CREDIT AND SECURITY AGREEMENT,

Exhibit 10.1

 

 

CREDIT AND SECURITY AGREEMENT

 

among

 

MTC TECHNOLOGIES, INC.,

a Delaware corporation

 

and

 

MTC TECHNOLOGIES, INC.,

an Ohio corporation,

as Borrowers,

 

THE FINANCIAL INSTITUTIONS NAMED HEREIN,

as Banks,

 

and

 

NATIONAL CITY BANK,

as Lead Arranger and Administrative Agent,

 

BRANCH BANKING AND TRUST COMPANY,

as Syndication Agent,

 

KEYBANK NATIONAL ASSOCIATION,

as Co-Documentation Agent

 

and

 

FIFTH THIRD BANK,

as Co-Documentation Agent

 

 

dated as of

April 21, 2005

 

TABLE OF CONTENTS

 

 

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SCHEDULES AND EXHIBITS

Schedule 1 – Banking Institution, Revolving Credit Commitment Percentage, Revolving Credit Commitment Amount, Term Loan Commitment Percentage, Term Loan Commitment and Maximum Amount

Schedule 2 – Guarantors of Payment

Schedule 5.8 – Indebtedness

Schedule 5.9 – Liens

Schedule 7.1 – Subsidiaries

Schedule 7.9 – Locations

Schedule 7.11 – ERISA Plans

Schedule 7.17 – Insurance

Exhibit A – Revolving Credit Note

Exhibit B – Term Loan Note

Exhibit C – Swing Line Note

Exhibit D – Notice of Loan

Exhibit E – Compliance Certificate

Exhibit F – Form of Assignment and Assumption Agreement

Annex 1 – Standard Terms and Conditions for Assignment and Assumption

 

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This CREDIT AND SECURITY AGREEMENT (as the same may from time to time be amended, restated or otherwise modified, this “Agreement”) is made effective as of the 21st day of April, 2005, among:

 

(a) MTC TECHNOLOGIES, INC., a Delaware corporation (“MTCT”);

 

(b) and MTC TECHNOLOGIES, INC., formerly known as MODERN TECHNOLOGIES CORP., an Ohio corporation, (together with MTCT, collectively, “Borrowers” and, individually, each a “Borrower”);

 

(c) the financial institutions listed on Schedule 1 hereto and each other Eligible Transferee, as hereinafter defined, that becomes a party hereto pursuant to Section 11.10 hereof (collectively, the “Banks” and, individually, each a “Bank”);

 

(d) NATIONAL CITY BANK, as lead arranger and administrative agent for the Banks under this Agreement (“Agent”);

 

(e) BRANCH BANKING AND TRUST COMPANY, as syndication agent (“ Syndication Agent ”);

 

(f) KEYBANK NATIONAL ASSOCIATION, as co-documentation agent (“Co-Documentation Agent”); and

 

(e) FIFTH THIRD BANK, as co-documentation agent (“Co-Documentation Agent”).

 

WITNESSETH:

 

WHEREAS, Borrowers, Agent and the Banks desire to contract for the establishment of credits in the aggregate principal amounts hereinafter set forth, to be made available to Borrowers upon the terms and subject to the conditions hereinafter set forth;

 

NOW, THEREFORE, it is mutually agreed as follows:

 

ARTICLE I. DEFINITIONS

 

Section 1.1. Definitions . As used in this Agreement, the following terms shall have the following meanings:

 

“Account” shall mean (a) all accounts, as defined in Chapter 1309 of the Ohio Revised Code as in effect from time to time; (b)(i) any right to payment now or hereafter owing to a Company (including but not limited to any such right to payment by reason of any lease, sale, manufacture, repair, processing or fabrication of personal property formerly, now or hereafter owned or otherwise held by such Company, by reason of any services formerly, now or hereafter rendered by or on behalf of such Company or by reason of any former, existing or future contract

 

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for any such lease, sale, manufacture, repair, processing, fabrication and/or services), whether such right to payment be classified by law as an instrument, chattel paper, contract right, account, document, general intangible or otherwise, (ii) the security, if any, for such right to payment, (iii) such Company’s right, title and interest (including, without limitation, all of such Company’s rights as an unpaid vendor, and any applicable right of stoppage in transit) in or to the personal property, if any, that is the subject of such right to payment, and (iv) all books and records pertaining to such right to payment; and (c) all proceeds of any of the foregoing, irrespective of the form or kind thereof.

 

“Account Debtor” shall mean any Person obligated to pay all or any part of any Account in any manner and includes (without limitation) any Guarantor thereof.

 

“Acquisition” shall mean any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of any Person, or any business or division of any Person (other than a Company), (b) the acquisition of in excess of fifty percent (50%) of the stock (or other equity interest) of any Person (other than a Company), or (c) the acquisition of another Person (other than a Company) by a merger, amalgamation or consolidation or any other combination with such Person.

 

“Administrative Borrower” shall mean MTCT.

 

“Advantage” shall mean any payment (whether made voluntarily or involuntarily, by offset of any deposit or other indebtedness or otherwise) received by any Bank in respect of the Debt, if such payment results in that Bank having less than its pro rata share (based upon its Overall Commitment Percentage) of the Debt then outstanding, than was the case immediately before such payment.

 

“Affiliate” shall mean any Person, directly or indirectly, controlling, controlled by or under common control with a Company and “control” (including the correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of a Company, whether through the ownership of voting securities, by contract or otherwise. The term “Affiliate” shall not include any Person controlled by Rajesh K. Soin that is not a Company.

 

“Agent Fee Letter” shall mean the Agent Fee Letter between Borrowers and Agent, dated on or before the Closing Date, as the same may from time to time be amended, restated or otherwise modified.

 

“Applicable Commitment Fee Rate” shall mean:

 

(a) for the period from the Closing Date through June 30, 2005, twenty-five (25.00) basis points; and

 

(b) commencing with the Consolidated financial statements of MTCT for the fiscal quarter ending March 31, 2005, the number of basis points set forth in the following matrix,

 

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based upon the result of the computation of the Leverage Ratio, shall be used to establish the number of basis points that will go into effect on July 1, 2005 and thereafter:

 

 

After July 1, 2005, changes to the Applicable Commitment Fee Rate shall be effective on the first day of each fiscal quarter following the date upon which Agent received, or, if earlier, Agent should have received, pursuant to Section 5.3(a) or (b) hereof, the financial statements of MTCT. The above matrix does not modify or waive, in any respect, the requirements of Section 5.7 hereof, the rights of Agent and the Banks to charge the Default Rate, or the rights and remedies of Agent and the Banks pursuant to Articles VIII and IX hereof.

 

“Applicable Commitment Percentage” shall mean, for each Bank:

 

(a) with respect to any Revolving Credit Commitment, the percentage, if any, set forth opposite such Bank’s name under the column headed “Revolving Credit Commitment Percentage”, as listed in Schedule 1 hereto; and

 

(b) with respect to the Term Loan Commitment, the percentage, if any, set forth opposite such Bank’s name under the column headed “Term Loan Commitment Percentage”, as listed in Schedule 1 hereto.

 

“Applicable Margin” shall mean:

 

(a) with respect to a Revolving Loan:

 

(i) for the period from the Closing Date through June 30, 2005, one hundred twenty-five (125.00) basis points for LIBOR Loans and zero (0.0) basis points for Base Rate Loans; and

 

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(ii) commencing with the Consolidated financial statements of MTCT for the fiscal quarter ending March 31, 2005, the number of basis points (depending upon whether Loans are LIBOR Loans or Base Rate Loans) set forth in the following matrix, based upon the result of the computation of the Leverage Ratio, shall be used to establish the number of basis points that will go into effect on July 1, 2005 and thereafter:

 

 

(b) with respect to the Term Loan:

 

(i) for the period from the Closing Date through June 30, 2005, one hundred fifty (150.00) basis points basis points for LIBOR Loans and zero (0.0) basis points for Base Rate Loans; and

 

(ii) commencing with the Consolidated financial statements of MTCT for the fiscal quarter ending March 31, 2005, the number of basis points (depending upon whether Loans are LIBOR Loans or Base Rate Loans) set forth in the following matrix, based upon the result of the computation of the Leverage Ratio, shall be used to establish the number of basis points that will go into effect on July 1, 2005 and thereafter:

 

 

After July 1, 2005 changes to the Applicable Margin shall be effective on the first day of each fiscal quarter following the date upon which Agent received, or, if earlier, Agent should have received, pursuant to Section 5.3(a) or (b) hereof, the financial statements of MTCT. The above matrixes do not modify or waive, in any respect, the requirements of Section 5.7 hereof, the rights of Agent and the Banks to charge the Default Rate, or the rights and remedies of Agent and the Banks pursuant to Articles VIII and IX hereof.

 

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“Assignment Agreement” shall mean an Assignment and Assumption Agreement in the form of the attached Exhibit F .

 

“Base Rate” shall mean a rate per annum equal to the greater of (a) the Prime Rate or (b) one-half of one percent (.50%) in excess of the Federal Funds Effective Rate. Any change in the Base Rate shall be effective immediately from and after such change in the Base Rate.

 

“Base Rate Loan” shall mean a Loan described in Section 2.2 or 2.3 hereof, on which Borrowers shall pay interest at a rate based on the Derived Base Rate.

 

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which national banks are required or authorized to close, and, if the applicable Business Day shall relate to any LIBOR Loan, a day of the year on which dealings are carried on in the London interbank Eurodollar market.

 

“Capital Distribution” shall mean a payment made, liability incurred or other consideration given by any Company to any Person that is not a Company, for the purchase, acquisition, redemption, repurchase or retirement of any capital stock or other equity interest of such Company or as a dividend, return of capital or other distribution in respect of such Company’s capital stock or other equity interest, but shall not include the following: (a) any stock dividend, stock split or other equity distribution payable only in capital stock or other equity of such Company, (b) any transaction pursuant to the 2002 Equity and Performance Incentive Plan of Borrowers, (c) any dividend, return of capital or other distribution in respect of such Company’s capital stock or other equity interest so long as such Company shall have provided to Agent no less than 5 Business Days prior to such distribution, evidence satisfactory to Agent of compliance with the following: (i) no Default or an Event of Default shall then exist, or immediately after giving effect to any such distribution would exist, and (ii) the Leverage Ratio shall be less than 1.50 to 1.00 both prior to and immediately after giving effect to any such distribution.

 

“Capitalized Lease Obligations” shall mean obligations of the Companies for the payment of rent for any real or personal property under leases or agreements to lease that, in accordance with GAAP, have been or should be capitalized on the books of the lessee and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Collateral Account” shall mean a commercial Deposit Account designated “cash collateral account” and maintained by any Borrower with Agent, without liability by Agent or the Banks to pay interest thereon, from which account Agent, on behalf of the Banks, shall have the exclusive right to withdraw funds until all of the Debt is paid in full.

 

“Cash Security” shall mean all cash, instruments, Deposit Accounts and other cash equivalents, whether matured or unmatured, whether collected or in the process of collection, upon which any Borrower presently has or may hereafter have any claim, wherever located, including but not limited to any of the foregoing that are presently or may hereafter be existing or maintained with, issued by, drawn upon, or in the possession of Agent or any Bank.

 

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“Change in Control” shall mean (a) the acquisition of, or, if earlier, the shareholder or director approval of the acquisition of, ownership or voting control, directly or indirectly, beneficially or of record, on or after the Closing Date, by any Person or group (within the meaning of Rule 13d-3 of the SEC under the Securities Exchange Act of 1934, as then in effect), of shares representing more than fifty-one percent (51%) of the aggregate ordinary Voting Power represented by the issued and outstanding capital stock of any Borrower; or (b) the occupation of a majority of the seats (other than vacant seats) on the board of directors or other governing body of any Borrower by Persons who were neither (i) nominated by the board of directors or other governing body of such Borrower nor (ii) appointed by directors so nominated.

 

“Closing Date” shall mean the effective date of this Agreement as set forth in the first paragraph of this Agreement.

 

“Closing Fee Letter” shall mean the Closing Fee Letter among Borrowers, Agent and the Banks, dated on or before the Closing Date.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated thereunder.

 

“Collateral” shall mean all of each Borrower’s existing and future (a) personal property; (b) Accounts, instruments, contract rights, chattel paper, documents, Investment Property, letter-of-credit rights, General Intangibles, Inventory and Equipment; (c) funds now or hereafter on deposit in the Cash Collateral Account, if any; (d) Cash Security; and (e) Proceeds, products, profits, and rents of any of (a) through (d) above.

 

“Commitment” shall mean the obligation hereunder of each Bank during the Commitment Period to make Loans and participate in the issuance of Letter of Credit and Swing Loans pursuant to such Bank’s Revolving Credit Commitment and the Term Loan Commitment, up to the Maximum Amount of such Bank.

 

“Commitment Period” shall mean, with respect to the Revolving Credit Commitment, the period from the Closing Date to March 31, 2010 or such earlier date on which the Commitment shall have terminated pursuant to Article IX hereof.

 

“Companies” shall mean all Borrowers and all Subsidiaries.

 

“Company” shall mean a Borrower or a Subsidiary and any Dormant Subsidiary.

 

“Compliance Certificate” shall mean a certificate, substantially in the form of the attached Exhibit E .

 

“Consideration” shall mean, in connection with an Acquisition, the aggregate consideration paid, including borrowed funds, cash, the issuance of securities or notes, the assumption or incurring of liabilities (direct or contingent), the payment of consulting fees or fees for a covenant not to compete and any other consideration paid for such Acquisition.

 

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“Consolidated” shall mean the resultant consolidation of the financial statements of MTCT and its Subsidiaries in accordance with GAAP, including principles of consolidation consistent with those applied in preparation of the consolidated financial statements referred to in Section 7.14 hereof.

 

“Consolidated Capital Expenditures” shall mean, for any period, the amount of capital expenditures of MTCT, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated EBITDA” shall mean, for any period, on a Consolidated basis and in accordance with GAAP, the EBITDA of MTCT, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Fixed Charges” shall mean, for any period, with respect to MTCT, on a Consolidated basis and in accordance with GAAP, without duplication, the aggregate of (a) Consolidated Interest Expense, (b) scheduled principal payments on Consolidated Funded Indebtedness due within the current period, (c) lease payments on Consolidated Rental Obligations for such period, (d) Consolidated Capital Expenditures, and (d) all Capital Distributions by any Company.

 

“Consolidated Funded Indebtedness” shall mean, for any period, Funded Indebtedness of MTCT for such period, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Income Tax Expense” shall mean, for any period, all provisions for taxes based on the gross or net income of MTCT (including, without limitation, any additions to such taxes, and any penalties and interest with respect thereto), and all franchise taxes of MTCT, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Interest Expense” shall mean, for any period, the interest expense of MTCT for such period, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Net Earnings” shall mean, for any period, the net income (loss) of MTCT for such period, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Net Worth” shall mean, at any date, the shareholders’ equity of MTCT, determined as of such date on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Pro-Forma EBITDA” shall mean, for any period, the sum of (a) Consolidated EBITDA, and (b)(i) without duplication, the EBITDA of Companies acquired in Acquisitions permitted by Section 5.13 hereof during such period to the extent that such EBITDA of Companies acquired is confirmed by audited financial information or other information satisfactory to Agent, minus (ii) the EBITDA of Companies disposed of in accordance with Section 5.12 hereof during such period (but only to the extent that such EBITDA is included in Consolidated EBITDA).

 

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“Consolidated Rental Obligations” shall mean, for any period, all Rental Obligations of MTCT (other than Capitalized Lease Obligations), as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Stock Option Expense” shall mean, for any period, all non-cash compensation expense arising from the issuance by MTCT of stock options during such period, as determined on a Consolidated basis and in accordance with GAAP.

 

“Controlled Group” shall mean a Company and each Person required to be aggregated with a Company under Code Section 414(b), (c), (m) or (o).

 

“Credit Event” shall mean the making by the Banks of a Loan, the conversion by the Banks of a Base Rate Loan to a LIBOR Loan, the continuation by the Banks of a LIBOR Loan after the end of the applicable Interest Period, the making by the Swing Line Bank of a Swing Loan or the issuance by the Fronting Bank of any Letter of Credit.

 

“Credit Party” shall mean each Borrower, Subsidiary or Affiliate, including any Guarantor of Payment, that, in each case, is a party to any Loan Document.

 

“Debt” shall mean, collectively, (a) all Indebtedness and other obligations incurred by any Borrower or Guarantor of Payment to Agent, the Swing Line Bank or any Bank (or any affiliate thereof) pursuant to this Agreement and includes the principal of and interest on all Notes; (b) each extension, renewal or refinancing thereof in whole or in part; (c) the commitment fees, other fees and any prepayment fees payable hereunder; and (d) all Related Expenses.

 

“Default” shall mean an event or condition that constitutes, or with the lapse of any applicable grace period or the giving of notice or both would constitute, an Event of Default and that has not been waived by the Required Banks in writing.

 

“Default Rate” shall mean, (a) with respect to any Loan, a rate per annum equal to two percent (2%) in excess of the Derived Base Rate from time to time in effect, and (b) with respect to any other amount, if no rate is specified or available, a rate per annum equal to two percent (2%) in excess of the Derived Base Rate from time to time in effect.

 

“Department of Defense Account” shall mean demand deposit account no. 685409422 at National City Bank.

 

“Deposit Account” shall mean (a) a deposit account, as defined in Chapter 1309 of the Ohio Revised Code as in effect from time to time, (b) any other deposit account, and (c) any demand, time, checking, savings, passbook, or a similar account maintained with a bank, savings and loan association, credit union, or similar organization. The term “Deposit Account” shall not include the Department of Defense Account.

 

“Depreciation and Amortization Charges” shall mean, for any period, in accordance with GAAP, the aggregate of all depreciation and amortization charges for fixed assets, leasehold improvements and general intangibles (specifically including goodwill) of a Person for such period.

 

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“Derived Base Rate” shall mean a rate per annum equal to the sum of the Applicable Margin (from time to time in effect) for Base Rate Loans plus the Base Rate.

 

“Derived LIBOR Rate” shall mean a rate per annum equal to the sum of the Applicable Margin (from time to time in effect) for LIBOR Loans plus the LIBOR Rate.

 

“Derived Swing Loan Rate” shall mean a rate per annum equal to (a) Agent’s cost of funds as quoted to Administrative Borrower by Agent and agreed to by Administrative Borrower, plus (b) the Applicable Margin (from time to time in effect) for LIBOR Loans.

 

“Dollar” or the $ sign shall mean lawful money of the United States of America.

 

“Domestic Subsidiary” shall mean a Subsidiary that is not a Foreign Subsidiary.

 

“Dormant Subsidiary” shall mean a Company that (a) is not a Credit Party, (b) has aggregate assets of less than Fifty Thousand Dollars ($50,000) and aggregate investments by the Companies of less than Fifty Thousand Dollars ($50,000), and (c) has no direct or indirect Subsidiaries with aggregate assets for all such Subsidiaries of more than Fifty Thousand Dollars ($50,000).

 

“EBIT” shall mean, for any period, in accordance with GAAP, Net Earnings for such period, plus the aggregate amounts deducted in determining such Net Earnings in respect of (a) Income Tax Expense, and (b) Interest Expense.

 

“EBITDA” shall mean, for any period, in accordance with GAAP, (a) EBIT, plus (b) the amount deducted in determining EBIT in respect of Depreciation and Amortization Charges and Stock Option Expense.

 

“Eligible Transferee” shall mean a commercial bank, financial institution or other “accredited investor” (as defined in SEC Regulation D) that is not a Borrower, a Subsidiary or an Affiliate.

 

“Environmental Laws” shall mean all provisions of law, statutes, ordinances, rules, regulations, permits, licenses, judgments, writs, injunctions, decrees, orders, awards and standards promulgated by the government of the United States of America or any foreign jurisdiction or by any state or municipality thereof, or by any court, agency, instrumentality, regulatory authority or commission of any of the foregoing concerning health, safety and protection of, or regulation of the discharge of substances into, the environment.

 

“Equipment” shall mean all (a) equipment, as defined in Chapter 1309 of the Ohio Revised Code as in effect from time to time, including, without limitation, machinery, motor vehicles, trade fixtures, office and other furniture and furnishings, tools, dies, jigs, and molds; (b) goods that are used or bought for use primarily in any Company’s business; (c) goods that are not consumer goods, farm products (as defined in Chapter 1309 of the Ohio Revised Code as in effect from time to time), or Inventory; and (d) substitutes or replacements for, and all parts, accessories, additions, attachments or accessions to (a) through (c) above.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated pursuant thereto.

 

“ERISA Event” shall mean (a) the existence of a condition or event with respect to an ERISA Plan that presents a risk of the imposition of an excise tax or any other liability on a Company or of the imposition of a Lien on the assets of a Company; (b) the engagement by a Controlled Group member in a non-exempt “prohibited transaction” (as defined under ERISA Section 406 or Code Section 4975) or a breach of a fiduciary duty under ERISA that could result in liability to a Company; (c) the application by a Controlled Group member for a waiver from the minimum funding requirements of Code Section 412 or ERISA Section 302 or a Controlled Group member is required to provide security under Code Section 401(a)(29) or ERISA Section 307; (d) the occurrence of a Reportable Event with respect to any Pension Plan as to which notice is required to be provided to the PBGC; (e) the withdrawal by a Controlled Group member from a Multiemployer Plan in a “complete withdrawal” or a “partial withdrawal” (as such terms are defined in ERISA Sections 4203 and 4205, respectively); (f) the involvement of, or occurrence or existence of any event or condition that makes likely the involvement of, a Multiemployer Plan in any reorganization under ERISA Section 4241; (g) the failure of an ERISA Plan (and any related trust) that is intended to be qualified under Code Sections 401 and 501 to be so qualified or the failure of any “cash or deferred arrangement” under any such ERISA Plan to meet the requirements of Code Section 401(k); (h) the taking by the PBGC of any steps to terminate a Pension Plan or appoint a trustee to administer a Pension Plan, or the taking by a Controlled Group member of any steps to terminate a Pension Plan; (i) the failure by a Controlled Group member or an ERISA Plan to satisfy any requirements of law applicable to an ERISA Plan; (j) the commencement, existence or threatening of a claim, action, suit, audit or investigation with respect to an ERISA Plan, other than a routine claim for benefits; or (k) any occurrence by or any expectation of the incurrence by a Controlled Group member of any liability for post-retirement benefits under any Welfare Plan, other than as required by ERISA Section 601, et. seq. or Code Section 4980B.

 

“ERISA Plan” shall mean an “employee benefit plan” (within the meaning of ERISA Section 3(3)) that a Controlled Group member at any time sponsors, maintains, contributes to, has liability with respect to or has an obligation to contribute to such plan.

 

“Eurocurrency Reserve Percentage” shall mean, for any Interest Period in respect of any LIBOR Loan, as of any date of determination, the aggregate of the then stated maximum reserve percentages (including any marginal, special, emergency or supplemental reserves), expressed as a decimal, applicable to such Interest Period (if more than one such percentage is applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) by the Board of Governors of the Federal Reserve System, any successor thereto, or any other banking authority, domestic or foreign, to which a Bank may be subject in respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board) or in respect of any other category of liabilities including deposits by reference to which the interest rate on LIBOR Loans is determined or any category of extension of credit or other assets that include the LIBOR Loans. For purposes hereof, such reserve requirements shall include, without limitation, those imposed under Regulation D of the Federal Reserve Board and the LIBOR Loans shall be deemed to constitute

 

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Eurocurrency Liabilities subject to such reserve requirements without benefit of credits for proration, exceptions or offsets that may be available from time to time to any Bank under said Regulation D.

 

“Eurodollar” shall mean a Dollar denominated deposit in a bank or branch outside of the United States.

 

“Event of Default” shall mean an event or condition that shall constitute an event of default as defined in Article VIII hereof.

 

“Excluded Taxes” shall mean net income taxes (and franchise taxes imposed in lieu of net income taxes) imposed on Agent or any Bank by the Governmental Authority located in the jurisdiction where Agent or such Bank is organized (other than any such connection arising solely from Agent or such Bank having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document).

 

“Federal Funds Effective Rate” shall mean, for any day, the rate per annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the Closing Date.

 

“Financial Officer” shall mean any of the following officers: chief executive officer, president, chief financial officer, vice president - controller or treasurer. Unless otherwise qualified, all references to a Financial Officer in this Agreement shall refer to a Financial Officer of MTCT.

 

“Fixed Charge Coverage Ratio” shall mean, for the most recently completed four fiscal quarters of MTCT, the ratio of (a) Consolidated Pro-Forma EBITDA for such period plus lease payments on Consolidated Rental Obligations for such period less Consolidated Income Tax Expense for such period, to (b) Consolidated Fixed Charges for such period.

 

“Foreign Subsidiary” shall mean a Subsidiary that is organized outside of the United States.

 

“Fronting Bank” shall mean, as to any Letter of Credit transaction hereunder, Agent as issuer of the Letter of Credit, or, in the event that Agent either shall be unable to issue or shall agree that another Bank may issue, a Letter of Credit, such other Bank as shall agree to issue the Letter of Credit in its own name, but on behalf of the Banks hereunder.”

 

“Funded Indebtedness” shall mean all Indebtedness for borrowed money and Capitalized Lease Obligations, including, but not limited to, current, long-term and Subordinated Indebtedness, if any.

 

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“GAAP” shall mean generally accepted accounting principles as then in effect, which shall include the official interpretations thereof by the Financial Accounting Standards Board, applied on a basis consistent with the past accounting practices and procedures of Borrowers.

 

“General Intangibles” shall mean all (a) general intangibles, as defined in Chapter 1309 of the Ohio Revised Code as in effect from time to time; (b) choses in action, causes of action, all customer lists, corporate or other business records, inventions, designs, patents, patent applications, service marks, registrations, trade names, trademarks, copyrights, goodwill, computer software, rights to indemnification and tax refunds; and (c) Proceeds of any of the foregoing, irrespective of the form or kind thereof.

 

“Governmental Authority” shall mean any nation or government, any state, province or territory or any city, county or other political subdivision thereof, any governmental agency, authority, instrumentality, regulatory body, court, central bank or other governmental entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

 

“Guarantor” shall mean a Person that shall have pledged its credit or property in any manner for the payment or other performance of the indebtedness, contract or other obligation of another and includes (without limitation) any guarantor (whether of payment or of collection), surety, co-maker, endorser or Person that shall have agreed conditionally or otherwise to make any purchase, loan or investment in order thereby to enable another to prevent or correct a default of any kind.

 

“Guarantor of Payment” shall mean each of the Companies set forth on Schedule 2 hereto, that are each executing and delivering a Guaranty of Payment, or any other Person that shall deliver a Guaranty of Payment to Agent subsequent to the Closing Date, whether pursuant to Section 5.20 hereof or by agreement of the parties hereto.

 

“Guaranty of Payment” shall mean each Guaranty of Payment of Debt executed and delivered on or after the Closing Date in connection with this Agreement by the Guarantors of Payment, as the same may from time to time be amended, restated or otherwise modified.

 

“Hedge Agreement” shall mean any hedge agreement, interest rate swap, cap, collar or floor agreement, or other interest rate management device entered into by a Borrower with any Person in connection with any Indebtedness of such Borrower.

 

“Income Tax Expense” shall mean, for any period, in accordance with GAAP, all provisions for taxes based on the gross or net income of any Person (including, without limitation, any additions to such taxes, and any penalties and interest with respect thereto), and all franchise taxes of such Person.

 

“Indebtedness” shall mean, for any Company (excluding in all cases trade payables payable in the ordinary course of business by such Company), without duplication, (a) all obligations to repay borrowed money, direct or indirect, incurred, assumed, or guaranteed, (b) all obligations for the deferred purchase price of capital assets, (c) all obligations under conditional

 

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sales or other title retention agreements, (d) all obligations (contingent or otherwise) under any letter of credit, banker’s acceptance, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management device, (e) all synthetic leases, (f) all lease obligations that have been or should be capitalized on the books of such Company in accordance with GAAP, (g) all obligations of such Company with respect to asset securitization financing programs, (h) all obligations to advance funds to, or to purchase assets, property or services from, any other Person in order to maintain the financial condition of such Person, and (i) any other transaction (including forward sale or purchase agreements) having the commercial effect of a borrowing of money entered into by such Company to finance its operations or capital requirements.

 

“Intellectual Property Collateral Assignment and Security Agreement” shall mean any Intellectual Property Collateral Assignment and Security Agreement, executed and delivered by a Borrower and/or each Guarantor of Payment in favor of Agent, for the benefit of the Banks, from time to time after the Closing Date, granting a security interest in and an assignment of all intellectual property owned by such Borrower or Guarantor of Payment, as the same may from time to time be amended, restated or otherwise modified.

 

“Interest Adjustment Date” shall mean the last day of each Interest Period.

 

“Interest Expense” shall mean, for any period, the interest expense of any Person for such period, as determined in accordance with GAAP.

 

“Interest Period” shall mean, with respect to any LIBOR Loan, the period commencing on the date such LIBOR Loan is made and ending on the last day of such period, as selected by Administrative Borrower pursuant to the provisions hereof, and thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of such period, as selected by Administrative Borrower pursuant to the provisions hereof. The duration of each Interest Period for LIBOR Loan shall be one month, two months, three months or six months, in each case as Administrative Borrower may select upon notice, as set forth in Section 2.7 hereof; provided that, if Administrative Borrower shall fail to so select the duration of any Interest Period at least three Business Days prior to the Interest Adjustment Date applicable to such Loan, Borrowers shall be deemed to have converted such LIBOR Loan to a Base Rate Loan at the end of the then current Interest Period.

 

“Interest Rate Protection” shall mean, with respect to Indebtedness of Borrowers, that either (a) Borrowers shall have obtained a fixed rate of interest on such Indebtedness, or (b) Borrowers shall have entered into a Hedge Agreement or Hedge Agreements; either of which shall be upon such terms and conditions as shall be satisfactory to Agent.

 

“Inventory” shall mean all (a) inventory, as defined in Chapter 1309 of the Ohio Revised Code as in effect from time to time; (b) goods that are raw materials; (c) goods that are work-in-process; (d) goods that are materials used or consumed in the ordinary course of any Company’s business; (e) goods that are, in the ordinary course of any Company’s business, held for sale or lease or furnished or to be furnished under contracts of service; and (f) substitutes and replacements for, and parts, accessories, additions, attachments or accessions to (a) through (e) above.

 

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“Investment Property” shall mean all investment property, as defined in Chapter 1309 of the Ohio Revised Code as in effect from time to time, unless the U.C.C. as in effect in another jurisdiction would govern the perfection and/or priority of a security interest in investment property, and, in such case, investment property shall be defined in accordance with the law of that jurisdiction as in effect from time to time.

 

“Landlord’s Agreement” shall mean a landlord’s waiver or mortgagee’s waiver, each in form and substance satisfactory to Agent, delivered by a Company in connection with this Agreement, as the same may from time to time be amended, restated or otherwise modified.

 

“Letter of Credit” shall mean any standby letter of credit that shall be issued by the Fronting Bank for the account of a Borrower, including amendments thereto, if any, and shall have an expiration date no later than the earlier of (a) one year after its date of issuance or (b) thirty (30) days prior to the last day of the Commitment Period.

 

“Letter of Credit Commitment” shall mean the commitment of the Fronting Bank, on behalf of the Banks, to issue Letters of Credit in an aggregate face amount of up to Five Million Dollars ($5,000,000).

 

“Letter of Credit Exposure” shall mean, at any time, the sum of (a) the aggregate undrawn face amount of all issued and outstanding Letters of Credit, and (b) the aggregate of the draws made on Letters of Credit that shall not have been reimbursed by Borrowers or converted to a Revolving Loan pursuant to Section 2.2(b)(iv) hereof.

 

“Leverage Ratio” shall mean, at any time, on a Consolidated basis and in accordance with GAAP, the ratio of (a) Consolidated Funded Indebtedness (for the most recently completed fiscal quarter of MTCT) to (b) Consolidated Pro-Forma EBITDA (for the most recently completed four fiscal quarters of MTCT).

 

“LIBOR Loan” shall mean a Loan described in Section 2.2 or Section 2.3 hereof on which Borrowers shall pay interest at a rate based upon the Derived LIBOR Rate.

 

“LIBOR Rate” shall mean, with respect to any LIBOR Loan, for any Interest Period, a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the nearest 1/16 ^th of 1%) by dividing (a) the rate of interest, determined by Agent in accordance with its usual procedures (which determination shall be conclusive absent demonstrable error) as of approximately 11:00 A.M. (London time) two (2) Business Days prior to the beginning of such Interest Period pertaining to such LIBOR Loan, as listed on British Bankers Association Interest Rate LIBOR 01 or 02 as provided by Reuters (or, if for any reason such rate is unavailable from Reuters, from any other similar company or service that provides rate quotations comparable to those currently provided by Reuters) as the rate in the London interbank market for deposits in Eurodollars in immediately available funds with a maturity comparable to such Interest Period, provided that, in the event that such rate quotation is not available for any reason, then the

 

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LIBOR Rate shall be the average (rounded upward to the nearest 1/16 ^th of 1%) of the per annum rates at which deposits in immediately available funds in Eurodollars for the relevant Interest Period and in the amount of the LIBOR Loan to be disbursed or to remain outstanding during such Interest Period, as the case may be, are offered to Agent (or an affiliate of Agent, in Agent’s discretion) by prime banks in any Eurodollar market reasonably selected by Agent, determined as of 11:00 A.M. (London time) (or as soon thereafter as practicable), three Business Days prior to the beginning of the relevant Interest Period pertaining to such LIBOR Loan hereunder; by (b) 1.00 minus the Eurocurrency Reserve Percentage.

 

“Lien” shall mean any mortgage, security interest, lien (statutory or other), charge, encumbrance on, pledge or deposit of, or conditional sale, leasing, sale with a right of redemption or other title retention agreement and any capitalized lease with respect to any property (real or personal) or asset.

 

“Loan” shall mean a Revolving Loan, the Term Loan or Swing Loan granted to Borrowers by the Banks in accordance with Section 2.2, 2.3 or 2.4 hereof.

 

“Loan Documents” shall mean, collectively, this Agreement, each Note, each Guaranty of Payment, each Security Document, the Agent Fee Letter, the Closing Fee Letter, each Letter of Credit and all applications executed or delivered in connection therewith, as any of the foregoing may from time to time be amended, restated or otherwise modified or replaced, and any other document delivered pursuant thereto.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or prospects of any Company, (b) the business, operations, property, condition (financial or otherwise) or prospects of the Companies taken as a whole, or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights and remedies of Agent or the Banks hereunder or thereunder.

 

“Material Indebtedness Agreement” shall mean any debt instrument, lease (capital, operating or otherwise), guaranty, contract, commitment, agreement or other arrangement evidencing any Indebtedness of any Company or the Companies in excess of the aggregate amount of One Million Dollars ($1,000,000).

 

“Maximum Amount” shall mean, for each Bank, the amount set forth opposite such Bank’s name under the column headed “Maximum Amount” as set forth on Schedule 1 hereto, subject to decreases determined pursuant to Section 2.11(a) hereof and assignments of interests pursuant to Section 11.10 hereof; provided, however, that the Maximum Amount for the Swing Line Bank shall exclude the Swing Line Commitment and the Maximum Amount of the Fronting Bank shall exclude the Letter of Credit Commitment (other than its pro rata share). The Maximum Amount for all of the Banks shall not exceed One Hundred Forty-Five Million Dollars ($145,000,000) in the aggregate.

 

“Maximum Revolving Amount” shall mean, for each Bank, the Revolving Credit Commitment Amount of such Bank as set forth on Schedule 1 hereto, subject to decreases determined pursuant to Section 2.11(a) hereof and assignments of interests pursuant to Section

 

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11.10 hereof; provided, however, that the Maximum Revolving Amount for the Swing Line Bank shall exclude the Swing Loan Commitment. The Maximum Revolving Amount for all of the Banks shall not exceed Eighty-Five Million Dollars ($85,000,000) in the aggregate.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor to such company.

 

“Mortgage” shall mean an Open-End Mortgage, Assignment of Leases and Rents and Security Agreement (or comparable document), relating to Real Property acquired by a Borrower or Guarantor after the Closing Date, executed and delivered by such Borrower or Guarantor of Payment from time to time, to further secure each Borrower’s obligations under the Notes, as the same may from time to time be amended, restated or otherwise modified.

 

“Multiemployer Plan” shall mean a Pension Plan that is subject to the requirements of Subtitle E of Title IV of ERISA.

 

“Net Earnings” shall mean, for any period, the net income (loss) for such period (excluding from the calculation any nonrecurring gains or losses) of any Person, determined in accordance with GAAP.

 

“Note” shall mean each Revolving Credit Note, each Term Loan Note or the Swing Line Note, or any other note delivered pursuant to this Agreement.

 

“Notice of Loan” shall mean a Notice of Loan in the form of the attached Exhibit D .

 

“Organizational Documents” shall mean, with respect to any Person (other than an individual), such Person’s Articles (Certificate) of Incorporation, or equivalent formation documents, and Regulations (Bylaws), or equivalent governing documents, and any amendments to any of the foregoing.

 

“Other Taxes” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, goods and services taxes, harmonized sales taxes and other sales taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

“Overall Commitment Percentage” shall mean a Bank’s percentage of the Total Commitment Amount based upon such Bank’s Maximum Amount of the Total Commitment Amount.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation, or its successor.

 

“Pension Plan” shall mean an ERISA Plan that is a “pension plan” (within the meaning of ERISA Section 3(2)).

 

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“Person” shall mean any individual, sole proprietorship, partnership, joint venture, unincorporated organization, corporation, limited liability company, institution, trust, estate, government or other agency or political subdivision thereof or any other entity.

 

“Pledge Agreement” shall mean the Pledge Agreements executed and delivered to Agent, for the benefit of the Banks, by each Borrower or Guarantor of Payment (that directly owns an equity interest in a Borrower or Subsidiary), dated as of the Closing Date, and any other Pledge Agreement executed by any other Person, on or after the Closing Date, as any of the foregoing may from time to time be amended, restated or otherwise modified.

 

“Pledged Securities” shall mean, subject to the proviso set forth in Section 5.20(b) hereof, the shares of capital stock or other equity interest of a Subsidiary of MTCT, whether now owned or hereafter acquired or created, and all proceeds thereof.

 

“Prepayment Event” shall mean (a) the receipt by any Company of the proceeds of any Indebtedness after the Closing Date from any Person other than Indebtedness incurred pursuant to Section 5.8 hereof; (b) the disposition of any assets (other than a disposition made in accordance with Section 5.12 hereof) by any Company outside of the ordinary course of business, provided that (i) the aggregate value of such assets shall exceed $250,000 and (ii) the proceeds of such disposition shall not have been used by the Companies for the purchase of other assets within one hundred eighty (180) days of receipt of such proceeds; or (c) the receipt by any Company of any sums in payment of insurance losses, returns or unearned premiums under any policy of insurance, litigation awards or any other material recovery event, provided that the proceeds of such event shall not have been used by the Companies for the purchase of other assets within one hundred eighty (180) days of receipt of such proceeds.

 

“Prepayment Proceeds” shall mean, with respect to a Prepayment Event, all of the proceeds of such Prepayment Event minus taxes, fees and expenses actually paid in connection with such Prepayment Event.

 

“Prime Rate” shall mean the fluctuating rate of interest which is publicly announced from time to time by Agent at its principal place of business as being its “prime rate” or “base rate” thereafter in effect, with each change in the Prime Rate automatically, immediately and without notice changing the fluctuating interest rate thereafter applicable hereunder, it being agreed that the Prime Rate is not necessarily the lowest rate of interest then available from Agent on fluctuating rate loans.

 

“Proceeds” shall mean (a) any proceeds, and (b) whatever is received upon the sale, exchange, collection, or other disposition of Collateral or proceeds, whether cash or non-cash. Cash proceeds includes, without limitation, moneys, checks, and Deposit Accounts. Proceeds includes, without limitation, any Account arising when the right to payment is earned under a contract right, any insurance payable by reason of loss or damage to the Collateral, and any return or unearned premium upon any cancellation of insurance. Except as expressly authorized in this Agreement, the right of Agent and the Banks to Proceeds specifically set forth herein or indicated in any financing statement shall never constitute an express or implied authorization on the part of Agent or any Bank to a Borrower’s sale, exchange, collection, or other disposition of any or all of the Collateral.

 

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“Real Property” shall mean real estate acquired by any Company after the Closing Date together with all improvements and buildings thereon and all appurtenances, easements or other rights thereto belonging, and being defined collectively as the “Property” in the Mortgage with respect thereto.

 

“Regularly Scheduled Payment Date” shall mean the last business day of each March, June, September and December of each year.

 

“Related Expenses” shall mean, without duplication, any and all costs and expenses (including, without limitation, losses, damages, penalties, claims, actions, attorneys’ fees, legal expenses, judgments, suits and disbursements) incurred by Agent, or imposed upon Agent or any Bank, in any attempt by Agent (a) to obtain, preserve, perfect or enforce any Loan Document or any security interest evidenced by any Loan Document; (b) to obtain payment, performance or observance of any and all of the Debt; (c) to maintain, insure, audit, collect, preserve, repossess or dispose of any of the collateral securing the Debt or any thereof, including, without limitation, costs and expenses for appraisals, assessments or audits of any Company or any such collateral; or (d) incidental or related to (a) through (c) above, including, without limitation, interest thereupon from the date incurred, imposed or asserted until paid at the Default Rate.

 

“Related Writing” shall mean each Loan Document and any other assignment, mortgage, security agreement, guaranty agreement, subordination agreement, financial statement, audit report or other writing furnished by any Credit Party, or any of its officers, to Agent or the Banks pursuant to or otherwise in connection with this Agreement.

 

“Rental Obligations” shall mean, with respect to any Person during any period, the aggregate amount of all rental obligations for which such Person is directly or indirectly liable (as lessee or as guarantor or as other surety) under all operating leases in effect or to be in effect at any time during such period, including all amounts for which any Person was so liable during such period accrued prior to the date such Person became a Subsidiary or was merged into or consolidated with any Company.

 

“Reportable Event” shall mean a reportable event as that term is defined in Title IV of ERISA, except actions of general applicability by the Secretary of Labor under Section 110 of such Act.

 

“Required Banks” shall mean the holders of at least fifty-one percent (51%) of the Total Commitment Amount (based upon each Bank’s Maximum Amount of the Total Commitment Amount), or, if there shall be any borrowing hereunder, the holders of at least fifty-one percent (51%) of the aggregate principal amount outstanding under the Notes (other than the Swing Line Note).

 

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“Requirement of Law” shall mean, as to any Person, any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property.

 

“Restricted Payment” shall mean, with respect to any Company, (a) any Capital Distribution, (b) any amount paid by such Company in repayment, redemption, retirement, repurchase, direct or indirect, of any Subordinated Indebtedness, or (c) any amount paid by such Company in respect of any management, consulting or other similar arrangement with any shareholder of a Company or Affiliate.

 

“Revolving Credit Commitment” shall mean the obligation hereunder, during the Commitment Period, of (a) each Bank to make Revolving Loans, up to the Maximum Revolving Amount for such Bank, (b) the Fronting Bank to issue and each Bank to participate in Letters of Credit, and (c) the Swing Line Bank to make and each Bank to participate in Swing Loans.

 

“Revolving Credit Exposure” shall mean, at any time, the sum of (a) the aggregate principal amount of all Revolving Loans outstanding, (b) the Letter of Credit Exposure, and (c) the Swing Line Exposure.

 

“Revolving Credit Note” shall mean a Revolving Credit Note executed and delivered pursuant to Section 2.6(a) hereof.

 

“Revolving Loan” shall mean a Loan granted to Borrowers by the Banks in accordance with Section 2.2 hereof.

 

“SEC” shall mean the United States Securities and Exchange Commission, or any governmental body or agency succeeding to any of its principal functions.

 

“Secured Debt” shall mean, collectively, (a) the Debt and (b) all obligations and liabilities now existing or hereafter incurred by a Borrower under a Hedge Agreement with any of the Banks in connection with the Debt.

 

“Security Agreement” shall mean each Security Agreement, executed and delivered by a Guarantor of Payment in favor of Agent, for the benefit of the Banks, dated as of the Closing Date, and any other Security Agreement executed on or after the Closing Date, as the same may from time to time be amended, restated or otherwise modified.

 

“Security Documents” shall mean each Security Agreement, Pledge Agreement, Intellectual Property Collateral Assignment Agreement, Landlord’s Agreement, Mortgage, U.C.C. financing statement, or similar filing as to a jurisdiction located outside of the United States of America, filed in connection herewith or perfecting any interest created in any of the foregoing documents, and any other document pursuant to which any Lien is granted by a Company to Agent, for the benefit of the Banks, as security for the Debt, or any part thereof, and each other agreement executed in connection with any of the foregoing, as any of the foregoing may from time to time be amended, restated or otherwise modified or replaced.

 

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“Specific Commitment” shall mean the Revolving Credit Commitment or the Term Loan Commitment.

 

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., or any successor to such company.

 

“Stock Option Expense” shall mean, for any period, in accordance with GAAP, all non-cash compensation expense arising from the issuance by any Person of stock options during such period.

 

“Subordinated”, as applied to Indebtedness, shall mean that the Indebtedness shall have been subordinated (by written terms or written agreement being, in either case, in form and substance satisfactory to Agent and the Required Banks) in favor of the prior payment in full of the Debt.

 

“Subsidiary” of a Company shall mean (a) a corporation more than fifty percent (50%) of the Voting Power of which is owned, directly or indirectly, by such Company or by one or more other subsidiaries of such Company or by such Company and one or more subsidiaries of such Company, (b) a partnership or limited liability company of which such Company, one or more other subsidiaries of such Company or such Company and one or more subsidiaries of such Company, directly or indirectly, is a general partner or managing member, as the case may be, or otherwise has an ownership interest greater than fifty percent (50%) of all of the ownership interests in such partnership or limited liability company, or (c) any other Person (other than a corporation, partnership or limited liability company) in which such Company, one or more other subsidiaries of such Company or such Company and one or more subsidiaries of such Company, directly or indirectly, has at least a majority interest in the Voting Power or the power to elect or direct the election of a majority of directors or other governing body of such Person.

 

“Subsidiary Borrower” shall mean a Borrower other than MTCT.

 

“Swing Line” shall mean the credit facility established by the Swing Line Bank for Borrowers in accordance with Section 2.4 hereof.

 

“Swing Line Bank” shall mean National City Bank, as holder of the Swing Line Commitment.

 

“Swing Line Commitment” shall mean the commitment of the Swing Line Bank to make Swing Loans to Borrowers up to the aggregate amount at any time outstanding of Five Million Dollars ($5,000,000).

 

“Swing Line Exposure” shall mean, at any time, the aggregate principal amount of all Swing Loans outstanding.

 

“Swing Line Note” shall mean the Swing Line Note executed and delivered pursuant to Section 2.6(b) hereof.

 

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“Swing Loan” shall mean a Loan granted to Borrowers by the Swing Line Bank under the Swing Line.

 

“Swing Loan Maturity Date” shall mean, with respect to any Swing Loan, the earlier of (a) the last day of the calendar month during which such Swing Loan is made, or (b) the last day of the Commitment Period.

 

“Taxes” shall mean any present or future taxes, levies, imposts, duties, charges, fees, deductions or withholdings now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (together with any interest, penalties or similar liabilities with respect thereto) other than Excluded Taxes.

 

“Term Loan” shall mean the Loan granted to Borrowers by the Banks in the original principal amount of Sixty Million Dollars ($60,000,000), in accordance with Section 2.3 hereof.

 

“Term Loan Commitment” shall mean the obligation hereunder of the Banks to make the Term Loan, with each Bank’s obligation to participate therein being the amount set forth opposite such Bank’s name under the column headed “Term Loan Commitment Amount” as set forth on Schedule 1 hereto, subject to assignments of interests pursuant to Section 11.10 hereof.

 

“Term Loan Note” shall mean a Term Loan Note executed and delivered pursuant to Section 2.6(b) hereof.

 

“Total Commitment Amount” shall mean the aggregate of each Bank’s Revolving Credit Commitment and Term Loan Commitment (which shall not exceed One Hundred Forty-Five Million Dollars ($145,000,000) in the aggregate for all of the Banks), as such amount may be decreased pursuant to Section 2.11(a) hereof.

 

“U.C.C.” shall mean the Uniform Commercial Code, as in effect from time to time in Ohio.

 

“Voting Power” shall mean, with respect to any Person, the exclusive ability to control, through the ownership of shares of capital stock, partnership interests, membership interests or otherwise, the election of members of the board of directors or other similar governing body of such Person. The holding of a designated percentage of Voting Power of a Person means the ownership of shares of capital stock, partnership interests, membership interests or other interests of such Person sufficient to control exclusively the election of that percentage of the members of the board of directors or similar governing body of such Person.

 

“Welfare Plan” shall mean an ERISA Plan that is a “welfare plan” within the meaning of ERISA Section 3(l).

 

“Wholly-Owned Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company or other entity, all of the securities or other ownership interest of which having ordinary Voting Power to elect a majority of the board of directors, or other Persons performing similar functions, are at the time directly or indirectly owned by such Person.

 

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Section 1.2. Accounting Terms . Any accounting term not specifically defined in this Article I shall have the meaning ascribed thereto by GAAP.

 

Section 1.3. Terms Generally . The foregoing definitions shall be applicable to the singular and plurals of the foregoing defined terms. Unless otherwise defined in this Article I, terms that are defined in Chapter 1309 of the Ohio Revised Code, as in effect from time to time, are used herein as so defined.

 

Section 1.4. USA Patriot Act Notification . The following notification is provided to Borrowers pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

 

(a) IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for Borrowers: When a borrower opens an account, if borrower is an individual, the applicable bank will ask for borrower’s name, taxpayer identification number, residential address, date of birth and other information that will allow such bank to identify borrower, and, if borrower is not an individual, such bank will ask for borrower’s name, taxpayer identification number, business address, and other information that will allow such bank to identify borrower. The bank may also ask, if borrower is an individual, to see borrower’s driver’s license or other identifying documents, and, if borrower is not an individual, to see borrower’s legal organizational documents or other identifying documents.

 

(b) Government Regulation. Borrowers shall not (a) be or become subject at any time to any law, regulation, or list of any government agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Agent or the Banks from making any advance or extension of credit to Borrowers or from otherwise conducting business with Borrowers, or (b) fail to provide documentary and other evidence of Borrowers’ identity as may be requested by Agent or the Banks at any time to enable Agent or the Banks to verify Borrowers’ identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

ARTICLE II. AMOUNT AND TERMS OF CREDIT

 

Section 2.1. Amount and Nature of Credit .

 

(a) Subject to the terms and conditions of this Agreement, each Bank, during the Commitment Period and to the extent hereinafter provided, shall make Loans to Borrowers, issue or participate in Letters of Credit and participate in Swing Loans made by the Swing Line Bank to Borrowers, in such aggregate amount as Borrowers shall request pursuant to the Commitments; provided, however, that in no event shall the Revolving Credit Exposure and the outstanding principal balance of the Term Loan be in excess of the Total Commitment Amount.

 

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(b) Each Bank, for itself and not one for any other, agrees to make Loans, to issue or participate in Letters of Credit and to participate in Swing Loans, during the Commitment Period, on such basis that, immediately after the completion of any borrowing by Borrowers, (i) the aggregate principal amount then outstanding on the Notes (other than the Swing Line Note) issued to such Bank, when combined with such Bank’s pro rata share, if any, of the Letter of Credit Exposure and the Swing Line Exposure, shall not be in excess of the Maximum Amount for such Bank, and (ii) the aggregate principal amount then outstanding on the Notes (other than the Swing Line Note) issued to such Bank shall represent that percentage of the aggregate principal amount then outstanding on all Notes (other than the Swing Line Note) that shall be such Bank’s Commitment Percentage. Within each Specific Commitment, each borrowing (other than Swing Loans which shall be risk participated on a pro rata basis) from the Banks hereunder shall be made pro rata according to the respective Applicable Commitment Percentages of the Banks.

 

(c) The Loans shall be made either as Revolving Loans as described in Section 2.2(a) hereof, as a Term Loan as described in Section 2.3 hereof, as Swing Loans as described in Section 2.4 hereof and Letters of Credit may be issued in accordance with Section 2.2(b) hereof.

 

Section 2.2. Revolving Credit . (a) Revolving Loans . Subject to the terms and conditions of this Agreement, during the Commitment Period, the Banks shall make a Revolving Loan or Revolving Loans to Borrowers in such amount or amounts as Borrowers may from time to time request, but not exceeding in aggregate principal amount at any time outstanding hereunder the Maximum Revolving Amount for all of the Banks, when such Revolving Loans are combined with the Swing Line Exposure and the Letter of Credit Exposure. Borrowers shall have the option, subject to the terms and conditions set forth herein, to borrow Revolving Loans, maturing on the last day of the Commitment Period, by means of any combination of Base Rate Loans or LIBOR Loans. Subject to the provisions of this Agreement, Borrowers shall be entitled under this Section 2.2(a) to borrow funds, repay the same in whole or in part and re-borrow hereunder at any time and from time to time during the Commitment Period.

 

(b) Letters of Credit .

 

(i) Generally . Subject to the terms and conditions of this Agreement, during the Commitment Period, the Fronting Bank shall, in its own name, on behalf of the Banks, issue such Letters of Credit for the account of any Borrower or any Guarantor of Payment, as Administrative Borrower may from time to time request. Administrative Borrower shall not request any Letters of Credit (and the Fronting Bank shall not be obligated to issue any Letter of Credit) if, after giving effect thereto, (A) the Letter of Credit Exposure would exceed the Letter of Credit Commitment or (B) the Revolving Credit Exposure would exceed the Revolving Credit Commitment. The issuance of each Letter of Credit shall confer upon the Banks the benefits and liabilities of a participation consisting of an undivided pro rata interest in the Letter of Credit to the extent of such Bank’s Applicable Commitment Percentage with respect to the Revolving Credit Commitment.

 

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(ii) Request for Letter of Credit . Each request for a Letter of Credit shall be delivered to Agent (and the Fronting Bank, if the Fronting Bank shall be a Bank other than Agent) not later than 11:00 A.M. (Eastern time) three Business Days prior to the day upon which the Letter of Credit is to be issued. Each such request shall be in a form acceptable to Agent (and the Fronting Bank, if the Fronting Bank shall be a Bank other than Agent) and specify the face amount thereof, the account party, the beneficiary, the intended date of issuance, and the expiry date thereof.

 

(iii) Letter of Credit Fees . With respect to each Letter of Credit, Borrowers agree to pay to Agent, for the benefit of the Banks, a non-refundable Letter of Credit commission based upon the face amount of such Letter of Credit, which shall be paid quarterly in arrears on each Regularly Scheduled Payment Date, at the rate per annum of the Applicable Margin for Revolving Loans that are LIBOR Loans (in effect on the date such payment is to be made) times the face amount of such Letter of Credit. Borrowers also agree to pay to the Fronting Bank, for its sole account, (A) with respect to each Letter of Credit, a non-refundable facing fee based upon the face amount of such Letter of Credit, which shall be paid annually in advance on the issuance date of such Letter of Credit and on each annual anniversary date thereof, at the rate per annum of one-eighth of one percent (1/8 of 1%) times the face amount of such Letter of Credit, and (B) such other issuance, amendment, negotiation, draw, acceptance, telex, courier, postage and similar transactional fees as are generally charged by such Fronting Bank under its fee schedule as in effect from time to time.

 

(iv) Refunding of Letters of Credit with Revolving Loans . Whenever a Letter of Credit shall be drawn, Borrowers shall immediately after Agent has given Borrowers notice of such drawing, reimburse the Fronting Bank for the amount drawn. In the event that the amount drawn shall not have been reimbursed by Borrowers within one Business Day of the drawing of such Letter of Credit, at the sole option of Agent (and the Fronting Bank, if the Fronting Bank is a Bank other than Agent), Borrowers shall be deemed to have requested a Revolving Loan, subject to the provisions of Sections 2.2 and 2.9 hereof, in the amount drawn. Such Revolving Loan shall be evidenced by the Revolving Credit Notes. The Banks agree to make a Revolving Loan on the date of such notice, subject to no conditions precedent whatsoever. The Banks acknowledge and agree that their obligation to make a Revolving Loan pursuant to Section 2.2(a) when required by this Section 2.2(b) shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or Event of Default, and that its payment to Agent, for the account of the Fronting Bank, of the proceeds of such Revolving Loan shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not the Revolving Credit Commitment shall have been reduced or terminated. Borrowers irrevocably authorize and instruct Agent to apply the proceeds of any borrowing pursuant to this subsection to reimburse, in full, the Fronting Bank for the amount drawn on

 

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such Letter of Credit. The Banks are hereby authorized to record on its records relating to its Revolving Credit Note such Bank’s pro rata share of the amounts paid and not reimbursed on the Letters of Credit.

 

(v) Participation in Letters of Credit . If, for any reason, Agent (or the Fronting Bank if the Fronting Bank shall be a Bank other than Agent) shall be unable to or, in the opinion of Agent, it shall be impracticable to, convert any Letter of Credit to a Revolving Loan pursuant to the preceding subsection, Agent (or the Fronting Bank if the Fronting Bank shall be a Bank other than Agent) shall have the right to request that the Banks purchase a participation in the amount due with respect to such Letter of Credit, and Agent shall promptly notify each Bank thereof (by facsimile or telephone, confirmed in writing). Upon such notice, but without further action, the Fronting Bank hereby agrees to grant to the Banks, and each Bank hereby agrees to acquire from the Fronting Bank, an undivided participation interest in the amount due with respect to such Letter of Credit in an amount equal to each such Bank’s Applicable Commitment Percentage of the aggregate principal amount of the amount due with respect to such Letter of Credit. In consideration and in furtherance of the foregoing, the Banks hereby absolutely and unconditionally agree, upon receipt of notice as provided above, to pay to Agent, for the account of the Fronting Bank, such Bank’s ratable share of the amount due with respect to such Letter of Credit (determined in accordance with such Bank’s Applicable Commitment Percentage). The Banks acknowledge and agree that their obligation to acquire participations in the amount due under any Letter of Credit that is drawn but not reimbursed by Borrowers pursuant to this subsection (v) shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or Event of Default, and that each such payment shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not each such Bank’s Revolving Credit Commitment shall have been reduced or terminated. The Banks shall comply with their obligation under this subsection (v) by wire transfer of immediately available funds, in the same manner as provided in Section 2.9 with respect to Revolving Loans. Each Bank is hereby authorized to record on its records such Bank’s pro rata share of the amounts paid and not reimbursed on the Letters of Credit.

 

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Section 2.3. Term Loan .

 

Subject to the terms and conditions of this Agreement, the Banks shall make a five-year Term Loan to Borrowers on the Closing Date, in the amount of the Term Loan Commitment. The Term Loan shall be payable in nineteen (19) consecutive quarterly installments in the amounts set forth below, commencing September 30, 2005, and continuing on each Regularly Scheduled Payment Date thereafter, with the balance thereof payable in full on March 31, 2010. The amount of each installment of principal shall be as follows:

 

 

Section 2.4. Swing Loans .

 

(a) Generally . Subject to the terms and conditions of this Agreement, during the Commitment Period, the Swing Line Bank shall make a Swing Loan or Swing Loans to Borrowers in such amount or amounts as Borrowers may from time to time request; provided that Borrowers shall not request any Swing Loan hereunder if, after giving effect thereto, (i) the Revolving Credit Exposure would exceed the Revolving Credit Commitment, or (ii) the Swing Line Exposure would exceed the Swing Line Commitment. Each Swing Loan shall be due and payable on the Swing Loan Maturity Date applicable thereto. Borrowers shall not request that more than two Swing Loans be outstanding at any time.

 

(b) Refunding of Swing Loans . If the Swing Line Bank so elects, by giving notice to Borrowers and the Banks, Borrowers agree that the Swing Line Bank shall have the right, in its sole discretion, to require that any Swing Loan be refinanced as a Revolving Loan. Such Revolving Loan shall be a Base Rate Loan unless otherwise requested by and available to Borrowers hereunder. Upon receipt of such notice by Borrowers and the Banks, Borrowers shall be deemed, on such day, to have requested a Revolving Loan in the principal amount of the Swing Loan in accordance with Sections 2.2 and 2.7 hereof (other than the requirement set forth in subsection (d) of Section 2.7 hereof). Each Bank agrees to make a Revolving Loan on the date of such notice, subject to no conditions precedent whatsoever. Each Bank acknowledges and agrees that such Bank’s obligation to make a Revolving Loan pursuant to Section 2.2 hereof when required by this subsection (b) is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or Event of Default, and that its payment to Agent, for the account of the Swing Line Bank, of the proceeds of such Revolving Loan shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not such Bank’s Revolving Credit Commitment shall have been reduced or terminated. Borrowers irrevocably authorize and instruct Agent to apply the proceeds of any borrowing pursuant to this subsection (b) to repay in full such Swing Loan.

 

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(c) Participation in Swing Loans . If, for any reason, Agent is unable to or, in the opinion of Agent, it is impracticable to, convert any Swing Loan to a Revolving Loan pursuant to the preceding subsection (b), then on any day that a Swing Loan is outstanding (whether before or after the maturity thereof), Agent shall have the right to request that each Bank purchase a participation in such Swing Loan, and Agent shall promptly notify each Bank thereof (by facsimile or telephone, confirmed in writing). Upon such notice, but without further action, the Swing Line Bank hereby agrees to grant to each Bank, and each Bank hereby agrees to acquire from the Swing Line Bank, an undivided participation interest in such Swing Loan in an amount equal to such Bank’s Applicable Commitment Percentage of the aggregate principal amount of such Swing Loan. In consideration and in furtherance of the foregoing, each Bank hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to Agent, for the benefit of the Swing Line Bank, such Bank’s ratable share of such Swing Loan (determined in accordance with such Bank’s Applicable Commitment Percentage). Each Bank acknowledges and agrees that its obligation to acquire participations in Swing Loans pursuant to this subsection (c) is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not such Bank’s Revolving Credit Commitment shall have been reduced or terminated. Each Bank shall comply with its obligation under this subsection (c) by wire transfer of immediately available funds, in the same manner as provided in Section 2.7 hereof with respect to Revolving Loans to be made by such Bank.

 

Section 2.5. I nterest .

 

(a) Revolving Loans .

 

(i) Base Rate Loan . Borrowers shall pay interest on the unpaid principal amount of a Base Rate Loan outstanding from time to time from the date thereof until paid at the Derived Base Rate from time to time in effect. Interest on such Base Rate Loan shall be payable, commencing June 30, 2005 , and on each Regularly Scheduled Payment Date thereafter and at the maturity thereof.

 

(ii) LIBOR Loans . Borrowers shall pay interest on the unpaid principal amount of each LIBOR Loan outstanding from time to time, fixed in advance on the first day of the Interest Period applicable thereto through the last day of the Interest Period applicable thereto (but subject to changes in the Applicable Margin), at the Derived LIBOR Rate. Interest on such LIBOR Loan shall be payable on each Interest Adjustment Date with respect to an Interest Period (provided that if an Interest Period shall exceed three months, the interest must be paid every three months, commencing three months from the beginning of such Interest Period).

 

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(b) Swing Loans . Borrowers shall pay interest to Agent, for the sole benefit of the Swing Line Bank (and any Bank that shall have purchased a participation in such Swing Loan), on the unpaid principal amount of each Swing Loan outstanding from time to time from the date thereof until paid at the Derived Swing Loan Rate applicable to such Swing Loan. Interest on each Swing Loan shall be payable on the Swing Loan Maturity Date applicable thereto. Each Swing Loan shall bear interest for a minimum of one day.

 

(c) Term Loan .

 

(i) Base Rate Loan . With respect to any portion of the Term Loan that shall be a Base Rate Loan, Borrower shall pay interest on the unpaid principal amount thereof outstanding from time to time from the date thereof until paid, commencing June 30, 2005, and continuing on each Regularly Scheduled Payment Date thereafter and at the maturity thereof, at the Derived Base Rate from time to time in effect.

 

(ii) LIBOR Loans . With respect to any portion of the Term Loan that shall be a LIBOR Loan, Borrower shall pay interest on the unpaid principal amount of each LIBOR Loan outstanding from time to time, fixed in advance on the first day of the Interest Period applicable thereto through the last day of the Interest Period applicable thereto (but subject to changes in the Applicable Margin), at the Derived LIBOR Rate. Interest on such LIBOR Loan shall be payable on each Interest Adjustment Date with respect to an Interest Period.

 

(d) Default Rate . Anything herein to the contrary notwithstanding, if an Event of Default shall occur hereunder, upon the election of the Required Banks, (i) the principal of each Note and the unpaid interest thereon shall bear interest, until paid, at the Default Rate; and (ii) in the case of any other amount due from Borrowers hereunder or under any other Loan Document, such amount shall bear interest at the Default Rate; provided that during an Event of Default under Section 8.11 hereof, the applicable Default Rate shall apply without any election or action of the part of Agent or any Bank.

 

(e) Limitation on Interest . In no event shall the rate of interest hereunder exceed the maximum rate allowable by law.

 

Section 2.6. Evidence of Indebtedness .

 

(a) Revolving Loans . The obligation of Borrowers to repay the Revolving Loans made by each Bank and to pay interest thereon shall be evidenced by a Revolving Credit Note of Borrowers in the form of Exhibit A hereto, payable to the order of such Bank in the principal amount of its Revolving Credit Commitment or, if less, the aggregate unpaid principal amount of Revolving Loans made hereunder by such Bank.

 

(b) Term Loan . The obligation of Borrowers to repay the Term Loan made by the Banks and to pay interest thereon shall be evidenced by a Term Loan Note of Borrowers in the form of Exhibit B hereto, payable to the order of each Bank in the principal amount of its Term Loan Commitment.

 

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(c) Swing Loan . The obligation of Borrowers to repay the Swing Loans and to pay interest thereon shall be evidenced by a Swing Line Note of Borrowers substantially in the form of Exhibit C hereto, and payable to the order of the Swing Line Bank in the principal amount of the Swing Line Commitment, or, if less, the aggregate unpaid principal amount of Swing Loans made hereunder by the Swing Line Bank.

 

Section 2.7. Notice of Credit Event; Funding of Loans .

 

(a) Notice of Credit Event . Administrative Borrower shall provide to Agent a Notice of Loan prior to (i) 11:00 A.M. (Eastern time) on the proposed date of borrowing or conversion of any Base Rate Loan, (ii) 11:00 A.M. (Eastern time) three Business Days prior to the proposed date of borrowing, conversion or continuation of any LIBOR Loan, and (iii) 2:00 P.M. (Eastern time) on the proposed date of borrowing of any Swing Loan. Borrowers shall comply with the notice provisions set forth in Section 2.2(b) hereof with respect to Letters of Credit.

 

(b) Funding of Loans . Agent shall notify each Bank of the date, amount and Interest Period (if applicable) promptly upon the receipt of a Notice of Loan, and, in any event, by 2:00 P.M. (Eastern time) on the date such notice is received. On the date that the Credit Event set forth in such notice is to occur, each such Bank shall provide to Agent, not later than 3:00 P.M. (Eastern time), the amount in Dollars, in federal or other immediately available funds, required of it. If Agent shall elect to advance the proceeds of such Loan prior to receiving funds from a Bank, Agent shall have the right, upon prior notice to Administrative Borrower, to debit any account of any Borrower or otherwise receive such amount from Borrowers, on demand, in the event that such Bank shall fail to reimburse Agent in accordance with this subsection (b). Agent shall also have the right to receive interest from such Bank at the Federal Funds Effective Rate in the event that such Bank shall fail to provide its portion of the Loan on the date requested and Agent shall elect to provide such funds. All funds distributed hereunder shall be deposited in the account of Administrative Borrower at the main office of Agent in Cleveland, Ohio.

 

(c) Conversion of Loans .

 

(i) Revolving Loans and Term Loans . At the request of Administrative Borrower to Agent, subject to the notice and other provisions of this Section 2.7, the Banks shall