<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For quarterly period ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 0-23335
MPW INDUSTRIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
Ohio 31-1567260
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
9711 Lancaster Road, S.E., Hebron, Ohio 43025
(Address of principal executive offices) (Zip code)
(740) 927-8790
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes No X
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of the issuer's classes of
common stock, as of the latest practicable date.
As of January 31, 1998, 10,321,167 shares of the issuer's common stock,
without par value, were outstanding.
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MPW INDUSTRIAL SERVICES GROUP, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1997 (unaudited)............3
Consolidated Statements of Operations for the three and six months ended December 31,
1996 and 1997 (unaudited)....................................................................4
Consolidated Statements of Cash Flows for the six months ended December 31, 1996 and
1997 (unaudited).............................................................................5
Notes to Consolidated Financial Statements (unaudited).......................................6
Item 2. Management's Discussion and Analysis of Consolidated Financial Condition
and Results of Operations...................................................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................................15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...........................................................................15
Item 2. Changes in Securities and Use of Proceeds...................................................15
Item 3. Defaults Upon Senior Securities.............................................................16
Item 4. Submission of Matters to a Vote of Security Holders.........................................16
Item 5. Other Information...........................................................................17
Item 6. Exhibits and Reports on Form 8-K............................................................17
SIGNATURES.............................................................................................18
EXHIBIT INDEX..........................................................................................19
</TABLE>
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PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
MPW INDUSTRIAL SERVICES GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1997
----------- ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 489 $ 788
Accounts receivable, net of allowances 13,560 17,744
Inventories 3,361 3,784
Deferred income taxes -- 2,216
Prepaid expenses 960 1,069
Other current assets 596 437
-------- --------
18,966 26,038
Property and equipment, net 23,400 23,326
Noncurrent assets:
Costs in excess of net assets of acquired businesses, net 2,518 7,202
Other assets 401 377
-------- --------
Total assets $ 45,285 $ 56,943
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,414 $ 4,638
Accrued compensation and related taxes 3,052 2,223
Current maturities of noncurrent liabilities 965 8,110
Other accrued liabilities 4,466 4,790
-------- --------
11,897 19,761
Noncurrent liabilities:
Long-term debt 11,719 1,587
Capital leases 2,048 --
Deferred income taxes -- 1,853
Deferred stock option compensation 2,764 --
-------- --------
16,531 3,440
Minority interest 379 --
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and
outstanding -- --
Common stock, no par value; 30,000,000 shares authorized; 6,200,000 and 10,083,667 shares
issued and outstanding at June 30, 1997 and December 31, 1997, respectively 62 101
Additional paid-in capital 837 33,990
Retained earnings (deficit) 15,579 (349)
-------- --------
16,478 33,742
======== ========
Total liabilities and shareholders' equity $ 45,285 $ 56,943
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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MPW INDUSTRIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- -------------------------
1996 1997 1996 1997
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues $ 18,157 $ 24,199 $ 37,579 $ 46,064
Costs and expenses:
Cost of services 11,925 16,358 24,566 30,738
Selling, general and administrative expenses 3,299 4,216 6,504 7,761
Depreciation and amortization 912 864 1,815 1,730
Deferred stock option compensation 221 3,255 2,410 3,415
-------- -------- -------- --------
Total costs and expenses 16,357 24,693 35,295 43,644
-------- -------- -------- --------
Income (loss) from operations 1,800 (494) 2,284 2,420
Interest expense, net 336 216 550 551
Minority earnings 88 20 213 119
-------- -------- -------- --------
Income (loss) before taxes 1,376 (730) 1,521 1,750
Provision (benefit) for income taxes 349 (1,418) 393 (1,269)
-------- -------- -------- --------
Net income $ 1,027 $ 688 $ 1,128 $ 3,019
======== ======== ======== ========
Pro forma information:
Historical income (loss) before taxes $ 1,376 $ (730) $ 1,521 $ 1,750
Pro forma taxes on income 550 (292) 608 700
-------- -------- -------- --------
Pro forma net income (loss) $ 826 $ (438) $ 913 $ 1,050
======== ======== ======== ========
Pro forma net income (loss) per share $ 0.13 $ (0.06) $ 0.15 $ 0.15
======== ======== ======== ========
Pro forma net income (loss) per share, assuming dilution $ 0.12 $ (0.06) $ 0.14 $ 0.14
======== ======== ======== ========
Weighted average common shares outstanding 6,200 7,531 6,200 6,866
Weighted average common shares outstanding, assuming dilution 6,811 7,531 6,719 7,550
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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MPW INDUSTRIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
--------------------------
1996 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 1,128 $ 3,019
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 1,434 1,585
Amortization 381 145
Gain on disposals of assets (22) (5)
Minority interest 213 119
Deferred stock option compensation 2,410 3,415
Cumulative deferred taxes -- (702)
Changes in operating assets and liabilities:
Accounts receivable (1,231) (3,502)
Inventories (423) 167
Prepaid expenses and other assets (257) 98
Accounts payable 222 411
Deferred income taxes -- 339
Other accrued liabilities 193 (2,223)
-------- --------
Net cash provided by operating activities 4,048 2,866
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,347) (2,538)
Purchase of business, net of acquired cash -- (2,738)
Purchase of minority interests -- (339)
Proceeds from disposal of property and equipment 145 66
-------- --------
Net cash used in investing activities (2,202) (5,549)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from initial public offering, net -- 30,250
Proceeds from revolving credit facility 15,069 17,949
Payments on revolving credit facility (14,686) (24,484)
Proceeds from notes payable 13 3,000
Payments on notes payable (440) (9,297)
Payments on AAA Notes -- (13,400)
Payments on capital lease obligations (370) (27)
Proceeds from capital contributions 773 233
Distributions to shareholders (2,103) (1,242)
-------- --------
Net cash provided by (used in) financing activities (1,744) 2,982
-------- --------
Increase in cash and cash equivalents 102 299
Cash and cash equivalents at beginning of year 508 489
-------- --------
Cash and cash equivalents at end of year $ 610 $ 788
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
MPW Industrial Services Group, Inc. (the "Company") is an industrial
services firm that provides industrial cleaning and facility support services,
industrial process water purification, industrial air filtration services and
other specialized services. Such services are typically provided at customer
facilities. The Company also operates a process facility for industrial
container cleaning. The Company's principal customers are large industrial
facilities in the automotive, electric power, chemical, pulp and paper, steel,
transportation, aerospace and other heavy manufacturing industries. The Company
provides services primarily in the Midwestern and Southeastern United States.
The unaudited consolidated financial statements include the accounts of
the Company including, but not limited to, (i) MPW Industrial Services, Inc.
("MPW"), (ii) Weston Engineering, Inc. ("Weston"), (iii) ESI International, Inc.
and ESI North, Limited (collectively "ESI International") from the effective
date of acquisition, October 1, 1997 and (iv) Aquatech Environmental, Inc.
("Aquatech"), which was 70% owned by the Company until December 5, 1997, at
which time the Company purchased the remaining minority shareholders' interests
of Aquatech, and it became wholly-owned. The minority shareholders' interests in
the equity and net income of Aquatech are presented separately in the
accompanying unaudited consolidated financial statements for the period through
December 4, 1997. All material intercompany transactions and balances have been
eliminated in consolidation.
The accompanying unaudited consolidated financial statements presented
herein have been prepared by the Company and reflect all adjustments of a normal
recurring nature that are, in the opinion of management, necessary for a fair
presentation of financial results for the three and six months ended December
31, 1996 and 1997, in accordance with generally accepted accounting principles
for interim financial reporting and pursuant to Article 10 of Regulation S-X.
Certain footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. These interim consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements contained in the Company's Registration Statement on Form
S-1 (File No. 333-36887) ("Registration Statement"). The results of operations
for the three and six months ended December 31, 1996 and 1997 are not
necessarily indicative of the results for the full year (see Note 9 for further
information regarding fluctuations in quarterly results).
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the accompanying
consolidated financial statements. Actual results could differ from those
estimates.
NOTE 2. ACQUISITION OF ESI INTERNATIONAL
Effective October 1, 1997, the Company acquired all of the outstanding
stock of ESI International, Inc., a Tennessee corporation ("ESI") and purchased
all of the members' interests in ESI North, Limited, an Ohio limited liability
company, ("ESIN" and collectively with ESI, "ESI International") for an
aggregate purchase price of $4,903,000 and $1,043,000 of assumed liabilities.
The purchase price was paid as follows: (i) $2,824,000 in cash; (ii) unsecured
promissory notes in the aggregate of $1,119,000, bearing interest at 6.5%, due
in twenty equal, consecutive, quarterly installments, with the first such
installment due on January 31, 1998; and (iii) 96,000 shares of common stock of
the Company. The number of shares of the Company's common stock issued as part
of the purchase price is subject to adjustments based on changes in the market
price of the Company's common stock during the 90-day period following the
Company's initial public offering of its common stock. The purchase price may be
increased by a maximum of $600,000 contingent upon the achievement of certain
revenue and operating objectives over the three-year period following the date
of acquisition. The acquisition has been accounted for using the purchase method
of accounting and, accordingly, the acquired assets and assumed liabilities have
been recorded at their estimated fair values as of October 1, 1997. The
accompanying unaudited consolidated financial statements include the results of
operations of ESI International from the effective acquisition date.
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NOTE 3. INITIAL PUBLIC OFFERING OF COMMON STOCK
On December 1, 1997, the Registration Statement related to the
Company's initial public offering of its common stock (the "Offering") was
declared effective by the Securities and Exchange Commission and its stock began
trading on the NASDAQ national market system on December 2, 1997. Pursuant to
the terms of the Offering, on December 5, 1997, the Company issued 3,750,000
shares of common stock that were sold at $9.00 per share, the net proceeds of
which were $31,388,000 before deducting expenses of $1,138,000.
On January 2, 1998, the over-allotment option in connection with the
Offering was partially exercised and on January 6, 1998, the Company issued an
additional 237,500 shares at $9.00 per share. The net proceeds of the partial
exercise of the over-allotment option were $1,988,000.
NOTE 4. OFFERING RELATED TRANSACTIONS
Restructuring of the Company and Termination of MPW's S Corporation
Status
In connection with the Offering, effective October 30, 1997, the
Company was restructured resulting in the creation of a new holding company,
MPW Industrial Services Group, Inc., an Ohio corporation. In connection with
this reorganization, MPW's S Corporation status was terminated. Prior to this
termination, MPW made a distribution to the S Corporation shareholders in the
amount of $21,200,000 for undistributed earnings associated with MPW's S
Corporation status. These distributions were made through the Company's
issuance of promissory notes to such shareholders (the "AAA Notes"), of which
$13,400,000 was subsequently paid off with the Offering proceeds. The remaining
$7,800,000 will be paid as follows: (i) $4,200,000 in cash on April 15, 1998
and (ii) $3,600,000 to be redeemed in connection with the sale of a corporate
aircraft to a holder of the AAA Notes.
Deferred Stock Option Compensation Expense
In connection with the Offering, the Company recorded a non-cash,
non-recurring charge of $1,869,000, net of tax, associated with certain of its
stock option plans. This charge resulted in a concurrent increase in paid-in
capital. The Company also eliminated the related deferred stock option
compensation liabilities previously recorded because, effective with the
Offering, the Company's repurchase obligations for stock options exercised
under these stock option plans were eliminated.
Related Party Lease Agreements
In connection with the Offering, the Company restructured certain lease
agreements with its principal shareholder for facilities that the Company uses
in its business operations. Additionally, subsequent to December 31, 1997, the
Company will redeem $3,600,000 of the AAA Notes as consideration for the sale of
a corporate aircraft at its fair market value to an entity controlled by the
Company's principal shareholder. In connection with this transaction, the
Company will enter into a lease agreement with this entity for the lease of this
corporate aircraft.
Purchase of Remaining Minority Shareholders' Interests
In connection with the Offering, on December 5, 1997, the Company
purchased the remaining minority shareholders' interests in the equity and net
income of Aquatech for an aggregate purchase price of $678,000, at which time
Aquatech became a wholly-owned subsidiary of the Company. The purchase price was
paid as follows: (i) $339,000 in cash and (ii) 37,667 shares of common stock of
the Company.
NOTE 5. LONG-TERM DEBT
Prior to the Offering, the Company had various credit arrangements with
its principal banks, including term notes and a revolving credit line with
outstanding balances totaling $8,948,000 and $6,935,000, respectively, of which
$3,000,000 was associated with the Company's acquisition of ESI International.
On December 5, 1997, the entire outstanding balance under these arrangements,
$15,883,000, was repaid.
Effective December 10, 1997, the Company entered into a new credit
agreement with its principal banks (the "Credit Facility") to replace the
existing agreement. The Credit Facility provides the Company with $50,000,000 of
unsecured credit availability for a three-year period. Under the Credit
Facility, $15,000,000 is available for working capital
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needs, of which $5,000,000 may be used for letters of credit, and the remaining
$35,000,000 is available for the Company's growth initiatives, including
acquisitions. Borrowing under the Credit Facility currently bears interest at
the prime rate less 0.75% or, at the Company's option, the Eurodollar market
rate plus 0.75%. The interest rate is subject to change based on interest rate
formulas tied to financial performance as measured by debt service coverage and
by the ratio of funded debt to equity. The Credit Facility also provides
covenants that impose minimum levels for interest coverage and tangible net
worth and ceiling levels for funded debt to equity. As of December 31, 1997, no
balances had been drawn on the Credit Facility. The Company pays a commitment
fee for unused portions of the Credit Facility of 0.25%.
NOTE 6. INCOME TAXES
Prior to October 31, 1997, MPW's income was taxed under the provisions
of Subchapter S of the Internal Revenue Code of 1986, as amended, which provides
that in lieu of corporate income taxes, the shareholders of the S Corporation
are taxed on their proportionate share of MPW's taxable income. Therefore, no
provision or liability for federal income tax has been included in historical
financial statements related to MPW prior to October 31, 1997. The accompanying
financial statements do, however, include provisions for income taxes for
federal, state, provincial and local tax purposes for the other members of the
Company that are subject to corporate income taxes.
Effective October 30, 1997, MPW terminated its S Corporation status and
became subject to corporate income taxes. The Company recorded a current
deferred tax asset and a noncurrent deferred tax liability of $2,111,000 and
$1,409,000, respectively, to recognize the cumulative deferred income taxes
attributable to MPW's change in tax status (from an S Corporation to a C
Corporation). The Company also recorded an additional current deferred tax asset
and noncurrent deferred tax liability of $105,000 and $444,000, respectively,
related to its results of operations since October 31, 1997. Deferred income
taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components of the Company's
deferred tax asset and liability as of December 31, 1997 are related to the use
of accelerated depreciation rates on property and equipment for tax purposes and
the carryforward of tax adjustments related to the termination of MPW's S
Corporation status.
The pro forma income taxes presented in the Consolidated Statements of
Operations for the three and six months ended December 31, 1996 and 1997
represent the estimated income taxes that would have been reported had MPW been
subject to federal and state income taxes for each of the periods presented.
NOTE 7. EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"), Earnings per Share,
effective for periods ending after December 15, 1997. SFAS No. 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is similar to the previously reported
fully diluted earnings per share. All earnings per share amounts for all periods
have been presented to conform to the SFAS No. 128 requirements.
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The following table sets forth the computation of pro forma basic and
diluted earnings per share (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------ ------------------
1996 1997 1996 1997
------------------ ------------------
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings per share:
Pro forma net income (loss) $ 826 $ (438) $ 913 $ 1,050
======= ======= ======= =======
Denominator for basic earnings per share -
weighted average common shares 6,200 7,531 6,200 6,866
Effect of dilutive employee stock options 611 -- 519 684
------- ------- ------- -------
Denominator for diluted earnings per share -
adjusted weighted average common shares and
assumed conversions 6,811 7,531 6,719 7,550
======= ======= ======= =======
Pro forma net income (loss) per share $ 0.13 $ (0.06) $ 0.15 $ 0.15
======= ======= ======= =======
Pro forma net income (loss) per share,
assuming dilution $ 0.12 $ (0.06) $ 0.14 $ 0.14
======= ======= ======= =======
</TABLE>
Options to purchase 1,311,500 shares of the Company's common stock at a
weighted average price per share of $4.29 were outstanding during the three
months ended December 31, 1997, but were not included in the computation of
diluted earnings per share because the Company reported a pro forma net loss
and, therefore, the effect would be antidilutive.
On January 2, 1998, the over-allotment option in connection with the
Offering was partially exercised and on January 6, 1998, the Company issued an
additional 237,500 shares at $9.00 per share.
NOTE 8. 1997 STOCK OPTION PLAN
On November 15, 1997, the Company adopted a new stock option plan (the
"1997 Plan") and subsequently granted 362,500 stock options to certain
employees. The purpose of the 1997 Plan is to attract and retain directors,
officers and key employees of the Company, to enhance their interest in the
Company's continued success and to allow associates an opportunity to have an
ownership in the Company through stock options, stock awards and a stock
purchase plan. The maximum number of common shares available to be issued under
the 1997 Plan is 700,000 shares of common stock.
NOTE 9. FLUCTUATIONS IN QUARTERLY RESULTS
The Company's revenues and results of operations tend to vary
seasonally as a result of a number of factors over which the Company has no
control, including its customers' budgetary constraints, the timing and duration
of its customers' planned maintenance activities and shutdowns, changes in its
competitors' pricing policies and general economic conditions. Also, certain
operating and fixed costs remain relatively constant throughout the fiscal year,
which when offset by differing levels of revenues may result in fluctuations in
quarterly operating results. Because of these factors, the Company typically
generates the least amount of revenues in the third quarter, higher revenues in
the second quarter and the greatest amount of revenues in the first and fourth
quarters. Although the Company believes that the historical trend in quarterly
revenue for the first and fourth quarters are generally higher than the second
and third quarters, there can be no assurance that this will occur in future
periods. Accordingly, quarterly or other interim results should not be
considered indicative of results to be expected for any quarter or for the full
year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Except for historical information, certain statements in this
Management's Discussion and Analysis of Consolidated Financial Condition and
Results of Operations are forward looking. These forward looking statements are
based on current expectations that are subject to a number of uncertainties and
risks, and actual results may differ materially. The uncertainties and risks
include, but are not limited to, competitive and other market factors, customer
purchasing behavior, general economic conditions and other facets of the
Company's business operations as well as other risk factors identified in the
Company's Registration Statement. The Company undertakes no obligation and does
not intend to update, revise or otherwise publicly release the result of any
revisions to these forward looking statements that may be made to reflect future
events or circumstances.
The following information should be read in conjunction with the
Unaudited Consolidated Financial Statements and Notes included in Part I, Item
1. The following information should also be read in conjunction with the Audited
Consolidated Financial Statements and Notes, and Management's Discussion and
Analysis of Financial Condition and Results of Operations for the year ended
June 30, 1997 as contained in the Company's Registration Statement.
OVERVIEW
Effective October 1, 1997, the Company completed the acquisition of ESI
International for an aggregate purchase price of $4.9 million and $1.0 million
of assumed liabilities. The purchase price was paid with $2.8 million in cash,
96,000 shares of common stock of the Company and $1.1 million in unsecured
promissory notes which bear interest at 6.5% payable over five years.
On December 1, 1997, the Registration Statement related to the
Company's initial public offering of its common stock was declared effective by
the Securities and Exchange Commission and its stock began trading on the NASDAQ
national market system on December 2, 1997. Pursuant to the terms of the
Offering, on December 5, 1997, the Company issued 3,750,000 shares of common
stock that were sold at $9.00 per share. On January 2, 1998, the over-allotment
option in connection with the Offering was partially exercised and on January 6,
1998, the Company issued an additional 237,500 shares at $9.00 per share. The
net proceeds to the Company in connection with the Offering, including the
partial exercise of the over-allotment option, were $33.4 million before
deducting expenses of $1.1 million.
During the three month period ended December 31, 1997, numerous events
occurred and certain transactions were recorded that were directly related to
the Offering. These events and transactions were:
1. Effective October 30, 1997, MPW terminated its S Corporation
election under subchapter S of the Internal Revenue Code of 1986,
as amended, for federal income tax purposes and under comparable
state tax laws. In connection therewith, MPW declared a dividend
of $21.2 million evidenced by the AAA Notes and the Company
recorded a net non-recurring tax benefit of $702,000 and a related
current deferred tax asset and noncurrent deferred tax liability
of $2.1 million and $1.4 million, respectively.
2. In connection with the Offering, the Company recorded a non-cash,
non-recurring charge associated with certain of its stock option
plans. This charge resulted in a concurrent increase in paid-in
capital. The Company also eliminated the related deferred stock
option compensation liabilities previously recorded because,
effective with the Offering, the Company's repurchase obligations
for stock options exercised under these stock option plans were
eliminated.
3. Effective with the Offering, the Company adjusted the historical
lease costs for certain facilities leased by the Company from
related parties and recharacterized such leases from capital to
operating as a result of restructured lease agreements.
4. On December 5, 1997, the Company purchased certain minority stock
ownership interests with cash in the amount of $339,000 and by the
issuance of 37,667 shares of the Company's common stock.
5. On December 5, 1997 the Company used a portion of the net proceeds
from the offering to repay $15.9 million of outstanding
liabilities to its principal banks, including $3.0 million of
long-term liabilities associated with the Company's acquisition of
ESI International during the three months ended December 31, 1997.
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6. During December 1997, the Company used a portion of the net
proceeds from the Offering to repay $13.4 million of the
outstanding balance of the AAA Notes.
As a result of the events discussed above and the related transactions
recorded during the three month period ended December 31, 1997, the
comparability of the results of operations for the Company for the three and six
month periods ended December 31, 1997 with the same periods in the prior year
has been affected. For purposes of this Management's Discussion and Analysis of
Consolidated Financial Condition and Results of Operations, the following
adjusted pro forma information is being presented as supplemental information to
the Consolidated Financial Statements contained in Part I, Item 1. Management's
analysis under the heading of Results of Operations below utilizes this
supplemental information.
ADJUSTED PRO FORMA INFORMATION
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
1996 1997 1996 1997
------------------------ ------------------------
<S> <C> <C> <C> <C>
Income (loss) before taxes as reported $ 1,376 $ (730) $ 1,521 $ 1,750
Adjustments other than income taxes:
Reduction of historical lease costs for certain facilities
leased by the Company from related parties pursuant to
restructured lease agreements which took effect in connection
with the Offering 64 22 130 90
Elimination of interest expense, net related to
repayment of existing debt from the proceeds of the
Offering 248 188 404 438
Elimination of minority earnings as a result of the
Company's purchase of certain minority shareholders'
interests effective with the Offering 88 20 213 119
Elimination of deferred stock option compensation expense 221 3,255 2,410 3,415
-------- -------- -------- --------
Adjusted pro forma income before income taxes 1,997 2,755 4,678 5,812
Taxes on income (1) 799 1,102 1,871 2,325
-------- -------- -------- --------
Adjusted pro forma net income $ 1,198 $ 1,653 $ 2,807 $ 3,487
======== ======== ======== ========
Adjusted pro forma net income per share $ 0.12 $ 0.16 $ 0.28 $ 0.35
======== ======== ======== ========
Adjusted pro forma net income per share, assuming dilution $ 0.11 $ 0.15 $ 0.26 $ 0.33
======== ======== ======== ========
Weighted average common shares outstanding (2) 9,988 10,084 9,988 10,036
Weighted average common shares outstanding, assuming
dilution (2) 10,669 10,774 10,669 10,726
<FN>
------------------
(1) Based on an assumed effective rate of 40%.
(2) Based on the assumption that the sale of 3,750,000 shares of the
Company's common stock in the Offering and the issuance of 37,667 shares of the
Company's common stock in exchange for certain minority shareholders' interests
occurred at the beginning of each period presented.
</TABLE>
Page 11
<PAGE> 12
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
adjusted pro forma consolidated statement of income data as a percentage of
revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
1996 1997 1996 1997
------------------------ ------------------------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Costs and expenses
Cost of services 65.7 67.6 65.5 66.7
Adjusted pro forma selling, general and administrative
expenses 19.1 17.5 18.2 17.0
Adjusted pro forma depreciation and amortization 4.2 3.5 3.9 3.7
----------- ---------- ---------- ----------
Adjusted pro forma total costs and expenses 89.0 88.6 87.6 87.4
----------- ---------- ---------- ----------
Adjusted pro forma income before taxes 11.0 11.4 12.4 12.6
Adjusted pro forma provision for income taxes 4.4 4.6 5.0 5.0
----------- ---------- ---------- ----------
Adjusted pro forma net income 6.6% 6.8% 7.4% 7.6%
=========== ========== ========== ==========
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1996
Basis of Presentation. Management's analysis of the three months ended
December 31, 1997 ("fiscal 1998 quarter") compared to the three months ended
December 31, 1996 ("fiscal 1997 quarter") utilizes the supplemental adjusted pro
forma information as provided in the tables on pages 11 and 12, herein.
Revenues. Revenues increased by $6.0 million, or 33.3%, to $24.2
million for the fiscal 1998 quarter from $18.2 million for the fiscal 1997
quarter. The internal rate of growth in revenues in the fiscal 1998 quarter was
23.2% as a result of significant growth in each of the Company's principal
services lines. Revenues also increased in the fiscal 1998 quarter as a result
of the acquisition of ESI International that contributed $1.8 million of
revenues.
Cost of Services. Cost of services increased by $4.5 million, or 37.2%,
to $16.4 million for the fiscal 1998 quarter from $11.9 million for the fiscal
1997 quarter. Cost of services as a percentage of revenues increased to 67.6%
for the fiscal 1998 quarter from 65.7% for the fiscal 1997 quarter. Projects
performed by the Company, primarily industrial cleaning projects, and work
performed for certain of the Company's industrial customers experienced lower
margins in the fiscal 1998 quarter as compared to the fiscal 1997 quarter. These
lower margin activities were partially offset by improved margins in the fiscal
1998 quarter in the Company's complementary service lines as compared to the
fiscal 1997 quarter.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $754,000, or 21.7%, to $4.2 million for the
fiscal 1998 quarter from $3.5 million for the fiscal 1997 quarter. This increase
is primarily due to the acquisition of ESI International, infrastructure
investments to support growth in Weston since its acquisition in April 1996 and
other investments in the Company's infrastructure to support overall growth.
Selling, general and administrative expenses decreased as a percentage of
revenues to 17.5% for the fiscal 1998 quarter from 19.1% for the fiscal 1997
quarter.
Depreciation and Amortization. Depreciation and amortization increased
by $97,000, or 12.8%, to $856,000 for the fiscal 1998 quarter from $759,000 for
the fiscal 1997 quarter. This increase is a result of additional capital
expenditures during the current fiscal year. Depreciation and amortization
decreased as a percentage of revenues to 3.5% for the fiscal 1998 quarter from
4.2% for the fiscal 1997 quarter. This decrease as a percentage of revenues is
primarily due to revenue growth in the container cleaning and industrial water
service lines for which capital investments were made in prior years and to
growth in revenues in service lines that require less capital than industrial
cleaning.
Income from Operations. Income from operations increased $758,000, or
38.0%, to $2.8 million for the fiscal 1998 quarter from $2.0 million for the
fiscal 1997 quarter. Income from operations also increased as a percentage of
Page 12
<PAGE> 13
revenues to 11.4% for the fiscal 1998 quarter from 11.0% for the fiscal 1997
quarter. The increase in income from operations and the improved operating
margin are due to the factors discussed above.
Interest Expense, net. Following the Offering, the Company had no
borrowing under the Credit Facility with its banks. For this reason, interest
expense, net has been eliminated in the adjusted pro forma information to give
effect as if the repayment of the Company's debt obligations from the proceeds
of the Offering had occurred as of the beginning of each of the periods
presented. Actual interest expense before the adjusted pro forma elimination
declined to $216,000 for the fiscal 1998 quarter from $336,000 for the fiscal
1997 quarter due primarily to the repayment discussed above.
Provision for Income Taxes. Prior to October 31, 1997, MPW was an S
Corporation for income tax purposes and did not record a provision for federal
and certain state income taxes. The provision for income taxes in the adjusted
pro forma information has been assumed to be at an effective rate of 40.0% for
each of the periods presented.
Net Income and Net Income per Share. Net income increased $455,000, or
38.0%, to $1.7 million for the fiscal 1998 quarter from $1.2 million for the
fiscal 1997 quarter. Assuming dilution, net income per share increased to $0.15
for the fiscal 1998 quarter from $0.11 for the fiscal 1997 quarter. These
increases are due to the factors discussed above. Weighted average common shares
outstanding used in the calculation of net income per share assumes that the
Offering and repurchase of minority interests had occurred at the beginning of
each of the periods presented.
SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO SIX MONTHS ENDED
DECEMBER 31, 1996
Basis of Presentation. Management's analysis of the six months ended
December 31, 1997 ("six month fiscal 1998 period") compared to the six months
ended December 31, 1996 ("six month fiscal 1997 period") utilizes the
supplemental adjusted pro forma information as provided in the tables on pages
11 and 12, herein.
Revenues. Revenues increased by $8.5 million, or 22.6%, to $46.1
million for the six month fiscal 1998 period from $37.6 million for the six
month fiscal 1997 period. The internal rate of growth in revenues in the six
month fiscal 1998 period was 17.7% as a result of growth of more than 11.0% in
industrial cleaning and facility support along with significant growth in each
of the Company's complementary services lines. Revenues also increased in the
six month fiscal 1998 period as a result of the acquisition of ESI International
that contributed $1.8 million of revenues.
Cost of Services. Cost of services increased by $6.1 million, or 25.1%,
to $30.7 million for the six month fiscal 1998 period from $24.6 million for the
six month fiscal 1997 period. Cost of services as a percentage of revenues
increased to 66.7% for the six month fiscal 1998 period from 65.5% for the six
month fiscal 1997 period. Projects and work performed by the Company for certain
of the Company's industrial customers experienced lower margins in the six month
fiscal 1998 period as compared to the six month fiscal 1997 period. Improved
margins in the Company's complementary service lines in the six month fiscal
1998 period as compared to six month fiscal 1997 period partially offset the
lower margins discussed above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $959,000, or 14.0%, to $7.8 million for the
six month fiscal 1998 period from $6.9 million for the six month fiscal 1997
period. This increase is primarily due to the acquisition of ESI International
and investments in the Company's infrastructure to support its overall growth.
Selling, general and administrative expenses decreased as a percentage of
revenues to 17.0% for the six month fiscal 1998 period from 18.2% for the six
month fiscal 1997 period.
Depreciation and Amortization. Depreciation and amortization increased
by $220,000, or 14.9%, to $1.7 million for the six month fiscal 1998 period from
$1.5 million for the six month fiscal 1997 period. This increase is primarily a
result of additional capital expenditures during the current fiscal year.
Depreciation and amortization decreased as a percentage of revenues to 3.7% for
the six month fiscal 1998 period from 3.9% for the six month fiscal 1997 period.
This decrease as a percentage of revenues is primarily due to revenue growth in
service lines for which less capital is required.
Income from Operations. Income from operations increased $1.1 million,
or 24.2%, to $5.8 million for the six month fiscal 1998 period from $4.7 million
for the six month fiscal 1997 period. Income from operations also increased as a
percentage of revenues to 12.6% for the six month fiscal 1998 period from 12.4%
for the six month fiscal 1997 period. The increase in income from operations and
the improved operating margin are due to the factors discussed above.
Page 13
<PAGE> 14
Interest Expense, net. Following the Offering, the Company had no
borrowing under the Credit Facility with its banks. For this reason, interest
expense, net has been eliminated in the adjusted pro forma information to give
effect as if the repayment of the Company's debt obligations from the proceeds
of the Offering had occurred as of the beginning of each of the periods
presented. Actual interest expense before the adjusted pro forma elimination was
$551,000 for the six month fiscal 1998 period compared to $550,000 for the six
month fiscal 1997 period.
Provision for Income Taxes. Prior to October 31, 1997, MPW was an S
Corporation for income tax purposes and did not record a provision for federal
and certain state income taxes. The provision for income taxes in the adjusted
pro forma information has been assumed to be at an effective rate of 40.0% for
each of the periods presented.
Net Income and Net Income per Share. Net income increased $680,000, or
24.2%, to $3.5 million for the six month fiscal 1998 period from $2.8 million
for the six month fiscal 1997 period. Assuming dilution, net income per share
increased to $0.33 for the six month fiscal 1998 period from $0.26 for the six
month fiscal 1997 period. These increases are due to the factors discussed
above. Weighted average common shares outstanding used in the calculation of net
income per share assumes that the Offering and repurchase of minority interests
had occurred at the beginning of each of the periods presented.
QUARTERLY RESULTS AND SEASONALITY
The Company's results of operations tend to vary seasonally, with the
least amount of revenues generated in the third quarter, higher revenues in the
second quarter and the greatest amount of revenues in the first and fourth
quarters. The Company's quarterly results of operations may fluctuate
significantly as a result of a number of factors over which the Company has no
control, including its customers' budgetary constraints, the timing and duration
of its customers' planned maintenance activities and shutdowns, changes in its
competitors pricing policies and general economic conditions. Also, certain
operating and fixed costs remain relatively constant throughout the fiscal year
that, when offset by differing levels of revenues, may result in fluctuations in
quarterly results.
LIQUIDITY AND CAPITAL RESOURCES
The proceeds of the Offering received by the Company on December 5,
1997 were $30.3 million, net of underwriting discounts and other costs
associated with the Offering of $3.5 million. Of the proceeds, the Company used
$15.9 million to repay all of the outstanding debt under the Company's various
credit arrangements with its principal banks. The amount repaid included $3.0
million relating to the acquisition of ESI International that occurred during
the fiscal 1998 quarter. Additionally, $13.4 million was used to satisfy a
portion of the AAA Notes. As a result of these payments, and as of December 31,
1997, the Company had no borrowing from its principal banks.
On January 6, 1998, the Company received an additional $2.0 million,
net of underwriting discounts of $150,000 from the exercise of a portion of the
underwriters' over-allotment option for 237,500 shares.
The Company's total debt as of December 31, 1997, including current
maturities, was $9.7 million. Of this amount, $4.2 million is the amount of AAA
Notes due April 15, 1998, which the Company intends to satisfy primarily with
its cash on hand, including the proceeds from the partial exercise of the
over-allotment option. The remaining amount of AAA Notes is $3.6 million that
will be redeemed by an entity controlled by the Company's principal shareholder
for the sale of a certain aircraft. The remaining amount of the Company's debt
of $1.9 million is related to the acquisition of ESI International.
As of December 31, 1997, the Company had cash and cash equivalents of
$788,000 and working capital of $6.3 million. During the six month fiscal 1998
period, the Company had net cash provided by operating activities of $2.9
million, made capital investments of $2.5 million and made cash payments for the
acquisition of ESI International of $2.7 million, net of cash received.
Effective December 10, 1997, the Company entered into the Credit
Facility with its principal banks. This Credit Facility provides the Company
with $50.0 million of credit availability for a three-year period. Under the
Credit Facility, $15.0 million is to be used for working capital needs, of which
$5.0 million may be used for letters of credit. The remaining $35.0 million is
available for use by the Company in growth initiatives such as capital
expenditure programs and
Page 14
<PAGE> 15
acquisitions. Borrowing under the Credit Facility is at rates, based on the
prime rate or LIBOR, that the Company believes to be very favorable.
Availability of borrowing is subject to the maintenance of a minimum level of
tangible net worth, certain levels of debt service coverage and maintenance of
a certain ratio of funded debt to equity that the Company believes are very
achievable. As of December 31, 1997, no amounts had been drawn on the Credit
Facility.
The Company believes that cash on hand as of December 31, 1997, cash
received from the partial exercise of the over-allotment option, cash flow from
operations and available borrowing under the Credit Facility will be sufficient
to fund its currently planned capital projects and operations for at least the
next 24 months. The Company actively seeks opportunities to expand its business
operations. If acquisition opportunities develop, the Company believes that it
has adequate financing capacity in the Credit Facility. If acquisition
opportunities of significant size develop that would extend the Company's
borrowing beyond the capacity of the Credit Facility, the Company may be
required to seek additional financing.
INFLATION
The effects of inflation on the Company's operations were not
significant during the periods presented in the Consolidated Financial
Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
PART II. -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) Not Applicable.
(b) Not Applicable.
(c) On October 30, 1997, each of the shareholders of MPW,
Monte R. Black, Susan K. Black and the Monte R. Black
and Susan K. Black 1994 Irrevocable Trust contributed
to the Company their shares of MPW for shares in the
Company on a one to one basis. The shareholders of
MPW received an aggregate of 1,550,000 shares of
common stock of the Company (subsequently subject to
a four to one stock split) reflecting their ownership
interests in the Company. The sale of the Company's
common stock to the shareholders of MPW was pursuant
to Section 4(2) of the Securities Act of 1933, as
amended (the "Act").
On October 31, 1997, pursuant to a Merger and
Purchase Agreement dated as of October 1, 1997 (the
"Agreement") among ESI and ESIN, the owners of ESI
and ESIN, the Company and MPW Filtration Acquisition
Corp. ("Filtration"), ESI merged with and into
Filtration (the "Merger"), and the Company and
Filtration purchased membership interests of ESIN. As
partial consideration for the Merger, the Company
issued 96,000 shares of its common stock to certain
of the owners of ESI as follows: 40,000 shares to Mr.
Barry Thiel, 24,100 shares to Mr. Jerry Broyles,
11,900 shares to Mr. Dan Jones and 10,000 shares to
each of Mr. George Sullivan and Mr. Kelly Six. Each
of the owners were officers and directors of ESI and
have entered into employment and non-competition
agreements with the Company and the surviving
corporation in the Merger. The number of shares of
the Company's common stock issued to such owners is
subject to adjustment upon completion of the Offering
based on an average trading price of the Company's
common
Page 15
<PAGE> 16
stock during the 90-day period following the
Offering. Pursuant to an Escrow Agreement entered
into in connection with the consummation of the
transaction contemplated by the Agreement, each of
the owner's shares are held in escrow for a minimum
period of at least one year, will be subject to
repurchase rights of the Company on certain events
and will be available for satisfaction of certain
indemnity claims that the Company may have against
such owners. The issuance of the shares of common
stock pursuant to the Agreement was made pursuant to
Rule 504 of Regulation D of the Act.
On December 5, 1997, the Company purchased the
remaining minority shareholders' interests in
Aquatech for an aggregate purchase price of $678,000,
at which time Aquatech became a wholly-owned
subsidiary of the Company. Pursuant to an agreement
between the Company and Robert C. Greenwood, the
President and Chief Executive Officer of Aquatech
("Greenwood") and an agreement between the Company
and James A. Leonard, the Vice President of Aquatech
("Leonard"), the purchase price was paid as follows:
(i) $339,000 in cash to Leonard and (ii) 37,667
shares of common stock of the Company to Greenwood.
The issuance of the Company's common stock to
Greenwood was pursuant to Section 4(2) of the Act.
(d) In connection with the Offering, the Company filed a
Registration Statement on Form S-1 (File No.
333-36887) whereby the Company registered shares of
its common stock, without par value. The Registration
Statement was declared effective by the Securities
and Exchange Commission on December 1, 1997 (the
"Effective Date"). The Offering commenced on December
2, 1997 and was terminated on January 2, 1998. All of
the shares registered in connection with the
Offering, excluding 325,000 shares of the
underwriters' over-allotment, have been sold. The
managing underwriters for the Offering were Raymond
James & Associates, Inc. and Robert W. Baird & Co.
Incorporated.
In connection with the Offering, the Company issued
3,987,500 shares (including the partial exercise of
the underwriters' over-allotment option) of its
common stock to the public at a price of $9.00 per
share. The Company received net proceeds from the
Offering of $32,238,000 after deducting expenses of
$1,138,000. Since the Effective Date, the Company has
(i) repaid all of the outstanding debt of $15,883,000
under the Company's various credit arrangements with
its principal banks, (ii) satisfied a portion of the
AAA Notes equal to $13,400,000 and (iii) paid
$339,000 as partial consideration for the purchase of
the remaining minority shareholders' interests in
Aquatech. The payments used to partially repay the
AAA Notes were made to Monte R. Black, the Company's
Chairman and Chief Executive Officer, Susan K.
Black, Mr. Black's wife, and a trust for the benefit
of Mr. Black's children.
The Credit Facility entered into by the Company
includes certain covenants that, among other things,
(i) restrict dividend or other distributions by the
Company, (ii) limit the Company's ability to become
liable on certain forms of indebtedness generally
outside the normal course of the Company's business,
(iii) provide that the Company's consolidated
tangible net worth (as defined in the Credit
Facility) will not be less than certain specified
amounts and (iv) provide that the Company's annual
capital expenditures will not exceed certain
specified amounts.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) On December 1, 1997, a special meeting of the
shareholders of the Company was held at the corporate
offices of the Company.
(b) Not Applicable.
Page 16
<PAGE> 17
(c) At the special meeting of shareholders, the
shareholders voted to approve the Company's 1997
Stock Option Plan and to approve the indemnification
agreements between the Company and its directors and
executive officers. The voting was as follows:
<TABLE>
<CAPTION>
Votes Votes
For Against Abstentions
------------- ------------- -------------
<S> <C> <C> <C>
1997 Stock Option Plan 5,116,216 0 0
Indemnification agreements 5,116,216 0 0
</TABLE>
(d) Not Applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3(a) Amended and Restated Articles of
Incorporation of the Company effective
October 30, 1997 (filed as Exhibit 3(a) to
the Company's Registration Statement, and
incorporated herein by reference)
3(b) Amended and Restated Code of Regulations of
the Company effective October 30, 1997
(filed as Exhibit 3(b) to the Company's
Registration Statement and incorporated
herein by reference)
4(a) Revolving Credit and Term Loan Agreement
among the Company and its subsidiaries and
affiliates, Bank One, NA, and National City
Bank of Columbus
4(b) First Amendment to Revolving Credit and Term
Loan Agreement among the Company and its
subsidiaries and affiliates, Bank One, NA,
and National City Bank of Columbus
10(a) 1997 Stock Option Plan
10(b) Lease for Hebron, Ohio facility
10(c) Lease for Newark, Ohio facility
10(d) First Lease Amendment for Chesterfield,
Michigan facility
10(e) Aircraft Purchase Agreement
10(f) Aircraft Lease
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the period.
Page 17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf by the
undersigned thereunto duly authorized.
MPW INDUSTRIAL SERVICES GROUP, INC.,
an Ohio corporation
Dated: February 11, 1998 By: /s/ Daniel P. Buettin
------------------ ---------------------------
Daniel P. Buettin
Vice President, Chief Financial Officer and
Secretary
(on behalf of the Registrant and as Principal
Financial Officer)
Page 18
<PAGE> 19
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------ ----------------------
3(a) Amended and Restated Articles of Incorporation of the Company
effective October 30, 1997 (filed as Exhibit 3(a) to the
Company's Form S-1 (File No. 333-36887) ("Registration
Statement"), and incorporated herein by reference)
3(b) Amended and Restated Code of Regulations of the Company
effective October 30, 1997 (filed as Exhibit 3(b) to the
Company's Registration Statement and incorporated herein by
reference)
4(a) Revolving Credit and Term Loan Agreement among the Company and
its subsidiaries and affiliates, Bank One, NA, and National City
Bank of Columbus
4(b) First Amendment to Revolving Credit and Term Loan Agreement
among the Company and its subsidiaries and affiliates, Bank One,
NA, and National City Bank of Columbus
10(a) 1997 Stock Option Plan
10(b) Lease for Hebron, Ohio facility
10(c) Lease for Newark, Ohio facility
10(d) First Lease Amendment for Chesterfield, Michigan facility
10(e) Aircraft Purchase Agreement
10(f) Aircraft Lease
27 Financial Data Schedule
Page 19
<PAGE> 1
EXHIBIT 4(a)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REVOLVING CREDIT AND TERM LOAN AGREEMENT
among
MPW INDUSTRIAL SERVICES GROUP, INC.
and its Subsidiaries and Affiliates Named Herein,
BANK ONE, NA,
NATIONAL CITY BANK OF COLUMBUS
and
BANK ONE, NA,
as Agent
Dated as of December 10, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
(This Table of Contents is not part of this Agreement
and is only for convenience of reference.)
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions.............................................1
Section 1.2 Use of Terms...........................................16
Section 1.3 Cross References; Headings.............................17
Section 1.4 Accounting Terms.......................................17
ARTICLE II
AMOUNT AND TERMS OF COMMITMENTS, REVOLVING CREDIT LOANS
-------------------------------------------------------
AND TERM LOANS
--------------
Section 2.1 Commitments............................................17
Section 2.2 Notes..................................................18
Section 2.3 Notice of Loan Borrowing; Funding of Loans.............19
Section 2.4 Conversion and Continuation Options....................21
Section 2.5 Optional Termination or Reduction of Commitments
......................................................22
Section 2.6 Termination of Commitments.............................23
Section 2.7 Interest...............................................23
Section 2.8 Fees...................................................25
Section 2.9 Prepayments............................................25
Section 2.10 General Provisions as to the Loans and Payments
and Funding of Loans..................................26
Section 2.11 Use of Proceeds........................................27
Section 2.12 Loan Administration....................................27
Section 2.13 Funding Losses.........................................27
ARTICLE III
STANDBY LETTERS OF CREDIT
-------------------------
Section 3.1 Issuance of Standby L/Cs...............................28
Section 3.2 Participation of L/Cs..................................29
Section 3.3 Further Assurances.....................................30
Section 3.4 Obligations Absolute...................................30
(i)
<PAGE> 3
ARTICLE IV
CONDITIONS OF LENDING
---------------------
Section 4.1 Conditions to Initial Transaction......................30
Section 4.2 Conditions to Each Transaction.........................33
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 5.1 Good Standing and Qualification........................34
Section 5.2 Authority..............................................34
Section 5.3 Binding Agreements.....................................34
Section 5.4 Litigation.............................................34
Section 5.6 Taxes..................................................35
Section 5.7 Financial Statements...................................35
Section 5.8 Adverse Developments...................................36
Section 5.9 Existence of Assets and Title Thereto..................36
Section 5.10 Regulations S,T,U or X.................................36
Section 5.11 Compliance.............................................36
Section 5.12 Leases.................................................36
Section 5.13 Pension Plans..........................................37
Section 5.14 Investment Company; Holding Company....................37
Section 5.15 No Insolvency..........................................37
Section 5.16 Environmental Matters..................................37
Section 5.17 Accuracy of Information................................38
Section 5.18 Assets for Conduct of Business.........................38
Section 5.19 Trade Relations........................................38
Section 5.20 Contingent Obligations.................................38
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Section 6.1 Financial Statements...................................39
Section 6.2 Certificates; Other Information........................39
Section 6.3 Payment of Obligations.................................40
Section 6.4 Maintenance of Rights, Permits, Etc; Compliance
with Law...............................................40
Section 6.5 Inspection of Property; Books and Records;
Discussions............................................40
Section 6.6 Notices................................................40
Section 6.7 Taxes..................................................41
Section 6.8 Maintenance of Property; Insurance.....................42
Section 6.9 ERISA Funding Requirements.............................42
(ii)
<PAGE> 4
Section 6.10 Indemnification........................................42
Section 6.11 Performance Under Facility Documents...................43
Section 6.12 Corporate Existence; Foreign Qualification.............43
Section 6.13 Maintenance of Business................................43
Section 6.14 Environmental Matters..................................43
Section 6.16 Change in Governing Documents..........................44
ARTICLE VII
NEGATIVE COVENANTS
------------------
Section 7.1 Mortgages and Pledges..................................44
Section 7.2 Merger, Consolidation, Sale and Acquisition of
Assets.................................................45
Section 7.3 Contingent Obligations.................................46
Section 7.4 Transactions with Affiliates...........................46
Section 7.5 Compliance with ERISA..................................46
Section 7.6 Financial Covenants....................................46
Section 7.7 Debt Restriction.......................................47
Section 7.8 Investments............................................47
Section 7.9 Limitation on Subsidiaries.............................47
Section 7.10 Change in Fiscal Year..................................47
Section 7.11 Change in Accounting Practices.........................47
Section 7.12 Sale and Leaseback.....................................47
Section 7.13 Disposing of Notes/Accounts Receivable.................48
Section 7.14 Subordinated Debt......................................48
Section 7.15 Restricted Payments....................................48
Section 7.16 Derivatives Obligations................................48
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
---------------------------
Section 8.1 Events of Default; Remedies............................48
Section 8.2 Application of Proceeds................................50
ARTICLE IX
THE AGENT
---------
Section 9.1 Appointment............................................51
Section 9.2 Delegation of Duties...................................51
Section 9.3 Exculpatory Provisions.................................51
Section 9.4 Reliance by Agent......................................52
Section 9.5 Notice of Default......................................52
Section 9.6 Non-Reliance on Agent and Other Banks..................52
(iii)
<PAGE> 5
Section 9.7 Indemnification........................................53
Section 9.8 Bank One in Its Individual Capacity....................53
Section 9.9 Successor Agent........................................53
ARTICLE X
CHANGE IN CIRCUMSTANCES
-----------------------
Section 10.1 Basis for Determining Interest Rate Inadequate or
Unfair.................................................54
Section 10.2 Illegality and Impossibility...........................54
Section 10.3 Increased Cost and Reduced Return......................55
Section 10.4 Taxes..................................................56
Section 10.5 Base Rate Loans Substituted for Affected Eurodollar
Rate Loans.............................................57
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1 Expenses...............................................57
Section 11.2 Covenants to Survive, Binding Agreement................58
Section 11.3 Waivers................................................58
Section 11.4 Notices................................................58
Section 11.5 Severability, Entire Agreement, Effectiveness..........60
Section 11.6 Governing Law; Venue...................................60
Section 11.7 Security and Right of Setoff...........................60
Section 11.8 Amendments and Waivers.................................61
Section 11.9 Taxes and Fees.........................................61
Section 11.10 Counterparts...........................................61
Section 11.11 Effective Dat..........................................62
Section 11.12 Waiver of Jury Trial...................................62
Section 11.13 Arbitration............................................62
Section 11.14 Waiver of Subrogation..................................63
EXHIBIT A Form of Revolving Credit Loan Note
EXHIBIT B Form of Term Loan Note
SCHEDULE 5.20 Contingent Obligations
(iv)
<PAGE> 6
REVOLVING CREDIT AND TERM LOAN AGREEMENT
----------------------------------------
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT (the "Agreement"), dated
as of December 10, 1997, is made and entered into by and among MPW Industrial
Services Group, Inc. ("MPW Group"), MPW Industrial Services, Inc. ("MPW, Inc."),
MPW Industrial Services, Ltd. ("MPW, Ltd."), MPW Management Services Corp. ("MPW
Corp."), Weston Engineering, Inc. ("Weston"), Aquatech Environmental, Inc.
("Aquatech), ESI International, Inc., ("ESII"), and ESI-North Limited ("ESI",
which, together the foregoing entities, shall be referred to herein collectively
as the "Borrowers" and individually as a "Borrower"), Bank One, NA, a national
banking association ("Bank One"), National City Bank of Columbus, a national
banking association ("NCBC"), and Bank One, NA, as Agent, acting in the manner
and to the extent described in Article IX hereof.
BACKGROUND INFORMATION
----------------------
The Borrowers have requested that the Banks provide revolving credit
and term loans to the Borrowers, and the Banks have agreed to provide such
revolving credit and term loans, upon and subject to the terms and conditions as
hereinafter set forth.
PROVISIONS
----------
NOW, THEREFORE, in consideration of the provision of such revolving
credit and term loans, the agreements and covenants hereinafter contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Banks, the Agent and the Borrowers do hereby agree
as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 DEFINITIONS. As used herein, in any certificate, document
or report delivered pursuant to this Agreement (except as otherwise defined
herein, in such certificate, document or report), the following terms shall have
the following meanings:
"AFFILIATE" shall mean any Person which, directly or
indirectly, is in Control of, is Controlled by, or is under common Control with,
another Person.
"AGENT" shall mean Bank One in its capacity as agent for the
Banks hereunder, and its successors and assigns in such capacity.
"AGGREGATE COMMITMENT" shall mean the collective, but several,
Commitment of the Banks to make Loans to the Borrowers and issue, provide and
fund Standby L/Cs
<PAGE> 7
up to the maximum aggregate amount of $50 million, subject to the terms and
conditions of this Agreement.
"AGGREGATE REVOLVING CREDIT LOAN COMMITMENT" shall mean the
aggregate amount of the Revolving Credit Loan Commitments of the Banks.
"AGGREGATE TERM LOAN COMMITMENT" shall mean the aggregate
amount of the Term Loan Commitments of the Banks.
"AGREEMENT" shall mean this Revolving Credit and Term Loan
Agreement, as the same may be amended, modified, supplemented, extended,
restated or replaced from time to time.
"AUTHORIZED OFFICER" shall mean the chief executive officer,
the chief financial officer or the treasurer of a Borrower, as the case may be.
"AVAILABLE COMMITMENT" shall mean, at any particular time, an
amount equal to the excess, if any, of (i) the Aggregate Commitment over (ii)
the sum of (x) the aggregate unpaid principal amount at such time of all
Revolving Credit Loans made by the Bank pursuant to the terms hereof, PLUS (y)
the aggregate amount of all Term Loans made by the Bank pursuant to the terms
hereof, PLUS (z) 100% of the Dollar amount available to be drawn under
outstanding Standby L/Cs at such time.
"BANKS" shall mean Bank One, NCBC and their respective
successors and assigns, and "BANK" shall mean any one of such Banks, successors
or assigns.
"BASE RATE" shall mean, for any Base Rate Loan for any day,
the rate per annum equal to the "prime rate" established by Bank One from time
to time based on its consideration of economic, money market, business and
competitive factors, and it is not necessarily Bank One's most favored rate. In
the event Bank One shall abolish or abandon the practice of establishing its
prime rate or should the same be unascertainable, the Agent shall designate a
comparable reference rate which shall be deemed to be the Base Rate under this
Agreement and the other Facility Documents. For purposes of determining the Base
Rate for any day, the Base Rate shall change automatically without notice to the
Borrower immediately on each Business Day with each change in the Base Rate,
with any change thereto effective as of the opening of business on the day of
the change.
"BASE RATE LOAN" shall mean, at any time, any outstanding Loan
that bears interest based on the Base Rate.
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<PAGE> 8
"BORROWERS" shall mean the entities described as the Borrowers
in the opening paragraph of this Agreement and their permitted successors and
assigns, and "BORROWER" shall mean any one of such Borrowers.
"BUSINESS DAY" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday or any day that
shall be in the City of Columbus, Ohio or New York, New York, a legal holiday or
a day on which banking institutions are authorized by law or a Governmental
Authority to close, and (ii) with respect to all determinations and notices in
connection with, and payments of principal and interest on, Eurodollar Rate
Loans, any day that is a Business Day described in clause (i) above and that is
also a day for trading by and between banks in Dollar deposits in the London
interbank market.
"CHANGE IN CONTROL" shall mean the occurrence of any of the
following events:
(a) MPW Group is merged, consolidated or reorganized
into or with another Person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined
voting power of the then outstanding voting stock (which shall all
include all other equity interests with voting power) of such Person
immediately after such transaction are held in the aggregate by the
holders of voting stock of MPW Group immediately prior to such
transaction;
(b) MPW Group sells or otherwise transfers all or
substantially all of its assets to another Person, and as a result of
such sale or transfer less than a majority of the combined voting power
of the then outstanding voting stock of such Person immediately after
such sale or transfer is held in the aggregate by the holders of voting
stock of MPW Group immediately prior to such sale or transfer;
(c) (i) there is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any person
(as the term "person" is used in Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act), other than Monte R. Black or members of his
immediate family, has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities
representing 20% or more of the combined voting power of the then
outstanding voting stock of MPW Group; AND (ii) the employment of a
majority of the executive officers of MPW Group has been terminated
and/or a majority of such executive officers have terminated their
employment for "good cause" in accordance with certain Severance
Agreements between such executive officers and MPW Group.
(d) MPW Group files a report or proxy statement with
the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in
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<PAGE> 9
response to Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) that a change in control of MPW Group has
occurred or will occur in the future pursuant to any then existing
contract or transaction; or
(e) if, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
directors of MPW Group cease for any reason to constitute at least a
majority thereof; provided, however, that for purposes of this clause
(e) each director who is first elected, or first nominated for election
by MPW Group's stockholders, by a vote of at least two-thirds of the
directors of MPW Group (or a committee thereof) then still in office
who were directors of MPW Group at the beginning of any such period
will be deemed to have been a director of MPW Group at the beginning of
such period.
Notwithstanding the foregoing provisions of subparts (c) or (d) above, unless
otherwise determined in a specific case by majority vote of the board of
directors of MPW Group, a "Change in Control" shall not be deemed to have
occurred for purposes of such subparts solely because (i) MPW Group, (ii) a
Subsidiary, or (iii) any MPW Group sponsored employee stock ownership plan or
any other employee benefit plan of MPW Group or any Subsidiary either files or
becomes obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of voting stock, whether in excess of 20%
or otherwise, or because MPW Group reports that a change in control of MPW Group
has occurred or will occur in the future by reason of such beneficial ownership.
"CLOSING DATE" shall mean the date on or after the Effective
Date on which the Agent shall have received the documents specified in or
pursuant to Section 4.1.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"COMMITMENT" shall mean (x) as to Bank One, the commitment of
Bank One to make Loans to the Borrowers and issue, provide and fund Standby L/Cs
on behalf of the Borrowers up to the maximum aggregate amount of $35 million,
and (y) as to NCBC, the commitment of NCBC to make Loans to the Borrowers and
fund Standby L/Cs on behalf of the Borrowers up to the maximum aggregate amount
of $15 million, in both cases subject to the terms and conditions of this
Agreement and subject to being increased and reduced in accordance with the
terms and conditions of this Agreement.
"COMMITMENT PERIOD" shall mean the period of time from the
date hereof through and including December 31, 2000.
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<PAGE> 10
"CONSOLIDATED CAPITAL EXPENDITURES" of the Borrowers shall
mean, for any period, the aggregate additions to property, plant and equipment
and other capital expenditures of the Borrowers for such period, determined on a
consolidated basis, but shall not include the cost of additions to property,
plant and equipment or otherwise arising out of acquisitions permitted by
Section 2.11.
"CONSOLIDATED FUNDED DEBT" shall mean, at any date, all Debt
of the Borrowers, determined on a consolidated basis, payable more than one (1)
year from the date of the creation thereof, which under GAAP is shown on the
Borrowers' balance sheet as a liability, and shall include all capitalized lease
obligations.
"CONSOLIDATED INTEREST EXPENSE" of the Borrowers shall mean,
for any period, the interest expense of the Borrowers, determined on a
consolidated basis for such period, with respect to all outstanding
indebtedness, including without limitation capital leases (in accordance with
GAAP), all commissions, discounts and other fees and charges owed in connection
with letters of credit or lines of credit, net costs or benefits under interest
rate protection agreements, amortization of deferred financing costs, original
issue discounts, any interest expense relating to deferred compensation
arrangements and any interest expense which must be capitalized in accordance
with GAAP.
"CONSOLIDATED NET INCOME" of the Borrowers shall mean, for any
period, the net income of the Borrowers, determined on a consolidated basis for
such period, inclusive of the effect of any extraordinary or other non-recurring
gain and loss.
"CONSOLIDATED NET WORTH" of the Borrowers shall mean, at any
date, the Shareholders' Equity of the Borrowers, determined on a consolidated
basis as of such date.
"CONSOLIDATED TANGIBLE NET WORTH" of the Borrowers (after
eliminating all intercompany accounts) shall mean, at any date, the Consolidated
Net Worth of the Borrowers, less all related Intangible Assets determined on a
consolidated basis at such date. For purposes of this definition, "Intangible
Assets" shall mean the amount (to the extent reflected in determining such
Consolidated Tangible Net Worth) of (i) all write-ups subsequent to June 30,
1997 in the book value of any asset owned by any Borrower, (ii) all investments
in unconsolidated Subsidiaries and all equity investments in Persons which are
not Subsidiaries, and (iii) all unamortized debt discount and expense,
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, anticipated future benefit of tax loss carry-forwards (other than
the recognition of net deferred tax assets resulting from the termination of
MPW, Inc. status as an S-corporation under the Code and the initial public
offering of securities of MPW Group), copyrights, organization or developmental
expenses and other intangible assets.
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<PAGE> 11
"CONTINGENT OBLIGATION" shall mean, as to any Person, any
reimbursement obligations of such Person in respect of drafts that may be drawn
under letters of credit and any obligation of such Person guaranteeing or in
effect guaranteeing any Debt, leases, dividends or other obligations primarily
to pay money ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR")
in any manner, whether directly or indirectly, including without limitation any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to 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 Consolidated Net Worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the obligee under any such
primary obligation of the ability of the primary obligor to make payment of such
primary obligation, or (d) otherwise to assure or hold harmless the obligee
under such primary obligation against loss in respect thereof; provided,
however, that the term "CONTINGENT OBLIGATION" shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROL": (including the terms "controlling", "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"COVERAGE RATIO" of the Borrowers shall mean the ratio of (i)
the sum of Consolidated Net Income of the Borrowers PLUS Consolidated Interest
Expense of the Borrowers, to (ii) the sum of Consolidated Interest Expense of
the Borrowers PLUS Current Maturities, as determined at the end of each Fiscal
Quarter of the Borrowers' Fiscal Year, based on such financial data for the
previous four (4) Fiscal Quarters.
"CURRENT MATURITIES" shall mean the aggregate amount of the
Borrowers' Consolidated Funded Debt due within one (1) year from the date of
determination thereof.
"DEBT" of any Borrower shall mean at any date, without
duplication (a) any indebtedness for borrowed money which any Borrower directly
or indirectly created, incurred, assumed, endorsed (other than for collection in
the ordinary course of business), discounted with recourse or in respect of
which any Borrower is otherwise directly or indirectly liable including, without
limitation, indebtedness in effect guaranteed by any Borrower through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such indebtedness or any security therefor, or to provide funds for the payment
or discharge of such indebtedness or any liability of the obligor of such
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<PAGE> 12
indebtedness (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or to maintain the solvency or other financial
condition of the obligor of such indebtedness, or to make payment for any
products, materials or supplies or for any transportation or service regardless
of the nondelivery or nonfurnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that such indebtedness will be
paid or discharged, or that any agreement relating thereto will be complied
with, or that the holders of such indebtedness will be protected against loss in
respect thereof; (b) any indebtedness, whether or not for borrowed money, which
any Borrower has incurred, assumed, guaranteed or with respect to which any
Borrower has become directly or indirectly liable (including, without
limitation, through any agreement of the character referred to in clause (a)
hereof) and which represents or has been incurred to finance the purchase price
of any property or business, whether by purchase, consolidation, merger or
otherwise; (c) any indebtedness, whether or not for borrowed money, which is
secured by any mortgage, pledge, security interest, lien or conditional sale or
other title retention agreement existing on any property owned or held by any
Borrower subject thereto, whether or not any Borrower has any personal liability
for such indebtedness.
"DEFAULT" shall mean an event or condition which would
constitute an Event of Default with the giving of notice or lapse of time, or
otherwise.
"DEFAULT RATE" shall mean, with respect to any Loan, the Base
Rate at such time PLUS 200 basis points.
"DERIVATIVES OBLIGATIONS" of any Person shall mean all
obligations of such Person in respect of any rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option with
respect to any of the foregoing transactions), any transaction whose value is
derived from another asset or security, or any combination of the foregoing
transactions.
"DOLLAR" and the sign "$" shall mean lawful money of the
United States.
"EFFECTIVE DATE" shall mean the date this Agreement becomes
effective in accordance with Section 11.5.
"ENVIRONMENTAL LAWS" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq., the Toxic Substances Control Act, 15 U.S.C. Section
2601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901, et seq., the Water Quality Act of 1987, 33 U.S.C. Section 1251, et seq.,
the Clean Air Act, 42 U.S.C. Section 7401, et seq., and any other federal,
state or local
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<PAGE> 13
statute, ordinance, law, code, rule, regulation or order regulating or imposing
liability (including strict liability) or standards of conduct regarding
Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may from time to time be supplemented or amended and any
successor statute.
"ERISA EVENT" shall mean, with respect to any Person, (a) a
Reportable Event (other than a Reportable Event not subject to the provision for
30-day notice to the PBGC under regulations issued under Section 4043 of ERISA),
(b) the withdrawal of any member of the ERISA Group from a Plan during a plan
year in which it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA if such withdrawal would have a adverse effect on such Person, (c) the
filing by such Person of a notice of intent to terminate a Plan under a distress
termination or the treatment of a Plan amendment as a distress termination under
Section 4041(c) of ERISA, (d) the institution of proceedings against such Person
to terminate a Plan by the PBGC under Section 4042 of ERISA, (e) the failure to
make required contributions that would result in the imposition of a lien under
Section 412 of the Code or Section 302 of ERISA, (f) any Prohibited Transaction
involving any Plan, and (g) any other event or condition which 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 Plan.
"ERISA GROUP" of any Person shall mean such Person, any
Subsidiary and all members of a controlled group of corporations and all trades
or business (whether or not incorporated) under common control which, together
with a Borrower or any Subsidiary, are treated as a single employer under
Section 414 of the Code.
"EURODOLLAR RATE" shall mean, for any Interest Period, an
interest rate per annum (based on a 360-day year) obtained by dividing (i) the
rate of interest determined by the Agent to be the arithmetic mean (rounded
upward, if necessary, to the nearest 1/100th of one percentage point of the rate
per annum) (based on a 360-day year) at which deposits in immediately available
and freely transferable Dollars are offered by first class banks in the London
interbank market to United States banks at 10:30 a.m. (Columbus, Ohio time) one
(1) Business Day before the first day of such Interest Period for a period equal
to such Interest Period and in an amount substantially equal to the amount of
the Eurodollar Rate Loan to be outstanding during such Interest Period, by (ii)
a percentage equal to 100% (expressed as a decimal) minus the Eurodollar Reserve
Percentage for such interest period. Each calculation by the Agent of the
applicable Eurodollar Rate shall be conclusive and binding for all purposes,
absent manifest error.
"EURODOLLAR RATE LOAN" shall mean, at any time, any
outstanding Loan that bears interest based on the Eurodollar Rate.
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<PAGE> 14
"EURODOLLAR RESERVE PERCENTAGE" shall mean for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirements (including, without
limitation, basic, supplemental, marginal and emergency reserves) for a member
bank of the Federal Reserve System in respect of "Eurocurrency liabilities" (or
in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Rate Loans is determined or
any category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents).
"EVENT OF DEFAULT" shall have the meaning set forth in Section
8.1.
"FACILITY DOCUMENTS" shall mean this Agreement, the Notes, the
Standby L/Cs, the Standby L/C Applications and any and all other documents
evidencing, securing or relating to the Loans, as such documents may be amended,
modified, supplemented, extended, restated or replaced from time to time.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per
annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Bank One on such day on such
transactions as determined by the Agent.
"FISCAL QUARTER" shall mean, as to the Borrowers, any
consecutive three-month period ending on March 31, June 30, September 30 and
December 31.
"FISCAL YEAR" shall mean, as to the Borrowers, any period of
twelve consecutive calendar months ending on June 30.
"GAAP" shall mean generally accepted accounting principles in
the United States in effect at the time any determination is made or financial
statement is required hereunder as promulgated by the American Institute of
Certified Public Accountants, the Accounting Principles Board, the Financial
Accounting Standards Board or other body existing from time to time which is
authorized to establish or interpret such principles.
"GOVERNMENTAL AUTHORITY" shall mean any national government,
central bank or comparable agency, any state or other political subdivision
thereof and any entity
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<PAGE> 15
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HAZARDOUS SUBSTANCES" shall mean and include all hazardous
and toxic substances, wastes, materials, compounds, pollutants and contaminants
(including, without limitation, asbestos, polychlorinated biphenyls, and
petroleum products) which are included under or regulated by Environmental Laws.
"INTEREST PAYMENT DATE" shall mean (a) with respect to each
Base Rate Loan, the last day of each Fiscal Quarter, beginning with December 31,
1997, and continuing on the last day of each Fiscal Quarter thereafter, and on
(i) the Termination Date with respect to the Revolving Credit Loans, and (ii)
the applicable Term Loan Maturity Date with respect each Term Loan, and (b) with
respect to each Eurodollar Rate Loan, (x) the last day of each Interest Period
with respect thereto, and in the case of an Interest Period greater than three
months, on the last day of each Fiscal Quarter, beginning with December 31,
1997, and continuing on the last day of each Fiscal Quarter thereafter and on
the last day of the Interest Period with respect thereto, and (y)on (A) the
Termination Date with respect to the Revolving Credit Loans, and (B) the
applicable Term Loan Maturity Date with respect each Term Loan.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar
Rate Loan:
(a) initially, the period commencing on the Loan
Borrowing Date or the Conversion Date, as the case may be, with respect
to such Eurodollar Rate Loan and ending one month, two months, three
months, six months or one year thereafter, as selected by the Borrowers
by irrevocable notice to the Agent not less than three (3) Business
Days prior to such Loan Borrowing Date; and
(b) thereafter, each such period commencing on the
last day of the next preceding Interest Period applicable to such
Eurodollar Rate Loan and ending one month, two months, three months,
six months or one year thereafter, as selected by the Borrowers by
irrevocable notice to the Agent not less than three (3) Business Days
prior to the last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) any Interest Period which would otherwise end on
a day that is not a Business Day shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding Business
Day;
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<PAGE> 16
(ii) any Interest Period that would otherwise extend
beyond the Termination Date or a Term Loan Maturity Date shall end on
the Termination Date or such Term Loan Maturity Date, respectively;
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar
month.
"INTEREST RATE" shall mean the rate of interest in effect at
any time with respect to a Loan, whether based on the Base Rate or the
Eurodollar Rate.
"INTEREST RATE CONVERSION DATE" shall have the meaning set
forth in Section 2.4(b).
"INVESTMENT" shall mean any investment in any Person, whether
by means of share purchase, capital contribution, loan, time deposit or
otherwise (but not including any demand deposit).
"L/C FUNDING" shall mean the funding of a draw pursuant to a
Standby L/C to the beneficiary thereof.
"LEVERAGE RATIO" of the Borrowers shall mean, at any time, the
ratio of Consolidated Funded Liabilities of the Borrowers to Consolidated
Tangible Net Worth of the Borrowers.
"LIEN" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, preference, priority or other security agreement, including
without limitation, any conditional sale or other title retention agreement, and
the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing.
"LOAN BORROWING DATE" shall mean a Revolving Credit Loan
Borrowing Date in connection with a Revolving Credit Loan and a Term Loan
Borrowing Date in connection with a Term Loan, as the case may be.
"LOAN COMMITMENT PERCENTAGE" shall mean each Bank's Revolving
Credit Loan Commitment Percentage in connection with a Revolving Credit Loan and
each Bank's Term Loan Commitment Percentage in connection with a Term Loan, as
the case may be.
"MATERIAL ADVERSE EFFECT" shall mean, relative to any
occurrence of whatever nature (including any determination in litigation,
arbitration or governmental proceeding
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<PAGE> 17
or investigation), which the Required Banks reasonably determine will have a
materially adverse effect on:
(a) the assets, business, profits, properties, condition
(financial or otherwise), operations or foreseeable financial prospects
of the Borrowers, taken as a whole; or
(b) the ability of any Borrower to perform any of its payment
or other obligations under this Agreement, the Notes and any other
Facility Documents or the transactions contemplated hereby and thereby.
"NOTES" shall mean, collectively, the Revolving Credit Loan
Notes and the Terms Loan Notes, and "NOTE" shall mean any one of such Notes of
the Borrowers.
"NOTICE OF BORROWING" shall mean a Notice of Revolving Credit
Loan Borrowing or a Notice of Term Loan Borrowing, as the case may be.
"NOTICE OF INTEREST RATE CONVERSION" shall have the meaning
set forth in Section 2.4(b).
"NOTICE OF REVOLVING CREDIT LOAN BORROWING" shall have the
meaning set forth in Section 2.3(a).
"NOTICE OF TERM LOAN BORROWING" shall have the meaning set
forth in Section 2.3(b).
"PARTICIPANT" shall mean any Person, now or at any time
hereafter, participating with any Bank in Loans to the Borrowers.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of the United States of
America or any agency or instrumentality thereof or obligations backed
by the full faith and credit of the United States of America maturing
in twelve (12) months or less from the date of acquisition;
(b) commercial paper maturing in 180 days or less
rated not lower than A-1 by Standard & Poor's Ratings Services, a
division of The McGraw Hill
-12-
<PAGE> 18
Companies, Inc., or P-1 by Moody's Investors Service, Inc. on the date
of acquisition;
(c) demand deposits, time deposits or certificates of
deposit maturing within one year in commercial banks whose obligations
are rated A-1, A or the equivalent or better by Standard & Poor's
Ratings Service, a division of The McGraw Hill Companies, Inc., on the
date of acquisition; and
(d) Investments offered by the Banks.
"PERSON" shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"PLAN" shall mean any employee benefit plan or other plan
maintained for employees covered by Title 10 of ERISA.
"PROHIBITED TRANSACTION" shall mean a transaction described in
Section 406 of ERISA which is not the subject of an exemption pursuant to
Section 408 of ERISA.
"RATE DETERMINATION DATE" shall have the meaning set forth in
Section 2.7(b).
"REAL PROPERTY" shall have the meaning set forth in Section
5.16.
"REPORTABLE EVENT" shall have the meaning given such term in
Section 4043(b) of ERISA.
"REQUIRED BANKS" shall mean at any time Banks having at least
66-2/3% of the aggregate amount of the Commitments or, if the Commitments shall
have been terminated, holding Notes evidencing at least 66-2/3% of the aggregate
unpaid principal amount of the Revolving Credit Loans and Term Loans.
"REQUIRED PROPERTY INSURANCE COVERAGE" shall mean at any time
business interruption insurance, workers' compensation insurance and insurance
insuring all property of the Borrowers against loss or damage by fire,
lightening, vandalism and malicious mischief and all other perils covered by
standard "extended coverage" or "all- risk" insurance in amounts satisfactory to
the Required Banks, with deductibles from the loss payable for any casualty not
to exceed the amounts set forth on Schedule A, or as otherwise may be required
by the Required Banks at any time and from time to time. If any insurance
policies with respect to Required Property Insurance Coverage is written on a
co-insurance basis, such policy must contain an agreed amount endorsement as
evidence that the coverage is in an amount sufficient to insure the full amount
of such property.
-13-
<PAGE> 19
"REQUIRED PUBLIC LIABILITY INSURANCE COVERAGE" shall mean
comprehensive general accident and public liability insurance (including
coverage for elevators and escalators, if any, on property owned or leased by
the Borrowers) against injury, loss and/or damage to persons and property in the
amounts satisfactory to the Required Banks, with deductibles not to exceed the
amounts set forth on Schedule A, or as otherwise may be required by the Required
Banks at any time and from time to time.
"REQUIREMENTS OF LAW" shall mean as to any Person, the
articles (certificate) of incorporation or formation, code of regulations
(by-laws), operating agreement or other organizational agreements or other
governing documents of such Person, and any law, statute, 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 or to which such Person or any of its property is subject.
"RESTRICTED PAYMENT" means (i) any dividend or other
distribution on any shares of a Person's capital stock (except dividends payable
solely in shares of its capital stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (y) any shares of a Person's
capital stock, or (z) any option, warrant or other right to acquire shares of a
Person's capital stock (but not including payments of principal, premium (if
any) or interest made pursuant to the terms of convertible debt securities prior
to conversion).
"REVOLVING CREDIT LOAN" or "REVOLVING CREDIT LOANS" shall mean
a loan or loans made from time to time to the Borrowers by the Banks pursuant to
Section 2.1(a) and as evidenced by the Revolving Credit Loan Notes.
"REVOLVING CREDIT LOAN BORROWING DATE" shall have the meaning
set forth in Section 2.3(a).
"REVOLVING CREDIT LOAN COMMITMENT" shall mean (x) as to Bank
One, the commitment of Bank One to make Loans to the Borrowers and issue,
provide and fund Standby L/Cs on behalf of the Borrowers up to the maximum
aggregate amount of $10,500,000, and (y) as to NCBC, the commitment of NCBC to
make Loans to the Borrowers and fund Standby L/Cs on behalf of the Borrowers up
to the maximum aggregate amount of $4,500,000, in both cases subject to the
terms and conditions of this Agreement and subject to being increased and
reduced in accordance with the terms and conditions of this Agreement.
"REVOLVING CREDIT LOAN COMMITMENT PERCENTAGE" shall mean the
percentage that each Bank's Revolving Credit Loan Commitment to make Revolving
Credit Loans bears to the Aggregate Revolving Credit Loan Commitment of all
Banks to make Revolving Credit Loans hereunder.
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<PAGE> 20
"REVOLVING CREDIT LOAN NOTES" shall mean the Revolving Credit
Loan Notes of the Borrowers, in the form of Exhibit A attached hereto,
evidencing the obligation of the Borrowers to repay the Revolving Credit Loans,
as the same may be amended, modified, supplemented, extended, restated or
replaced from time to time.
"SETOFF OBLIGATION" shall mean and include all Debt of the
Borrowers to the Banks, including, but not limited to, the Debt of the Borrowers
arising under the Notes or any other document, instrument or agreement referred
to herein.
"SHAREHOLDERS' EQUITY" shall mean the shareholders' or other
owners' equity with respect to the Borrowers, as shown on the consolidated
balance sheet of the Borrowers and as determined in accordance with GAAP.
"STANDBY L/C" shall mean an irrevocable letter of credit under
which the Bank agrees to make payments in Dollars for the account of the
Borrowers, or on behalf of the Borrowers, in respect of obligations of any
Borrower incurred pursuant to contracts made or performances undertaken or like
matters relating to contracts to which any Borrower is or proposing to become a
party in the ordinary course of such Borrower's business.
"STANDBY L/C APPLICATION" shall mean a Standby Letter of
Credit Application and Agreement in Bank One's customary form at any time with
respect to a request to issue a Standby L/C.
"SUBSIDIARY" shall mean, as to any Person, any corporation or
other entity of which securities or other ownership interests 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; unless otherwise specified, "Subsidiary" means a Subsidiary of a
Borrower.
"TERM LOAN" or "TERM LOANS" shall mean a loan or loans made
from time to time to the Borrowers by the Banks pursuant to Section 2.1(c) and
as evidenced by the Term Loan Notes.
"TERM LOAN BORROWING DATE" shall have the meaning set forth in
Section 2.3(b).
"TERM LOAN COMMITMENT" shall mean (x) as to Bank One, the
commitment of Bank One to make Term Loans to the Borrowers up to the maximum
aggregate amount of $24,500,000, and (y) as to NCBC, the commitment of NCBC to
make Terms Loans to the Borrowers up to the maximum aggregate amount of
$10,500,000, in both cases subject to the terms and conditions of this Agreement
and subject to being increased and reduced in accordance with the terms and
conditions of this Agreement.
-15-
<PAGE> 21
"TERM LOAN COMMITMENT PERCENTAGE" shall mean the percentage
that each Bank's Term Loan Commitment to make Term Loans bears to the Aggregate
Term Loan Commitment of all Banks to make Term Loans hereunder.
"TERM LOAN MATURITY DATE" shall mean the date which is five
(5) years after the date each Term Loan Note is issued by the Borrowers to a
Bank in accordance with the terms of this Agreement.
"TERM LOAN NOTE" or "TERM LOAN NOTES" shall mean the
promissory note or notes of the Borrowers, each in the form of Exhibit B
attached hereto, evidencing the obligation of the Borrowers to repay the Term
Loans , as the same may be amended, modified, supplemented, extended, restated
or replaced from time to time.
"TERMINATION DATE" shall mean the date upon which the
Commitment Period ends.
"TOTAL INTEREST EXPENSE" shall mean, for any Person, interest
paid on a consolidated basis with respect to all outstanding indebtedness
including without limitation capital leases (in accordance with GAAP), all
commissions, discounts and other fees and charges owed in connection with
letters of credit or lines of credit, net costs or benefits under interest rate
protection agreements, amortization of deferred financing costs, original issue
discounts, and any interest expense relating to deferred compensation
arrangements.
"UNIFORM COMMERCIAL CODE" shall mean means Chapters 1301
through 1309, inclusive, Ohio Revised Code, as from time to time amended.
"UNIFORM CUSTOMS" shall mean the Uniform Customs and Practice
for Documentary Credits, 1993 Revision, ICC Publication No. 500, or any
amendment thereof or successor thereto.
"UNITED STATES" shall mean the United States of America,
including the States and the District of Columbia, but excluding its territories
and possessions.
SECTION 1.2 USE OF TERMS. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the exhibits and schedules hereto, the
other Facility Documents and any other communications delivered from time to
time in connection with this Agreement. Terms defined in the singular shall have
a comparable meaning when used in the plural, and vice versa, unless otherwise
defined in the plural.
-16-
<PAGE> 22
SECTION 1.3 CROSS REFERENCES; HEADINGS. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement or in
any of the other Facility Documents shall refer to this Agreement or such
Facility Documents as a whole and not to any particular provision of this
Agreement or such Facility Documents. Section, article, schedule and exhibit
references contained in this Agreement are references to sections, articles,
schedules and exhibits in or to this Agreement unless otherwise specified. Any
reference in any section or definition to any clause is, unless otherwise
specified, to such clause of such section or definition. The various headings in
this Agreement and the other Facility Documents are inserted for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement or the other Facility Documents or any provision hereof or thereof.
SECTION 1.4 ACCOUNTING TERMS. Any accounting term used in this
Agreement and in the other Facility Documents and any certificate or other
document made or delivered pursuant hereto or thereto that is not specifically
defined shall have the meaning customarily given in accordance with GAAP;
provided, however, that in the event that changes in GAAP shall be mandated by
the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, and to the extent that such changes would modify or could
modify such accounting terms or the interpretation or computation thereof, such
changes shall be followed in defining such accounting terms only from and after
the date the Borrowers and the Banks shall have amended this Agreement to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENTS, REVOLVING CREDIT LOANS AND
-----------------------------------------------------------
TERM LOANS
----------
SECTION 2.1 COMMITMENTS.
(a) Subject to the terms and conditions of this Agreement,
each Bank severally agrees to make Revolving Credit Loans to the Borrowers from
time to time during the Commitment Period; provided that, immediately after each
such Revolving Credit Loan is made, the aggregate principal amount of Revolving
Credit Loans by such Bank shall not exceed the amount of its Revolving Loan
Commitment (as such Revolving Loan Commitment may be increased or reduced from
time to time in accordance with the terms of this Agreement), either as to
Dollar amount or its Revolving Credit Loan Commitment Percentage. Each borrowing
for a Revolving Credit Loan shall be in an aggregate principal amount of at
least $100,000, or larger multiples of $10,000, and shall be made by the Banks
in accordance with each Bank's respective Revolving Credit Loan Commitment
Percentage. During the Commitment Period and as long as no Default or Event of
Default exists, the Borrowers may use the Revolving Loan Commitment by
-17-
<PAGE> 23
borrowing, repaying the Revolving Credit Loans, in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) Subject to the terms and conditions of this Agreement, up
to $5 million of the Revolving Loan Commitment may be taken, from time to time,
at the Borrowers' option, in the form of Standby L/Cs pursuant to the terms
hereof and the Standby L/C Applications. Amounts paid against draws under
Standby L/Cs shall be considered to be Revolving Credit Loans outstanding under
the Revolving Loan Commitment until such amounts shall have been reimbursed to
the Bank pursuant to the terms of the Standby L/C Applications.
(c) Subject to the terms and conditions of this Agreement,
each Bank severally agrees to make Term Loans to the Borrowers from time to time
during the Commitment Period; provided that, immediately after each such Term
Loan is made, the aggregate principal amount of Term Loans by such Bank shall
not exceed the amount of its Term Loan Commitment (as such Term Loan Commitment
may be increased or reduced from time to time in accordance with the terms of
this Agreement), either as to Dollar amount or its Term Loan Commitment
Percentage. Each borrowing for a Term Loan shall be in an aggregate principal
amount of at least $1 million, and shall be made from the several Banks in
accordance with each Bank's respective Term Loan Commitment Percentage. After
the funding of any Term Loan, the Borrowers shall not have the ability to
reborrow, in whole or in part, any amounts repaid with respect to the Term
Loans.
(d) Within the limits of the Commitments and subject to the
other terms and conditions of this Agreement and the other Facility Documents,
each Borrower may borrow hereunder and, with respect to Revolving Credit Loan
Commitment, repay and reborrow.
(e) Notwithstanding any provision hereof to the contrary, the
total amount of the sum of (i) the amount of outstanding and unpaid Revolving
Credit Loans, PLUS (ii) the amount of Term Loans funded hereunder, PLUS (iii)
the total aggregate Dollar amount available to be drawn under outstanding
Standby L/Cs, shall at no time exceed the Aggregate Commitment.
SECTION 2.2 NOTES.
(a) The Revolving Credit Loans made by each Bank to the
Borrowers pursuant hereto shall be evidenced by a separate Revolving Credit Loan
Note payable to the order of such Bank in an aggregate amount equal to the
Revolving Credit Loan Commitment of such Bank at any time. Each Revolving Credit
Loan Note shall (i) be dated as of the date the Revolving Credit Loan Note is
issued or reissued, as the case may be, (ii) be in a principal amount
corresponding to the aggregate amount of such Bank's Revolving Credit Loan
Commitment when so issued or reissued, as the case may be, (iii)
-18-
<PAGE> 24
bear interest as determined pursuant to this Agreement, (iv) mature on the
Termination Date, and (v) require accrued interest to be paid on the applicable
Interest Payment Date and at maturity in accordance with the terms of this
Agreement.
(b) Each Term Loan made by each Bank to the Borrowers pursuant
hereto shall be evidenced by a separate Term Loan Note payable to the order of
such Bank in an aggregate amount equal to the Term Loan Commitment Percentage of
such Bank multiplied by the amount of Term Loan. Each Term Loan Note shall (i)
be dated as of the date the Term Loan Note is issued or reissued, as the case
may be, (ii) be in a principal amount equal to the Term Loan Commitment
Percentage of such Bank multiplied by the amount of Term Loan when so issued or
reissued, as the case may be, (iii) require principal to be repaid in 20 equal
consecutive payments of principal to be paid on the last day of each Fiscal
Quarter, (iv) bear interest as determined pursuant to this Agreement, (v) mature
on the applicable Term Loan Maturity Date, and (vi) require accrued interest to
be paid on the applicable Interest Payment Date and at maturity in accordance
with the terms of this Agreement.
(c) Upon receipt of each Bank's Note pursuant to Article IV,
the Agent shall forward such Note to such Bank. Each Bank is hereby authorized
to record electronically or otherwise the date and amount of each Loan
disbursement made by such Bank, the date and amount of each payment or repayment
of principal thereof, the type of such borrowing (whether a Eurodollar Rate Loan
or a Base Rate Loan), and such other information as it deems necessary or
appropriate. Such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded; provided, however, the failure of such
Bank to make any such recordation(s) shall not affect the obligation of the
Borrowers to repay outstanding principal, interest or any other amount due
hereunder or under such Note in accordance with the terms hereof and thereof.
SECTION 2.3 NOTICE OF LOAN BORROWING; FUNDING OF LOANS.
(a) When the Borrowers desire to borrow hereunder with respect
to a Revolving Credit Loan, the Borrowers shall give the Agent notice (a "Notice
of Revolving Credit Loan Borrowing"). Such Notice of Revolving Credit Loan
Borrowing (i) shall be irrevocable, and (ii) must be received by the Agent prior
to (x) 10:30 a.m. Columbus, Ohio time, at least one (1) Business Day prior to
the proposed date of the borrowing, which date shall be a Business Day (a
"Revolving Credit Loan Borrowing Date"), if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Rate Loans, or (y) 10:30
a.m. Columbus, Ohio time, at least one (1) Business Day prior to the Revolving
Credit Loan Borrowing Date if all of the requested Revolving Credit Loans are to
be initially Base Rate Loans. Each such Notice of Revolving Credit Loan
Borrowing shall specify (i) the amount to be borrowed, (ii) the requested
Revolving Credit Loan Borrowing Date, (iii) whether the borrowing is to be of
Eurodollar Rate Loans, Base Rate Loans or a
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<PAGE> 25
combination thereof, and (iv) if the borrowing is to be entirely or partly of
Eurodollar Rate Loans, the amount and the Interest Period with respect to each
Eurodollar Rate Loan.
(b) When the Borrowers desire to borrow hereunder with respect
to a Term Loan, the Borrowers shall give the Agent notice (a "Notice of Term
Loan Borrowing"). Such Notice of Term Loan Borrowing must be received by the
Agent at least five (5) days prior to the proposed date of the borrowing, which
date shall be a Business Day (a "Term Loan Borrowing Date"). Each such Notice of
Term Loan Borrowing shall specify (i) the amount to be borrowed, (ii) the
requested Term Loan Borrowing Date, (iii) whether the borrowing is to be of
Eurodollar Rate Loans, Base Rate Loans or a combination thereof, and (iv) if the
borrowing is to be entirely or partly of Eurodollar Rate Loans, the amount and
the Interest Period with respect to each Eurodollar Rate Loan. In addition, if
the requested Term Loan is in connection with an acquisition pursuant to Section
2.11(y), the information required to be provided to the Banks pursuant to such
Section 2.11(y) shall have been provided to the Banks and any necessary consents
required by such Section 2.11(y) shall have given by the Banks prior to the date
the relevant Notice of Term Loan Borrowing is given to the Agent.
(c) Upon receipt of a Notice of Borrowing given in accordance
with subsections (a) or (b) above, the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's Revolving Credit Loan in proportion to
its Revolving Credit Loan Commitment Percentage or such Bank's Term Loan in
proportion to its Term Loan Commitment Percentage, as the case may be.
(d) Unless the Agent determines that any applicable
condition(s) specified in Article IV has not been satisfied not later than 12:00
noon, Columbus, Ohio time on the applicable Loan Borrowing Date, each Bank shall
make available its Loan in proportion to its Loan Commitment Percentage in
federal or other funds immediately available in Columbus, Ohio, to the Agent at
its address set forth in Section 11.4, and in turn, the Agent will promptly make
the funds so received from the Banks available to the Borrowers at the Agent's
aforesaid address.
(e) In the event that a Notice of Borrowing fails to specify
whether the Loans are to be Eurodollar Rate Loans or Base Rate Loans, or a
combination thereof, such Loans shall be made as Base Rate Loans.
(f) There may be no more than four (4) different Interest
Periods for Eurodollar Rate Loans outstanding at the same time (for which
purpose Interest Periods described in the definition of the term "Interest
Period" shall be deemed to be different Interest Periods even if they are
coterminous).
(g) Unless the Agent shall have received notice from a Bank
prior to a Loan Borrowing Date that such Bank will not make available to the
Agent the amount that
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<PAGE> 26
would constitute its Loan Commitment Percentage of the borrowing to be made on
such date, the Agent may assume that such Bank has made such amount available to
the Agent on such Loan Borrowing Date, and the Agent may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. If and to
the extent that such Bank shall not have so made such amount available to the
Agent, such Bank and the Borrowers shall severally repay to the Agent on demand
such corresponding amount, together with interest thereon for each day from the
date such amount is made available to the Borrowers until the date such amount
is repaid to the Agent, at (i) in the case of the Borrowers, a rate per annum
equal to the interest rate applicable thereto pursuant to Section 2.7, and (ii)
in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to
the Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Revolving Credit Loan included in such borrowing for purposes of this
Agreement. Nothing in this subsection (g) shall be interpreted to relieve any
Bank of its obligations to make Loans hereunder.
(h) The failure of any Bank to make the Loan to be made by it
on any Loan Borrowing Date shall not relieve any other Bank of its respective
obligation, if any, hereunder to make its Loan on such Loan Borrowing Date, but
no Bank shall be responsible for the failure of any other Bank to make the Loan
to be made by such other Bank on such Loan Borrowing Date.
SECTION 2.4 CONVERSION AND CONTINUATION OPTIONS.
(a) All Loans shall bear interest at the initial Interest Rate
selected by the Borrowers for such Loan until (i) the Interest Rate is converted
to another Interest Rate in accordance with the terms of this Agreement, or (ii)
the Borrowers convert such Interest Rate(s) to a different Interest Rate in
accordance with the terms of this Agreement.
(b) The Borrowers may elect from time to time to convert
outstanding Loans from one Interest Rate to the other Interest Rate by giving
prior irrevocable notice (a "Notice of Interest Rate Conversion") to the Agent
prior to the requested conversion date, which date shall be a Business Day (a
"Interest Rate Conversion Date") as follows:
(i) The Borrowers may elect from time to time to
convert outstanding Loans from Eurodollar Rate Loans to Base Rate Loans
by giving prior irrevocable notice (a "Notice of Interest Rate
Conversion") to the Agent at least one (1) Business Day prior to the
requested Interest Rate Conversion Date of such election; provided,
however, that any such conversion of Eurodollar Rate Loans may only be
made on the last day of an Interest Period with respect thereto. Each
such Notice of Interest Rate Conversion shall specify (i) the Loans to
be so converted, and (ii) the requested Interest Rate Conversion Date.
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<PAGE> 27
(ii) The Borrowers may elect from time to time to
convert outstanding Loans from Base Rate Loans to Eurodollar Rate Loans
by giving the Agent a Notice of Interest Rate Conversion at least one
(1) Business Day prior to the requested Interest Rate Conversion Date.
Each such Notice of Interest Rate Conversion shall specify (i) the
Loans to be so converted, (ii) the requested Interest Rate Conversion
Date, and (iii) the respective amounts of each Eurodollar Rate Loan and
the Interest Period with respect thereto.
(c) All or any part of outstanding Eurodollar Rate Loans and
Base Rate Loans may be converted as provided herein, provided that (x) no Loan
may be converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing hereunder, (y) no Loan may be converted
into, or continued as, a Eurodollar Rate Loan after the date that is one month
prior to the Termination Date, and (z) such conversion otherwise complies with
the applicable provisions of the proposed Interest Period and this Agreement.
(d) The Borrowers may elect from time to time to continue any
Eurodollar Rate Loan as such upon the expiration of the then current Interest
Period with respect thereto by giving prior notice of such continuation to the
Agent at least three (3) Business Days prior to the requested continuation date;
provided that no Eurodollar Rate Loan may be continued as such (x) when any
Default or Event of Default has occurred and is continuing, (y) after the date
that is one month prior to the Termination Date, and (z) such continuation
otherwise complies with the applicable provisions of the proposed Interest
Period and this Agreement. If the Borrowers shall fail to give any required
notice as described above in this subsection or if such continuation is not
permitted pursuant to the terms of this Agreement, such Loan shall be
automatically converted to a Base Rate Loan on the last day of such then
expiring Interest Period.
SECTION 2.5 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. During
the Commitment Period and provided no Default or Event of Default shall then
have occurred and be continuing, the Borrowers may, upon at least thirty (30)
days' prior written notice to the Agent and the Banks:
(a) permanently terminate the Revolving Credit Loan
Commitments at any time, if no Revolving Credit Loans and/or Standby L/Cs are
outstanding at such time;
(b) permanently and ratably (as among the Banks) reduce from
time to time, by an aggregate amount of $500,000 or any larger multiple of
$100,000, the aggregate amount of the Revolving Credit Loan Commitments in
excess of the then aggregate outstanding principal amount of the Revolving
Credit Loans;
(c) permanently terminate the Term Loan Commitments at any
time, if no Term Loans are outstanding at such time;
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<PAGE> 28
(d) permanently and ratably (as among the Banks) reduce from
time to time by an aggregate amount of $500,000 or any larger multiple of
$100,000 the aggregate amount of the Term Loan Commitments in excess of the
aggregate principal amount of Term Loans previously funded.
SECTION 2.6 TERMINATION OF COMMITMENTS.
(a) The Revolving Credit Loan Commitments shall terminate on
the Termination Date and any Revolving Credit Loans then outstanding, together
with all accrued interest thereon and all other outstanding fees, charges and
expenses payable hereunder and under the other Facility Documents shall be due
and payable immediately.
(b) The Term Loan Commitments shall terminate on the
Termination Date.
SECTION 2.7 INTEREST.
(a) "Applicable Margin" shall be as set forth in the follow
matrix:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
APPLICABLE MARGIN
-----------------------------------------------------------------
LEVERAGE REVOLVING REVOLVING TERM LOAN TERM LOAN
RATIO/ CREDIT LOAN CREDIT LOAN EURODOLLAR
COVERAGE BASE RATE EURODOLLAR RATE
RATIO FOR RATE
THE
BORROWERS
<S> <C> <C> <C> <C>
LESS THAN -75 BASIS +75 BASIS -50 BASIS +100 BASIS
0.125:1.0/ POINTS POINTS POINTS POINTS
GREATER THAN
2.0:1.0
- ---------------------------------------------------------------------------------------
EQUAL TO OR -60 BASIS +90 BASIS -35 BASIS +115 BASIS
GREATER THAN POINTS POINTS POINTS POINTS
0.125 TO 1.0
BUT LESS
THAN 0.25 TO
1.0/
GREATER THAN
2.0 TO 1.0
- ---------------------------------------------------------------------------------------
EQUAL TO OR -50 BASIS +100 BASIS -25 BASIS +125 BASIS
GREATER THAN POINTS POINTS POINTS POINTS
0.25 TO 1.0
BUT LESS
THAN 1.0 TO
1.0/
GREATER THAN
1.75 TO 1.0
- ---------------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE> 29
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
EQUAL TO OR -25 BASIS +125 BASIS +0 BASIS +150 BASIS
GREATER THAN POINTS POINTS POINTS POINTS
1.0 TO 1.0/
GREATER THAN
1.5 TO 1.0
- ---------------------------------------------------------------------------------------
</TABLE>
(b) The Applicable Margin shall be determined as of the first
day of each Fiscal Quarter (each a "Rate Determination Date") based upon the
calculation of the Leverage Ratio and Coverage Ratio of the Borrowers as of the
end of the second Fiscal Quarter next preceding a Rate Determination Date as set
forth in the certificate of the Authorized Officer required to be delivered to
the Bank pursuant to Section 6.2(a). Such Applicable Margin shall remain in
effect from such Rate Determination Date until the next Rate Determination Date,
provided that:
(i) in the case of an Applicable Margin determined
from such certificate of the Authorized Officer for the fourth and
final Fiscal Quarter of every Fiscal Year, in the event that the annual
financial statements for such Fiscal Year subsequently provided to the
Bank indicate that the Applicable Margin originally determined to be
effective on the Rate Determination Date immediately following the end
of such Fiscal Quarter was inappropriate in light of such annual
financial statements, then the Applicable Margin shall be adjusted
retroactively to such Rate Determination Date to reflect the proper
Applicable Margin; and
(ii) if on any Rate Determination Date the Borrowers
shall have failed to have delivered to the Bank such certificate of the
Authorized Officer required be delivered pursuant to Section 6.2(a)
with respect to the second preceding Fiscal Quarter, then for the
period beginning on such Rate Determination Date and ending on the
earlier of (x) the date on which the Borrowers shall deliver to the
Bank the delinquent certificate or (y) the date on which the Borrowers
shall deliver to the Bank such certificate of the Authorized Officer
required to be delivered pursuant to Section 6.2(a) with respect to the
Fiscal Year which includes such Fiscal Quarter, the Applicable Margin
shall be determined as if the Leverage Ratio and Coverage Ratio of the
Borrowers were (x) equal to or greater than 1.0 to 1.0 and (y) greater
than 1.5 to 1.0, respectively, at all times during such period. Any
change in the Applicable Margin on any Rate Determination Date shall
immediately result in a corresponding change to the Interest Rate
applicable to each Revolving Credit Loan or Term Loan outstanding on
such Rate Determination Date.
(c) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Base Rate Loan is made
and continuing while outstanding and unpaid, at a rate equal to the sum of (i)
the Base Rate, PLUS (ii) the
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Applicable Margin. Accrued interest shall be payable on each applicable Interest
Payment Date. The Base Rate shall be adjusted automatically and as of the
effective date of any change in the Base Rate. Interest on Base Rate Loans shall
be calculated on the basis of a year of 365/366 days for the actual number of
days elapsed. Any overdue principal of, and to the extent permitted by
applicable law, overdue interest on, any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate equal to the Default Rate
for such day.
(d) Each Eurodollar Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Eurodollar
Rate Loan is made and continuing while outstanding and unpaid, at a rate equal
to the sum of (i) the Eurodollar Rate, PLUS (ii) the Applicable Margin. Such
interest shall be payable on each applicable Interest Payment Date. Interest on
Eurodollar Rate Loans shall be calculated on the basis of a year of 360 days and
30 day months. The Eurodollar Rate shall be adjusted automatically and as of the
effective date of any change in any Eurodollar Reserve Requirement, as
applicable. Any overdue principal of, and to the extent permitted by law,
overdue interest on, any Eurodollar Rate Loans shall bear interest, payable on
demand, for each day until paid at the rate or equal to the Default Rate for
such day.
(e) The Agent shall determine each Interest Rate applicable to
the Loans hereunder and its determination shall be conclusive in the absence of
manifest error.
SECTION 2.8 FEES.
(a) The Borrowers, upon execution of this Agreement, shall pay
to the Agent, for the ratable benefit of the Banks, a facility fee of $62,500.
(b) During the Commitment Period, the Borrowers shall pay to
the Bank a commitment fee at a rate of 1/4% per annum of the daily average
Available Commitment (calculated on the basis of a 365/366-day year for the
actual number of days elapsed); provided, that the aggregate Dollar amount
available to be drawn under outstanding Standy L/Cs shall be included as usage
in determining this commitment fee. Such commitment fee shall accrue on the
Available Commitment beginning on the date hereof and shall continue to accrue
thereafter through the Termination Date. The accrued commitment fee shall be
payable (i) quarterly in arrears on the last day of each Fiscal Quarter
(beginning with the Fiscal Quarter ending on December 31, 1997, and (ii) on the
Termination Date.
SECTION 2.9 PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. Subject in the case of any
Eurodollar Rate Loan to Section 2.13, the Borrowers may, at their option and
upon at least one (1) Business Day's notice to the Agent, prepay any Base Rate
Loans, or upon at least three
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(3) Business Days' notice to the Agent, prepay any Term Loans, in each case in
whole at any time, or in part from time to time in amounts aggregating at least
$100,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. In its notice of prepayment, the
Borrowers shall specify the date of prepayment and the amount of the prepayment.
Each such optional prepayment shall be applied to prepay ratably the Term Loans
of the Banks. Upon receipt of notice of a prepayment pursuant to this
subsection, the Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrowers. All prepayments shall be applied to
installments of principal of the Term Loan in the inverse order of their
maturity.
(b) MANDATORY PREPAYMENT. Upon notice to the Borrowers by the
Agent, the Borrowers shall prepay the Loans (together with any funding losses
and expenses and premiums required to be paid pursuant Section 2.13) or provide
cash to the Bank with respect to outstanding and undrawn Standby L/Cs on each
such date as and to the extent the outstanding balance of all Loans PLUS the
Dollar amount available to be drawn under outstanding Standby L/Cs exceeds the
Aggregate Commitment. Each such mandatory prepayment shall be applied to prepay
ratably the Loans of the Banks. Upon receipt of any prepayment pursuant to this
subsection, the Agent shall promptly notify each Bank of such Bank's ratable
share of such prepayment or cash held to fully collateralize such outstanding
Standby L/Cs.
SECTION 2.10 GENERAL PROVISIONS AS TO THE LOANS AND PAYMENTS AND
FUNDING OF LOANS.
(a) The Borrowers shall make each payment of principal of, and
interest on, the Loans and of each Bank's fees hereunder not later than 11:00
a.m. (Columbus, Ohio time) on the date when due, in federal or other funds
immediately available at the place where payment is due, to the Agent at the
Agent's address set forth in Section 11.4. The Agent shall distribute such
payments ratably to the Banks promptly upon receipt in like funds as received.
(b) Whenever any payment of principal of, or interest on, any
Loan or of such fees shall be due on a day which is not a Business Day, the day
for payment thereof shall be extended to the next succeeding Business Day. If
the date for any payment of principal is so extended or is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time
period.
(c) For the purpose of computing the Available Commitment, the
Agent and the Banks shall have the right, in their sole discretion, to treat as
outstanding Loans under this Agreement the unpaid amount of any interest, fees,
costs or expenses otherwise then due and payable hereunder and under the Notes
and the other Facility Documents;
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provided, however, that such interest, fees, costs or expenses shall not be
deemed to be outstanding Loans for purposes of Section 2.8(b).
(c) Upon receipt of each Bank's Note pursuant to Article IV,
the Agent shall forward such Note to such Bank.
SECTION 2.11 USE OF PROCEEDS. The Borrowers represent and agree that
(i) the proceeds of the Revolving Credit Loans made hereunder shall be used by
the Borrowers only for repayment of Debt and working capital and general
corporate purposes and with respect to Standby L/Cs, and (ii) the proceeds of
the Terms Loans made hereunder shall be used by the Borrowers only to fund (x)
capital expenditures permitted by this Agreement, and (y) acquisitions which
meet the following requirements:
(A) the Banks shall have been provided any information
requested in accordance with Section 6.2(c); and
(B) if the cost of the proposed acquisition would be in excess
of 25% of the Borrowers' Consolidated Tangible Net Worth at such time,
the prior consent of the Banks is obtained.
SECTION 2.12 LOAN ADMINISTRATION. The Banks shall have no obligation to
(i) advance or re-advance any sums or make any Loan, or (ii) issue any Standby
L/C, pursuant to terms of this Agreement at any time when a Default or an Event
of Default exists.
SECTION 2.13 FUNDING LOSSES. If the Borrowers make any payment of
principal with respect to any Eurodollar Rate Loan (including as a mandatory
prepayment pursuant to Section 2.9(b)) or any Eurodollar Rate Loan is converted
to a Base Rate Loan pursuant to this Agreement on any day other than the last
day of any Interest Period applicable thereto, or if the Borrowers fail to
borrow, prepay, convert or continue any Eurodollar Rate Loan after notice has
been given to the Agent in accordance with this Agreement, the Borrowers shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including, without limitation, any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion, provided that such
Bank shall have delivered to the Borrowers a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in the absence of
manifest error.
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ARTICLE III
STANDBY LETTERS OF CREDIT
-------------------------
SECTION 3.1 ISSUANCE OF STANDBY L/CS.
(a) REQUEST TO ISSUE. The Borrowers may request Bank One to
issue, extend or modify a Standby L/C by delivery to Bank One of a Standby L/C
Application completed to the satisfaction of Bank One, together with the
proposed form of such Standby L/C and such other certificates, documents and
other papers and information as Bank One may reasonably request.
(b) FORM AND EXPIRY. Each Standby L/C issued hereunder shall,
among other things, (i) be in such form requested by the Borrowers and shall be
acceptable to Bank One in its sole discretion, and (ii) have an expiry date
occurring (x) not later than one year after such Standby L/C's date of issuance,
and (y) not later than the Termination Date. If the Commitment is terminated,
not later than such termination, all outstanding Standby L/Cs shall be returned
to Bank One or the Borrowers shall provide cash to the Agent, for the ratable
benefit of the Banks, to fully collateralize all outstanding Standby L/Cs. Each
Standby L/C Application and each Standby L/C shall be subject to the Uniform
Customs and, to the extent not subject to the Uniform Customs and, to the extent
not inconsistent therewith, the laws of the State of Ohio.
(c) PROCEDURE FOR OPENING STANDBY L/CS. Upon receipt of any
Standby L/C Application and the requested form of the Standby L/C from the
Borrowers, Bank One will review such Standby L/C Application and the other
certificates, documents, information and papers delivered to Bank One in
connection therewith, in accordance with its customary procedures and shall
promptly notify the Borrowers of its decision whether to issue the Standby L/C
and, if its decision is to issue the Standby L/C on the terms and in the form
requested, open such Standby L/C by issuing the original of such Standby L/C to
the beneficiary thereof and by furnishing a copy thereof to the Borrowers.
(d) PAYMENTS. The Borrowers agree (i) to reimburse Bank One
forthwith upon its demand and otherwise in accordance with the terms of the
Standby L/C Application relating thereto, for any expenditure or payment made by
Bank One under or in connection with any Standby L/C and (ii) to pay interest on
any unreimbursed portion of any such payment from the due date of any such
payment until reimbursement in full thereof at a rate per annum equal to (x)
prior to the date which is one Business Day after the date on which Bank One
demands reimbursement from the Borrowers for such payment, the rate which would
then be payable on any outstanding Revolving Credit Loan when no Event of
Default is existing, and (y) thereafter, the rate which would then be payable on
any outstanding Revolving Credit Loan during the existence of an Event of
Default.
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(e) STANDBY L/C FEES. In lieu of any letter of credit
commissions and fees provided for in any Standby L/C Application (other than
standard issuance, amendment and negotiation fees), the Borrowers agree to pay
Bank One, for the ratable benefit of the Banks, with respect to each Standby L/C
a nonrefundable Standby L/C fee of 1.0% per annum of the face amount of each
Standby L/C, payable in advance not later than the date of issuance thereof. In
addition, Bank One shall charge and retain for its own account its standard
issuance, amendment and negotiation fees, if any, with respect to the issuance
and administration of the Standby L/Cs.
SECTION 3.2 PARTICIPATION OF L/CS.
(a) PURCHASE BY NCBC. NCBC shall be deemed to have purchased
from Bank One participations in all Standby L/Cs issued pursuant to this
Agreement or which are currently outstanding which may hereafter be renewed or
otherwise extended or modified. Such participations shall be in an amount equal
to the Revolving Credit Loan Commitment Percentage for NCBC. All interest
thereon and all fees and commissions, other than Bank One's standard issuance,
amendment and negotiation fees, with respect to the issuance or renewal of such
Standby L/Cs shall be shared ratably by the Banks in accordance with their
respective Revolving Credit Loan Commitment Percentage.
(b) AMENDMENT OF L/C. If any such Standby L/C is amended
whereby the amount is increased or decreased, each Bank's share of participation
shall be increased or decreased accordingly to its Revolving Credit Loan
Commitment Percentage.
(c) PAYMENTS. If the Borrowers do not immediately reimburse
Bank One for amounts funded under draws under Standby L/Cs, NCBC shall make
payment to Bank One in an amount equivalent to its participation in the Standby
L/Cs at Bank One's address set forth in Section 11.4 hereof, and in any event
not later than the time of payment provided for in the terms and conditions of
the applicable Standby L/C Applications. NCBC's obligation to purchase such
participations shall be primary, and not subject to any condition, precedent or
otherwise, except the issuance of the subject Standby L/C.
Until payment of NCBC's participation to Bank One, Bank One shall be
entitled to all amounts of credits received by Bank One or either Bank from the
Borrowers, whether by voluntary payment, realization upon any security or
exercise of the right of setoff, or by payment from any source, except, that
upon default of the Borrowers, all payments received by either Bank shall be
applied in the proportion set forth in Section 8.2.
(d) NO LIABILITY. Bank One shall not be liable to NCBC for any
action taken or omitted with respect to the Standby L/Cs unless caused by its
own gross negligence or willful misconduct. Bank One shall exercise the same
care as in dealing with its own letters of credit, but shall not be responsible
in any manner to ascertain or
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inquire as to the financial condition of the Borrowers, or the Borrowers'
authority to execute the Standby L/C Applications, or the existence or possible
existence of any default under the Standby L/C Applications.
SECTION 3.3 FURTHER ASSURANCES. The Borrowers hereby agree, from time
to time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by Bank One and/or the Agent to more fully
effect the purposes of this Agreement and the issuance of Standby L/Cs
hereunder, and further agree to execute any and all instruments reasonably
requested by Bank One and/or the Agent in connection with the obtaining and/or
maintaining of any insurance coverage, if any, applicable to any Standby L/C.
SECTION 3.4 OBLIGATIONS ABSOLUTE. The Standby L/C payment obligations
of the Borrowers under this Agreement and the Standby L/C Applications shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement and the Standby L/C Applications under all
circumstances, including the following:
(a) the existence of any claim, setoff, defense or other right
which the Borrowers may have at any time against any beneficiary, or any
transferee, of any Standby L/C (or any Person for whom any such beneficiary or
any such transferee may be acting), the Banks, or any other Person, whether in
connection with this Agreement, the Standby L/C Applications, the transactions
contemplated herein and therein, or any unrelated transaction;
(b) any statement or any other document presented under any
Standby L/C proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(c) payment by Bank One under any Standby L/C against
presentation of a draft or certificate which does not comply with the terms of
such Standby L/C, provided that Bank One has made such payment to the
beneficiary set forth on the face of such Standby L/C, as the case may be, and
Bank One has not made such payment negligently or with willful misconduct; or
(d) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.1 CONDITIONS TO INITIAL TRANSACTION. The agreement of the
Banks to make the initial transaction (whether such transaction be a Revolving
Credit Loan, a Term Loan
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or the issuance of a Standby L/C) hereunder on any date is subject to the
satisfaction of the following conditions precedent:
(a) FACILITY DOCUMENTS. The Agent shall have received (i) this
Agreement, executed and delivered by duly authorized officer of each Borrower,
(ii) the Revolving Credit Loan Notes, conforming to the requirements hereof and
executed and delivered by a duly authorized officer of each Borrower, (iii) if
such initial transaction is a Term Loan, the Term Loan Notes, conforming to the
requirements hereof and executed and delivered by a duly authorized officer of
each Borrower, (iv) if such initial transaction is a Standby L/C, a Standby L/C
Application, conforming to the requirements hereof and executed and delivered by
a duly authorized officer of each Borrower, and (v) each of the other Facility
Documents, conforming to the requirements hereof and executed and delivered by a
duly authorized officer or representative of each party thereto.
(b) CONSENTS. The Agent shall have received true copies (in
each case certified as to authenticity on such date by such Person as may be
appropriate or may be reasonably required by the Agent) of all documents and
instruments, including all consents, authorizations and filings, required or
advisable under any Requirements of Law or by any Contractual Obligation in
connection with the execution, delivery, performance, validity and
enforceability of this Agreement, the Notes and the other Facility Documents,
and such consents, authorizations and filings shall be reasonably satisfactory
in form and substance to the Agent and its counsel and be in full force and
effect.
(c) CORPORATE/ENTITY DOCUMENTS. The Agent shall have received
true and complete certified copies of the each Borrower's articles (certificate)
of incorporation (formation), code of regulations (by-laws), operating agreement
or other governing documents, and a copy of the resolutions (in form and
substance satisfactory to the Agent) of the Board of Directors (or other
governing Person) of each Borrower authorizing (i) the execution, delivery and
performance of this Agreement, the Notes and the other Facility Documents, as
applicable, (ii) the consummation of the transactions contemplated hereby and
thereby, (iii) the borrowing and other financial transactions provided for
herein, and (iv) the documents provided for in this Agreement, certified by the
secretary or an assistant secretary (or other appropriate representative) of
each Borrower. Such certificate shall state that the resolutions set forth
therein have not been amended, modified, revoked or rescinded as of the date
hereof.
(d) GOOD STANDING CERTIFICATES. The Agent shall have received
copies of certificates dated as of a recent date from the Secretary of State, or
other appropriate authority of such jurisdiction, evidencing the good standing
(or comparable status) of each Borrower in the jurisdiction of its incorporation
(formation) and the State of Ohio.
(e) INCUMBENCY CERTIFICATES. The Agent shall have received a
certificate of the secretary or an assistant secretary (or other appropriate
representative) of each
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Borrower as to the incumbency and signature of the officer(s) or other
representatives of each Borrower executing this Agreement, the Notes, the other
Facility Documents and any certificate or other documents to be delivered
pursuant hereto or thereto.
(f) UCC SEARCHES; RELEASE OF EXISTING LIENS. The Agent shall
have received (i) appropriate UCC security interest searches which name each
Borrower (and any recent predecessor name of any Borrower), as a "debtor"; and
(ii) all filing receipts, acknowledgments or other evidence satisfactory to it
evidencing any recordation or filing necessary to release all Liens (except
Liens permitted hereby).
(g) FINANCIAL INFORMATION. The Agent shall have received a
copy of each of the financial statements referred to in Section 5.7.
(h) NO LITIGATION. No suit, action, investigation, inquiry or
other proceeding (including, without limitation, the enactment or promulgation
of a statute or rule) by or before any arbitrator or any Governmental Authority
shall be pending and no preliminary or permanent injunction or order by a state
or federal court shall have been entered (i) in connection with this Agreement,
the Notes, the other Facility Documents or any of the transactions contemplated
hereby or thereby, or (ii) which, in the reasonable judgment of the Banks, would
have a Material Adverse Effect.
(i) NO VIOLATION. The consummation of the transactions
contemplated hereby and by the Notes and the other Facility Documents shall not
contravene, violate or conflict with, nor involve the Agent or any Bank in a
violation of, any Requirement of Law.
(j) LEGAL OPINIONS. The Bank shall have received the executed
legal opinion of Jones, Day, Reavis & Pogue, legal counsel to each Borrower,
each in form and substance satisfactory to the Agent with respect to the
transactions contemplated hereby.
(k) INSURANCE CERTIFICATES. The Bank shall have received the
certificates of insurance referred to in Section 6.8.
(l) PAYMENT OF DEBT. The Borrowers shall have repaid all Debt
of the Borrowers, except for (x) Debt owed to the former shareholders of ESI and
ESII, (y) Debt owed to Monte R. Black, Susan K. Black and the Monte R. Black and
Susan K. Black 1994 Irrevocable Trust, UA dated April 19, 1994 pursuant to
promissory notes dated October 29, 1997 which require principal payments of $1
million on December 15, 1997 and $4,200,000 on April 14, 1998, and (z) a
mortgage loan with respect to the principal facility of ESI in Nashville,
Tennessee evidenced by a promissory note of ESI with an outstanding balance as
of October 31, 1997 of not more than $480,000.
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SECTION 4.2 CONDITIONS TO EACH TRANSACTION.
(a) The agreement of the Banks to make any transaction
(whether such transaction be a Revolving Credit Loan, a Term Loan or the
issuance of a Standby L/C, and including, without limitation, the initial
Revolving Credit Loan, Term Loan or Standby L/C) hereunder on any date is
subject to the satisfaction of the following conditions precedent as of the date
such transaction is requested to be made:
(i) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties (except for the representations and
warranties as set forth in Section 5.15) made by each Borrower in or
pursuant to this Agreement, the Notes or any other Facility Document
delivered in connection herewith or therewith shall be true and correct
in all material respects on and as of such date as if made on and as of
such date unless stated to relate to a specific earlier date.
(ii) NO DEFAULT. No Event of Default and no Default
shall have occurred and be continuing on such date or after giving
effect to the transaction requested by the Borrowers to be made on such
date.
(iii) NO LITIGATION. No litigation, investigation or
proceeding before or by any arbitrator or Governmental Authority shall
be continuing or threatened against any Borrower questioning the
enforceability of or any Borrower's authority to enter into this
Agreement, the Notes or the other Facility Documents.
(iv) ADDITIONAL DOCUMENTS. The Agent shall have
received each additional document, instrument or item of information
reasonably requested by the Agent, including, without limitation,
appropriate Term Loan Notes if the transaction is the making of a Term
Loan or an appropriate Standby L/C Application if the transaction is
the issuance of a Standby L/C.
(v) ADDITIONAL MATTERS. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement, the
Notes and the other Facility Documents shall be reasonably satisfactory
in form and substance to the Agent.
(b) Each Notice of Borrowing and Standby L/C Application
submitted by the Borrowers hereunder shall constitute a representation and
warranty by each Borrower to the Agent and the Banks as of the date of such
transaction that the conditions contained in this Section 4.2 have been
satisfied.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Each Borrower represents and warrants to the Banks that:
SECTION 5.1 GOOD STANDING AND QUALIFICATION. Each of the Borrowers (i)
is duly organized, validly existing and in good standing (or comparable status)
under the laws of the jurisdiction of its incorporation or formation, (ii) has
all requisite power and authority to own and operate its properties and to carry
on its business as presently conducted, (iii) is duly qualified as a foreign
corporation (or other entity) to do business in and is in good standing (or
comparable status) under the laws of each jurisdiction where, by the nature of
its business or because of the character of the properties owned or leased by it
or the transaction of its business, failure to be so qualified would have a
Material Adverse Effect or where failure to qualify would affect the ability of
the Borrower to enforce any of its material rights, and (iv) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect and would
not materially and adversely affect the ability of the Borrower to perform its
obligations under this Agreement and all other Facility Documents.
SECTION 5.2 AUTHORITY. Each of the Borrowers has full power and
authority (i) to enter into this Agreement and all other Facility Documents,
(ii) to make the borrowings contemplated by this Agreement, (iii) to execute,
deliver and perform this Agreement, the Notes and the other Facility Documents
and to incur the obligations provided for herein and therein, all of which have
been duly authorized by all necessary and proper corporate action. No consent,
waiver or authorization of, or filing with, any Person (including without
limitation any Governmental Authority), is required to be made or obtained by
any Borrower in connection with the borrowings hereunder or the execution,
delivery, performance, validity or enforceability of this Agreement and all
other Facility Documents.
SECTION 5.3 BINDING AGREEMENTS. This Agreement constitutes, and the
Notes and all other Facility Documents, when executed and delivered pursuant
hereto for value received, shall constitute, the valid and legally binding
obligations of each Borrower, enforceable in accordance with their respective
terms, except as enforcement of such terms may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws
affecting creditors' rights generally, provided, however, that each Borrower
represents and warrants that no proceedings under such laws exist as of the date
of this Agreement, or (ii) equitable principles which may limit the availability
of the remedy of specific performance or other equitable remedies.
SECTION 5.4 LITIGATION. There are no actions, suits, investigations or
administrative proceedings of or before any court, arbitrator or Governmental
Authority, pending or, to the knowledge of the Borrowers, threatened against any
Borrower or any of their
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respective properties or assets which: (i) either in any case or in the
aggregate, (x) an unfavorable outcome for any such Borrower is probable (as used
in this context, "probable" means, as reasonably determined by the Required
Banks, the prospects of the claimant not succeeding are judged to be extremely
doubtful and the prospects for success by any such Borrower in its defense are
judged to be slight), and (y) if so adversely determined, would have a Material
Adverse Effect; or (ii) question the validity of this Agreement or any other
Facility Documents or any action to be taken in connection with the transactions
contemplated hereby and thereby.
SECTION 5.5 NO CONFLICTING LAW OR AGREEMENTS. The execution, delivery
and performance by and of each Borrower of this Agreement and all other Facility
Documents: (i) do not and will not violate any Requirement of Law; (ii) do not
and will not violate any order, decree or judgment by which any Borrower is
bound; (iii) do not and will not violate or conflict with, result in a breach of
or constitute (with notice, lapse of time, or otherwise) a default under any
material agreement, mortgage, indenture or contract to which any Borrower is a
party, or by which any Borrower's properties are bound, which violation would
have a Material Adverse Effect; or (iv) do not and will not result in the
creation or imposition of any lien, security interest, charge or encumbrance of
any nature whatsoever upon any property or assets of any Borrower.
SECTION 5.6 TAXES. With respect to all taxable periods, each of the
Borrowers has filed all tax returns which are required to be filed and all
federal, state, municipal, franchise and other taxes shown to be due and payable
on such filed returns have been paid or have been reserved against, as required
by GAAP, and each of the Borrowers knows of no unpaid assessment against it.
SECTION 5.7 FINANCIAL STATEMENTS. The Borrowers have heretofore
delivered to the Banks (i) the audited consolidated annual balance sheet of the
Borrowers as of June 30, 1997 and the related consolidated statements of income,
shareholders' equity and cash flows for the Fiscal Year then ended; and (ii) the
unaudited consolidated balance sheet of the Borrowers as of the end of the
Fiscal Quarter ending September 30, 1997 and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash flows for the
three (3) months then ended. Such financial statements, with accompanying
footnotes (if any), fairly present the financial condition, results of
operations and cash flows of the Borrowers, on a consolidated basis, as of the
dates and for the periods referred to and have been prepared in accordance with
GAAP consistently applied by the Borrowers throughout the periods involved, with
such quarterly financial statements being subject to normal year-end adjustments
and the omission of footnotes. The financial statements referred to in this
Section 5.7 do not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading.
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SECTION 5.8 ADVERSE DEVELOPMENTS. Since the date of the financial
statements most recently furnished to the Banks, there has been no change in the
business, prospects, operations or condition, financial or otherwise, of any of
the Borrowers or any of their respective properties or assets which would have a
Material Adverse Effect.
SECTION 5.9 EXISTENCE OF ASSETS AND TITLE THERETO. Each of the
Borrowers has good and marketable title to its properties and assets, including
the properties and assets reflected in the financial statements referred to
herein. Such properties and assets are not subject to any Lien except as
expressly permitted under the terms of this Agreement.
SECTION 5.10 REGULATIONS S,T,U OR X. None of the Borrowers is engaged,
nor will any Borrower engage, principally or as one of its important activities,
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" under Regulation U of the Board of Governors of
the Federal Reserve System as now or from time to time in effect. No part of the
proceeds of the borrowings hereunder will be used, directly or indirectly, for
the purpose of "purchasing" or "carrying" any "margin stock". The terms
"purchasing," "carrying" and "margin stock" shall be as defined in Regulation U
promulgated by the Board of Governors of the Federal Reserve System. No part of
the proceeds of the borrowings hereunder will be used, directly or indirectly,
for any purpose which violates, or which is inconsistent with, the provisions of
Regulations S, T, U or X of said Board of Governors. If requested by the Agent,
the Borrowers shall furnish to the Banks a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said Regulation U to the
foregoing effect.
SECTION 5.11 COMPLIANCE. No Default nor Event of Default has occurred
or is existing. None of the Borrowers is in default with respect to any order,
writ, injunction or decree of any court or of any federal, state, municipal or
other Governmental Authority or in violation of any Requirement of Law to which
any of them or their respective properties are subject, which default or
violation might have a Material Adverse Effect. None of the Borrowers are in
default in the payment or performance of any of their respective obligations or
in the performance of any Contractual Obligation to which any of them is a party
or by which any of them or any of their respective assets or properties may be
bound, which default might have a Material Adverse Effect. None of the Borrowers
has failed to obtain any licenses, permits, franchises or other governmental or
environmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, which violation or
failure might have a Material Adverse Effect.
SECTION 5.12 LEASES. Each of the Borrowers enjoys quiet and undisturbed
possession under all leases under which each is operating, and all such leases
are valid and subsisting, and not in default.
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SECTION 5.13 PENSION PLANS. No ERISA Event has occurred with respect to
any Plan of any of the Borrowers or any member of its ERISA Group. The PBGC has
not made a determination that, with respect to any Plan of any Borrower or any
member of its ERISA Group, an event or condition has occurred which constitutes
grounds under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any such Plan. None of the Borrowers nor
any member of its ERISA Group is in violation of any laws, ordinances,
governmental rules or regulations to which it is subject, including without
limitation any laws, rulings or regulations relating to ERISA or Section 4975 of
the Code, which violation might have a Material Adverse Effect.
SECTION 5.14 INVESTMENT COMPANY; HOLDING COMPANY. None of the Borrowers
is (i) an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
(ii) a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (iii) subject to any regulatory scheme which
restricts its ability to incur Debt.
SECTION 5.15 NO INSOLVENCY. On the date hereof and after giving effect
to all Debt of the Borrowers (including the Loans), (i) each Borrower will be
able to pay its obligations as they become due and payable; (ii) the present
fair saleable value of each Borrower's assets exceeds the amount that will be
required to pay its probable liability on its obligations as the same become
absolute and matured; (iii) the sum of each Borrower's property at a fair
valuation exceeds each Borrower's liabilities; and (iv) each Borrower will have
sufficient capital to engage in its business.
SECTION 5.16 ENVIRONMENTAL MATTERS.
(a) None of the Borrowers has used Hazardous Materials on,
from or affecting any real property owned, leased or used by any Borrower (the
"Real Property") in any manner which violates any Environmental Laws governing
the use, storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials, which violation would have a
Material Adverse Effect, and, to the best knowledge of each Borrower, no present
or prior owner of the Real Property or any tenant, subtenant, occupant, prior
tenant, prior subtenant or prior occupant has used Hazardous Materials on, from
or affecting the Real Property in any manner which violates any Environmental
Laws governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials.
(b) None of the Borrowers has received any notice of any
violation of any Environmental Laws governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials, and there have been no actions commenced or, to the best
knowledge of the Borrowers, threatened by any party for noncompliance therewith.
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SECTION 5.17 ACCURACY OF INFORMATION. All information, reports and
other papers and data (including without limitation, copies of all filings made
with all Governmental Authorities) furnished heretofore or contemporaneously
herewith by or on behalf of the Borrowers to the Agent, the Banks or any Person
furnishing an opinion required to be delivered hereunder for purposes of or in
connection with this Agreement and the other Facility Documents and the
transactions contemplated hereby and thereby, is, and all other such information
hereafter furnished by or on behalf of the Borrowers to the Agent, the Banks or
any Person furnishing an opinion required to be delivered hereunder will be,
true and accurate in every material respect on the date as of which such
information is dated or certified.
SECTION 5.18 ASSETS FOR CONDUCT OF BUSINESS. Each of the Borrowers
possesses adequate assets, patents, patent applications, copyrights, trademarks,
servicemarks, and trade names or licenses thereto, to continue to conduct their
respective businesses as heretofore conducted, without any material conflict
with the rights of others, except that the failure to possess such asset or
assets, in the aggregate, would not have a Material Adverse Effect.
SECTION 5.19 TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship of any Borrower with any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of any Borrower and there exists no present condition or state of facts
or circumstances known to any Borrower that would have a Material Adverse Effect
or prevent any Borrower from conducting their respective businesses after the
consummation of the transactions contemplated by this Agreement in substantially
the same manner in which such business has heretofore been conducted.
SECTION 5.20 CONTINGENT OBLIGATIONS. Each of the Borrowers has no
Contingent Obligations other than those set forth on Schedule 5.20.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
So long as the Borrowers may borrow under this Agreement (including
pursuant to Standby L/Cs) and until payment in full of the Notes, any L/C
Funding and all other amounts and obligations owing to the Banks hereunder and
under the other Facility Documents, each of the Borrowers shall, unless the
Required Banks otherwise consent in writing:
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SECTION 6.1 FINANCIAL STATEMENTS. Furnish to the Banks:
(a) as soon as available, but in any event within 90 days
after the end of each Fiscal Year of the Borrowers, a copy of the audited
consolidated balance sheet of the Borrowers as at the end of such Fiscal Year
and the related audited consolidated statements of income and changes in
shareholders' equity and cash flows for such Fiscal Year, setting forth in each
case in comparative form the figures for the previous year, together with the
opinion of independent certified public accountants of nationally recognized
standing, which opinion shall not contain a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit or qualification which would affect the computation of financial covenants
contained herein other than a qualification for consistency due to a change in
the application of GAAP with which the Borrowers' independent certified public
accountants concur; and
(b) as soon as available, but in any event within 60 days
after the end of each Fiscal Quarter, a copy of the unaudited consolidated
balance sheet of the Borrowers as at the end of such Fiscal Quarter and the
related unaudited consolidated statements of income and changes in shareholders'
equity and cash flows for such Fiscal Quarter and for the portion of the
Borrowers' Fiscal Year ended at the end of such Fiscal Quarter, setting forth in
each case in comparative form the figures for the corresponding Fiscal Quarter
and corresponding portion of the Borrowers' previous Fiscal Year, all certified
(subject to normal year-end adjustments and the omission of footnotes) as to
fairness of presentation, GAAP and consistency by an Authorized Officer.
SECTION 6.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Banks:
(a) concurrently with the delivery of each annual financial
statement referred to in Section 6.1(a) and each quarterly financial statement
referred to in Section 6.1(b), a certificate of an Authorized Officer of each
Borrower (in such form as shall be reasonably acceptable to the Banks) stated to
have been made after due examination by such Authorized Officer (i) stating
whether any Default or Event of Default exists on the date of such certificate
and, if any Default or Event of Default then exists, setting forth the details
thereof and the action which the applicable Borrower is taking or proposes to
take with respect thereto, (ii) setting forth in detail the calculations
required to establish whether the Borrowers were in compliance with financial
covenants set forth in Section 7.6 on the date of such financial statements, and
(iii) stating that the representations and warranties expressed in Article V
(other than Section 5.15) are true, correct and complete in all material
respects on and as of the date of such certificate (unless stated to relate to a
specific earlier date) and, if any such representation or warranty is not so
true, correct and complete, setting forth the details thereof;
(b) promptly after the same are sent, copies of all quarterly
financial statements, reports and notices which any Borrower sends to its
shareholders as
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shareholders, and promptly after the same are filed, copies of all financial
statements and reports (including, without limitation, reports on Forms 10-K,
10-Q and 8-K), which any Borrower may make to, or file with, and copies of all
material notices any Borrower receives from, the Securities and Exchange
Commission or any public body succeeding to any or all of the functions of the
Securities and Exchange Commission; and
(c) promptly, on reasonable notice to the Borrowers, such
additional financial and other information as a Bank or the Agent may from time
to time reasonably request.
SECTION 6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy, at or before maturity or before they become delinquent, as the case may
be, all its Debt, including without limitation all amounts due under the Notes
and hereunder, and other material obligations of whatever nature, except for any
Debt or other obligations (including any obligations for taxes), when the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrowers.
SECTION 6.4 MAINTENANCE OF RIGHTS, PERMITS, ETC; COMPLIANCE WITH LAW.
(x) Preserve, renew and keep in full force and effect all, (y) take all
reasonable action to maintain all, and (z) not sell, transfer or otherwise
dispose of any, rights, privileges, contracts, licenses, permits, copyrights,
patents, trademarks, trade names and franchises necessary or desirable in the
normal conduct of its business if the same would have a Material Adverse Effect;
and comply with all Requirements of Law.
SECTION 6.5 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities, subject in
the case of interim statements to year-end audit adjustments; and permit
representatives of the Agent and the Banks (at the Borrowers' expense) to (i)
visit and inspect any of its properties, and examine and make abstracts from any
of the books and records at any reasonable time and as often as may reasonably
be requested, and (ii) discuss the business, operations, properties and
financial and other condition of each Borrower with appropriate officers of each
Borrower and, if notice thereof is given to any Borrower prior to the date of
such discussions and provided such Borrower shall be entitled to participate in
such discussions, with its independent certified public accountants.
SECTION 6.6 NOTICES. Promptly give notice to the Agent and the Banks:
(a) of the occurrence of any Default or Event of Default;
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(b) of any (i) default under any loan, letter of credit
agreement or acceptance agreement, (ii) default under any other Contractual
Obligations that would enable the obligee of such obligations to compel any
Borrower to immediately pay all amounts owing thereunder or otherwise accelerate
payments thereunder and which would have a Material Adverse Effect, or (iii)
litigation, investigation or proceeding which may exist at any time between any
Borrower and any Governmental Authority, which (x) an unfavorable outcome for
any such Borrower is probable (as used in this context, "probable" means, as
reasonably determined by the Required Banks, the prospects of the claimant not
succeeding are judged to be extremely doubtful and the prospects for success by
any such Borrower in its defense are judged to be slight), and (y) if so
adversely determined, would have a Material Adverse Effect;
(c) of any litigation or proceeding affecting or threatened
against any Borrower (i) in which the amount involved is $1 million or more, or
(ii) in which injunctive or similar relief is sought;
(d) of the following events, as soon as possible and in any
event within thirty (30) days after the occurrence thereof: (i) the occurrence
of any Reportable Event with respect to any Plan of any Borrower or any member
of its ERISA Group with respect to which the PBGC has not waived the thirty (30)
day reporting requirement, or (ii) the institution of proceedings or the taking
or expected taking of any other action by PBGC or any Borrower or any member of
its ERISA Group to terminate or withdraw or partially withdraw from any Plan
under circumstances which could lead to material liability to the PBGC or, with
respect to a Multiemployer Plan, the Reorganization or Insolvency (as each such
terms are defined in ERISA) of the Plan and in addition to such notice, deliver
to the Agent and the Banks whichever of the following may be applicable: (A) a
certificate of an appropriate officer of such Borrower setting forth details as
to such Reportable Event and the action such Borrower proposes to take with
respect thereto, together with a copy of any notice of such Reportable Event
that may be required to be filed with PBGC, or (B) any notice delivered by PBGC
evidencing its intent to institute such proceedings or any notice to PBGC that
such Plan is to be terminated, as the case may be; and
(e) of any change relating to the business, operations,
property or financial or other condition of any Borrower which may have a
Material Adverse Effect.
Each notice pursuant to this Section 6.6 shall be accompanied by a
statement of an Authorized Officer setting forth details of the occurrence
referred to therein and stating what action the Borrowers proposes to take with
respect thereto.
SECTION 6.7 TAXES. Pay and discharge all taxes, assessments,
governmental charges and levies upon or collected by each of the Borrowers as
and when they become due and payable, unless, and only to the extent that, such
taxes, assessments,
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governmental charges and levies shall be contested in good faith by appropriate
proceedings and shall have been reserved against as required by GAAP, by any
Borrower.
SECTION 6.8 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property
useful in and necessary to its business in good working order and condition,
ordinary wear and tear excepted; and shall keep its property continuously
insured with Required Property Insurance Coverage and maintain Required Public
Liability Insurance Coverage. All insurance shall be obtained and maintained
either by means of policies with generally recognized, responsible insurance
companies qualified to do business in the jurisdiction where such property is
located or pursuant to other arrangements satisfactory to the Banks. The
insurance to be provided may be by blanket policy. Each policy of insurance
shall be written so as not to be subject to cancellation or substantial
modification upon less than 30 days advance written notice to the Borrowers, and
each Borrower shall so inform the Agent and the Banks of the receipt, and
contents, of any such notice. The Borrowers shall deposit with the Agent
certificates or other evidence satisfactory to it that (i) the insurance
required hereby has been obtained and is in full force and effect, and (ii) all
premiums thereon have been paid in full. Prior to the expiration of any such
insurance, the Borrowers shall furnish the Agent with evidence satisfactory to
it that such insurance has been renewed or replaced and that all premiums
thereon have been paid in full. In the event any Borrower fails to provide,
maintain and keep in force the policies of insurance required by this Section
6.8, the Banks may procure such insurance or single-interest insurance for such
risk covering the Banks' interest and the Borrowers shall pay all premiums
thereon promptly upon demand by the Agent, together with interest thereon at the
highest rate then in effect under any Note.
SECTION 6.9 ERISA FUNDING REQUIREMENTS. Comply, and cause each member
of its ERISA Group to comply, with all funding requirements of ERISA with
respect to any Plan of each and/or any member of its ERISA Group.
SECTION 6.10 INDEMNIFICATION. Defend, indemnify and hold the Agent and
the Banks and any of their respective officers, directors, agents and employees
harmless against any and all loss, cost, expense (including the reasonable fees
and expenses of counsel), claims or actions relating to or arising out of this
Agreement, the Notes and the other Facility Documents, or any actual or proposed
use of proceeds of the Loans, regardless of whether or not the disbursement of
any Loans shall actually occur, unless any such loss, cost, expense, claim or
action are due to the gross negligence or willful misconduct of the Banks. The
provisions of this Section 6.10 shall survive the termination of this Agreement.
If any claim, action or proceeding is made or brought against the Agent
and/or the Banks or any such officers, directors, agents and employees in
respect of which indemnity may be sought hereunder, the Agent shall give notice
to the Borrowers of the claim, action or proceeding and upon such notice, at the
option of the Required Banks, (i) the Borrowers
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shall assume, at the Borrowers' expense, the defense of the action or proceeding
with legal counsel satisfactory to the Required Banks, (ii) the Borrowers shall
so assume the defense of the action or proceeding with the participation of the
Agent and/or the Banks, at the Borrowers' expense, in such defense, or (iii) the
Agent and/or the Banks shall assume the defense of the claim, action or
proceeding, at the Borrowers' expense; provided that the failure of the Agent to
give such notice shall not relieve the Borrowers from any of their obligations
under this Section 6.10 unless the failure prejudices the defense by the
Borrowers of the claim, action or proceeding.
SECTION 6.11 PERFORMANCE UNDER FACILITY DOCUMENTS. Perform all
obligations required to be performed by it under the terms of this Agreement and
the other Facility Documents and any other agreements now or hereafter existing
or entered into between the Borrowers and the Banks.
SECTION 6.12 CORPORATE EXISTENCE; FOREIGN QUALIFICATION. Except in
connection with transactions permitted by Section 7.2, do or cause to be done at
all times all things necessary to: (i) maintain and preserve its existence, as a
corporation or other entity, as the case may be; (ii) be duly qualified to do
business and be in good standing as a foreign corporation or other entity in
each jurisdiction where failure to do so will have a Material Adverse Effect;
and (iii) comply with all Contractual Obligations where failure to do so will
have a Material Adverse Effect.
SECTION 6.13 MAINTENANCE OF BUSINESS. Maintain the general character of
the business of the Borrowers as presently conducted.
SECTION 6.14 ENVIRONMENTAL MATTERS.
(a) Each of the Borrowers shall keep or cause the Real
Property to be free of Hazardous Materials except to the extent that such
Hazardous Materials are stored and/or used in material compliance with all
applicable Environmental Laws; and, without limiting the foregoing, each of the
Borrowers shall not cause or permit the Real Property to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce or process Hazardous Materials, except in material compliance with all
applicable Environmental Laws, nor shall any Borrower knowingly cause or permit,
as a result of any intentional or negligent act or omission on the part of the
Borrower, or any tenant, subtenant or occupant, a material release of Hazardous
Materials onto the Real Property; and
(b) Each of the Borrowers shall (x) conduct and complete all
investigations, studies, sampling and testing, and all remedial, removal and
other actions necessary to clean up and remove any Hazardous Materials on,
under, from or affecting the Real Property in accordance with all applicable
Environmental Laws, to the satisfaction of the Agent and in accordance with the
orders and directives of all Governmental
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Authorities and (y) defend, indemnify and hold harmless the Agent and the Banks,
their respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs or
expenses of whatsoever kind or nature, known or unknown, contingent or
otherwise, arising out of, or in any way relating to (A) the presence, disposal,
release or threatened release of any Hazardous Materials on, over and under,
from or affecting the Real Property or the soil, water, vegetation, buildings,
personal property, persons or animals thereon; and (B) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or relating to such Hazardous Materials including, without limitation,
attorneys' and consultants' fees, investigation and laboratory fees, court costs
and litigation expenses.
(c) The provisions of this Section 6.14 shall be in addition
to any and all other obligations and liabilities the Borrowers may have to the
Agent and the Banks at common law and shall survive (i) the repayment of all
sums due under the Notes and any other Facility Document and (ii) the
satisfaction of all other obligations of the Borrowers hereunder and under the
other Facility Documents.
SECTION 6.15 PRIMARY DEPOSITORY. Maintain its primary banking and
depository accounts with Bank One or its Affiliates.
SECTION 6.16 CHANGE IN GOVERNING DOCUMENTS. Give notice to the Banks of
any restatement, replacement or other change, amendment or modification of any
organizational and governing documents of (i) MPW Group at least 30 days prior
thereto, and (ii) any other Borrower prior thereto.
ARTICLE VII
NEGATIVE COVENANTS
------------------
So long as the Borrowers may borrow under this Agreement (including
pursuant to Standby L/Cs) and until payment in full of the Notes, any L/C
Funding and all other amounts and obligations owing to the Banks hereunder and
under the other Facility Documents, each Borrower shall not, unless the Required
Banks shall otherwise consent in writing:
SECTION 7.1 MORTGAGES AND PLEDGES. Create, incur, assume or suffer to
exist (i) any Lien upon or in any of its property or assets, whether now owned
or hereafter acquired except as specifically permitted under this Agreement, or
(ii) an agreement with any Person (other than the Banks) which prohibits or
restricts the granting of any such Lien of any kind in favor of the Banks,
except:
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(a) Liens securing taxes, assessments, fees or other
governmental charges or levies, or the claims of materialmen, mechanics,
carriers, warehousemen, landlords and other similar Persons;
(b) Liens incurred or deposits made in the ordinary course of
business (i) in connection with worker's compensation, unemployment insurance,
social security and other similar laws, or (ii) to secure the performance of
bids, tenders, sales, contracts, public or statutory obligations, customs,
appeal and performance bonds, or (iii) other similar obligations not incurred in
connection with the borrowing of money, the obtaining of advances or the payment
of the deferred purchase price of property;
(c) reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other similar title
exceptions or encumbrances affecting Real Property, provided they do not in the
aggregate materially detract from the value of such properties or materially
interfere with their use in the ordinary conduct of Borrowers' business;
(d) Liens in favor of the Banks on a pro rata basis;
(e) purchase money Liens in an aggregate amount not to exceed
$1 million (as used herein, "purchase money Liens" shall mean Liens taken or
retained by the seller in connection with the sale of property to any Borrower
to secure all or part of its purchase price, which purchase price shall not
exceed the fair market value of such property);
(f) Liens in respect of judgements or awards with respect to,
which the Borrowers are, in good faith, prosecuting an appeal or proceeding for
review and with respect to which a stay of execution upon such appeal or
proceeding for review has been granted;
(g) notice filing by any creditor in respect of any operating
leases;
(h) a mortgage on the principal facility of ESI in Nashville,
Tennessee securing a promissory note of ESI with an outstanding balance as of
October 31, 1997 of not more than $480,000; and
(i) Liens in favor of Bank One with respect to the airplane
owned by MPW, Inc.
SECTION 7.2 MERGER, CONSOLIDATION, SALE AND ACQUISITION OF ASSETS.
Except for (x) in connection with acquisitions permitted by Section 2.11, and
(y) transactions with another Borrower, enter into any transaction of merger or
consolidation of any Borrower (or suffer any liquidation or dissolution), or
sell, lease or otherwise transfer all or any substantial part
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of its business or assets, whether now owned or hereafter acquired, or make any
material change in the method by which it conducts business, or acquire all or
any material part of the business assets of, any Person.
SECTION 7.3 CONTINGENT OBLIGATIONS. Assume, guarantee, endorse, sell
with recourse, contingently agree to purchase, discount, or otherwise become or
remain liable with respect to any Contingent Obligations or enter into any
agreement for the purchase or other acquisition of any product, materials or
supplies, or for transportation or for the payment for services, if in any such
case payment therefor is to be made regardless of the non-delivery of the
product, materials or supplies or the non-furnishing of the transportation or
services.
SECTION 7.4 TRANSACTIONS WITH AFFILIATES.
(a) Enter into any transactions, including without limitation,
the purchase, sale or exchange of property or the rendering of any service, with
any Affiliate (other than another Borrower), except (i) in the ordinary course
of and pursuant to the reasonable requirements of its business and upon fair and
reasonable terms no less favorable to such Borrower as would be obtained in an
arm's length transaction with a Person not an Affiliate, and (ii) those
transactions existing or contemplated as of the Closing Date.
(b) Make any loans or advances to any Affiliate (other than
another Borrower) in excess of an aggregate of $250,000 outstanding at any time.
SECTION 7.5 COMPLIANCE WITH ERISA. (a) Allow or suffer to exist any
Prohibited Transaction involving any Plan of any Borrower or any member of its
ERISA Group; (b) incur or suffer to exist any accumulated funding deficiency,
whether or not waived, involving any such Plan; or (c) allow any occurrence of
or suffer to exist any ERISA Event, or any other event or condition, that
presents a material risk of termination of any such Plan by the PBGC, if such
Prohibited Transaction, accumulated funding deficiency or ERISA Event would
result in a liability of any Borrower or any member of its ERISA Group to the
PBGC which would have a Material Adverse Effect.
SECTION 7.6 FINANCIAL COVENANTS.
(a) CONSOLIDATED TANGIBLE NET WORTH. Permit Consolidated
Tangible Net Worth to be less than $29,000,000, which amount shall increase (but
not decrease by any losses) quarterly on the last day of each Fiscal Quarter by
50% of Consolidated Net Income (determined at the end of each Fiscal Quarter for
such Fiscal Quarter), commencing with the Fiscal Quarter ending December 31,
1997.
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(b) RATIO OF CONSOLIDATED FUNDED DEBT TO CONSOLIDATED TANGIBLE
NET WORTH. Permit the ratio of Consolidated Funded Debt to Consolidated Tangible
Net Worth to exceed 1.25 to 1.00.
(c) COVERAGE RATIO. Permit the Coverage Ratio to be less than
1.50 to 1.00.
(d) CONSOLIDATED CAPITAL EXPENDITURES. Permit Consolidated
Capital Expenditures of the Borrowers to exceed $10 million in any Fiscal Year.
SECTION 7.7 DEBT RESTRICTION. Incur, assume, guarantee or
otherwise create any Debt other than:
(a) the Loans and Standby L/Cs provided for pursuant to this
Agreement;
(b) Debt relating to purchase money Liens permitted by Section
7.1(e);
(c) Debt not exceeding an aggregate of $6 million at any time,
which Debt is fully subordinated to the payment of Debt owed to the Banks; and
(d) Debt not exceeding an aggregate of $3 million at any time,
which Debt is assumed by any Borrower in connection with acquisitions permitted
by Section 2.11.
SECTION 7.8 INVESTMENTS. Except in connection with acquisitions
permitted by Section 2.11 and for Permitted Investments, hold, make or acquire
any Investment in any Person other than Investments existing as of the Closing
Date.
SECTION 7.9 LIMITATION ON SUBSIDIARIES. Create any Subsidiaries after
the Closing Date unless any such Subsidiary becomes a party to this Agreement
and a maker of all Notes, and the satisfaction of such other measures as may be
reasonably requested by the Required Banks.
SECTION 7.10 CHANGE IN FISCAL YEAR. Change its Fiscal Year.
SECTION 7.11 CHANGE IN ACCOUNTING PRACTICES. Permit any changes in it
accounting practices in effect as of the Closing Date unless (x) permitted by
GAAP (as GAAP is in effect as of the Closing Date) and (y) comparability of the
Borrowers' financial statements is maintained.
SECTION 7.12 SALE AND LEASEBACK. Enter into any arrangements whereby
any Borrower shall sell or transfer any of its property and then or within one
year thereafter, as lessee, rent or lease such property, other than for the
hangar facility of MPW, Inc. located at the Newark, Ohio airport.
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SECTION 7.13 DISPOSING OF NOTES/ACCOUNTS RECEIVABLE. Discount, sell or
otherwise dispose of its note or accounts receivable.
SECTION 7.14 SUBORDINATED DEBT. Make or permit any changes to or
modification of Debt subordinated to the payment of Debt owed to the Banks or
any documentation in connection with such subordinated Debt.
SECTION 7.15 RESTRICTED PAYMENTS. Declare or make any Restricted
Payment.
SECTION 7.16 DERIVATIVES OBLIGATIONS. Incur any Derivatives
Obligations.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
---------------------------
SECTION 8.1 EVENTS OF DEFAULT; REMEDIES. The occurrence of any of the
following shall constitute an "Event of Default" hereunder:
(a) Any Borrower fails to pay any principal, interest, fees or
any other amount payable under the Notes, hereunder or under any other Facility
Document in accordance with the terms thereof and hereof within 10 days after
such payment is due;
(b) Any Borrower (i) fails to observe or perform any other
term of the Notes, this Agreement, any Standby L/C Application or any other
Facility Document and such failure to observe or perform continues for more than
30 days after such failure shall first become known to any officer of any
Borrower, provided, however, that such 30 day cure period shall not apply to (w)
any such failure with respect to the covenants set forth in Article VII; (x) any
such failure which in the Required Bank's good faith opinion is incapable of
cure; (y) any such failure which has previously occurred and not thereafter
waived by the Banks or cured; or (z) any failure to maintain and keep in effect
any insurance required by any Facility Document; (ii) makes any materially
incorrect or misleading representation, warranty, or certificate to the Agent or
the Banks when made; or (iii) makes any materially incorrect or misleading
representation in any financial statement or other information delivered to the
Agent or the Banks;
(c) Any event or condition occurs which results in the
acceleration of the maturity of any Debt in excess of $250,000 or enables (or,
with the giving of notice, lapse of time or otherwise, would enable) the holder
of such Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(d) A Reportable Event occurs that would permit the PBGC to
terminate any employee benefit plan of any Borrower or any member of its ERISA
Group, or the occurrence of an ERISA Event which shall not have been cured
within 60 days;
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(e) Any Borrower becomes insolvent or unable to pay its debts
as they become due;
(f) Any Borrower (i) makes an assignment for the benefit of
creditors; (ii) consents to the appointment of a custodian, receiver, or trustee
for itself or for a substantial part of its assets; or (iii) commences or
consents to any proceeding under any bankruptcy, reorganization, liquidation,
insolvency or similar laws of any jurisdiction;
(g) A custodian, receiver or trustee is appointed for any
Borrower , or for a substantial part of its assets, without its consent and is
not removed within 90 days after such appointment;
(h) Proceedings are commenced against any Borrower under any
bankruptcy, reorganization, liquidation, or similar laws of any jurisdiction,
and such proceedings remain undismissed for 90 days after commencement;
(i) Any judgment is entered against any Borrower, or any
attachment, levy or garnishment is issued against any property of any Borrower,
in excess of $250,000, and which judgment, attachment, levy or garnishment has
not been discharged or stayed within 30 days after issuance;
(j) an aggregate change of 20% or more of the shares or other
interests in MPW Group owned of record or beneficially by Monte R. Black, his
wife, other members of his immediate family and/or trust(s) for the benefit of
any of the foregoing parties occurs because of such shares or interest being
sold, assigned, pledged, mortgaged, disposed of or otherwise encumbered or
transferred without the prior written consent of the Required Banks; or
(k) a Change in Control occurs.
Upon the happening of any of the foregoing Events of Default, the Agent shall
(x) if requested by the Required Banks, by notice to the Borrowers, terminate
all Commitments of the Banks to make further Loans or issues Standby L/Cs
hereunder, and (y) if requested by the Required Banks, by notice to the Borrower
declare all amounts owing under the Notes, this Agreement and all other Facility
Documents to be, and the same shall thereupon become, immediately due and
payable without presentment, demand, protest, or other notice of any kind, all
of which are hereby waived by the Borrower, and, in addition, the Borrowers
shall return, or cause to be returned, all outstanding Standby L/Cs to Bank One
or the Borrowers shall provide cash to the Agent, for the ratable benefit of the
Banks, to fully collateralize all outstanding Standby L/Cs which are not so
returned; provided that in the case of any of the Events of Default specified in
clauses 8.1(e), (f), (g) and (h) above with respect to any Borrower, without any
notice to the Borrowers or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and all
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amounts owing under the Notes, this Agreement and all other Facility Documents
shall become immediately due and payable without presentment, demand, protest,
or other notice of any kind, all of which are hereby waived by the Borrower.
Upon the happening of any of the foregoing Events of Default, the Agent and the
Banks shall have all of the rights and remedies provided by any law or
agreement. The Borrowers, jointly and severally, shall be liable to the Agent
and the Banks for all reasonable costs and expenses of every kind incurred in
the making or collection of amounts due hereunder and under the Notes and the
other Facility Documents, including, without limitation, reasonable attorneys'
fees and court costs. These costs and expenses shall include, without
limitation, any costs or expenses incurred by the Agent and the Banks in any
bankruptcy, reorganization, insolvency or other similar proceeding.
SECTION 8.2 APPLICATION OF PROCEEDS. Any moneys received by the Agent
and/or the Banks pursuant to the exercise of any remedies provided herein or in
the other Facility Documents or by law shall be applied in the following order
of priority:
First: the payment of each Bank and the Agent for all moneys
reasonably advanced by each for taxes, assessments, insurance,
costs incurred for the protection of any property of the
Borrowers and costs incurred in the collection thereof
(including, without limitation, reasonable attorneys' fees and
expenses);
Second: to collateralize all outstanding Standby L/Cs;
Third: the payment to the Banks in proportion to the Revolving Credit
Loan Commitment Percentage (or, if different, the percentage
that each Bank's outstanding Revolving Credit Loans and Term
Loans bears to the aggregate outstanding Revolving Credit
Loans and Term Loans of all Banks at such time) of all unpaid
interest, fees and other sums and/or charges (other than the
principal of the Loans) owing to the Banks hereunder and the
other Facility Documents;
Fourth: the payment to the Banks in proportion to the Revolving Credit
Loan Commitment Percentage (or, if different, the percentage
that each Bank's outstanding Revolving Credit Loans and Term
Loans bears to the aggregate outstanding Revolving Credit
Loans and Term Loans of all Banks at such time) of all unpaid
principal of Loans and unreimbursed L/C Fundings owing to the
Banks;
Fifth: To, or at the direction of, the Borrowers, or as a court of
competent jurisdiction otherwise directs.
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ARTICLE IX
THE AGENT
---------
SECTION 9.1 APPOINTMENT. Each Bank hereby irrevocably designates and
appoints Bank One as Agent of such Bank under this Agreement, each of the Notes
and the other Facility Documents, and each Bank hereby irrevocably authorizes
Bank One, as Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement, the Notes and the other Facility Document and to
exercise such powers and perform such duties as are expressly delegated to Agent
by the terms of this Agreement, the Notes and the other Facility Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, any
Note or any other Facility Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Banks, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement, any Note or any other Facility Documents, or otherwise exist against
the Agent.
SECTION 9.2 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
SECTION 9.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement, any Note or any other
Facility Documents (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to the Banks for any
recitals, statements, representations or warranties made by the Borrowers or any
officer thereof contained in this Agreement, any Note or any other Facility
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Agreement, any Note or any other Facility Documents or for the value, or
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Note or any other Facility Documents, or for any failure of any
Borrower to perform its obligations hereunder or thereunder. The Agent shall be
under no obligation to any Bank to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this
Agreement, any Note or any other Facility Documents, or to inspect the
properties, books or records of the Borrowers. The Agent shall have no liability
or responsibility to any of the Banks in connection with the collection or
payment of any sums due to the Banks by the Borrowers, the responsibility of the
Agent being only to account to the Banks for monies actually received by it. The
use of the term "agent" in this Agreement with reference to the Agent
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is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom and is intended to create or
reflect only an administrative relationship between independent contracting
parties.
SECTION 9.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrowers),
independent accountants and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement, any Note or any other Facility Documents unless it shall first
receive such advice or concurrence of the Banks or it shall first be indemnified
to its satisfaction by all Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement, any Note or any other Facility Documents in
accordance with a request of the Banks, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Banks and all future
holders of the Notes.
SECTION 9.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from any Bank or the Borrowers
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". If the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Banks. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Banks; provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall reasonably deem advisable in the best
interest of the Banks.
SECTION 9.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrowers, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers and made its own decision to make its extensions of credit hereunder
and enter into this
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Agreement. Each Bank also represents that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, the Notes and the other Facility Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers. Except for notices, reports and other documents expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrowers which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 9.7 INDEMNIFICATION. Each Bank agrees to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so), ratably according to the
respective Revolving Credit Loan Commitment Percentage, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expense or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement, the Notes and the other Facility
Documents or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this Section 9.7 shall survive the payment of the Notes and all
other amounts payable hereunder and the other Facility Documents and the
termination of this Agreement and the other Facility Documents.
SECTION 9.8 BANK ONE IN ITS INDIVIDUAL CAPACITY. Bank One and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrowers as though Bank One were not the Agent
hereunder. With respect to its Loans made or renewed by it and any Note issued
to it either as Bank One or the Agent, Bank One shall have the same rights and
powers under this Agreement as any Bank and may exercise the same as though it
were not the Agent, and the terms "Bank" and "Banks" shall include Bank One in
its individual capacity.
SECTION 9.9 SUCCESSOR AGENT. The Agent may resign as agent at any time
by giving notice to the Banks and the Borrowers. Upon any such resignation, the
Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent
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may, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized or licensed under the laws of the United States or of
any State thereof and having a combined capital and surplus of at least $100
million. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to the rights, powers and
duties of the retiring Agent, and the term "Agent" shall mean such successor
Agent effective upon its appointment, and the retiring Agent's rights, powers
and duties as Agent shall be terminated, without any other or further act or
deed on the part of such retiring Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article VIII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE X
CHANGE IN CIRCUMSTANCES
-----------------------
SECTION 10.1 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
If on or prior to the funding of a Loan at, or converting the Interest Rate on a
Loan to, the Eurodollar Rate:
(a) any Bank determines that deposits in Dollars (in the
applicable amounts) are not being offered to the Bank in the Eurodollar market
for such Interest Period, or
(b) any Bank determines that the Eurodollar Rate, as
determined by the Agent, will not adequately and fairly reflect the cost to such
Bank of funding the Eurodollar Rate Loans for such Interest Period, the Bank
shall forthwith give notice thereof to the Agent and the Borrowers, whereupon
until the Bank notifies the Agent and the Borrowers that the circumstances
giving rise to such suspension no longer exist, (i) the obligations of the Banks
to make Eurodollar Rate Loans or to continue or convert outstanding Loans as or
into Eurodollar Rate Loans shall be suspended, and (ii) each outstanding
Eurodollar Rate Loan shall be converted into a Base Rate Loan on the date set
forth in such notice. Unless the Borrowers notifies the Agent at least one (1)
Business Day before the date of any Eurodollar Rate Loan borrowing for which a
Notice of Borrowing has previously been given that it elects not to borrow on
such date, such borrowing shall instead be made as a Base Rate Loan.
SECTION 10.2 ILLEGALITY AND IMPOSSIBILITY. In the event that any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect and whether or not presently applicable to any Bank, or any
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by any Bank
with any request or directive of such authority (whether or not having the force
of law), including without limitation exchange controls, shall make
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it unlawful or impossible for any Bank to make, maintain or fund its Eurodollar
Rate Loans and such Bank shall forthwith give notice thereof to the Agent and
the Borrowers, whereupon until such Bank notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, the obligation of
the Banks to make Eurodollar Rate Loans, or to convert outstanding Base Rate
Loans to Eurodollar Rate Loans, shall be suspended. If such notice is given,
each Eurodollar Rate Loan of the Banks then outstanding shall be converted to a
Base Rate Loan immediately.
SECTION 10.3 INCREASED COST AND REDUCED RETURN.
(a) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to any Bank, or any interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by any Bank with any guideline, request or
directive of any such authority (whether or not having the force of law), shall
(i) affect the basis of taxation of payments to any Bank of any amounts payable
by the Borrowers under this Agreement or any other Facility Document (other than
taxes imposed on the overall net income of the Bank by the jurisdiction, or by
any political subdivision or taxing authority of such jurisdiction, in which the
Bank has its principal office), or (ii) impose, modify or deem applicable any
Eurodollar Reserve Percentage or any such requirement imposed by the Board of
Governors of the Federal Reserve System, special deposit, insurance assessment
or similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Bank, or (iii) impose on any Bank or the London
interbank market any other condition affecting the Eurodollar Rate Loans, the
Notes or any Bank's obligation to make Eurodollar Rate Loans and the result of
any of the foregoing is to increase the cost to any Bank of making, funding or
maintaining any Eurodollar Rate Loan, or to reduce the amount of any sum
received or receivable by the Bank under this Agreement or under any Note with
respect thereto, by any amount deemed by any Bank to be material, then, within
15 days after demand by such Bank, the Borrowers shall pay to the Bank such
additional amount or amounts sufficient to compensate the Bank for such
increased cost or reduction.
(b) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to any Bank or any interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by any Bank with any guideline, request or
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects or would affect the amount
of capital required or expected to be maintained by any Bank (or any corporation
controlling such Bank) and the Bank determines that the amount of such capital
is increased by or based upon the existence of the Bank's obligations hereunder
and such increase has the effect of reducing the rate of return on the Bank's
(or such controlling corporation's) capital as a consequence of such obligations
hereunder to a level below that which the Bank (or
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such controlling corporation) could have achieved but for such circumstances
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by the Bank to be material, then, within 15 days after demand by
the Bank, the Borrowers shall pay to the Bank such additional amount or amounts
sufficient to compensate the Bank for such reduction.
(c) A Bank shall promptly notify the Agent and the Borrowers
of any event of which it has knowledge, occurring after the date hereof, which
will entitle the Bank to compensation pursuant to this Section 10.3. A
certificate of the Bank claiming compensation under this Section 10.3 and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive and binding for all purposes, absent manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
SECTION 10.4 TAXES.
(a) For the purposes of this Section 10.4, the following terms
have the following meanings:
"TAXES" shall mean any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings with respect to any
payment by the Borrowers pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, excluding, in the case of any Bank, taxes
imposed on its income, and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which the Bank is organized, in which its
principal executive office is located or the State of Ohio.
"OTHER TAXES" shall mean any present or future stamp or
documentary taxes and any other excise or property taxes, or similar charges or
levies, which arise from any payment made pursuant to this Agreement or under
any Note or from the execution or delivery of, or otherwise with respect to,
this Agreement or, any Note or any other Facility Document.
(b) Any and all payments by the Borrowers to or for the
account of any Bank or the Agent hereunder or under any Note or other Facility
Document shall be made without deduction for any Taxes or Other Taxes; provided
that, if the Borrowers shall be required by law to deduct any Taxes or Other
Taxes from any such payments, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 10.4) such Bank or the
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrowers shall make such
deductions, (iii) the Borrowers shall pay the full amount deducted to the
relevant taxation authority or other Governmental Authority in accordance with
applicable law, and (iv) the
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Borrowers shall furnish to the Agent, at its address referred to in Section
11.4, the original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrowers agree to indemnify each Bank and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 10.4) paid by such Bank or the Agent (as the case may be) and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto; provided, however, if any Bank or the Agent successfully
defends against any claim so asserted, and such outcome would also be applicable
as to all of such Bank's transactions with customers similarly or analogously
situated, the indemnification provided for shall be proportionally reduced. This
indemnification provided for in this subsection (c) shall be paid within 15 days
after such Bank or the Agent (as the case may be) makes demand therefor.
SECTION 10.5 BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURODOLLAR RATE
LOANS. If (a) the obligation of any Bank to make, or convert outstanding Loans
to, Eurodollar Rate Loans has been suspended pursuant to the terms of this
Agreement, or (b) any Bank has demanded compensation under Section 10.3 or 10.4
with respect to its Eurodollar Rate Loans and the Borrowers shall, by at least
five Business Days' prior notice to such through the Agent, have elected that
the provisions of this Section 10.5 shall apply to such Bank, then, unless and
until such Bank notifies the Agent and the Borrowers that the circumstances
giving rise to such suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by the Bank as (or
continued as or converted into) Eurodollar Rate Loans shall instead be
Base Rate Loans; and
(b) after each of its Eurodollar Rate Loans has been repaid
(or converted to a Base Rate Loan), all payments of principal which
would otherwise be applied to repay such Eurodollar Rate Loans shall be
applied to repay its Base Rate Loans instead.
If the Bank notifies the Agent and the Borrowers that the circumstances giving
rise to such notice no longer apply, the principal amount of each such Base Rate
Loan shall be converted into a Eurodollar Rate Loan on the date set forth in
such notice.
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.1 EXPENSES. Whether or not the transactions herein
contemplated shall be consummated, the Borrowers agree to pay all out-of-pocket
expenses (including
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reasonable fees and expenses of counsel) of the Agent and the Banks incurred in
connection with the preparation of this Agreement, the Notes, any amendments or
supplements to this Agreement and the other Facility Documents, any audit,
appraisal or other such service deemed necessary or desirable by the Agent or
the Banks for the preparation of the Agreement, underwriting documents or
enforcing the Agent's and the Banks' rights hereunder, and all out-of-pocket
expenses (including reasonable fees and expenses of their respective counsel)
incidental to the enforcement of the rights of the Agent and the Banks under any
provisions of this Agreement, the Notes and any other Facility Document.
SECTION 11.2 COVENANTS TO SURVIVE, BINDING AGREEMENT. This Agreement
shall be binding upon and inure to the benefit of the Agent, the Banks, the
Borrowers and their respective successors or assigns; provided, however, that
the Borrowers may not assign or otherwise dispose of any of its rights or
obligations hereunder. All covenants, agreements, warranties and representations
made herein, and in all certificates and documents delivered in connection with
this Agreement by or on behalf of the Borrowers shall survive the execution and
delivery hereof and thereof, and all such covenants, agreements, representations
and warranties shall inure to the respective successors and assigns of the Banks
whether or not so expressed.
SECTION 11.3 WAIVERS. No failure on the part of the Agent or the Banks
to exercise and no delay in exercising any right or remedy hereunder or under
the Notes or any other Facility Documents shall operate as a waiver thereof, nor
shall any single or partial exercise by the Agent or the Banks of any right,
remedy or power hereunder thereunder preclude any other right, remedy or power.
The rights, remedies and powers provided herein, in the Notes and the other
Facility Documents are cumulative and not exclusive of any other rights,
remedies or powers which the Agent, the Banks or any holder of the Notes, would
otherwise have. Notice to or demand on the Borrowers in any circumstance in
which the terms of this Agreement, the Notes or the other Facility Documents do
not require notice or demand to be given shall not entitle the Borrowers to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent, the Banks or the holder of any
Notes to take any other further action in any circumstances without notice or
demand.
SECTION 11.4 NOTICES. Notice from one party to another relating to this
Agreement shall be deemed effective if made in writing (including
telecommunications) and delivered to the recipient's address, telex number or
facsimile number set forth below (or to such other address or number as such
party shall give notice) by any of the following means: (i) hand delivery, (ii)
registered or certified mail, postage prepaid, with return receipt requested,
(iii) Federal Express, Airborne Express or like overnight courier service or
(iv) telecopy, telex or other wire transmission with request for assurance of
receipt in a manner typical with respect to communications of that type. Notice
made in accordance with this Section 11.4 shall be deemed delivered on receipt
if delivered by hand or wire
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transmission, on the third business day after mailing if mailed by registered or
certified mail, or the next Business Day after mailing or deposit with an
overnight courier service if delivered by express mail or overnight courier for
next day delivery.
If to Bank One: Bank One, NA
Corporate Banking
100 East Broad Street
Columbus, OH 43271-0170
Attention: Thomas E. Redmond,
Vice President
with a copy to: Schottenstein, Zox & Dunn
41 South High Street, Suite 2600
Columbus, OH 43215
Attention: Jay R. Dingledy, Esq.
If to NCBC: National City Bank of Columbus
155 East Broad Street
Columbus, OH 43251-0034
Attention: Brian T. Strayton,
Vice President
with a copy to: National City Bank of Columbus
155 East Broad Street
Columbus, OH 43251
Attention: Robert G. Hartmann, Esq.,
If to the Agent: Bank One, NA
Corporate Banking
100 East Broad Street
Columbus, OH 43271-0170
Attention: Thomas E. Redmond,
Vice President
with a copy to: Schottenstein, Zox & Dunn
41 South High Street, Suite 2600
Columbus, OH 43215
Attention: Jay R. Dingledy, Esq.
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<PAGE> 65
If to the Borrowers: MPW Industrial Services Group, Inc.
9711 Lancaster Road, S. E.
Hebron, OH 43025
Attention: Daniel P. Buettin, Chief
Financial Officer
with a copy to: Jones, Day, Reavis & Pogue
1900 Huntington Center
Columbus, OH 43215
Attention: Robert J. Gilker, Esq.
SECTION 11.5 SEVERABILITY, ENTIRE AGREEMENT, EFFECTIVENESS. Every
provision of this Agreement, the Notes and the other Facility Documents is
intended to be severable; if any term or provision of this Agreement, any Note
or other Facility Document shall be invalid, illegal or unenforceable for any
reason whatsoever, the validity, legality and enforceability of the remaining
provisions hereof or thereof shall not in any way be affected or impaired
thereby. All exhibits and schedules to this Agreement shall be annexed hereto
and shall be deemed to be part of this Agreement. This Agreement and the
exhibits and schedules attached hereto and the other Facility Documents embody
the entire agreement and understanding between the Borrowers, the Agent and the
Banks and supersede all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall become effective upon receipt by the
Agent of counterparts hereof signed by each of the parties hereto (or, in the
case of any party as to which an executed counterpart shall not have been
received, receipt by the Agent in form satisfactory to it of telegraphic,
facsimile or other written confirmation from such party of execution of a
counterpart hereof by such party).
SECTION 11.6 GOVERNING LAW; VENUE. This Agreement, the Notes and all
other Facility Documents are being delivered, and are intended to be performed
in, the State of Ohio and shall be construed and enforceable in accordance with,
and governed by, the laws of the State of Ohio. Each Borrower agrees that any
legal suit, action or proceeding arising out of or related to this Agreement or
any other Facility Document or the transactions contemplated hereby and thereby
may be instituted in a state of federal court of appropriate jurisdiction in
Franklin County, Ohio, waives any objection which it may have now or hereafter
to the venue of any such suit, action or proceeding, and irrevocably submits to
the jurisdiction of any such court in any such suit, action or proceeding.
SECTION 11.7 SECURITY AND RIGHT OF SETOFF. Each Borrower hereby grants
to the Banks a right of setoff for all Setoff Obligations of the Borrower to
each Bank hereunder in and to any and all moneys of the Borrower and the
proceeds thereof now or hereafter held or received by or in transit to either
Bank from or for the account of the Borrower, whether for safekeeping, pledge,
transmission, collection or otherwise, and also upon any and all deposits
(general and special), account balances and credits of the Borrower with
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<PAGE> 66
either Bank at any time existing. Each Bank is hereby expressly and irrevocably
authorized by the Borrower at any time and from time to time upon or after the
occurrence of an Event of Default, without notifying the Borrower, to setoff and
appropriate all items hereinbefore referred to in this Section 11.7. All items
so setoff and appropriated shall be delivered to the Agent for delivery to and
allocation among the Banks in accordance with each Bank's respective Revolving
Credit Loan Commitment Percentage and shall be applied first by each Bank to the
Borrower's obligations hereunder and the other Facility Documents and thereafter
to all other Setoff Obligations of the Borrower to such Bank, and the Borrower
shall continue to be liable to the Banks for any deficiency with interest at the
applicable rates. Each Borrower hereby irrevocably consents that the Banks shall
have the right of possessing, setting-off, appropriating and applying such items
for the benefit of the Banks and paying or delivering over to the Banks any of
such items for application in accordance with the provisions hereof. Any sums so
set-off shall be held in trust by the Agent for the pro rata benefit of all
Banks with respect to their respective Loans.
SECTION 11.8 AMENDMENTS AND WAIVERS. Any provision of this Agreement,
the Notes or any other Facility Document may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the Agent are affected thereby,
by the Agent); provided that no such amendment or waiver shall, unless signed by
all the Banks, (i) increase or decrease the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder or for any scheduled
reduction or termination of any Commitment, (iv) change the aggregate amount of
Loans required to be repaid on any date pursuant to this Agreement, (v) amend or
waive this Section 11.8 or any of the financial covenants set forth in Section
7.6, (vi) change the Loan Commitment Percentage of any Bank, (vii) change the
aggregate unpaid principal amount of the Notes, or (viii) or the definition of
Required Banks.
SECTION 11.9 TAXES AND FEES. Should any tax (other than a tax based
upon the net income of the Banks) or any recording or filing fees become payable
in respect of this Agreement, the Notes or any other Facility Document or any
amendment, modification or supplement hereof or thereof, the Borrowers agrees,
jointly and severally, to pay the same together with any interest or penalties
thereon and agree to hold the Banks harmless with respect thereof.
SECTION 11.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which
shall constitute one agreement. It shall not be necessary in making proof of
this Agreement or of any document required to be executed and delivered in
connection herewith to produce or account for more than one counterpart.
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<PAGE> 67
SECTION 11.11 EFFECTIVE DATE. This Agreement shall be effective at such
time as executed counterparts of this Agreement have been delivered by the
Borrowers to the Agent.
SECTION 11.12 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT AND THE
BORROWERS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE NOTES, THE OTHER FACILITY DOCUMENTS, OR ANY RELATED INSTRUMENT OR
AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF
CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OF
THEM. NEITHER THE BANKS, THE AGENT NOR THE BORROWERS SHALL SEEK TO CONSOLIDATE,
BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY THE BANKS, THE AGENT OR THE BORROWERS EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY ALL OF THEM.
SECTION 11.13 ARBITRATION. The Banks, the Agent and Borrowers agree
that upon the written demand of any party, whether made before or after the
institution of any legal proceedings, but prior to the rendering of any judgment
in that proceeding, all disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this Agreement, any other
Facility Document or otherwise, including without limitation contract disputes
and tort claims, shall be resolved by binding arbitration pursuant to the
Commercial Rules of the American Arbitration Association ("AAA"). Any
arbitration proceeding held pursuant to this arbitration provision shall be
conducted in the city nearest the Borrower's address having an AAA regional
office, or at any other place selected by mutual agreement of the parties. This
arbitration provision shall not limit the right of any party during any dispute,
claim or controversy to seek, use, and employ ancillary, or preliminary rights
and/or remedies, judicial or otherwise, for the purposes of realizing upon,
preserving, protecting, foreclosing upon or proceeding under forcible entry and
detainer for possession of, any real or personal property, and any such action
shall not be deemed an election of remedies. Such remedies include, without
limitation, obtaining injunctive relief or a temporary restraining order,
invoking a power of sale under any deed of trust or mortgage, obtaining a writ
of attachment or imposition of a receivership, or exercising any rights relating
to personal property, including taking or disposing of such property with or
without judicial process pursuant to Article 9 of the Uniform Commercial Code or
when applicable, a judgment by confession of judgment. Any disputes, claims or
controversies concerning the lawfulness or reasonableness of an act, or exercise
of any right or remedy concerning any property, including any claim to rescind,
reform or otherwise modify any agreement relating to any property, shall also be
arbitrated; provided, however that no
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<PAGE> 68
arbitrator shall have the right or the power to enjoin or restrain any act of
either party. Judgement upon any award rendered by any arbitrator may be entered
in any court having jurisdiction. Nothing in this arbitration provision shall
preclude either party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of any action for these
purposes. The Federal Arbitration Act (Title 9 of the United States Code) shall
apply to the construction, interpretation, and enforcement of this arbitration
provision.
SECTION 11.14 WAIVER OF SUBROGATION. Each Borrower expressly waives any
and all rights of subrogation, contribution, reimbursement, indemnity,
exoneration, implied contract, recourse to security or any other claim
(including any claim, as that term is defined in the federal Bankruptcy Code,
and any amendments) which such Borrower may now have or later acquire against
any other Borrowers, any other entity directly or contingently liable for the
obligations of the Borrowers under this Agreement, the Notes and all other
Facility Documents, arising from the existence or performance of such Borrower's
obligations under this Agreement and the other Facility Documents.
[Balance of Page Intentionally Left Blank]
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<PAGE> 69
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
BANKS:
Bank One, NA National City Bank of Columbus
By: /s/ Thomas E. Redmond By: /s/ Brian T. Strayton
----------------------------- ------------------------------
Name: Thomas E. Redmond Name: Brian T. Strayton
--------------------------- ----------------------------
Title: Vice President Title: Vice President
-------------------------- ---------------------------
AGENT:
Bank One, NA
By: /s/ Thomas E. Redmond
-----------------------------
Name: Thomas E. Redmond
---------------------------
Title: Vice President
--------------------------
BORROWERS:
MPW Industrial Services Group, Inc. MPW Industrial Services, Inc.
By: /s/ Daniel P. Buettin By: /s/ Daniel P. Buettin
----------------------------- ------------------------------
Name: Daniel P. Buettin Name: Daniel P. Buettin
--------------------------- ----------------------------
Title: Vice President & CFO Title: Vice President & CFO
-------------------------- ---------------------------
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<PAGE> 70
MPW Industrial Services, Ltd. MPW Management Services Corp.
By: /s/ Daniel P. Buettin By: /s/ Daniel P. Buettin
----------------------------- ----------------------------------
Name: Daniel P. Buettin Name: Daniel P. Buettin
--------------------------- --------------------------------
Title: Vice President & CFO Title: Vice President & CFO
-------------------------- -------------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: /s/ Brad A. Martyn By: /s/ Peter G. Schumacher
----------------------------- ----------------------------------
Name: Brad A. Martyn Name: Peter G. Schumacher
--------------------------- --------------------------------
Title: Controller Title: Vice President
-------------------------- -------------------------------
ESI International, Inc. ESI-North Limited
By: /s/ Brad A. Martyn By: /s/ Brad A. Martyn
----------------------------- ----------------------------------
Name: Brad A. Martyn Name: Brad A. Martyn
--------------------------- --------------------------------
Title: Secretary Title: Asst. Secretary
-------------------------- -------------------------------
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<PAGE> 71
EXHIBIT A
FORM OF REVOLVING CREDIT LOAN NOTE
<PAGE> 72
REVOLVING CREDIT LOAN NOTE
$10,500,000.00 Columbus, Ohio December 10, 1997
PROMISE TO PAY. Not later than December 31, 2000, for value received,
the undersigned, MPW Industrial Services Group, Inc., MPW Industrial Services,
Inc., , MPW Industrial Services, Ltd., MPW Management Services Corp., Weston
Engineering, Inc., Aquatech Environmental, Inc., ESI International, Inc. and
ESI-North Limited (collectively, the "Borrowers"), jointly and severally, hereby
promise to pay to the order of Bank One, NA (the "Bank") or its assigns, as
further provided herein, the principal amount of Ten Million Five Hundred
Thousand Dollars ($10,500,000) or, if such principal is less, the aggregate
unpaid principal amount of all Revolving Credit Loans made by the Bank to the
Borrowers pursuant to the Revolving Credit and Term Loan Agreement referred to
below, together with interest on the unpaid principal balance from time to time
outstanding hereunder until paid in full at the rates of interest determined in
accordance with such Revolving Credit and Term Loan Agreement. Such interest
shall be due and payable on the dates set forth in such Revolving Credit and
Term Loan Agreement. Both principal and interest are payable in federal funds or
other immediately available money of the United States of America at the main
office of the Agent (defined below) located at 100 East Broad Street, Columbus,
Ohio 43215, or such other address as the Agent may hereafter designate by notice
to the Borrowers.
LOAN AGREEMENT. This Revolving Credit Loan Note is one of the Revolving
Credit Loan Notes referred to in the Revolving Credit and Term Loan Agreement
among the Borrowers, the Bank, National City Bank of Columbus and Bank One, NA,
as Agent (the "Agent"), dated as of December 10, 1997, as the same may be
amended, modified, supplemented, restated or replaced from time to time (the
"Agreement"), which Agreement, as so amended, is incorporated by reference
herein. All capitalized terms used herein shall have the same meanings as are
assigned to such terms in the Agreement. This Revolving Credit Loan Note is
entitled to the benefits of and is subject to the terms, conditions and
provisions of the Agreement. The Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events, and also for repayments and reborrowings on account of the
principal hereof prior to maturity upon the terms, conditions and provisions
specified therein. The Borrowers and each endorser and any other party liable on
this Revolving Credit Loan Note severally waive demand, presentment, notice of
dishonor and protest, and consent to any extension or postponement of time of
its payment without limit as to the number or period, to any substitution,
exchange or release of all or part of any collateral securing this Revolving
Credit Loan Note, to the addition of any party, and to the release or discharge
of, or suspension of any rights and remedies against, any person who may be
liable for the payment of this Revolving Credit Loan Note.
<PAGE> 73
SETOFF. Any and all moneys now or at any time hereafter owing to the
Borrowers from the holder hereof are hereby pledged for the security of this and
all other Debt from the Borrowers to the holder hereof, and may, upon the
occurrence and during the continuation of any Event of Default, be paid and
applied thereon whether such Debt be then due or is to become due, except for
(a) funds necessary to cover checks for the payment of taxes or employee
contributions in which the Borrowers have no beneficial interest issued to third
parties prior to the date any setoff is claimed by the Bank and (b) accounts
maintained, but not substantially overfunded, for the payment of taxes or
employee contributions in which the Borrowers have no beneficial interest.
BORROWERS:
MPW Industrial Services Group, Inc. MPW Industrial Services, Inc.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
MPW Industrial Services, Ltd. MPW Management Services Corp.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
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<PAGE> 74
ESI International, Inc. ESI-North Limited
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
-3-
<PAGE> 75
REVOLVING CREDIT LOAN NOTE
$4,500,000.00 Columbus, Ohio December 10, 1997
PROMISE TO PAY. On or before December 31, 2000, for value received, the
undersigned, MPW Industrial Services Group, Inc., MPW Industrial Services, Inc.,
, MPW Industrial Services, Ltd., MPW Management Services Corp., Weston
Engineering, Inc., Aquatech Environmental, Inc., ESI International, Inc. and
ESI-North Limited (collectively, the "Borrowers"), jointly and severally, hereby
promise to pay to the order of National City Bank of Columbus (the "Bank") or
its assigns, as further provided herein, the principal amount of Four Million
Five Hundred Thousand Dollars ($4,500,000) or, if such principal is less, the
aggregate unpaid principal amount of all Revolving Credit Loans made by the Bank
to the Borrowers pursuant to the Revolving Credit and Term Loan Agreement
referred to below, together with interest on the unpaid principal balance from
time to time outstanding hereunder until paid in full at the rates of interest
determined in accordance with such Revolving Credit and Term Loan Agreement.
Such interest shall be due and payable on the dates set forth in such Revolving
Credit and Term Loan Agreement. Both principal and interest are payable in
federal funds or other immediately available money of the United States of
America at the main office of the Agent (defined below) located at 100 East
Broad Street, Columbus, Ohio 43215, or such other address as the Agent may
hereafter designate by notice to the Borrowers.
LOAN AGREEMENT. This Revolving Credit Loan Note is one of the Revolving
Credit Loan Notes referred to in the Revolving Credit and Term Loan Agreement
among the Borrowers, the Bank, Bank One, NA and Bank One, NA, as Agent (the
"Agent"), dated as of December 10, 1997, as the same may be amended, modified,
supplemented, restated or replaced from time to time (the "Agreement"), which
Agreement, as so amended, is incorporated by reference herein. All capitalized
terms used herein shall have the same meanings as are assigned to such terms in
the Agreement. This Revolving Credit Loan Note is entitled to the benefits of
and is subject to the terms, conditions and provisions of the Agreement. The
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, and also for
repayments and reborrowings on account of the principal hereof prior to maturity
upon the terms, conditions and provisions specified therein. The Borrowers and
each endorser and any other party liable on this Revolving Credit Loan Note
severally waive demand, presentment, notice of dishonor and protest, and consent
to any extension or postponement of time of its payment without limit as to the
number or period, to any substitution, exchange or release of all or part of any
collateral securing this Revolving Credit Loan Note, to the addition of any
party, and to the release or discharge of, or suspension of any rights and
remedies against, any person who may be liable for the payment of this Revolving
Credit Loan Note.
<PAGE> 76
SETOFF. Any and all moneys now or at any time hereafter owing to the
Borrowers from the holder hereof are hereby pledged for the security of this and
all other Debt from the Borrowers to the holder hereof, and may, upon the
occurrence and during the continuation of any Event of Default, be paid and
applied thereon whether such Debt be then due or is to become due, except for
(a) funds necessary to cover checks for the payment of taxes or employee
contributions in which the Borrowers have no beneficial interest issued to third
parties prior to the date any setoff is claimed by the Bank and (b) accounts
maintained, but not substantially overfunded, for the payment of taxes or
employee contributions in which the Borrowers have no beneficial interest.
BORROWERS:
MPW Industrial Services Group, Inc. MPW Industrial Services, Inc.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
MPW Industrial Services, Ltd. MPW Management Services Corp.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
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<PAGE> 77
ESI International, Inc. ESI-North Limited
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
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<PAGE> 78
EXHIBIT B
FORM OF TERM LOAN NOTE
<PAGE> 79
TERM LOAN NOTE
$______________.00 Columbus, Ohio _______, 199__
For value received, the undersigned, MPW Industrial Services Group,
Inc., MPW Industrial Services, Inc., MPW Industrial Services, Ltd., MPW
Management Services Corp., Weston Engineering, Inc., Aquatech Environmental,
Inc., ESI International, Inc. and ESI-North Limited (collectively, the
"Borrowers"), jointly and severally, hereby promise to pay to the order of
_______________ (the "Bank") or its assigns, as further provided herein, the
principal amount of __________________ Dollars ($_____________), together with
interest on the unpaid principal balance hereunder at the rates of interest
determined in accordance with the Revolving Credit and Term Loan Agreement
referred to below. The principal hereof shall be paid in consecutive quarterly
installments of principal in the amount of __________________ Dollars
($________) each, the first of such installments to be due and payable on
__________, 199__, and the remaining of such installments to be due and payable
on the last day each March, June, September and December thereafter until
_________, 200__, at which time all remaining unpaid principal and interest
shall be paid in full. All accrued interest hereon shall be due and payable on
the dates set forth in such Revolving Credit and Term Loan Agreement. Both
principal and interest are payable in federal funds or other immediately
available money of the United States of America at the main office of the Agent
(defined below) located at 100 East Broad Street, Columbus, Ohio 43215, or such
other address as the Agent may hereafter designate by notice to the Borrowers.
LOAN AGREEMENT. This Term Loan Note is one of the Term Loan Notes
referred to in the Revolving Credit and Term Loan Agreement among the Borrowers,
the Bank, _______________ and Bank One, NA, as Agent (the "Agent"), dated as of
December 10, 1997, as the same may be amended, modified, supplemented, restated
or replaced from time to time (the "Agreement"), which Agreement, as so amended,
is incorporated by reference herein. All capitalized terms used herein shall
have the same meanings as are assigned to such terms in the Agreement. This Term
Loan Note is entitled to the benefits of and is subject to the terms, conditions
and provisions of the Agreement. The Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events, and also for repayments of principal prior to maturity hereof
upon the terms, conditions and provisions specified therein. The Borrowers and
each endorser and any other party liable on this Term Loan Note severally waive
demand, presentment, notice of dishonor and protest, and consent to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of any
collateral securing this Term Loan Note, to the addition of any party, and to
the release or discharge of, or suspension of any
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<PAGE> 80
rights and remedies against, any person who may be liable for the payment of
this Term Loan Note.
PREPAYMENTS. Subject to the provisions of the Agreement, the principal
of this Term Loan Note may be prepaid in whole at any time or in part from time
to time in any amount, provided that each partial prepayment shall be applied to
the principal installments in the inverse order of their respective maturities.
Each prepayment shall be accompanied by the payment of accrued interest on the
principal so prepaid to the date of such prepayment and such additional amounts
as may be due pursuant to the Agreement.
SETOFF. Any and all moneys now or at any time hereafter owing to the
Borrowers from the holder hereof, are hereby pledged for the security of this
and all other Indebtedness from the Borrowers to the holder hereof, and may,
upon the occurrence and during the continuation of any Event of Default, be paid
and applied thereon whether such Indebtedness be then due or is to become due,
except for (a) funds necessary to cover checks for the payment of taxes or
employee contributions in which the Borrowers have no beneficial interest issued
to third parties prior to the date any setoff is claimed by the Bank and (b)
accounts maintained, but not substantially overfunded, for the payment of taxes
or employee contributions in which the Borrowers have no beneficial interest.
BORROWERS:
MPW Industrial Services Group, Inc. MPW Industrial Services, Inc.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
MPW Industrial Services, Ltd. MPW Management Services Corp.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
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<PAGE> 81
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
ESI International, Inc. ESI-North Limited
By: By:
----------------------------- ----------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
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<PAGE> 82
SCHEDULE A
REQUIRED PROPERTY INSURANCE COVERAGE AND REQUIRED PUBLIC LIABILITY INSURANCE
COVERAGE
Policy Type Deductible
----------- ----------
General Liability $250,000.00
Large Fleet 100,000.00
Umbrella 10,000.00
Workers' Compensation 25,000.00
Pollution 500,000.00
Auto Pollution 250,000.00
Property/Contractors Equipment 1,000.00
Excess Workers' Compensation (Ohio) 350,000.00
Small Fleet 25,000.00
Aviation 250,000.00
Employee Dishonesty 25,000.00
<PAGE> 83
SCHEDULE 5.20
CONTINGENT OBLIGATIONS
1. Contingent Obligations owed to the Banks.
-2-
<PAGE> 1
EXHIBIT 4(b)
FIRST AMENDMENT
TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (the
"Amendment"), dated as of February 11, 1998, is made and entered into by and
among MPW Industrial Services Group, Inc. ("MPW Group"), MPW Industrial
Services, Inc. ("MPW, Inc."), MPW Industrial Services, Ltd. ("MPW, Ltd."), MPW
Management Services Corp. ("MPW Corp."), Weston Engineering, Inc. ("Weston"),
Aquatech Environmental, Inc. ("Aquatech), ESI International, Inc., ("ESII"), and
ESI-North Limited ("ESI", which, together the foregoing entities, shall be
referred to herein collectively as the "Borrowers" and individually as a
"Borrower"), Bank One, NA, a national banking association ("Bank One"), National
City Bank of Columbus, a national banking association ("NCBC"), and Bank One,
NA, as Agent.
WHEREAS, the Borrowers, Bank One and NCBC entered into a Revolving
Credit and Term Loan Agreement dated as of December 10, 1997 (the "Credit
Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement, as
set forth below, to correct a misunderstanding contained in the Credit
Agreement:
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms used herein but not defined shall have the meaning
ascribed in the Credit Agreement.
2. Section 7.6(a) of the Credit Agreement is hereby amended and
restated, effective as of December 10, 1997, as follows:
SECTION 7.6 Financial Covenants.
--------------------
(a) CONSOLIDATED TANGIBLE NET WORTH. Permit Consolidated
Tangible Net Worth to be less than (i) $26,500,000 prior to March 31, 1998 and
(ii) $29,000,000 as and after March 31, 1998, provided such amount shall
increase (but not decrease by any losses) quarterly on the last day of each
Fiscal Quarter by 50% of Consolidated Net Income (determined at the end of each
Fiscal Quarter for such Fiscal Quarter), commencing with the Fiscal Quarter
ending June 30, 1998.
3. Except as amended hereby, the Credit Agreement and all other
Facility Documents, and all the terms and conditions thereof, shall be and
remain in full force and effect with the changes herein deemed to be
incorporated therein. This Amendment is to be considered attached to the Credit
Agreement and made a part thereof. This Amendment shall not release or affect
the liability of any guarantor, surety or endorser of
<PAGE> 2
the Credit Agreement and the other Facility Documents or release any owner of
collateral securing the Credit Agreement and the other Facility Documents. The
validity, priority and enforceability of the Credit Agreement and the other
Facility Documents shall not be impaired hereby. To the extent that any
provision of this Amendment conflicts with any term or condition set forth in
the Credit Agreement, or any agreement or security document executed in
connection therewith, the provisions of this Amendment shall supersede and
control.
4. The Borrowers acknowledge and agree that this Amendment is limited
only to the terms outlined above, and shall not be construed as an amendment of
any other terms or provisions of the Credit Agreement. The Borrowers hereby
specifically ratify and affirm their obligations and liability under, and the
terms and provisions of, the Credit Agreement and the other Facility Documents.
This Amendment shall not establish a course of dealing or be construed as
evidence of any willingness on the part of the Banks to grant other or future
amendments, should any be requested.
5. The Borrowers represent and warrant to the Banks and the Agent that,
as of the date of this Amendment, (i) the representations and warranties of the
Borrowers contained in Article V of the Loan Agreement are true and correct on
and as of the date of this Amendment as if made on and as of such date (unless
stated to relate to a specific earlier date); and (ii) no Default or Event of
Default exists.
6. This Amendment is being delivered, and is intended to be performed
in, the State of Ohio and shall be construed and enforceable in accordance with,
and governed by, the laws of the State of Ohio.
7. The Borrowers agree to pay all out-of-pocket expenses (including
reasonable fees and expenses of counsel) of the Agent and the Banks incurred in
connection with this Amendment.
8. Every provisions of this Amendment is intended to be severable; if
any term or provision of this Amendment shall be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not in any
way be affected or impaired thereby.
9. This Amendment may be executed in any number of counterparts, each
of which shall be an original and all of which shall constitute one agreement.
It shall not be necessary in making proof of this Amendment or of any document
required to be executed and delivered in connection herewith to produce or
account for more than one counterpart.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers as of the date first written above.
BANKS:
Bank One, NA National City Bank of Columbus
By: /s/ Thomas E. Redmond By: /s/ Brian T. Strayton
------------------------------- --------------------------------
Name: Thomas E. Redmond Name: Brian T. Strayton
----------------------------- -------------------------------
Title: Vice President Title: Vice President
---------------------------- ------------------------------
AGENT:
Bank One, NA
By: /s/ Thomas E. Redmond
-------------------------------
Name: Thomas E. Redmond
-----------------------------
Title: Vice President
----------------------------
BORROWERS:
MPW Industrial Services Group, Inc. MPW Industrial Services, Inc.
By: /s/ Monte R. Black By: /s/ Brad A. Martyn
------------------------------- -----------------------------
Name: Monte R. Black Name: Brad A. Martyn
----------------------------- ----------------------------
Title: Chairman and CEO Title: Controller
---------------------------- ---------------------------
-3-
<PAGE> 4
MPW Industrial Services, Ltd. MPW Management Services Corp.
By: /s/ Daniel P. Buettin By: /s/ Brad A. Martyn
------------------------------- ---------------------------------
Name: Daniel P. Buettin Name: Brad A. Martyn
------------------------------ -------------------------------
Title: Vice President and CFO Title: Controller
----------------------------- ------------------------------
Weston Engineering, Inc. Aquatech Environmental, Inc.
By: /s/ Brad A. Martyn By: /s/ Peter G. Schumacher
------------------------------- --------------------------------
Name: Brad A. Martyn Name: Peter G. Schumacher
---------------------------- -------------------------------
Title: Controller Title: Vice President
---------------------------- ------------------------------
ESI International, Inc. ESI-North Limited
By: /s/ Brad A. Martyn By: /s/ Brad A. Martyn
------------------------------ --------------------------------
Name: Brad A. Martyn Name: Brad A. Martyn
--------------------------- -------------------------------
Title: Secretary Title: Assistant Secretary
-------------------------- ------------------------------
-4-
<PAGE> 1
EXHIBIT 10(a)
MPW INDUSTRIAL SERVICES GROUP, INC.
1997 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to attract and retain
directors, officers and key employees and consultants for MPW Industrial
Services Group, Inc., an Ohio corporation (the "Corporation"), and its
Subsidiaries and to provide such persons with incentives and rewards for
superior performance.
2. DEFINITIONS. As used in this Plan,
"BOARD" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" means the committee described in Section 11(a) of this
Plan; PROVIDED, HOWEVER, that until the Corporation shall have a class of equity
securities registered pursuant to Section 12 of the Exchange Act of 1934, as
amended, the "Committee" shall mean the Board, as defined herein.
"COMMON SHARES" means (i) shares of the common stock of the
Corporation, no par value, and (ii) any security into which Common Shares may be
converted by reason of any transaction or event of the type referred to in
Section 6 of this Plan.
"DATE OF GRANT" means the date specified by the Committee on which a
grant of Option Rights shall become effective, which shall not be earlier than
the date on which the Committee takes action with respect thereto.
"INCENTIVE STOCK OPTIONS" means Option Rights that are intended to
qualify as "incentive stock options" under Section 422 of the Code or any
successor provision.
"LESS-THAN-80-PERCENT SUBSIDIARY" means a Subsidiary with respect to
which the Corporation directly or indirectly owns or controls less than 80
percent of the total combined voting or other decision-making power.
"MARKET VALUE PER SHARE" means, at any date, (i) the closing sales
price for the Common Shares on that date, if available, or, if there are no
sales on that date or if a closing sales price is not available, (ii) the
average of the "bid" and "asked" prices of the Common Shares on that date, in
each case as reported by the National Association of Securities Dealers
Automated Quotation System or any national securities exchange on which the
Common Shares are then traded, or, if (i) or (ii) are not available, the fair
market value of the Common Shares as determined by the Committee from time to
time.
<PAGE> 2
"NONEMPLOYEE DIRECTOR" means a member of the Board, who is not also
an employee of the Company or any of its subsidiaries on the date an Option
Right is granted to him or her pursuant to Section 4(b) of this Plan.
"OPTIONEE" means the person so designated in an agreement evidencing
an outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the exercise of
an Option Right.
"OPTION RIGHT" means the right to purchase Common Shares upon
exercise of an option granted pursuant to Section 4 of this Plan.
"PARTICIPANT" means a person who is selected by the Committee to
receive benefits under this Plan and who is at that time an officer, including
without limitation an officer who may also be a member of the Board, any other
key employee of, or a consultant to, the Corporation or any Subsidiary, or who
has agreed to commence serving in any such capacity or a Nonemployee Director
receiving an Option Right pursuant to Section 4(b) hereof.
"RELOAD OPTION RIGHTS" means additional Option Rights granted
automatically to an Optionee upon the exercise of Option Rights pursuant to
Section 4(f) of this Plan.
"RULE 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect), as in effect from time to
time.
"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Corporation has a direct
or indirect ownership or other equity interest; provided, however, for purposes
of determining whether any person may be a Participant for purposes of any grant
of Incentive Stock Options, "Subsidiary" means any corporation in which the
Corporation owns or controls directly or indirectly more than 50 percent of the
total combined voting power represented by all classes of stock issued by such
corporation at the time of such grant.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 6 of this Plan, the
number of Common Shares issued or transferred upon the exercise of Option Rights
shall not in the aggregate exceed 700,000 Common Shares, which may be Common
Shares of original issuance or Common Shares held in treasury or a combination
thereof. If any award terminates, expires or is canceled with respect to any
Common Shares, new awards may thereafter be granted covering such Common Shares.
(b) Upon the full or partial payment of any Option Price by the
transfer to the Corporation of Common Shares or upon satisfaction of tax
withholding provisions in connection with any such exercise or any other payment
made or benefit realized under this Plan by the transfer or relinquishment of
Common Shares, there shall be deemed to have been issued or transferred under
this plan only the net number of Common Shares actually issued or transferred by
the Corporation.
-2-
<PAGE> 3
4. OPTION RIGHTS.
(a) The Committee may from time to time authorize grants to
Participants of options to purchase Common Shares upon such terms and conditions
as the Committee may determine in accordance with the following provisions:
(i) Each grant shall specify the number of Common Shares to
which it pertains.
(ii) Each grant shall specify an Option Price per Common Share,
which in the case of Incentive Options, shall be equal to or greater than the
Market Value per Share on the Date of Grant and, in the case of other options,
shall not be less than eighty-five percent (85%) of the Market Value per Share
on the Date of Grant.
(iii) Each grant shall specify the form of consideration to be
paid in satisfaction of the Option Price and the manner of payment of such
consideration, which may include (A) cash in the form of currency or check or
other cash equivalent acceptable to the Corporation, (B) nonforfeitable,
unrestricted Common Shares, which are already owned by the Optionee and have a
value at the time of exercise that is equal to the Option Price, (C) any other
legal consideration, including, without limitation, promissory notes, that the
Committee may deem appropriate, including without limitation any form of
consideration authorized under Section 4(a)(iv) below, on such basis as the
Committee may determine in accordance with this Plan and (D) any combination of
the foregoing.
(iv) Any grant may provide for deferred payment of the Option
Price from the proceeds of sale through a bank or broker on the date of exercise
of some or all of the Common Shares to which the exercise relates.
(v) Any grant may provide for the automatic grant to the
Optionee of Reload Option Rights upon the exercise of Option Rights, including
Reload Option Rights, for Common Shares or any other noncash consideration
authorized under Sections 4(a)(iii) above.
(vi) Successive grants may be made to the same Participant
regardless of whether any Option Rights previously granted to such Participant
remain unexercised.
(vii) Each grant shall specify the period or periods of
continuous employment of the Optionee by the Corporation or any Subsidiary that
are necessary before the Option Rights or installments thereof shall become
exercisable, and any grant may provide for the earlier exercisability of such
rights in the event of retirement, death or disability of the Participant or a
change in control of the Corporation or other similar transaction or event.
(viii) Option Rights granted under this Plan may be (A) options
that are intended to qualify under particular provisions of the Code, including
without limitation Incentive Stock Options, (B) options that are not intended to
so qualify or (C) combinations of the foregoing.
-3-
<PAGE> 4
(ix) No Option Right granted under this Plan may be exercised
more than 10 years from the Date of Grant.
(x) Each grant shall be evidenced by an agreement, which shall
be executed on behalf of the Corporation by any officer thereof and delivered to
and accepted by the Optionee and shall contain such terms and provisions as the
Committee may determine consistent with this Plan.
(b) (i) Notwithstanding the above, each director who is a Nonemployee
Director is hereby granted, effective the close of business on the first
business day after (1) the date of the first annual meeting of shareholders
occurring after the date of this Plan at which he or she is elected a Director,
an option to purchase 2,000 Common Shares, and (2) the date of each subsequent
annual meeting of shareholders at which he or she is elected a Director, an
option to purchase 1,000 Common Shares.
(ii) All options granted pursuant to this Section 2(b)(i) hereof
shall be non-statutory options not intended to qualify under Section 422 of the
Code and shall be evidenced by an agreement, which shall be executed on behalf
of the Corporation by any officer thereof and delivered to and accepted by such
Nonemployee Director, and which agreement shall be in the form attached hereto
as Exhibit A.
(iii) The Option Price per Common Share shall be equal to 100% of
the Market Value per Share as of the date such option is granted, shall be
exercisable in full one year following the date of grant and shall expire ten
years from the date of grant, unless terminated earlier in accordance with the
stock option agreement.
5. TRANSFERABILITY.
(a) No Option Right or other derivative security (as that term is
used in Rule 16b-3) awarded under this Plan shall be transferable by a
Participant other than by will or the laws of descent and distribution or, other
than with respect to an Incentive Stock Option, a qualified domestic relations
order, as defined in the Code. Option Rights shall be exercisable during a
Participant's lifetime only by the Participant or, in the event of the
Participant's legal incapacity, by his guardian or legal representative acting
in a fiduciary capacity on behalf of the Participant under state law and court
supervision. Notwithstanding the foregoing, the Committee, in its sole
discretion, may provide for transferability of particular awards under this Plan
so long as such provisions will not disqualify the exemption for other awards
under Rule 16b-3.
(b) Any award made under this Plan may provide that all or any part
of the Common Shares that are to be issued or transferred by the Corporation
upon the exercise of Option Rights shall be subject to further restrictions upon
transfer.
6. ADJUSTMENTS. The Committee may make or provide for such adjustments
in the (a) number of Common Shares covered by outstanding Option Rights, (b)
prices per share applicable to such Option Rights, and (c) kind of shares
(including shares of another issuer) covered thereby, as the Committee in its
sole discretion may in good faith determine to be equitably required in order to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from
-4-
<PAGE> 5
(x) any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Corporation, (y) any merger,
consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of rights or
warrants to purchase securities or (z) any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding awards under this Plan such alternative consideration as it may in
good faith determine to be equitable under the circumstances and may require in
connection therewith the surrender of all awards so replaced. Moreover, the
Committee may on or after the Date of Grant provide in the agreement evidencing
any award under this Plan that the holder of the award may elect to receive an
equivalent award in respect of securities of the surviving entity of any merger,
consolidation or other transaction or event having a similar effect, or the
Committee may provide that the holder will automatically be entitled to receive
such an equivalent award. In any case, such substitution of securities shall not
require the consent of any person who is granted awards pursuant to this Plan.
7. FRACTIONAL SHARES. The Corporation shall not be required to issue
any fractional Common Shares pursuant to this Plan. The Committee may provide
for the elimination of fractions or for the settlement thereof in cash.
8. WITHHOLDING TAXES. To the extent that the Corporation is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Corporation for such withholding are insufficient,
it shall be a condition to the receipt of such payment or the realization of
such benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of such taxes
required to be withheld. At the discretion of the Committee, such arrangements
may include relinquishment of a portion of such benefit. The Corporation and any
Participant or such other person may also make similar arrangements with respect
to the payment of any taxes with respect to which withholding is not required.
9. PARTICIPATION BY EMPLOYEES OF A LESS-THAN-80-PERCENT SUBSIDIARY. As
a condition to the effectiveness of any grant or award to be made hereunder to a
Participant who is an employee of a Less-Than-80-Percent Subsidiary, regardless
whether such Participant is also employed by the Corporation or another
Subsidiary, the Committee may require the Less-Than-80-Percent Subsidiary to
agree to transfer to the Participant (as, if and when provided for under this
Plan and any applicable agreement entered into between the Participant and the
Less-Than-80-Percent Subsidiary pursuant to this Plan) the Common Shares that
would otherwise be delivered by the Corporation upon receipt by the
Less-Than-80-Percent Subsidiary of any consideration then otherwise payable by
the Participant to the Corporation. Any such award may be evidenced by an
agreement between the Participant and the Less-Than-80-Percent Subsidiary, in
lieu of the Corporation, on terms consistent with this Plan and approved by the
Committee and the Less-Than-80-Percent Subsidiary. All Common Shares so
delivered by or to a Less-Than-80-Percent Subsidiary will be treated as if they
had been delivered by or to the Corporation for purposes of Section 3 of this
Plan, and all references to the Corporation in this Plan shall be deemed to
refer to the Less-Than-80-Percent Subsidiary except with respect to the
definitions of the Board and the Committee and in other cases where the context
otherwise requires.
-5-
<PAGE> 6
10. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF
ABSENCE. Notwithstanding any other provision of this Plan to the contrary, in
the event of termination of employment by reason of death, disability, normal
retirement, early retirement with the consent of the Corporation, termination of
employment to enter public service with the consent of the Corporation or leave
of absence approved by the Corporation, or in the event of hardship or other
special circumstances, of a Participant who holds an Option Right that is not
immediately and fully exercisable, the Committee may in its sole discretion take
any action that it deems to be equitable under the circumstances or in the best
interests of the Corporation, including without limitation waiving or modifying
any limitation or requirement with respect to any award under this Plan.
11. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Compensation Committee of
the Board appointed from time to time by the Board of Directors of the
Corporation. The Committee shall be composed of not less than two members of the
Board, each of whom shall be a "disinterested person" within the meaning of Rule
16b-3 and an "outside director" within the meaning of Section 162(m) of the
Code. A majority of the Committee shall constitute a quorum, and the acts of the
members of the Committee who are present at any meeting thereof at which a
quorum is present, or acts unanimously approved by the members of the Committee
in writing, shall be the acts of the Committee.
(b) The interpretation and construction by the Committee of any
provision of this Plan or of any agreement, notification or document evidencing
the grant of Option Rights, and any determination by the Committee pursuant to
any provision of this Plan or any such agreement, notification or document,
shall be final and conclusive. No member of the Committee shall be liable for
any such action taken or determination made in good faith.
12. AMENDMENTS AND OTHER MATTERS.
(a) This Plan may be amended from time to time by the Committee, but
except as expressly authorized by this Plan no such amendment shall increase the
maximum number of shares specified in Section 3(a) of this Plan (except that
adjustments authorized by Section 6 of this Plan shall not be limited by this
provision), or cause Rule 16b-3 to become inapplicable to this Plan, without the
further approval of the shareholders of the Corporation, unless permitted by
Rule 16b-3. Without limiting the generality of the foregoing, the Committee may
amend this Plan to eliminate provisions which are no longer necessary as a
result of changes in tax or securities laws or regulations, or in the
interpretation thereof.
(b) With the concurrence of the affected Optionee, the Committee may
cancel any agreement evidencing Option Rights or any other award granted under
this Plan. In the event of such cancellation, the Committee may authorize the
granting of new Option Rights or other awards hereunder, which may or may not
cover the same number of Common Shares that had been the subject of the prior
award, at such Option Price and subject to such other terms, conditions and
discretions as would have been applicable under this Plan had the canceled
Option Rights or other awards been granted.
-6-
<PAGE> 7
(c) The Committee may, in its sole discretion, accelerate the time
at which any Option Right may be exercised. The Committee also may permit
Participants to elect to defer the issuance of Common Shares pursuant to such
rules, procedures or programs as it may establish for purposes of this Plan. The
Committee also may provide that deferred settlements include the payment or
crediting of interest on the deferral amounts, or the payment or crediting of
dividend equivalents where the deferral amounts are denominated in Common
Shares.
(d) This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Corporation or
any Subsidiary and shall not interfere in any way with any right that the
Corporation or any Subsidiary would otherwise have to terminate any
Participant's employment or other service at any time.
(e) To the extent that any provision of this Plan would prevent any
Option Right that was intended to qualify under particular provisions of the
Code from so qualifying, such provision of this Plan shall be null and void with
respect to such Option Right; provided, however, that such provision shall
remain in effect with respect to other Option Rights, and there shall be no
further effect on any provision of this Plan.
-7-
<PAGE> 1
EXHIBIT 10(b)
LEASE
-----
THIS LEASE ("LEASE"), is made this 11th day of February, 1998,
effective as of December 1, 1997, by and between MONTE R. BLACK AND SUSAN K.
BLACK, Ohio residents ("LANDLORD") and MPW INDUSTRIAL SERVICES, INC., an Ohio
corporation ("TENANT").
WITNESSETH:
-----------
1. DEMISED PREMISES: Landlord for and in consideration of the covenants
and agreements hereinafter set forth and the "RENT" (which term includes both
Base Rent and all Additional Rent) does hereby lease to Tenant not less than
100% of that certain approximately 45.88 acre tract of land (the legal
description of which is set forth on EXHIBIT "A-1" attached hereto (the "LAND"),
together with all improvements and fixtures located thereon including an
approximately 67,000 square foot office/industrial facility (collectively, the
"BUILDING") (all as more particularly described on the attached EXHIBIT "A-2"),
commonly known as 9711 Lancaster Road, SE, Village of Hebron, Licking County,
Ohio (the Building and the Land are sometimes hereinafter referred to
collectively as the "PREMISES").
2. TERM:
(a) INITIAL TERM. This Lease has an initial term of eighty-five (85)
months (or until such term shall sooner terminate as hereinafter provided) (the
"INITIAL TERM") commencing on December, 1, 1997 (the "COMMENCEMENT DATE") and
ending on December 31, 2004, unless sooner terminated in accordance herewith.
(b) RENEWAL TERM. Tenant may, at its sole option, choose to extend
the term of this Lease for two (2) additional periods of five (5) years each (a
"RENEWAL TERM") under such terms and conditions as Landlord and Tenant will
negotiate, based upon a fair market appraisal of the Premises. Tenant shall
provide Landlord with written notice of Tenant's intent to exercise this option
not later than one hundred eighty (180) days prior to the expiration of the
Initial Term or first Renewal Term, as applicable. As used in this Lease, "TERM"
means both the Initial Term and, if Tenant exercises its option(s), any Renewal
Term. As used in this Lease, "LEASE YEAR" means each consecutive twelve (12)
month period of the Term, starting on the Commencement Date of this Lease.
3. RENT:
(a) Tenant shall pay as "BASE RENT" for each Lease Year during the
Initial Term the sum of Six Hundred Thousand and No/100 Dollars ($600,000),
payable in advance, in equal monthly installments of Fifty Thousand and No/100
Dollars ($50,000). If Tenant exercises its option(s) to extend the Term, Tenant
shall pay as Base Rent during the Renewal Term(s) a rental based upon the
"market rate" for the Premises. The first and last monthly installments are due
and payable on the execution of this Lease and the remaining installments are
due and payable in advance on the first day of each and every month during the
Term, without offset or deduction, to Landlord at the address set forth in
PARAGRAPH 26 or at such other place as Landlord may hereafter designate in
writing. Rent checks are to be made payable to Landlord, or such other person,
firm or corporation as Landlord may designate in writing.
(b) All sums due and payable by Tenant under this Lease other than
Base Rent are "ADDITIONAL RENT", whether or not so called in the text of this
Lease. Any Additional Rent for which no time for payment is specified in this
Lease shall be due and payable within ten (10) days after demand is made
therefor.
(c) All Rent, whether Base Rent or Additional Rent, is due and
payable in full without demand, deduction or set-off and Tenant's obligation to
pay the same shall survive the expiration or other termination of this Lease.
Tenant's covenant to pay Rent is an independent covenant.
(d) Rent shall be equitably pro rated for any partial Lease Year or
calendar year, as the case may be, during the Term.
(e) For each Renewal Term, Tenant shall notify Landlord that Tenant
desires to exercise its option to extend the Term of this Lease for the next
ensuing five (5) year period, and to obtain an appraisal of the Premises to
determine the market rent for the Premises by delivering written notice to
Landlord not less than one hundred twenty (120) days prior to the beginning of
each Renewal Term. Tenant shall include in such notice the name of an MAI
appraiser selected by Tenant which has an office in Licking County, Ohio.
Landlord shall within thirty (30) days following receipt of such notice from
Tenant give written notice to Tenant setting forth the name of a second MAI
appraiser with an office in Licking County, Ohio. If Landlord fails to notify
Tenant of the name of an appraiser within the thirty (30) day period, then the
appraiser selected by Tenant shall determine the market rent and the decision of
said appraiser shall be binding upon the parties hereto. If Landlord has
selected an appraiser in accordance with the provisions of this Paragraph, then
the appraiser selected by Landlord and the appraiser selected by Tenant shall
meet and select a third MAI appraiser with an office in Licking County, Ohio.
The appraiser selected by Landlord and the appraiser selected by Tenant shall
each appraise the Premises for purposes of obtaining said market rent. The third
appraiser shall determine and notify Landlord and Tenant which of the two
appraisals made by Landlord's and Tenant's appraisers more closely reflects the
market rent of the Premises, and the decision of the third appraiser shall be
binding upon the parties hereto. Notwithstanding anything in this paragraph to
the contrary, in no event shall the Base Rent for any Renewal Term be less than
the Base Rent for the previous Renewal Term or the Initial Term, as applicable.
<PAGE> 2
-2-
4. USE OF PREMISES:
(a) PERMITTED USE. Tenant shall use and occupy the Premises solely
for operation of an industrial cleaning facility and related incidental uses
(including office and warehouse), in accordance with the standards of an
industrial facility in Union Township, Ohio, and for no other purpose
whatsoever.
(b) COMPLIANCE WITH LAWS; NUISANCE. Tenant shall not use or permit
the Premises or any part thereof to be used for any disorderly, unlawful or
extra hazardous purpose nor for any purpose other than hereinbefore specified.
Tenant shall not act in conflict with the statutes, laws, ordinances, codes,
rules and regulations applicable to Tenant, the Premises and/or the Building,
including without limitation the rules, regulations and requirements of any fire
rating organizations or rating bureaus with jurisdiction over the Premises
(collectively, the "LEGAL REQUIREMENTS"). Tenant shall be responsible at its own
cost for complying with the provisions of the Americans With Disabilities Act or
any similar federal or Ohio statute, law, ordinance, or code, as they may be
amended from time to time, and the rules and regulations which may be adopted
thereunder from time to time, as the same may be applicable to Tenant's own use
of the Premises or as may be necessary or appropriate as the result of any
Alteration (as defined in PARAGRAPH 8). Landlord's approval of any Alteration or
other act by Tenant is not a representation by Landlord that said Alteration or
act complies with applicable law, and Tenant shall remain solely responsible for
such compliance. Notwithstanding the expiration or other termination of this
Lease, Tenant shall defend, indemnify and hold Landlord and Landlord's
mortgagees harmless from and against any claim, demand, suit, action,
proceeding, damage, liability, loss, cost or expense (including, without
limitation, reasonable attorneys' fees), foreseen or unforeseen, arising from
any violation of this PARAGRAPH 4; the provisions of this sentence shall survive
the expiration or other termination of this Lease.
(c) HAZARDOUS SUBSTANCES. Tenant shall not (either with or without
negligence) cause or permit within or on the Premises the escape, disposal or
release of any biologically- or chemically-active or other hazardous or toxic
substances, materials or wastes (collectively, "HAZARDOUS SUBSTANCES"). Tenant
shall not allow the generation, storage or use of any Hazardous Substances
within the Premises in any manner other than normal quantities of cleaning
solvents controlled and stored in accordance with the Legal Requirements, unless
such Hazardous Substances are generated, stored or used in accordance with the
Legal Requirements and approved in advance in writing by Landlord. Any use of
Hazardous Substances shall only be in the ordinary course of Tenant's business
and in accordance with the highest standards prevailing in the industry for the
generation, storage and use of such Hazardous Substances. Without limitation,
Hazardous Substances shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 ET SEQ., any applicable state or local laws and the
regulations adopted under these acts. If Tenant uses Hazardous Substances within
the Premises and if Landlord or any lender or governmental agency requires
testing to ascertain whether or not there has been any release of Hazardous
Substances, then the reasonable costs thereof shall be reimbursed by Tenant to
Landlord upon demand as Additional Rent. In addition, Tenant shall execute
affidavits, representations and the like from time to time at Landlord's request
concerning Tenant's best knowledge and belief regarding the presence of
Hazardous Substances in the Premises. Further, Tenant shall indemnify and save
Landlord harmless from and against any and all clean-up costs, remedial or
restoration work, claims, judgments, damages, penalties, fines, costs,
liabilities or losses, including, without limitation, attorneys', consultants'
and experts' fees, which arise during or after the Term as a result of any
Hazardous Substances being generated, used or disposed of in or on, or brought
to, the Premises by Tenant or its employees, agents, contractors or invitees, or
as the result of an abatement, treatment or management required as the result of
any acts, negligence, repairs or alterations made by Tenant in the Premises. The
within covenants shall survive the expiration or earlier termination of this
Lease.
5. TAXES, FEES AND CHARGES: Tenant shall pay directly to the applicable
taxing authorities, at its sole cost and expense, and prior to delinquency, all
taxes, fees, assessments, and charges, general and special, foreseen or
unforeseen, affecting the Building, Premises or Tenant's other property or
operations thereon (the "TAXES"), including, without limitation, the payment for
any governmental licenses, permits, approvals, and authorizations attributable
to the Premises, the Building or any improvements thereto during the Term.
Tenant shall also pay any tax (other than Landlord's income tax) which may be
levied at any time on the Rent or other charges payable hereunder. Tenant shall
provide written proof of all such required payments to Landlord prior to the due
date thereof, and shall provide paid receipts therefor to Landlord upon request.
Tenant may contest any required payment of any of the Taxes by appropriate
proceedings duly instituted and diligently prosecuted at Tenant's expense,
provided that Tenant shall notify Landlord prior to the commencement of any such
contest. Landlord shall reasonably cooperate with Tenant (at Tenant's expense)
in connection with any such contest, and shall permit any such contest to be
prosecuted in Landlord's name if the same shall be required for the proper
resolution of the disputed matter. So long as any such contest is pending,
Tenant shall pay the disputed Taxes so that the Premises are not subjected to
loss or forfeiture as a result of nonpayment. Tenant shall indemnify, defend,
and hold Landlord harmless from and against any loss or forfeiture of the
Premises and any fines, penalties or other charges arising out of any such
contest or the resolution thereof or arising out of Tenant's failure to pay any
amounts required to be paid by Tenant hereunder.
6. INSURANCE:
(a) Tenant shall not do or permit anything to be done on the
Premises or in the Building or bring or keep anything therein which shall in any
way increase the rate of fire or other insurance on the Building, or on the
property kept therein or conflict with any insurance policy upon the Building or
any part thereof, or with any statutes, rules or regulations enacted or
established by the appropriate governmental authorities.
(b) Tenant shall carry such insurance as Landlord may reasonably
require from time to time, including (without limitation) personal property,
liability, plate glass, builder's risk (during any period when any construction
work is being done in the Premises), business interruption, and workers'
compensation insurance. Tenant shall also provide and maintain public
liability/general comprehensive insurance protecting and indemnifying Landlord
and Tenant against all claims for damages in amounts not less than $2,000,000
per occurrence, $2,000,000 bodily injury, and $1,000,000 property damage. All
insurance must be issued by companies and be in amounts satisfactory to Landlord
in its reasonable discretion, include waivers of subrogation, provide that it
may not be canceled except upon at least thirty (30) days written notice to
Landlord, and name Landlord, its asset and building manager(s), and any
mortgagee or ground lessor of the Building as an additional named insured or
loss payee, as appropriate. Evidence of such insurance must be delivered to
Landlord before Tenant may enter the Premises and must be provided not less
frequently than the first day of each Lease Year thereafter.
(c) At all times during the Term, Tenant shall, at Tenant's sole
cost and expense, maintain fire and extended coverage insurance covering the
Building to its full replacement value and with such co-insurance and deductible
provisions as may reasonably be deemed
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appropriate by Landlord. Subject to the rights of any Landlord's mortgagee under
PARAGRAPH 18, below, all insurance proceeds under such policy shall be payable
to Tenant solely for the purpose of completing the restoration required under
PARAGRAPH 12, and Landlord shall be entitled to receive any proceeds remaining
following the completion of such restoration; if not so restored such insurance
proceeds shall be paid to Landlord.
(d) Landlord shall maintain comprehensive general liability
insurance in amounts of at least $1,000,000 per occurrence, $500,000 property
damage, for losses occasioned by Landlord's and its representatives', agents'
and employees' negligence or willful misconduct.
(e) No indemnity shall be paid to the other party under this Lease
where the claim, damage, liability, loss or expense incurred was or was required
to be insured by such other party for whose benefit such indemnity would run. If
reasonably available, all insurance policies obtained by the parties pursuant to
this Lease shall contain provisions or have the effect of waiving any right of
subrogation by the insurer of one party against the other party or its insurer.
Each party hereby releases the other from any claims to the extent covered by
insurance obtained by the parties pursuant to this Lease.
7. UPKEEP OF PREMISES: Tenant shall keep the Premises and the fixtures
therein in good order and condition and will, at the expiration or other
termination of the Term, surrender and deliver up the same in like good order
and condition as the same now is or shall be at the commencement of the Term,
ordinary wear and tear and insured damage excepted. Subject to the provisions of
PARAGRAPHS 8 and 15 below, Landlord is not required to make any improvements,
replacements or repairs of any kind or character on the Premises during the
Term.
8. ALTERATIONS:
(a) Except as set forth in this PARAGRAPH 8 or in PARAGRAPH 12,
Tenant shall not make any alterations, installations, changes, replacements,
additions, or improvements (structural or otherwise) (each an "ALTERATION") in
or to the Premises or any part thereof without the consent of Landlord;
PROVIDED, HOWEVER, that Landlord shall not unreasonably withhold, condition or
delay its consent to any of the same which do not affect the structural,
mechanical, electrical, hydraulic, plumbing, heating, ventilating or air
conditioning systems serving either the Building or the Premises. All
Alterations in the Premises (whether installed with or without Landlord's
consent), shall at the election of Landlord remain in the Premises and be
surrendered with the Premises at the expiration of this Lease without
disturbance, molestation or injury; FURTHER PROVIDED, HOWEVER, that any and all
manufacturing items or other items of Tenant's personalty shall remain Tenant's
property and shall be removed by Tenant upon the expiration or earlier
termination of the Term. Should Landlord elect that Alterations made by Tenant
in the Premises be removed upon expiration or termination of this Lease, Tenant
shall cause same to be removed and to repair any damage caused thereby and
restore the Premises at Tenant's sole cost and expense and Tenant shall
reimburse Landlord for the cost of such removal together with any and all
damages which Landlord may suffer and sustain by reason of the failure of Tenant
to remove the same and to repair and restore as set forth above. Tenant shall
similarly restore any damage resulting from its removal of its personal
property.
(b) Landlord is delivering the Premises to Tenant in their "AS IS"
condition, without any representation or warranty of any kind, express or
implied, as to their condition and without any obligation to perform any work or
to pay for any third party or Tenant to perform any work. By its execution of
this Lease, Tenant acknowledges that it has inspected Building and the Land and
that they are in condition satisfactory to Tenant.
(c) All of Tenant's work shall be done by contractors acceptable to
Landlord in its reasonable discretion. Alterations by Tenant, including any
initial build-out, shall be coordinated with any work being performed by
Landlord. As further conditions to Landlord's approval of any proposed
Alterations or additions by Tenant which are to be made by a contractor, Tenant
shall cause the contractor(s) and subcontractor(s) to carry workmen's
compensation insurance in statutory amounts, builder's risk insurance and
comprehensive public liability insurance with limits as approved by Landlord,
and Tenant shall deliver to Landlord certificates of all such insurance.
Tenant's work shall be performed in a first-class and lien-free manner. Tenant
shall not be Landlord's agent for purposes of this work and Tenant shall be
solely responsible for any mechanics' or materialmen's lien arising therefrom;
Tenant shall pay, bond or otherwise release of record any such lien within ten
(10) days after receiving notice of its existence.
(d) Tenant shall promptly pay for any work done or material
furnished in or about the Premises and shall not permit or suffer any lien to
attach to the Premises, and Tenant shall indemnify and save Landlord harmless
from and against any loss, liability, cost, or expense which may be incurred by
Landlord with respect to any such lien or claim of lien. Tenant shall promptly
cause any such liens which have arisen by reason of any work claimed to have
been undertaken by or through Tenant to be released by payment, bond or
otherwise within thirty (30) days after request by Landlord. Tenant shall have
no authority or power, express or implied, to create or cause any lien, charge,
or encumbrance of any kind against the Premises or the Building. Tenant shall
notify all of its contractors and materialmen in writing that any liens relating
to any work ordered by Tenant shall attach to Tenant's leasehold estate in the
Premises and shall not encumber Landlord's interest in the Premises or the
Building.
9. SUBLETTING AND ASSIGNMENT: Tenant shall not sublet the Premises or
any part thereof or transfer possession or occupancy thereof to any person, firm
or corporation, or transfer or assign this Lease, nor will any assignment or
subletting hereof be effected by operation of law or otherwise, without
Landlord's prior consent, such consent not to be unreasonably withheld, delayed
or conditioned. A sale or other conveyance of any sort of all or substantially
all of the assets of Tenant relating to the Premises, or of a sufficient amount
of the stock or other ownership interests in Tenant to constitute a change in
control, or of any general partnership interest in Tenant if Tenant is a
partnership, whether directly or indirectly, constitutes an assignment under
this Paragraph. If Tenant desires to sublet the Premises or if Tenant desires to
transfer or assign this Lease, Tenant shall give Landlord thirty (30) days
written notice of Tenant's intention so to do. In no event whatsoever, and
without limiting Landlord's right to reasonably reject any proposed sublease or
assignment, may this Lease be assigned in part or the Premises subleased in
part, without Landlord's prior written reasonable consent.
10. TENANT'S COVENANTS: Tenant further agrees: that no sign,
advertisement or notice shall be inscribed, painted or affixed on any part of
the outside or inside the Premises or Building except as may be expressly
permitted by this Lease, and then only in such size, color and style as Landlord
may reasonably approve; that Landlord shall have the right to prescribe the
weight and method of installation and position of safes or other heavy fixtures
or equipment and Tenant shall not install in the Premises any fixtures,
equipment or machinery that will place a load upon any floor exceeding the floor
load per square foot area which such floor was designed to carry; and that all
damages done to the Building by taking in or removing a safe or any other
article of Tenant's equipment, or due to Tenant's being in the Premises, shall
be repaired at the expense of Tenant.
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11. ACCESS: Tenant further agrees that it will allow Landlord, its
agent or employees, or any mortgagee to enter the Premises at all reasonable
times: to examine, inspect or to protect the same or prevent damage or injury to
the same, or to make such alterations and repairs to the Premises or other
premises as Landlord may deem necessary; to exhibit the same to prospective
tenants during the last nine (9) months of the Term or following the
commencement of any action to evict Tenant, even if the Term has not been
terminated; and to exhibit the same to prospective and actual mortgagees,
purchasers and brokers at any time during the Term.
12. DAMAGE:
(a) In the event of damage to or destruction of the Premises, the
Building, or Tenant's other Alterations, or any portion thereof, during the Term
by fire, explosion or other casualty ("Damage"), this Lease will not terminate
unless Landlord determines that it will take Landlord more than ninety (90) days
to repair and restore the Premises to the same condition they are in on the date
hereof, in which event Landlord may terminate this Lease by notice to Tenant.
(b) Unless this Lease is terminated pursuant to PARAGRAPH 12(A),
and except as expressly provided to the contrary in this Lease, in the event of
any Damage to the Premises: (i) this Lease shall remain in full force and effect
and to the extent possible, Tenant shall remain in possession of the Premises,
and (ii) whether or not any insurance proceeds are available or adequate for
such purposes and regardless of the dollar amount of such damage or loss, at
Tenant's own sole cost and expense, Tenant shall repair, refixture, restock and
otherwise restore the Premises to the same condition they were in before such
fire or other casualty. Due allowance, however, shall be given for a reasonable
time required for adjustment and settlement of insurance claims and for such
other delays as may result from government restrictions and controls on
construction, if any, and for strikes, national emergencies, and other
conditions beyond the control of the parties. (c) Any restoration required to be
performed by Tenant under this PARAGRAPH 12 shall be commenced by Tenant
promptly after such damage or destruction, and shall be diligently and
continuously pursued to completion and shall be completed by Tenant in a good
and workmanlike manner and in accordance with all Legal Requirements.
(d) Tenant shall have no right to terminate this Lease or to have
the rent and other charges due hereunder abated despite the occurrence of Damage
to the Premises, the Building or Tenant's other Alterations, even if such Damage
prevents the conduct of Tenant's business on the Premises. No compensation,
claim, or diminution of Rent will be allowed or paid by Landlord by reason of
inconvenience, annoyance, or injury to business arising from any such Damage or
the necessity of repairing the Premises or the Building, however the necessity
may occur.
13. PERSONAL PROPERTY: All personal property of Tenant at the Premises
is at the sole risk of Tenant. Landlord is not liable for any accident or
damages to property of Tenant resulting from the use or operation of elevators
or of the heating, cooling, electrical, mechanical, hydraulic, plumbing or other
Building systems or components. Landlord is not, in any event, liable for
damages to property resulting from water, steam, or other causes. Tenant hereby
expressly releases Landlord from any liability incurred or claimed by reason of
damage to Tenant's property. Landlord is not liable in damages, nor is this
Lease affected, for conditions arising or resulting from construction of
contiguous premises. The foregoing does not exculpate Landlord from its gross
negligence or willful misconduct.
14. LIABILITY FOR TENANT'S OPERATIONS; INDEMNIFICATION:
(a) Landlord assumes no liability or responsibility whatsoever with
respect to the conduct and operation of the business to be conducted in the
Premises. Landlord shall not be liable for any accident or injury to any person
or persons or property in or about the Premises which are caused by the conduct
and operation of said business or by virtue of equipment or property of Tenant
in the Premises. Tenant agrees to defend, indemnify and hold Landlord and
Landlord's mortgagees harmless from and against all such claims (including,
without limitation, reasonable attorneys' fees). The foregoing does not
exculpate Landlord from its gross negligence or willful misconduct.
(b) Tenant retains responsibility as operator of the Premises for
payment of all costs of the Premises, and shall defend, indemnify and hold
Landlord harmless therefrom, and from all costs incurred by Landlord in the
defense of any claims relating to the Premises brought against it or any action
relating to the Premises in which it is named as a party, including reasonable
attorneys' fees, costs of investigation, court costs and other such expenses.
This indemnification obligation shall survive termination of this Lease, and is
subject to the waiver of subrogation provisions of PARAGRAPH 6(e); PROVIDED,
HOWEVER, notwithstanding anything contained herein to the contrary, Landlord
shall indemnify Tenant and hold Tenant and its affiliates and their respective
representatives, agents and employees harmless in connection with damage or loss
sustained by reason of the dishonesty, willful misconduct or negligence of
Landlord and its representatives, agents or employees.
15. SERVICES AND UTILITIES:
(a) Landlord shall provide the normal utility service connections
into the Premises. Tenant shall pay the cost of all utility service, including,
without limitation, initial connection charges, all charges for gas, water and
electricity used on the Premises, and for all plumbing, interior
cleaning/janitorial, and for all electric light lamps or tubes. Tenant shall pay
all costs caused by Tenant introducing excess pollutants into the sanitary sewer
system.
(b) Any failure by Landlord to furnish any services or utilities to
be provided by Landlord or otherwise under this Lease as the result of any act
of God, FORCE MAJEURE or any cause beyond the reasonable control of Landlord
will not render Landlord liable in any respect for damages to either person or
property, nor be construed as an eviction of Tenant, nor work an abatement of
Rent, nor relieve Tenant from Tenant's obligations hereunder.
16. BANKRUPTCY: If Tenant makes an assignment of its assets for the
benefit of creditors, or if Tenant files a voluntary petition in bankruptcy, or
if an involuntary petition in bankruptcy or for receivership is instituted
against Tenant and the same is not dismissed within ninety (90) days of the
filing thereof, or if Tenant is adjudged bankrupt, then and in any of the
foregoing events, to the extent permitted by law, this Lease will immediately
cease and terminate at the option of Landlord with the same force and effect as
though the date of said event was the day herein fixed for expiration of the
Term.
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17. DEFAULTS & REMEDIES: If Tenant fails to pay the Rent, or any
installment thereof, within five (5) days after the same becomes due and
payable, or if Tenant violates or fails or neglects to keep and perform any of
the covenants, conditions, and agreements herein contained on the part of Tenant
to be kept and performed within thirty (30) days after receipt of written notice
of such failure or neglect, or if the Premises becomes vacant or deserted, then,
and in each and every such event, at the option of Landlord, Tenant's right of
possession will thereupon cease and terminate, and to the extent permitted by
law Landlord will be entitled to the possession of the Premises and to re-enter
the same without demand of Rent or demand of possession and may forthwith
proceed to recover possession of the Premises by process of law, ANY NOTICE TO
QUIT OR OF INTENTION TO RE-ENTER THE SAME BEING HEREBY EXPRESSLY WAIVED BY
TENANT. In the event of such re-entry by process of law or otherwise, Tenant
nevertheless agrees to remain answerable for any and all damage, deficiency or
loss of Rent which Landlord may sustain by such re-entry, including reasonable
attorneys' fees and court costs; and in such case, Landlord reserves full power,
which is hereby acceded to by Tenant, to relet the Premises for the benefit of
Tenant, in liquidation and discharge, in whole or in part, as the case may be,
of the liability of Tenant under the terms and provision of this Lease. In
addition to the foregoing remedies, Landlord will also have the following
remedies to the extent permitted by law and all other remedies afforded to it at
law or in equity, all of which shall be cumulative: to terminate this Lease; to
declare due and payable all Rent for the unexpired Term as and when the same
becomes due and payable or to defer any suit until after the Term without
thereby prejudicing its rights; to accelerate the Rent for the remainder of the
Term and declare it all immediately due and payable [with a present value
discount two (2) whole percentage points below the prime rate published in The
Wall Street Journal on the date Landlord elects said remedy]; and to bring an
action for specific performance, injunction, or other equitable relief to
prevent any threatened or impending default or to end any existing default. In
addition, Landlord may perform any obligation which Tenant has failed to perform
after the expiration of any applicable notice and/or cure period (except in an
emergency, when no notice or cure period will be necessary or afforded), all at
the cost of Tenant as Additional Rent payable upon demand. Tenant shall also pay
all expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord following a default, whether or not suit is instituted; the
same shall be Additional Rent payable upon demand. In determining the Rent due
for the balance of the Term, all Additional Rent shall be determined by
projecting into the future the Additional Rent payable on the date of default
increasing by a compounding five percent (5%) per Lease Year. No waiver of any
breach of any covenant, condition, or agreement herein contained shall operate
as a waiver of the covenant, condition or agreement itself, or of any subsequent
breach thereof. No provision of this Lease shall be deemed to have been waived
by Landlord unless such waiver shall be in writing signed by Landlord. No
payment by Tenant or receipt by Landlord of a lesser amount than the Rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated Rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or pursue any other remedy
provided in this Lease. Landlord shall have a lien for the payment of the Rent
upon all of the goods, wares, chattels, fixtures, furniture and other personal
property of Tenant which may be in or upon the Premises, Tenant hereby
specifically waiving any and all exemptions allowed by law; such lien may be
enforced on the nonpayment of any installment of Rent by the taking and selling
of such property in the same manner as in the case of chattel mortgages on
default thereunder; said sale is to made upon ten (10) days notice served upon
Tenant by posting upon the Premises or such lien may be enforced in any other
lawful manner at the option of Landlord.
18. RIGHTS OF LENDERS, GROUND LESSORS AND PURCHASERS: This Lease is
subject and subordinate to all ground or underlying leases (hereinafter
collectively referred to as "GROUND LEASES") and to all of the terms and
provisions and liens of all mortgages and/or deeds of trust (hereinafter
collectively referred to as "MORTGAGES") which may now or hereafter affect this
Lease or the Building, and to all renewals, modifications, consolidations,
replacements, amendments and extensions thereof. This clause is self-operative,
and no lessor or mortgagee (as used in this Lease, "MORTGAGEE" includes any
mortgagee under a mortgage, any beneficiary or trustee under a deed of trust,
and any lender or other secured party under a deed to secure debt or other
instrument similar to any of the foregoing) may require any instrument of
subordination. In confirmation of such subordination, Tenant shall execute
promptly any certificate that Landlord may request. Tenant hereby constitutes
and appoints Landlord Tenant's attorney-in-fact to execute any such certificate
or certificates for and on behalf of Tenant. Notwithstanding the foregoing, a
ground lessor or mortgagee may recognize this Lease and, in the event of the
termination of any ground lease or any foreclosure or similar sale or deed in
lieu thereof under such mortgage, this Lease will continue in full force and
effect at the option of the ground lessor or mortgagee (or the purchaser at any
such foreclosure sale). Tenant will, at the written request of the ground lessor
or mortgagee (or the purchaser at any such foreclosure sale), execute,
acknowledge and deliver any instrument that has for its purpose and effect the
subordination of such ground lease or mortgage to this Lease. In any case, such
ground lessor, mortgagee, landlord or successor shall not be bound by any
prepayment on the part of Tenant of any Rent for more than one month in advance,
so that Rent shall be payable under this Lease in accordance with its terms as
if such prepayment had not been made; nor shall any such ground lessor,
mortgagee, landlord or successor be liable for any default under this Lease by
any predecessor Landlord or subject to any counterclaim, set-off or defense as a
result of any such default; and provided, further, such ground lessor,
mortgagee, landlord or successor shall not be bound by this Lease or any
amendment or modification of this Lease unless Landlord's ground lessor or
mortgagee, as may be applicable, had approved the same in writing. At any time
and from time to time, upon the request and at the sole option of any successor
to Landlord's interest, Tenant shall attorn to any successor to Landlord's
interest, whether such successor acquires its interest by voluntary conveyance,
foreclosure, deed in lieu of foreclosure, termination or expiration of a ground
lease, or any other method, and in that event this Lease shall continue as a
direct lease between Tenant and such landlord or its successor and the prior
Landlord shall be released from all obligations and liability under this Lease
arising after the date of transfer. The terms of this Lease are subject to
approval by the Landlord's ground lessor(s) and lender(s), and such approval is
a condition precedent to Landlord's obligations hereunder. Tenant shall furnish
copies of any default or similar notices delivered by Tenant to Landlord
hereunder at the same time to each ground lessor or mortgagee, now or at anytime
and from time to time hereafter, and no such notice shall be effective unless
and until a copy of it is sent to each such ground lessor or mortgagee, provided
that Tenant has been afforded written notice of the name and address of such
party. Each such ground lessor or mortgagee may cure any default by Landlord
within the same time period afforded Landlord to cure any such default, plus
such additional period of time thereafter as may be reasonably necessary for
such ground lessor or mortgagee to cure such default.
19. CONDEMNATION: If the Premises or any part thereof is taken or
condemned for public or quasi-public use or purpose by any competent authority,
or conveyed in lieu of being taken or condemned, Tenant will have no claim
against Landlord and will not have any claim or right to any portion of the
amount that may be awarded to Landlord as damages or paid as a result thereof.
All right of Tenant to damages therefor, if any, are hereby assigned by Tenant
to Landlord. Upon such condemnation or taking, or conveyance in lieu thereof,
the Term shall terminate from the date of such governmental taking or
condemnation, or conveyance in lieu thereof, and Tenant will have no claim
against Landlord for the value of any unexpired Term. Nothing in this Paragraph
limits or affects Tenant's right to seek any separate award from the condemning
authority as long as Tenant does not thereby reduce, delay or in any other way
affect Landlord's claim or award.
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20. SUCCESSORS: All rights, remedies and liabilities herein given to or
imposed upon either of the parties hereto extend to their respective heirs,
executors, administrators, successors and permitted assigns.
21. TENANT HOLDOVER: If Tenant continues to remain in the Premises
after the termination or expiration of the Term, then Tenant will become a
tenant by the month at 125% of the Base Rent per month payable for the last
month before the expiration or termination of the Term plus all Additional Rent
that may be incurred during any such holdover, but in no event less than the
then market rent for the Premises. Holdover Rent will commence with the first
day following the end of the Term. During any holdover, each party must give the
other at least thirty (30) days written notice to quit the Premises, except in
the event of any default by Tenant, in which event Tenant will not be entitled
to any notice to quit, the usual thirty (30) days' notice to quit being hereby
expressly waived; PROVIDED, HOWEVER, that if Tenant holds over after the
expiration of the Term hereby created, and if Landlord desires to regain
possession of the Premises promptly at the expiration of the Term, then at any
time prior to Landlord's acceptance of Rent from Tenant as a monthly tenant
hereunder, Landlord, at its option, may forthwith re-enter and take possession
of the Premises without process, or by any legal process in force. Tenant shall
not use FORCE MAJEURE as an excuse for any holding over.
22. POSSESSION: Landlord shall give possession of the Premises to
Tenant on the Commencement Date. If Landlord is unable to give possession of the
Premises on the Commencement Date because any portion of the Premises are
located in a Building being constructed that has not been sufficiently completed
to make the Premises ready for occupancy, or because a certificate of occupancy
has not been procured, or if Landlord is unable to give possession of the
Premises on the Commencement Date because of the holding over or retention of
possession by any previous tenant, occupant or owner, or if repairs,
improvements or decorations of the Premises or of the Building are not
completed, or for any other reason, Landlord will not be subject to any
liability for the failure to give possession on the Commencement Date. No such
failure to give possession on the Commencement Date will affect in any other
respect the validity of this Lease or the obligations of Tenant hereunder, nor
will the same be construed in any way to extend the Term. If Landlord permits
Tenant to enter into the possession of the Premises or a portion of the Premises
prior to the Commencement Date, such occupancy shall be deemed to be under all
terms, covenants, conditions and provisions of this Lease.
23. JOINT AND SEVERAL LIABILITY: If Tenant consists of more than one
individuals and/or entities, then the liability of each of them for Tenant's
obligations under this Lease shall be joint and several.
24. PRONOUNS: Feminine, masculine or neuter pronouns shall be
substituted for each other, and the plural shall be substituted for the singular
number and vice versa in any place in which the context may require such
substitution.
25. LATE PAYMENT: If Tenant fails to pay any Rent on or before the
fifth (5th) day after such payment becomes due and payable, Tenant shall pay to
Landlord a late charge of five percent (5%) of the amount of such overdue
payment. In addition, any Rent not paid when due will bear interest at the
lesser of eighteen percent (18%) per annum or the maximum rate allowed by law
until paid. Acceptance of the foregoing sums shall not constitute a waiver of
the default. Upon Landlord's receipt of any check from Tenant which is
dishonored for payment, Landlord may require Tenant to make all future payments
due to Landlord hereunder by cash, certified or cashier's check.
26. NOTICES: All notices required or desired to be given hereunder by
either party to the other shall be given by hand, by overnight courier or by
certified or registered mail. Notices shall be effective upon receipt (refusal
to accept delivery or the inability to make delivery due to an incorrect or
outdated address being provided by the intended recipient shall constitute
receipt). Notices to the respective parties must be addressed as follows:
If to Landlord - Monte R. Black
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
If to Tenant - MPW Industrial Services, Inc.
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
Attn: Daniel P. Buettin
Either party may, by like written notice, designate a new address or addressee
to which notices must be directed. Tenant shall provide a copy of any notice
given to Landlord to any mortgagee or ground lessor of whom Tenant has notice.
Notices may be given by authorized agents or attorneys on behalf of a party.
27. ESTOPPEL CERTIFICATES: Within ten (10) days after request therefor
by Landlord or any ground lessor or mortgagee of the Building, Tenant shall
execute and deliver estoppel certificates certifying, among other things: the
text of this Lease and any amendments thereto; whether this Lease has been
amended and, if so, the date of each such amendment; whether this Lease is in
full force and effect and, if not, the reason therefor; whether any default or
any situation which could be a default after the giving of notice or the
expiration of any cure period (or both) exists under this Lease on the part of
Landlord or Tenant and, if so, specifying the default or potential default;
whether Tenant has taken possession of the Premises; whether the Premises have
been completed in accordance with the terms of this Lease and all bills therefor
paid and, if not, what remains to be done or paid; the Commencement Date and the
expiration date of the Term; whether Tenant has any renewal options, expansion
options, or rights to purchase and, if so, identifying the conditions and
periods when they may be exercised; the date Rent commenced to accrue and the
date to which Rent has been paid; whether any security deposit has been posted;
whether Tenant has any knowledge or any environmental problem affecting the
Premises or the Building; and such other matters as may be reasonably requested.
28. NO PERSONAL LIABILITY: Notwithstanding any provision of this Lease
to the contrary or any general rule of law, in no event whatsoever shall
Landlord or any of its shareholders, partners, directors, officers, employees,
agents or other principals have any personal liability whatsoever with respect
to this Lease, and no such personal liability shall be sought, obtained or
enforced. Any liability of Landlord under this Lease may be enforced solely
against Landlord's equity interest in the Land and Building; no other properties
or assets of Landlord are subject to this Lease or Landlord's liabilities
hereunder.
<PAGE> 7
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29. BROKERS: Each party represents and warrants to the other that it
has not engaged or used any broker or finder in connection with this Lease. Each
party shall defend, indemnify and hold the other party harmless from and against
any breach by the indemnifying party of the representation and warranty set
forth in the first sentence of this Paragraph. Tenant shall defend, indemnify
and hold Landlord's ground lessors and mortgagees harmless from and against any
breach by Tenant of the representation and warranty set forth in the first
sentence of this Paragraph. No broker is a third party beneficiary of this
Lease.
30. COMPLETE AGREEMENT; NO ORAL MODIFICATIONS: This Lease represents
the complete and integrated agreement of the parties with respect to the
Premises and, except as set forth herein, there are no other agreements,
covenants, representations or warranties (express or implied) between the
parties. Nothing in this Lease shall be deemed or construed to create a
partnership or joint venture or to create any relationship other than landlord
and tenant. This Lease may not be amended except by a written document signed by
the party to be bound thereby.
31. GOVERNING LAW AND RULES OF INTERPRETATION: This Lease is governed
by the laws of the State of Ohio without regard to conflicts of laws. Without
limiting a party's right to bring any action in any other jurisdiction or forum,
each party submits itself to the jurisdiction of the federal and local courts
sitting in the State of Ohio and to venue therein. It is the intent of the
parties that this Lease will be enforceable to the fullest extent permitted by
law. If any provision of this Lease is capable of two or more interpretations or
can be reformed so as to comply with applicable law while giving effect to the
intent of such provision, then such provision shall be interpreted in the way
most likely to be in compliance with applicable law. Although the printed
provisions of this Lease were drawn by Landlord, this Lease shall not be
construed either for or against Landlord or Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
LANDLORD:
WITNESS:
/s/ Daniel P. Buettin /s/ Monte R. Black
- ----------------------- -------------------------------
Monte R. Black
WITNESS:
/s/ Brad A. Martyn
- -----------------------
WITNESS:
/s/ Daniel P. Buettin /s/ Susan K. Black
- ----------------------- -------------------------------
Susan K. Black
WITNESS:
/s/ Brad A. Martyn
- ------------------------
TENANT:
WITNESS: MPW INDUSTRIAL SERVICES, INC.
/s/ Rodd Lape
- -----------------------
By: /s/ Daniel P. Buettin
----------------------------
WITNESS: Name: Daniel P. Buettin
--------------------------
/s/ Matt W. Hughes Title: Vice President, CFO and
- ----------------------- Secretary
-------------------------
<PAGE> 8
-8-
ACKNOWLEDGMENT
--------------
STATE OF Ohio )
-----------------) SS.
COUNTY OF Franklin )
-----------------
Before me, a Notary Public in and for said County, personally
appeared the above-named Monte R. Black and Susan K. Black ("Landlord"), who
acknowledged that they did sign the foregoing instrument on behalf of Landlord,
and that the same is their free act and deed on Landlord's behalf and the free
act and deed of Landlord.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Columbus, Ohio this 11th day of February, 1998.
[Notarial Seal] /s/ Dawn M. Black
---------------------------------
Notary Public
My commission expires:
September 26, 2001
ACKNOWLEDGMENT
--------------
STATE OF Ohio )
-----------------) SS.
COUNTY OF Franklin )
-----------------
Before me, a Notary Public in and for said County, personally
appeared the above-named Daniel P. Buettin, Vice President, Chief Financial
Officer and Secretary of MPW Industrial Services, Inc. ("Tenant"), who
acknowledged that he did sign the foregoing instrument on behalf of Tenant as
such officer, and that the same is his free act and deed on Tenant's behalf and
the free act and deed of Tenant.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Columbus, Ohio this 11th day of February, 1998.
[Notarial Seal] /s/ Dawn M. Black
---------------------------------
Notary Public
My commission expires:
September 26, 2001
<PAGE> 9
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
-----------------------------
[ATTACHED]
<PAGE> 1
EXHIBIT 10(c)
LEASE
-----
THIS LEASE ("LEASE"), is made this 11th day of February, 1998,
effective as of December 1, 1997, by and between MONTE R. BLACK AND SUSAN K.
BLACK, Ohio residents ("LANDLORD") and MPW INDUSTRIAL SERVICES, INC., an Ohio
corporation ("TENANT").
WITNESSETH:
-----------
1. DEMISED PREMISES: Landlord for and in consideration of the covenants
and agreements hereinafter set forth and the "RENT" (which term includes both
Base Rent and all Additional Rent) does hereby lease to Tenant not less than
100% of that certain approximately .5903 acre tract of land (the legal
description of which is set forth on EXHIBIT "A-1" attached hereto (the "LAND"),
together with all improvements and fixtures located thereon including an
approximately 14,040 square foot industrial facility (collectively, the
"BUILDING") (all as more particularly described on the attached EXHIBIT "A-2"),
commonly known as 150 S. 28th Street, Newark, Licking County, Ohio (the Building
and the Land are sometimes hereinafter referred to collectively as the
"PREMISES").
2. TERM:
(a) INITIAL TERM. This Lease has an initial term of eighty-five (85)
months (or until such term shall sooner terminate as hereinafter provided) (the
"INITIAL TERM") commencing on December 1, 1997 (the "COMMENCEMENT DATE") and
ending on December 31, 2004, unless sooner terminated in accordance herewith.
(b) RENEWAL TERM. Tenant may, at its sole option, choose to extend
the term of this Lease for two (2) additional periods of five (5) years each (a
"RENEWAL TERM") under such terms and conditions as Landlord and Tenant will
negotiate, based upon a fair market appraisal of the Premises. Tenant shall
provide Landlord with written notice of Tenant's intent to exercise this option
not later than one hundred eighty (180) days prior to the expiration of the
Initial Term or first Renewal Term, as applicable. As used in this Lease, "TERM"
means both the Initial Term and, if Tenant exercises its option(s), any Renewal
Term. As used in this Lease, "LEASE YEAR" means each consecutive twelve (12)
month period of the Term, starting on the Commencement Date of this Lease.
3. RENT:
(a) Tenant shall pay as "BASE RENT" for each Lease Year during the
Initial Term the sum of Sixty-Six Thousand and No/100 Dollars ($66,000.00),
payable in advance, in equal monthly installments of Five Thousand Five Hundred
and No/100 Dollars ($5,500.00). If Tenant exercises its option(s) to extend the
Term, Tenant shall pay as Base Rent during the Renewal Term(s) a rental based
upon the "market rate" for the Premises. The first and last monthly installments
are due and payable on the execution of this Lease and the remaining
installments are due and payable in advance on the first day of each and every
month during the Term, without offset or deduction, to Landlord at the address
set forth in PARAGRAPH 26 or at such other place as Landlord may hereafter
designate in writing. Rent checks are to be made payable to Landlord, or such
other person, firm or corporation as Landlord may designate in writing.
(b) All sums due and payable by Tenant under this Lease other than
Base Rent are "ADDITIONAL RENT", whether or not so called in the text of this
Lease. Any Additional Rent for which no time for payment is specified in this
Lease shall be due and payable within ten (10) days after demand is made
therefor.
(c) All Rent, whether Base Rent or Additional Rent, is due and
payable in full without demand, deduction or set-off and Tenant's obligation to
pay the same shall survive the expiration or other termination of this Lease.
Tenant's covenant to pay Rent is an independent covenant.
(d) Rent shall be equitably pro rated for any partial Lease Year or
calendar year, as the case may be, during the Term.
(e) For each Renewal Term, Tenant shall notify Landlord that Tenant
desires to exercise its option to extend the Term of this Lease for the next
ensuing five (5) year period, and to obtain an appraisal of the Premises to
determine the market rent for the Premises by delivering written notice to
Landlord not less than one hundred twenty (120) days prior to the beginning of
each Renewal Term. Tenant shall include in such notice the name of an MAI
appraiser selected by Tenant which has an office in Licking County, Ohio.
Landlord shall within thirty (30) days following receipt of such notice from
Tenant give written notice to Tenant setting forth the name of a second MAI
appraiser with an office in Licking County, Ohio. If Landlord fails to notify
Tenant of the name of an appraiser within the thirty (30) day period, then the
appraiser selected by Tenant shall determine the market rent and the decision of
said appraiser shall be binding upon the parties hereto. If Landlord has
selected an appraiser in accordance with the provisions of this Paragraph, then
the appraiser selected by Landlord and the appraiser selected by Tenant shall
meet and select a third MAI appraiser with an office in Licking County, Ohio.
The appraiser selected by Landlord and the appraiser selected by Tenant shall
each appraise the Premises for purposes of obtaining said market rent. The third
appraiser shall determine and notify Landlord and Tenant which of the two
appraisals made by Landlord's and Tenant's appraisers more closely reflects the
market rent of the Premises, and the decision of the third appraiser shall be
binding upon the parties hereto. Notwithstanding anything in this paragraph to
the contrary, in no event shall the Base Rent for any Renewal Term be less than
the Base Rent for the previous Renewal Term or the Initial Term, as applicable.
<PAGE> 2
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4. USE OF PREMISES:
(a) PERMITTED USE. Tenant shall use and occupy the Premises solely
for operation of an industrial water facility and related incidental uses
(INCLUDING OFFICE AND WAREHOUSE), in accordance with the standards of an
industrial facility in Union Township, Ohio, and for no other purpose
whatsoever.
(b) COMPLIANCE WITH LAWS; NUISANCE. Tenant shall not use or permit
the Premises or any part thereof to be used for any disorderly, unlawful or
extra hazardous purpose nor for any purpose other than hereinbefore specified.
Tenant shall not act in conflict with the statutes, laws, ordinances, codes,
rules and regulations applicable to Tenant, the Premises and/or the Building,
including without limitation the rules, regulations and requirements of any fire
rating organizations or rating bureaus with jurisdiction over the Premises
(collectively, the "LEGAL REQUIREMENTS"). Tenant shall be responsible at its own
cost for complying with the provisions of the Americans With Disabilities Act or
any similar federal or Ohio statute, law, ordinance, or code, as they may be
amended from time to time, and the rules and regulations which may be adopted
thereunder from time to time, as the same may be applicable to Tenant's own use
of the Premises or as may be necessary or appropriate as the result of any
Alteration (as defined in PARAGRAPH 8). Landlord's approval of any Alteration or
other act by Tenant is not a representation by Landlord that said Alteration or
act complies with applicable law, and Tenant shall remain solely responsible for
such compliance. Notwithstanding the expiration or other termination of this
Lease, Tenant shall defend, indemnify and hold Landlord and Landlord's
mortgagees harmless from and against any claim, demand, suit, action,
proceeding, damage, liability, loss, cost or expense (including, without
limitation, reasonable attorneys' fees), foreseen or unforeseen, arising from
any violation of this PARAGRAPH 4; the provisions of this sentence shall survive
the expiration or other termination of this Lease.
(c) HAZARDOUS SUBSTANCES. Tenant shall not (either with or without
negligence) cause or permit within or on the Premises the escape, disposal or
release of any biologically- or chemically-active or other hazardous or toxic
substances, materials or wastes (collectively, "HAZARDOUS SUBSTANCES"). Tenant
shall not allow the generation, storage or use of any Hazardous Substances
within the Premises in any manner other than normal quantities of cleaning
solvents controlled and stored in accordance with the Legal Requirements, unless
such Hazardous Substances are generated, stored or used in accordance with the
Legal Requirements and approved in advance in writing by Landlord. Any use of
Hazardous Substances shall only be in the ordinary course of Tenant's business
and in accordance with the highest standards prevailing in the industry for the
generation, storage and use of such Hazardous Substances. Without limitation,
Hazardous Substances shall include those described in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 ET SEQ., any applicable state or local laws and the
regulations adopted under these acts. If Tenant uses Hazardous Substances within
the Premises and if Landlord or any lender or governmental agency requires
testing to ascertain whether or not there has been any release of Hazardous
Substances, then the reasonable costs thereof shall be reimbursed by Tenant to
Landlord upon demand as Additional Rent. In addition, Tenant shall execute
affidavits, representations and the like from time to time at Landlord's request
concerning Tenant's best knowledge and belief regarding the presence of
Hazardous Substances in the Premises. Further, Tenant shall indemnify and save
Landlord harmless from and against any and all clean-up costs, remedial or
restoration work, claims, judgments, damages, penalties, fines, costs,
liabilities or losses, including, without limitation, attorneys', consultants'
and experts' fees, which arise during or after the Term as a result of any
Hazardous Substances being generated, used or disposed of in or on, or brought
to, the Premises by Tenant or its employees, agents, contractors or invitees, or
as the result of an abatement, treatment or management required as the result of
any acts, negligence, repairs or alterations made by Tenant in the Premises. The
within covenants shall survive the expiration or earlier termination of this
Lease.
5. TAXES, FEES AND CHARGES: Tenant shall pay directly to the
applicable taxing authorities, at its sole cost and expense, and prior to
delinquency, all taxes, fees, assessments, and charges, general and special,
foreseen or unforeseen, affecting the Building, Premises or Tenant's other
property or operations thereon (the "TAXES"), including, without limitation, the
payment for any governmental licenses, permits, approvals, and authorizations
attributable to the Premises, the Building or any improvements thereto during
the Term. Tenant shall also pay any tax (other than Landlord's income tax) which
may be levied at any time on the Rent or other charges payable hereunder. Tenant
shall provide written proof of all such required payments to Landlord prior to
the due date thereof, and shall provide paid receipts therefor to Landlord upon
request. Tenant may contest any required payment of any of the Taxes by
appropriate proceedings duly instituted and diligently prosecuted at Tenant's
expense, provided that Tenant shall notify Landlord prior to the commencement of
any such contest. Landlord shall reasonably cooperate with Tenant (at Tenant's
expense) in connection with any such contest, and shall permit any such contest
to be prosecuted in Landlord's name if the same shall be required for the proper
resolution of the disputed matter. So long as any such contest is pending,
Tenant shall pay the disputed Taxes so that the Premises are not subjected to
loss or forfeiture as a result of nonpayment. Tenant shall indemnify, defend,
and hold Landlord harmless from and against any loss or forfeiture of the
Premises and any fines, penalties or other charges arising out of any such
contest or the resolution thereof or arising out of Tenant's failure to pay any
amounts required to be paid by Tenant hereunder.
6. INSURANCE:
(a) Tenant shall not do or permit anything to be done on the
Premises or in the Building or bring or keep anything therein which shall in any
way increase the rate of fire or other insurance on the Building, or on the
property kept therein or conflict with any insurance policy upon the Building or
any part thereof, or with any statutes, rules or regulations enacted or
established by the appropriate governmental authorities.
(b) Tenant shall carry such insurance as Landlord may reasonably
require from time to time, including (without limitation) personal property,
liability, plate glass, builder's risk (during any period when any construction
work is being done in the Premises), business interruption, and workers'
compensation insurance. Tenant shall also provide and maintain public
liability/general comprehensive insurance protecting and indemnifying Landlord
and Tenant against all claims for damages in amounts not less than $2,000,000
per occurrence, $2,000,000 bodily injury, and $1,000,000 property damage. All
insurance must be issued by companies and be in amounts satisfactory to Landlord
in its reasonable discretion, include waivers of subrogation, provide that it
may not be canceled except upon at least thirty (30) days written notice to
Landlord, and name Landlord, its asset and building manager(s), and any
mortgagee or ground lessor of the Building as an additional named insured or
loss payee, as appropriate. Evidence of such insurance must be delivered to
Landlord before Tenant may enter the Premises and must be provided not less
frequently than the first day of each Lease Year thereafter.
<PAGE> 3
-3-
(c) At all times during the Term, Tenant shall, at Tenant's sole
cost and expense, maintain fire and extended coverage insurance covering the
Building to its full replacement value and with such co-insurance and deductible
provisions as may reasonably be deemed appropriate by Landlord. Subject to the
rights of any Landlord's mortgagee under PARAGRAPH 18, below, all insurance
proceeds under such policy shall be payable to Tenant solely for the purpose of
completing the restoration required under PARAGRAPH 12, and Landlord shall be
entitled to receive any proceeds remaining following the completion of such
restoration; if not so restored, such insurance proceeds on the Building shall
be paid to Landlord.
(d) Landlord shall maintain comprehensive general liability
insurance in amounts of at least $1,000,000 per occurrence, $500,000 property
damage, for losses occasioned by Landlord's and its representatives', agents'
and employees' negligence or willful misconduct.
(e) No indemnity shall be paid to the other party under this Lease
where the claim, damage, liability, loss or expense incurred was or was required
to be insured by such other party for whose benefit such indemnity would run. If
reasonably available, all insurance policies obtained by the parties pursuant to
this Lease shall contain provisions or have the effect of waiving any right of
subrogation by the insurer of one party against the other party or its insurer.
Each party hereby releases the other from any claims to the extent covered by
insurance obtained by the parties pursuant to this Lease.
7. UPKEEP OF PREMISES: Tenant shall keep the Premises and the fixtures
therein in good order and condition and will, at the expiration or other
termination of the Term, surrender and deliver up the same in like good order
and condition as the same now is or shall be at the commencement of the Term,
ordinary wear and tear and insured damage excepted. Subject to the provisions of
PARAGRAPHS 8 and 15 below, Landlord is not required to make any improvements,
replacements or repairs of any kind or character on the Premises during the
Term.
8. ALTERATIONS:
(a) Except as set forth in this PARAGRAPH 8 or in PARAGRAPH 12,
Tenant shall not make any alterations, installations, changes, replacements,
additions, or improvements (structural or otherwise) (each an "ALTERATION") in
or to the Premises or any part thereof without the consent of the Landlord;
PROVIDED, HOWEVER, that Landlord shall not unreasonably withhold, condition or
delay its consent to any of the same which do not affect the structural,
mechanical, electrical, hydraulic, plumbing, heating, ventilating or air
conditioning systems serving either the Building or the Premises. All
Alterations in the Premises (whether installed with or without Landlord's
consent), shall at the election of Landlord remain in the Premises and be
surrendered with the Premises at the expiration of this Lease without
disturbance, molestation or injury; FURTHER PROVIDED, HOWEVER, that any and all
manufacturing items or other items of Tenant's personalty shall remain Tenant's
property and shall be removed by Tenant upon the expiration or earlier
termination of the Term. Should Landlord elect that Alterations made by Tenant
in the Premises be removed upon expiration or termination of this Lease, Tenant
shall cause same to be removed and to repair any damage caused thereby and
restore the Premises at Tenant's sole cost and expense and Tenant shall
reimburse Landlord for the cost of such removal together with any and all
damages which Landlord may suffer and sustain by reason of the failure of Tenant
to remove the same and to repair and restore as set forth above. Tenant shall
similarly restore any damage resulting from its removal of its personal
property.
(b) Landlord is delivering the Premises to Tenant in their "AS IS"
condition, without any representation or warranty of any kind, express or
implied, as to their condition and without any obligation to perform any work or
to pay for any third party or Tenant to perform any work. By its execution of
this Lease, Tenant acknowledges that it has inspected Building and the Land and
that they are in condition satisfactory to Tenant.
(c) All of Tenant's work shall be done by contractors acceptable to
Landlord in its reasonable discretion. Alterations by Tenant, including any
initial build-out, shall be coordinated with any work being performed by
Landlord. As further conditions to Landlord's approval of any proposed
Alterations or additions by Tenant which are to be made by a contractor, Tenant
shall cause the contractor(s) and subcontractor(s) to carry workmen's
compensation insurance in statutory amounts, builder's risk insurance and
comprehensive public liability insurance with limits as approved by Landlord,
and Tenant shall deliver to Landlord certificates of all such insurance.
Tenant's work shall be performed in a first-class and lien-free manner. Tenant
shall not be Landlord's agent for purposes of this work and Tenant shall be
solely responsible for any mechanics' or materialmen's lien arising therefrom;
Tenant shall pay, bond or otherwise release of record any such lien within ten
(10) days after receiving notice of its existence.
(d) Tenant shall promptly pay for any work done or material
furnished in or about the Premises and shall not permit or suffer any lien to
attach to the Premises, and Tenant shall indemnify and save Landlord harmless
from and against any loss, liability, cost, or expense which may be incurred by
Landlord with respect to any such lien or claim of lien. Tenant shall promptly
cause any such liens which have arisen by reason of any work claimed to have
been undertaken by or through Tenant to be released by payment, bond or
otherwise within thirty (30) days after request by Landlord. Tenant shall have
no authority or power, express or implied, to create or cause any lien, charge,
or encumbrance of any kind against the Premises or the Building. Tenant shall
notify all of its contractors and materialmen in writing that any liens relating
to any work ordered by Tenant shall attach to Tenant's leasehold estate in the
Premises and shall not encumber Landlord's interest in the Premises or the
Building.
9. SUBLETTING AND ASSIGNMENT: Tenant shall not sublet the Premises or
any part thereof or transfer possession or occupancy thereof to any person, firm
or corporation, or transfer or assign this Lease, nor will any assignment or
subletting hereof be effected by operation of law or otherwise, without
Landlord's prior consent, such consent not to be unreasonably withheld, delayed
or conditioned. A sale or other conveyance of any sort of all or substantially
all of the assets of Tenant relating to the Premises, or of a sufficient amount
of the stock or other ownership interests in Tenant to constitute a change in
control, or of any general partnership interest in Tenant if Tenant is a
partnership, whether directly or indirectly, constitutes an assignment under
this Paragraph. If Tenant desires to sublet the Premises or if Tenant desires to
transfer or assign this Lease, Tenant shall give Landlord thirty (30) days
written notice of Tenant's intention so to do. In no event whatsoever, and
without limiting Landlord's right to reasonably reject any proposed sublease or
assignment, may this Lease be assigned in part or the Premises subleased in
part, without Landlord's prior written reasonable consent.
10. TENANT'S COVENANTS: Tenant further agrees: that no sign,
advertisement or notice shall be inscribed, painted or affixed on any part of
the outside or inside the Premises or Building except as may be expressly
permitted by this Lease, and then only in such size, color and style as Landlord
may reasonably approve; that Landlord shall have the right to prescribe the
weight and method of installation and position of safes or other
<PAGE> 4
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heavy fixtures or equipment and Tenant shall not install in the Premises any
fixtures, equipment or machinery that will place a load upon any floor exceeding
the floor load per square foot area which such floor was designed to carry; and
that all damages done to the Building by taking in or removing a safe or any
other article of Tenant's equipment, or due to Tenant's being in the Premises,
shall be repaired at the expense of Tenant.
11. ACCESS: Tenant further agrees that it will allow Landlord, its
agent or employees, or any mortgagee to enter the Premises at all reasonable
times: to examine, inspect or to protect the same or prevent damage or injury to
the same, or to make such alterations and repairs to the Premises or other
premises as Landlord may deem necessary; to exhibit the same to prospective
tenants during the last nine (9) months of the Term or following the
commencement of any action to evict Tenant, even if the Term has not been
terminated; and to exhibit the same to prospective and actual mortgagees,
purchasers and brokers at any time during the Term.
12. DAMAGE:
(a) In the event of damage to or destruction of the Premises, the
Building, or Tenant's other alterations or improvements, or any portion thereof,
during the Term by fire, explosion or other casualty ("Damage"), this Lease will
not terminate unless Landlord determines that it will take Landlord more than
ninety (90) days to repair and restore the Premises to the same condition they
are in on the date hereof, in which event Landlord may terminate this Lease by
notice to Tenant.
(b) Unless this Lease is terminated pursuant to PARAGRAPH 12(a), and
except as expressly provided to the contrary in this Lease, in the event of any
Damage to the Premises: (i) this Lease shall remain in full force and effect and
to the extent possible, Tenant shall remain in possession of the Premises, and
(ii) whether or not any insurance proceeds are available or adequate for such
purposes and regardless of the dollar amount of such damage or loss, at Tenant's
own sole cost and expense, Tenant shall repair, refixture, restock and otherwise
restore the Premises to the same condition they were in before such fire or
other casualty. Due allowance, however, shall be given for a reasonable time
required for adjustment and settlement of insurance claims and for such other
delays as may result from government restrictions and controls on construction,
if any, and for strikes, national emergencies, and other conditions beyond the
control of the parties.
(c) Any restoration required to be performed by Tenant under this
PARAGRAPH 12 shall be commenced by Tenant promptly after such damage or
destruction, and shall be diligently and continuously pursued to completion and
shall be completed by Tenant in a good and workmanlike manner and in accordance
with all Legal Requirements.
(d) Tenant shall have no right to terminate this Lease or to have
the rent and other charges due hereunder abated despite the occurrence of Damage
to the Premises, the Building or Tenant's other Alterations or improvements,
even if such Damage prevents the conduct of Tenant's business on the Premises.
No compensation, claim, or diminution of Rent will be allowed or paid by
Landlord by reason of inconvenience, annoyance, or injury to business arising
from any such Damage or the necessity of repairing the Premises or the Building,
however the necessity may occur.
13. PERSONAL PROPERTY: All personal property of Tenant at the Premises
is at the sole risk of Tenant. Landlord is not liable for any accident or
damages to property of Tenant resulting from the use or operation of elevators
or of the heating, cooling, electrical, mechanical, hydraulic, plumbing or other
Building systems or components. Landlord is not, in any event, liable for
damages to property resulting from water, steam, or other causes. Tenant hereby
expressly releases Landlord from any liability incurred or claimed by reason of
damage to Tenant's property. Landlord is not liable in damages, nor is this
Lease affected, for conditions arising or resulting from construction of
contiguous premises. The foregoing does not exculpate Landlord from its gross
negligence or willful misconduct.
14. LIABILITY FOR TENANT'S OPERATIONS; INDEMNIFICATION:
(a) Landlord assumes no liability or responsibility whatsoever with
respect to the conduct and operation of the business to be conducted in the
Premises. Landlord shall not be liable for any accident or injury to any person
or persons or property in or about the Premises which are caused by the conduct
and operation of said business or by virtue of equipment or property of Tenant
in the Premises. Tenant agrees to defend, indemnify and hold Landlord and
Landlord's mortgagees harmless from and against all such claims (including,
without limitation, reasonable attorneys' fees). The foregoing does not
exculpate Landlord from its gross negligence or willful misconduct.
(b) Tenant retains responsibility as operator of the Premises for
payment of all costs of the Premises, and shall defend, indemnify and hold
Landlord harmless therefrom, and from all costs incurred by Landlord in the
defense of any claims relating to the Premises brought against it or any action
relating to the Premises in which it is named as a party, including reasonable
attorneys' fees, costs of investigation, court costs and other such expenses.
This indemnification obligation shall survive termination of this Lease, and is
subject to the waiver of subrogation provisions of PARAGRAPH 6(e); PROVIDED,
HOWEVER, notwithstanding anything contained herein to the contrary, Landlord
shall indemnify Tenant and hold Tenant and its affiliates and their respective
representatives, agents and employees harmless in connection with damage or loss
sustained by reason of the dishonesty, willful misconduct or negligence of
Landlord and its representatives, agents or employees.
15. SERVICES AND UTILITIES:
(a) Landlord shall provide the normal utility service connections
into the Premises. Tenant shall pay the cost of all utility service, including,
without limitation, initial connection charges, all charges for gas, water and
electricity used on the Premises, and for all plumbing, interior
cleaning/janitorial, and for all electric light lamps or tubes. Tenant shall pay
all costs caused by Tenant introducing excess pollutants into the sanitary sewer
system.
(b) Any failure by Landlord to furnish any services or utilities to
be provided by Landlord or otherwise under this Lease as the result of any act
of God, FORCE MAJEURE or any cause beyond the reasonable control of Landlord
will not render Landlord liable in any respect for damages to
<PAGE> 5
-5-
either person or property, nor be construed as an eviction of Tenant, nor work
an abatement of Rent, nor relieve Tenant from Tenant's obligations hereunder.
16. BANKRUPTCY: If Tenant makes an assignment of its assets for the
benefit of creditors, or if Tenant files a voluntary petition in bankruptcy, or
if an involuntary petition in bankruptcy or for receivership is instituted
against Tenant and the same is not dismissed within ninety (90) days of the
filing thereof, or if Tenant is adjudged bankrupt, then and in any of the
foregoing events, to the extent permitted by law, this Lease will immediately
cease and terminate at the option of Landlord with the same force and effect as
though the date of said event was the day herein fixed for expiration of the
Term.
17. DEFAULTS & REMEDIES: If Tenant fails to pay the Rent, or any
installment thereof, within five (5) days after the same becomes due and
payable, or if Tenant violates or fails or neglects to keep and perform any of
the covenants, conditions, and agreements herein contained on the part of Tenant
to be kept and performed within thirty (30) days after receipt of written notice
of such failure or neglect, or if the Premises becomes vacant or deserted, then,
and in each and every such event, at the option of Landlord, Tenant's right of
possession will thereupon cease and terminate, and to the extent permitted by
law Landlord will be entitled to the possession of the Premises and to re-enter
the same without demand of Rent or demand of possession and may forthwith
proceed to recover possession of the Premises by process of law, ANY NOTICE TO
QUIT OR OF INTENTION TO RE-ENTER THE SAME BEING HEREBY EXPRESSLY WAIVED BY
TENANT. In the event of such re-entry by process of law or otherwise, Tenant
nevertheless agrees to remain answerable for any and all damage, deficiency or
loss of Rent which Landlord may sustain by such re-entry, including reasonable
attorneys' fees and court costs; and in such case, Landlord reserves full power,
which is hereby acceded to by Tenant, to relet the Premises for the benefit of
Tenant, in liquidation and discharge, in whole or in part, as the case may be,
of the liability of Tenant under the terms and provision of this Lease. In
addition to the foregoing remedies, Landlord will also have the following
remedies to the extent permitted by law and all other remedies afforded to it at
law or in equity, all of which shall be cumulative: to terminate this Lease; to
declare due and payable all Rent for the unexpired Term as and when the same
becomes due and payable or to defer any suit until after the Term without
thereby prejudicing its rights; to accelerate the Rent for the remainder of the
Term and declare it all immediately due and payable [with a present value
discount two (2) whole percentage points below the prime rate published in The
Wall Street Journal on the date Landlord elects said remedy]; and to bring an
action for specific performance, injunction, or other equitable relief to
prevent any threatened or impending default or to end any existing default. In
addition, Landlord may perform any obligation which Tenant has failed to perform
after the expiration of any applicable notice and/or cure period (except in an
emergency, when no notice or cure period will be necessary or afforded), all at
the cost of Tenant as Additional Rent payable upon demand. Tenant shall also pay
all expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord following a default, whether or not suit is instituted; the
same shall be Additional Rent payable upon demand. In determining the Rent due
for the balance of the Term, all Additional Rent shall be determined by
projecting into the future the Additional Rent payable on the date of default
increasing by a compounding five percent (5%) per Lease Year. No waiver of any
breach of any covenant, condition, or agreement herein contained shall operate
as a waiver of the covenant, condition or agreement itself, or of any subsequent
breach thereof. No provision of this Lease shall be deemed to have been waived
by Landlord unless such waiver shall be in writing signed by Landlord. No
payment by Tenant or receipt by Landlord of a lesser amount than the Rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated Rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or pursue any other remedy
provided in this Lease. Landlord shall have a lien for the payment of the Rent
upon all of the goods, wares, chattels, fixtures, furniture and other personal
property of Tenant which may be in or upon the Premises, Tenant hereby
specifically waiving any and all exemptions allowed by law; such lien may be
enforced on the nonpayment of any installment of Rent by the taking and selling
of such property in the same manner as in the case of chattel mortgages on
default thereunder; said sale is to made upon ten (10) days notice served upon
Tenant by posting upon the Premises or such lien may be enforced in any other
lawful manner at the option of Landlord.
18. RIGHTS OF LENDERS, GROUND LESSORS AND PURCHASERS: This Lease is
subject and subordinate to all ground or underlying leases (hereinafter
collectively referred to as "GROUND LEASES") and to all of the terms and
provisions and liens of all mortgages and/or deeds of trust (hereinafter
collectively referred to as "MORTGAGES") which may now or hereafter affect this
Lease or the Building, and to all renewals, modifications, consolidations,
replacements, amendments and extensions thereof. This clause is self-operative,
and no lessor or mortgagee (as used in this Lease, "MORTGAGEE" includes any
mortgagee under a mortgage, any beneficiary or trustee under a deed of trust,
and any lender or other secured party under a deed to secure debt or other
instrument similar to any of the foregoing) may require any instrument of
subordination. In confirmation of such subordination, Tenant shall execute
promptly any certificate that Landlord may request. Tenant hereby constitutes
and appoints Landlord Tenant's attorney-in-fact to execute any such certificate
or certificates for and on behalf of Tenant. Notwithstanding the foregoing, a
ground lessor or mortgagee may recognize this Lease and, in the event of the
termination of any ground lease or any foreclosure or similar sale or deed in
lieu thereof under such mortgage, this Lease will continue in full force and
effect at the option of the ground lessor or mortgagee (or the purchaser at any
such foreclosure sale). Tenant will, at the written request of the ground lessor
or mortgagee (or the purchaser at any such foreclosure sale), execute,
acknowledge and deliver any instrument that has for its purpose and effect the
subordination of such ground lease or mortgage to this Lease. In any case, such
ground lessor, mortgagee, landlord or successor shall not be bound by any
prepayment on the part of Tenant of any Rent for more than one month in advance,
so that Rent shall be payable under this Lease in accordance with its terms as
if such prepayment had not been made; nor shall any such ground lessor,
mortgagee, landlord or successor be liable for any default under this Lease by
any predecessor Landlord or subject to any counterclaim, set-off or defense as a
result of any such default; and provided, further, such ground lessor,
mortgagee, landlord or successor shall not be bound by this Lease or any
amendment or modification of this Lease unless Landlord's ground lessor or
mortgagee, as may be applicable, had approved the same in writing. At any time
and from time to time, upon the request and at the sole option of any successor
to Landlord's interest, Tenant shall attorn to any successor to Landlord's
interest, whether such successor acquires its interest by voluntary conveyance,
foreclosure, deed in lieu of foreclosure, termination or expiration of a ground
lease, or any other method, and in that event this Lease shall continue as a
direct lease between Tenant and such landlord or its successor and the prior
Landlord shall be released from all obligations and liability under this Lease
arising after the date of transfer. The terms of this Lease are subject to
approval by the Landlord's ground lessor(s) and lender(s), and such approval is
a condition precedent to Landlord's obligations hereunder. Tenant shall furnish
copies of any default or similar notices delivered by Tenant to Landlord
hereunder at the same time to each ground lessor or mortgagee, now or at anytime
and from time to time hereafter, and no such notice shall be effective unless
and until a copy of it is sent to each such ground lessor or mortgagee, provided
that Tenant has been afforded written notice of the name and address of such
party. Each such ground lessor or mortgagee may cure any default by Landlord
within the same time period afforded Landlord to cure any such default, plus
such additional period of time thereafter as may be reasonably necessary for
such ground lessor or mortgagee to cure such default.
<PAGE> 6
-6-
19. CONDEMNATION: If the Premises or any part thereof is taken or
condemned for public or quasi-public use or purpose by any competent authority,
or conveyed in lieu of being taken or condemned, Tenant will have no claim
against Landlord and will not have any claim or right to any portion of the
amount that may be awarded to Landlord as damages or paid as a result thereof.
All right of Tenant to damages therefor, if any, are hereby assigned by Tenant
to Landlord. Upon such condemnation or taking, or conveyance in lieu thereof,
the Term shall terminate from the date of such governmental taking or
condemnation, or conveyance in lieu thereof, and Tenant will have no claim
against Landlord for the value of any unexpired Term. Nothing in this Paragraph
limits or affects Tenant's right to seek any separate award from the condemning
authority as long as Tenant does not thereby reduce, delay or in any other way
affect Landlord's claim or award.
20. SUCCESSORS: All rights, remedies and liabilities herein given to or
imposed upon either of the parties hereto extend to their respective heirs,
executors, administrators, successors and permitted assigns.
21. TENANT HOLDOVER: If Tenant continues to remain in the Premises
after the termination or expiration of the Term, then and in that event Tenant
will become a tenant by the month at 125% of the Base Rent per month payable for
the last month before the expiration or termination of the Term plus all
Additional Rent that may be incurred during any such holdover, but in no event
less than the then market rent for the Premises. Holdover Rent will commence
with the first day following the end of the Term. During any holdover, each
party must give the other at least thirty (30) days written notice to quit the
Premises, except in the event of any default by Tenant, in which event Tenant
will not be entitled to any notice to quit, the usual thirty (30) days' notice
to quit being hereby expressly waived; PROVIDED, HOWEVER, that if Tenant holds
over after the expiration of the Term hereby created, and if Landlord desires to
regain possession of the Premises promptly at the expiration of the Term, then
at any time prior to Landlord's acceptance of Rent from Tenant as a monthly
tenant hereunder, Landlord, at its option, may forthwith re-enter and take
possession of the Premises without process, or by any legal process in force.
Tenant shall not use FORCE MAJEURE as an excuse for any holding over.
22. POSSESSION: Landlord shall give possession of the Premises to
Tenant on the Commencement Date. If Landlord is unable to give possession of the
Premises on the Commencement Date because any portion of the Premises are
located in a Building being constructed that has not been sufficiently completed
to make the Premises ready for occupancy, or because a certificate of occupancy
has not been procured, or if Landlord is unable to give possession of the
Premises on the Commencement Date because of the holding over or retention of
possession by any previous tenant, occupant or owner, or if repairs,
improvements or decorations of the Premises or of the Building are not
completed, or for any other reason, Landlord will not be subject to any
liability for the failure to give possession on the Commencement Date. No such
failure to give possession on the Commencement Date will affect in any other
respect the validity of this Lease or the obligations of Tenant hereunder, nor
will the same be construed in any way to extend the Term. If Landlord permits
Tenant to enter into the possession of the Premises or a portion of the Premises
prior to the Commencement Date, such occupancy shall be deemed to be under all
terms, covenants, conditions and provisions of this Lease.
23. JOINT AND SEVERAL LIABILITY: If Tenant consists of more than one
individuals and/or entities, then the liability of each of them for Tenant's
obligations under this Lease shall be joint and several.
24. PRONOUNS: Feminine, masculine or neuter pronouns shall be
substituted for each other, and the plural shall be substituted for the singular
number and vice versa in any place in which the context may require such
substitution.
25. LATE PAYMENT: If Tenant fails to pay any Rent on or before the
fifth (5th) day after such payment becomes due and payable, Tenant shall pay to
Landlord a late charge of five percent (5%) of the amount of such overdue
payment. In addition, any Rent not paid when due will bear interest at the
lesser of eighteen percent (18%) per annum or the maximum rate allowed by law
until paid. Acceptance of the foregoing sums shall not constitute a waiver of
the default. Upon Landlord's receipt of any check from Tenant which is
dishonored for payment, Landlord may require Tenant to make all future payments
due to Landlord hereunder by cash, certified or cashier's check.
26. NOTICES: All notices required or desired to be given hereunder by
either party to the other shall be given by hand, by overnight courier or by
certified or registered mail. Notices shall be effective upon receipt (refusal
to accept delivery or the inability to make delivery due to an incorrect or
outdated address being provided by the intended recipient shall constitute
receipt). Notices to the respective parties must be addressed as follows:
If to Landlord - Monte R. Black
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
If to Tenant - MPW Industrial Services, Inc.
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
Attn: Daniel P. Buettin
Either party may, by like written notice, designate a new address or addressee
to which notices must be directed. Tenant shall provide a copy of any notice
given to Landlord to any mortgagee or ground lessor of whom Tenant has notice.
Notices may be given by authorized agents or attorneys on behalf of a party.
27. ESTOPPEL CERTIFICATES: Within ten (10) days after request therefor
by Landlord or any ground lessor or mortgagee of the Building, Tenant shall
execute and deliver estoppel certificates certifying, among other things: the
text of this Lease and any amendments thereto; whether this Lease has been
amended and, if so, the date of each such amendment; whether this Lease is in
full force and effect and, if not, the reason therefor; whether any default or
any situation which could be a default after the giving of notice or the
expiration of any cure period (or both) exists under this Lease on the part of
Landlord or Tenant and, if so, specifying the default or potential default;
whether Tenant has taken possession of the Premises; whether the Premises have
been completed in accordance with the terms of this Lease and all bills therefor
paid and, if not, what remains to be done or paid; the Commencement Date and the
expiration date of the Term; whether Tenant has any renewal options, expansion
options, or rights to purchase
<PAGE> 7
-7-
and, if so, identifying the conditions and periods when they may be exercised;
the date Rent commenced to accrue and the date to which Rent has been paid;
whether any security deposit has been posted; whether Tenant has any knowledge
or any environmental problem affecting the Premises or the Building; and such
other matters as may be reasonably requested.
28. NO PERSONAL LIABILITY: Notwithstanding any provision of this Lease
to the contrary or any general rule of law, in no event whatsoever shall
Landlord or any of its shareholders, partners, directors, officers, employees,
agents or other principals have any personal liability whatsoever with respect
to this Lease, and no such personal liability shall be sought, obtained or
enforced. Any liability of Landlord under this Lease may be enforced solely
against Landlord's equity interest in the Land and Building; no other properties
or assets of Landlord are subject to this Lease or Landlord's liabilities
hereunder.
29. BROKERS: Each party represents and warrants to the other that it
has not engaged or used any broker or finder in connection with this Lease. Each
party shall defend, indemnify and hold the other party harmless from and against
any breach by the indemnifying party of the representation and warranty set
forth in the first sentence of this Paragraph. Tenant shall defend, indemnify
and hold Landlord's ground lessors and mortgagees harmless from and against any
breach by Tenant of the representation and warranty set forth in the first
sentence of this Paragraph. No broker is a third party beneficiary of this
Lease.
30. COMPLETE AGREEMENT; NO ORAL MODIFICATIONS: This Lease represents
the complete and integrated agreement of the parties with respect to the
Premises and, except as set forth herein, there are no other agreements,
covenants, representations or warranties (express or implied) between the
parties. Nothing in this Lease shall be deemed or construed to create a
partnership or joint venture or to create any relationship other than landlord
and tenant. This Lease may not be amended except by a written document signed by
the party to be bound thereby.
31. GOVERNING LAW AND RULES OF INTERPRETATION: This Lease is governed
by the laws of the State of Ohio without regard to conflicts of laws. Without
limiting a party's right to bring any action in any other jurisdiction or forum,
each party submits itself to the jurisdiction of the federal and local courts
sitting in the State of Ohio and to venue therein. It is the intent of the
parties that this Lease will be enforceable to the fullest extent permitted by
law. If any provision of this Lease is capable of two or more interpretations or
can be reformed so as to comply with applicable law while giving effect to the
intent of such provision, then such provision shall be interpreted in the way
most likely to be in compliance with applicable law. Although the printed
provisions of this Lease were drawn by Landlord, this Lease shall not be
construed either for or against Landlord or Tenant.
[the rest of this page is intentionally blank]
<PAGE> 8
-8-
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
LANDLORD:
WITNESS:
/s/ Daniel P. Buettin /s/ Monte R. Black
- ----------------------- -------------------------------
Monte R. Black
WITNESS:
/s/ Brad A. Martyn
- -----------------------
WITNESS:
/s/ Daniel P. Buettin /s/ Susan K. Black
- ----------------------- -------------------------------
Susan K. Black
WITNESS:
/s/ Brad A. Martyn
- -----------------------
TENANT:
WITNESS: MPW INDUSTRIAL SERVICES, INC.
/s/ Rodd Lape
- -----------------------
By: /s/ Daniel P. Buettin
----------------------------
WITNESS: Name: Daniel P. Buettin
--------------------------
/s/ Matt W. Hughes Title: Vice President, CFO and
- ----------------------- Secretary
-------------------------
<PAGE> 9
-9-
ACKNOWLEDGMENT
--------------
STATE OF Ohio )
-----------------) SS.
COUNTY OF Franklin )
-----------------
Before me, a Notary Public in and for said County, personally
appeared the above-named Monte R. Black and Susan K. Black ("Landlord"), who
acknowledged that they did sign the foregoing instrument on behalf of Landlord,
and that the same is their free act and deed on Landlord's behalf and the free
act and deed of Landlord.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Columbus, Ohio this 11th day of February, 1998.
[Notarial Seal] /s/ Dawn M. Black
---------------------------------
Notary Public
My commission expires:
September 26, 2001
ACKNOWLEDGMENT
--------------
STATE OF Ohio )
-----------------) SS.
COUNTY OF Franklin )
-----------------
Before me, a Notary Public in and for said County, personally
appeared the above-named Daniel P. Buettin, Vice President, Chief Financial
Officer and Secretary of MPW Industrial Services, Inc. ("Tenant"), who
acknowledged that he did sign the foregoing instrument on behalf of Tenant as
such officer, and that the same is his free act and deed on Tenant's behalf and
the free act and deed of Tenant.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Columbus, Ohio this 11th day of February, 1998.
[Notarial Seal] /s/ Dawn M. Black
---------------------------------
Notary Public
My commission expires:
September 26, 2001
<PAGE> 10
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
\ -----------------------------
[ATTACHED]
<PAGE> 1
EXHIBIT 10(d)
FIRST LEASE AMENDMENT
---------------------
THIS FIRST LEASE AMENDMENT (this "First Amendment"), is made this
11th day of February, 1998, by and between THE BLACK FAMILY LIMITED
PARTNERSHIP, an Ohio limited partnership ("LANDLORD") and MPW INDUSTRIAL
SERVICES, INC., an Ohio corporation ("TENANT").
WITNESSETH:
-----------
WHEREAS Landlord and Tenant have heretofore entered into that certain
lease, dated as of May 1, 1996 (the "LEASE"), for certain premises containing a
35,500 square foot industrial facility located on approximately 5.99 acres of
land in Chesterfield Township, Macomb County, Michigan (the "Premises");
WHEREAS, the Lease grants to Tenant, INTER ALIA, an option to renew the
Term for one additional five (5) year period, and Tenant and Landlord wish to
modify the extension rights of Tenant; and
WHEREAS, the parties wish to further modify certain terms of the Lease
in accordance with the provisions of this First Amendment.
NOW, THEREFORE, in consideration of the mutual premises contained
herein, the sum of One Dollar ($1.00) in hand paid, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Landlord and Tenant, intending to be legally bound, hereby agree as follows:
1. DEFINED TERMS: All terms used herein but not defined shall have the
meanings ascribed thereto in the Lease.
2. TERM:
(a) Subparagraph 2(a)is modified by deleting the phrase "April 30,
2001" in the second line thereof and inserting in lieu thereof
the phrase "November 30, 2004."
(b) Subparagraph 2(b) of the Lease is hereby deleted, and the
following is inserted in lieu thereof:
RENEWAL TERM. Tenant may, at its sole option, choose to extend
the term of this Lease for two (2) additional periods of five
(5) years each (a "RENEWAL TERM") under such terms and
conditions as Landlord and Tenant will negotiate, based upon a
fair market appraisal of the Premises. Tenant shall provide
Landlord with written notice of Tenant's intent to exercise
this option not later than one hundred twenty (120) days prior
to the expiration of the Initial Term or first Renewal Term,
as applicable. As used in this Lease, "TERM" means both the
Initial Term and, if Tenant exercises its option(s), any
Renewal Term. As used in this Lease, "LEASE YEAR" means each
consecutive twelve (12) month period of the Term, starting on
the Commencement Date of this Lease.
3. RENT: Subparagraph 3(a) of the Lease is hereby deleted, and the
following is inserted in lieu thereof:
(a) Tenant shall pay as "BASE RENT" for each Lease Year during the
Initial Term the sum of Two Hundred Eighty-Eight Thousand and
No/100 Dollars ($288,000.00), payable in advance, in equal
monthly installments of Twenty-Four Thousand and No/100
Dollars ($24,000.00). The first and last monthly installments
are due and payable on the execution of this Lease and the
remaining installments are due and payable in advance on the
first day of each and every month during the Term, without
offset or deduction, to Landlord at the address set forth in
PARAGRAPH 26 or at such other place as Landlord may hereafter
designate in writing. Rent checks are to be made payable to
Landlord, or such other person, form or corporation as
Landlord may designate in writing.
A new subparagraph 3(e) is inserted in the lease as follows:
(e) For each Renewal Term, Tenant shall notify Landlord that
Tenant desires to exercise its option to extend the Term of
this Lease for the next ensuing five (5) year period, and to
obtain an appraisal of the Premises to determine the market
rent for the Premises by delivering written notice to Landlord
not less than one hundred twenty (120) days prior to the
beginning of each renewal Term. Tenant shall include in such
notice the name of an MAI appraiser selected by Tenant which
has an office in Macomb County, Michigan. Landlord shall
within thirty (30) days following receipt of such notice from
Tenant give written notice to Tenant setting forth the name of
a second MAI appraiser with an office in Macomb County,
Michigan. If Landlord fails to notify Tenant of the name of an
appraiser within the thirty (30) day period, then the
appraiser selected by Tenant shall determine the market rent
and the decision of said appraiser shall be binding upon the
parties hereto. If Landlord has selected an appraiser in
accordance with the provisions of this Paragraph, then the
appraiser selected by Landlord and the appraiser selected by
Tenant shall meet and select a third MAI appraiser with an
office in Macomb County, Michigan. The appraiser selected by
Landlord and the appraiser selected by Tenant shall each
appraise the Premises for purposes of obtaining said market
rent. The third appraiser shall determine and notify Landlord
and Tenant which of the two appraisals made by Landlord's and
Tenant's appraisers more closely reflects the market rent of
the
<PAGE> 2
-2-
Premises, and the decision of the third appraiser shall be
binding upon the parties hereto. Notwithstanding anything in
this paragraph to the contrary, in no event shall the Base
Rent for any Renewal Term be less than the Base Rent for the
previous Renewal Term or the Initial Term, as applicable.
4. COMPLETE AGREEMENT; NO ORAL MODIFICATION: The Lease, as modified by
this First Amendment, represents the complete and integrated agreement of the
parties with respect to the Premises and, except as set forth herein, there are
no other agreements, covenants, representations or warranties (express or
implied) between the parties. The Lease, as modified by this First Amendment,
may not be amended except by a written document signed by the party to be bound
thereby. The parties hereby ratify and confirm the Lease, as modified hereby.
5. GOVERNING LAW AND RULES OF INTERPRETATION: This First Amendment is
governed by the laws of the State of Michigan without regard to conflicts of
laws. Without limiting a party's right to bring any action in any other
jurisdiction or forum, each party submits itself to the jurisdiction of the
federal and local courts sitting in the State of Michigan and to venue therein.
It is the intent of the parties that this First Amendment be enforceable to the
fullest extent permitted by law. If any provision of this First Amendment is
capable of two or more interpretations or can be reformed so as to comply with
applicable law while giving effect to the intent of such provision, then such
provision shall be interpreted in the way most likely to be in compliance with
applicable law. Although the printed provisions of this First Amendment were
drawn by Landlord, this instrument shall not be construed either for or against
Landlord or Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment under
seal as of the day and year first above written.
LANDLORD:
WITNESS:
/s/ Daniel P. Buettin
- --------------------- THE BLACK FAMILY LIMITED PARTNERSHIP
By: /s/ Monte R. Black
------------------------------------------
WITNESS:
/s/ Brad A. Martyn
- --------------------- Name: Monte R. Black
-----------------------------------------
Title: General Partner
---------------------------------------
TENANT:
WITNESS: MPW INDUSTRIAL SERVICES, INC.
/s/ Rodd Lape
- --------------------- By: /s/ Daniel P. Buettin
------------------------------------------
WITNESS: Name: Daniel P. Buettin
-----------------------------------------
/s/ Matt W. Hughes Title: Vice President, CFO and Secretary
- ---------------------- ----------------------------------------
<PAGE> 3
-3-
ACKNOWLEDGMENT
STATE OF Ohio )
------------------ ) SS.
COUNTY OF Franklin )
------------------
Before me, a Notary Public in and for said County, personally
appeared the above-named The Black Family Limited Partnership, by Monte R.
Black, General Partner ("Landlord"), who acknowledged that he did sign the
foregoing instrument on behalf of Landlord, and that the same is his free act
and deed on Landlord's behalf and the free act and deed of Landlord.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Columbus, Ohio this 11th day of February, 1998.
/s/ Dawn M. Black
[Notarial Seal] -----------------------------------
Notary Public
My commission expires:
September 26, 2001
ACKNOWLEDGMENT
STATE OF Ohio )
------------------ ) SS.
COUNTY OF Franklin )
------------------
Before me, a Notary Public in and for said County, personally
appeared the above-named Daniel P. Buettin, Vice President, CFO and Secretary
of MPW Industrial Services, Inc. ("Tenant"), who acknowledged that he did sign
the foregoing instrument on behalf of Tenant as such officer, and that the same
is his free act and deed on Tenant's behalf and the free act and deed of
Tenant.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Columbus, Ohio this 11th day of February, 1998.
/s/ Dawn M. Black
[Notarial Seal] ----------------------------------------
Notary Public
My commission expires: September 26, 2001
<PAGE> 1
EXHIBIT 10(e)
AIRCRAFT PURCHASE AGREEMENT
---------------------------
This Aircraft Purchase Agreement ("Agreement") is made between the
parties hereafter named on the date set forth below.
1. PARTIES
----------
1.1 MPW Industrial Services, Inc., an Ohio corporation having its
principal office located at 9711 Lancaster Road, S.E., Hebron, Ohio 43205 (the
"Seller").
1.2 Miramonte Aviation, LLC, an Ohio limited liability company having
its principal office located at 1400 Stringtown Road, Lancaster, Ohio 43130 (the
"Purchaser").
2. RECITALS
-----------
2.1 Seller is the owner of a certain aircraft, aircraft engines and
related parts, equipment and appliances, all as more particularly described on
Exhibit 2.1 attached hereto and made a part hereof (collectively hereafter, the
"Aircraft").
2.2 Purchaser desires to purchase the Aircraft from Seller and Seller
is willing to sell the Aircraft to Purchaser subject to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
3. AGREEMENT; TERMS OF SALE
---------------------------
3.1 Sale. Purchaser agrees to purchase from Seller and Seller agrees to
sell to Purchaser the Aircraft.
3.2 Binding Agreement. By execution of this Agreement, Seller and
Purchaser shall be bound by the terms and conditions hereof.
3.3 Purchase Price. Purchaser agrees to pay Seller a purchase price of
$3,600,000.00 for the Aircraft ("Purchase Price"), which sum as of the Closing
Date (as defined in Section 3.4 hereof) shall be offset against and reduce the
outstanding balance due to Purchaser as assignee of a portion of that certain
Subordinated Promissory Note executed by Seller in favor of Monte R. Black on
October 31, 1997 for a principal amount of $13,099,200.00.
3.4 Closing Date. The sale transaction contemplated hereby shall be
closed on or before February 11, 1998 ("Closing Date"). The closing shall take
place at the offices of Jones, Day, Reavis & Pogue, 1900 Huntington Center, 41
S. High Street, Columbus, Ohio 43215, or such other location as shall be agreed
to by the parties hereto.
<PAGE> 2
3.5 Delivery of Aircraft. On the Closing Date, Seller shall deliver the
Aircraft to Purchaser at Newark, Ohio, or such other place as may be mutually
agreed upon. Seller shall be responsible for any costs and expenses associated
with such delivery.
3.6 Risk of Loss. The risk of loss, injury, destruction or damage to
the Aircraft by fire or casualty or other occurrence shall be assumed by the
Purchaser at the time of delivery of the Aircraft pursuant to Section 3.5 or
upon execution of the Bill of Sale, whichever event shall first occur, and such
occurrence after delivery or transfer of title shall not relieve Purchaser from
any obligation thereunder.
3.7 Seller's Representations, Warranties and Covenants. Upon closing,
Purchaser will accept the Aircraft in its "as is", "where is" condition. ANY
WARRANTIES OF OR WITH RESPECT TO FITNESS FOR A PARTICULAR PURPOSE OR OF
MERCHANTABILITY, PROFITABILITY OR MARKETABILITY ARE SPECIFICALLY DISCLAIMED.
SELLER DOES NOT MAKE NOR WILL SELL OR MAKE ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY MATTER SET FORTH IN THIS
AGREEMENT EXCEPT THAT:
3.7.1 Seller is an Ohio corporation duly organized, validly
existing and in good standing under the laws of the State of and has all
requisite power and authority to own its interest in the Aircraft.
3.7.2 All necessary consents and approvals have been obtained
by Seller for the execution and delivery of this Agreement. The execution and
delivery of this Agreement and all documents to be executed and delivered by
Seller pursuant hereto have been duly and validly authorized and approved by all
necessary action of Seller.
3.7.3 Seller has no knowledge of existence of any fact or
circumstance that, at the date of its execution of this Agreement and as of the
Closing Date, would constitute a breach by Seller hereof.
3.7.4 Seller has no knowledge of and has received no notice
from any governmental authority of any violation of any law, ordinance, rule,
regulation applicable to the ownership, use or operation of the Aircraft or any
part thereof.
3.7.5 At the time of full payment of the Purchase Price by
Purchaser, Seller shall transfer to Purchaser title to the Aircraft pursuant to
the Bill of Sale (in form attached hereto as Exhibit 3.8.5), conveying title of
the Aircraft to Purchaser free and clear of any liens, charges or encumbrances.
Seller warrants that the Bill of Sale shall pass to Purchaser good and
defensible title to the Aircraft.
3.7.6 To the extent that any manufacturer's warranties are
still in effect with respect to the Aircraft (other than warranties that by
their terms are unassignable), Seller will reasonably assist Purchaser to
maintain continuity of the warranties and take such other reasonable steps to
assist Purchaser to process warranty claims directly with the manufacturers.
2
<PAGE> 3
3.7.7 Seller will transfer to Purchaser at the time of
delivery of the Aircraft all available books and records that pertain to the
operation and maintenance of the Aircraft, including without limitation all
engine and airframe logbooks, maintenance records and all airworthiness
certificates relating to the Aircraft.
THE PARTIES UNDERSTAND AND AGREE THAT SELLER'S LIABILITY, WHETHER IN CONTRACT,
IN TORT, UNDER ANY WARRANTY, IN NEGLIGENCE OR OTHERWISE, SHALL NOT EXCEED THE
PURCHASE PRICE (OR SO MUCH THEREOF AS HAS BEEN PAID BY PURCHASER) AND UNDER NO
CIRCUMSTANCES SHALL SELLER BE LIABLE FOR SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES. NO ACTION, REGARDLESS OF FORM, ARISING OUT OF THE TRANSACTIONS UNDER
THIS AGREEMENT, MAY BE BROUGHT BY PURCHASER MORE THAN ONE (1) YEAR AFTER THE
CAUSE OF ACTION HAS ACCRUED.
3.8 Purchaser's Representations and Warranties; Covenants.
3.8.1 Purchaser represents that all necessary consents and
approvals have been obtained by Purchaser for the execution and delivery of this
Agreement. The execution and delivery of this Agreement and all documents to be
executed and delivered by Purchaser pursuant hereto have been duly and validly
authorized and approved by all necessary action of Purchaser.
3.8.2 Purchaser hereby agrees to indemnify and hold Seller
harmless from and against any and all liabilities or responsibility whatsoever
in any manner arising out of or attributable to the ownership, custody,
movement, sale, use, operation or disposition of the Aircraft.
3.9 Sale Closing Adjustments. At the closing, the Purchase Price shall
be adjusted as of the Closing Date as follows:
3.9.1 Taxes and Other Expenses. Purchaser hereby agrees to pay
the taxes, duties or fees that may be assessed or levied by any federal, state
or local taxing authority as a result of the sale, delivery, re-registration or
ownership of the Aircraft, but specifically excluding any capital gains, income
or other similar taxes of Seller and Purchaser shall indemnify Seller and hold
Seller harmless from all liability of loss, cost and expense by reason thereof.
4. GENERAL TERMS
----------------
4.1 Acceptance/Effectiveness of Agreement. Each of the terms contained
in this Agreement are conditioned upon each of the other terms contained herein.
Accordingly, neither Seller nor Purchaser shall have any obligation hereunder if
this Agreement is canceled pursuant to its terms. Purchaser must execute this
Agreement and deliver such executed copies to Seller not later than 5:00 p.m. on
February 11, 1998. Purchaser's execution hereof shall constitute an agreement by
Purchaser to perform and satisfy all of the other terms and conditions of this
Agreement no later than the Closing Date.
4.2 Matters to be Completed on Closing Date. Among other matters, on
the Closing Date: (i) Seller shall deliver to Purchaser the Bill of Sale; and
(ii) Purchaser and Seller shall execute such documents as are necessary to
reduce the principal amount of the Subordinated Promissory Note
3
<PAGE> 4
by an amount equal to the Purchase Price. Seller shall deliver to Purchaser
possession of the Aircraft, including any log books and other records that the
Seller may have pertaining to the Aircraft.
4.3 Notice. All notices are required to be given or given hereunder
shall be in writing or by telecommunication device capable of creating a written
record, including without limitation, telefax or telecopy, and shall be deemed
to have been "received" when delivered by hand, courier, telefax or telecopy or,
if mailed three (3) days after deposit of same in the United States Mail
provided, in such latter event, that the notice is sent by certified mail with
postage fully prepaid thereon. All notices must be addressed as follows:
If to Seller: If to Purchaser:
MPW Industries Services, Inc. Miramonte Aviation, LLC
9711 Lancaster Road, S.E. 1400 Stringtown Road
Hebron, Ohio 43205 Lancaster, Ohio 43130
Fax No. (614) 928-3309 Fax No. (614) 928-3309
or to such other person or address as a party receiving such notice shall have
requested in writing in accordance with the provisions of this Section 4.3.
4.4 Further Assurances. Each party hereto shall execute and deliver
such other and further documents or perform such acts as may be reasonably
requested by the other to confirm and consummate the transaction evidenced
hereby.
4.5 Complete Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the Aircraft, and there are no other
agreements m existence as of the date hereof. Any amendment to this Agreement
shall be valid only if the same is in writing and executed by the parties
hereto.
4.6 Seller's Successors and Assigns. This Agreement shall inure to the
benefit of Seller's successors and assigns and the same shall be bound hereby.
4.7 Time of the Essence. Time is of the essence with respect to the
performance by Purchaser of the terms and conditions of this Agreement.
4.8 Applicable Law. This Agreement and the construction and enforcement
hereof shall be governed by the laws of the State of Ohio.
4.9 Return of Documents. If this Agreement is terminated for any reason
whatsoever and Purchaser is entitled to return of the Deposit, Purchaser shall
properly deliver to Seller all documents received from Seller or its agents and
representatives in connection with this matter including all reports received
from Seller with respect to the Aircraft.
4.10 Enforceability. If any one or more provisions of this Agreement
shall be found to be illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date first above
written.
"SELLER"
MPW INDUSTRIAL SERVICES, INC.
By: /s/ Daniel P. Buettin
---------------------------------------
Its: Vice President, Chief Financial Officer
---------------------------------------
and Secretary
---------------------------------------
Dated: February 11, 1998
"PURCHASER"
MIRAMONTE AVIATION, LLC
By: /s/ Monte R. Black
---------------------------------------
Its: President
---------------------------------------
Dated: February 11, 1998
5
<PAGE> 6
EXHIBIT 2.1
DESCRIPTION OF AIRCRAFT
-----------------------
Make and Model: 1989 Cessna Citation V Airframe
-------------------------------
Serial Number: 560-0007
-------------------------------
Registration #: N57VP
-------------------------------
Make and Model Engines:
-------------------------------
Engine Serial #:
-------------------------------
Avionics:
-------------------------------
<PAGE> 7
EXHIBIT 3.8.5
BILL OF SALE
------------
<PAGE> 1
EXHIBIT 10(f)
-----------------------------------------------------------------------
AIRCRAFT LEASE
DATED AS OF FEBRUARY 11, 1998
BETWEEN
MIRAMONTE AVIATION, LLC,
as Lessor
AND
MPW MANAGEMENT SERVICES CORP.,
as Lessee
-----------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
Definitions...................................................................1
SECTION 1. LEASE OF AIRCRAFT................................................4
SECTION 2. TERM, RENT AND LESSOR USAGE......................................4
SECTION 3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
LESSOR...........................................................5
SECTION 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
LESSEE...........................................................6
SECTION 5. NET LEASE........................................................7
SECTION 6. RETURN OF AIRCRAFT...............................................7
SECTION 7. LIENS............................................................8
SECTION 8. TAXES............................................................8
SECTION 9. MAINTENANCE AND OPERATION; COMPLIANCE AND USE;
REPLACEMENT PARTS; ADDITIONS.....................................9
SECTION 10. INSPECTION......................................................11
SECTION 11. LOSS OR DESTRUCTION; REQUISITION OF USE.........................11
SECTION 12. INSURANCE.......................................................12
SECTION 13. INDEMNIFICATION.................................................13
SECTION 14. SUBLEASE; POSSESSION............................................14
SECTION 15. TAX INDEMNIFICATION.............................................14
SECTION 16. EVENT OF DEFAULT................................................15
SECTION 17. REMEDIES........................................................17
SECTION 18. NOTICES.........................................................17
SECTION 19. SUCCESSORS AND ASSIGNS..........................................18
i
<PAGE> 3
SECTION 20. MISCELLANEOUS...................................................18
SECTION 21. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR..................19
SECTION 22. TRUTH-IN-LEASING................................................19
ii
<PAGE> 4
AIRCRAFT LEASE
--------------
THIS AIRCRAFT LEASE dated as of February 11, 1998 (the "Lease"),
between MIRAMONTE AVIATION, LLC ("Lessor") and MPW MANAGEMENT SERVICES CORP., an
Ohio corporation ("Lessee"). Certain capitalized terms as used in this Lease are
defined below, and such definitions are hereby incorporated herein and made a
part hereof.
DEFINITIONS
(a) All references in the Lease to designated Sections and other
Sections and other subdivisions are to such designated Sections and other
subdivisions only, and the words "herein", "hereof" and "hereunder" and other
words of similar import refer to the Lease as a whole and not to any particular
Section or other subdivision.
(b) Except as otherwise indicated, all the agreements or instruments
defined herein or shall mean such agreements or instruments as the same may from
time to time be supplemented or amended or the terms thereof waived or modified
to the extent permitted by, and in accordance with, the terms thereof.
(c) The terms defined in this Lease shall, for purposes of the lease
and all Exhibits hereto, have the meanings assigned to them and shall include
the plural as well as the singular.
(d) The following terms shall have the following meanings for all
purposes of the Lease:
"Abatement" shall have the meaning defined in Section 5.
"Aircraft" shall mean the 1989 Cessna Citation V Airframe,
Manufacturer's Serial Number 560-0007, Registration Number N57VP
delivered and leased under the Lease with (i) the Engines installed on
such Airframe, and (ii) all Parts leased in connection therewith.
"Airframe" shall mean the Aircraft defined herein and any and all Parts
so long as the same shall be incorporated or installed in or attached
to such aircraft, or so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 11 of the Lease. Unless
the context requires otherwise, the term Airframe shall not include the
Engines from time to time installed on the Airframe.
"Casualty Value" means the value of the Aircraft on the date of an
Event of Loss which will be calculated based on the assessment of an
agreed upon third party aircraft valuation expert.
"Claims" shall have the meaning defined in Section 13.
"Daily Prorated Rent" shall mean the Rent divided by 365, which equals
$965.30.
<PAGE> 5
"Default" shall mean an event that, after the giving of notice or lapse
of time, or both, would constitute an Event of Default.
"Depreciation Deduction" shall have the meaning set forth in the
definition of "Tax Benefits."
"Delivery Date" shall mean the date the Aircraft is delivered by Lessor
and accepted by Lessee under this Lease.
"Engine" shall mean (i) the two JT 15D-5A engines described in the Used
Aircraft Purchase Agreement and originally installed on the Airframe
covered by such Lease Supplement whether or not from time to time
thereafter no longer installed on such Airframe, and (ii) any engine
which may from time to time be substituted for an Engine leased
thereunder; together in each case with any and all Parts incorporated
or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto shall remain vested in Lessor after
removal from such Engine.
"Engines" shall mean, as of any date of determination, all Engines then
leased under the Lease.
"Event of Default" shall have the meaning set forth in Section 16 of
the Lease.
"Event of Loss" with respect to the Aircraft, the Airframe or any
Engine shall mean any of the following events with respect to such
property: (i) loss of such property or the use thereof for more than
sixty (60) days due to theft, disappearance, destruction, damage beyond
repair or rendition of such property permanently unfit for normal use
for any reason whatsoever; (ii) any damage to such property that
results in an insurance settlement with respect to such property on the
basis of a total loss; (iii) the condemnation, confiscation or seizure
of, or requisition of title to or use of, except for a period not
extending beyond the term of the Lease, such property by the act of any
government (foreign or domestic) or of any state or local authority or
any instrumentality or agency of the foregoing ("Requisition of Use");
(iv) as a result of any rule, regulation, order or other action by any
government (foreign or domestic) or governmental body (including,
without limitation, the Federal Aviation Administration or any foreign
governmental body) having jurisdiction, the use of such property shall
have been prohibited, or such property shall have been declared unfit
for use, for a period of six consecutive months, unless Lessor, prior
to the expiration of such six-month period, shall have undertaken and,
in the opinion of Lessor, shall be diligently carrying forward all
steps that are necessary or desirable to permit the normal use of such
property by Lessee or, in any event, if use shall have been prohibited,
or such property shall have been declared unfit for use, for a period
of twelve consecutive months, (v) with respect to an Engine, the
removal thereof from the Airframe for a period of six months or longer,
whether or not such Engine is operational; (vi) such property shall be
returned to the manufacturer other than for modification in the event
of patent infringement or for repair or replacement (any such return
being herein referred to as a "Return to Manufacturer"). The date of
such
2
<PAGE> 6
Event of Loss shall be the date of such theft, disappearance,
destruction, damage, Requisition of Use, unfitness for use for the
stated period or Return to Manufacturer. An Event of Loss with respect
to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe that is part of such Aircraft. An
Event of Loss with respect to any Engine shall not, without loss of the
Airframe, be deemed an Event of Loss with respect to the Aircraft.
"Expiration Date" shall mean the date on which the original Lease Term
expires.
"Extension Period" shall mean any period in which the Lease is in
effect after the Expiration Date.
"FAA" and "Federal Aviation Administration" means the United States
Federal Aviation Administration, the administrator thereof and any
agency or instrumentality of the United States government succeeding to
their functions.
"Federal Aviation Act" shall mean the Federal Aviation Act of 1958, as
amended.
"Impositions" shall have the meaning set forth in Section 8 of the
Lease.
"Lessor's Lien" shall mean a Lien on or in respect of the Aircraft or
any part thereof securing a claim against Lessor or any other Person
that claim results from an act or omission on the part of Lessor or a
claim arising by, through or under Lessor.
"Liens" shall mean any mortgage, pledge, lien, charge, disposition of
title, encumbrance, lease, exercise of rights, security interest,
easement, servitude, or claim of any kind whatsoever.
"Loss" and "Foreign Loss" shall have the meanings set forth
respectively in Section 15 of the Lease.
"Maintenance Cost Limitation" shall have the meaning set forth in
Section 9.1.
"Parts" shall mean all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other
than Additions or complete Engines), which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine.
"Person" shall mean any individual, partnership, corporation, trust,
unincorporated association or joint venture, a government or any
department or agency thereof, or any other entity.
"Rent" shall mean the Base Rent and Excess Rent as defined in Section
2.2 hereof.
"Replacement Parts" shall have the meaning set forth in Section 9 of
the Lease.
3
<PAGE> 7
"Tax Benefits" shall mean certain assumptions of Lessor with respect to
its treatment of the Aircraft Lessor's rights hereunder for income tax
purposes, as follows: (i) that the Lessor will be treated as owner of
the Aircraft for Federal, state and local income tax purposes; (ii)
that the Lessor will be entitled to the maximum depreciation deductions
allowable pursuant to Section 167(a) of the Code ("Depreciation
Deduction") determined pursuant to Section 168(a) of the Code,
beginning in Lessor's taxable year that includes the Delivery Date;
(iii) that the Depreciation Deduction is determined on a five (5) year
recovery period, as defined in Section 168(c) of the Code and the
applicable depreciation method pursuant to Section 168(b) of the Code;
and (iv) that the Depreciation Deduction over the recovery period shall
be Lessor's Cost.
"Term" shall have the meaning set forth in Section 2.1.
"Used Aircraft Purchase Agreement" means agreement UA-9522 between The
Cessna Aircraft Company and MPW Industrial Services, Inc. dated
September 15, 1995 and attached hereto as Exhibit One.
SECTION 1. LEASE OF AIRCRAFT
Lessee hereby agrees to lease from Lessor the Aircraft pursuant to the
terms and conditions of this Lease.
SECTION 2. TERM, RENT AND LESSOR USAGE
2.1 Except as set forth in the next succeeding sentence, the leasing of
the Aircraft by Lessor to Lessee shall be for a Term beginning on February 1,
1998 and ending on January 31, 2003 unless this Lease shall have been terminated
or extended in accordance with the terms hereof. Notwithstanding the previous
sentence, either party shall have the right to terminate this lease on not less
than 120 days' prior written notice to the other party, and the date set forth
in such written notice shall be deemed to be the expiration of the Term.
2.2 Lessee shall pay Lessor Rent in the amount of $360,000 per year
(the "Base Rent"), payable in equal monthly installments of $30,000 per month on
the 1st day of each month commencing February 1, 1998 plus applicable state and
local sales taxes with respect to this Lease and payable in United States
currency. The parties agree that the Base Rent is calculated on the basis that
Lessee will use the Aircraft for no more than 250 engine hours per year (the
"Base Usage"). To the extent that for any year of the Term, the Aircraft is used
for more than the Base Usage, Lessee shall pay to Lessee, no later than 45 days
following the end of such year, an amount equal to $250 for each engine hour
that the Aircraft is used by Lessee in excess of the Base Usage (the "Excess
Rent").
2.3 All payments of Rent hereunder shall be made on the date payable
hereunder to Lessor in immediately available funds or by check at 1400
Stringtown Road, Lancaster, Ohio 43130, Attn: Monte R. Black, or at such other
address or to such other Person as Lessor may direct by notice in writing to
Lessee.
4
<PAGE> 8
2.4 As additional consideration for this Lease, Lessee agrees that
Lessor shall have the right to use the Aircraft, including the pilots, fuel and
other goods and services provided with the Aircraft, at mutually convenient
times. Lessor agrees to pay Lessee for such use of the Aircraft at a rate of
$700 per engine hour, which amount shall be payable upon receipt of an invoice
therefor, or may be setoff by Lessee from amounts of Rent due hereunder.
SECTION 3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
LESSOR
Lessor represents, warrants and agrees:
3.1 that during the term of this Lease as long as no Event of Default
has occurred, Lessee's use of the Aircraft shall not be interrupted by Lessor or
anyone claiming through or under Lessor.
3.2 that Lessor is a limited liability company with authority to enter
into, and consummate, the transactions contemplated by, this Lease and that this
Lease has been duly authorized, executed and delivered by the Lessor and
constitutes a valid, enforceable and binding obligation of the Lessor in
accordance with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general application affecting the
enforcement of creditor's rights and general principles of equity, including
without limitation, specific performance.
LESSEE EXPRESSLY AGREES TO LEASE THE AIRCRAFT "AS-IS, WHERE-IS". LESSOR
SHALL NOT BE DEEMED TO HAVE MADE, AND LESSOR HEREBY DISCLAIMS, ANY OTHER
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN OR CONDITION OF THE
AIRCRAFT, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE
QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT TO THE PROVISIONS AND
SPECIFICATIONS OF ANY PURCHASE AGREEMENT OR AGREEMENTS RELATING THERETO, THE
ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR THE
ABSENCE OF ANY INFRINGEMENT OR ANY PATENT, TRADEMARK OR COPYRIGHT, NOR SHALL
LESSOR BE LIABLE REGARDLESS OF ANY ACTUAL OR ALLEGED NEGLIGENCE OF LESSOR, OR
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR STRICT OR ABSOLUTE LIABILITY IN
TORT, AND ANY RISKS WITH RESPECT THERETO SHALL BE ASSUMED BY LESSEE. THE
FOREGOING SHALL NOT, HOWEVER, BE CONSTRUED TO RELIEVE LESSOR FROM LIABILITY TO
LESSEE FOR DAMAGES PROXIMATELY CAUSED BY LESSOR'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OR LESSOR'S ACTS OF NEGLIGENCE IN THE UNDERTAKING OF AFFIRMATIVE
ACTS. The warranties set forth hereinabove are in lieu of all other warranties
of Lessor, whether written, oral or implied with respect to this Lease or the
Aircraft, and Lessor shall not be deemed to have modified in any respect the
obligations of Lessee pursuant to Section 5 hereof, which obligations are
absolute and unconditional.
5
<PAGE> 9
SECTION 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE
Lessee represents, warrants and agrees as follows:
4.1 DUE ORGANIZATION. Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio. Lessee is and
will continue to be a "Citizen of the United States" within the meaning of
Section 101(16) of the Federal Aviation Act, and has the corporate power and
authority to carry on its business as presently conducted, to hold property
under lease and to enter into and perform its obligations under this Lease.
4.2 DUE AUTHORIZATION; ENFORCEABILITY. The Lease has been duly
authorized by all necessary corporate action on the part of Lessee and does not
require any approval of the stockholders of Lessee, and has been or will be duly
executed and delivered by Lessee and, assuming due authorization, execution and
delivery by the other party thereto, is or will be legal, valid and binding
obligations of Lessee, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
laws of general application affecting the enforcement of creditor's rights and
general principles of equity, including without limitation, specific
performance.
4.3 NO VIOLATION. The execution and delivery of the Lease by Lessee is
not, and the performance by it of its obligations under the Lease will not be,
inconsistent with its articles of incorporation or code of regulations, does not
and will not contravene any law, governmental rule or regulation, judgment or
order applicable to or binding on Lessee, does not and will not contravene any
provision of, or constitute a default or result in the creation of any Lien
(other than as permitted by Section 7 hereof) under any indenture, mortgage,
contract or other instrument to which Lessee is a party or by which it is bound,
and does not and will not require any approval or consent of any trustee or
holders of indebtedness or obligations of Lessee, except such as have been duly
obtained.
4.4 GOVERNMENTAL APPROVALS. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of or by, any
Federal, state or local governmental authority or agency except with respect to
the operation and maintenance of Aircraft (including, without limitation, the
Federal Aviation Administration) or other Person is required with respect to the
execution, delivery and performance by Lessee under the Lease or the
consummation of any of the transactions by Lessee contemplated hereby or
thereby, or if any such approval, notice, registration or action is required, it
has been duly given or obtained.
4.5 LOCATION OF CHIEF EXECUTIVE OFFICES. The chief executive office or
chief place of business (as either of such terms is used in Article 9 of the
Uniform Commercial Code) of Lessee is 9711 Lancaster Road S.E., P.O. Box 895,
Hebron, Ohio 43205, and Lessee agrees to give Lessor not less than ten (10) days
prior written notice of any relocation of said chief executive office or chief
place of business from its present location.
4.6 COPIES ON AIRCRAFT. A copy of this Lease, related Lease
Supplements, and a current and valid AC Form 8050-1 will be kept on the Aircraft
at all times during the term of this Lease.
6
<PAGE> 10
SECTION 5. NET LEASE
This Lease is a net lease, and Lessee acknowledges and agrees that
Lessee's obligation to pay all Rent hereunder, and the rights of Lessor in and
to such Rent, shall be absolute and unconditional and shall not be subject to
any abatement, reduction, set-off, defense, counterclaim or recoupment
("Abatements") for any reason whatsoever, including without limitation,
Abatements due to any present or future claims of Lessee against Lessor under
this Lease or otherwise, against the Airframe Manufacturer or Engine
Manufacturer or against any other Person other than Lessor for whatever reason.
Except as otherwise expressly provided herein, this Lease shall not terminate,
nor shall the obligations of Lessee be affected, by reason of any defect in or
damage to, or any loss or destruction of, the Aircraft or any part thereof from
whatsoever cause, or the interference with the use thereof by Lessor or any
Person, or the invalidity or unenforceability or lack of due authorization of
this Lease or lack of right, power or authority of Lessor or Lessee to enter
into this Lease, or for any other cause, whether similar or dissimilar to the
foregoing, any present or future law or regulation to the contrary
notwithstanding, it being the express intention of Lessor and Lessee that all
Rent payable by Lessee hereunder shall be, and continue to be, payable in all
events unless the obligation to pay the same shall be terminated pursuant to the
express provisions of this Lease. Provided, however, nothing contained herein
shall be deemed a waiver of or prevent Lessee from enforcing any of its rights
against Lessor hereunder.
SECTION 6. RETURN OF AIRCRAFT
6.1 MANUALS AND RECORDS. Upon the expiration or termination of this
Lease (except under Section 11), Lessee, at its own expense, will return the
Aircraft to Lessor and shall deliver all logs, manuals and data, including
without limitation inspection, modification and overhaul records required to be
maintained with respect thereto under this Lease or under the applicable rules
and regulations of the Federal Aviation Administration, along with a currently
effective Federal Aviation Administration airworthiness certificate to Lessor to
any location within the continental United States as Lessor shall direct.
Subject to the consent of the maintenance or warranty provider, as applicable,
Lessee shall, upon request, assign to Lessor its rights under any maintenance
service contract or warranty for the Aircraft, any Engine or Part thereof. All
expenses for return of the Aircraft and delivery of the aforementioned logs,
manuals and data shall be borne by Lessee, except that any cost to assign any
maintenance contract or warranty shall be Lessor's obligation. If Lessee desires
to obtain for its own use the United States "N" registration number that is on
the Airframe, prior to the return of the Aircraft to Lessor, Lessee, at its
expense, shall make application to the FAA for a new "N" number designated by
Lessor, and shall have such new number painted on the Airframe in such location
and to such specifications as Lessor shall direct.
6.2 CONDITION OF AIRCRAFT. The Aircraft when returned to Lessor shall
be in as good operating condition as when delivered to Lessee, ordinary wear and
tear and Event of Loss excepted. In addition, the Aircraft shall be returned (a)
in the condition in which the Aircraft is required to be maintained pursuant to
Section 9 hereof, but with all logos or other identifying marks of Lessee
removed; (b) free and clear of all Liens other than Lessor's liens; (c) such
that each Engine is current on the service required under the Engine
Manufacturer's maintenance service program or an equivalent service program
authorized in writing by Lessor.
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6.3 DELAYED RETURN. If Lessee fails to return the Aircraft on
termination or expiration of the Term, Lessor shall be entitled to damages equal
to the Daily Prorated Rent for the Aircraft. Such damages for retention of the
Aircraft after termination or expiration of the Term shall not be interpreted as
an extension or reinstatement of the Term.
6.4 SURVIVAL. All of Lessor's rights contained in this Section shall
survive the expiration or other termination of this Lease.
SECTION 7. LIENS
Title to the Aircraft shall remain in the Lessor exclusively. Lessee
will not directly or indirectly create, incur, assume or suffer to exist any
Liens on or with respect to the Aircraft or any part thereof, Lessor's title
thereto or any interest of Lessor therein (and Lessee will promptly, at its own
expense, take such action as may be necessary duly to discharge any such Lien),
except (a) the respective rights of Lessor and Lessee as herein provided, (b)
the rights of others under agreements or arrangements to the extent expressly
provided by the terms of Section 16 hereof, (c) Lessor's Liens, (d) Liens for
taxes either not yet due or being contested by Lessee in good faith (and for the
payment of which adequate assurances in Lessor's reasonable judgment have been
provided Lessor), and (e) inchoate materialmen's, mechanics', workmen's,
repairmen's, employees' or other like Liens arising in the ordinary course of
business of Lessee for sums not yet delinquent or being contested in good faith
(and for the payment of which adequate assurances in Lessor's reasonable
judgment have been provided Lessor).
SECTION 8. TAXES
Lessee shall not be liable for any taxes on or measured by the income
or net worth of Lessor. Lessee agrees to pay and to indemnify Lessor for, and
hold Lessor harmless from and against, all other license and registration fees,
sales, use, excise, personal property, ad valorem, value added, leasing, leasing
use, stamp, landing, airport use or other taxes, levies, imposts, duties,
charges, or withholdings of any nature, together with any penalties, fines or
interest thereon ("Impositions"), arising out of the transactions contemplated
by this Lease and imposed against Lessor, Lessee or the Aircraft or any part
thereof by any Federal, state, local or foreign government or other taxing
authority upon or with respect to the Aircraft or any part thereof or upon the
sale, purchase, ownership, delivery, leasing, possession, use, operation,
return, transfer or other disposition thereof or upon the rentals, receipts or
earnings arising therefrom (other than those Impositions arising therefrom after
the expiration of the Lease term, for which Lessor shall be responsible), or
upon or with respect to this Lease, unless, and only to the extent that, Lessee
shall have given to Lessor written notice of any such Imposition, which notice
shall state that such Imposition is being contested by Lessee in good faith with
due diligence and by appropriate proceedings. The foregoing notwithstanding,
Lessor, not Lessee, shall be responsible for any Impositions, including but not
limited to fines, penalties and interest, resulting from Lessor's failure to
file returns, reports and/or pay in a timely manner any Impositions assessed
Lessor, unless Lessor and Lessee agree in writing that Lessee and not Lessor
will file any such returns or reports. If a claim is made against Lessee or
Lessor for any Imposition, the party receiving notice of such claim shall
promptly notify the other, but the failure of either party to so notify the
other shall not relieve Lessee of its obligation under this Section to indemnify
Lessor, provided that the party failing to promptly notify the other party shall
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be liable for any and all damages, costs, fines, pending, and/or other expense
proximately caused by such failure.
SECTION 9. MAINTENANCE AND OPERATION; COMPLIANCE AND USE; REPLACEMENT PARTS;
ADDITIONS
9.1 MAINTENANCE AND OPERATION. Except as set forth in the next
succeeding sentence, Lessee shall (i) maintain, inspect, service, repair,
overhaul and test the Airframe and each Engine in accordance with (a) all
required procedures under any maintenance manuals initially furnished with the
Aircraft, including any subsequent amendments or supplements to such manuals
issued by the Airframe Manufacturer or Engine Manufacturer from time to time,
(b) all mandatory "Service Bulletins" and "Aircraft Modification Kits" issued,
supplied, or available by or through the Airframe Manufacturer and/or the Engine
Manufacturer with respect to the Aircraft, and (c) all "airworthiness alerts"
and Airworthiness Directives issued by the Federal Aviation Administration or
similar regulatory agency having jurisdictional authority, and whenever possible
causing compliance to such Directives to be completed through corrective
modification in lieu of operating manual restrictions; (ii) maintain all
records, logs and other materials required by the Federal Aviation
Administration to be maintained in respect of the avionics, Airframe and each
Engine or by the Airframe Manufacturer or Engine Manufacturer for enforcement of
any warranties; (iii) with due diligence after written request, furnish to
Lessor such information as may be required to enable Lessor to timely file any
reports required by any governmental authority as a result of Lessor's ownership
of the Aircraft; and (iv) not change the Aircraft's primary hangar location
without the consent of Lessor, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Lessor shall be responsible for the costs and
expenses of the Hot Section Inspection and 3,000 Hours Time Between Overhaul, as
such terms are defined in the Cessna Maintenance Manual. Lessee shall not remove
the Aircraft from the Continental United States, or from the base indicated for
a period in excess of thirty (30) days, without the express, prior written
consent of Lessor. All maintenance procedures required by Section 9.1(i) shall
be undertaken and completed in accordance with Airframe Manufacturer's or Engine
Manufacturer's required procedures, and only by properly trained, licensed, and
certificated maintenance sources and maintenance personnel, so as to keep the
Airframe and each Engine in as good operating condition as when delivered to
Lessee hereunder, ordinary wear and tear excepted, and so as to keep the
Aircraft in such operating condition as may be necessary to enable the
airworthiness certification of such Aircraft to be maintained in good standing
at all times under the Federal Aviation Act. Lessee further agrees that it shall
comply with the Engine Manufacturer's maintenance service program currently in
force (a certified copy of which has been provided to Lessor), or an equivalent
maintenance program authorized in writing by Lessor, for the full term of the
Lease and shall take all steps necessary under the terms thereof to keep such
maintenance service program in effect with respect to the Engines.
9.2 COMPLIANCE AND USE. Lessee agrees that the Aircraft will be
maintained, used and operated in compliance with any and all statutes, laws,
ordinances, regulations and mandatory standards or directives issued by any
governmental agency applicable to the maintenance, use or operation thereof, in
compliance with any airworthiness certificate, license or registration relating
to the Aircraft issued by any agency and in a manner that does not modify or
impair any existing warranties on the Aircraft or any part thereof. Lessee also
represents and warrants that it will operate the Aircraft primarily in the
conduct of its business and not operate or permit the Aircraft to be
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operated at any time or in any geographic area when insurance required by the
provisions of Section 12 hereof shall not be in effect. Throughout the term of
this Lease, except as otherwise expressly stated, the possession, use and
maintenance of the Aircraft shall be at the sole risk and expense of Lessee and
the Aircraft shall be based and properly hangared at the primary hanger
location. At all times the Aircraft will be operated only by duly-qualified,
currently-certificated pilots having the minimum total pilot hours required by
the requirements of Lessee's insurance carriers, and for such certification by
the Federal Aviation Administration.
9.3 REPLACEMENT PARTS. Lessee shall as soon as practicable replace all
Parts that may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered or declared
unfit for use for any reason whatsoever (such substituted parts hereinafter
called Replacement Parts). In addition, in the ordinary course of maintenance,
service, repair, overhaul or testing, Lessee may, at its own cost and expense,
remove serviceable parts, provided that Lessee shall, at its own cost and
expense, replace such serviceable Parts as promptly as practicable. All
Replacement Parts shall be free and clear of all Liens except Lessor Liens and
shall be in as good operating condition as, and shall have a value and utility
as least equal to, the Parts replaced assuming such replaced Parts were in the
condition and repair required to be maintained by the terms hereof. All Parts at
any time removed from the Airframe or any Engine shall remain the property of
Lessor, no matter where located, until such time as such Parts shall be replaced
by Parts that have been incorporated or installed in or attached to the Airframe
or such Engine and which meet the requirements for Replacement Parts specified
above. Immediately upon any Replacement Part becoming incorporated or installed
in or attached to the Airframe or any Engine as above provided, without further
act, (a) title to the removed Part shall thereupon vest in Lessee, free and
clear of all rights of Lessor and shall no longer be deemed a Part hereunder,
(b) title to such Replacement Part shall thereupon vest in Lessor, and (c) such
Replacement Part shall become subject to the Lease and be deemed part of the
Airframe or Engine, as the case may be, for all purposes hereof to the same
extent as the Parts originally incorporated or installed or attached to the
Airframe or such Engine.
9.4 AIRCRAFT MARKING. Lessee agrees, at its own cost and expense, to
(a) cause the Airframe and the Engines to be conspicuously identified with the
Registration Number N57VP; (b) notify Lessor of any change in an Engine serial
number resulting from a replacement of an Engine pursuant to this Lease and file
an appropriate Lease Supplement with the FAA with respect thereto; (c)
prominently display on the Aircraft the Registration Number N57VP; (d) affix and
maintain in the Aircraft reasonably adjacent to the airworthiness certificate a
nameplate bearing the Aircraft Registration Number and such other markings as
from time to time may be required by law or otherwise deemed necessary or
advisable by Lessor in order to protect the title of Lessor to the Aircraft and
the rights of Lessor under this Lease.
9.5 ALTERATIONS. Lessee shall not make any alterations, additions, or
improvements to the Aircraft without the express, prior written consent of
Lessor. Any additions and improvements to the Aircraft during the term of this
Lease shall be at the sole cost and expense of Lessor. All additions and
improvements of whatsoever kind or description made to the Aircraft shall belong
and become the property of Lessor upon their creation and Lessee shall have no
interest therein.
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SECTION 10. INSPECTION
Lessor shall have the right, upon reasonable notice, but not the duty,
to inspect the Aircraft and any Engine at any reasonable time at Lessee's
primary hangar location. Lessee shall, at any reasonable time, make Lessee's
books and records pertaining to the Aircraft available to Lessor for inspection
at Lessee's primary hangar location.
SECTION 11. LOSS OR DESTRUCTION; REQUISITION OF USE
11.1 NOTIFICATION OF EVENT OF LOSS AIRCRAFT. Upon the occurrence of an
Event of Loss with respect to the Airframe, or any Engine (whether or not then
installed on such Airframe), or any engine installed on such Airframe, Lessee
shall notify Lessor thereof within ten (10) days of the date thereof. Within
thirty (30) days following the date of an Event of Loss with respect to the
Airframe or the Airframe and any Engines then installed thereon Lessee shall pay
the lessor the Casualty value of the Aircraft determined as of the Rent Date
immediately preceding the date of such Event of Loss plus an amount equal to the
Daily Prorated Rent, together with any Rent then due. Upon making Payment of
such Casualty Value in respect thereof and all Rent due and owing with respect
thereto, Lessee's obligation to pay further Rent for the Aircraft for months
commencing subsequent to such Event of Loss shall cease. Upon making the payment
of the Casualty Value together with any rent due and owing, Lessor shall convey
all of Lessor's right, title and interest in the Aircraft to Lessee or to
Lessee's insurance carrier, as Lessee may direct, free and clear of any and all
Lessor's Liens and Lessor shall have no further rights, title or interest in the
Aircraft.
11.2 RISK OF LOSS: NO RELEASE OF OBLIGATIONS. Lessee shall bear the
risk of loss and shall not be released from its obligations hereunder in the
event of any damage to the Aircraft or any part thereof or any Event of Loss
relating thereto.
11.3 APPLICATION OF INSURANCE PROCEEDS. As between Lessor and Lessee,
it is agreed that all insurance proceeds under policies required hereby received
as the result of the occurrence of an Event of Loss with respect to the Aircraft
will be applied as follows: proceeds that shall not exceed the Casualty Value
required to be paid by Lessee pursuant to Section 11.1 shall be applied in
reduction of Lessee's obligation to pay such Casualty Value, if not already paid
by Lessee, or, if already paid by Lessee and no Event of Default has occurred
and is continuing shall be applied to reimburse Lessee for its payment of such
Casualty Value, and the balance, if any, of such insurance proceeds remaining
thereafter will be paid to the order of Lessee. The proceeds of any insurance
received by Lessor on account of or for any loss not constituting an Event of
Loss shall be released upon written application signed by the President, the
Treasurer or a Vice President of Lessee for the payment of, or to reimburse the
Lessee for the payment of, the cost of repairs and Replacement Parts (which
application shall be accompanied by evidence satisfactory to Lessor of such cost
and evidence of good title to such Replacement Parts in Lessor and a statement
(i) that such repairs have been completed and (ii) that no Event of Default has
occurred and is continuing) and any balance remaining shall be paid to Lessee;
provided that, if Lessee is at the time of such application or payment in
Default in the payment of any other liability of Lessee to Lessor hereunder,
such proceeds may be applied against any such liability by Lessor in its sole
discretion, and such amount shall be paid to Lessee at such time as there no
longer exists any Default or Event of Default.
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SECTION 12. INSURANCE
12.1 PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE. Lessee represents
and warrants that it will maintain in effect, at its own expense, with insurers
of recognized responsibility reasonably satisfactory to Lessor, (a) public
liability insurance against personal injury and property damage claims
(including, without limitation, passenger legal liability) in an amount not less
than $ 50,000,000 for each single occurrence and (b) such other property damage
insurance (exclusive of manufacturer's product liability insurance) with respect
to the Aircraft as is the type and in the amounts usually carried by
corporations engaged in the same or a similar business, similarly situated with
Lessee, and owning or operating similar aircraft and engines and which covers
risks of the kind customarily insured against by such corporation. Lessee shall
provide at its own expense workmen's compensation insurance with all-states
coverage for the crew and maintenance personnel.
12.2 INSURANCE AGAINST LOSS OR DAMAGE TO THE AIRCRAFT. Lessee
represents and warrants that it will maintain in effect, at its own expense,
with insurers of recognized responsibility reasonably satisfactory to Lessor,
all-risk ground and flight aircraft hull insurance covering the Aircraft,
including F.O.D. (foreign object damage), fire and explosion coverage, ingestion
and lightning and electrical damage, and with respect to any Engines or Parts
while removed form the Aircraft, and with respect to any engines or parts while
temporarily installed on the Aircraft, provided that such insurance shall at all
times while the Aircraft is subject to this Lease be for an amount that, when
paid, will be not less than the greater of Fair Market Sales Value or the
Casualty Value of the Aircraft from time to time. Not less than five (5) days
prior to the expiration of any policy of insurance, Lessee shall deliver to
Lessor renewals or new policies in like amounts covering the same risks.
12.3 LESSOR AS ADDITIONAL INSURED; NOTICE. Any policies of insurance
carried in accordance with this Section and any policies taken out in
substitution or replacement for any such policies (a) shall be amended to name
Lessor, as owner of the Aircraft, as additional named insured as its interest
may appear, (b) with respect to insurance carried in accordance with Section
12.2 covering the Aircraft shall provide that any amount(s) payable thereunder
shall be paid to Lessor as loss payee (and such amounts shall be disbursed by
Lessor to Lessee or other appropriate Person in payment of the costs actually
incurred with respect to repairs made to the Aircraft so as to restore it to the
operating condition required by Section 9 hereof or shall be disbursed by Lessor
as otherwise required by this Lease), (c) shall provide that if the insurers
cancel such insurance for any reason whatsoever, or any substantial change is
made in the coverage that adversely affects the interests of Lessor, or the same
is allowed to lapse for nonpayment of premium or such insurance coverage is
reduced, such cancellation, change, lapse or reduction shall not be effective as
to Lessor for thirty (30) days following receipt by Lessor of written notice by
such insurers of such cancellation, change, lapse or reduction and (d) shall
provide that in respect of the interest of Lessor in such policies the insurance
shall not be invalidated by any action or inaction of Lessee or any other Person
(other than Lessor) and shall insure Lessor's interest, as it appears,
regardless of any breach or violation of any warranties, declarations or
conditions contained in such policies by Lessee or any other Person (other than
Lessor). Each insurance policy and its respective coverage amounts obtained in
accordance with the requirements set forth in Sections 12.1 and 12.2 shall (i)
be primary without right of contribution from any other insurance that is
carried by Lessor to the extent that such other insurance provides Lessor with
contingent and/or excess liability insurance with respect to its interest as
such in the Aircraft and (ii) expressly provide that all of the provisions
thereof, except the limits of liability, shall
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operate in the same manner as if there were a separate policy covering each
insured, and shall waive any right of the insurers to any set-off or
counterclaim or any other deduction, by attachment or otherwise, in respect of
Lessor or Lessee. Lessee shall arrange for appropriate certification as to the
satisfaction of the requirements set forth above in this Section 12 to be
delivered promptly (and in any case not later than the Delivery Date for such
Aircraft) to Lessor by each insurer with respect thereto, which certification
shall specifically acknowledge that the insurance is in conformity with this
Section.
12.4 REPORTS, ETC. Annually on the renewal date of insurance, Lessee
shall furnish to Lessor a report describing in reasonable detail the insurance
then carried and maintained on the Aircraft and certifying that such insurance
complies with the terms hereof and a certificate of the insurer as to such
insurance. Lessee will advise Lessor in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of Lessee
which might invalidate or render unenforceable, in whole or in part, any
insurance on the Aircraft pursuant to this Section. In the event Lessee shall
fail to maintain insurance as herein provided, Lessor may, at its option,
provide such insurance, and Lessee shall, upon demand, reimburse Lessor for the
cost thereof.
SECTION 13. INDEMNIFICATION
Lessee assumes liability for, and hereby agrees to indemnify, protect,
save and keep harmless Lessor from and against any and all liabilities,
obligations, losses, damages, penalties, claims (including, without limitation
(except as set forth in the provision below) claims involving or alleging
Lessor's negligence and claims involving or alleging strict or absolute
liability in tort), actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable legal fees and expenses) of any kind
and nature whatsoever ("Claims") that may be imposed on, incurred by or asserted
against Lessor, whether or not Lessor shall also be indemnified as to any such
Claim by any other Person, in any way relating to or arising out of this Lease
or any documents contemplated hereby, or the performance or enforcement of any
of the terms hereof or thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
sublease, possession, use, operation, maintenance, condition, registration,
sale, return, storage or other disposition of the Aircraft or any part thereof
or any accident in connection therewith (including, without limitation, latent
and other defects, whether or not discoverable and any claim for patent,
trademark or copyright infringement); provided, however, that Lessee shall not
be required to indemnify Lessor for (a) any Claim in respect of the Aircraft
arising from acts or events that occur after possession of the Aircraft has been
redelivered to Lessor in accordance with Section 6 hereof, or (b) any Claim
arising from acts that would Constitute the willful misconduct or gross
negligence of Lessor. If any claim is made against Lessee or Lessor, the party
receiving notice of such Claim shall promptly notify the other, but the failure
of the party receiving notice to so notify the other shall not relieve either
party of any obligation hereunder. Lessee shall have the right to assume the
defense of any Claim or litigation arising from any Claim through counsel
reasonably acceptable to Lessor in such matter provided if Lessee shall so
assume the defense of such Claim or litigation, Lessor shall nevertheless have
the right to participate in such defense through its counsel at the expense of
Lessor and Lessee shared equally if in Lessor's reasonable judgment such
participation is necessary to ensure against any impairment of its interests.
Lessor will cooperate with Lessee in the defense of any Claim.
LESSEE AGREES THAT LESSOR SHALL NOT BE LIABLE TO LESSEE FOR ANY
CLAIM CAUSED DIRECTLY OR INDIRECTLY BY THE INADEQUACY OF THE
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AIRCRAFT OR ANY PART THEREOF FOR ANY PURPOSE OR ANY DEFICIENCY OR DEFECT THEREIN
OR THE USE OR MAINTENANCE THEREOF OR ANY REPAIRS, SERVICING OR ADJUSTMENTS
THERETO OR ANY DELAY IN PROVIDING OR FAILURE TO PROVIDE ANY SERVICE OR
INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF OR ANY LOSS OF BUSINESS, ALL OF
WHICH SHALL BE THE RISK AND RESPONSIBILITY OF LESSEE.
All of Lessor's rights, privilege and indemnities contained in this
Section 13 shall survive the expiration or other termination of this Lease and
the rights, privileges and responsibilities contained herein are expressly made
for the benefit of, and shall be enforceable by Lessor, its successors and
assigns. The liability of Lessee to make indemnification payments pursuant to
this Section 13 shall, notwithstanding any expiration or termination of the
Lease, continue to exist until such indemnity payments are made by Lessee, in
full and received by Lessor. This Section 13 shall not apply to, and Lessee does
not indemnify Lessor against, any impositions or assessments or assessments for
federal, state or local income taxes or for taxes which are covered by Section 8
hereof.
SECTION 14. SUBLEASE; POSSESSION
Lessee will not, without the prior written consent of Lessor, which
consent shall not be unreasonably withheld, assign any of its rights hereunder
or sublet or otherwise relinquish possession of the Airframe or any Engine or
install any Engine or Part, or permit any Engine or Part to be installed, on any
airframe other than the Airframe. In no event may the Aircraft be subleased to a
Person who is not a United States citizen or "United States Resident" within the
meaning of the Federal Aviation Act.
SECTION 15. TAX INDEMNIFICATION
15.1 Lessee represents, warrants and covenants that (a) at the
commencement of this Lease, no Improvements, modifications or additions to the
Aircraft (other than ancillary items of equipment of a kind that customarily are
selected and furnished by purchasers or lessees of similar equipment) will be
required in order to render it complete for its intended use by Lessee, and (b)
at no time during the term of this Lease will Lessee take or omit to take, any
action not otherwise permitted by Lessor or the terms of this Lease, which will
result in the disqualification of the Aircraft or any portion thereof for, or
recapture of, all or any portion of Depreciation Deductions, and (c) at no time
during the term of this Lease will Lessee permit any Sublessee or Assignee to
take or omit to take any action (whether or not such act or omission is
otherwise permitted by Lessor or the terms of this Lease), which will result in
the disqualification of the Aircraft or any portion thereof for, or recapture
of, all or any portion of Depreciation Deductions. If as a result of a breach of
any representation, warranty or covenant contained in the immediately preceding
sentence (x) tax counsel of Lessor, in its reasonable opinion, shall determine
that Lessor is not entitled to claim on its Federal income tax return all or any
portion of the Tax Benefits with respect to the Aircraft, or (y) any such Tax
Benefit claimed on the federal income tax return of Lessor is disallowed or
adjusted by the Internal Revenue Service, or (2) any such Tax Benefit is
recomputed or recaptured by Lessor's tax counsel (any such determination,
disallowance, adjustment, recomputation or recapture being hereinafter called a
"loss"), THEN Lessee shall pay, upon demand, to Lessor, as an indemnity and as
additional Rent, such amount as shall cause Lessor's after-tax economic yields
and cash flows,
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computed on the same assumptions including tax rates, as were utilized by lessor
in originally evaluating the transaction (such yields and flows hereinafter
called the "Net Economic Return") to equal the Net Economic Return that would
have been realized by Lessor if such loss had not occurred.
15.2 Lessee hereby further represents, warrants and covenants that all
amounts includible in the gross income of Lessor with respect to the Aircraft,
and all deductions or credits allowable to Lessor with respect to the Aircraft,
will be treated as primarily derived from or allocable to sources within the
United States in each and every year throughout the term of this Lease. In the
event of a breach of the representation, warranty and covenant contained in the
immediately preceding sentence, if any item of income credit or deduction with
respect to the Aircraft shall not be treated as derived from, or allocable to,
sources within the United States for a given taxable year (any such event
hereinafter referred to as a "Foreign Loss"), then Lessee shall pay to Lessor as
an indemnity, on the next succeeding Rent Date, or in any event within thirty
(30) days after written demand to Lessee by Lessor, such amount as, after
deduction of all taxes required to be paid by Lessor in respect of the receipt
of such amounts under the laws of any Federal, state or local government or
taxing authority of the United States, shall equal the sum of: (a) the excess of
(x) the foreign tax credits which Lessor would have been entitled to for such
year had no such Foreign Loss occurred over (y) the foreign tax credits to which
Lessor was limited as a result of such year had no such Foreign Loss occurred
plus (b) the amount of any interest, penalties or additions to tax payable as a
result of such Foreign Loss.
15.3 Lessee shall not be required to make any indemnity payment
pursuant to Section 15.1 or 15.2 to the extent that the loss giving rise to such
indemnity payment is a direct result of any event whereby Lessee is required to
pay by the terms of this Lease, and shall have paid in full, the Casualty Value.
15.4 All of Lessor's rights, privileges and indemnities contained in
this Section 15 shall survive the expiration or other termination of this Lease
and the rights, privileges and indemnities contained herein are expressly made
for the benefit of, and shall be enforceable by, Lessor, its successor's and
assigns.
SECTION 16. EVENT OF DEFAULT
The term Event of Default, whenever used herein, shall mean any of the
following events under this Lease (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary, or come about or be effected
by operation of law, or be pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation or any
administrative or governmental body).
16.1 Lessee shall fail to make any payment of Rent when due, and such
failure shall continue for more than ten (10) days after written notice thereof
from Lessor to Lessee; or
16.2 Lessee shall fail to keep in full force and effect insurance
required under this Lease; or
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16.3 Lessee shall fail to perform or observe any covenant, condition or
agreement (other than that referred to in 16.1 or 16.2 above) required to be
performed or observed by it under this Lease or any agreement, document or
certificate delivered by Lessee in connection herewith, and such failure shall
continue for sixty (60) days after written notice thereof from Lessor to Lessee;
provided, however, if such failure is not reasonably susceptible to cure within
such sixty (60) day period, and Lessee has commenced to cure such failure within
said sixty (60) day period, Lessee shall have an additional period of time to
cure as may be required to effect such cure if Lessee continues to diligently
prosecute such cure to completion.
16.4 Lessee shall or shall attempt to (except as expressly permitted by
the provisions of this Lease) remove, sell, transfer, encumber, part with
possession of, assign or sublet the Aircraft or any part thereof, use the
Aircraft for an illegal purpose, or permit the same to occur; or
16.5 Lessee fails to pay its debts as they become due or files a
voluntary petition in bankruptcy or a voluntary petition or an answer seeking
reorganization in a proceeding under any bankruptcy laws (as now or hereafter in
effect) or an answer admitting the material allegations of a petition filed
against Lessee in any such proceeding, or Lessee by voluntary petition, answer
or consent, seeks relief under the provisions of any other now existing or
future bankruptcy or other similar law (other than a law which does not provide
for or permit the readjustment or alteration of Lessee's obligations hereunder)
providing for the reorganization or liquidation or corporations, or providing
for an agreement, composition, extension or adjustment with its creditors; or
16.6 A petition against Lessee in a proceeding under applicable
bankruptcy laws or other insolvency laws (other than any law which does not
provide for or permit any readjustment or alteration of Lessee's obligations
hereunder in each case), as now or hereafter in effect, is filed and shall not
be withdrawn or dismissed within ninety (90) days thereafter, or if, under the
provisions of any law (other than any law which does not provide for or permit
any readjustment or alteration of Lessee's obligations hereunder in each case)
providing for reorganization or liquidation of corporations which may apply to
Lessee, any court of competent jurisdiction shall assume jurisdiction, custody
or control of Lessee or of any substantial part of its property and such
jurisdiction, custody or control shall remain in force relinquished, unstayed or
unterminated for a period of sixty (60) days; or
16.7 Lessee (a) defaults on the payment of any obligation for borrowed
money, under any lease (whether or not capitalized) or for the deferred purchase
price of property, including interest thereon, beyond the period of grace, if
any, provided with respect thereto, or (b) defaults in the performance or
observance of any other term, condition or agreement contained in any such
obligation or in any agreement relating thereto, if the effect of either such
default is to cause, or permit the holder or holders of such obligation (or a
trustee on behalf of such holder or holders) to cause such obligation to become
due prior to its stated maturity or to realize upon any collateral given as
security therefor and such default results in material adverse change in the
financial condition of Lessee.
16
<PAGE> 20
SECTION 17. REMEDIES
17.1 Upon the occurrence of any Event of Default and so long as the
same shall be continuing, Lessor may, at its option, declare this Lease to be in
default by written notice to such effect given to Lessee, and at any time
thereafter, Lessor may exercise one or more of the following remedies, as Lessor
in its sole discretion shall lawfully elect.
(a) proceed by appropriate court action, either at law or in
equity, to enforce performance by Lessee of the applicable covenants of this
Lease or to recover damages for the breach thereof;
(b) by notice in writing terminate this Lease, whereupon all
rights of Lessee to the use of the Aircraft or any part thereof shall absolutely
cease and terminate but Lessee shall remain liable as hereinafter provided; and
thereupon Lessee, if so requested by Lessor, shall at its expense promptly
return the Aircraft to the possession of Lessor at such place within the United
States (excluding Alaska and Hawaii) as Lessor shall designate and in the
condition required upon the return thereof pursuant to and in accordance with
the terms hereof, or Lessor, at its option, may enter upon the premises where
the Aircraft is located and take immediate possession of and remove the same
together with any Engines and Parts by summary proceedings or otherwise. Lessee
shall, without further demand, forthwith pay to Lessor an amount equal to any
unpaid Rent due and payable for all periods up to Rent Date immediately
following the date on which Lessor has declared this Lease to be in default,
plus, as liquidated damages for loss of a bargain and not as a penalty, an
amount equal to the Casualty Value of the Aircraft, computed as of the Rent Date
immediately preceding the date on which Lessor has declared this Lease to be in
default.
17.2 Lessee shall be liable for all costs, charges and expenses
incurred by Lessor by reason of the occurrence of any Event of Default or the
exercise of Lessor's remedies with respect thereto.
17.3 No remedy referred to herein is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity. No express or implied waiver
by Lessor of any Default or Event of Default hereunder shall in anyway be, or be
construed to be, a waiver of any future or subsequent Default or Event of
Default. The failure or delay of Lessor in exercising any rights granted it
hereunder upon any occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or recurrence of
any such contingencies or similar contingencies and any single or partial
exercise of any particularly right by Lessor shall not exhaust the same or
constitute a waiver of any other right provided herein.
SECTION 18. NOTICES
All communications and notices provided for herein shall be in writing
and shall become effective when deposited in the United States mail, with proper
postage for first-class mail, prepaid, addressed if to Lessor or Lessee at their
respective addresses set forth below or such other address as either party may
hereafter designate by written notice to the other:
17
<PAGE> 21
LESSOR: Miramonte Aviation, LLC
1400 Stringtown Road
Lancaster, Ohio 43130
Attn.: Monte R. Black
LESSEE: MPW Management Services Corp.
9711 Lancaster Road, S.E.
P.O. Box 895
Hebron, Ohio 43205
Attn.: Daniel P. Buettin
SECTION 19. SUCCESSORS AND ASSIGNS
This Lease, including all agreements, covenants, representations and
warranties, shall be binding upon and inure to the benefit of, any may be
enforced by, (a) Lessor and its successors, assigns, and (b) Lessee and its
successors and assigns; PROVIDED, HOWEVER, that neither party shall assign this
Lease without the prior written consent of the other party.
SECTION 20. MISCELLANEOUS
20.1 The terms of this Lease shall not be waived, altered, modified,
amended, supplemented or terminated in any manner whatsoever by written
instrument signed by Lessor and Lessee.
20.2 All agreements, indemnities, representations and warranties
contained in this Lease or any agreement, document or certificate delivered
pursuant hereto or thereto or in connection herewith or therewith shall survive
the execution and delivery of this Lease and the expiration or other termination
of this Lease.
20.3 Any provision of this Lease that may be determined by competent
authority to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, Lessee and Lessor for themselves hereby waives any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect.
20.4 Lessor's failure at any time or times to require strict
performance by Lessee of any of the terms or provisions hereof shall not waive,
affect or diminish any right of Lessor to demand strict compliance and
performance thereof, and any waiver of any default shall not waive or affect any
other or subsequent default. None of the conditions, provisions, and terms
contained herein shall be deemed to have been waived by any act or knowledge of
Lessor, its agents, officers, or employees. No waiver shall be effective unless
in writing specifically identifying such waiver and signed by Lessor.
18
<PAGE> 22
20.5 This Lease represents the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
understandings. This Lease shall constitute an agreement of lease and nothing
herein shall be construed as conveying to Lessee any right, title or interest in
or to the Aircraft, except as Lessee only.
20.6 This Lease shall be deemed to have been delivered in, and shall be
governed by and construed in accordance with the laws of the State of Ohio.
20.7 This Lease may be executed in any number of counterparts and by
the different parties hereto on separate counterparts.
20.8 The division of this Lease into sections, the provision of a table
of contents and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretations of this Lease.
20.9 Although this Lease is dated as of the date first above written
for convenience, the actual dates of execution hereof by the parties hereto are
respectively the dates set forth under the signatures hereto, and this Lease
shall be effective on the latest of such dates.
20.10 Lessee agrees to execute and deliver to Lessor all instruments,
documents and other writings as may be necessary to carry out the intent and
purposes of this Aircraft Lease. All charges relating to the delivery of the
Aircraft to Lessee or of the return of same to Lessor including costs, expenses,
and attorney fees shall be borne by Lessee and shall be paid to Lessor,
forthwith.
20.11 If Lessee holds beyond the termination date of this Aircraft
Lease, Lessee shall pay rent therefor at the said rate until the Aircraft
arrives at Lessor's premises.
SECTION 21. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR
If an Event of Default should occur hereunder, Lessor may thereafter
make the payment or perform or comply with the agreement, the nonpayment,
nonperformance or noncompliance with which caused such Event of Default, and the
amount of such payment and the amount of reasonable expenses of Lessor incurred
in connection with such payment or the performance of or compliance with such
agreement, as the case may be, shall be payable by Lessee upon demand by Lessor,
and such action by Lessor shall not be deemed a cure or waiver of any Default or
Event of Default hereunder.
SECTION 22. TRUTH-IN-LEASING
22.1 Lessee has reviewed the Aircraft's maintenance and operating logs
since its date of manufacture and has found that the Aircraft has been
maintained and inspected under Part 91 of the regulations of the Federal
Aviation Administration. Lessee certifies that the Aircraft presently complies
with the applicable maintenance and inspection requirements of Part 91 of the
regulations of the Federal Aviation Administration.
19
<PAGE> 23
22.2 Lessee certifies that Lessee, and not Lessor, is responsible for
operational control of the Aircraft under this Lease during the term hereof.
Lessee further certifies that Lessee understands its responsibility for
compliance with applicable regulations of the Federal Aviation Administration.
22.3 Lessee certifies that the Aircraft will be maintained and
inspected under Part 91 of the regulations of the Federal Aviation
Administration for operations to be conducted under this Lease. Lessee
understands that an explanation of Factors being an operational control and
pertinent federal aviation regulations can be obtained from the nearest FAA
Flight Standards District Office, General Aviation District office, or Air
Carrier District Office.
IN WITNESS WHEREOF, the parties hereto have each caused this Lease to
be duly executed by the respective officers thereunto duly authorized.
LESSOR:
MIRAMONTE AVIATION, LLC
By: /s/ Monte R. Black
----------------------------------------
Printed Name: Monte R. Black
-----------------------------
Its: President
--------------------------------------
LESSEE:
MPW MANAGEMENT SERVICES CORP.
By: /s/ Daniel P. Buettin
----------------------------------------
Printed Name: Daniel P. Buettin
-----------------------------
Its: Vice President and CFO
--------------------------------------
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MPW
INDUSTRIAL SERVICES GROUP, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 788
<SECURITIES> 0
<RECEIVABLES> 18,511
<ALLOWANCES> 767
<INVENTORY> 3,784
<CURRENT-ASSETS> 3,722
<PP&E> 51,729
<DEPRECIATION> 28,403
<TOTAL-ASSETS> 56,943
<CURRENT-LIABILITIES> 19,761
<BONDS> 0
101
0
<COMMON> 0
<OTHER-SE> 33,641
<TOTAL-LIABILITY-AND-EQUITY> 56,943
<SALES> 46,064
<TOTAL-REVENUES> 46,064
<CGS> 30,738
<TOTAL-COSTS> 43,644
<OTHER-EXPENSES> 119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 551
<INCOME-PRETAX> 1,750
<INCOME-TAX> (1,269)
<INCOME-CONTINUING> 3,019
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,019
<EPS-PRIMARY> .15
<EPS-DILUTED> .14
</TABLE>
