name of
Agent, any designee of Agent or Borrower, to verify the validity,
amount or any other matter relating to any Accounts by mail,
telephone, telegraph or otherwise. Borrower shall cooperate fully
with Agent in an effort to facilitate and promptly conclude any
such verification process.
5.4 Collection of Accounts.
(A) All remittances received by Borrower on account
of Accounts shall be held as Agent's and Lenders' property by
Borrower as trustee of an express trust for Agent's and Lenders'
benefit and Borrower shall immediately deposit same in the Dominion
Account as required by and in accordance with Section (B) below.
Agent retains the right at all times to notify Account Debtors that
Accounts have been assigned to Agent and to collect Accounts
directly in its own name and to charge the collection costs and
expenses, including attorneys' fees to Borrower. Agent has no duty
to protect, insure, collect or realize upon the Accounts or
preserve rights in them. For the purpose of computing interest
hereunder, all items of payment received by Agent shall be deemed
applied by Agent on account of the Obligations (subject to final
payment of such items) on the first Business Day after Agent's
receipt of payment in immediately available funds.
(B) Borrower shall deposit all proceeds of the
Collateral or cause the same to be deposited in kind in a Dominion
Account pursuant to a lockbox arrangement with such banks as may be
selected by Borrower and be acceptable to Agent. Borrower shall
issue to any such banks an irrevocable letter of instruction
directing such banks to deposit all payments or other remittances
received in the lockbox to the Dominion Account for application on
account of the Obligations. All funds deposited in the Dominion
Account shall immediately become the property of Agent and Borrower
shall obtain the agreement by such banks to waive any offset rights
against the funds so deposited. Agent assumes no responsibility
for such lockbox arrangement, including, without limitation, any
claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
5.5 Notice Regarding Disputed Accounts. In the event
any amounts due and owing in excess of $50,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide
Agent with written notice thereof at the time of submission of the
next set of schedules pursuant to Section 5.2 hereof, explaining in
detail the reason for the dispute, all claims related thereto and
the amount in controversy.
SECTION 6. PROVISIONS RELATING TO INVENTORY
6.1 Representations, Warranties and Covenants. With
respect to Inventory, Borrower represents and warrants to Agent and
Lenders that Agent may rely, in determining which items of
Inventory constitute Eligible Inventory, on all statements and
representations made by Borrower with respect to any Inventory and,
unless otherwise indicated in writing to Agent, that:
(A) All Inventory is presently and will continue to
be located at Borrower's places of business listed on Schedule 4.4
and will not be removed therefrom except as authorized by Section
4.4 of this Agreement;
(B) No Inventory is now, nor shall any Inventory at
any time or times hereafter be, stored with a bailee, warehouseman
or similar party without Agent's prior written consent and, if
Agent gives such consent, Borrower will concurrently therewith
cause any such bailee, warehouseman, or similar party to issue and
deliver to Agent, in form and substance acceptable to Agent,
warehouse receipts therefor in Agent's name;
(C) No Inventory is or will be consigned by
Borrower to any Person without Agent's prior written consent, and,
if such consent is given, Borrower shall, prior to the delivery of
any Inventory on consignment, (i) provide Agent with all
consignment agreements to be used in connection with such
consignment, all of which shall be acceptable to Agent, (ii)
prepare, execute and file appropriate financing statements with
respect to any consigned Inventory, showing Agent as assignee,
(iii) conduct a search of all filings made against the consignee in
all jurisdictions in which any consigned Inventory is to be located
and deliver to Agent copies of the results of all such searches and
(iv) notify, in writing, all the creditors of the consignee which
are or may be holders of Liens in the Inventory to be consigned
that Borrower expects to deliver certain Inventory to the
consignee, all of which Inventory shall be described in such notice
by item or type; and
(D) No Inventory is or will be produced in
violation of the Fair Labor Standards Act.
6.2 Inventory Reports. Borrower agrees to furnish Agent
with Inventory reports at such times as Agent may request, but at
least once each month on or before the twentieth (20th) day of such
month. Such reports shall be in form and detail satisfactory to
Agent. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Agent a report based
on each such physical inventory promptly thereafter, together with
such supporting information as Agent shall in its discretion
request.
6.3 Returns of Inventory. If at any time or times
hereafter any Account Debtor returns any Inventory in excess of
$50,000 to Borrower, Borrower shall notify Agent of the same
immediately, specifying the reason for such return and the location
and condition of the returned Inventory. After the occurrence of
an Event of Default, Borrower shall hold all returned Inventory in
trust for Agent, shall segregate all returned Inventory from all
other Property owned by Borrower or in its possession and shall
conspicuously label such Inventory as the Property of Agent.
SECTION 7. PROVISIONS RELATING TO EQUIPMENT
7.1 Representations, Warranties and Covenants. With
respect to the Equipment, Borrower represents, warrants and
covenants to and with Agent and Lenders that:
(A) The Equipment is in good operating condition
and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved, reasonable wear and
tear excepted; and
(B) Borrower will not permit any of the Equipment
to become affixed to any Real Property leased to Borrower so that
an interest arises therein under the real estate laws of the
applicable jurisdiction unless the landlord of such Real Property
has executed a landlord waiver or leasehold mortgage in favor of
Agent for the ratable benefit of Lenders, and Borrower will not
permit any of the Equipment to become an accession to any personal
Property other than Equipment subject to first priority Liens in
favor of Agent for the ratable benefit of Lenders or subject to
Permitted Liens.
7.2 Evidence of Ownership of Equipment. Immediately on
request therefor by Agent, Borrower shall deliver to Agent any and
all evidence of ownership, if any, of any of the Equipment
(including, without limitation, certificates of title and
applications for title).
7.3 Records and Schedules of Equipment. Borrower shall
maintain accurate records itemizing and describing the kind, type,
quality, quantity and value of its Equipment and all dispositions
made in accordance with Section 7.4 hereof, and shall furnish Agent
with a current schedule containing the foregoing information on at
least an annual basis and more often if requested by Agent.
7.4 Dispositions of Equipment. Borrower will not sell,
lease or otherwise dispose of or transfer any of the Equipment or
any part thereof without the prior written consent of Agent;
provided, however, that the foregoing restriction shall not apply,
for so long as no Default or Event of Default exists, to (i)
dispositions of Equipment which, in the aggregate for Borrower
during any consecutive twelve-month period, has a fair market value
or book value, whichever is less, of $100,000 or less, provided
that all proceeds thereof are turned over to Agent, or (ii)
replacements of Equipment that is substantially worn, damaged or
obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired prior to or
concurrently with any disposition of the Equipment that is to be
replaced, the replacement Equipment shall be free and clear of
Liens other than Permitted Liens that are not Purchase Money Liens,
Borrower shall give Agent at least five (5) days prior written
notice of such disposition and Borrower shall turn over to Agent
all proceeds realized from any such disposition.
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1 General Representations and Warranties. To induce
Agent and Lenders to enter into this Agreement and to make advances
hereunder, Borrower warrants, represents and covenants to Agent and
Lenders that:
(A) Organization and Qualification. Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of the state of New York. Borrower has duly
qualified and is authorized to do business and is in good standing
as a foreign corporation in each state or jurisdiction listed on
Schedule 8.1(A) attached hereto and made a part hereof and in all
other states and jurisdictions where the character of its
Properties or the nature of its activities make such qualification
necessary except where the failure of Borrower to be so qualified
would not have a material adverse effect on the financial
condition, operations, business, revenues, assets or Properties of
Borrower .
(B) Corporate Names. Since January 1, 1995,
Borrower has not been known as or used any corporate, fictitious or
trade names except as disclosed on Schedule 8.1(B) attached hereto
and made a part hereof. Except as set forth on Schedule 8.1(B),
Borrower has not, since January 1, 1995, been the surviving
corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.
(C) Corporate Power and Authority. Borrower has
the right and power and is duly authorized and empowered to enter
into, execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other
Loan Documents have been duly authorized by all necessary corporate
action and do not and will not (i) require any consent or approval
of the shareholders of Borrower; (ii) contravene Borrower's
charter, articles of incorporation or by-laws; (iii) violate, or
cause Borrower to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award in effect binding upon Borrower; (iv) result
in a breach of or constitute a default under any indenture or loan
or credit agreement or any other material agreement, lease or
instrument to which Borrower is a party or by which it or its
Properties may be bound or affected; or (v) result in, or require,
the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or
hereafter acquired by Borrower.
(D) Legally Enforceable Agreement. This Agreement
is, and each of the other Loan Documents when delivered under this
Agreement will be, a legal, valid and binding obligation of
Borrower enforceable against it in accordance with their respective
terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally or by principles of equity pertaining
to the availability of equitable remedies.
(E) Use of Proceeds. Borrower's uses of the
proceeds of any Loans pursuant to this Agreement are, and will
continue to be, legal and proper corporate uses, duly authorized by
its Board of Directors, and such uses will not violate any
applicable laws including, without limitation, the Foreign Assets
Control Regulations, the Foreign Funds Control Regulations and the
Transaction Control Regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended).
(F) Margin Stock. Borrower is not engaged
principally, or as one of its important activities, in the business
of purchasing or carrying "margin stock" (within the meaning of
Regulation G or U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loans to Borrower will
be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin
stock, or be used for any purpose which violates or is inconsistent
with the provisions of Regulation X of said Board of Governors.
(G) Governmental Consents. Borrower has, and is in
good standing with respect to, all material governmental consents,
approvals, authorizations, permits, certificates, inspections, and
franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease
and operate its Properties as now owned or leased by it.
(H) Patents, Trademarks, Copyrights and Licenses.
Borrower owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and license necessary for the
present and planned future conduct of its business without any
known conflict with the rights of others. All such material
patents, trademarks, service marks, tradenames, copyrights,
licenses and other similar rights are listed on Schedule 8.1(H)
attached hereto and made a part hereof.
(I) Capital Structure. Schedule 8.1(I) attached
hereto and made a part hereof states (a) the correct name of each
of the Subsidiaries of Borrower, the jurisdiction of incorporation
and the percentage of its Voting Stock owned by Borrower, (b) the
name of Borrower's corporate or joint venture affiliates and the
nature of the affiliation, (c) the number, nature and holder of all
outstanding Securities of Borrower and each Subsidiary of Borrower,
and (d) the number of authorized, issued and treasury shares of
Borrower and each Subsidiary of Borrower. Borrower has good title
to all of the shares it purports to own of the stock of each
Subsidiary, free and clear in each case of any Lien other than
Permitted Liens. All such shares have been duly issued and are
fully paid and non-assessable. There are not outstanding any
options to purchase, or any rights or warrants to subscribe for, or
any commitments or agreements to issue or sell, or any Securities
or obligations convertible into, or any powers of attorney relating
to, shares of the capital stock of Borrower. There are not
outstanding any agreements or instruments binding upon any of
Borrower's shareholders relating to the ownership of its shares of
capital stock.
(J) Solvent Financial Condition. Borrower is now
and, after giving effect to initial Loans to be made hereunder, at
all times will be, Solvent.
(K) Restrictions. Borrower is not a party or
subject to any material contract, agreement, or charter or other
corporate restriction, which materially and adversely affects its
business or the use or ownership of any of its Properties.
Borrower is not a party or subject to any contract or agreement
which restricts its right or ability to incur Indebtedness.
Neither Borrower nor any of its Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its Property, whether now owned
or hereafter acquired, to be subject to a Lien that is not a
Permitted Lien.
(L) Litigation. Except as set forth on Schedule
8.1(L) attached hereto and made a part hereof, there are no
actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower or
any of its Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of Borrower or any of its
Subsidiaries, in any court or before any governmental authority or
arbitration board or tribunal, and no action, suit, proceeding or
investigation shown on Schedule 8.1(L) involves the possibility of
materially and adversely affecting the Properties, business,
prospects, profits or condition (financial or otherwise) of
Borrower or the ability of Borrower to perform this Agreement.
Neither Borrower nor any of its Subsidiaries is in default with
respect to any order, writ, injunction, judgement, decree or rule
of any court, governmental authority or arbitration board or
tribunal.
(M) Title to Properties. Borrower has good,
indefeasible and marketable title to and fee simple ownership of,
or valid and subsisting leasehold interests in, all of its Real
Property, and good title to all of its other Property, in each
case, free and clear of all Liens except Permitted Liens.
(N) Financial Statements; Fiscal Year. The balance
sheets of MPDI on a Consolidated Basis as of September 30, 1996,
and the related statements of income and statements of cash flow,
for the periods ended on such dates, have been prepared in
accordance with GAAP (except for changes in application in which
Borrower's independent certified public accountants concur), and
present fairly the financial positions of MPDI and Borrower at such
dates and the results of MPDI's and Borrower's operations for such
periods. Since September 30, 1996, there has been no material
change in the condition, financial or otherwise, of Borrower as
shown on the consolidated balance sheet as of such date and no
change in the aggregate value of Equipment and real property owned
by Borrower except changes in the ordinary course of business, none
of which individually or in the aggregate has been materially
adverse. The fiscal year of Borrower ends on the last Saturday of
the calendar year.
(O) Full Disclosure. The financial statements
referred to in Section 8.1(N) above, do not, nor does this
Agreement or any other written statement of Borrower to Agent
(including, without limitation, Borrower's filings, if any, with
the Securities and Exchange Commission), contain any untrue
statement of a material fact or omit a material fact necessary to
make the statements contained therein or herein not misleading.
There is no fact which Borrower has failed to disclose to Agent in
writing which materially affects adversely or, so far as Borrower
can now foresee, will materially affect adversely the Properties,
business, prospects, profits, or condition (financial or otherwise)
of Borrower or the ability of Borrower to perform this Agreement.
(P) Pension Plans. Except as disclosed on Schedule
8.1(P) attached hereto and made a part hereof, neither Borrower nor
any of its Subsidiaries has any Plan. Neither Borrower, any ERISA
Affiliate of Borrower, nor any Plan is, in any material respect, in
violation of any of the provisions of ERISA, the IRC, or other
applicable laws. Except as set forth on Schedule 8.1(P), since
January 1, 1992, (a) no Prohibited Transaction or Reportable Event
has occurred with respect to any Plan, nor has any Plan been the
subject of a waiver of the minimum funding standard under
Section 412 of the IRC; (b) no Plan has experienced an accumulated
funding deficiency under Section 412 of the IRC; (c) no lien has
been imposed upon Borrower or any ERISA Affiliate of Borrower under
Section 412(n) of the IRC; (d) no Plan has been amended in such a
way that the security requirements of Section 401(a)(29) of the IRC
apply; (e) no notice of intent to terminate a Plan has been
distributed to affected parties or filed with the PBGC under
Section 4041 of ERISA, nor has any Plan been terminated under
Section 4041(e) of ERISA; (f) the PBGC has not instituted
proceedings to terminate, or appoint a trustee to administer, a
Plan and no event has occurred or condition exists which might
constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan; (g)
neither Borrower nor any ERISA Affiliate of Borrower would be
liable for any amount pursuant to Sections 4062, 4063 or 4064 of
ERISA if all Plans terminated as of the most recent valuation dates
of such Plans; (h) neither Borrower nor any ERISA Affiliate of
Borrower maintains any employee welfare benefit plan, as defined in
Section 3(1) of ERISA, which provides any benefits to an employee
or the employee's dependents with respect to claims incurred after
the employee separates from service other than is required by
applicable law; (i) neither Borrower nor any ERISA Affiliate of
Borrower has incurred any material liability for any excise tax
arising under Section 4972 or 4980B of the IRC and no fact or event
exists which would give rise to any such material liability; and
(j) neither Borrower nor any ERISA Affiliate of Borrower has
incurred or expects to incur any withdrawal liability to any
Multiemployer Plan.
(Q) Taxes. Borrower's federal tax identification
number is set forth on Schedule 8.1(Q). Borrower has filed all
federal, state and local tax returns and other reports it is
required by law to file and has paid, or made provision for the
payment of, all taxes, assessments, fees and other governments,
charges that are due and payable, except such taxes, if any, as are
being actively contested in good faith and as to which adequate
reserves have been provided. The provision for taxes on the books
of Borrower and its Subsidiaries are adequate for all years not
closed by applicable statutes, and for its current fiscal year.
(R) Labor Relations. Except as described on
Schedule 8.1(R) attached hereto and made a part hereof, neither
Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement, and there are no material grievances,
disputes or controversies with any union or any other organization
of Borrower's employees, or threats of strikes, work stoppages or
any asserted pending demands for collective bargaining by any union
or organization.
(S) Compliance With Laws. Borrower has duly
complied in all material respects with, and its Properties,
business operations and leaseholds are in compliance in all
material respects with, the provisions of all federal, state and
local laws, rules and regulations applicable to Borrower, its
Properties or the conduct of its business, including, without
limitation, OSHA and all Environmental Laws, and since January 1,
1992, there have been no citations, notices or orders of
noncompliance issued to Borrower or any of its Subsidiaries under
any such law, rule or regulation.
(T) Surety Obligations. Borrower is not obligated
as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or
obligation of any Person.
(U) No Defaults. No event has occurred and no
condition exists which would, upon the execution and delivery of
this Agreement or Borrower's performance hereunder, constitute a
Default or an Event of Default. Neither Borrower nor any of its
Subsidiaries is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default in
the payment of any Indebtedness to any Person for Money Borrowed.
(V) Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection
with the transactions contemplated by this Agreement.
(W) Business Locations; Agent for Process. Since
January 1, 1992, Borrower has not had any office, place of business
or agent for service of process located in any state or county
other than as shown on Schedule 8.1(W).
(X) Trade Relations. There exists no actual or
threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between
Borrower and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of
the Borrower, or with any material supplier, and there exists no
present condition or state of facts or circumstances which would
materially affect adversely Borrower or prevent Borrower from
conducting such business after the consummation of the transaction
contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.
(Y) Leases. Schedule 8.1(Y)(i) attached hereto is
a complete listing of all capitalized leases of Borrower, and
Schedule 8.1(Y)(i)(i) attached hereto is a complete listing of all
operating leases of Borrower.
(Z) Investment Company Act. Borrower is not an
"investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940,
as amended.
(AA) OSHA and Environment Compliance.
(a) There are no outstanding unresolved
citations, notices or orders of non-compliance issued to Borrower
or relating to its business, assets, Property, leaseholds or
Equipment under any Environmental Laws, rules or regulations other
than shown on Schedule 8.1(AA).
(b) Borrower has been issued all material
federal, state and local licenses, certificates or permits relating
to all applicable Environmental Laws.
(c)(i) There are no visible signs of releases,
spills, discharges, leaks or disposal (collectively referred to as
"Releases") of Hazardous Substances at, upon, under or within any
Real Property or any premises leased by Borrower which require
remediation by Borrower under any applicable Environmental Laws;
(ii) there are no underground storage tanks or polychlorinated
biphenyls on the Real Property or any premises leased by Borrower;
(iii) neither the Real Property nor any premises leased by Borrower
has ever been used as a treatment, storage or disposal facility of
Hazardous Waste; and (iv) no Hazardous Substances are present on
the Real Property or any premises leased by Borrower in violation
of any Environmental Laws.
(AB) Indebtedness. Borrower does not have any
Indebtedness for Money Borrowed other than Indebtedness expressly
permitted by the provisions contained in Section 9.2(C) hereof,
after giving effect to the transactions contemplated by this
Agreement and the payments being made on the Closing Date.
(AC) True Copies of Charter and Loan Documents.
Borrower has furnished or caused to be furnished to Agent true and
complete copies of (a) all charter and other incorporation
documents together with any amendments thereto), with respect to
Borrower, and (b) by-laws (together with any amendments thereto).
8.2 Reaffirmation. Each request for a Loan made by
Borrower pursuant to this Agreement or any of the other Loan
Documents shall constitute (i) an automatic representation and
warranty by Borrower to Agent and Lenders that there does not then
exist any Default or Event of Default and (ii) a reaffirmation as
of the date of said request of all of the representations and
warranties of Borrower contained in this Agreement and the other
Loan Documents.
8.3 Survival of Representations and Warranties.
Borrower covenants, warrants and represents to Agent and Lenders
that all representations and warranties of Borrower contained in
this Agreement or any of the other Loan Documents shall be true at
the time of Borrower's execution of this Agreement and the other
Loan Documents, and shall survive the execution, delivery and
acceptance thereof by Agent and the parties thereto and the closing
of the transactions described therein or related thereto.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.2 Affirmative Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations
to Agent and Lenders, Borrower covenants that, unless otherwise
consented to by Agent in writing, it shall:
(A) Taxes and Liens. Pay and discharge, and cause
each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges upon it, its income and Properties as and when
such taxes, assessments and charges are due and payable, except and
to the extent only that such taxes, assessments and charges are
being actively contested in good faith and by appropriate
proceedings, Borrower maintains adequate reserves on its books
therefor and the nonpayment of such taxes, assessments and charges
does not result in a Lien upon any Properties of Borrower other
than a Permitted Lien. Borrower shall also pay and discharge any
lawful claims which, if unpaid, might become a Lien against any of
Borrower's Properties except for Permitted Liens.
(B) Tax Returns. File, and cause each Subsidiary
to file, all federal, state and local tax returns and other reports
Borrower or such Subsidiary is required by law to file and maintain
adequate reserves for the payment of all taxes, assessments,
governmental charges, and levies imposed upon it, its income, or
its profits, or upon any Property belonging to it.
(C) Payment of Bank Charges. Pay to Agent, on
demand, any and all fees, costs or expenses which Agent pays to a
bank or other similar institution arising out of or in connection
with (i) the forwarding to Borrower or any other Person on behalf
of Borrower, by Agent, proceeds of loans made by Agent to Borrower
pursuant to this Agreement and (ii) the depositing for collection,
by Agent, of any check or item of payment received or delivered to
Agent on account of the Obligations.
(D) Business and Existence. Preserve and maintain,
and cause each Subsidiary to preserve and maintain, its separate
corporate existence and all rights, privileges, and franchises in
connection therewith, and maintain, and cause each Subsidiary to
maintain, its qualification and good standing in all states in
which the failure to be so qualified might have a material adverse
effect on the financial condition, operations, business revenues,
assets or Properties of Borrower.
(E) Maintain Properties. Maintain, and cause each
Subsidiary to maintain, its Properties in good condition and make,
and cause each Subsidiary to make, all necessary renewals, repairs,
replacements, additions and improvements thereto.
(F) Compliance with Laws. Comply in all material
respects, and cause each Subsidiary to comply in all material
aspects, with all laws, ordinances, governmental rules and
regulations to which it is subject, including, without limitation,
all Environmental Laws, and obtain and keep in force any and all
material licenses, permits, franchises, or other governmental
authorizations from, give all such notices promptly to, register,
enroll or file promptly all such agreements, instruments or
documents required by applicable laws with, and promptly take all
such other legally required action with respect to, any
governmental or regulatory authority, agency or official,
including, without limitation, any state or federal agency or
subdivision that regulates environmental activities or is otherwise
involved in monitoring or enforcing Environmental Laws as is
required from under any provision of any applicable law and that
Borrower or Agent reasonably deems necessary (a) for the continued
operation of any of Borrower's activities or business or the
performance by Borrower of any of its agreements or obligations
under this Agreement, the Security Documents or any of the Loan
Documents, or (b) to ensure the continuing legality, validity,
binding effect or enforceability of this Agreement, the Security
Documents or any of the Loan Documents or any of the Obligations
thereunder of Borrower necessary to the ownership of its Properties
or to the conduct of its business, which violation or failure to
obtain might materially and adversely affect the business,
prospects, profits, Properties, or condition (financial or
otherwise) of Borrower.
(G) ERISA Compliance. (i) At all times make timely
payment of contributions required to meet the minimum funding
standards set forth in ERISA with respect to each Plan; (ii)
promptly after the filing thereof, furnish to Agent copies of any
annual report required to be filed pursuant to ERISA in connection
with each Plan and any other employee benefit plan of it and its
Affiliates subject to said Section; (iii) notify Agent as soon as
practicable of any Reportable Event and of any additional act or
condition arising in connection with any Plan which Borrower
believes might constitute grounds for the termination thereof by
the Pension Benefit Guaranty Corporation or for the appointment by
the appropriate United States district court of a trustee to
administer the Plan; and (iv) furnish to Agent, promptly upon
Agent's request therefor, such additional information concerning
any Plan or any other such employee benefit plan as may be
reasonably requested.
(H) ERISA Events. Borrower shall furnish to Agent:
(a) as soon as possible, but in no event later than thirty (30)
days after Borrower knows or has reason to know that any Reportable
Event with respect to any Plan has occurred, a statement of the
Chief Financial Officer of Borrower setting forth the details
concerning such Reportable Event and the action which Borrower
proposes to take with respect thereto, together with a copy of the
notice of such Reportable Event given to the PBGC, if a copy of
such notice is available to Borrower ; (b) promptly after receipt
thereof, a copy of any notice of any potential material liability,
adverse determination letter, ruling or opinion Borrower may
receive from the PBGC or the Internal Revenue Service with respect
to any Plan; (c) when the same is made available to participants in
a Plan, all notices of a significant reduction in the rate of
benefit accrual or plan termination to the participants by the
administrator of such Plan; and (d) promptly after receipt thereof,
any notice from any Multiemployer Plan to which Borrower or any
ERISA Affiliate of Borrower contributes which quantifies any actual
or potential withdrawal liability which will or may be imposed upon
the withdrawal of Borrower or any ERISA Affiliate of Borrower from
such Multiemployer Plan.
(I) Business Records. Keep, and cause each
Subsidiary to keep, adequate records and books of account with
respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all its financial transactions.
(J) Visits and Inspections. Permit representatives
of Agent, from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and
inspect the Properties of Borrower, inspect and make extracts from
its books and records, and discuss with its officers, its employees
and its independent accountants, Borrower's business, assets,
liabilities, financial condition, business prospects and results of
operations.
(K) Financial Statements. Cause to be prepared and
furnished to Agent the following (all to be kept and prepared in
accordance with GAAP applied on a consistent basis, unless
Borrower's certified public accountant concur in any change therein
and such change is disclosed to Agent and is consistent with GAAP):
(i) as soon as possible, but not later than
one hundred twenty (120) days after the close
of each fiscal year of Borrower, unqualified
audited financial statements of MPDI on a
Consolidated Basis as of the end of such year
together with supplementary consolidating
schedules covering Borrower and any other
Subsidiary of MPDI for any fiscal year during
which Borrower shall not have been the sole
subsidiary of MPDI, including, but not limited
to, statements of income and cash flow from
the beginning of the current year to the end
of the current year and the balance sheet as
at the end of such year, setting forth in
comparative form the corresponding figures for
the preceding year, reported on without
qualification by a firm of independent
certified public accountants of recognized
national standing or otherwise acceptable to
Agent (except for a qualification for a change
in accounting principles with which the
independent public accountant concurs);
(ii) as soon as possible, but not later than
sixty (60) days after the end of each fiscal
quarter of Borrower, unaudited interim
financial statements of MPDI and Borrower on a
Consolidated Basis, as of the end of such
quarter and of the portion of MPDI's and
Borrower's fiscal year then elapsed together
with supplementary consolidating schedules
covering Borrower and any other subsidiary of
MPDI for any fiscal quarter during which
Borrower shall not have been the sole
subsidiary of MPDI, certified by the principal
financial officer of Borrower as prepared in
accordance with GAAP and fairly presenting the
financial position and results of operations
of MPDI and Borrower for such quarter and
period subject only to changes from audit and
year-end adjustments and except that such
statements need not contain notes;
(iii) as soon as possible, but not later than
forty-five (45) days after the end of each
month hereafter, unaudited interim financial
statements of MPDI and Borrower on a
Consolidated Basis, as of the end of such
month and of the portion of MPDI's and
Borrower's fiscal year then elapsed, together
with supplementary consolidating schedules
covering Borrower and any other subsidiary of
MPDI for any month during which Borrower shall
not have been the sole subsidiary of MPDI,
certified by the principal financial officer
of Borrower as prepared in accordance with
GAAP and fairly presenting the financial
position and results of operations of MPDI and
Borrower for such month and period subject
only to changes from audit and year-end
adjustments and except that such statements
need not contain notes;
(iv) promptly after the sending or filing
thereof, as the case may be, copies of any
proxy statements, financial statements or
reports which Borrower has made available to
its shareholders and copies of any regular,
periodic and special reports or registration
statements which Borrower files with the
Securities and Exchange Commission or any
governmental authority which may be
substituted therefor, or any national
securities exchange;
(v) as soon as available, and in any event no
later than the end of each fiscal year of
Borrower, deliver to Agent Projections of MPDI
and Borrower on a consolidated and
consolidating basis for the immediately next
fiscal year, on a month by month basis; and
(vi) such other data and information
(financial and otherwise) as Agent, from time
to time, may reasonably request, bearing upon
or related to the Collateral, Borrower's
financial condition or results of operations,
including, without limitation, federal income
tax returns of Borrower, accounts payable
ledgers, and bank statements.
Within ninety (90) days following the delivery of the
financial statements described in clause (i) of this Section
9.1(K), Borrower shall forward to Agent a copy of the accountants'
letter to Borrower's management that is prepared in connection with
such financial statements and shall also cause to be prepared and
furnish to Agent a certificate of the aforesaid certified public
accountants certifying to Agent that, based upon their examination
of the financial statements of MPDI and its Subsidiaries performed
in connection with their examination of said financial statements,
they are not aware of any Default or Event of Default, or, if they
are aware of such Default or Event of Default, specifying the
nature thereof. Concurrently with the delivery of the financial
statements described in clauses (i), (ii) and (iii) of this Section
9.1(K), Borrower shall cause to be prepared and furnished to Agent
a certificate from the Chief Financial Officer of Borrower
certifying to Agent that to the best of his knowledge, Borrower has
kept, observed, performed and fulfilled each and every covenant,
obligation and agreement binding upon Borrower in this Agreement
and the other Loan Documents and that no Default or Event of
Default has occurred, or, if such Default or Event of Default has
occurred, specifying the nature thereof.
(L) Notices to Agent. Notify Agent in writing:
(i) promptly after Borrower's learning thereof, of the commencement
of litigation affecting Borrower or any of its Properties, whether
or not the claim is considered by Borrower to be covered by
insurance, and of the institution of any administrative proceeding
which may materially and adversely affect Borrower's operations,
financial condition, Properties or business or Agent's and Lenders'
Lien upon any of the Collateral; (ii) at least sixty (60) days
prior thereto, of Borrower's opening of any new office or place of
business or Borrower's closing of any existing office or place of
business; (iii) promptly after Borrower's learning thereof, of any
material labor dispute to which Borrower may become a party, any
strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which it is
a party or by which it is bound; (iv) promptly after Borrower's
learning thereof, of any material default by Borrower under any
note, indenture, loan agreement, mortgage, lease, deed, guaranty or
other similar agreement relating to any Indebtedness of Borrower
exceeding $100,000; (v) promptly after the occurrence thereof, of
any Default or Event of Default; (vi) promptly after the occurrence
thereof, of any default by any obligor under any material note or
other evidence of Indebtedness payable to Borrower; and (vii)
promptly after the rendition thereof, of any judgment rendered
against Borrower or any of Subsidiaries.
(M) Landlord and Storage Agreements. Provide Agent
with copies of all agreements between Borrower and any landlord or
warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.
(N) Subordinations. Provide Agent with debt
subordination agreements, in form and substance satisfactory to
Agent, executed by Borrower and any Person who is an officer,
director or Affiliate of Borrower to whom Borrower is or hereafter
becomes indebted for Money Borrowed, subordinating in right of
payment and claim all of such Indebtedness and any future advances
thereon to the full and final payment and performance of the
Obligations.
(O) Further Assurances. At Agent's request,
promptly execute or cause to be executed and deliver to Agent any
and all documents, instruments and agreements deemed necessary by
Agent to give effect to or carry out the terms or intent of this
Agreement or any of the other Loan Documents. Without limiting the
generality of the foregoing, if any of the Accounts of Borrower,
exceeding $100,000 arises out of a contract with the United States
of America, or any department, agency, subdivision or
instrumentality thereof, Borrower shall promptly notify Agent
thereof in writing and shall execute any instruments and take any
other action required or requested by Agent to comply with the
provisions of the Federal Assignment of Claims Act with regard to
any Accounts other than progress ▇▇▇▇▇▇▇▇; provided, however, after
the occurrence and during the continuance of an Event of Default,
Agent may require Borrower to comply with the provisions of the
Federal Assignment of Claims Act with regard to any Accounts other
than progress ▇▇▇▇▇▇▇▇, notwithstanding that the face value of any
such Account is less than $100,000. For purposes of this paragraph
Accounts shall mean accounts as defined under the Uniform
Commercial Code of the State of New York.
(P) Mortgagee Waiver. Borrower shall use its best
efforts to deliver to Agent on the Closing Date or thereafter, a
mortgagee waiver executed by SCIDA in form and substance
satisfactory to Agent on the Real Property. If Borrower shall fail
to deliver such waiver to Agent, Agent shall, at its discretion,
maintain a reserve which shall not exceed an amount equal to
Borrower's aggregate payment obligations to SCIDA for a period of
three (3) months.
(Q) Environmental Matters.
(i) Borrower will ensure that Borrower's Real
Property remains in compliance in all material respects
with all Environmental Laws and it will not place or
permit to be placed any Hazardous Substances on any of
Borrower's Real Property except as not prohibited by
applicable law or appropriate governmental authorities.
(ii) Borrower will establish and maintain a system
to assure and monitor continued compliance in all
material respects with all applicable Environmental Laws
which system shall include periodic reviews of such
compliance and shall be appropriate to the nature of
Borrower's business.
(iii) Borrower will (a) employ in connection with
its use of its Real Property appropriate technology
necessary to maintain compliance in all material respects
with any applicable Environmental Laws and (b) dispose of
any and all Hazardous Waste generated at Borrower's Real
Property only at facilities and with carriers that
maintain valid permits under RCRA and any other
applicable Environmental Laws. To the extent required by
applicable Environmental Laws, Borrower shall obtain
certificates of disposal, such as hazardous waste
manifest receipts, from all treatment, transport, storage
or disposal facilities or operators in connection with
the transport or disposal of any Hazardous Waste
generated at Borrower's Real Property.
(iv) In the event Borrower obtains, gives or
receives notice of any Release or threat of release of a
reportable quantity of any Hazardous Substances at
Borrower's Real Property (any such event being
hereinafter referred to as a "Hazardous Discharge") or
receives any notice of violation, request for information
or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at
Borrower's Real Property, demand letter or complaint,
order, citation, or other written notice with regard to
any Hazardous Discharge or violation of Environmental
Laws affecting Borrower's Real Property or Borrower's
interest therein (any of the foregoing is referred to
herein as an "Environmental Complaint") from any Person
or entity, including any state agency responsible in
whole or in part for environmental matters in the state
in which Borrower's Real Property is located or the
United States Environmental Protection Agency (any such
person or entity hereinafter the "Authority"), then
Borrower shall, within five (5) Business Days, give
written notice of same to the Agent setting forth facts
and circumstances giving rise to the Hazardous Discharge
or Environmental Complaint. Such information is to be
provided to allow Agent and Lenders to protect their
security interest in Borrower's Real Property and is not
intended to create nor shall it create any obligation
upon Agent or any Lender with respect thereto.
(v) Borrower shall promptly forward to Agent copies
of any request for information, notification of potential
liability, demand letter relating to potential
responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned,
operated or used by Borrower to dispose of Hazardous
Substances and shall continue to forward copies of
correspondence between Borrower and the Authority
regarding such claims to Agent until the claim is
settled. Borrower shall promptly forward to Agent copies
of all documents and reports concerning a Hazardous
Discharge at Borrower's Real Property that Borrower is
required to file under any Environmental Laws. Such
information is to be provided solely to allow Agent to
protect Agent's and Lenders' security interest in the
Collateral.
(vi) Borrower shall respond promptly to any
Hazardous Discharge or Environmental Complaint and take
all necessary action in order to safeguard the health of
any Person and to avoid subjecting the Collateral to any
Lien other than a Permitted Lien. If Borrower shall fail
to respond promptly to any Hazardous Discharge or
Environmental Complaint or Borrower shall fail to comply
in any material respect with any of the requirements of
any Environmental Laws Agent may, but without the
obligation to do so, for the sole purpose of protecting
Agent's and Lenders' interest in the Collateral and on
five (5) Business Days prior written notice to Borrower
(except in instances when Agent reasonably determines
that an emergency situation exists in which event only
one (1) day's notice which may be telephonic) shall be
required: (A) give such notices or (B) enter onto its
premises (or authorize third parties to enter) and take
such actions as the Agent (or such third parties as
directed by the Agent) deem reasonably necessary or
advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by
the Agent (or such third parties) in the exercise of any
such rights, including any sums paid in connection with
any judicial or administrative investigation or
proceedings, fines and penalties, together with interest
thereon from the date expended at the Default Rate for
Loans constituting Revolving Credit Loans shall be paid
upon demand by Borrower, and until paid shall be added to
and become a part of the Obligations secured by the Liens
created by the terms of this Agreement or any other
agreement between Agent and Borrower.
(vii) Promptly upon the written request of Agent,
from time to time Borrower shall provide Agent, at the
Borrower's expense, with an environmental site assessment
or environmental audit report prepared by an
environmental engineering firm acceptable to Agent to
assess with a reasonable degree of certainty the
existence of such Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal
of Hazardous Substances found on, under, at or within
Borrower's Real Property. Any report or investigation of
such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the
clean-up of such Hazardous Discharge shall be acceptable
to the Agent. If such estimates, individually or in the
aggregate, exceed $50,000, Agent shall have the right to
require Borrower to post a bond, letter of credit or
other security reasonably satisfactory to Agent to secure
payment of these costs and expenses.
(viii) Borrower shall defend and indemnify Agent and
Lenders and hold Agent, Lenders, and their respective
employees, agents, directors and officers harmless from
and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's
fees, suffered or incurred by Agent or any Lenders under
or on account of any Environmental Laws, including,
without limitation, the assertion of any lien thereunder,
with respect to any Hazardous Discharge, or the presence
of any Hazardous Substances affecting Borrower's Real
Property. Borrower's obligations under this Section
9.1(Q) shall arise upon the discovery of the presence of
any Hazardous Substances, whether or not any federal,
state, or local environmental agency has taken or
threatened any action in connection with the presence of
any Hazardous Substances. Borrower obligations and the
indemnifications hereunder shall survive the termination
of this Agreement.
(ix) For purposes of Sections 8.1(AA), 9.1(Q) and
9.2(H), all references to Real Property shall be deemed
to include all of Borrower's right, title and interest in
and to all leased or owned premises.
(R) Insurance. Maintain, at all times, insurance
coverage in accordance with the provisions of Section 4.5 herein.
(S) Intellectual Property. Borrower shall, at such
time that it becomes the owner of any material trademark and/or
patent applications or registrations, execute the appropriate
assignment and security documentation in form and substance
satisfactory to Agent granting Agent for the benefit of Lenders a
security interest in such trademarks and/or patents.
(T) Letters of Credit Supporting Foreign Sales.
Deliver to Agent, at its request, copies of all letters of credit
which support foreign sales by Borrower promptly after any such
letter of credit is issued.
9.2 Negative Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations
to Agent or Lenders, Borrower covenants that, unless Agent has
first consented thereto in writing, it will not:
(A) Mergers; Consolidations; Acquisitions. Merge
or consolidate, or permit any Subsidiary of Borrower to merge or
consolidate, with any Person, except a consolidation or merger
involving only Borrower and one or more wholly owned Subsidiaries;
nor acquire all or any substantial part of the Properties of any
Person unless after immediately giving effect to such acquisition,
(i) no Default or Event of Default shall have occurred, (ii) Excess
Availability is then equal to or greater than $900,000 and (iii)
Agent for the ratable benefit of Lenders has obtained a first
priority security interest on such acquired Properties.
(B) Loans. Make, or permit any Subsidiary of
Borrower to make, any loans or other advances of money (other than
for salary, travel advances, advances against commissions and other
similar advances in the ordinary course of business) to any Person,
including, without limitation, of Borrower's Affiliates, officers
or employees.
(C) Total Indebtedness. Create, incur, assume, or
suffer to exist, or permit any Subsidiary of Borrower to create
incur or suffer to exist, any Indebtedness, except: (i)
Obligations owing to Agent and Lenders; (ii) Indebtedness of any
Subsidiary to Borrower; (iii) accounts payable to trade creditors
which are not aged more than one hundred twenty (120) days from
billing date and current operating expenses (other than for Money
Borrowed) which are not more than sixty (60) days past due, in each
case incurred in the ordinary course of business and paid within
such time period, unless the same is actively contested in good
faith and by appropriate and lawful proceedings and Borrower shall
have set aside such reserves, if any, with respect thereto as are
required by generally accepted accounting principles and deemed
adequate by Borrower and its independent accountants; (iv)
Obligations to pay Rentals permitted by Section 9.2(W); (v)
Permitted Purchase Money Indebtedness; (vi) contingent liabilities
arising out of endorsements of checks and other negotiable
instruments for deposit or collection in the ordinary course of
business; (vii) Indebtedness owing to SCIDBA; and (viii)
Indebtedness not included in paragraphs (i) through (vii) above
solely to be used to make capital expenditures which does not
exceed at any time, in the aggregate, $4,000,000 and (ix)
Indebtedness which is subordinated to Agent and Lenders pursuant to
subordination agreements in form and substance satisfactory to
Agent in all respects.
(D) Affiliate Transactions. Except as set forth on
Schedule 9.2(D), enter into, or be a party to, or permit any
Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate or stockholder, except in the
ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business and upon fair and
reasonable terms which are fully disclosed to Agent and which are
no less favorable to Borrower than would it obtain in a comparable
arm's length transaction with a Person not an Affiliate or
stockholder of Borrower or such Subsidiary.
(E) Partnerships or Joint Ventures. Become or
agree to become a general or limited partner in any general or
limited partnership or a joint venturer in any joint venture.
(F) Adverse Transactions. Enter into any
transaction, or permit any Subsidiary of Borrower to enter into any
transaction, which materially and adversely affects or may
materially and adversely affect the Collateral or Borrower's
ability to repay the Obligations or permit or agree to any material
extension, compromise or settlement or make any change or
modification of any kind or nature with respect to any Account,
including any of the terms relating thereto, other than discounts
and allowances in the ordinary course of business, all of which
shall be reflected in the Schedules of Accounts submitted to Agent
pursuant to Section 5.2 of this Agreement.
(G) Guaranties. Guarantee, assume, endorse or
otherwise, in any way, become directly or contingently liable with
respect to the Indebtedness of any Person except by endorsement of
instruments or items of payment for deposit or collection.
(H) Limitation on Liens. Create or suffer to
exist, or permit any Subsidiary of Borrower to create or suffer to
exist, any Lien upon any of its Property, income or profits,
whether now owned or hereafter acquired, except: (i) Liens at any
time granted in favor of Agent and Lenders; (ii) Liens for taxes
(excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due or being contested as permitted by Section
9.1(A) hereof, but only if in Agent's judgment such Lien does not
affect adversely Agent's and Lenders' rights or the priority of
Agent's and Lenders' Lien in the Collateral; (iii) Liens securing
the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons for labor,
materials, supplies or rentals incurred in the ordinary course of
Borrower's business, but only if the payment thereof is not at the
time required and only if such Liens are junior to the Liens in
favor of Agent and Lenders; (iv) Liens resulting from deposits made
in the ordinary course of business in connection with workmen's
compensation, unemployment insurance, social security and other
like laws; (v) attachment, judgment and other similar non-tax Liens
arising in connection with court proceedings, but only if and for
so long as the execution or other enforcement of such Liens is and
continues to be effectively stayed and bonded on appeal in a manner
satisfactory to Agent for the full amount thereof, the validity and
amount of the claims secured thereby are being actively contested
in good faith and by appropriate lawful proceedings and such Liens
do not, in the aggregate, materially detract from the value of the
Property of Borrower or materially impair the use thereof in the
operation of Borrower's business; (vi) Purchase Money Liens
securing Permitted Purchase Money Indebtedness which is not
incurred in violation of Section 9.2(C) of this Agreement; (vii)
reservations, exceptions, easements, rights of way, Liens and other
similar encumbrances affecting Real Property, provided that, in
Agent's reasonable judgment, they do not materially interfere with
their use in the ordinary conduct of Borrower's business and, if
said Real Property constitutes Collateral, Agent has consented
thereto; (viii) Liens securing Indebtedness of a Subsidiary to
Borrower or another Subsidiary of Borrower; (ix) such other Liens
as appear on Schedule 9.2(H) attached hereto; and (x) such other
Liens as Agent may hereafter approve in writing.
(I) Distributions. Declare or make, or permit any
Subsidiary of Borrower to declare or make, any Distributions other
than Distributions to MPDI up to $100,000 in any Contract Year to
be used solely by MPDI for the payment of franchise taxes, state
income taxes, NASDAQ fees and other fees and expenses incidental to
being a publicly owned company due during such Contract Year.
(J) Subsidiaries. Hereafter create any Subsidiary
or divest itself of any material assets by transferring them to any
Subsidiary to whose existence Agent has not consented.
(K) Capital Expenditures. Make Capital
Expenditures (including, without limitation, by way of capitalized
leases) which, in the aggregate, as to Borrower, exceed $3,000,000
during any fiscal year of Borrower.
(L) Business Locations. Transfer its principal
place of business or chief executive office, or open new
manufacturing plants, or transfer existing manufacturing plants, or
maintain warehouses or records with respect to Accounts or
Inventory, to or at any locations other than those at which the
same are presently kept or maintained, as set forth on Schedule 4.4
hereto, except upon at least thirty (30) days prior written notice
to Agent and after the delivery to Agent of financing statements,
if required by Agent, in form satisfactory to Agent to perfect or
continue the perfection of Agent's and Lenders' Lien and security
interest hereunder.
(M) Change of Business. Enter into any new
business other than the business of electronics for defense and
commercial applications or make any material change in Borrower's
business objectives, purposes and operations.
(N) Disposition of Assets. Sell, lease or
otherwise dispose of any of its Properties (excluding any real
property), including any disposition of Property as part of a sale
and leaseback transaction, to or in favor of any Person, except (i)
sales of Inventory in the ordinary course of Borrower's business
for so long as no Event of Default exists hereunder, (ii) a
transfer of Property to Borrower by Borrower's Subsidiary or (iii)
dispositions expressly authorized by this Agreement.
(O) Name of Borrower. Use any corporate name
(other than its own) or any fictitious name, tradestyle or "d/b/a"
except for the names disclosed on Schedule 9.2(O) attached hereto.
(P) ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any
customer on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale
on approval or consignment basis, or any sale on a repurchase or
return basis.
(Q) Executive Compensation. Permit the total
annual base salary of its officers, shareholders and directors to
exceed during any fiscal year of Borrower one hundred twenty
percent (120%) of the amount paid during the preceding fiscal year.
(R) Use of Agent's Name. Without the prior written
consent of Agent, use the name of Agent or any Lender or the name
of any Affiliates of Agent or such Lender in connection with any of
Borrower's business or activities, except in connection with
internal business matters, as required in dealings with
governmental agencies and financial institutions and to trade
creditors of Borrower solely for credit reference purposes.
(S) Margin Securities. Own, purchase or acquire
(or enter into any contract to purchase or acquire) any "margin
security" as defined by any regulation of the Federal Reserve Board
as now in effect or as the same may hereafter be in effect unless,
prior to any such purchase or acquisition or entering into any such
contract, Agent shall have received an opinion of counsel
satisfactory to Agent to the effect that such purchase or
acquisition will not cause this Agreement to violate Regulations G
or U or any other regulation of the Federal Reserve Board then in
effect.
(T) Restricted Investment. Make or have, or permit
any Subsidiary to make or have, any Restricted Investment.
(U) Fiscal Year. Change, or permit any Subsidiary
of Borrower to change, its fiscal year, or permit any Subsidiary of
Borrower to have a fiscal year different from that of Borrower, in
each case, other than a fiscal year ending on December 31.
(V) Stock of Subsidiary, Etc. Sell or otherwise
dispose of any shares of capital stock of any Subsidiary of
Borrower, except in connection with a transaction permitted under
Section 9.2(A), or permit any Subsidiary of Borrower to issue any
additional shares of its capital stock except director's qualifying
shares.
(W) Leases. Become a lessee under any operating
lease (other than a lease under which Borrower is lessor) of
Property if the aggregate Rentals payable during any current or
future period of twelve (12) consecutive months under the lease in
question and all other leases under which Borrower is then lessee
would exceed $3,000,000. The term "Rentals" means, as of the date
of determination, all payments which the lessee is required to make
by the terms of any lease.
(X) Tax Consolidation. File or consent to the
filing of any consolidated income tax return with any Person other
than a Subsidiary of Borrower or MPDI.
9.3 Specific Financial Covenants. During the term of
this Agreement, and thereafter for so long as there are any
Obligations to Agent and Lenders, Borrower covenants that, unless
otherwise consented to by Agent in writing, it shall maintain a
Fixed Charge Ratio of not less than (i) .10 to 1.00 for the three
month period ending March 31, 1997; (ii) .25 to 1.00 for the six
month period ending June 30, 1997; (iii) .50 to 1.00 for the nine
month period ending September 30, 1997; (iv) .75 to 1.00 for the
twelve month period ending December 31, 1997; and (v) 1.00 to 1.00
as at the end of each fiscal quarter thereafter for the twelve
month period then ended.
SECTION 10. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or
any of the other Loan Documents, and without affecting in any
manner the rights of Agent and Lenders under the other Sections of
this Agreement, it is understood and agreed neither Agent nor any
Lender will make any Loan under Section 2 of this Agreement unless
and until each of the following conditions has been and continues
to be satisfied, all in form and substance satisfactory to Agent
and its counsel:
10.1 Documentation. Agent shall have received the
following documents, each to be in form and substance satisfactory
to Agent and its counsel:
(A) Certified copies of Borrower's casualty
insurance policies, together with loss payable endorsements on
Agent's standard form of loss payee endorsement naming Agent as
loss payee, and certified copies of Borrower's liability insurance
policies, together with endorsements naming Agent as a co-insured;
(B) Copies of all filing receipts or
acknowledgments issued by any governmental authority to evidence
any filing or recordation necessary to perfect the Liens of Agent
and Lenders in the Collateral and evidence in a form acceptable to
Agent that such Liens constitute valid and perfected security
interests and Liens, having the Lien priority specified in Section
4.2(B) hereof;
(C) A copy of the Articles or Certificate of
Incorporation of Borrower, and all amendments thereto, certified by
the Secretary of State or other appropriate official of its
jurisdiction of incorporation;
(D) Good standing certificates for Borrower, issued
by the Secretary of State or other appropriate official of
Borrower's jurisdiction of incorporation and each jurisdiction
where the conduct of Borrower's business activities or the
ownership of its Properties necessitates qualification;
(E) A closing certificate signed by the President
and Chief Financial Officer of Borrower dated as of the date
hereof, stating that (i) the representations and warranties set
forth in Section 8 hereof are true and correct on and as of such
date, (ii) Borrower is on such date in compliance with all the
terms and provisions set forth in this Agreement and (iii) on such
date no Default or Event of Default has occurred or is continuing;
(F) The Security Documents duly executed, accepted
and acknowledged by or on behalf of each of the signatories
thereto;
(G) The Other Agreements duly executed and
delivered by Borrower;
(H) The favorable, written opinion of Proskauer,
Rose, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ LLP counsel to Borrower, as to the
transactions contemplated by this Agreement and any of the other
Loan Documents;
(I) Borrowing Base Certificate from Borrower
reflecting that Borrower has Eligible Accounts and Eligible
Inventory in amounts sufficient in value and amount to support
Loans in the amount requested by Borrower for Borrower on the date
of such certificate;
(J) Duly executed agreements establishing the
Dominion Account with a financial institution acceptable to Agent
for the collection or servicing of the Accounts;
(K) Any and all domestic governmental consents,
authorizations, orders or approvals necessary to permit the
effectuation the transactions contemplated by this Agreement and
Loan Documents shall have been granted or obtained;
(L) Copies of the resolutions in form and substance
reasonably satisfactory to it, of the Board of Directors of
Borrower authorizing the execution, delivery and performance of
this Agreement, the Notes and the Other Agreements on behalf of
Borrower;
(M) Evidence reasonably satisfactory to Agent that
(i) no litigation, investigation or proceeding before or by any
arbitrator or governmental authority shall be continuing or
threatened against Borrower other than as set forth on Schedule
10.1(M) (A) in connection with the Documents or any of the
transactions contemplated thereby and which, in the reasonable
opinion of Agent, is deemed material or (B) which if adversely
determined, would, in the reasonable opinion of Agent, materially
and adversely affect the business, financial condition or results
of operations of Borrower and (ii) no injunction, writ, restraining
order or other order of any nature materially adverse to Borrower
or the conduct of its business or inconsistent with the due
consummation of the transactions contemplated hereby shall have
been issued by any governmental authority;
(N) After giving effect to the initial Loans
hereunder, Borrower shall have Excess Availability of at least
$1,500,000; and
(O) Such other documents, instruments and
agreements as Agent shall reasonably request in connection with the
foregoing matters.
10.2 Other Conditions. The following conditions have
been and shall continue to be satisfied, in the reasonable
discretion of Agent:
(A) No Default or Event of Default shall exist;
(B) Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied;
(C) Since September 30, 1996, there shall not have
occurred any material adverse change in the business, financial
condition or results of operations of Borrower, or the existence or
value of any Collateral, or any event, condition or state of facts
which would reasonably be expected materially and adversely to
affect the business, financial condition or results of operations
of Borrower;
(D) No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body
to enjoin, restrain or prohibit, or to obtain damages in respect
of, or which is related to or arises out of this Agreement or the
consummation of the transactions contemplated hereby or which, in
Agent's reasonable discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement or any
of the other Loan Documents;
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1 Events of Default. The occurrence of any one or
moreof the following events shall constitute an "Event of Default":
(A) Payment of Notes. Borrower shall fail to pay
any installment of principal, interest or premium, if any, owing on
any of the Notes or Borrower shall not be in compliance with the
Borrowing Base which non-compliance is not cured within five (5)
Business Days after Borrower's receipt of notice of such non-
compliance from Agent;.
(B) Payment of Obligations. Borrower shall fail to
pay any of the Obligations that are not evidenced by the Notes on
the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise).
(C) Misrepresentations. Any warranty,
representation, or other statement made or furnished to Agent by or
on behalf of Borrower or in any instrument, certificate or
financial statement furnished in compliance with or in reference to
this Agreement or any of the other Loan Documents proves to have
been false or misleading in any material respect when made or
furnished.
(D) Breach of Covenants. Borrower shall fail or
neglect to perform, keep or observe (i) any covenant contained in
Sections 4.3, 4.4, 4.5, 4.6, 5.2, 9.1(A), 9.1(F), 9.1(J), 9.1(N),
9.2 or 9.3 of this Agreement or (ii) any other covenant contained
in this Agreement (other than a covenant, a default in the
performance or observance of which is dealt with specifically
elsewhere in this Section 11.1) and the breach of such other
covenant is not cured to Agent's satisfaction within twenty (20)
days after the sooner to occur of Borrower's receipt of notice of
such breach from Agent or the date on which such failure or neglect
becomes known to any officer of Borrower.
(E) Default Under Other Agreements. Any event of
default shall occur under, or Borrower shall default in the
performance or observance of any term, covenant, condition or
agreement contained in, any of the Other Agreements and such
default shall continue beyond any applicable period of grace.
(F) Default Under Security Documents. Any event of
default shall occur under, or Borrower shall default in the
performance or observance of any term, covenant, condition or
agreement contained in, any of the Security Documents and such
default shall continue beyond any applicable period of grace.
(G) Other Defaults. There shall occur any default
or event of default on the part of Borrower (including
specifically, but without limitation, due to non-payment) under any
agreement, document or instrument to which Borrower is a party or
by which Borrower or any of its Property is bound, creating or
relating to any Indebtedness (other than the Obligations) in excess
of $250,000 in the aggregate if the payment or maturity of such
Indebtedness is accelerated in consequence of such event of default
or demand for payment of such Indebtedness is made.
(H) Uninsured Losses; Unauthorized Dispositions.
Any material loss, theft, damage or destruction not fully covered
by insurance (as required by this Agreement and subject to such
deductibles as Agent shall have agreed to in writing), or sale,
lease or encumbrance of any material portion of the Collateral or
the making of any levy, seizure, or attachment thereof or thereon
except in all cases as may be specifically permitted by other
provisions of this Agreement.
(I) Adverse Changes. There shall occur any
material adverse change in the financial condition or business
prospects of Borrower.
(J) Insolvency, Etc. Any resolution shall be
passed or any action shall be taken by Borrower for the
termination, winding up, liquidation or dissolution of such Person
or its debts, or Borrower shall make an assignment for the benefit
of creditors, or Borrower shall file a petition in voluntary
liquidation or bankruptcy, or Borrower shall file a petition or
answer or consent seeking the reorganization of such Person or the
readjustment of any of the Indebtedness of such person under
applicable insolvency or bankruptcy laws now or hereafter existing,
or Borrower shall consent to the appointment of any receiver,
administrator, liquidator, custodian or trustee of all or any part
of its property or assets, or corporate action shall be taken by
Borrower or personal action taken by Borrower for the purpose of
effecting any of the foregoing.
(K) Bankruptcy Etc. By order or decree of any
court of competent jurisdiction, Borrower shall be adjudicated a
bankrupt or insolvent, or a petition for proceedings in bankruptcy
or liquidation or for the reorganization or the readjustment of its
Indebtedness under applicable bankruptcy or insolvency laws now or
hereafter existing shall be filed against Borrower, and Borrower
shall admit the material allegations thereof, or any order,
judgment or decree shall be made approving such petition and such
order, judgment or decree shall not be vacated, set aside or stayed
within thirty (30) days of their commencement or any receiver,
administrator, liquidator or trustee shall be appointed for
Borrower or for all or any part of the property of such person and
such receiver, administrator, liquidator or trustee shall not be
discharged or his jurisdiction shall not be relinquished, vacated
or stayed, on appeal or otherwise, within thirty (30) days after
his appointment.
(L) Solvency. Borrower shall cease to be Solvent.
(M) Business Disruption; Condemnation. There shall
occur a cessation of a substantial part of the business of Borrower
for a period which significantly affects Borrower's capacity to
continue its business, on a profitable basis; or Borrower shall
suffer the loss or revocation of any license or permit now held or
hereafter acquired by Borrower which is necessary to the continued
or lawful operation of its business; or Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of
its business affairs; or any material lease or agreement pursuant
to which Borrower leases, uses or occupies any Property shall be
cancelled or terminated prior to the expiration of its stated term;
or any material part of the Collateral shall be taken through
condemnation or the value of such Property shall be impaired
through condemnation.
(N) Change of Ownership. A Change of Ownership
shall occur.
(O) ERISA. A Reportable Event shall occur which
Agent, in its sole discretion, shall determine in good faith
constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the
appropriate United States district court of a trustee for any Plan,
or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or if Borrower is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's complete or partial
withdrawal from such Plan.
(P) Litigation. Borrower or any Affiliate of
Borrower, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement or any
of the other Loan Documents, the legality or enforceability of any
of the Obligations or the perfection or priority of any Lien
granted to Agent.
(Q) Criminal Forfeiture. Borrower shall be
criminally convicted under any law that could lead to a forfeiture
of any Property of Borrower.
(R) Judgments. Any money judgment, writ of
attachment or similar process in excess of $250,000 is entered or
filed against Borrower or any of its Property and results in the
creation or imposition of any Lien that is not a Permitted Lien
which shall not have been vacated, discharged, stayed or bonded
pending appeal within forty (40) days from the entry thereof.
11.2 Acceleration of the Obligations. Without in any way
limiting the right of Agent to demand payment of any portion of the
Obligations payable on demand in accordance with Section 3.4
hereof, upon or at any time after the occurrence of an Event of
Default as above provided, all or any portion of the Obligations
due or to become due from Borrower to Agent, whether under this
Agreement, or any of the other Loan Documents or otherwise, shall,
at the option of Agent and without notice or demand by Agent,
become at once due and payable and Borrower shall forthwith pay to
Agent, in addition to any and all sums and charges due, the entire
principal of and interest accrued on the Obligations.
11.3 Remedies. Upon and after the occurrence of an
Event of Default, Agent on behalf of Lenders shall have and may
exercise from time to time the following rights and remedies:
(A) All of the rights and remedies of a secured
party under the Code or under other applicable law, and all other
legal and equitable rights to which Agent or any Lender may be
entitled, all of which rights and remedies shall be cumulative, and
none of which shall be exclusive, and shall be in addition to any
other rights or remedies contained in this Agreement or any of the
other Loan Documents.
(B) The right to take immediate possession of the
Collateral, and (i) to require Borrower to assemble the Collateral,
at Borrower's joint and several expense, and make it available to
Agent at a place designated by Agent which is reasonably convenient
to both parties, and (ii) to enter any of the premises of Borrower
or wherever any of the Collateral shall be located, and to keep and
store the same on said premises until sold (and if said premises be
the Property of Borrower, Borrower agrees not to charge Agent for
storage thereof).
(C) The right to sell or otherwise dispose of all
or any Inventory or Equipment in its then condition, or after any
further manufacturing or processing thereof, at public or private
sale or sales, with such notice as may be required by law, in lots
or in bulk, for cash or on credit, all as Agent, in its sole
discretion, may deem advisable. Borrower agree that ten (10) days
written notice to Borrower of any public or private sale or other
disposition of such Collateral shall be reasonable notice thereof,
and such sale shall be at such locations as Agent may designate in
said notice. Agent shall have the right to conduct such sales on
Borrower's premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with applicable law.
Agent shall have the right to sell, lease or otherwise dispose of
such Collateral, or any part thereof, for cash, credit or any
combination thereof, and Agent or any Lender may purchase all or
any part of such Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price,
may set off the amount of such price against the Obligations.
(D) Agent on behalf of Lenders is hereby granted a
license or other right to use, without charge, Borrower's labels,
patents, copyrights, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any Property of
a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Agent's and
Lenders' benefit.
(E) The proceeds realized from the sale of any
Collateral may be applied, after allowing two (2) Business Days for
collection, first to the costs, expenses and attorneys' fees
incurred by Agent or any Lender in collecting the Obligations, in
enforcing the rights of Agent and Lenders under the Loan Documents
and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivery any of the
Collateral; secondly, to interest due upon any of the Obligations;
and thirdly, to the principal of the Obligations. If any
deficiency shall arise, Borrower shall remain liable to Agent and
Lenders therefor.
11.4 Remedies Cumulative; No Waiver. All covenants,
conditions, provisions, warranties, guaranties, indemnities, and
other undertakings of Borrower contained in this Agreement and the
other Loan Documents, or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule
given to Agent or contained in any other agreement between Agent
and Borrower, heretofore, concurrently, or hereafter entered into,
shall be deemed cumulative to and not in derogation or substitution
of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent or any
Lender to exercise or enforce any rights, Liens, powers, or
remedies hereunder or under any of the aforesaid agreements or
other documents or security or Collateral shall not operate as a
waiver of such Liens, rights, powers and remedies, but all such
Liens, rights, powers, and remedies shall continue in full force
and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Agent and Lenders shall have been
fully satisfied, and all Liens, rights, powers, and remedies herein
provided for are cumulative and none are exclusive.
SECTION 12. REGARDING AGENT.
12.1 Appointment. Each Lender hereby designates
IBJS to act as Agent for such Lender under this Agreement and the
Loan Documents. Each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this
Agreement and the Loan Documents and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof
and such other powers as are reasonably incidental thereto and
Agent shall hold all Collateral, payments of principal and
interest, fees (except the fees set forth in Sections 3.1(C), (E)
and (F)) charges and collections (without giving effect to any
collection days) received pursuant to this Agreement, for the
ratable benefit of Lenders. Agent may perform any of its duties
hereunder by or through its agents or employees. As to any matters
not expressly provided for by this Agreement (including without
limitation, collection of the Note) 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
Required Lenders, and such instructions shall be binding; provided,
however, that Agent shall not be required to take any action which
exposes Agent to liability or which is contrary to this Agreement
or the Loan Documents or applicable law unless Agent is furnished
with an indemnification reasonably satisfactory to Agent with
respect thereto.
12.2 Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement
and the Loan Documents. Neither Agent nor any of its officers,
directors, employees or agents shall be (i) liable for any action
taken or omitted by them as such hereunder or in connection
herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by
Borrower or any officer thereof contained in this Agreement, or in
any of the Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by
Agent under or in connection with, this Agreement or any of the
Loan Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, or
any of the Loan Documents or for any failure of Borrower to perform
its obligations hereunder. Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement or any of the Loan Documents, or to inspect the
properties, books or records of Borrower. The duties of Agent as
respects the Loans to Borrower shall be mechanical and
administrative in nature; Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in
respect of this Agreement except as expressly set forth herein.
12.3 Lack of Reliance on Agent and Resignation.
Independently and without reliance upon Agent or any other Lender,
each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of
Borrower in connection with the making and the continuance of the
Loans hereunder and the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the
creditworthiness of Borrower. Agent shall have no duty or
responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before making
of the Loans or at any time or times thereafter except as shall be
provided by Borrower pursuant to the terms hereof. Agent shall not
be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in
connection with or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of
Borrower, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or
conditions of this Agreement, the Notes, the Loan Documents or the
financial condition of Borrower, or the existence of any Event of
Default or any Default.
Agent may resign on sixty (60) days' written notice to
each of Lenders and Borrower and upon such resignation, the
Required Lenders will promptly designate a successor Agent
reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights,
powers and duties of Agent, and the term "Agent" shall mean such
successor agent effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former
Agent. After any Agent's resignation as Agent, the provisions of
this Section 12 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this
Agreement.
12.4 Certain Rights of Agent. If Agent shall request
instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any
Loan Document, Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received
instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without
limiting the foregoing, Lenders shall not have any right of action
whatsoever against Agent as a result of its acting or refraining
from acting hereunder in accordance with the instructions of the
Required Lenders.
12.5 Reliance. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or telephone
message believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the
Loan Documents and its duties hereunder, upon advice of counsel
selected by it. Agent may employ agents and attorneys-in-fact and
shall not be liable for the default or misconduct of any such
agents or attorneys-in-fact selected by Agent with reasonable care.
12.6 Notice of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event
of Default hereunder or under the Loan Documents, unless Agent has
received notice from a Lender or Borrower referring to this
Agreement or the Loan Documents, describing such Default or Event
of Default and stating that such notice is a "notice of default".
In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, that, unless and until
Agent shall have received such directions, Agent may (but shall not
be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of Lenders.
12.7 Indemnification. To the extent Agent is not
reimbursed and indemnified by Borrower, each Lender will reimburse
and indemnify Agent in proportion to its respective portion of the
Loans (or, if no Loans are outstanding, according to its Commitment
Percentage), 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 Agent in
performing its duties hereunder, or in any way relating to or
arising out of this Agreement or any Loan Document; provided that,
Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross (not
mere) negligence or willful misconduct.
12.8 Agent in its Individual Capacity. With respect to
the obligation of Agent to lend under this Agreement, the Loans
made by it shall have the same rights and powers hereunder as any
other Lender and as if it were not performing the duties as Agent
specified herein; and the term "Lender" or any similar term shall,
unless the context clearly otherwise indicates, include Agent in
its individual capacity as a Lender. Agent may engage in business
with Borrower as if it were not performing the duties specified
herein, and may accept fees and other consideration from Borrower
for services in connection with this Agreement or otherwise without
having to account for the same to Lenders.
12.9 Delivery of Documents. To the extent Agent receives
documents and information from Borrower pursuant to the terms of
this Agreement, Agent will promptly furnish such documents and
information to Lenders.
12.10 Borrower's Undertaking to Agent. Without
prejudice to their respective obligations to Lenders under the
other provisions of this Agreement, Borrower hereby undertakes with
Agent to pay to Agent from time to time on demand all amounts from
time to time due and payable by it for the account of Agent or
Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall
pro tanto satisfy Borrower's obligations to make payments for the
account of Lenders or the relevant one or more of them pursuant to
this Agreement.
SECTION 13. MISCELLANEOUS
13.1 Power of Attorney. Borrower hereby irrevocably
designates, makes, constitutes and appoints Agent (and all Persons
designated by Agent) as Borrower's true and lawful attorney (and
agent-in-fact) and Agent, or Agent's agent, may, without notice to
Borrower and in either Borrower's or Agent's name, but at the cost
and expense of Borrower :
(A) At such time or times hereafter as Agent or
said agent, in its sole discretion, may determine, endorse
Borrower's name on any checks, notes, acceptances, drafts, money
orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Agent or under Agent's
control; and
(B) At such time or times upon or after the
occurrence of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from
the Account Debtors, enforce payment of the Accounts by legal
proceedings or otherwise, and generally exercise all of Borrower's
rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the
Accounts or other Collateral or any legal proceedings brought to
collect any of the Accounts or other Collateral; (iii) sell or
assign any of the Accounts and other Collateral upon such terms,
for such amounts and at such time or times as Agent deems
advisable; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign
Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien,
assignment or satisfaction of lien or similar document in
connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such
address as Agent may designate; (vii) endorse the name of Borrower
upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Agent on account
of the Obligations; (viii) endorse the name of Borrower upon any
chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use Borrower's stationery
and sign the name of Borrower to verifications of the Accounts and
notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory,
Equipment and any other Collateral and to which Borrower has
access; (xi) make and adjust claims under policies of insurance;
and (xii) do all other acts and things necessary, in Agent's
determination, to fulfill Borrower's obligations under this
Agreement.
13.2 Indemnity. Borrower hereby agrees to indemnify
Agent and each Lender and hold Agent and each Lender harmless from
and against any liability, loss, damage, suit, action or proceeding
ever suffered or incurred by Agent and any Lender as the result of
Borrower's failure to observe, perform or discharge Borrower's
duties hereunder. Without limiting the generality of the
foregoing, this indemnity shall extend to any claims asserted
against Agent and any Lender by any Person under any Environmental
Laws or similar laws by reason of Borrower's or any other Person's
failure to comply with laws applicable to solid or hazardous waste
materials or other toxic substances. Notwithstanding any contrary
provision of this Agreement, the obligation of Borrower under this
Section 13.2 shall survive the payment in full of the Obligations
and the termination of this Agreement.
13.3 Modification of Agreement; Sale of Interest. This
Agreement may not be modified, altered or amended, except by an
agreement in writing signed by Borrower and Agent. Borrower may
not sell, assign or transfer any interest in this Agreement or any
of the other Loan Documents, or any portion thereof, including,
without limitation, Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder. Borrower hereby
consents to Agent's participation, sale, assignment, transfer or
other disposition, at any time or times hereafter, of this
Agreement and any of the other Loan Documents or any of the
Obligations, or of any portion hereof or thereof, including,
without limitation, Agent's and Lenders' rights, title, interests,
remedies, powers, and duties hereunder or thereunder. In the case
of an assignment, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would
if it were "Agent" hereunder and Agent shall be relieved of all
obligations hereunder upon any such assignment.
13.4 Reimbursement of Expenses. If, at any time or times
prior or subsequent to the date hereof, regardless of whether or
not an Event of Default then exists or any of the transactions
contemplated hereunder are concluded, Agent or any Lender employs
counsel for advice or other representation, or incurs legal
expenses or other costs or out-of-pocket expenses in connection
with: (A) the negotiation and preparation of this Agreement or any
of the other Loan Documents, any amendment of or modification of
this Agreement or any of the other Loan Documents including,
without limitation, any amendment or modification due to a change
of ownership of Borrower or MPDI; or (B) the administration of this
Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (C) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Agent
and any Lender, Borrower or any other Person) in any way relating
to the Collateral, this Agreement or any of the other Loan
Documents or Borrower's affairs; (D) any attempt to enforce any
rights of Agent or Lenders against Borrower or any other Person
which may be obligated to Agent or Lenders by virtue of this
Agreement or any of the other Loan Documents, including, without
limitation, the Account Debtors; or (E) any attempt to inspect,
verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral; then, in any
such event, the attorneys' fees arising from such services and all
expenses, costs, charges and other fees of such counsel or of Agent
or Lenders or relating to any of the events or actions described in
this Section shall be payable, on demand, by Borrower to Agent or
Lenders and shall be additional Obligations hereunder secured by
the Collateral, provided that no such costs and expenses of any
Lender arising solely in connection with such Lender's sale,
assignment or transfer of all or a portion of its rights under this
Agreement to a Purchasing Lender shall be additional Obligations
hereunder unless such fees and expenses were incurred by any Lender
in connection with an increase in the total credit facility.
Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include accountants' fees, costs and
expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges;
secretarial over-time charges; and expenses for travel, lodging and
food paid or incurred in connection with the performance of such
legal services. Additionally, if any taxes (excluding taxes
imposed upon or measured by the net income of Agent or any Lender)
shall be payable on account of the execution or delivery of this
Agreement, or the execution, delivery, issuance or recording of any
of the other Loan Documents, or the creation of any of the
Obligations hereunder, by reason of any existing or hereafter
enacted federal or state statute, Borrower will pay all such taxes,
including, but not limited to, any interest and penalties thereon,
and will indemnify and hold Agent and each Lender harmless from and
against liability in connection therewith.
13.5 Indulgences Not Waivers. Agent's or Lenders'
failure, at any time or times hereafter, to require strict
performance by Borrower of any provision of this Agreement shall
not waive, affect or diminish any right of Agent or any Lender
thereafter to demand strict compliance and performance therewith.
Any suspension or waiver by Agent or any Lender of an Event of
Default by Borrower or Borrower under this Agreement or any of the
other Loan Documents shall not suspend, waive or affect any other
Event of Default by Borrower under this Agreement or any of the
other Loan Documents, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of
the undertakings, agreements, warranties, covenants and
representations of Borrower or Borrower contained in this Agreement
or any of the other Loan Documents and no Event of Default by
Borrower or Borrower under this Agreement or any of the other Loan
Documents shall be deemed to have been suspended or waived by
Agent, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a
duly authorized representative of Agent and directed to Borrower or
Borrower.
13.6 Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
13.7 Successors and Assigns.
(A) This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit
of the successors and assigns of Borrower and Agent. This
provision, however, shall not be deemed to modify Section 13.3
hereof.
(B) Borrower acknowledges that in the regular
course of commercial banking business one or more Lenders may at
any time and from time to time sell participating interests in the
Advances to other financial institutions (each such transferee or
purchaser of a participating interest, a "Transferee"), provided,
however that in no event shall the Commitment Percentage of IBJS be
less than fifty one percent (51%) at any time or from time to time.
Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion
of such Advances held by it or other Obligations payable hereunder
as fully as if such Transferee were the direct holder thereof
provided that Borrower shall not be required to pay to any
Transferee more than the amount which it would have been required
to pay to Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender
retained such interest in the Advances hereunder or other
Obligations payable hereunder and in no event shall Borrower be
required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable
hereunder to both such Lender and such Transferee. Borrower hereby
grants to any Transferee a continuing security interest in any
deposits, moneys or other property actually or constructively held
by such Transferee as security for the Transferee's interest in the
Advances.
(C) Any Lender may with the consent of Agent which
shall not be unreasonably withheld or delayed sell, assign or
transfer all or any part of its rights under this Agreement and the
Loan Documents to one or more additional banks or financial
institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a
"Purchasing Lender"), in minimum amounts of not less than
$2,500,000, pursuant to a Commitment Transfer Supplement, executed
by a Purchasing Lender, the transferor Lender, and Agent and
delivered to Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective
date determined pursuant to such Commitment Transfer Supplement,
(i) Purchasing Lender thereunder shall be a party hereto and, to
the extent provided in such Commitment Transfer Supplement, have
the rights and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender
thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation
for that purpose. Such Commitment Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the
extent, necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of the Commitment Percentages arising
from the purchase by such Purchasing Lender of all or a portion of
the rights and obligations of such transferor Lender under this
Agreement and the Loan Documents. Borrower hereby consents to the
addition of such Purchasing Lender and the resulting adjustment of
the Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations
of such transferor Lender under this Agreement and the Loan
Documents. Borrower shall execute and deliver such further
documents and do such further acts and things in order to
effectuate the foregoing.
(D) Agent shall maintain at its address a copy of
each Commitment Transfer Supplement delivered to it and a register
(the "Register") for the recordation of the names and addresses of
the Advances owing to each Lender from time to time. The entries
in the Register shall be conclusive, in the absence of manifest
error, and Borrower, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register
shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
Agent shall receive a fee in the amount of $2500 payable by the
applicable Purchasing Lender upon the effective date of each
transfer or assignment to such Purchasing Lender.
(E) Borrower authorizes each Lender to disclose to
any Transferee or Purchasing Lender and any prospective Transferee
or Purchasing Lender any and all financial information in such
Lender's possession concerning Borrower which has been delivered to
such Lender by or on behalf of Borrower pursuant to this Agreement
or in connection with such Lender's credit evaluation of Borrower.
13.8 Cumulative Effect; Conflict of Terms. The
provisions of the Other Agreements and the Security Documents are
hereby made cumulative with the provisions of this Agreement.
Except as otherwise provided in Section 3.6 of this Agreement and
except as otherwise provided in any of the other Loan Documents by
specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in direct conflict
with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern
and control.
13.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same
instrument.
13.10 Notice. Except as otherwise provided herein,
all notices, requests and demands to or upon a party hereto shall
be in writing and shall be sent by certified or registered mail,
return receipt requested or by telegraph or telex and, unless
otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered when delivered against receipt
or one Business Day after deposit in the mail, postage prepaid, or,
in the case of telegraphic notice, when delivered to the telegraph
company, or, in the case of telex notice, when sent, answer back
received, addressed as follows:
(a) If to Agent or IBJS: IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ & Hessen LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to Borrower: MPD Technologies, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by
like notice given in accordance with this Section 13.10; provided,
however, that any notice, request or demand to or upon Agent
pursuant to Sections 2.2 or 3.3 shall not be effective until
received by Agent. Any written notice that is not sent in
conformity with the provisions hereof shall nevertheless be
effective on the date such notice is actually received by the
noticed party.
13.11 Agent's Consent. Whenever Agent's consent is
required to be obtained under this Agreement, any of the Other
Agreements or any of the Security Documents as a condition to any
action, inaction, condition or event, Agent shall be authorized to
give or withhold such consent in its sole and absolute discretion
and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or
any other matter.
13.12 Demand Obligations. Nothing in this Agreement
shall affect or abrogate the demand nature of any portion of the
Obligations expressly made payable on demand by this Agreement or
by any instrument evidencing or securing same, and the occurrence
of an Event of Default shall not be a prerequisite for Agent's
requiring payment of such Obligations other than the Revolving
Credit Loan and the Term Loan.
13.13 Entire Agreement.
(A) This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates
executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the
parties hereto and thereto with respect to the subject matter
hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or
written.
(B) The Required Lenders, Agent with the consent in
writing of the Required Lenders, and Borrower may, subject to the
provisions of this Section 13.13(B), from time to time enter into
written supplemental agreements to this Agreement, the Notes or the
Loan Documents executed by Borrower, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Borrower thereunder
or the conditions, provisions or terms thereof of waiving any Event
of Default thereunder, but only to the extent specified in such
written agreements; provided, however, that no such supplemental
agreement shall, without the consent of all Lenders:
(I) increase the Commitment Percentage of any
Lender.
(II) extend the maturity of any Note or the due
date for any amount payable hereunder, or decrease the rate of
interest or reduce any fee payable by Borrower to Lenders pursuant
to this Agreement.
(III) alter the definition of the term Required
Lenders or alter, amend or modify this Section 13.13(B).
(IV) release any Collateral during any calendar
year (other than in accordance with the provisions of this
Agreement) having an aggregate value in excess of $500,000.
(V) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each of
Lenders and shall be binding upon Borrower, Lenders and Agent and
all future holders of the Obligations. In the case of any waiver,
Borrower, Agent and Lenders shall be restored to their former
positions and rights, and any Event of Default waived shall be
deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the
Event of Default which was waived), or impair any right consequent
thereon.
13.14 Interpretation. No provision of this Agreement
or any of the other Loan Documents shall be construed against or
interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party
having or being deemed to have structured, drafted or dictated such
provision.
13.15 GOVERNING LAW; CONSENT TO FORUM. THIS
AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL
BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW YORK. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW
YORK, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER
AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL
AND THE ENFORCEMENT OF AGENT'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS PART
OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF BORROWER, ANY LENDER OR AGENT, BORROWER, EACH LENDER
AND AGENT HEREBY CONSENT AND AGREE THAT THE SUPREME COURT OF NEW
YORK COUNTY, NEW YORK OR, AT AGENT'S OPTION, THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN BORROWER, ANY LENDER AND AGENT PERTAINING TO THIS AGREEMENT
OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING FOR SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE
OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS
SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY
AGENT OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
13.16 WAIVER OF TRIAL BY JURY AND OTHER WAIVERS BY
BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH
AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL: (ii)
PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST,
DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH
BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER AGENT MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY
WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO
EXERCISE ANY OF AGENT'S REMEDIES; (iv) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) ANY RIGHT BORROWER
MAY HAVE UPON PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE AGENT
TO TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL OR IN ANY
OTHER PROPERTY OF BORROWER UNTIL TERMINATION OF THIS AGREEMENT IN
ACCORDANCE WITH ITS TERMS AND THE EXECUTION BY BORROWER, AND BY ANY
PERSON WHOSE LOANS TO BORROWER ARE USED IN WHOLE OR IN PART TO
SATISFY THE OBLIGATIONS, OF AN AGREEMENT INDEMNIFYING AGENT AND
LENDERS FROM ANY LOSS OR DAMAGE AGENT OR ANY LENDER MAY INCUR AS
THE RESULT OF DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED
BY AGENT OR ANY LENDER FROM BORROWER OR ANY ACCOUNT DEBTOR AND
APPLIED TO THE OBLIGATIONS; AND (vi) NOTICE OF ACCEPTANCE HEREOF.
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND
THAT AGENT AND LENDERS ARE RELYING UPON THE FOREGOING WAIVERS IN
THEIR FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND
REPRESENTS THAT IT HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, this Agreement has been duly executed
on the day and year specified at the beginning hereof.
Executed in New York, New York:
MPD TECHNOLOGIES, INC.
By:____________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Vice President
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST
COMPANY, as Lender and as Agent
By:____________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
Commitment Percentage: 100%
TABLE OF CONTENTS
SECTION 1. GENERAL DEFINITIONS 1
1.1. Defined Terms 1
1.2. Accounting Terms 13
1.3. Other Terms 14
1.4. Certain Matters of Construction 14
SECTION 2. CREDIT FACILITY 14
2.1. Revolving Credit Loans 14
2.2. Manner of Borrowing Revolving Credit Loans 15
2.3. Term Loan 15
2.4. All Loans to Constitute One Obligation 16
2.5. Loan Account 16
2.6. Letters of Credit 16
2.7. Request for Letter of Credit 16
2.8. Description of Letters of Credit 16
2.9. Indemnification 17
2.10. Agent's Instructions 17
2.11. Disbursements 17
2.12. Reimbursement Obligation 17
2.13. Cash Collateral 18
2.14. Waiver of Liability 18
2.15. Lenders' Reimbursement Obligations 19
2.16. Manner of Borrowing and Payment 20
2.17. Defaulting Lender 21
SECTION 3. INTEREST, FEES, TERM AND REPAYMENT 22
3.1. Interest, Fees and Charges 23
(A) Interest 23
(B) Default Rate of Interest 23
(C) Closing Fee 23
(D) Unused Facility Fee 23
(E) Collateral Evaluation Fee 24
(F) Collateral Monitoring Fee 24
(G) Computation of Interest and Fees 24
(H) Capital Adequacy Charge 24
(I) Letter of Credit 24
3.2. Term of Agreement 25
3.3. Termination 25
3.4. Payments 26
3.5. Application of Payments and Collections 27
3.6. Statements of Account 27
SECTION 4. COLLATERAL: GENERAL TERMS 28
4.1. Security Interest in Collateral 28
4.2. Representations, Warranties and Covenants 28
4.3. Lien Perfection 29
4.4. Location of Collateral 29
4.5. Insurance of Collateral 30
4.6. Protection of Collateral 31
SECTION 5. PROVISIONS RELATING TO ACCOUNTS 32
5.1. Representations, Warranties and Covenants 32
5.2. Schedules 33
5.3. Administration of Accounts 33
5.4. Collection of Accounts 34
5.5. Notice Regarding Disputed Accounts 34
SECTION 6. PROVISIONS RELATING TO INVENTORY 34
6.1. Representations, Warranties and Covenants 34
6.2. Inventory Reports 35
6.3. Returns of Inventory 35
SECTION 7. PROVISIONS RELATING TO EQUIPMENT 36
7.1. Representations, Warranties and Covenants 36
7.2. Evidence of Ownership of Equipment 36
7.3. Records and Schedules of Equipment 36
7.4. Dispositions of Equipment 36
SECTION 8. REPRESENTATIONS AND WARRANTIES 37
8.1. General Representations and Warranties 37
(A) Organization and Qualification 37
(B) Corporate Names 37
(C) Corporate Power and Authority 37
(D) Legally Enforceable Agreement 37
(E) Use of Proceeds 38
(F) Margin Stock 38
(G) Governmental Consents 38
(H) Patents, Trademarks, Copyrights and Licenses38
(I) Capital Structure 38
(J) Solvent Financial Condition 39
(K) Restrictions 39
(L) Litigation 39
(M) Title to Properties 39
(N) Financial Statements; Fiscal Year 39
(O) Full Disclosure 40
(P) Pension Plans 40
(Q) Taxes 41
(R) Labor Relations 41
(S) Compliance With Laws 41
(T) Surety Obligations 41
(U) No Defaults 41
(V) Brokers 41
(W) Business Locations; Agent for Process 42
(X) Trade Relations 42
(Y) Leases 42
(Z) Investment Company Act 42
(AA) OSHA and Environment Compliance 42
(AB) Indebtedness 42
(AC) True Copies of Charter and Loan Documents 43
8.2. Reaffirmation 43
8.3. Survival of Representations and Warranties 43
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS 43
9.1. Affirmative Covenants 43
(A) Taxes and Liens 43
(B) Tax Returns 43
(C) Payment of Bank Charges 44
(D) Business and Existence 44
(E) Maintain Properties 44
(F) Compliance with Laws 44
(G) ERISA Compliance 44
(H) ERISA Events 45
(I) Business Records 45
(J) Visits and Inspections 45
(K) Financial Statements 45
(L) Notices to Agent 47
(M) Landlord and Storage Agreements 48
(N) Subordinations 48
(O) Further Assurances 48
(P) Mortgagee Waiver 48
(Q) Environmental Matters 49
(R) Insurance 51
(S) Intellectual Property 51
(T) Letters of Credit Supporting Foreign Sales 52
9.2. Negative Covenants 52
(A) Mergers; Consolidations; Acquisitions 52
(B) Loans 52
(C) Total Indebtedness 52
(D) Affiliate Transactions 52
(E) Partnerships or Joint Ventures 53
(F) Adverse Transactions 53
(G) Guaranties 53
(H) Limitation on Liens 53
(I) Distributions 54
(J) Subsidiaries 54
(K) Capital Expenditures 54
(L) Business Locations 54
(M) Change of Business 54
(N) Disposition of Assets 54
(O) Name of Borrower 55
(P) ▇▇▇▇-and-Hold Sales, Etc 55
(Q) Executive Compensation 55
(R) Use of Agent's Name 55
(S) Margin Securities 55
(T) Restricted Investment 55
(U) Fiscal Year 55
(V) Stock of Subsidiary, Etc 55
(W) Leases 55
(X) Tax Consolidation 56
9.3. Specific Financial Covenants 56
SECTION 10. CONDITIONS PRECEDENT 56
10.1. Documentation 56
10.2. Other Conditions 58
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON
DEFAULT 58
11.1. Events of Default 58
(A) Payment of Notes 58
(B) Payment of Obligations 59
(C) Misrepresentations 59
(D) Breach of Covenants 59
(E) Default Under Other Agreements 59
(F) Default Under Security Documents 59
(G) Other Defaults 59
(H) Uninsured Losses; Unauthorized Dispositions 59
(I) Adverse Changes 60
(J) Insolvency, Etc 60
(K) Bankruptcy Etc 60
(L) Solvency 60
(M) Business Disruption; Condemnation 60
(N) Change of Ownership 61
(O) ERISA 61
(P) Litigation 61
(Q) Criminal Forfeiture 61
(R) Judgments 61
11.2. Acceleration of the Obligations 61
11.3. Remedies 61
11.4. Remedies Cumulative; No Waiver 63
SECTION 12. REGARDING AGENT 63
12.1. Appointment 63
12.2. Nature of Duties 63
12.3. Lack of Reliance on Agent and
Resignation 64
12.4. Certain Rights of Agent 65
12.5. Reliance 65
12.6. Notice of Default 65
12.7. Indemnification 65
12.8. Agent in its Individual Capacity 66
12.9. Delivery of Documents 66
12.10. Borrower's Undertaking to Agent66
SECTION 13. MISCELLANEOUS 66
13.1. Power of Attorney 66
13.2. Indemnity 67
13.3. Modification of Agreement; Sale of
Interest 67
13.4. Reimbursement of Expenses 68
13.5. Indulgences Not Waivers 69
13.6. Severability 69
13.7. Successors and Assigns 69
13.8. Cumulative Effect; Conflict of
Terms 71
13.9. Execution in Counterparts 71
13.10. Notice 71
13.11. Agent's Consent 72
13.12. Demand Obligations 72
13.13. Entire Agreement 72
13.14. Interpretation 73
13.15. GOVERNING LAW; CONSENT TO FORUM 73
13.16. WAIVER OF TRIAL BY JURY AND OTHER
WAIVERS BY BORROWER 74