CREDIT AGREEMENT
DATED AS OF NOVEMBER 23, 2005
BY AND AMONG
MTM TECHNOLOGIES, INC.
MTM TECHNOLOGIES (CALIFORNIA), INC.
MTM TECHNOLOGIES (TEXAS), INC.
MTM TECHNOLOGIES (US), INC.
MTM TECHNOLOGIES (MASSACHUSETTS), LLC
INFO SYSTEMS, INC.
AS BORROWERS
AND
COLUMBIA PARTNERS, L.L.C. INVESTMENT MANAGEMENT
AS INVESTMENT MANAGER
AND
NATIONAL ELECTRICAL BENEFIT FUND
AS LENDER
TABLE OF CONTENTS
PAGE
ARTICLE 1 AMOUNTS AND TERMS OF LOAN..................................1
1.1 Loan...........................................................1
1.2 Warrant........................................................1
1.3 Note...........................................................2
1.4 Payment Premium................................................2
1.5 Facility Fee...................................................3
1.6 Expenses and Attorneys Fees....................................3
1.7 Payments.......................................................4
1.8 Prepayments....................................................4
1.9 Application of Payments........................................5
1.10 Maximum Lawful Rate............................................5
ARTICLE 2 CONDITIONS TO LOAN.........................................5
2.1 Closing........................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES.............................7
3.1 Disclosure.....................................................7
3.2 No Material Adverse Effect.....................................8
3.3 No Conflict; Compliance........................................8
3.4 Organization, Powers, Capitalization and Good Standing.........8
3.5 Financial Statements and Projections...........................9
3.6 Intellectual Property..........................................9
3.7 Investigations, Audits, Etc....................................9
3.8 Employee Matters...............................................9
3.9 Solvency......................................................10
3.10 Litigation; Adverse Facts.....................................10
3.11 Use of Proceeds; Margin Regulations...........................10
3.12 Ownership of Property; Liens..................................10
3.13 Environmental Matters.........................................11
3.14 ERISA.........................................................11
3.15 Brokers.......................................................12
3.16 Deposit and Disbursement Accounts.............................12
3.17 Material Agreements; Customers and Suppliers..................12
i
3.18 Insurance.....................................................12
ARTICLE 4 AFFIRMATIVE COVENANTS.....................................12
4.1 Maintenance of Financial Records; Inspections.................13
4.2 Further Assurances............................................13
4.3 Insurance and Condemnation....................................13
4.4 Payment of Taxes..............................................15
4.5 Compliance With Laws..........................................16
4.6 Notices Concerning Environmental, Employee Benefit and
Pension Matters...............................................16
4.7 Business Qualification........................................17
4.8 Anti-Money Laundering and Terrorism Regulations...............17
4.9 Maintenance of Properties ....................................17
4.10 Lender Meeting................................................17
4.11 Organizational Existence......................................17
4.12 Landlords' Agreements, Mortgagee Agreements, Bailee
Letters and Real Estate Purchases.............................17
4.13 New Subsidiaries..............................................18
4.14 Registration Rights...........................................18
ARTICLE 5 NEGATIVE COVENANTS........................................18
5.1 Liens and Encumbrances; No Negative Pledges...................19
5.2 Indebtedness..................................................19
5.3 Sale of Assets................................................19
5.4 Corporate Change..............................................19
5.5 Guaranty Obligations..........................................20
5.6 Dividends and Distributions...................................20
5.7 Investments...................................................20
5.8 Related Party Transactions....................................20
5.9 Restricted Payments...........................................20
5.10 Use of Proceeds...............................................21
5.11 No Restrictions on Subsidiary Distributions to Borrowers......21
5.12 Conduct of Business...........................................21
5.13 Changes Relating to Subordinated Debt.........................21
ii
5.14 Press Release; Public Offering Materials......................22
5.15 Bank Accounts.................................................22
5.16 ERISA.........................................................22
ARTICLE 6 FINANCIAL COVENANTS/REPORTING.............................22
6.1 Financial Statements and Other Reports........................23
6.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement..................................26
6.3 Financial Covenants...........................................26
ARTICLE 7 DEFAULT, RIGHTS AND REMEDIES..............................26
7.1 Event of Default..............................................26
7.2 Acceleration and other Remedies...............................28
7.3 Performance by Investment Manager.............................29
7.4 Set Off and Sharing of Payments...............................29
7.5 Application of Proceeds after Default.........................29
ARTICLE 8 ASSIGNMENT ...............................................30
8.1 Assignment....................................................30
ARTICLE 9 PROVISIONS RELATED TO INVESTMENT MANAGER..................31
9.1 Appointment...................................................31
9.2 Reliance......................................................31
9.3 Successor Investment Manager..................................31
9.4 Collateral Matters............................................32
9.5 Agency for Perfection.........................................33
9.6 Notice of Default.............................................33
9.7 Lender Actions Against Collateral.............................34
9.8 Payment; Information; Actions in Concert......................34
ARTICLE 10 MISCELLANEOUS.............................................34
10.1 Indemnities...................................................34
10.2 Amendments and Waivers........................................35
10.3 Notices.......................................................35
10.4 Obligations Absolute; Failure or Indulgence Not
Waiver; Remedies Cumulative...................................36
10.5 Marshaling; Payments Set Aside................................36
iii
10.6 Severability..................................................36
10.7 Headings......................................................36
10.8 Applicable Law................................................37
10.9 Successors and Assigns........................................37
10.10 No Fiduciary Relationship; Limited Liability..................37
10.11 Construction..................................................37
10.12 Confidentiality...............................................37
10.13 CONSENT TO JURISDICTION.......................................38
10.14 WAIVER OF JURY TRIAL..........................................38
10.15 Survival of Warranties and Certain Agreements.................39
10.16 Entire Agreement..............................................39
10.17 Counterparts; Effectiveness...................................39
10.18 Delivery of Termination Statements and Mortgage Releases......39
10.19 Suretyship Waivers............................................39
10.20 Subordination to Senior Indebtedness..........................41
iv
INDEX OF APPENDICES
ANNEXES
Annex A - Definitions
EXHIBITS
Exhibit 1.1A - Form of Note
Exhibit 1.2 - Form of Warrant
Exhibit 1.4 - Payment Premium Example
Exhibit 2.1(e) - Opinion
Exhibit 6.1(m) - Compliance Certificate
SCHEDULES
Schedule 3.4(a) - Jurisdictions of Organization and Qualifications
Schedule 3.4(b) - Capitalization
Schedule 3.6 - Intellectual Property
Schedule 3.7 - Investigations and Audits
Schedule 3.8 - Employee Matters
Schedule 3.10 - Litigation
Schedule 3.12 - Real Estate
Schedule 3.14 - ERISA
Schedule 3.16 - Deposit and Disbursement Accounts
Schedule 3.17(a) - Material Agreements
Schedule 3.18 - Insurance
Schedule 5.1 - Liens
Schedule 5.2 Indebtedness
Schedule 5.12 - Business Description
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 23, 2005 and entered
into by and among MTM TECHNOLOGIES, INC., a New York corporation ("MTM"), MTM
TECHNOLOGIES (CALIFORNIA), INC., a Delaware corporation ("MTM-CA"), MTM
TECHNOLOGIES (TEXAS), INC., a Delaware corporation ("MTM-TX"), MTM TECHNOLOGIES
(US), INC., a Delaware corporation ("MTM-US"), MTM TECHNOLOGIES (MASSACHUSETTS),
LLC, a Delaware limited liability company ("MTM-MA") and INFO SYSTEMS, INC., a
Delaware corporation ("ISI", MTM, MTM-CA, MTM-TX, MTM-US, MTM-MA and ISI are
collectively, the "BORROWERS" and each a "BORROWER"); COLUMBIA PARTNERS, L.L.C.
INVESTMENT MANAGEMENT, as Investment Manager; and NATIONAL ELECTRICAL BENEFIT
FUND, as Lender.
RECITALS:
WHEREAS, Borrowers desire that Lender extend term credit facilities to
Borrowers, to provide funds for general corporate purposes of Borrowers; and
WHEREAS, Borrowers desire to secure all of the Obligations (as
hereinafter defined) under the Loan Documents (as hereinafter defined) by
granting to Investment Manager, for the benefit of Investment Manager and
Lender, a security interest in and lien upon all of the personal and real
property of Borrowers as provided in the Security Agreement (as hereinafter
defined); and
WHEREAS, all capitalized terms herein shall have the meanings ascribed
thereto in ANNEX A hereto which is incorporated herein by reference.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrowers, Lender and Investment
Manager agree as follows:
ARTICLE 1
AMOUNTS AND TERMS OF LOAN
1.1 LOAN. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties set forth in ARTICLE 3,
Borrowers shall issue and sell to Lender on the Closing Date (as defined below),
and Lender shall purchase for face value on the Closing Date (the "CLOSING") a
secured promissory note containing the terms and conditions set forth herein and
in the form of note attached hereto as EXHIBIT 1.1, payable to the order of
Lender in the principal amount of Twenty Five Million Dollars ($25,000,000) (the
"NOTE"), subject to the satisfaction of the conditions to closing set forth in
SECTION 2.1 of this Agreement. The date on which the Closing shall take place is
referred to herein as the "CLOSING DATE."
1.2 WARRANT. At the Closing, MTM shall issue and sell to Lender, as part of
its inducement to purchase the Note, a warrant (the "WARRANT") entitling Lender
to purchase 700,000 shares of MTM's Common Stock at an exercise price of $4.06
per share, which Warrant shall be in the form attached hereto as EXHIBIT 1.2.
Borrowers and Lender, as a result of arm's length bargaining, agree that:
(a) Neither Lender, Investment Manager nor any affiliated company of
Lender or Investment Manager has rendered any services to any Borrower in
connection with this Agreement;
(b) The Warrant is not being issued as compensation;
(c) The aggregate fair market value of the Warrant, if issued apart
from the Note, is $1,700,000; and
(d) All tax returns and other information return of each party
relative to this Agreement and the Note and Warrant issued pursuant hereto shall
consistently reflect the matters agreed to in (a) through (c) above.
1.3 NOTE.
(a) SECURITY. The Note and the Obligations of Borrowers shall be
secured in accordance with the terms of the Collateral Documents.
(b) MATURITY. The principal amount of the Note issued under this
Agreement, any accrued and unpaid interest thereon, the applicable Payment
Premium (as defined below) and all other amounts then owing by Borrowers to
Lender or Investment Manager hereunder shall be due and payable on November 23,
2009 (the "MATURITY DATE"), unless such amounts become due and payable earlier
in accordance with the terms hereof or otherwise.
(c) INTEREST. The outstanding principal amount of the Note shall bear
interest at a rate per annum equal to 4.52% for the term between the date of
issuance and the Maturity Date. Interest equal to one half of one percent (.5%)
of the outstanding principal amount of the Note shall be payable in cash in
arrears on each Quarterly Interest Payment Date. The remaining accrued and
unpaid interest shall be payable by Borrower to Investment Manager, for the
benefit of Lender, on the Maturity Date, upon a Change of Control or Liquidity
Event, on the date of any prepayment or at such time such amount becomes due and
payable in accordance with the terms hereof. All computations of interest
payable hereunder shall be on the basis of a 360-day year consisting of twelve
30-day months and actual days elapsed in the period of which such interest is
payable.
1.4 PAYMENT PREMIUM. Upon the occurrence of the Maturity Date, an
acceleration of the Loan due to an Event of Default, a Change of Control, a
Liquidity Event or a voluntary prepayment pursuant to SECTION 1.8(a), Borrowers
shall pay to Investment Manager, for the benefit of Lender, in addition to all
other amounts due hereunder, a payment premium (the "PAYMENT PREMIUM") equal to
the amount required to provide the Lender with an IRR of eleven percent (11%),
except during any period in which an Event of Default shall have occurred and be
continuing, in which case the IRR for such period shall be adjusted to thirteen
percent (13%), all in accordance with the calculation examples set forth on
EXHIBIT 1.4. Notwithstanding anything to the contrary contained herein, in the
2
event of a voluntary partial prepayment made pursuant to SECTION 1.8(a) or
mandatory partial prepayment made in the event of a Liquidity Event pursuant to
SECTION 1.8(b)(ii), the Payment Premium shall be calculated assuming the payment
of all outstanding principal and accrued and unpaid interest, whether or not
such amounts are actually paid in connection with the subject prepayment.
1.5 FACILITY FEE.
At the Closing, Borrowers shall pay to Investment Manager, for the benefit
of Lender, an amount equal to Five Hundred Thousand Dollars ($500,000) (the
"FACILITY FEE").
1.6 EXPENSES AND ATTORNEYS FEES. Borrowers agree to pay or reimburse
Investment Manager and Lender for: (a) all costs, expenses and other charges in
respect of any lien, tax and judgment searches performed by a service firm, to
be chosen by Investment Manager in its sole discretion, in connection with the
transactions contemplated by the Loan Documents and other collateral searches
and filings; (b) all costs and expenses of Investment Manager and Lender
including the legal fees and disbursements of Xxxxxx Godward LLP, incurred in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents and the other instruments and agreements
entered into pursuant hereto and thereto; provided, that any legal and
professional fees of Investment Manager and Lender shall not exceed $70,000 and
any out-of-pocket expenses of Investment Manager and Lender shall not exceed
$5,000; (c) all reasonable out-of-pocket costs and expenses of Investment
Manager and Lender including the fees and disbursements of counsel for
Investment Manager and Lender, incurred in connection with the negotiation,
preparation, execution and delivery of any modification, supplement or waiver of
this Agreement and any other Loan Documents (whether or not consummated); (d)
all expenses of Investment Manager and Lender including the fees and
disbursements of counsel for Investment Manager and Lender in connection with
(1) any Default or Event of Default and any enforcement or collection
proceedings resulting therefrom, including, without limitation, all manner of
participation in or other involvement with (A) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (B) judicial
or regulatory proceedings and (C) workout, restructuring or other negotiations
or proceedings (whether or not the workout, restructuring or transaction
contemplated thereby is consummated) and (2) the enforcement of this SECTION
1.6; and (e) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Loan Documents or any other
document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
the Collateral Documents or any other document referred to therein. Payments
under this Section shall be made promptly and in any case no later than ten (10)
days after written demand therefor. Any payments under this Section which remain
outstanding more than sixty (60) after written demand therefor shall accrue
interest at a per annum rate equal to (x) the "prime rate" as set forth in the
Wall Street Journal on the date of determination, plus (y) two percent (2.00%).
Costs and expenses in excess of the amounts set forth in (b) above shall be
subject to approval by Borrower prior to incurrence. Upon the Closing, the
non-refundable advance from Borrower to Investment Manager in the amount of
3
$75,000 shall be credited to the reimbursement of any expenses of Investment
Manager and Lender incurred as of the Closing and entitled to reimbursement
hereunder. The remaining amount, if any, of the non-refundable advance from
Borrower shall be credited to the Facility Fee payable under SECTION 1.5 above.
1.7 PAYMENTS. All payments by Borrowers of the Obligations shall be without
deduction, defense, setoff or counterclaim and shall be made in same day funds
and delivered to Lender, for the benefit of Investment Manager and Lender, as
applicable, by wire transfer to the account of Lender specified on the signature
page hereof or such other place as Investment Manager may from time to time
designate in writing. Borrowers shall receive credit on the day of receipt for
funds received by Investment Manager by 2:00 p.m. (Eastern Time). Funds received
after 2:00 pm (Eastern Time) shall be deemed to have been paid on the next
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business Day, the payment may be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the amount of interest and Fees due hereunder.
1.8 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. At any time and from time to time,
Borrowers may prepay amounts due under the Note, in whole or in part. If
Borrowers elect to prepay all or any amounts due under the Note pursuant to this
SECTION 1.8(a), Borrowers shall give notice of such prepayment to the Investment
Manager not less than fifteen (15) Business Days or more than sixty (60) days
prior to the date fixed for prepayment, specifying the amounts to be repaid. The
payments made pursuant to this SECTION 1.8(a) shall be applied in accordance
with SECTION 1.9.
(b) MANDATORY PREPAYMENT.
(i) CHANGE OF CONTROL. Subject to satisfaction by Investment
Manager of the notice requirement set forth in the Subordination Agreement, upon
the occurrence of a Change of Control, Borrowers shall immediately pay to
Investment Manager, for the benefit of Lender, all amounts due under the Loan as
set forth in this Agreement, including, without limitation, all costs and fees
incurred as of the date of payment, all accrued and unpaid interest, the
principal outstanding as of the date of such payment, and the applicable Payment
Premium. The payments made pursuant to this SECTION 1.8(b)(i) shall be applied
in accordance with SECTION 1.9.
(ii) LIQUIDITY EVENT. Upon the occurrence of a Liquidity Event,
Borrowers shall immediately pay to the Investment Manager, for the benefit of
Lender, in respect of the Loan an amount equal to (A) the net proceeds received
by MTM (or the applicable Borrower) in the Liquidity Event minus (B) Twenty Five
Million Dollars ($25,000,0000), but not in excess of all amounts due under the
Loan as set forth in this Agreement, including, without limitation, all costs
and fees incurred as of the date of payment, all accrued and unpaid interest,
the principal outstanding as of the date of such payment, and the applicable
4
Payment Premium. The payments made pursuant to this SECTION 1.8(b)(ii) shall be
applied in accordance with SECTION 1.9.
1.9 APPLICATION OF PAYMENTS. Other than with respect to interest
payments made pursuant to SECTIONS 1.3(c) AND 1.3(d), any payment hereunder
shall be applied: first, to the payment of all fees and expenses due and payable
pursuant to this Agreement; second, to any Payment Premium due at such time;
third, to reduce the outstanding principal balance under the Note; and fourth,
to any other Obligations of Borrower owing to Investment Manager or Lender
hereunder; provided that notwithstanding any prior allocation of payments to the
Payment Premium, upon the final payment in full of all outstanding principal
under the Note, the Payment Premium shall be recalculated and any additional
Payment Premium shall be immediately due and payable.
1.10 MAXIMUM LAWFUL RATE. Notwithstanding anything to the contrary
contained herein, if a court of competent jurisdiction determines in a final
order that the effective rate of interest payable hereunder exceeds the highest
rate of interest permissible under law (the "MAXIMUM LAWFUL RATE"), then so long
as the Maximum Lawful Rate would be so exceeded, the effective rate of interest
payable hereunder shall be equal to the Maximum Lawful Rate; provided, however,
that if at any time thereafter the effective rate of interest payable hereunder
is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by Investment Manager, on behalf of Lender, is equal to the total
interest that would have been received had the effective interest rate payable
hereunder been (but for the operation of this paragraph) the interest rate
payable since the Closing Date as otherwise provided in this Agreement.
Thereafter, the effective interest payable hereunder shall be paid at the
rate(s) of interest and in the manner provided hereunder, unless and until the
rate of interest again exceeds the Maximum Lawful Rate, and at that time this
paragraph shall again apply. In no event shall the total interest received by
any Lender pursuant to the terms hereof exceed the amount that such Lender could
lawfully have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is
calculated pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of days in the
year in which such calculation is made. If, notwithstanding the provisions of
this SECTION 1.10, a court of competent jurisdiction shall determine by a final,
non-appealable order that Lender has received interest hereunder in excess of
the Maximum Lawful Rate, Investment Manager shall, to the extent permitted by
applicable law, promptly apply such excess to the outstanding principal amount
of the Loan and thereafter, Lender shall refund any excess to Borrowers or as
such court of competent jurisdiction may otherwise order.
ARTICLE 2
CONDITIONS TO LOAN
The obligation of Lender to make the Loan on the Closing Date, as
provided in SECTION 1.1 hereof, shall be subject to the performance by Borrowers
of their agreements to be performed hereunder and to the satisfaction, prior
thereto or concurrently therewith, of the following further conditions:
5
2.1 CLOSING.
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Borrowers contained in ARTICLE 3 hereof shall be true and correct in all
respects as of the Closing Date (as modified by the Disclosure Schedules
delivered as of the Closing Date) as though such warranties and representations
were made at and as of such date, except as otherwise affected by the
transactions contemplated hereby.
(b) COMPLIANCE WITH LOAN DOCUMENTS, NO DEFAULT OR EVENT OF DEFAULT.
Borrowers shall have performed and complied with all agreements, covenants and
conditions contained in the Loan Documents which are required to be performed or
complied with by it prior to or on the Closing Date. No Default or Event of
Default shall exist prior to or after giving effect to the transactions
contemplated on the Closing Date.
(c) OFFICER'S CERTIFICATE. Investment Manager shall have received a
certificate, dated the Closing Date, signed by the Chief Executive Officer of
MTM, certifying that the conditions specified in SECTION 2.1(i) hereof have been
fulfilled.
(d) INJUNCTION. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as herein provided.
(e) COUNSEL'S OPINION. Investment Manager shall have received from
Borrowers' counsel, an opinion, dated the Closing Date, substantially in the
form of EXHIBIT 2.1(e) hereto.
(f) ADVERSE DEVELOPMENT. There shall have been no developments in the
business of Borrowers, which in the opinion of Investment Manager or Lender
could reasonably be expected to have a Material Adverse Effect.
(g) APPROVAL OF PROCEEDINGS. All proceedings to be taken in connection
with the transactions contemplated by this Agreement, and all documents incident
thereto, shall be satisfactory in form and substance to Investment Manager or
Lender and their counsel; and Investment Manager shall have received copies of
all documents or other evidence which they and their counsel may request in
connection with such transactions and of all records of corporate proceedings in
connection therewith in form and substance satisfactory to Investment Manager or
Lender and their counsel.
(h) OTHER FEES AND EXPENSES. Borrowers shall have paid to Investment
Manager all other amounts payable hereunder, including the payment of the fees
and expenses of Xxxxxx Godward LLP, counsel to Investment Manager.
(i) SERIES A-5 FINANCING. MTM shall have received net proceeds of at
least $10,000,000 from its existing institutional investors or other
institutional investors reasonably acceptable to Investment Manager from the
sale of MTM's Series A-5 Preferred Stock (the "SERIES A-5 FINANCING").
6
(j) SECRETARY'S CERTIFICATE. Investment Manager shall have received a
certificate, dated the Closing Date, signed by the Secretary or Assistant
Secretary, as the case may be, of each Borrower certifying that (i) its articles
or certificate of incorporation, or certificate of organization annexed thereto
are in full force and effect without any amendment, (ii) the by-laws or
operating agreement annexed thereto are correct and complete as in effect on the
date thereof; and (iii) the resolutions annexed thereto approving the
transactions contemplated herein have been duly approved by the Board of
Directors of such Borrower and remain in full force and effect.
(k) SECURITY INTERESTS. All action necessary or determined by
Investment Manager to be desirable to create and perfect the security interests
purported to be created by the Collateral Documents shall have been taken or
completed, including the execution and delivery of the Collateral Documents and
the filing of the Uniform Commercial Code financing statements, delivery of
instruments or securities and delivery of "control" agreements necessary to
establish control of deposit accounts and securities accounts as contemplated by
Articles 8 and 9 of the Uniform Commercial Code.
(l) INSURANCE. Investment Manager shall have received evidence that
the insurance required to be maintained under this Agreement and the Collateral
Documents is in full force and effect and that Investment Manager or Lender has
been named as loss payee or additional insured, as appropriate, under the
applicable insurance policies.
(m) OTHER DOCUMENTS. Borrowers shall have executed and delivered to
Investment Manager, for the benefit of Lender, the Note and the Warrant.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce Investment Manager and Lender to enter into the Loan Documents
and to make the Loan, Borrowers, jointly and severally, represent and warrant to
Investment Manager and Lender that the following statements are true, correct
and complete as of the Closing Date. Such representations and warranties are
subject to the qualifications and exceptions set forth in the Disclosure
Schedules delivered to Investment Manager in connection herewith. References to
the knowledge or awareness of Borrowers are deemed to include the actual
knowledge of any officer or director of any Borrower or any of their respective
Subsidiaries after due inquiry.
3.1 DISCLOSURE. No representation or warranty of any Borrower contained in
this Agreement, the Financial Statements, or any other document, certificate or
written statement furnished to Investment Manager or Lender by Borrowers or
their auditors at Closing contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made; provided that Investment Manager and
Lender acknowledge that the Projections delivered on or prior to the Closing
Date and the updated Projections delivered pursuant to SECTION 6.1(g) are
forward-looking statements and not to be viewed as statements of fact.
7
3.2 NO MATERIAL ADVERSE EFFECT. There have been no events or changes in
facts or circumstances affecting any Borrower or any of their Subsidiaries which
individually or in the aggregate have had or would reasonably be expected to
have a Material Adverse Effect and that have not been disclosed herein or in the
attached Disclosure Schedules.
3.3 NO CONFLICT; COMPLIANCE. The consummation of the transactions
contemplated by this Agreement and the other Loan Documents does not and will
not violate or conflict with any laws, rules, regulations or orders of any
Governmental Authority or violate, conflict with, result in a breach of, or
constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation or organizational documents of any Borrower or any of
their Subsidiaries except if such violations, conflicts, breaches or defaults
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. Borrowers (i) are in compliance and each
of their Subsidiaries is in compliance with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority and the
obligations, conditions and covenants contained in all Contractual Obligations
other than those laws, rules, regulations, orders and provisions of such
Contractual Obligations the noncompliance with which could not be reasonably
expected to have a Material Adverse Effect, and (ii) maintains and each of their
Subsidiaries maintains all licenses, qualifications and permits necessary for
the conduct of their respective businesses as presently conducted and expected
to be conducted.
3.4 ORGANIZATION, POWERS, CAPITALIZATION AND GOOD STANDING.
(a) ORGANIZATION AND POWERS. Each Borrower and each of their
respective Subsidiaries is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and qualified to do business
in all states where such qualification is required except where failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.
The jurisdiction of organization and all jurisdictions in which each Borrower is
qualified to do business are set forth on SCHEDULE 3.4(a). Each Borrower and
each of their respective Subsidiaries has all requisite organizational power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each of the Loan Documents
to which it is a party and to incur the Obligations, grant liens and security
interests in the Collateral and carry out the transactions contemplated by this
Agreement and the other Loan Documents.
(b) CAPITALIZATION. As of the Closing Date: (i) the authorized Stock
of each Borrower and each of their respective Subsidiaries is as set forth on
SCHEDULE 3.4(b); (ii) all issued and outstanding Stock of each Borrower and each
of their respective Subsidiaries is duly authorized and validly issued, fully
paid, nonassessable, free and clear of all Liens other than those in favor of
Senior Bank Lenders and Investment Manager for the benefit of Investment Manager
and Lender, and such Stock was issued in compliance with all applicable state,
federal and foreign laws concerning the issuance of securities; (iii) MTM is the
sole holder of the Stock of each Borrower (other than MTM); (iv) the
capitalization of MTM is as set forth on SCHEDULE 3.4(b); and (v) no Stock of
Borrower or any of their respective Subsidiaries, other than those described
above, are issued and outstanding. Except as provided in SCHEDULE 3.4(b), as of
8
the Closing Date, there are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Borrower or any of their respective
Subsidiaries of any Stock of any such entity.
(c) BINDING OBLIGATION. This Agreement is, and the other Loan
Documents when executed and delivered will be, the legally valid and binding
obligations of the applicable parties thereto, each enforceable against each of
such parties, as applicable, in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
and laws affecting the rights of creditors generally and by general principles
of equity whether considered at law or in equity.
3.5 FINANCIAL STATEMENTS AND PROJECTIONS. The financial statements of MTM
and its consolidated subsidiaries that have been filed with the Securities and
Exchange Commission, have been prepared in accordance with GAAP consistently
applied (except as disclosed therein) and present fairly in all material
respects the financial condition of MTM and its consolidated subsidiaries as at
the dates thereof and the results of their operations for the periods then
ended, subject to, in the case of unaudited financial statements, the absence of
footnotes and normal year end adjustments. The Projections delivered to the
Investment Manager by MTM on or prior to the Closing Date were prepared on the
basis of the assumptions stated therein and such assumptions were reasonable at
the time such Projections were prepared.
3.6 INTELLECTUAL PROPERTY. Each Borrower and each of their respective
Subsidiaries owns, is licensed to use or otherwise has the right to use, all
Intellectual Property used in or necessary for the conduct of its business as
currently conducted and all such Intellectual Property (other than off the shelf
software) is identified on SCHEDULE 3.6 and fully protected and/or duly and
properly registered, filed or issued in the appropriate office and jurisdictions
for such registrations, filings or issuances. Except as disclosed in SCHEDULE
3.6, the use of such Intellectual Property by Borrowers and their Subsidiaries
and the conduct of their businesses do not, and, to the knowledge of the
Borrowers, have not been alleged in writing by any Person to infringe on the
rights of any Person.
3.7 INVESTIGATIONS, AUDITS, ETC. As of the Closing Date, except as set
forth on SCHEDULE 3.7, no Borrower nor any Subsidiary of any Borrower is the
subject of any review or audit by the IRS or any governmental investigation
concerning the violation or possible violation of any law.
3.8 EMPLOYEE MATTERS. Except as set forth on SCHEDULE 3.8, there are no
strikes, slowdowns, work stoppages or controversies pending or, to the knowledge
of Borrowers after due inquiry, threatened between any Borrower or any
Subsidiary of any Borrower and its respective employees, other than employee
grievances arising in the ordinary course of business which could not reasonably
be expected to have a Material Adverse Effect and the hours worked by and
payments made to employees of each Borrower and each of their Subsidiaries
comply with the Fair Labor Standards Act and each other federal, state, local or
foreign law applicable to such matters, except as could not reasonably be
expected to have a Material Adverse Effect. Except as set forth on SCHEDULE 3.8,
9
no Borrower or Subsidiary of any Borrower is party to an employment contract.
3.9 SOLVENCY. Each Borrower and each Subsidiary of Borrowers is Solvent.
3.10 LITIGATION; ADVERSE FACTS. Except as set forth on SCHEDULE 3.10, there
are no judgments outstanding against any Borrower or any Subsidiary of any
Borrower or affecting any property of Borrower or any Subsidiary of any
Borrower, nor is there any Litigation pending, or to the best knowledge of
Borrowers threatened, against any Borrower or any Subsidiary of any Borrower
which could reasonably be expected to result in any Material Adverse Effect.
3.11 USE OF PROCEEDS; MARGIN REGULATIONS.
(a) No part of the proceeds of the Loan will be used for "buying" or
"carrying" "margin stock" within the respective meanings of such terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect or for any other purpose that violates the
provisions of the regulations of the Board of Governors of the Federal Reserve
System. If requested by Investment Manager, Borrowers will furnish to Investment
Manager and Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G 3 or FR Form 0 1, as applicable, referred to in
Regulation U.
(b) Borrowers shall utilize the proceeds of the Loan solely for the
financing of the NEXL Acquisition and the financing of Borrowers' general
corporate needs.
3.12 OWNERSHIP OF PROPERTY; LIENS. As of the Closing Date, the real estate
("REAL ESTATE") listed in SCHEDULE 3.12 constitutes all of the real property
owned, leased, subleased, or used by any Borrower or any of their Subsidiaries.
Each Borrower and each Subsidiary of Borrowers owns good and marketable fee
simple title to all of its owned Real Estate, and valid and marketable leasehold
interests in all of its leased Real Estate, and copies of all such leases have
been delivered to Investment Manager. SCHEDULE 3.12 further describes any Real
Estate with respect to which any Borrower or any of their Subsidiaries is a
lessor, sublessor or assignor as of the Closing Date. Each Borrower and each
Subsidiary of Borrowers also has good and marketable title to, or valid
leasehold interests in or licenses of, all of its personal property and assets.
As of the Closing Date, none of the properties and assets of any Borrower or any
Subsidiary of any Borrower are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to
Borrowers that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances against the properties or
assets of any Borrower or any of their Subsidiaries. SCHEDULE 3.12 also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. As of the Closing Date, no
portion of any Borrower's or any Subsidiary of any Borrower's Real Estate has
suffered any material damage by fire or other casualty loss that has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, all permits required to
have been issued to enable the Real Estate to be lawfully occupied and used for
10
all of the purposes for which it is currently occupied and used have been
lawfully issued and are in full force and effect.
3.13 ENVIRONMENTAL MATTERS.
(a) None of the operations of any Borrower is the subject of any
federal, state or local investigation to determine whether any remedial action
is needed to address the presence or disposal of any environmental pollution,
hazardous material or environmental clean-up of the Real Estate or any of such
Borrower's leased Real Estate. No enforcement proceeding, complaint, summons,
citation, notice, order, claim, litigation, investigation, letter or other
communication from a federal, state or local authority has been filed against or
delivered to any Borrower, regarding or involving any release of any
environmental pollution or hazardous material on any real property now or
previously owned or operated by any Borrower.
(b) No Borrower has any known contingent liability with respect to any
release of any environmental pollution or hazardous material on any real
property now or previously owned or operated by any Borrower.
(c) Each Borrower is in compliance with all environmental statutes,
acts, rules, regulations and orders applicable to the operation of such
Borrower's business, except to the extent that the failure to so comply would
not be reasonably likely to have a Material Adverse Effect.
(d) Borrowers hereby acknowledge and agree that neither Investment
Manager nor Lender (i) is now, or has ever been, in control of any of the Real
Estate or affairs of any Borrower or Subsidiary of any Borrower, and (ii) has
the capacity through the provisions of the Loan Documents or otherwise to
influence Borrowers' or their Subsidiaries' conduct with respect to the
ownership, operation or management of any of their Real Estate or compliance
with Environmental Laws or Environmental Permits.
3.14 ERISA. SCHEDULE 3.14 lists: (i) all Plans, separately identifying all
Pension Plans, ESOPs and Welfare Plans, including all Retiree Welfare Plans; and
(ii) each instance known to Borrower of a material failure to comply with ERISA
or the Code with respect to a Plan. Copies of all such listed Plans, together
with a copy of the latest form IRS/DOL 5500-series for each such Plan have been
delivered to Investment Manager. No Borrower or any ERISA Affiliate has at any
time during the six-year period preceding the Closing Date maintained,
contributed to, or had an obligation to contribute to, any Title IV Plan or any
other Plan subject to Section 412 of the Code or Section 302 of ERISA on behalf
of participants who are or were employed by such Borrower. Except to the extent
that any noncompliance would not reasonably be expected to have a Material
Adverse Effect: (i) each Plan is in compliance with the applicable provisions of
ERISA and the IRC, including the timely filing of all reports required under the
IRC or ERISA; (ii) each Qualified Plan has been determined by the IRS to qualify
under Section 401 of the IRC, the trusts created thereunder have been determined
to be exempt from tax under the provisions of Section 501 of the IRC, and,
nothing has occurred that would reasonably be expected to cause the loss of such
11
qualification or tax exempt status; (iii) no Borrower or ERISA Affiliate has
engaged in a "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the IRC, in connection with any Plan;. (iv) there are no
pending, or to the knowledge of Borrowers, threatened claims (other than claims
for benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
and (v) except in the case of any ESOP, Stock of such Borrower and its ERISA
Affiliates makes up, in the aggregate, no more than 10% of fair market value of
the assets of any Plan measured on the basis of fair market value as of the
latest valuation date of any Plan.
3.15 BROKERS. No broker or finder acting on behalf of any Borrower or
Affiliate of any Borrower brought about the obtaining, making or closing of the
Loan, and Borrower or Affiliate of any Borrower has any obligation to any Person
in respect of any finder's or brokerage fees in connection therewith.
3.16 DEPOSIT AND DISBURSEMENT ACCOUNTS. SCHEDULE 3.16 lists all banks and
other financial institutions at which any Borrower maintains deposit or other
accounts as of the Closing Date, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number therefor.
3.17 MATERIAL AGREEMENTS; CUSTOMERS AND SUPPLIERS.
(a) SCHEDULE 3.17(a) sets forth a true and complete list of each
Material Agreement to which any Borrower is a party or is otherwise bound. Each
Material Agreement is valid and binding on the Borrowers that are parties
thereto, is in full force and effect and is enforceable against the applicable
Borrower and, to Borrowers' knowledge, the other parties thereto, in accordance
with its terms, except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) state and federal securities laws with respect to rights to
indemnification or contribution. No Borrower is in default or breach under any
of the Material Agreements, nor, to the knowledge of Borrowers, is any other
party thereto in default or breach thereunder, nor are there facts or
circumstances which have occurred which, with or without the giving of notice or
the passage of time or both, would constitute a material default or breach under
any of the Material Agreements.
(b) To Borrowers' knowledge, no material customer or material supplier
intends to cancel or materially curtail its relationship with any Borrower in a
way that could reasonably be expected to have a Material Adverse Effect.
3.18 INSURANCE. SCHEDULE 3.18 lists all insurance policies of any nature
maintained, as of the Closing Date, for current occurrences by each Borrower, as
well as a certificate setting forth the deductibles, coverage limits and
durations of such policies.
12
ARTICLE 4
AFFIRMATIVE COVENANTS
Borrowers, jointly and severally, agree that from and after the date
hereof and until the Termination Date:
4.1 MAINTENANCE OF FINANCIAL RECORDS; INSPECTIONS. Borrowers agree to
maintain books and records pertaining to their financial matters in such detail,
form and scope, for so long as the CIT Financing Agreement remains in effect, as
CIT reasonably may require, and thereafter, as Investment Manager reasonably may
require. Each Borrower agrees that Investment Manager, accompanied by any Lender
(at such Lender's expense), and/or any agent designated by Investment Manager,
upon notice to Borrowers (provided that such notice shall not be required after
any Default or Event of Default shall have occurred), may enter upon such
Borrower's premises at any time during normal business hours, and from time to
time, in order to (i) examine and inspect the books and records of such
Borrower, and make copies thereof and take extracts therefrom, and (ii) verify,
inspect and perform physical counts and other valuations of the Collateral and
any and all records pertaining thereto. Each Borrower irrevocably authorizes all
accountants and third parties to disclose and deliver directly to Investment
Manager and Lender, at such Borrower's expense, all financial statements and
information, books, records, work papers and management reports generated by
them or in their possession regarding such Company or the Collateral. All costs,
fees and expenses incurred by Investment Manager in connection with such
examinations, inspections, physical counts and other valuations shall constitute
Fees reimbursable by Borrowers pursuant to SECTION 1.6 for purposes of this
Agreement.
4.2 FURTHER ASSURANCES. Each Borrower agrees to comply with the
requirements of all state and federal laws in order to grant to Investment
Manager, for the benefit of Lender, valid and perfected first priority security
interests in the Collateral pursuant to the Collateral Documents, subject only
to the Permitted Encumbrances. Investment Manager is hereby authorized by each
Borrower to file any financing statements, continuations and amendments covering
the Collateral without such Borrower's signature in accordance with the
provisions of the Code. Each Borrower hereby consents to and ratifies the filing
of any financing statements covering the Collateral by Investment Manager on or
prior to the Closing Date. Each Borrower agrees to do whatever Investment
Manager reasonably may request from time to time, by way of (i) filing notices
of liens, financing statements, amendments, renewals and continuations thereof,
(ii) cooperating with agents and employees of Investment Manager, (iii) keeping
Collateral records, (iv) transferring proceeds of Collateral to Investment
Manager's possession in accordance with the terms of this Agreement and the
Collateral Documents and (v) performing such further acts as Investment Manager
reasonably may require in order to effect the purposes of this Agreement and the
Collateral Documents, including the execution of control agreements with respect
to deposit accounts and investment property.
4.3 INSURANCE AND CONDEMNATION.
(a) REQUIRED INSURANCE. Each Borrower agrees to maintain insurance on
the Real Estate, Equipment and Inventory under such policies of insurance, with
such insurance companies, in such reasonable amounts and covering such insurable
risks, for so long as the CIT Financing Agreement remains in effect, as are at
all times reasonably satisfactory to CIT, and thereafter, as are at all times
reasonably satisfactory to Investment Manager (the "REQUIRED INSURANCE"). All
13
policies covering the Real Estate, Equipment and Inventory are, subject to the
rights of any holder of a Permitted Encumbrance having priority over the
security interests of Investment Manager, to be made payable solely to
Investment Manager, for the benefit of Lender, in case of loss, under a standard
non contributory "mortgagee", "secured party" or "lender's loss payable" clause
or endorsement, and are to contain such other provisions as Investment Manager
reasonably may require to fully protect Investment Manager's interest in the
Real Estate, Inventory and Equipment and to any payments to be made under such
policies. Each loss payable endorsement in favor of Investment Manager shall
provide (x) for not less than thirty (30) days prior written notice to
Investment Manager of the exercise of any right of cancellation and (y) that
Investment Manager's right to payment under any property insurance policy will
not be invalidated by any act or neglect of, or any breach of warranty or
condition by, any Borrower or any other party. If an Event of Default shall have
occurred and remain outstanding, Investment Manager, subject to the rights of
any holder of a Permitted Encumbrance having priority over the security
interests of Investment Manager, shall have the sole right, in the name of
Investment Manager or any Borrower, to file claims under any insurance policies,
to receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
(b) INVESTMENT MANAGER'S PURCHASE OF INSURANCE. Unless Borrowers
provide Investment Manager with evidence of the Required Insurance in the manner
set forth in SECTION 4.3(a) above, Investment Manager may purchase insurance at
Borrowers' expense to protect Investment Manager's interests in the Collateral.
The insurance purchased by the Investment Manager may, but need not, protect
Borrowers' interests in the Collateral, and therefore such insurance may not pay
any claim which any Borrower makes or any claim which is made against any
Borrower in connection with the Collateral. Borrowers may later request that
Investment Manager cancel any insurance purchased by Investment Manager, but
only after providing Investment Manager with satisfactory evidence that
Borrowers have the Required Insurance. If Investment Manager purchases insurance
covering all or any portion of the Collateral, Borrowers shall be responsible
for the costs of such insurance, including interest (at the applicable rate set
forth hereunder) and other charges accruing on the purchase price therefor,
until the effective date of the cancellation or the expiration of the insurance.
The costs of the premiums of any insurance purchased by Investment Manager may
exceed the costs of insurance which Borrowers may be able to purchase on their
own. In the event that Investment Manager purchases insurance, Investment
Manager will notify Borrowers of such purchase within thirty (30) days after the
date of such purchase. If, within thirty (30) days after the date of receipt of
such notice, Borrowers provide Investment Manager with proof that Borrowers had
the Required Insurance as of the date on which Investment Manager purchased
insurance and Borrowers have continued at all times thereafter to have the
Required Insurance, then Investment Manager agrees to cancel the insurance
purchased by Investment Manager.
14
(c) APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS. So long as no
Default or Event of Default shall have occurred and remain outstanding as of the
date of Investment Manager's receipt of any Casualty Proceeds:
(i) Except as may otherwise be provided in any intercreditor or
subordination agreement between Investment Manager and another creditor of
Borrowers, in the event of any loss or damage to any item of Equipment by
condemnation, fire or other casualty, if the Casualty Proceeds relating to such
condemnation, fire or other casualty exceed $100,000, the applicable Borrower
may elect (by delivering written notice to Investment Manager within ten (10)
Business Days following Investment Manager's receipt of such Casualty Proceeds)
to replace or repair such item of Equipment.
(ii) In the event of any loss or damage to any Real Estate leased by the a
Borrower by condemnation, fire or other casualty, such Borrower may use the
Casualty Proceeds in the manner required or permitted by the lease agreement
relating thereto. In the event of any loss or damage to any Real Estate owned by
a Borrower by condemnation, fire or other casualty, if the Casualty Proceeds
relating to such condemnation, fire or other casualty exceed $100,000, and so
long as such Borrower has sufficient business interruption insurance to replace
the lost profits of the facilities affected by the condemnation, fire or other
casualty, such Borrower may elect to repair or replace such Real Estate, subject
to the following terms:
(1) If such Borrower reasonably determines that the Real Estate may be
repaired to substantially the same condition of the Real Estate prior to the
condemnation, fire or other casualty, such Borrower may elect to repair the Real
Estate by delivering written notice to Investment Manager within thirty (30)
days following Investment Manager's receipt of such Casualty Proceeds.
(2) Such Borrower may elect to replace the Real Estate owned by such
Borrower only on terms and conditions satisfactory to Investment Manager in its
sole discretion.
If a Default or an Event of Default shall have occurred and remain
outstanding as of the date of Investment Manager's receipt of any Casualty
Proceeds, or if the Borrower does not or cannot elect to use the Casualty
Proceeds in the manner set forth in paragraphs (i) or (ii) above, Investment
Manager may, subject to the terms of any intercreditor or subordination
agreement between Investment Manager and another creditor of Borrowers, and
subject to the rights of any holder of a Permitted Encumbrance having priority
over the security interests of Investment Manager, apply the Casualty Proceeds
to the payment of the Obligations in such manner and in such order as Investment
Manager may elect in its sole discretion.
4.4 PAYMENT OF TAXES. Each Borrower agrees to pay when due all Taxes
lawfully levied, assessed or imposed upon such Borrower or the Collateral
(including all sales taxes collected by the Borrower on behalf of such
Borrower's customers in connection with sales of Inventory and all payroll taxes
collected by such Borrower on behalf of such Borrower's employees), unless such
Borrower is contesting such Taxes in good faith, by appropriate proceedings, and
is maintaining adequate reserves for such Taxes in accordance with GAAP.
Notwithstanding the foregoing, if a lien securing any Taxes is filed in any
public office and such lien is not a Permitted Tax Lien, then the applicable
15
Borrower shall pay all taxes secured by such lien immediately and remove such
lien of record promptly. Pending the payment of such taxes and removal of such
lien, Investment Manager may, at its election and without curing or waiving any
Event of Default which may have occurred as a result thereof, pay such taxes on
behalf of such Borrower, and the amount paid by Investment Manager shall become
an Obligation which is due and payable on demand by Investment Manager.
4.5 COMPLIANCE WITH LAWS.
(a) Each Borrower agrees to comply with all federal, state and local
acts, rules and regulations, and all orders of any federal, state or local
legislative, administrative or judicial body or official, if the failure to so
comply would be reasonably likely to have a Material Adverse Effect, provided
that such Borrower may contest any acts, rules, regulations, orders and
directions of such bodies or officials in any reasonable manner which Investment
Manager determines, in the exercise of its reasonable business judgment, will
not materially and adversely effect Investment Manager's or Lender's rights or
priorities in the Collateral.
(b) Without limiting the generality of the foregoing, each Borrower
agrees to comply with all environmental statutes, acts, rules, regulations or
orders, as presently existing or as adopted or amended in the future, applicable
to the ownership and/or use of its real property and operation of its business,
if the failure to so comply would be reasonably likely to have a Material
Adverse Effect. No Borrower shall be deemed to have breached any provision of
this SECTION 4.5(b) if (x) the failure to comply with the requirements of this
SECTION 4.5 resulted from good faith error or innocent omission, (y) such
Borrower promptly commences and diligently pursues a cure of such breach and (z)
such failure is cured within thirty (30) days following such Borrower's receipt
of notice from Investment Manager of such failure, or if such breach cannot in
good faith be cured within thirty (30) days following such Borrower's receipt of
such notice, then such breach is cured within a reasonable time frame based on
the extent and nature of the breach and the necessary remediation, and in
conformity with any applicable consent order, consensual agreement and
applicable law.
4.6 NOTICES CONCERNING ENVIRONMENTAL, EMPLOYEE BENEFIT AND PENSION MATTERS.
Borrowers agree to notify Investment Manager in writing of:
(a) any expenditure (actual or anticipated) by any Borrower in excess
of $100,000 for environmental clean up, environmental compliance or
environmental testing and the impact of said expenses on such Borrower's working
capital;
(b) any Borrower's receipt of notice from any local, state or federal
authority advising such Borrower of any environmental liability (real or
potential) arising from such Borrower's operations, its premises, its waste
disposal practices, or waste disposal sites used by such Borrower; and
16
(c) any Borrower's receipt of notice from any governmental agency or
any sponsor of any "multiemployer plan" (as that term is defined in ERISA) to
which such Borrower has contributed, relating to any ERISA Event.
Each Borrower agrees to provide Investment Manager promptly with copies of
all such notices and other information pertaining to any matter set forth above
if Investment Manager so requests.
4.7 BUSINESS QUALIFICATION. Each Borrower agrees to qualify to do business,
and to remain qualified to do business and in good standing, in each
jurisdiction where the failure to so qualify, or to remain qualified or in good
standing, would have, or would be reasonably likely to have, a Material Adverse
Effect.
4.8 ANTI-MONEY LAUNDERING AND TERRORISM REGULATIONS. Each Borrower agrees
to comply with all applicable anti-money laundering and terrorism laws,
regulations and executive orders in effect from time to time (including, without
limitation, the USA Patriot Act (Pub. L. No. 107-56)). Each Borrower also agrees
to ensure that no person who owns a controlling interest in or otherwise
controls such Borrower is a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (issued September 23, 2001) or any other similar
Executive Order. Each Borrower acknowledges that Investment Manager's and
Lender's performance hereunder is subject to compliance with all such laws,
regulations and executive orders, and in furtherance of the foregoing, each
Borrower agrees to provide to Investment Manager and Lender all information
about such Borrower's ownership, officers, directors, customers and business
structure as Investment Manager and Lender reasonably may require to comply
with, such laws, regulations and executive orders.
4.9 MAINTENANCE OF PROPERTIES . Each Borrower will maintain or cause to be
maintained in good repair, working order and condition all material properties
used in the business of such Borrower and its Subsidiaries and will make or
cause to be made all appropriate repairs, renewals and replacements thereof,
ordinary wear and tear excepted.
4.10 LENDER MEETING. Borrower will participate and will cause its key
management personnel and those of its Subsidiaries to participate in a meeting
with Investment Manager and Lender at least once during each year, which meeting
shall be held at such time and such place as may be reasonably requested by
Investment Manager.
4.11 ORGANIZATIONAL EXISTENCE. Except as permitted by SECTION 5.4, each
Borrower will and will cause its Subsidiaries to at all times preserve and keep
in full force and effect its organizational existence and all rights and
franchises the absence of which could reasonably be expected to have a Material
Adverse Effect.
4.12 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS AND REAL
ESTATE PURCHASES. Borrowers shall use reasonable efforts to obtain a landlord's
agreement, mortgagee agreement or bailee letter, as applicable, from each lessor
of leased property, mortgagee of owned property or bailee with respect to any
warehouse, processor or converter facility or other location where Collateral is
stored or located, which agreement or letter shall contain a waiver or
17
subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Investment Manager. After the
Closing Date, no real property or warehouse space shall be leased by any
Borrower or any Subsidiary or any Borrower and no Inventory shall be shipped to
a processor or converter under arrangements established after the Closing Date
without the prior written consent of Investment Manager or, unless and until a
satisfactory landlord agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location. Borrowers shall and shall
cause each of their Subsidiaries to timely and fully pay and perform their
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. In the
event any Borrower acquires a fee interest in real property after the Closing
Date, Borrower shall deliver to Investment Manager a fully executed mortgage or
deed of trust over such real property in form and substance satisfactory to
Investment Manager, together with such title insurance policies, surveys,
appraisals, evidence of insurance, legal opinions, environmental assessments and
other documents and certificates as shall be reasonably requested by Investment
Manager.
4.13 NEW SUBSIDIARIES. Borrowers shall (a) cause each Person, upon its
becoming a Subsidiary of any Borrower (provided that this shall not be construed
to constitute consent by Lender to any transaction not expressly permitted by
the terms of this Agreement), promptly to guaranty the Obligations and to grant
to Investment Manager, for the benefit of Investment Manager and Lender, a
security interest in the real, personal and mixed property of such Person to
secure the Obligations and (b) pledge, or cause to be pledged, to Investment
Manager, for the benefit of Investment Manager and Lender, all of the Stock of
such Subsidiary owned by any Borrower to secure the Obligations. The
documentation for such guaranty, security and pledge shall be substantially
similar to the Loan Documents executed concurrently herewith with such
modifications as are reasonably requested by Investment Manager.
4.14 REGISTRATION RIGHTS. Subject to receipt of necessary information from
Investment Manager and Lender, MTM will in no event later than 270 days
following the date hereof, prepare and file with the SEC a Registration
Statement on Form S-3, or any equivalent form for registration in accordance
with the Securities Act, to permit a public offering and resale of the shares of
MTM's Common Stock underlying the Warrants under the Securities Act on a
continuous basis under Rule 415 thereof. MTM acknowledges that the plan of
distribution contemplated by such Registration Statement shall include offers
and sales through underwriters or agents, offers and sales directly to
investors, block trades and such other methods of offer and sale as Investment
Manager shall request. MTM will cause such Registration Statement to remain
effective until such time as all of such shares of Common Stock are sold or the
holders thereof are entitled to rely on Rule 144(k) for sales of such shares
without registration under the Securities Act and without compliance with the
public information, sales volume, manner of sale or notice requirements of Rule
144(c), (e), (f) or (h).
18
ARTICLE 5
NEGATIVE COVENANTS
Borrowers, jointly and severally, agree that from and after the date hereof
until the Termination Date that no Borrower shall, nor shall it permit any
Subsidiary to:
5.1 LIENS AND ENCUMBRANCES; NO NEGATIVE PLEDGES. Mortgage, assign, pledge,
transfer or otherwise permit any lien, charge, security interest, encumbrance or
judgment (whether as a result of a purchase money or title retention
transaction, or other security interest, or otherwise) to exist on any of the
Collateral or its other assets, whether now owned or hereafter acquired, except
for the Permitted Encumbrances. No Borrower shall, or cause or permit its
Subsidiaries to, directly or indirectly, enter into or assume any agreement
(other than the Loan Documents and the Senior Indebtedness) prohibiting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired
5.2 INDEBTEDNESS. Incur or create any Indebtedness other than the Permitted
Indebtedness.
5.3 SALE OF ASSETS. Sell, lease, assign, transfer or otherwise dispose of
(i) Collateral, except for the disposition of Inventory and Equipment in the
ordinary course of business or as otherwise specifically permitted by this
Agreement or the terms of any Senior Bank Indebtedness, or (ii) all or any
substantial part of its assets, if any, which do not constitute Collateral. Each
Borrower may sell obsolete Equipment or surplus Equipment from time to time,
provided that in each such instance: (i) no Event of Default shall have occurred
and remain outstanding at the time of such sale; (ii) the aggregate book value
of all Equipment owned by all of the Borrowers subject to sale does not exceed
$100,000 in any fiscal year of MTM, and (iii) all net proceeds of such sales are
either (x) promptly used by such selling Borrower to repay Senior Indebtedness,
or (y) within 90 days of such sale, used to purchase replacement Equipment that
such selling Borrower determines in its reasonable business judgment to have a
value at least equal to the Equipment sold. Upon the sale, transfer, lease or
other disposition of Equipment, the security interest of Investment Manager and
Lender in the Equipment shall, without break in continuity and without further
formality or act, continue in, and attach to, all proceeds thereof. As to any
such sale, transfer, lease or other disposition, Investment Manager shall have
all of the rights of an unpaid seller, including stoppage in transit, replevin,
rescission and reclamation.
5.4 CORPORATE CHANGE. (i) Merge or consolidate with any other entity except
in connection with a Permitted Acquisition or a Change of Control, (ii) change
its name or principal place of business, (iii) change its structure or
organizational form, or reincorporate or reorganize in a new jurisdiction, (iv)
enter into or engage in any operation or activity materially different from that
presently being conducted by such Borrower provided that such Borrower may (x)
change its name or its principal place of business or (y) change its structure
or organizational form, or reincorporate or reorganize in a new jurisdiction, so
long as such Borrower provides Investment Manager with thirty (30) days prior
written notice thereof and such Borrower executes and delivers to Investment
Manager, prior to making such change, all documents and agreements required by
Investment Manager in order to ensure that the liens and security interests
granted to Investment Manager, for the benefit of Lender, hereunder continue in
effect without any break or lapse in perfection. For the purposes of this
Section, any operation or activity by a Borrower that materially involves
producing, manufacturing, designing, reselling, marketing, licensing or
19
providing products (including intellectual property and software) or services
relating to information technology shall be deemed not to be an operation or
activity materially different from that presently conducted by such Borrower.
5.5 GUARANTY OBLIGATIONS. Assume, guarantee, endorse, or otherwise become
liable upon the obligations of any person, firm, entity or corporation, except
by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business and other than
guarantees permitted under the definition of Permitted Indebtedness herein.
5.6 DIVIDENDS AND DISTRIBUTIONS. Declare or pay any dividend or
distribution of any kind on, or purchase, acquire, redeem or retire, any of its
equity interests (of any class or type whatsoever), whether now or hereafter
issued and outstanding, other than Permitted Distributions.
5.7 INVESTMENTS. (i) Create any new subsidiary, or (ii) make any advance or
loan to, or any investment in, any firm, entity, person or corporation, or (iii)
acquire all or substantially all of the assets of, or any capital stock or any
equity interests in, any firm, entity or corporation, other than current
investments of such Borrower in its existing subsidiaries, provided, however
that (x) such Borrower may make loans and advances on an unsecured basis, in the
ordinary course of its business and on fair and reasonable terms, to any other
Borrower and (y) such Borrower may make a Permitted Acquisition so long as the
Acquisition Conditions shall have been satisfied on or before the date of
consummation thereof.
5.8 RELATED PARTY TRANSACTIONS. Enter into any transaction, including,
without limitation, any purchase, sale, lease, loan or exchange of property,
with any shareholder, officer, director, parent (direct or indirect), subsidiary
(direct or indirect) or other person or entity otherwise affiliated with such
Borrower unless (i) such transaction otherwise complies with the provisions of
this Agreement, (ii) such transaction is for the sale of goods or services
rendered in the ordinary course of business and pursuant to the reasonable
requirements of the Borrower or for the sale of Subordinated Debt or equity
interests of the Borrower and, in each case, and upon standard terms and
conditions and fair and reasonable terms, no less favorable to such entity than
such entity could obtain in a comparable arms length transaction with an
unrelated third party, and (iii) no Event of Default shall have occurred and
remain outstanding at the time such transaction occurs, or would occur after
giving effect to such transaction. For the avoidance of doubt, the parties
acknowledge and agree that any Borrower may, after the date hereof, enter into
one or more transactions with a portfolio company of any shareholder of MTM,
provided that each such transaction complies with this SECTION 5.8.
5.9 RESTRICTED PAYMENTS. (i) Make any payment of the principal of, or
interest on, any Subordinated Debt, or purchase, acquire or redeem any of the
Subordinated Debt, unless (x) such payment, purchase, acquisition or redemption
is expressly permitted by the terms of the applicable intercreditor or
subordination agreement and (y) no Default or Event of Default shall have
occurred and remain outstanding on the date on which such payment or transaction
20
occurs, or would occur as a result thereof; provided, that so long as such
payment, purchase, acquisition or redemption does not cause a Default or Event
of Default to occur, it may be paid in stock or other equity interests of any
Borrower or from the proceeds of Subordinated Debt; and (ii) pay any management,
consulting or other similar fees to any shareholder, director, parent (direct or
indirect), subsidiary (direct or indirect) or other person or entity otherwise
affiliated with such Borrower, any Guarantor or any subsidiary of the Borrower,
(other than the current, customary or prevailing fees and expenses to members of
such Borrower's Board of Directors, and fees and salaries of any shareholder or
other person paid to such person in their capacity as officer or employee of
such Borrower, including, without limitation, fees, salaries, bonuses and other
forms of compensation pursuant to employment or other agreements.
5.10 USE OF PROCEEDS. Use the proceeds of any loan made under this
Agreement, directly or indirectly, (i) in violation of any applicable law or
regulation, including without limitation Regulations T, U or X of the Board of
Governors of the Federal Reserve System as from time to time in effect (and any
successor regulation or official interpretation of such Board), (ii) to purchase
or carry any "margin stock", as defined in Regulations U and X, or any "margin
security", "marginable OTC stock" or "foreign margin stock" within the meaning
of Regulation T, U or X, (iii) for any purpose other than to finance the NEXL
Acquisition, refinance present Indebtedness on the Closing Date and fund the
working capital needs of Borrowers. If the NEXL Acquisition does not occur, MTM
shall within 10 Business Days after the Closing, reserve at least $15 million
the proceeds of the Loan in a separate account set up for the sole purpose of
financing the cost of other Permitted Acquisitions, such account to be subject
to a control agreement in favor of Investment Manager, in form and substance
reasonably satisfactory Investment Manager.
5.11 NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWERS. Except as
provided herein, no Borrower shall, or cause or permit its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to: (1) pay dividends or make any other distribution on
any of such Subsidiary's Stock owned by any Borrower or any other Subsidiary;
(2) pay any Indebtedness owed to any Borrower or any other Subsidiary; (3) make
loans or advances to any Borrower or any other Subsidiary; or (4) transfer any
of its property or assets to any Borrower or any other Subsidiary.
5.12 CONDUCT OF BUSINESS. No Borrower shall, or cause or permit its
Subsidiaries to, directly or indirectly, engage in any business other than
businesses of the type described on SCHEDULE 5.12.
5.13 CHANGES RELATING TO SUBORDINATED DEBT. No Borrower shall, or cause or
permit its Subsidiaries to, directly or indirectly, change or amend the terms of
any of its Subordinated Debt if the effect of such amendment is to: (a) increase
the interest rate on such Indebtedness; (b) accelerate the dates upon which
payments of principal or interest are due on such Indebtedness; (c) add or make
more likely any event of default or add or make more restrictive any covenant
with respect to such Indebtedness; (d) add or make more onerous on any Borrower
the redemption or prepayment provisions of such Indebtedness; (e) change the
21
subordination provisions thereof (or the subordination terms of any guaranty
thereof) in a manner adverse to any Borrower, Investment Manager or Lender; (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights on
the holder of such Indebtedness in a manner adverse to any Borrower or Lender;
or (g) increase the portion of interest payable in cash with respect to any
Indebtedness for which interest is payable by the issuance of payment-in-kind
notes or is permitted to accrue.
5.14 PRESS RELEASE; PUBLIC OFFERING MATERIALS. Each Borrower agrees that
neither it nor its Affiliates will in the future issue any press releases, using
the name of Investment Manager or Lender or their respective Affiliates or
referring to this Agreement or the other Loan Documents without at least two (2)
Business Days' prior notice to Investment Manager or Lender unless (and only to
the extent that) Borrower or such Affiliate is required to do so under law and
then, in any event, Borrowers or such Affiliate will consult with Investment
Manager before issuing such press release. Borrowers consent to the publication
by Investment Manager or Lender of a tombstone or similar advertising material
relating to the financing transactions contemplated by this Agreement; provided
that such tombstone or material complies with applicable law. Investment Manager
or Lender shall provide a draft of any such tombstone or similar advertising
material to Borrowers for review and comment prior to the publication thereof.
Investment Manager and Lender reserve the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
5.15 BANK ACCOUNTS. No Borrower shall, or cause or permit its Subsidiaries
to, establish any new bank accounts without prior written notice to Investment
Manager and unless Investment Manager and the bank at which the account is to be
opened enter into a tri-party agreement regarding such bank account pursuant to
which such bank (i) acknowledges the security interest of Investment Manager in
such bank account, (ii) subject to the terms of the Subordination Agreement,
agrees to comply with instructions originated by Investment Manager directing
disposition of the funds in the bank account without further consent from any
Borrower or Subsidiary of any Borrower following the occurrence and during the
continuance of an Event of Default, and (iii) agrees to subordinate and limit
any security interest the bank may have in the bank account on terms
satisfactory to Investment Manager.
5.16 ERISA. No Borrower shall, or cause or permit any ERISA Affiliate to,
cause or permit to occur an ERISA Event to the extent such ERISA Event could
reasonably be expected to have a Material Adverse Effect.
ARTICLE 6
FINANCIAL COVENANTS/REPORTING
Borrowers, jointly and severally, covenant and agree that from and after
the date hereof until the Termination Date, Borrowers shall perform and comply
with all covenants in this ARTICLE 6.
22
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS. Borrowers will maintain, and
cause each of their Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to permit
preparation of Financial Statements in conformity with GAAP (it being understood
that monthly Financial Statements are not required to have footnote
disclosures). Borrowers will deliver each of the Financial Statements and other
reports described below to Investment Manager.
(a) MONTHLY FINANCIALS AND FORECASTS. If requested by Investment
Manager, as soon as available and in any event within thirty (30) days after the
end of each month (except the last month of each of Borrowers' Fiscal Quarters),
Borrowers will deliver (i) the consolidated and consolidating balance sheets of
Borrowers and their Subsidiaries, as at the end of such month, and the related
consolidated statements of income, stockholders' equity and cash flow for such
month and for the period from the beginning of the then current Fiscal Year of
Borrowers to the end of such month, (ii) a report setting forth in comparative
form the corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures for the current Fiscal Year delivered
pursuant to SECTION 6.1(g).
(b) QUARTERLY FINANCIALS. As soon as available and in any event within
forty-five (45) days after the end of each calendar quarter (including the last
quarter of Borrowers' Fiscal Year), Borrowers will deliver (i) the consolidated
and consolidating balance sheets of Borrowers and their Subsidiaries, as at the
end of such quarter, and the related consolidated statements of income,
stockholders' equity and cash flow for such quarter and for the period from the
beginning of the then current Fiscal Year of Borrowers to the end of such
quarter and (ii) a report setting forth in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the current Fiscal Year delivered pursuant to SECTION
6.1(g).
(c) YEAR-END FINANCIALS. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year of Borrowers, Borrowers will
deliver (1) the consolidated and consolidating balance sheets of Borrower and
their Subsidiaries, as at the end of such year, and the related consolidated
statements of income, stockholders' equity and cash flow for such Fiscal Year,
(2) a schedule of the outstanding Indebtedness for borrowed money of Borrowers
and their Subsidiaries describing in reasonable detail each such debt issue or
loan outstanding and the principal amount and amount of accrued and unpaid
interest with respect to each such debt issue or loan and (3) a report with
respect to the consolidated Financial Statements from Xxxxxxxxx Xxxxx Xxxxxxx
LLP or another nationally recognized firm of Certified Public Accountants
selected by Borrowers, which report shall be prepared in accordance with
Statement of Auditing Standards No. 58 (the "STATEMENT") "Reports on Audited
Financial Statements" and such report shall be "Unqualified" (as such term is
defined in such Statement).
(d) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, Borrowers
will deliver copies of all significant reports submitted by Borrowers' firm of
certified public accountants in connection with each annual, interim or special
audit or review of any type of the Financial Statements or related internal
control systems of Borrowers and their Subsidiaries made by such accountants,
23
including any comment letter submitted by such accountants to management in
connection with their services.
(e) MANAGEMENT REPORT. Together with each delivery of Financial
Statements of Borrowers pursuant to SECTION 6.1(b) AND (c), Borrowers will
deliver, in electronic form and hard copy, a management report (1) describing
the operations and financial condition of Borrowers and their Subsidiaries for
the applicable period then ended and the portion of the current Fiscal Year then
elapsed (or for the Fiscal Year then ended in the case of year-end financials)
and (2) discussing the reasons for any significant variations. The information
above shall be presented in reasonable detail and shall be certified by the
chief financial officer of Borrowers to the effect that such information fairly
presents in all material respects the results of operations and financial
condition of Borrowers and their Subsidiaries as at the dates and for the
periods indicated.
(f) APPRAISALS. At Borrowers' expense, Investment Manager may, from
time to time, obtain appraisal reports in form and substance and from appraisers
satisfactory to Investment Manager, stating the then current market values of
all or any portion of the Real Estate and personal property owned by any
Borrower.
(g) PROJECTIONS. As soon as available and in any event no later than
the later of (x) thirty (30) days prior to the beginning of each of Borrowers'
Fiscal Years and (y) approval by MTM's Board of Directors, Borrowers will
deliver Projections of Borrowers and their Subsidiaries for the forthcoming
three (3) fiscal years, year by year, and for the forthcoming fiscal year, month
by month; provided, however, that in no event shall such Projections be required
to extend beyond the Maturity Date. Additionally, Borrowers shall immediately
notify Investment Manager if any then-current Projections are modified in any
manner and provide a copy thereof to Investment Manager promptly after such
modifications are provided to MTM's Board of Directors.
(h) SENIOR BANK INDEBTEDNESS REPORTS. Upon the request of Investment
Manager, Borrowers will promptly deliver to Investment Manager any reports or
other information delivered by Borrowers to any Senior Bank Lender under any of
the Senior Bank Indebtedness.
(i) EVENTS OF DEFAULT, ETC. Promptly upon any officer of any Borrower
obtaining knowledge of any of the following events or conditions, Borrowers
shall deliver copies of all written notices given or received by such Borrower
or any of their Subsidiaries with respect to any such event or condition and a
certificate of such Borrower's chief executive officer specifying the nature and
period of existence of such event or condition and what action such Borrower or
its Subsidiary has taken, is taking and proposes to take with respect thereto:
(1) any condition or event that constitutes, or which could reasonably be
expected to result in the occurrence of, an Event of Default or; (2) any notice
that any Person has given to any Borrower or any of their Subsidiaries or any
other action taken with respect to a claimed default or event or condition of
the type referred to in SECTION 7.1(b); (3) any event or condition that could
reasonably be expected to result in any Material Adverse Effect; or (4) any
24
default or event of default with respect to any Indebtedness of any Borrower or
any of their Subsidiaries.
(j) LITIGATION. Promptly upon any officer of any Borrower obtaining
knowledge of (1) the institution of any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation, tax audit or arbitration now
pending or, to the best knowledge of Borrowers after due inquiry, threatened in
writing against any Borrower or any of their Subsidiaries or affecting any
property of Borrower or any of their Subsidiaries ("LITIGATION") not previously
disclosed by Borrowers to Investment Manager or (2) any material development in
any action, suit, proceeding, governmental investigation or arbitration at any
time pending against any Borrower or affecting any property of any Borrower
which, in each case, could reasonably be expected to have a Material Adverse
Effect, Borrowers will promptly give notice thereof to Investment Manager and
provide such other information as may be reasonably available to them to enable
Investment Manager and its counsel to evaluate such matter.
(k) NOTICE OF CORPORATE AND OTHER CHANGES. Borrowers shall provide
prompt written notice of (1) all jurisdictions in which any Borrower becomes
qualified after the Closing Date to transact business, (2) any change after the
Closing Date in the authorized and issued Stock of any Borrower or any
Subsidiary of any Borrower or any amendment to their articles or certificate of
incorporation, by-laws, partnership agreement or other organizational documents,
(3) any Subsidiary created or acquired by any Borrower or any of their
Subsidiaries after the Closing Date, such notice, in each case, to identify the
applicable jurisdictions, capital structures or Subsidiaries, as applicable, and
(4) any other event that occurs after the Closing Date which would cause any of
the representations and warranties in ARTICLE 3 of this Agreement or in any
other Loan Document to be untrue or misleading in any material respect. The
foregoing notice requirement shall not be construed to constitute consent by
Lender to any transaction referred to above which is not expressly permitted by
the terms of this Agreement.
(l) OTHER INFORMATION. With reasonable promptness, Borrowers will
deliver such other information, reports and data with respect to Borrowers or
any Subsidiary as from time to time may be reasonably requested by Investment
Manager.
(m) COMPLIANCE CERTIFICATE. Together with each delivery of Financial
Statements of Borrowers and their Subsidiaries pursuant to SECTIONS 6.1(a), (b)
AND (c), Borrowers will deliver a fully and properly completed Compliance
Certificate (in substantially the same form as EXHIBIT 6.1(m) signed by
Borrowers' chief executive officer or chief financial officer.
(n) TAXES. Borrowers shall provide prompt written notice of (i) the
execution or filing with the IRS or any other Governmental Authority of any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges by any Borrower or any of
their Subsidiaries and (ii) any agreement by any Borrower or any of their
Subsidiaries or request directed to any Borrower or any of their Subsidiaries to
make any adjustment under IRC Section 481(a), by reason of a change in
25
accounting method or otherwise, which could reasonably be expected to have a
Material Adverse Effect.
6.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT. For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial Statements and other information furnished to
Investment Manager pursuant to SECTION 6.1 or any other section (unless
specifically indicated otherwise) shall be prepared in accordance with GAAP as
in effect at the time of such preparation; provided that no Accounting Change
shall affect financial covenants, standards or terms in this Agreement; provided
further that Borrowers shall prepare footnotes to the Financial Statements
required to be delivered hereunder that show the differences between the
Financial Statements delivered (which reflect such Accounting Changes) and the
basis for calculating financial covenant compliance (without reflecting such
Accounting Changes).
6.3 FINANCIAL COVENANTS. Until termination of this Agreement and the full
and final payment and satisfaction of all Obligations, each Borrower agrees:
(a) CONSOLIDATED SENIOR LEVERAGE. To cause MTM to maintain
Consolidated Senior Leverage of not greater than 4.40 to 1.00 as of the end of,
and for (i) the four fiscal quarters ending on or about December 31, 2005, and
(ii) each period of four consecutive fiscal quarters ending thereafter.
(b) CONSOLIDATED FIXED CHARGE COVERAGE. To cause MTM to maintain a
Consolidated Fixed Charge Coverage Ratio of not less than .90 to 1.00 for (i)
the four fiscal quarters ending on or about December 31, 2005 and (ii) each
period of four consecutive fiscal quarters ending thereafter.
ARTICLE 7
DEFAULT, RIGHTS AND REMEDIES
7.1 EVENT OF DEFAULT. "EVENT OF DEFAULT" shall mean the occurrence or
existence of any one or more of the following:
(a) PAYMENT. Failure to pay any installment or other payment of
principal on the Loan or any interest on the Loan, any Payment Premium or any
other amount due under this Agreement or any of the other Loan Documents, in any
such case, within three (3) Business Days when due; or
(b) DEFAULT IN OTHER AGREEMENTS. (1) Any Borrower or any of their
Subsidiaries fails to pay when due or within any applicable grace period any
principal or interest on Indebtedness (other than the Loan) or breaches or
defaults under the terms of any Indebtedness (other than the Loan), or any
condition or event occurs with respect to any Indebtedness (other than the
Loan), if the effect of such failure to pay, breach, default or occurrence is to
cause the holder or holders of Indebtedness having an aggregate principal amount
in excess of $250,000 to declare due prior to their stated maturity or (2)
breach or default by any Borrower under any Material Agreement other than with
26
respect to any Indebtedness (if such breach or default has not been waived by
the other parties thereto within thirty (30) days following the occurrence
thereof); or
(c) BREACH OF CERTAIN PROVISIONS. Failure of any Borrower to perform
or comply with any term or condition contained in that portion of SECTION 4.3
relating to Borrowers' obligation to maintain insurance, SECTION 4.1, SECTION
4.10, ARTICLE 5 (other than Overadvances (as defined in the CIT Financing
Agreement) which are cured within three (3) days) OR ARTICLE 6; or
(d) BREACH OF WARRANTY. Any representation, warranty, certification or
other statement made by any Borrower or any Guarantor in any Loan Document or in
any statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect (without duplication of materiality qualifiers contained therein) on the
date made; or
(e) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Any Borrower defaults in the
performance of or compliance with any term contained in this Agreement or the
other Loan Documents (other than occurrences described in other provisions of
this SECTION 7.1 for which a different grace or cure period is specified, or for
which no cure period is specified and which constitute immediate Events of
Default) and such default is not remedied or waived within thirty (30) days
after the earlier of (1) receipt by Borrowers of notice from Investment Manager
or Lender of such default or (2) actual knowledge of any Borrower of such
default; or
(f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) A court
enters a decree or order for relief with respect to any Borrower or any
Guarantor in an involuntary case under the Bankruptcy Code, which decree or
order is not stayed or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the following events for
sixty (60) days unless dismissed, bonded or discharged: (a) an involuntary case
is commenced against any Borrower or any Guarantor, under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or (b) a
decree or order of a court for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over any
Borrower, or over all or a substantial part of its property, is entered; or (c)
a receiver, trustee or other custodian is appointed without the consent of any
Borrower, for all or a substantial part of the property of such Borrower; or
(g) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) Borrower
commences a voluntary case under the Bankruptcy Code, or consents to the entry
of an order for relief in an involuntary case or to the conversion of an
involuntary case to a voluntary case under any such law or consents to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or (2) any Borrower or any
Guarantor makes any assignment for the benefit of creditors; or (3) the Board of
Directors of any Borrower or any Guarantor adopts any resolution or otherwise
authorizes action to approve any of the actions referred to in this SECTION
7.1(g); or
27
(h) JUDGMENT AND ATTACHMENTS. Any final, non-appealable money
judgment, writ or warrant of attachment, or similar process (other than those
described elsewhere in this SECTION 7.1) involving (1) an amount in any
individual case in excess of $250,000 or (2) an amount in the aggregate at any
time in excess of $1,000,000 (in either case to the extent not adequately
covered by insurance in Investment Manager's sole discretion as to which the
insurance company has acknowledged coverage) is entered or filed against any
Borrower or any of its assets and remains undischarged, unvacated or unstayed
for a period of thirty (30) days or in any event later than five (5) Business
Days prior to the date of any proposed sale thereunder; or
(i) DISSOLUTION. Any order, judgment or decree is entered against any
Borrower or any Guarantor decreeing the dissolution or split up of such Borrower
or such Guarantor and such order remains undischarged or unstayed for a period
in excess of fifteen (15) days; or
(j) SOLVENCY. Any Borrower or any Guarantor fails to pay its debts as
they become due or admits in writing its present or prospective inability to pay
its debts as they become due; or
(k) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Borrower or any Guarantor denies that it has any further liability
under any Loan Documents to which it is party, or gives notice to such effect;
or
(l) SUBORDINATED INDEBTEDNESS. The failure of any Borrower or any
creditor of any Borrower or any of their Subsidiaries to comply with the terms
of any subordination or intercreditor agreement or any subordination provisions
of any note or other document running to the benefit of Investment Manager or
Lender, or if any such document becomes null and void or any party denies
further liability under any such document or provides notice to that effect.
7.2 ACCELERATION AND OTHER REMEDIES.
(a) Upon the occurrence of any Event of Default described in SECTIONS
7.1(f) OR 7.1(g), all of the Obligations shall automatically become immediately
due and payable, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other requirements of any kind, all of
which are hereby expressly waived by Borrower.
(b) Upon the occurrence and during the continuance of any Event of
Default other than described in SECTIONS 7.1(f) OR 7.1(g), Investment Manager
may, and at the request of Lender, Investment Manager shall by written notice to
Borrowers (i) declare all or any portion of the Obligations to be, and the same
shall forthwith become, immediately due and payable together with accrued
interest thereon and (ii) exercise any other remedies which may be available
28
under the Loan Documents or applicable law, including all remedies provided
under the Code.
(c) Except as otherwise provided for in this Agreement or by
applicable law, each Borrower waives: (i) presentment, demand and protest and
notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, 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 Investment Manager on which such Borrower may in any way be liable,
and hereby ratifies and confirms whatever Investment Manager may do in this
regard, (ii) all rights to notice and a hearing prior to Investment Manager's
taking possession or control of, or to Investment Manager's replevy, attachment
or levy upon, the Collateral or any bond or security that might be required by
any court prior to allowing Investment Manager to exercise any of its remedies,
and (iii) the benefit of all valuation, appraisal, marshaling and exemption
laws.
7.3 PERFORMANCE BY INVESTMENT MANAGER. If any Borrower shall fail to
perform any covenant, duty or agreement contained in any of the Loan Documents,
Investment Manager may perform or attempt to perform such covenant, duty or
agreement on behalf of such Borrower after the expiration of any cure or grace
periods set forth herein. In such event, Borrowers shall, at the request of
Investment Manager, promptly pay any amount reasonably expended by Investment
Manager in such performance or attempted performance to Investment Manager.
Notwithstanding the foregoing, it is expressly agreed that Investment Manager
shall not have any liability or responsibility for the performance of any
obligation of any Borrower under this Agreement or any other Loan Document.
7.4 SET OFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, Lender is hereby
authorized by each Borrower at any time or from time to time, with reasonably
prompt subsequent notice to such Borrower (any prior or contemporaneous notice
being hereby expressly waived) to set off and to appropriate and to apply any
and all (A) balances held by Lender at any of its offices for the account of any
Borrower or any of their Subsidiaries (regardless of whether such balances are
then due to such Borrower or Subsidiary), and (B) other property at any time
held or owing by Lender to or for the credit or for the account of any Borrower
or any of their Subsidiaries, against and on account of any of the Obligations;
except that Lender shall not exercise any such right without the prior written
consent of Investment Manager. Lender, in exercising a right to set off or
otherwise receiving any payment on account of the Obligations, shall deliver
such amounts to Investment Manager and Investment Manager shall apply such funds
to the payment of the Obligations in accordance with SECTION 7.5.
7.5 APPLICATION OF PROCEEDS AFTER DEFAULT. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) each Borrower irrevocably waives the
right to direct the application of any and all payments at any time or times
thereafter received by Lender or Investment Manager from or on behalf of such
Borrower, and Investment Manager shall have the continuing and exclusive right
29
to apply and to reapply any and all payments received at any time or times after
the occurrence and during the continuance of an Default or Event of Default
against the Obligations in such manner as Investment Manager may deem advisable
notwithstanding any previous application by Investment Manager and (b) in the
absence of a specific determination by Investment Manager with respect thereto,
the proceeds of any sale of, or other realization upon, all or any part of the
Collateral shall be applied in accordance with SECTION 1.9 hereof. Any balance
remaining shall be delivered to Borrowers or to whomever may be lawfully
entitled to receive such balance or as a court of competent jurisdiction may
direct.
ARTICLE 8
ASSIGNMENT
8.1 ASSIGNMENT.
(a) Subject to the terms of this SECTION 8.1, Lender may make an
assignment, at any time or times, of the Loan Documents, the Loan or any portion
thereof or interest therein, including Lender's rights, title, interests,
remedies, powers or duties thereunder. Any assignment by Lender shall: (i)
require the consent of Investment Manager and MTM (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement in form and substance reasonably
satisfactory to, and acknowledged by, Investment Manager); (iii) be conditioned
on such assignee Lender representing to the assigning Lender and Investment
Manager that it is purchasing the Loan or portion of the Loan to be assigned to
it for its own account, for investment purposes and not with a view to the
distribution thereof; and (iv) after giving effect to any such partial
assignment, the assignee Lender shall hold a partial Loan the original principal
amount of which is at least $5,000,000 and the assigning Lender shall continue
to hold a portion of the Loan the original principal amount of which is at least
equal to $5,000,000. In the case of an assignment by Lender under this SECTION
8.1, the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as Lender hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to the assigned portion of
the Loan from and after the date of such assignment. Each Borrower hereby
acknowledges and agrees that any assignment shall give rise to a direct
obligation of such Borrower to the assignee and that the assignee shall be
considered to be a "Lender." In the event Investment Manager or Lender assigns
or otherwise transfers all or any part of the Obligations, Investment Manager or
Lender shall so notify Borrowers and Borrowers shall, upon the request of
Investment Manager or Lender, execute new notes in exchange for the Note being
assigned. Notwithstanding the foregoing provisions of this SECTION 8.1(a),
Lender may at any time pledge the Obligations held by it and Lender's rights
under this Agreement and the other Loan Documents to a Federal Reserve Bank.
(b) Borrowers shall assist Lender as required to enable the assigning
Lender to effect any such assignment, including the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be
requested and the prompt preparation of informational materials for, and the
participation of management in meetings with potential assignees, all on a
reasonable timetable established by Investment Manager in its sole discretion.
30
Borrowers shall certify the correctness, completeness and accuracy in all
material respects of all written descriptions of Borrowers and their affairs
contained in any selling materials provided by MTM and included in such
materials.
(c) Lender may furnish any information concerning Borrowers in the
possession of Lender from time to time to assignees and participants (including
prospective assignees and participants); provided that Lender shall obtain from
assignees or participants confidentiality covenants substantially equivalent to
those contained in SECTION 10.12.
ARTICLE 9
PROVISIONS RELATED TO INVESTMENT MANAGER
9.1 APPOINTMENT. Lender hereby designates and appoints Investment Manager
as its agent under this Agreement and the other Loan Documents, and Lender
hereby irrevocably authorizes Investment Manager to execute and deliver the
Collateral Documents and to take such action or to refrain from taking such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Investment
Manager is authorized and empowered to amend, modify, or waive any provisions of
this Agreement or the other Loan Documents on behalf of Lender subject to the
requirement that Lender's consent be obtained in certain instances as provided
in this ARTICLE 9 and SECTION 10.2. The provisions of this ARTICLE 9 are solely
for the benefit of Investment Manager and Lender and no Borrower nor any other
Person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Investment Manager shall act solely as agent of Lender and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for any Borrower. Investment Manager may perform any of
its duties hereunder, or under the Loan Documents, by or through its agents or
employees.
9.2 RELIANCE. Investment Manager shall be entitled to rely, and shall be
fully protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, fax or telegram) believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person, and with respect to all matters pertaining to this Agreement
or any of the Loan Documents and its duties hereunder or thereunder. Investment
Manager shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Investment Manager in its sole
discretion.
9.3 SUCCESSOR INVESTMENT MANAGER.
(a) RESIGNATION. Investment Manager may resign from the performance of
all its agency functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to Borrower and Lender. Such
resignation shall take effect upon the acceptance by a successor Investment
Manager of appointment pursuant to clause (b) below or as otherwise provided in
clause (b) below.
31
(b) APPOINTMENT OF SUCCESSOR. Upon any such notice of resignation
pursuant to clause (a) above, Lender shall appoint a successor Investment
Manager which, unless an Event of Default has occurred and is continuing, shall
be acceptable to Borrowers (Borrowers' approval not to be unreasonably
conditioned, delayed or withheld). If a successor Investment Manager shall not
have been so appointed within the thirty (30) Business Day period referred to in
clause (a) above, the retiring Investment Manager, upon notice to Borrower,
shall then appoint a successor Investment Manager who shall serve as Investment
Manager until such time, if any, as Lender appoints a successor Investment
Manager as provided above.
(c) SUCCESSOR INVESTMENT MANAGER. Upon the acceptance of any
appointment as Investment Manager under the Loan Documents by a successor
Investment Manager, such successor Investment Manager shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Investment Manager, and the retiring Investment Manager shall be
discharged from its duties and obligations under the Loan Documents. After any
retiring Investment Manager's resignation as Investment Manager, the provisions
of this ARTICLE 9 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it in its capacity as Investment Manager.
9.4 COLLATERAL MATTERS.
(a) RELEASE OF COLLATERAL. Lender hereby irrevocably authorizes
Investment Manager, at its option and in its discretion, to release any Lien
granted to or held by Investment Manager upon any Collateral (x) upon payment
and satisfaction of all Obligations (other than contingent indemnification
obligations to the extent no claims giving rise thereto have been asserted) or
(y) constituting property being sold or disposed of if Borrowers certify to
Investment Manager that the sale or disposition is made in compliance with the
provisions of this Agreement (and Investment Manager may rely in good faith
conclusively on any such certificate, without further inquiry).
(b) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES. Without in any
manner limiting Investment Manager's authority to act without any specific or
further authorization or consent by Lender (as set forth in SECTION 9.4(a)),
Lender agrees to confirm in writing, upon request by Investment Manager or
Borrowers, the authority to release any Collateral conferred upon Investment
Manager under clauses (x) and (y) of SECTION 9.4(a). Upon receipt by Investment
Manager of any required confirmation from Lender of its authority to release any
particular item or types of Collateral, and upon at least ten (10) Business
Days' prior written request by Borrowers, Investment Manager shall (and is
hereby irrevocably authorized by Lender to) execute such documents as may be
necessary to evidence the release of the Liens granted to Investment Manager
upon such Collateral; provided, however, that (x) Investment Manager shall not
be required to execute any such document on terms which, in Investment Manager's
opinion, would expose Investment Manager to liability or create any obligation
or entail any consequence other than the release of such Liens without recourse
or warranty, and (y) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon, all interests retained by Borrowers,
32
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(c) ABSENCE OF DUTY. Investment Manager shall have no obligation
whatsoever to Lender or any other Person to assure that the property covered by
the Collateral Documents exists or is owned by any Borrower or is cared for,
protected or insured or has been encumbered or that the Liens granted to
Investment Manager have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Investment Manager in this
SECTION 9.4 or in any of the Loan Documents, it being understood and agreed that
in respect of the property covered by the Collateral Documents or any act,
omission or event related thereto, Investment Manager may act in any manner it
may deem appropriate, in its discretion, given Investment Manager's own interest
in property covered by the Collateral Documents and that Investment Manager
shall have no duty or liability whatsoever to Lender, provided that Investment
Manager shall exercise the same care which it would in dealing with loans for
its own account.
9.5 AGENCY FOR PERFECTION. Investment Manager and Lender hereby appoint
each other Lender as agent for the purpose of perfecting Investment Manager's
security interest in assets which, in accordance with the Code in any applicable
jurisdiction, can be perfected by possession or control. Should Lender obtain
possession or control of any such assets, Lender shall notify Investment Manager
thereof, and, promptly upon Investment Manager's request therefor, shall deliver
such assets to Investment Manager or in accordance with Investment Manager's
instructions or transfer control to Investment Manager in accordance with
Investment Manager's instructions. Lender agrees that it will not have any right
individually to enforce or seek to enforce any Collateral Document or to realize
upon any collateral security for the Loan unless instructed to do so by
Investment Manager in writing, it being understood and agreed that such rights
and remedies may be exercised only by Investment Manager.
9.6 NOTICE OF DEFAULT. Investment Manager shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
Investment Manager shall have received written notice from Lender or Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". Investment Manager will use
reasonable efforts to notify Lender of its receipt of any such notice, unless
such notice is with respect to defaults in the payment of principal, interest
and Fees, in which case Investment Manager will notify Lender of its receipt of
such notice. Investment Manager shall take such action with respect to such
Default or Event of Default as may be requested by Lender in accordance with
ARTICLE 7. Unless and until Investment Manager has received any such request,
Investment Manager 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 or in the best interests of Lender.
33
9.7 LENDER ACTIONS AGAINST COLLATERAL. With respect to any action by
Investment Manager to enforce the rights and remedies of Investment Manager and
Lender under this Agreement and the other Loan Documents, Lender hereby consents
to the jurisdiction of the court in which such action is maintained, and agrees
to deliver the Note to Investment Manager to the extent necessary to enforce the
rights and remedies of Investment Manager for the benefit of Lender under the
mortgages or similar Liens or encumbrances in accordance with the provisions
hereof.
9.8 PAYMENT; INFORMATION; ACTIONS IN CONCERT.
(a) RETURN OF PAYMENTS.
(i) If Investment Manager pays an amount to any Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Investment Manager from any Borrower and such related payment is
not received by Investment Manager, then Investment Manager will be entitled to
recover such amount from such Lender on demand without setoff, counterclaim or
deduction of any kind.
(ii) If Investment Manager determines at any time that any amount
received by Investment Manager under this Agreement must be returned to
Borrowers or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this Agreement
or any other Loan Document, Investment Manager will not be required to
distribute any portion thereof to Lender. In addition, Lender will repay to
Investment Manager on demand any portion of such amount that Investment Manager
has distributed to Lender, together with interest at such rate, if any, as
Investment Manager is required to pay to Borrowers or such other Person, without
setoff, counterclaim or deduction of any kind.
(b) DISSEMINATION OF INFORMATION. Investment Manager shall use
reasonable efforts to provide Lender with any notice of Default or Event of
Default received by Investment Manager from, or delivered by Investment Manager
to, Borrowers, with notice of any Event of Default of which Investment Manager
has actually become aware and with notice of any action taken by Investment
Manager following any Event of Default; provided, that Investment Manager shall
not be liable to Lender for any failure to do so.
ARTICLE 10
MISCELLANEOUS
10.1 INDEMNITIES. Borrowers agree, jointly and severally, to indemnify,
pay, and hold Investment Manager, Lender and their respective officers,
directors, employees, agents, and attorneys (the "INDEMNITEES") harmless from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs and expenses (including all reasonable
fees and expenses of counsel to such Indemnitees) of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the
Indemnitee as a result of such Indemnitees being a party to this Agreement or
the transactions consummated pursuant to this Agreement; provided, that
Borrowers shall have no obligation to an Indemnitee hereunder with respect to
34
liabilities to the extent resulting from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower agrees to make the maximum contribution
to the payment and satisfaction thereof which is permissible under applicable
law.
10.2 AMENDMENTS AND WAIVERS. Except for actions expressly permitted to be
taken by Investment Manager, no amendment, modification, termination or waiver
of any provision of this Agreement or any other Loan Document, or any consent to
any departure by any Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by Borrowers, Investment Manager and
Lenders owning a majority of the principal amount of the Note.
10.3 NOTICES. Any notice or other communication required shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by fax, on the date of transmission if transmitted
on a Business Day before 4:00 p.m. Eastern Time; (c) if delivered by overnight
courier, one (1) Business Day after delivery to the courier properly addressed;
or (d) if delivered by U.S. mail, four (4) Business Days after deposit with
postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrowers: MTM TECHNOLOGIES, INC.
MTM TECHNOLOGIES (CALIFORNIA), INC.
MTM TECHNOLOGIES (TEXAS), INC.
MTM TECHNOLOGIES (US), INC.
MTM TECHNOLOGIES (MASSACHUSETTS), LLC
INFO SYSTEMS, INC.
0000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
With a copy to: XXXXXX XXXX & PRIEST LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: E. Xxx Xxxx, Esq.
Fax: (000) 000-0000
If to Investment Manager
or Lender: COLUMBIA PARTNERS, L.L.C. INVESTMENT
MANAGEMENT
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 0000
Xxxxxxxxxx, XX 00000
ATTN: Xxxxx Xxxxx
Fax: (000) 000-0000
35
With a copy to: XXXXXX GODWARD LLP
The Xxxxx Building
000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
ATTN: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
10.4 OBLIGATIONS ABSOLUTE; FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. The payment and performance by Borrowers of all of the Obligations
shall be absolute and unconditional, irrespective of any defense or rights of
set-off, recoupment or counterclaim Borrowers might otherwise have against
Investment Manager or Lender, and Borrowers shall pay and perform all of the
Obligations, free of any deductions and without abatement, diminution,
recoupment, counterclaim or set-off. Until payment in full of all of the
Obligations, (a) no Borrower shall suspend or discontinue any payments required
pursuant to the Note, this Agreement or any other Loan Document; and (b) each
Borrower shall perform and observe all of the other terms and provisions of this
Agreement or any other Loan Documents. No failure or delay on the part of
Investment Manager or Lender to exercise, nor any partial exercise of, any
power, right or privilege hereunder or under any other Loan Documents shall
impair such power, right, or privilege or be construed to be a waiver of any
Default or Event of Default. All rights and remedies existing hereunder or under
any other Loan Document are cumulative to and not exclusive of any rights or
remedies otherwise available.
10.5 MARSHALING; PAYMENTS SET ASIDE. Neither Investment Manager nor Lender
shall be under any obligation to marshal any assets in payment of any or all of
the Obligations. To the extent that any Borrower makes payment(s) or Investment
Manager enforces its Liens or Investment Manager or Lender exercises its right
of set-off, and such payment(s) or the proceeds of such enforcement or set-off
is subsequently invalidated, declared to be fraudulent or preferential, set
aside, or required to be repaid by anyone, then to the extent of such recovery,
the Obligations or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or set
off had not occurred.
10.6 SEVERABILITY. The invalidity, illegality, or unenforceability in any
jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents. Furthermore, in lieu of
any such provision, there shall be added automatically as part of the applicable
agreement a legal and enforceable provision as similar in terms to such
provision as may be possible.
10.7 HEADINGS. Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
36
10.8 APPLICABLE LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
WHICH DOES NOT EXPRESSLY SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
10.9 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of Borrowers, Investment
Manager, Lender and their respective successors and assigns (including, in the
case of Borrowers, a debtor-in-possession on behalf of any Borrower), except as
otherwise provided herein or therein. No Borrower may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder or under any of the other Loan Documents without the prior express
written consent of Investment Manager and Lender owning a majority in principal
amount of the Note. Any such purported assignment, transfer, hypothecation or
other conveyance by any Borrower without the prior express written consent of
Investment Manager and Lender shall be void. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and obligations of
Borrowers, Investment Manager and Lender with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.
10.10 NO FIDUCIARY RELATIONSHIP; LIMITED LIABILITY. No provision in the
Loan Documents and no course of dealing between the parties shall be deemed to
create any fiduciary duty owing to any Borrower by Investment Manager or Lender.
Each Borrower agrees that neither Investment Manager nor Lender shall have
liability to such Borrower (whether sounding in tort, contract or otherwise) for
losses suffered by such Borrower in connection with, arising out of, or in any
way related to the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in connection
therewith, unless and to the extent that it is determined that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought as determined by a final non-appealable order by a court of
competent jurisdiction. Neither Investment Manager nor Lender shall have any
liability with respect to, and each Borrower hereby waives, releases and agrees
not to xxx for, any special, indirect or consequential damages suffered by
Borrower in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby.
10.11 CONSTRUCTION. Investment Manager, Lender and Borrowers acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review the Loan Documents with its legal counsel
and that the Loan Documents shall be construed as if jointly drafted by
Investment Manager, Lender and Borrowers.
10.12 CONFIDENTIALITY. Investment Manager and Lender agree to exercise
reasonable efforts to keep confidential any non-public information delivered
pursuant to the Loan Documents and not to disclose such information to Persons
other than to potential assignees or participants or to Persons employed by or
engaged by Investment Manager or Lender or Lender's assignees or participants
37
including attorneys, auditors, professional consultants, rating agencies,
provided that each of the foregoing has agreed to comply with confidentiality
provisions substantially similar to those contained herein. The confidentiality
provisions contained in this SECTION 10.12 shall not apply to disclosures (i)
required to be made by Investment Manager or Lender to any regulatory or
governmental agency or pursuant to legal process or (ii) consisting of general
portfolio information that does not identify Borrowers or separately state
information regarding Borrowers. The obligations of Investment Manager and
Lender under this SECTION 10.12 shall supersede and replace the obligations of
Investment Manager and Lender under any confidentiality agreement in respect of
this financing executed and delivered by Investment Manager or Lender prior to
the date hereof.
10.13 CONSENT TO JURISDICTION. EACH BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK
AND IRREVOCABLY AGREE THAT, SUBJECT TO INVESTMENT MANAGER'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY
SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON
SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO SUCH BORROWER, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND
SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
IN ANY LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS OF EACH BORROWER SHALL BE DEEMED TO BE EMPLOYEES
OR MANAGING AGENTS OF SUCH BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT
RULES REGARDING THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN
A DEPOSITION, AT TRIAL OR OTHERWISE). EACH BORROWER AGREES THAT INVESTMENT
MANAGER'S OR LENDER'S COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY
EXAMINE ANY OF THESE INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY
DISCOVERY DEPOSITION OF ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE
AN EVIDENCE DEPOSITION. EACH BORROWER IN ANY EVENT WILL USE ALL COMMERCIALLY
REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION PROCEEDING, AT THE
TIME AND IN THE MANNER REQUESTED BY INVESTMENT MANAGER OR LENDER, ALL PERSONS,
DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER THINGS UNDER
THEIR CONTROL AND RELATING TO THE DISPUTE.
10.14 WAIVER OF JURY TRIAL. BORROWERS, INVESTMENT MANAGER AND LENDER EACH
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
38
BORROWERS, INVESTMENT MANAGER AND LENDER EACH ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWERS, INVESTMENT MANAGER AND LENDER EACH WARRANT AND REPRESENT THAT EACH
HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
10.15 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loan and the execution and
delivery of the Note. Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of Borrowers set forth in SECTIONS 1.6 AND
10.1 shall survive the repayment of the Obligations and the termination of this
Agreement.
10.16 ENTIRE AGREEMENT. This Agreement, the Note and the other Loan
Documents embody the entire agreement among the parties hereto and supersede all
prior commitments, agreements, representations, and understandings, whether oral
or written, relating to the subject matter hereof, and may not be contradicted
or varied by evidence of prior, contemporaneous, or subsequent oral agreements
or discussions of the parties hereto. All Exhibits, Schedules and Annexes
referred to herein are incorporated in this Agreement by reference and
constitute a part of this Agreement.
10.17 COUNTERPARTS; EFFECTIVENESS. This Agreement and any amendments,
waivers, consents or supplements 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 an original, but all of which
counterparts together shall constitute but one in the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
10.18 DELIVERY OF TERMINATION STATEMENTS AND MORTGAGE RELEASES. Upon
payment in full in cash and performance of all of the Obligations (other than
indemnification Obligations), and a release of all claims against Investment
Manager and Lender, and so long as no suits, actions proceedings, or claims are
pending or threatened against any Indemnitee asserting any damages, losses or
liabilities that are indemnified liabilities hereunder, Agent shall deliver to
Borrower termination statements, mortgage releases and other documents necessary
or appropriate to evidence the termination of the Liens securing payment of the
Obligations.
10.19 SURETYSHIP WAIVERS. The Borrowers shall be jointly and severally
liable for all obligations hereunder. Each Borrower hereby expressly waives (a)
diligence, presentment, demand for payment, protest, benefit of any statute of
limitations affecting such Borrower's liability under the Loan Documents; (b)
discharge due to any disability of any Borrower; (c) any defenses of any
39
Borrower to obligations under the Loan Documents not arising under the express
terms of the Loan Documents or from a material breach thereof by Lender which
under applicable law has the effect of discharging any Borrower from the
Obligations as to which this Agreement or any other Loan Document is sought to
be enforced; (d) the benefit of any act or omission by Lender which directly or
indirectly results in or aids the discharge of any Borrower from any of the
Obligations by operation of law or otherwise; (e) except as expressly provided
herein, all notices whatsoever, including notice of acceptance of the incurring
of the Obligations; (f) any right it may have to require Lender to disclose to
it any information that Lender may now or hereafter acquire concerning the
financial condition or any circumstances that bears on the risk of nonpayment by
any other Borrower, including the release of such other Borrower from its
Obligations hereunder; and (g) any requirement that Lender exhaust any right,
power or remedy or proceed against any other Borrower or any other security for,
or any guarantor of, or any other party liable for, any of the Obligations, or
any portion thereof. Each Borrower specifically agrees that it shall not be
necessary or required, and Borrowers shall not be entitled to require, that
Lender (i) file suit or proceed to assert or obtain a claim for personal
judgment against any other Borrower for all or any part of the Obligations; (ii)
make any effort at collection or enforcement of all or any part of the
Obligations from any Borrower; (iii) foreclose against or seek to realize upon
the Collateral or any other security now or hereafter existing for all or any
part of the Obligations; (iv) file suit or proceed to obtain or assert a claim
for personal judgment against any Borrower or any guarantor or other party
liable for all or any part of the Obligations; (v) exercise or assert any other
right or remedy to which Lender is or may be entitled in connection with the
Obligations or any security or guaranty relating thereto to assert; or (vi) file
any claim against assets of one Borrower before or as a condition of enforcing
the liability of any other Borrower under this Agreement. WITHOUT LIMITING THE
FOREGOING IN ANY WAY, EACH BORROWER HEREBY IRREVOCABLY WAIVES AND RELEASES:
(i) Any and all rights it may have at any time (whether arising
directly or indirectly, by operation of law, contract or otherwise) to require
the marshaling of any assets of any Borrower, which right of marshaling might
otherwise arise from any such payments made or obligations performed;
(ii) Any and all rights that would result in such Borrower being
deemed a "creditor" under the United States Code of any other Borrower or any
other Person, on account of payments made or obligations performed by such
Borrower; and
Until such time as the Obligations have been satisfied in full, any claim,
right or remedy which it may now have or hereafter acquire against any other
Borrower that arises hereunder and/or from the performance by it hereunder
including any claim, remedy or right of subrogation, reimbursement, exoneration,
contribution, indemnification, or participation in any claim, right or remedy of
Lender against any other Borrower or any collateral security which Lender now
has or may hereafter acquire, whether or not such claim, right or remedy arises
in equity, under contract, by statute, under common law or otherwise.
40
10.20 SUBORDINATION TO SENIOR INDEBTEDNESS. This Agreement is subject to
the terms of the Subordination Agreement, which agreement is incorporated herein
by reference. Notwithstanding any statement to the contrary contained in this
Agreement, no remedies shall be pursued, except in accordance with the terms of
such agreement. Notwithstanding the incorporation by reference of the
Subordination Agreement, Borrowers acknowledge that no other parties, including
any Borrower or any of their successors or assigns, are intended to be
benefited, in any way, by the Subordination Agreement. If MTM refinances or
renegotiates the Senior Indebtedness or replaces it with other Senior
Indebtedness, Investment Manager and Lender hereby agree to enter into any
subordination agreement requested by any Person or Persons who are MTM's Senior
Lenders or agents therefor, pursuant to which Investment Manager and Lender
agree to subordinate their respective rights and interests hereunder and under
the Note and the liens securing same to such Person, on terms consistent with or
no less favorable to Investment Manager and Lender than those contained in the
Subordination Agreement and the subordination agreement of even date herewith by
and between Investment Manager and Xxxxxx.
41
IN WITNESS WHEREOF, the undersigned have hereunto set their hands to this Credit
Agreement as of the day and year first above written.
MTM TECHNOLOGIES, INC.,
a New York corporation
By:
--------------------------------------
Name:
----------------------------------
Title:
----------------------------------
MTM TECHNOLOGIES (CALIFORNIA), INC.
a Delaware corporation
By:
--------------------------------------
Name:
----------------------------------
Title:
----------------------------------
MTM TECHNOLOGIES (TEXAS), INC.,
a Delaware corporation
By:
--------------------------------------
Name:
----------------------------------
Title:
----------------------------------
MTM TECHNOLOGIES, (US), INC.,
a Delaware corporation
By:
--------------------------------------
Name:
----------------------------------
Title:
----------------------------------
INFO SYSTEMS, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
----------------------------------
Title:
----------------------------------
MTM TECHNOLOGIES (MASSACHUSETTS), LLC,
a Delaware limited liability company
By:
--------------------------------------
Name:
----------------------------------
Title:
----------------------------------
42
COLUMBIA PARTNERS, L.L.C. INVESTMENT
MANAGEMENT,
as Investment Manager
By:
--------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Address: 0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn:
------------------------------
Fax: (___) ___-____
43
NATIONAL ELECTRICAL BENEFIT FUND,
as Lender
By: Columbia Partners, L.L.C. Investment
MANAGEMENT, its Authorized Signatory
By:
------------------------------------
Name:
----------------------------------
Address: 0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn:
------------------------------
Fax: (___) ___-____
ABA No.:
---------------------------------
Account No.:
Bank:
------------------------------------
Bank Address:
----------------------------
44
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings and
all references to Sections, Exhibits, Schedules or Annexes in the following
definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:
"ACCOUNTING CHANGES" means: (a) changes in accounting principles required
by GAAP and implemented by any Borrower; and (b) changes in accounting
principles recommended by Borrowers' certified public accountants and
implemented by any Borrower.
"ACQUISITION CONDITIONS" shall mean, with respect to any Permitted
Acquisition, that (i) Borrowers shall have given Investment Manager not less
than twenty (20) days prior written notice of the intention of the applicable
acquiring Borrower, or an entity organized by the applicable acquiring Borrower
for the purpose of making such Permitted Acquisition (each a "BUYER") to
consummate such Permitted Acquisition, which notice shall include, in reasonable
detail (x) a description of such Permitted Acquisition, (y) a statement of the
Buyer's expected sources and uses of cash pertaining to such Permitted
Acquisition, which sources and uses shall be reasonably satisfactory to
Investment Manager, and (z) a calculation, certified by Buyer's chief executive
officer or chief financial officer, showing that on a pro forma basis, after
giving effect to such Permitted Acquisition, the Borrowers and their
Subsidiaries on a consolidated basis shall be in compliance with SECTION 6.3 (it
being understood that no such chief executive officer or chief financial officer
shall have any personal liability to Investment Manager or Lender hereunder with
respect to any such certificates if such officer believes in good faith that the
information set forth therein is accurate), (ii) if the sources of cash
reflected in the statement described in clause (y) above include the proceeds of
(A) Indebtedness (other than the Loan or Senior Indebtedness), such Indebtedness
shall be unsecured and Borrowers shall have used commercially reasonable efforts
to cause the holders of such Indebtedness to execute and deliver a subordination
agreement to and in favor of Investment Manager, in form and substance
acceptable to Investment Manager; provided that no such subordination agreement
shall be required in connection with the NEXL Acquisition (Indebtedness pursuant
to this subsection, "PERMITTED ACQUISITION INDEBTEDNESS"), or (B) Senior
Indebtedness to CIT, then the certification described in clause (z) above shall
also include a calculation showing that immediately after giving effect to the
borrowing of such Indebtedness, Net Availability (as defined in the CIT
Financing Agreement) shall not be less than $2,000,000, (iii) Investment Manager
shall have received and reviewed to its satisfaction copies of all of the
applicable acquisition documents, (iv) Investment Manager shall have received
the results of a UCC, tax and judgment lien search, and pending litigation
search, against the Target and (v) the Buyer or the Target, as the case may be,
shall have (1) become a Borrower pursuant to a joinder agreement executed and
delivered by it, in form and substance satisfactory to Investment Manager and
(2) granted to Investment Manager, for the benefit of Lender, as collateral
security for all Obligations, and Investment Manager shall have a perfected, a
first priority lien (subject to the Senior Indebtedness) on and security
A-1
interest in all of its personal property and real property (if so requested by
Investment Manager).
"AFFILIATE" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "CONTROL" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "AFFILIATE" shall specifically
exclude Investment Manager and Lender.
"AGREEMENT" means this Credit Agreement (including all schedules,
subschedules, annexes and exhibits hereto), as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"BANKRUPTCY CODE" means the provisions of Title 11 of the United States
Code, 11 U.S.C. xx.xx. 101 et seq. or any other applicable bankruptcy,
insolvency or similar laws.
"BORROWERS" has the meaning ascribed to it in the Preamble.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"CAPITAL EXPENDITURES" means, for any period, the aggregate expenditures of
the Borrowers during such period on account of property, plant, equipment or
similar fixed assets that, in conformity with GAAP, are required to be reflected
on the consolidated balance sheet of MTM.
"CAPITAL LEASE" means, with respect to any Borrower, any lease of any
property (whether real, personal or mixed) by such Borrower as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of MTM.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"CASH EQUIVALENTS" means: (i) marketable securities (A) issued or directly
and unconditionally guaranteed as to interest and principal by the United States
government or (B) issued by any agency of the United States government the
obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after acquisition
thereof and having, at the time of acquisition, a rating of at least A-1 from
S&P or at least P 1 from Xxxxx'x; (iii) commercial paper maturing no more than
A-2
one year from the date of acquisition and, at the time of acquisition, having a
rating of at least A 1 from S&P or at least P 1 from Xxxxx'x; (iv) certificates
of deposit or bankers' acceptances issued or accepted by Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that is at least (A) "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (B) has Tier 1 capital (as defined in such regulations) of not
less than $250,000,000, in each case maturing within one year after issuance or
acceptance thereof; and (v) shares of any money market mutual or similar funds
that (A) has substantially all of its assets invested continuously in the types
of investments referred to in clauses (i) through (iv) above, (B) has net assets
of not less than $500,000,000 and (C) has the highest rating obtainable from
either S&P or Xxxxx'x.
"CASUALTY PROCEEDS" means (a) payments or other proceeds from an insurance
carrier with respect to any loss, casualty or damage to Collateral, and (b)
payments received on account of any condemnation or other governmental taking of
any of the Collateral.
"CHANGE OF CONTROL" means (i) a sale, lease, license or other disposition
of all or substantially all of the assets of MTM, (ii) the acquisition by any
person or group (as such term is used in Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended), other than one or more of the
institutional investors that own voting stock of MTM on the Closing Date, of
beneficial ownership of more than 50% of the voting power of the total issued
and outstanding shares of voting stock of MTM, or (iii) MTM shall cease to own
directly, or indirectly through one or more of the other Borrowers, 100% of the
total issued and outstanding capital stock of each of the other Borrowers;
provided, however, that, nothing herein shall be construed as a waiver of MTM's
or any other Borrower's obligations under SECTIONS 5.6 or 5.7 in connection with
the transfer of the capital stock of any Borrower to another Borrower or any
other corporate restructuring.
"CHARGES" means all federal, state, county, city, municipal, local, foreign
or other governmental taxes (including premiums and other amounts owed to the
PBGC at the time due and payable), levies, assessments, charges, liens, claims
or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of Borrowers, (d) Borrowers'
ownership or use of any properties or other assets, or (e) any other aspect of
Borrowers' businesses.
"CIT" means The CIT Group/Business Credit, Inc.
"CIT FINANCING AGREEMENT" means that certain Financing Agreement dated June
8, 2005, by and among CIT, the Borrowers and the other parties thereto, as
amended
"CLOSING" has the meaning ascribed to it in SECTION 1.1.
"CLOSING DATE" has the meaning ascribed to it in SECTION 1.1.
"CODE" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
A-3
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Investment Manager's or Lender's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"COLLATERAL" means the "Collateral" as defined in the Security Agreement
and the other Collateral Documents and any other property, real or personal,
tangible or intangible, now existing or hereafter acquired, that may at any time
be or become subject to a security interest or Lien in favor of, or for the
benefit of, Investment Manager or Lender, to secure the Obligations or any
portion thereof.
"COLLATERAL DOCUMENTS" means the Security Agreement, the Guaranties, the
Pledge Agreements, the Intellectual Property Security Agreement and all similar
agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations or any portion thereof.
"CONSOLIDATED EBITDA" means, for any period, with respect to MTM and its
consolidated Subsidiaries, all earnings before all interest, tax obligations and
depreciation and amortization expense for such period, all determined in
conformity with GAAP on a basis consistent with the latest audited financial
statements of MTM, but excluding the effect of extraordinary and/or nonrecurring
gains or losses for such period.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean, for any period, the
quotient (expressed as a ratio) obtained by dividing (a) Consolidated EBITDA for
such period by (b) Consolidated Fixed Charges for such period.
"CONSOLIDATED FIXED CHARGES" shall mean, for any period, with respect to
MTM and its consolidated Subsidiaries, the sum of (a) all cash interest
obligations paid or due during such period, (b) the amount of all scheduled fees
paid to Senior Bank Lenders during such period, (c) the amount of principal
repaid in cash or scheduled to be repaid but not paid on Indebtedness (other
than Senior Bank Indebtedness) during such period (including, without
limitation, principal repayments in respect of any Subordinated Debt, but not
including principal repayments in respect of any Indebtedness that is, by its
terms, payable only in stock) provided, that, cash payments made in respect of
Indebtedness incurred in connection with any Permitted Acquisition will be
excluded from Consolidated Fixed Charges to the extent that they were made with
the proceeds of the Loan or capital contributions (either in the form of equity
or Subordinated Debt) and not with the proceeds of Senior Bank Indebtedness or
other working capital, (d) unfinanced Capital Expenditures incurred during such
period, (e) all federal, state and local income tax expenses due and payable
during such period, (f) all cash payments made or due in respect of any earnout
or similar contingent obligations during such period, provided, that, such cash
payments will be excluded from Consolidated Fixed Charges to the extent that
they were made with the proceeds of the Loan or capital contributions (either in
the form of equity or Subordinated Debt) and not with the proceeds of Senior
Bank Indebtedness or other working capital and (g) all payments made or due in
respect of Capital Leases during such period.
A-4
"CONSOLIDATED SENIOR LEVERAGE" means, as of any date, the quotient
(expressed as a ratio) obtained by dividing (a) the sum of the aggregate
principal amount of the Senior Bank Indebtedness, as of such date, by (b)
Consolidated EBITDA for the applicable period ending on such date.
"CONTINGENT OBLIGATION" means, as applied to any Person, means any direct
or indirect liability of that Person: (i) with respect to Guaranteed
Indebtedness and with respect to any Indebtedness, lease, dividend or other
obligation of another Person if the purpose or intent of the Person incurring
such liability, or the effect thereof, is to provide assurance to the obligee of
such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; (ii) any agreement, contract or transaction involving commodity options
or future contracts, (iii) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement, or
(iv) pursuant to any agreement to purchase, repurchase or otherwise acquire any
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
"CONTRACTUAL OBLIGATIONS" means, as applied to any Person, any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"COPYRIGHT LICENSE" means any and all rights now owned or hereafter
acquired by any Borrower under any written agreement granting any right to use
any Copyright or Copyright registration.
"COPYRIGHTS" means all of the following now owned or hereafter adopted or
acquired by any Borrower: (a) all copyrights and General Intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; and (b) all
reissues, extensions or renewals thereof.
"DEFAULT" means any event that, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.
"DISCLOSURE SCHEDULES" means the Schedules prepared by Borrowers and
denominated as SCHEDULES 3.4(a) THROUGH 5.12 in the index to the Agreement.
"DOLLARS" or "$" means lawful currency of the United States of America.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and foreign
laws, statutes, ordinances, codes, rules, standards and regulations, now or
hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
A-5
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. ss.
9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation Authorization
Act of 1994 (49 U.S.C. ss. 5101 et seq.); the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. ss. 136 et seq.); the Solid Waste Disposal Act (42
U.S.C. ss. 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. ss. 2601 et
seq.); the Clean Air Act (42 U.S.C. ss. 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C. ss. 651 et seq.); and the Safe Drinking Water Act (42
U.S.C. ss. 300(f) et seq.), and any and all regulations promulgated thereunder,
and all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.
"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"EQUIPMENT" means all "equipment," as such term is defined in the Code, now
owned or hereafter acquired by any Borrower, wherever located and, in any event,
including all of Borrowers' machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer equipment,
including embedded software and peripheral equipment and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, together with all additions and accessions
thereto, replacements therefor, all parts therefor, all substitutes for any of
the foregoing, fuel therefor, and all manuals, drawings, instructions,
warranties and rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA AFFILIATE" means, with respect to any Borrower, any trade or
business (whether or not incorporated) that, together with such Borrower, are
treated as a single employer within the meaning of Sections 414(b), (c) or (m)
of the IRC.
"ERISA EVENT" means, with respect to any Borrower or any ERISA Affiliate,
(a) any event described in Section 4043(c) of ERISA with respect to a Title IV
Plan; (b) the withdrawal of any Borrower or ERISA Affiliate from a Title IV Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Borrower or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (e) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (f) the failure by any Borrower or ERISA
A-6
Affiliate to make when due required contributions to a Multiemployer Plan or
Title IV Plan unless such failure is cured within 30 days; (g) any other event
or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the final determination that a Qualified Plan's qualification or tax exempt
status should be revoked; or (j) the termination of a Plan described in Section
4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of Section
4975(e)(7) of the IRC.
"EVENT OF DEFAULT" has the meaning ascribed to it in SECTION 7.1.
"FACILITY FEE" has the meaning ascribed to it in SECTION 1.5.
"FAIR LABOR STANDARDS ACT" means the Fair Labor Standards Act, 29 U.S.C.
ss.201 et seq.
"FEES" means any and all fees payable to Investment Manager or Lender
pursuant to the Agreement or any of the other Loan Documents, including without
limitation, the Facility Fees.
"FINANCIAL STATEMENTS" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrowers and their
Subsidiaries delivered in accordance with SECTION 6.1.
"FISCAL QUARTER" means any of the three month periods of Borrower ending on
December 31, March 31, June 30 and September 30 of each year.
"FISCAL YEAR" means any of the annual accounting periods of Borrowers
ending on March 31 of each year.
"FIXTURES" means all "fixtures" as such term is defined in the Code, now
owned or hereafter acquired by any Borrower.
"GAAP" means generally accepted accounting principles in the United States
of America, consistently applied.
"GENERAL INTANGIBLES" means "general intangibles," as such term is defined
in the Code, now owned or hereafter acquired by any Borrower, including all
right, title and interest that any Borrower may now or hereafter have in or
under any Contractual Obligation, all payment intangibles, customer lists,
Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
A-7
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, chooses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including all tapes, cards, computer runs and other papers and
documents in the possession or under the control of any Borrower or any computer
bureau or service company from time to time acting for any Borrower.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GUARANTEED INDEBTEDNESS" means, as to any Person, any obligation of such
Person guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation ("PRIMARY OBLIGATION") of any other Person
(the "PRIMARY OBLIGOR") in any manner, including any obligation or arrangement
of such Person to (a) purchase or repurchase any such primary obligation, (b)
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (d) protect the beneficiary of such arrangement from loss (other
than product warranties given in the ordinary course of business) or (e)
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
incurred and (y) the maximum amount for which such Person may be liable pursuant
to the terms of the instrument embodying such Guaranteed Indebtedness, or, if
not stated or determinable, the maximum reasonably anticipated liability
(assuming full performance) in respect thereof.
"GUARANTIES" means, collectively, any guaranty executed by any Guarantor in
favor of Investment Manager and Lender in respect of the Obligations.
"GUARANTOR" means any Person, if any, that executes a guaranty or other
similar agreement in favor of Investment Manager, for itself and the benefit of
Lender, or Lender in connection with the transactions contemplated by the
Agreement and the other Loan Documents.
"HAZARDOUS MATERIAL" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
A-8
any fraction or by product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"INDEBTEDNESS" means, with respect to any Person, without duplication (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than six (6) months unless
being contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations, (f) all
obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent or
matured, (g) all obligations of such Person under any foreign exchange contract,
currency swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of that Person
arising from fluctuations in currency values or interest rates, in each case
whether contingent or matured, (h) all Indebtedness referred to above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
(i) "earnouts" and similar payment obligations, except for such obligations
which are payable solely in Stock, (j) Contingent Obligations and (k) the
Obligations.
"INDEMNITEES" has the meaning ascribed to it in SECTION 10.1.
"XXXXXX" means Xxxxxx Micro Inc.
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents, Copyrights,
Trademarks, and the goodwill associated with such Trademarks.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the Intellectual Property
Security Agreement made in favor of Investment Manager, for the benefit of
itself and Lender, by Borrowers.
"INVENTORY" means any "inventory," as such term is defined in the Code, now
owned or hereafter acquired by any Borrower, wherever located, including
inventory, merchandise, goods and other personal property that are held by or on
behalf of any Borrower for sale or lease or are furnished or are to be furnished
under a contract of service, or that constitute raw materials, work in process,
finished goods, returned goods, supplies or materials of any kind, nature or
description used or consumed or to be used or consumed in Borrower's business or
in the processing, production, packaging, promotion, delivery or shipping of the
same, including all supplies and embedded software.
A-9
"INVESTMENT MANAGER" means Columbia Partners, L.L.C. Investment
Management in its capacity as Investment Manager for Lender or its successor
appointed pursuant to SECTION 9.3.
"INVESTMENT PROPERTY" means all "investment property," as such term is
defined in the Code, now owned or hereafter acquired by any Borrower, wherever
located, including: (i) all securities, whether certificated or uncertificated,
including stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Borrower, including the rights of any Borrower to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii)
all securities accounts of any Borrower; (iv) all commodity contracts of any
Borrower; and (v) all commodity accounts held by any Borrower.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"IRR" means, with respect to the calculation of a Payment Premium then due
or owing pursuant to the terms of this Agreement, a referenced interest rate
that, when used as a discount rate, causes (a) the net present value (as of the
Closing Date) of the aggregate payments made by Borrowers of principal, accrued
interest and the applicable Payment Premium from the Closing Date through the
payment date to which the applicable Payment Premium relates (excluding, for
avoidance of doubt, all others payments, including the Facility Fee and other
fees and expenses), to equal (b) the net present value (as of the Closing Date)
of principal loaned by Lender from the Closing Date through the payment date to
which the applicable Payment Premium relates.
"IRS" means the Internal Revenue Service.
"LENDER" means National Electrical Benefit Fund, and if Lender shall decide
to assign all or any portion of the Obligations, such term shall include any
assignee of Lender.
"LICENSE" means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Borrower.
"LIEN" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"LIQUIDITY EVENT" means the issuance after the Closing Date by any Borrower
of indebtedness for borrowed money or the sale by any Borrower of equity
securities in a public offering or in a private sale to a Person that is not a
Borrower for cash in which such Borrower receives aggregate net proceeds in
excess of Twenty-Five Million Dollars ($25,000,000); provided none of the
following events shall constitute a Liquidity Event: (i) the issuance of equity
securities in connection with MTM's Series A Preferred Stock (including upon
conversion of such stock, the payment of "in kind" dividends, the issuance of
shares upon the exercise of warrants or the operation of anti-dilution
A-10
provisions), (ii) the issuance, vesting or exercise of board, employee,
management and consultant equity incentives, (iii) the incurrence by Borrowers
of Senior Indebtedness, the Obligations, or short term inventory, receivables or
vendor financing and the issuance and sale of the Warrant, (iv) the issuance of
acquisition consideration and related earn-outs, notes and similar payments, (v)
the issuance of securities upon the exercise of the Warrant or any warrant
issued by MTM on or prior to the Closing Date or (vi) the issuance and sale of
Series A-5 Preferred Stock and warrants by MTM in the Series A-5 Financing.
"LITIGATION" has the meaning ascribed to it in SECTION 6.1(j).
"LOAN DOCUMENTS" means the Agreement, the Note, the Collateral Documents
and all other agreements, instruments, documents and certificates executed and
delivered to, or in favor of, Investment Manager or Lender and including all
other pledges, powers of attorney, consents, assignments, contracts, notices,
and all other written matter whether now or hereafter executed by or on behalf
of any Borrower and delivered to Investment Manager or Lender in connection with
the Agreement or the transactions contemplated hereby. Any reference in the
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to the Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.
"LOAN" means the loan made by Lender hereunder in exchange for Note.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of
Borrowers taken as a whole, (b) Borrowers' ability to pay any of the Loan or
pay, or perform any of the other Obligations in accordance with the terms of the
Agreement and the other Loan Documents, (c) the Collateral or Investment
Manager's Liens, on behalf of itself and Lender, on the Collateral or the
priority of such Liens, or (d) Investment Manager's or Lender's rights and
remedies under the Agreement and the other Loan Documents.
"MATERIAL AGREEMENT" means any written contract, agreement, instrument,
commitment or other written arrangement to which any Borrower is a party, the
absence of which would reasonably be expected to have a Material Adverse Effect
(other than the Loan Documents).
"MATURITY DATE" has the meaning ascribed to it in SECTION 1.3(b).
"XXXXX'X" means Xxxxx'x Investor's Services, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, and to which Borrower or any ERISA Affiliate is making, is
obligated to make or has made or been obligated to make, contributions on behalf
of participants who are or were employed by any of them.
"NEXL ACQUISITION" the merging of NEXL, Inc. with and into MTM-MA.
"NOTE" has the meaning ascribed to it in SECTION 1.1.
A-11
"OBLIGATIONS" means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable), owing by any
Borrower to Investment Manager or Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether or not evidenced
by any note, agreement or other instrument, in each case, arising under the
Agreement or any of the other Loan Documents. This term includes all principal,
interest (including all interest that accrues after the commencement of any case
or proceeding by or against any Borrower in bankruptcy, whether or not allowed
in such case or proceeding), Fees, Charges, expenses, attorneys' fees and any
other sum chargeable to any Borrower under the Agreement or any of the other
Loan Documents, but expressly excludes the obligations of MTM under the Warrant
and any other equity-related document or agreement executed or delivered in
connection therewith.
"PATENT LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Borrower granting any right with respect to any
invention on which a Patent is in existence.
"PATENTS" means all of the following in which any Borrower now holds or
hereafter acquires any interest: (a) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations in part or extensions thereof.
"PAYMENT PREMIUM" has the meaning ascribed to it in SECTION 1.4.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" means a Plan described in Section 3(2) of ERISA.
"PERMITTED ACQUISITION" shall mean an acquisition by any Borrower of all or
a substantial part of the capital stock or other equity interests or assets of a
Target, which acquisition satisfies each of the following conditions: (i) no
Default or Event of Default shall have occurred on or prior to the date of any
such acquisition or would be caused upon the consummation thereof, (ii) the
assets acquired (or the assets of the Target in which such capital stock or
equity interest is acquired) are to be used in the same or a substantially
similar line of business as that conducted by such Borrower and (iii) if the
capital stock or other equity interests of such Target are acquired, the
governing body of such Target shall have approved such acquisition to the extent
such approval is required. For the purposes of this definition, any Target (or
assets of a Target to be acquired) materially involved in the business of
producing, manufacturing, designing, reselling, marketing, licensing or
providing products (including intellectual property and software) or services
relating to information technology shall be deemed to be conducting a
substantially similar business as that conducted by the acquiring Borrower.
"PERMITTED ACQUISITION INDEBTEDNESS" shall have the meaning ascribed to it
in the definition of Acquisition Conditions.
A-12
"PERMITTED DISTRIBUTIONS" shall mean (a) dividends declared and paid in
cash by any subsidiary of MTM to MTM, and by any subsidiary of a Borrower (other
than MTM) to such Borrower; (b) purchases, acquisitions, redemptions,
retirements and dividends payable solely in stock or other equity interests of
any Borrower and (c) cash dividends payable with respect to MTM's Series A
Preferred Stock.
"PERMITTED ENCUMBRANCES" means the following encumbrances: (a) all Liens
existing on the Closing Date on specific items of Equipment and Real Estate and
described on SCHEDULE 5.2 attached hereto; (b) Purchase Money Liens; (c)
statutory Liens of landlords and Liens of carriers, warehousemen, bailees,
mechanics, materialmen and other like Liens imposed by law, created in the
ordinary course of business and securing amounts not yet due (or which are being
contested in good faith, by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such Liens), and with
respect to which adequate reserves or other appropriate provisions are being
maintained by the applicable Borrower in accordance with GAAP; (d) deposits made
(and the Liens thereon) in the ordinary course of business of the applicable
Borrower (including, without limitation, security deposits for leases, indemnity
bonds, surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, contracts (other than for the repayment or
guarantee of borrowed money or purchase money obligations), statutory
obligations and other similar obligations arising as a result of progress
payments under government contracts; (e) Liens granted to Investment Manager,
for the benefit of Lender, by each Borrower; (f) Liens of judgment creditors,
provided that such Liens do not exceed $100,000 in the aggregate at any time
(other than Liens bonded or insured to the reasonable satisfaction of the
Investment Manager); (g) Permitted Tax Liens; (h) easements (including, without
limitation, reciprocal easement agreements and utility agreements),
encroachments, minor defects or irregularities in title, variation and other
restrictions, charges or encumbrances (whether or not recorded) affecting the
Real Estate, if applicable, and which in the aggregate (i) do not materially
interfere with the occupation, use or enjoyment by any Borrower of its business
or property so encumbered and (ii) in the reasonable business judgment of
Investment Manager, do not materially and adversely affect the value of such
Real Estate; (i) Liens granted by one or more of the Borrowers on personal
and/or real property to secure the payment and performance of Senior
Indebtedness; and (j) bid and performance bonds and Liens in respect thereof in
the ordinary course of business and in an aggregate amount not to exceed
$5,000,000 outstanding at any time, on reasonable and customary terms.
"PERMITTED INDEBTEDNESS" means (a) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, Taxes or labor; (b) Indebtedness secured by
Purchase Money Liens; (c) Indebtedness arising under this Agreement; (d)
deferred Taxes and other expenses incurred in the ordinary course of business;
(e) Subordinated Debt; (f) Senior Indebtedness; (g) other Indebtedness existing
on the Closing Date and listed on SCHEDULE 5.2 attached hereto; (h) guarantees
of Capital Leases; and (i) unsecured guarantees by any Borrower of any
Indebtedness or other obligation of any other Borrower permitted hereunder or of
obligations under any real property lease for premises occupied by any Borrower;
(j) bid and performance bonds in the ordinary course of business and in an
aggregate amount not to exceed $5,000,000 outstanding at any time, on reasonable
and customary terms; (k) all reimbursement and other obligations with respect to
A-13
letters of credit, bankers' acceptances and surety bonds, whether or not
matured; and (l) Permitted Acquisition Indebtedness.
"PERMITTED TAX LIENS" means liens for Taxes not due and payable and liens
for Taxes that the applicable Borrower is contesting in good faith, by
appropriate proceedings which are sufficient to prevent imminent foreclosure of
such liens, and with respect to which adequate reserves are being maintained by
such Borrower in accordance with GAAP; provided that in either case, such liens
(a) are not filed of record in any public office, (b) other than with respect to
Real Estate, are not senior in priority to the liens granted by such Borrower to
Investment Manager, for the benefit of Lender, or (c) do not secure taxes owed
to the United States of America (or any department or agency thereof) or any
State or State authority, if applicable State law provides for the priority of
tax liens in a manner similar to the laws of the United States of America.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"PLAN" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA (other than a Title IV Plan), that any Borrower or any
ERISA Affiliate maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by such Borrower.
"PLEDGE AGREEMENTS" means any pledge agreement in favor of Investment
Manager or Lender, including without limitation, the Stock Pledge Agreement.
"PROJECTIONS" means Borrowers' forecasted consolidated: (a) balance sheets;
(b) profit and loss statements; (c) cash flow statements; and (d) capitalization
statements, all prepared on a consolidated basis consistent with the historical
Financial Statements of Borrowers, together with appropriate supporting details
and a statement of underlying assumptions.
"PURCHASE MONEY LIENS" shall mean (i) liens on any item of Equipment
acquired by the applicable Borrower after the date of this Agreement, provided
that (a) each such lien shall attach only to the Equipment acquired, (b) a
description of the Equipment so acquired is furnished by such Borrower to
Investment Manager, (ii) liens on any item of Equipment acquired by the
applicable Borrower after the date of this Agreement arising in connection with
a Capital Lease of such Equipment, provided, that each such lien shall attach
only to the Equipment leased and (iii) any other liens incurred to secure the
unpaid purchase price of assets and which the applicable Borrower is permitted
to incur pursuant to the terms of its Senior Bank Indebtedness.
"QUALIFIED ASSIGNEE" means (a) Lender and any other similar investment fund
that invests in commercial loans and that is managed or advised by Investment
Manager, and (b) any commercial bank, savings and loan association, savings
bank, commercial finance lender or other financial institution which is an
"accredited investor" (as defined in Regulation D under the Securities Act)
which extends credit or buys loans as one of its businesses, including insurance
A-14
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Xxxxx'x at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that the
term Qualified Assignee shall not include any hedge fund, vulture fund, buyout
fund or other similar entity.
"QUALIFIED PLAN" means a Pension Plan that is intended to be tax-qualified
under Section 401(a) of the IRC.
"QUARTERLY INTEREST PAYMENT DATE" means December 31, March 31, June 30 and
September 30 of each year during the term hereof, beginning March 31, 2006.
"REAL ESTATE" has the meaning ascribed to it in SECTION 3.12.
"RELEASE" means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.
"REQUIRED INSURANCE" has the meaning ascribed to it in SECTION 4.3.
"RETIREE WELFARE PLAN" means, at any time, a Welfare Plan that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"S&P" means Standard & Poor's Ratings Services, a division of the
XxXxxx-Xxxx Companies, Inc.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Security Agreement of even date herewith
entered into by and among Investment Manager, on behalf of itself and Lender,
and Borrowers.
"SENIOR BANK INDEBTEDNESS" means, collectively, Indebtedness described in
clauses (i) and (ii) of the definition of Senior Indebtedness, and any renewals,
refinancings or replacements of such Indebtedness, so long as the aggregate
principal amount of such Indebtedness does not at any time exceed the amount
permitted pursuant to the formula set forth in the definition of Senior
Indebtedness.
"SENIOR BANK LENDER" means each lender with respect to any Senior Bank
Indebtedness.
"SENIOR INDEBTEDNESS" means, collectively, (i) Indebtedness to CIT and the
other lenders named in the CIT Financing Agreement, (ii) Indebtedness to Textron
pursuant to that certain Loan and Security Agreement dated June 8, 2005, by and
among Textron and the Borrowers, as amended, (iii) Indebtedness to Xxxxxx and
A-15
any other vendor to any Borrower, in the case of (i), (ii) and (iii), which is
secured on a basis that is senior to the lien and security interest of Lender
and is in an aggregate principal amount not in excess of an amount equal to 130%
of the sum of (a) 85% of Borrowers' eligible accounts receivable (as set forth
in the CIT Financing Agreement); plus (b) 80% of Borrowers' eligible in-transit
inventory (as set forth in the CIT Financing Agreement); plus (c) 80% of
Borrowers' eligible finished goods inventory (as set forth in the CIT Financing
Agreement), and (iv) any renewals, refinancings or replacements of the
Indebtedness described in (i) and (ii) above so long as the aggregate principal
amount of Senior Indebtedness does not at any time exceed the amount permitted
pursuant to the foregoing formula.
"SENIOR LENDERS" means each lender with respect to any Senior Indebtedness.
"SERIES A-5 FINANCING" has the meaning ascribed to it in SECTION 2.1(i).
"SOLVENT" means, with respect to any Person on a particular date, that on
such date (a) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (b) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as Litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.
"STOCK" means all shares, options, warrants, general or limited partnership
interests, membership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including common stock, preferred
stock or any other "equity security" (as such term is defined in Rule 3a11 1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934).
"STOCKHOLDER" means, with respect to any Person, each holder of Stock of
such Person.
"STOCK PLEDGE AGREEMENT" means that certain Stock Pledge Agreement dated of
even date herewith, executed by MTM in favor of Investment Manager.
"SUBORDINATED DEBT" means any Indebtedness of any Borrower subordinated to
the Obligations in a manner and form reasonably satisfactory to Investment
Manager and Lender in their sole discretion, as to right and time of payment and
as to any other rights and remedies thereunder.
"SUBORDINATION AGREEMENT" means that certain Subordination Agreement dated
of even date herewith, executed by Investment Manager in favor of CIT, as agent
for certain lenders, and Textron, as the same may be amended, modified,
supplemented or restated from time to time, or any other subordination or
intercreditor agreement entered into between Investment Manager and any holder
of Senior Bank Indebtedness in replacement thereof.
A-16
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of more than 50% of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower.
"TARGET" shall mean an entity, the assets or equity interests of which are
the subject of a Permitted Acquisition.
"TAXES" shall mean all federal, state, municipal and other governmental
taxes, levies, charges, claims and assessments which are or may be owed or
collected by each Borrower with respect to its business, operations, Collateral
or otherwise.
"TERMINATION DATE" means the date on which (a) the Loan has been
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, and (c) Borrowers
shall not have any further right to borrow any monies under the Agreement.
"TEXTRON" means Textron Financial Corporation.
"TITLE IV PLAN" means a Pension Plan including a Multiemployer Plan, that
is covered by Title IV of ERISA.
"TRADEMARK LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Borrower granting any right to use any Trademark.
"TRADEMARKS" means all of the following now owned or hereafter adopted or
acquired by any Borrower: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, internet domain names, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"WARRANT" has the meaning ascribed to it in SECTION 1.2.
"WELFARE PLAN" means a Plan described in Section 3(1) of ERISA.
A-17
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth or referred to in
this ANNEX A. All other undefined terms contained in any of the Loan Documents
which are defined in Article 9 of the Code shall, unless the context indicates
otherwise, have the meanings provided in Article 9 of the Code. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Borrower or Borrowers, such words
are intended to signify that any Borrower has actual knowledge or awareness of a
particular fact or circumstance or that any Borrower, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
A-18
