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EXHIBIT 10.20
CREDIT AGREEMENT
BY AND BETWEEN
CHART INDUSTRIES, INC., ALTEC INTERNATIONAL LIMITED
PARTNERSHIP, ALTEC, INC, CHART MANAGEMENT COMPANY, INC., CHART
INDUSTRIES FOREIGN SALES CORPORATION,
GREENVILLE TUBE CORPORATION, AND
PROCESS SYSTEMS INTERNATIONAL, INC.
The "Borrowing Group"
NATIONAL CITY BANK AND NBD BANK,
The "Banks" or "Bank"
NATIONAL CITY BANK, AS AGENT FOR THE BANKS
The "Agent"
July __, 1997
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS; ACCOUNTING TERMS; AMENDMENTS............................1
Section 1.01 Definitions. ............................................1
Section 1.02 Accounting Terms. ......................................17
ARTICLE II - CREDIT FACILITY....................................................17
Section 2.01 Amounts. ...............................................17
Section 2.02 Reduction. .............................................17
Section 2.03 Single Loan. ...........................................18
Section 2.04 Advances; LCs; Revolving Period. .......................18
Section 2.05 Interest on the Revolving Loan. ........................18
Section 2.06 Election of Base Rate for Revolving Loan ................18
Section 2.07 Election of Overall Libor Rate for Revolving Loan. .....18
Section 2.08 Notice. ................................................20
Section 2.09 Limits on Overall Libor Rate Elections. ................20
Section 2.10 Compensation; Illegality. ..............................21
Section 2.11 Interest Payment Dates. ................................22
Section 2.12 Voluntary Prepayments. .................................22
Section 2.13 Application of Payments to Revolving Loan. .............23
Section 2.14 Overall Libor Rate Indemnity. ..........................23
Section 2.15 Interest Calculations. .................................23
Section 2.16 Late Charge; Post-Default Rate. ........................24
Section 2.17 Commitment Fee. ........................................24
Section 2.18 Repayment of the Revolving Loan;
The Revolving Notes .....................................24
Section 2.19 Letters of Credit .......................................25
Section 2.20 Ratable Participation in LCs. ..........................25
Section 2.21 Maximum..................................................25
Section 2.22 Term ....................................................26
Section 2.23 Form ....................................................26
Section 2.24 Fees ...................................................26
Section 2.25 Commissions ............................................26
Section 2.26 Reimbursement ..........................................27
Section 2.27 Foreign Currencies .....................................27
Section 2.28 Purpose of the Revolving Loan. .........................28
Section 2.29 Event of Default or Possible Default. ..................28
Section 2.30 Agent Fees. ............................................28
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ARTICLE III - INTERCOMPANY MATTERS..............................................29
Section 3.01 Appointment of Parent as Agent. .........................29
Section 3.02 Intercompany Guaranty.....................................29
Section 3.03 Further Assurances. .....................................31
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BORROWING
GROUP..................................................................31
Section 4.01 Organization of the Companies; Business
and Property; CHD. .....................................32
Section 4.02 Authorization; Validity. ................................32
Section 4.03 Permits. ................................................32
Section 4.04 Financial Statements. ...................................33
Section 4.05 Financial Condition at Date of Credit Agreement. ........33
Section 4.06 No Adverse Changes. .....................................33
Section 4.07 Title to Properties; Patents, Trade Marks, etc. .........33
Section 4.08 Litigation. .............................................34
Section 4.09 Liabilities. ............................................34
Section 4.10 Compliance with Other Instruments. ......................34
Section 4.11 Material Restrictions. ..................................34
Section 4.12 Correctness of Data Furnished. ..........................34
Section 4.13 ERISA. ..................................................35
Section 4.14 Taxes. ..................................................36
Section 4.15 Compliance with Laws. ...................................36
Section 4.16 Environmental Matters. ...................................36
Section 4.17 Leases. .................................................37
Section 4.18 Regulation U, etc. ......................................37
Section 4.19 Holding Company Act. ....................................37
Section 4.20 Securities Act, etc. ....................................37
Section 4.21 Solvency. ...............................................37
Section 4.22 No Default. .............................................38
Section 4.23 Employee Controversies. .................................38
Section 4.24 Brokers, etc. ...........................................38
ARTICLE V - CONDITIONS TO BORROWING.............................................38
Section 5.01 Representations and Warranties. .........................38
Section 5.02 No Defaults. ............................................38
Section 5.03 Performance. ............................................38
Section 5.04 Closing Certificate. ....................................38
Section 5.05 Insurance Report. .......................................39
Section 5.06 Revolving Notes/Pledge Agreement. .......................39
Section 5.07 Disbursement Instructions. ..............................39
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Section 5.08 Opinions of Counsel for the Borrowing Group. ...........39
Section 5.09 Corporate Proceedings. .................................39
Section 5.10 Payment of Expenses. ...................................40
Section 5.11 Schedules. .............................................40
Section 5.12 Other Documents. .......................................40
Section 5.14 No Defaults. ...........................................41
Section 5.15 Performance. ...........................................41
Section 5.16 Representations and Warranties. ........................41
Section 5.17 Certificate. ...........................................41
Section 5.18 Cryenco. ...............................................41
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE BORROWING GROUP..........................41
Section 6.01 Payment of Amounts Due. ................................42
Section 6.02 Existence, Business, etc. ..............................42
Section 6.03 Maintenance of Properties. .............................42
Section 6.04 Payment of Taxes, etc. .................................42
Section 6.05 Insurance. .............................................43
Section 6.06 Accounts and Reports of each Company. ..................43
Section 6.07 Information and Inspection. ............................45
Section 6.08 Notice of Litigation. ..................................46
Section 6.09 Pension Plans. .........................................46
Section 6.10 Hazardous Material. ....................................46
Section 6.11 Net Worth. .............................................46
Section 6.12 Leverage. ..............................................47
Section 6.13 Pretax Interest Coverage Ratio. ........................47
Section 6.14 Fixed Charge Coverage Ratio. ...........................47
Section 6.15 Current Ratio. .........................................47
Section 6.17 Post-Closing Items. ....................................47
Section 6.18 Further Assurances. ....................................47
ARTICLE VII - NEGATIVE COVENANTS OF THE BORROWING GROUP............................47
Section 7.01 Limitation of Indebtedness. ............................48
Section 7.02 Limitation on Liens. ...................................49
Section 7.03 Guarantees. ............................................51
Section 7.04 Leases. ................................................51
Section 7.05 Investments, Revolving Loan, and Advances. .............52
Section 7.06 Assignment or Sale of Accounts or Revolving Notes
Receivable...............................................53
Section 7.07 Liquidation, Merger, or Consolidation. .................53
Section 7.08 Amendment of Certificate of Incorporation
and/or By-Laws...........................................54
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Section 7.09 Distributions; Purchases or Redemption of
Stock; Dividends ..............................................54
Section 7.10 Disposition of Assets. ..................................55
Section 7.11 Acquisition of Going Concern Business. ..................55
Section 7.12 Purchase of Fixed or Capital Assets. ....................56
Section 7.13 Fiscal Year. ............................................56
Section 7.14 ERISA. ..................................................56
Section 7.15 Regulation U. ...........................................57
Section 7.16 Partnerships and Joint Ventures. ........................57
Section 7.17 Transactions with Affiliates. ...........................57
Section 7.18 Tax Exemption of CHD. ...................................57
Section 7.19 Goodwill/Intangibles. ...................................58
ARTICLE VIII - WAIVERS..............................................................58
ARTICLE IX - DEFAULTS...............................................................58
Section 9.01 Principal Default. ......................................58
Section 9.02 Interest Default. .......................................59
Section 9.03 Other Payment Defaults. .................................59
Section 9.04 Certain Article VI and VII Defaults. ....................59
Section 9.06 Defaults Under Article VI. ..............................59
Section 9.07 Other Provision Default. ................................59
Section 9.08 Representation and Warranty. ............................59
Section 9.09 Financial Difficulties. .................................60
Section 9.10 ERISA Termination. ......................................60
Section 9.11 Accumulated Funding Deficiency. .........................60
Section 9.12 Ownership. ..............................................61
Section 9.13 Cross-Default. ..........................................61
Section 9.14 Judgments. ..............................................61
Section 9.15 Material Adverse Change. ................................61
Section 9.16 Restraint on Business. ..................................62
ARTICLE X - REMEDIES................................................................62
Section 10.01 Acceleration. ..........................................62
Section 10.02 Recovery of Amounts. ...................................62
Section 10.03 LCs. ...................................................63
Section 10.04 Remedies Cumulative. ...................................63
Section 10.05 Cost of Collection. ....................................63
Section 10.06 No Advances, etc. ......................................63
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ARTICLE XI - AGENT................................................................63
Section 11.01 Appointment of Agent. .................................63
Section 11.02 Compensation. .........................................64
Section 11.03 Independent Investigation. ............................64
Section 11.04 Agent's Exculpation. ..................................64
Section 11.05 Disbursements. ........................................64
Section 11.06 The Agent's Indemnity. ................................65
Section 11.07 Actions After a Default Under this Agreement. .........65
Section 11.08 Actions Requiring Consent of a Majority
of the Banks ................................................66
Section 11.09 Actions Requiring Consent of All Banks. ...............66
ARTICLE XII - MISCELLANEOUS.......................................................66
Section 12.01 Payment of Expenses. ..................................66
Section 12.02 Notices. ..............................................67
Section 12.03 Survival of Representations and Warranties. ...........68
Section 12.04 Entire Agreement; Amendment. ...........................68
Section 12.05 Parties in Interest; Bank's Purpose. ..................68
Section 12.06 Waiver of Assertion of Counterclaims;
Waiver of Jury Trial. .................................69
Section 12.07 Set-off Provision. ....................................69
Section 12.08 Severability of Provisions. ...........................70
Section 12.09 Headings. .............................................70
Section 12.10 Consent to Jurisdiction. ..............................70
Section 12.11 Governing Law. ........................................70
Section 12.12 Counterparts. .........................................70
Section 12.13 Nature of the Borrowing Group's Obligations and
Modification Thereof. .................................71
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT (the "Credit Agreement" or "Agreement"), dated as
of the day of July, 1997, by and between CHART INDUSTRIES, INC., a Delaware
corporation (referred to hereinafter as the "Parent"), ALTEC INTERNATIONAL
LIMITED PARTNERSHIP ("ALTEC"), ALTEC, INC. ("AI"), CHART MANAGEMENT COMPANY,
INC. ("Chart Management"), CHART INDUSTRIES FOREIGN SALES CORPORATION ("Chart
Foreign"), GREENVILLE TUBE CORPORATION ("Greenville"), PROCESS SYSTEMS
INTERNATIONAL, INC. ("PSI") (the Parent, ALTEC, AI, Chart Management, Chart
Foreign, Greenville and PSI being referred to collectively as the "Borrowing
Group") and NATIONAL CITY BANK ("NCB") and NBD BANK, ("NBD") (NCB and NBD being
referred to collectively as the "Banks" and singly as a "Bank") and NATIONAL
CITY BANK, as agent for the Banks (the "Agent")).
WITNESSETH;
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WHEREAS, the Borrowing Group desires to obtain from the Banks an
unsecured revolving credit facility (the "Credit Facility") in a principal
amount not to exceed FORTY FIVE MILLION DOLLARS ($45,000,000) less the face
amount of any outstanding letters of credit and foreign bank guaranties
including both (i) a revolving loan that may be borrowed, repaid and reborrowed
and (ii) standby letters of credit in an aggregate stated amount not to exceed
FIFTEEN MILLION DOLLARS ($15,000,000) (the "Revolving Loan"), all upon the terms
and conditions set forth hereafter.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
In addition to terms defined elsewhere in this Credit Agreement,
certain terms used herein are defined in Section 1.01.
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; AMENDMENTS
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Section 1.01 DEFINITIONS. As used herein and in the Revolving Notes and
the other Loan Documents, the following terms shall have the following meanings:
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"Acceptable Marketable Securities" means securities that are direct
obligations of the United States of America or any agency thereof, or
certificates of deposit issued by any Bank, or any other money-market investment
if it carries the highest quality rating of any nationally-recognized rating
agency, provided that no such security shall mature more than ninety (90) days
after the date when made.
"Account Officer" means that officer of the Bank in question who at the
time in question is designated by that Bank as the officer having the primary
responsibility for giving consideration to the Borrowing Group's request for
credit or, in that officer's absence, that officer's immediate superior or any
other officer who reports directly to that superior officer.
"Adjusted Net Worth" means, as of any date of determination thereof,
the excess of (a) the amount of the "present fair saleable value" of the assets
of any Guarantor as of the date of such determination over (b) the amount of all
liabilities of such Guarantor, contingent or otherwise, as of the date of such
determination, as such terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors. In
determining the Adjusted Net Worth of any Guarantor for purposes of calculating
the Maximum Guaranteed Amount for such Guarantor, (i) the liabilities of such
Guarantor shall include (x) any amounts guaranteed by such Guarantor to the
extent guaranteed pursuant to clause (a) of the definition of Maximum Guaranteed
Amount and (y) advances of Revolving Loans directly to such Guarantor (ii) the
Net Worth of any Guarantor shall exclude any increase in Net Worth resulting
from a Valuable Transfer.
"Advances" means advances of cash proceeds obtained by the Borrowing
Group in respect of the Revolving Loan.
"Advantage" means any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by a Bank in respect of the subject indebtedness if the payment results
in that Bank's having less than its ratable share of the subject indebtedness in
question.
"Affiliate" means any director, principal officer of the Borrowing
Group or shareholder owning more than five percent (5%) of any class of
outstanding securities of the Borrowing Group, or any spouse, parent, or child
of any of the foregoing, or any corporation, partnership or other business
enterprise directly or indirectly controlled by, or under direct, indirect or
common control with, any one or more of such Persons and/or the Borrowing Group.
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"Alternative Currency" means any lawful currency other than Dollars
which is freely transferable and convertible into Dollars and which, from time
to time, is acceptable to NBD.
"Assets" as applied to the Borrowing Group means all items which, in
accordance with GAAP applied on a consistent basis, would be included in
determining total assets as shown on the asset side of a balance sheet of the
Borrowing Group as of the date on which Assets are to be determined.
"Authorized Fiscal Officer" means the chief executive officer or chief
financial officer of the Parent.
"Available Rates" shall have the meaning given to it in Section 2.05.
"Bank Guaranty" means any bank guaranty issued by an affiliate of NBD
for the account of PSI, each Bank Guaranty issued in Alternative Currency and
being part of the Credit Exposure of each Bank.
"Banks" shall have the meaning given to it in the preamble of this
Credit Agreement.
"Base Rate" means the fluctuating rate, as in effect at the time in
question, that is publicly announced by the Agent from time to time in
Cleveland, Ohio, as being its base rate or prime rate thereafter in effect;
which rate is not necessarily the lowest rate charged by the Banks to their
borrowing customers.
"Borrowed Debt/Net Worth" means all Indebtedness for Borrowed Money of
the Borrowing Group divided by Net Worth, all on a Consolidated basis.
"Borrowing" means a series of the Revolving Loan obtained concurrently
and divided ratably among the Banks and includes, without limitation, part of
the Revolving Loan the proceeds of which represent new money to the Borrowing
Group and part of the Revolving Loan the proceeds of which are applied to any
portion of the Revolving Loan bearing interest at an Overall Libor Rate at the
end of the applicable Libor Rate Period; to the extent that the term "borrowed
money" is used in this Agreement, it is used as a generic term and is not
derived solely from "Borrowing".
"Borrowing Group" shall have the meaning given to it in the preamble of
this Credit Agreement.
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"Business Day" means any day on which dealings in United States Dollar
deposits in the London inter-bank market are carried out and which is not a
Saturday, Sunday or other day on which banks in Cleveland, Ohio or Detroit,
Michigan are authorized or required to close.
"Capital Expenditures" means any and all amounts invested, expended or
incurred (including by reason of Capitalized Lease Obligations incurred by the
Borrowing Group) in respect of the purchase, acquisition, improvement,
renovation or expansion of any properties or assets of the Borrowing Group,
including, without limitation, expenditures required to be capitalized in
accordance with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under leases of, or
other agreements conveying the right to use real and/or personal property, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person, prepared in accordance with GAAP (including the
Financial Accounting Standards Board).
"Cash Flow" means the aggregate of (a) net income plus (b) income taxes
(whether federal, state or local) plus (c) interest expense plus (d)
amortization, depreciation and obsolescence charges, all as determined in
accordance with GAAP and on a Consolidated basis.
"CHD" means CHD Inc., a Delaware corporation and wholly-owned
subsidiary of AI.
"CHD Guaranty Documents" means, collectively, CHD's joint and several
guaranty of payment of the Obligations, and, in respect of that guaranty,
resolutions having been duly adopted by CHD's board of directors and certified
by CHD's secretary, the estoppel of CHD's shareholder or shareholders, the
opinion of the Borrowing Group's legal counsel (which opinion shall address such
issues, may be based on such assumptions and may be subject to such
qualifications and exceptions as those set forth in the opinion of the
companies' counsel dated the date of this Agreement delivered to the Banks and
the Agent pursuant to this Agreement), and such other writings as the Banks and
the Agent shall reasonably require, all in form and substance satisfactory to
the Banks and the Agent except as specifically set forth herein with respect to
the opinion of the Borrowing Group's legal counsel.
"Closing Date" means the date that the proceeds of the first Advance
are disbursed to the Borrowing Group under this Credit Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, and the rules and regulations promulgated
thereunder.
"Company" refers to the Parent or to any Subsidiary of the Parent, as
the case may be and "Companies" means all of the Parent and its Subsidiaries.
"Commitment" means the commitment of a Bank to extend credit to the
Borrowing Group pursuant to Section 2.01 of this Agreement and upon the terms,
subject to the conditions and in accordance with other provisions of this
Agreement.
"Conclusive" means that the calculation, determination or other matter
referred to is presumed for all purposes to be true and correct and absolutely
binding on the Borrowing Group except to the extent of manifest or obvious error
(e.g. arithmetic error or misplacement of decimal points).
"Consolidated" means on a consolidated basis for the Parent and all of
its Subsidiaries, as determined in accordance with GAAP.
"Consolidated Net Income" for any period means the net income of the
Borrowing Group for such period, determined on a Consolidated basis in
accordance with GAAP.
"Covenant Compliance Certificate" shall have the meaning given to such
term in Section 6.06(ii).
"Credit Exposure" means, as to the Bank in question, the aggregate at
the time in question of (a) the unpaid principal of the Revolving Loans then
owing to it plus (b) its ratable share of the undrawn balance of the LCs then
outstanding plus (c) its ratable share of the amount of the Bank Guaranties then
outstanding.
"Credit Facility" is defined in the recitals of this Agreement.
"Cryenco" means Cryenco Sciences, Inc., a Delaware corporation.
"Cryenco Acquisition" means the acquisition by Greenville of all of the
issued and outstanding shares of capital stock of Cryenco, pursuant to that
certain Merger Agreement dated April 30, 1997.
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"Current Assets" means the net book value, as determined in accordance
with GAAP, of all such assets after deducting applicable reserves, if any, and
without consideration to any reappraisal or write-up of asset effected after
March 31, 1997.
"Current Liabilities" means all such Liabilities and includes (without
limitation) (a) all accrued taxes and (b) all principal of any Funded
Indebtedness (except the Outstanding Amount) maturing within twelve months of
the date of determination.
"Distribution" means any payment or distribution or transfer to,
redemption, acquisition or purchase from, or exchange with (directly or
indirectly), a Shareholder made in respect of his Equity Interest, of any
property, including, without limitation, cash, whether or not the same shall be
made from earnings of the Companies or a redemption of a Shareholder's Equity
Interest, but, excluding in all cases, any of the foregoing made by a Subsidiary
to the Parent or stock dividends or splits of the capital stock of the Parent.
"Dollars" and "$" means United States dollars or such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts in the United States.
"Effective Date" means the date on which the Banks make an Advance or
the election by the Borrowing Group of any Interest Option becomes effective.
"Environmental Laws" means any and all foreign, federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other requirements of law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning the protection of human health or the
environment, as now or may at any time be in effect.
"Environmental Remediation" means the containment, remediation,
clean-up, removal or other resolution of Hazardous Materials in respect of which
any Company has any liability or obligation.
"Equity Interests" means all capital stock and options, warrants and
rights to acquire or convert to capital stock of any of the Companies.
"Equity Offering" means any public offering or private placement of
Equity Interests or the conversion of any other debt or equity security into
Equity Interests.
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"ERISA" means the Employee Retirement Income Security Act of 1974 and
the regulations thereunder, each as amended from time to time.
"ERISA Affiliate" means, as applied to any Person, any trade or
business (whether or not incorporated) that would be aggregated with the
Companies for any purpose relevant to ERISA or the Code relating to any Plan or
Multi-Employer Plan.
"Event of Default" shall have the meaning specified in Article X of
this Credit Agreement.
"Execution Date" means the date of this Credit Agreement first written
above.
"Exhibits" and "Schedules" means and refers collectively to the
documents attached to this Credit Agreement and labeled as Exhibits or Schedules
hereto.
"Facilities" means the manufacturing, distribution, warehousing and
engineering facilities of the Borrowing Group and, after the Closing Date, such
additions, improvements and modifications thereto.
"federal", "state", or "local" means and relates to the United States,
its political division of states, and the respective political subdivisions and
equivalents of such states.
"Federal Funds Rate" means a fluctuating interest rate per annum, as in
effect at the time in question, that is the rate determined by NCB to be the
opening rate per annum paid or payable by it on the day in question in its
regional market for federal funds purchased overnight from other banking
institutions.
"Fiscal Year" means a period consisting of four Quarters ending on
December 31.
"Fixed or Capital Assets" means and includes all assets which are
defined or classified as fixed or capital assets in accordance with GAAP.
"Fixed Charges" means the aggregate of (a) interest expense plus (b)
current portion of Funded Indebtedness plus (c) Capital Expenditures plus (d)
Distributions (other than Distributions consisting of purchases of common shares
of Parent's capital stock for purposes of making contributions to the Companies'
401(k) Plans), all as determined in accordance with GAAP and on a Consolidated
basis.
"Fixed Charge Coverage Ratio" means the ratio of Cash Flow to Fixed
Charges.
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"Four-Quarter Period" means a period of four consecutive Quarters,
whether or not in the same Fiscal Year.
"Funded Indebtedness" means Indebtedness for Borrowed Money of the
person or entity in question which matures or which (including each renewal or
extension, if any, in whole or in part) remains unpaid for more than twelve
months after the date originally incurred and includes, without limitation (a)
any Indebtedness for Borrowed Money (regardless of its maturity) if it is
renewable or refundable in whole or in part solely at the option of that person
or entity (in the absence of default) to a date more than one year after the
date of determination, (b) any Capitalized Lease Obligation, (c) any Guarantee
of Indebtedness for Borrowed Money owing by another person or entity and (d) any
indebtedness secured by a security interest, mortgage or other lien encumbering
any property owned or being acquired by the person or entity in question even if
the full faith and credit of that person or entity is not pledged to the payment
thereof; provided that in the case of any Indebtedness for Borrowed Money
payable in installments or evidenced by serial notes or calling for sinking fund
payments, those payments maturing within twelve months after the date of
determination shall be considered a Current Liability rather than Funded
Indebtedness for the purposes of Section 7.14 but shall be considered Funded
Indebtedness for all other purposes.
"GAAP" means generally accepted accounting principles as consistently
applied in the United States from time to time.
"Governmental Authority" shall have the meaning given to such term in
Section 5.03.
"Guaranteed" or to "Guarantee" as applied to an obligation shall mean
and include (a) a guarantee or guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation and (b) an
agreement, direct or indirect, contingent or otherwise, and whether or not
constituting a guaranty, the practical effect of which is to assure the payment
or performance (or payment of damages in the event of non-performance) of any
part or all of such obligation whether by (i) the purchase of securities or
obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property
or the purchase or sale of services primarily for the purpose of enabling the
obligor with respect to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on account of any part
or all of such obligation, or to assure the owner of such obligation against
loss, (iii) the supplying of funds to or in any other manner investing in the
obligor with respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries of letters of credit or (v) the supplying of funds to or investing
in a Person on account of all or any part of such
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Person's obligation under a Guarantee of any obligation or indemnifying or
holding harmless, in any way such Person against any part or all of such
obligation.
"Guarantor" means one who pledges his credit or property in any manner
for the payment or other performance of the Indebtedness for Borrowed Money,
contract or other obligation of another and includes (without limitation) any
guarantor (whether of collection or payment), any obligor in respect of a
stand-by letter of credit or surety bond issued for the obligor's account, and
surety, any co-maker, any endorser and anyone who agrees conditionally or
otherwise to make any loan, purchase or investment in order thereby to enable
another to prevent or correct a default of any kind.
"Guaranty" means the obligation of a Guarantor.
"Hazardous Material" means any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes defined or regulated as such in or under any
Environmental Law, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"Indebtedness for Borrowed Money" of any Person means at any date,
without duplication, (i) all obligations of such Person for borrowed money,
including, without limitation, all borrowings under insurance policies, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price for property or services, except accounts payable arising in the
ordinary course of business, (iv) all Capitalized Lease Obligations of such
Person, (v) all Indebtedness for Borrowed Money of others secured by a Lien on
any asset of such Person, whether or not such Indebtedness for Borrowed Money is
assumed by such Person and (vi) all Indebtedness for Borrowed Money of others
Guaranteed by such Person.
"Indemnified Liabilities" shall have the meaning given to it in
Section 12.01.
"Intangibles" means any Assets which, in accordance with GAAP applied
on a consistent basis, would be treated as intangible assets, including without
limitation, such items as goodwill, trademarks, trade names, service marks,
patents, licenses, rights with regard to any such items, unamortized debt
discount, deferred charges and organization expenses.
"Interest Option" means any one or more of the Base Rate or the Overall
Libor Rate.
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"Investment" means any advance, extension of credit (excluding accounts
receivable arising in the ordinary course of business and endorsements of
negotiable instruments for collection in the ordinary course of business) or
contribution of capital to any Person or purchase or other acquisition of the
stock or any notes, debentures or other securities of, or any equity interest
in, any other person.
"LCs" means any letter of credit issued by NCB for the account of the
Borrowing Group, each of which LCs being part of the Credit Exposure of each
Bank.
"Leverage Ratio" means the ratio of (A) Total Liabilities to (B) Net
Worth.
"Liabilities" as applied to the Companies, means:
(i) All items which in accordance with GAAP applied on a
consistent basis would be included in determining total liabilities as
shown on the liability side of a balance sheet of the Companies as of
the date on which Liabilities are to be determined, regardless whether
such items are recourse indebtedness or otherwise and, including,
without limitation or duplication of the foregoing, obligations in
respect of reimbursement for letters of credit issued, obligations in
respect of funding obligations for any Plan or Multi-Employer Plan,
obligations in respect of Environmental Remediation, and obligations in
respect of deferred compensation; and
(ii) All liabilities of others within the meaning of (i) above
which the Companies has directly or indirectly Guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of
business), discounted with recourse or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire or become
liable for, or in respect of which the Companies have entered into any
agreement for the purchase or other acquisition of any product,
materials, or supplies, or for the making of shipments, or for the
payment for services, if in any such case payment therefor is to be
made regardless of the nondelivery of the product, materials, or
supplies or the nonfurnishing of the transportation or services.
"Libor Margin" shall mean the number of basis points calculated based
on the following performance grid (pricing is based on the higher of the rates
resulting from independent application of the second and third columns and is
adjusted quarterly as more fully described in Section 2.07):
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Borrowed Fixed Charge LIBOR Plus Letter of Credit
Level Debt/ Coverage Ratio (basis points) Pricing (%)
Net Worth
- ------------------------------------------------------------------------------------------
1 less than or greater than or
equal to 1.00 equal to 2.61 100 1.00
2 1.01 to 1.35 2.16 to 2.60 125 1.25
3 1.36 to 1.70 2.71 to 2.15 150 1.50
4 1.71 to 2.00 1.26 to 1.70 175 1.50
"Libor Rate" means, with respect to any Effective Date, a rate per
annum equal to the quotient obtained (rounded upwards, if necessary, to the next
highest 1/100 of 1%) by dividing (i) the rate of interest determined by the
Agent three (3) Business Days prior to such Effective Date that it would have to
pay on such Effective Date in the London inter-bank market for inter-bank
deposits of United States Dollars with a maturity equal (or as nearly equal as
possible) to the Libor Rate Period selected by the Borrowing Group and in an
amount equal to such amount of the Revolving Loan on which interest will be
determined by the Libor Rate by (ii) 1.00 minus for the day the rate of interest
is determined by the Agent 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 reserve requirement for
the Banks in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the Libor
Rate is determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of the Banks to United States
residents). The Libor Rate will be increased by such amount as provided in
Section 2.09 to compensate the Banks for the changes in circumstances described
in Section 2.09 and if such changes in circumstances are no longer applicable or
are otherwise modified so that such increase is no longer required in whole or
in part, then the Libor Rate will be decreased on an equivalent basis (in whole
or in part), in each case, without duplication.
"Libor Rate Period" means the period for which an Overall Libor Rate is
in effect for the purpose of determining the rate of interest on all or any part
of the Revolving Loan.
"Lien" as applied to the property of any Person means: (a) any
mortgage, lien, pledge, charge, lease constituting a Capitalized Lease
Obligation, conditional sale or other title retention agreement, or other
security interest or encumbrance of any kind in respect of any property of such
Person, or upon the income or profits therefrom; (b) any arrangement, express or
implied, under which any property of such Person is transferred, sequestered or
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otherwise identified for the purpose of subjecting the same to the payment of
Indebtedness for Borrowed Money in priority to the payment of the general,
unsecured creditors of such Person; (c) any Liabilities which are unpaid more
than 60 days after the same shall have become due and payable and which if
unpaid would by law (including, but not limited to, bankruptcy and insolvency
laws), or otherwise, be given any priority whatsoever over general unsecured
creditors of such Person; and (d) the filing of, or any agreement to give, any
financing statement under the Uniform Commercial Code or its equivalent of any
jurisdiction in respect of Indebtedness for Borrowed Money.
"Loan Documents" means and includes this Credit Agreement and the
Revolving Notes.
"Majority of the Banks" means Banks which have committed not less than
two-thirds (2/3), by amount, of the Commitments as set forth in Section 2.01.
"Material Adverse Effect" means a materially adverse effect on the
business, properties, operations or condition (financial or otherwise) of the
Companies, on a Consolidated basis.
"Maximum Guaranteed Amount" means, as to any of the Borrowing Group to
the extent deemed to be a Guarantor under Section 3.02 of this Agreement, as of
any date of determination thereof, the sum of (a) the aggregate amount of the
Revolving Loans to any other member of the Borrowing Group, to the extent that
the proceeds thereof are used to make a Valuable Transfer by such other member
to such Guarantor plus (b) the greater of (i) 95% of the Adjusted Net Worth of
such Guarantor at the date of the execution of this Agreement and (ii) 95% of
the Adjusted Net Worth of such Guarantor at the earlier of (A) the date of the
commencement of a case under Title 11 of the United States Code in which such
Guarantor is a debtor and (B) the date enforcement hereunder is obtained and
realized upon.
"Multi-Employer Plan" shall have the meaning given to the term
"multi-employer plan" in Section 5.13 hereof.
"Net Proceeds" means, with respect to the sale or disposition of any
asset, the total proceeds received in cash (from time to time, including,
without limitation, any installment, rental or other deferred payments) upon
such sale or disposition minus (i) any reasonable out-of-pocket expenses
directly arising out of such sale or disposition and (ii) Taxes payable in
respect of such proceeds.
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"Net Worth" means the amount equal to the sum of (i) Assets minus (ii)
Liabilities, of the Companies on a Consolidated basis, as determined in
accordance with GAAP.
"Obligations" means:
(i) the payment of all principal of and interest owing or
outstanding on any of the Revolving Notes or the Revolving Loan,
including, without limitation, future advances made by the Banks which
are or may be evidenced by said Revolving Notes, regardless of whether
the Banks were obligated to make such advances;
(ii) the payment of all amounts from time to time owing to a
Bank or the Agent under or in connection with this Credit Agreement or
any of the Collateral Security Documents;
(iii) the payment by the Borrowing Group of all reasonable
costs and expenses (including attorneys' fees) incurred by any of the
Banks or the Agent in the collection of the Revolving Loan or any of
the Revolving Notes or in the enforcement of their rights under this
Credit Agreement or the other Loan Documents;
(iv) the payment by the Borrowing Group of all sums expended
or advanced by a Bank or the Agent pursuant to the terms of this Credit
Agreement, or any other Loan Document;
(v) the performance by the Borrowing Group of all its
obligations under this Credit Agreement, the Revolving Notes and the
other Loan Documents;
(vi) subject to the simultaneous or prior payment of the
amounts described in clauses (i) through (v) above and only so long as
any such amounts are unpaid, the payment of any and all other
indebtedness (including principal, interest or fees, if any) of any
kind or description now or hereafter owing by the Borrowing Group to a
Bank, including, without limitation, overdrafts, amounts owing under
other notes, bonds, debentures, letters of credit, interest rate
protection arrangements or other evidences of indebtedness and
contingent obligations.
"Outstanding Amount" means the sum of (i) the outstanding unpaid
principal of the Revolving Loan plus (ii) the outstanding stated amount of any
LCs plus (iii) the amount of any Bank Guaranties then outstanding.
"Overall Libor Rate" means the Libor Rate plus the Libor Margin.
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"Overall Libor Rate Indemnity" shall have the meaning specified in
Section 2.14 in respect of a Loan to the extent bearing interest at an Overall
Libor Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Permitted Capital Expenditures" means Capital Expenditures of the
Borrowing Group not in excess of the amounts for the relevant period as set
forth in Section 7.12.
"Permitted Distributions" has the meaning given to such term in Section
7.09.
"Permitted Exceptions" has the meaning given to such term in Section
7.02.
"Permitted Indebtedness" has the meaning given to such term in Section
7.01.
"Person" includes a corporation, an association, a partnership, an
organization, a trust or business trust, an individual, a government or
political subdivision thereof or a governmental agency or other entity.
"Plan" means any pension plan which is covered by Title IV of ERISA in
respect of which the Borrowing Group or any ERISA Affiliate is an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement of even date herewith
executed and delivered by ALTEC and Chart Management pledging to the Agent for
the ratable benefit of the Banks all of the issued shares of common stock of
CHD, on terms and conditions acceptable to the Banks.
"Possible Default" means an event or condition which, after notice or
lapse of time, or both, would constitute an Event of Default.
"Post-Default Rate" means a per annum rate of interest equal to two
percent (2%) over the Base Rate.
"Pretax Interest Coverage Ratio" means the ratio of (i) the sum of (a)
net income plus (b) income taxes (whether federal, state or local) plus (c)
interest expense to (ii) interest expense.
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"Quarter" means a period of three successive calendar months ending on
March 31, June 30, September 30 or December 31.
"Ratable" and "Ratably" mean in the proportion of the Commitments as
set forth in Section 2.01.
"Reference Rate" means, on any given date, either the Base Rate in
effect for that day or a rate equal to one percent (1%) per annum plus the
federal funds rate in effect for that day, whichever rate shall be the higher
for that day.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, in each case where reporting
requirements have not been waived and which event could or would give rise to
the termination of any Plan, the appointment of a trustee for such Plan or
otherwise impose any liability on the Companies, including, without limitation,
as described in Department of Labor Regulations sections 2615.11, 2615.12 or
2615.15 through 2615.17.
"Revolving Loan" shall have the meaning given to it in the recitals of
this Agreement.
"Revolving Notes" means the promissory notes executed by the Borrowing
Group in favor of the Banks to evidence the Borrowing Group's indebtedness
pursuant to the Credit Facility.
"Revolving Period" shall have the meaning given to such term in Section
2.04.
"Shareholder" means each Person owning or possessing any Equity
Interest (or right to acquire an Equity Interest by warrant, option or
otherwise).
"Subsidiaries" means and includes any corporation, association, or
other business entity, the majority (by number of votes) of the stock of any
class or classes of which is at the time owned or controlled by the Parent or by
any Subsidiary, if the holders of the stock of such class or classes (i) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or persons performing similar functions) of the
issuer thereof, even though the right so to vote has been suspended by the
happening of any contingency, or (ii) are at the time entitled, as such holders,
to vote for the election of a majority of the directors (or persons performing
similar functions) of the issuer thereof, whether or not the right so to vote
exists by reason of the happening of a contingency.
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"Taxes" means all federal, state and local or foreign income, payroll,
withholding, excise, sales, use, real and personal property, use and occupancy,
business and occupation, mercantile, real estate, capital stock and franchise or
other taxes, including interest and penalties thereon, and including estimated
taxes thereof.
"Total Liabilities" means the aggregate (without duplication) of all
Liabilities of the Companies on a Consolidated basis, as determined in
accordance with GAAP.
"Unfunded Liability" means, with regard to any Plan, the excess of the
present value of accrued benefits under the plan over the current value of the
Plan's assets. Whenever this Agreement requires the amount of any Unfunded
Liability to be determined, it shall be determined as of the beginning of the
most recent Plan year on the final actuarial valuation prepared for the Plan for
funding purposes.
"Valuable Transfer" means, as to any member of the Borrowing Group, to
the extent that deemed to be a Guarantor under Section 3.02 of this Agreement:
(a) all loans, advances or capital contributions made by any other member of the
Borrowing Group to such Guarantor with proceeds of the Revolving Loans to such
other member of the Borrowing Group, (b) all debt securities or other
obligations of any Guarantor acquired by any other member of the Borrowing Group
from such Guarantor with the proceeds of the Revolving Loan made to such other
member of the Borrowing Group, (c) the fair market value of all property
acquired by any other member of the Borrowing Group with proceeds of the
Revolving Loans to such other member of the Borrowing Group and transferred,
absolutely and not as collateral, to such Guarantor, (d) all equity securities
of such Guarantor acquired by any other member of the Borrowing Group from such
Guarantor with proceeds of the Revolving Loans to such other member and (e) the
value of any quantifiable economic benefits not included in clauses (a) through
(d) above, but includable in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, accruing to such
Guarantor from the other member or members of the Borrowing Group as a result of
the Revolving Loans to such other member or members.
"Wholly-owned Subsidiary" means any Subsidiary the stock of any class
or classes of which is at the time owned and controlled solely by the Parent or
other Company that is a Wholly-owned Subsidiary.
Whenever any agreement, promissory note, intercreditor agreement, or
other instrument or document is defined in this Credit Agreement, such
definition shall be deemed to mean and include, from and after the date of an
amendment, restatement, or modification thereof, such agreement, promissory note
or other instrument or document as amended,
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restated or modified. To the extent that the plural of any term defined herein
is not defined in this Credit Agreement, that usage of the plural in this Credit
Agreement shall mean the plural of the singular term so defined and if the
defined term is plural, usage of the singular of such term shall mean the
singular thereof, in each case as the context so requires. The words "hereof",
"herein" or similar words shall refer to this Credit Agreement and references to
Sections or Articles shall mean Sections or Articles of this Credit Agreement.
Section 1.02 ACCOUNTING TERMS. Any accounting terms used herein and not
defined herein shall have the meaning ascribed to them by, and be determined in
accordance with, GAAP. All computations made pursuant to this Agreement shall be
made in accordance with GAAP consistently applied and all balance sheets and
other financial statements shall be prepared in accordance with GAAP
consistently applied except, with respect to interim financial statements, for
normal recurring year-end adjustments.
ARTICLE II
----------
CREDIT FACILITY
---------------
Section 2.01 AMOUNTS. The Banks hereby establish their respective
several, but not joint, commitments (the "Commitments") in respect of the Credit
Facility. The aggregate amount of the Commitments shall be FORTY FIVE MILLION
DOLLARS ($45,000,000), less the face amount of any outstanding letters of credit
and foreign bank guaranties, but that amount may be reduced from time to time
pursuant to Section 2.02 and the Commitments may be terminated pursuant to
Article X. The amount of each Bank's Commitment (subject to such reduction or
termination), and the proportion (expressed as a percentage) that it bears to
all of the Commitments, is set forth opposite the Bank's name below, to-wit:
- -------------------------------------------------------------------------------
$27,000,000 60% National City Bank
18,000,000 40% NBD Bank
-----------
$45,000,000 100% Total
- -------------------------------------------------------------------------------
Section 2.02 REDUCTION. The Borrowing Group shall have the right at all
times to permanently and irrevocably reduce the Commitments in whole or in part
by giving written notice of the reduction to the Agent at least one (1) Business
Day prior to the reduction, each such reduction to be equal to at least
$1,000,000. Concurrently with each reduction, the Borrowing Group shall prepay
the amount, if any, together with interest thereon, by which the Outstanding
Amount exceeds the Commitments as so reduced. Each reduction shall be allocated
ratably among the Commitments. Section 2.11 shall apply to each such prepayment.
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Section 2.03 SINGLE LOAN. The Outstanding Amount borrowed by the
Borrowing Group from the Banks under the Commitments shall constitute a single
loan from the Banks regardless of how many Advances have been borrowed, repaid
or reborrowed or LCs or Bank Guaranties have been issued or are outstanding.
Section 2.04 ADVANCES; LCS; REVOLVING PERIOD. The Borrowing Group may
obtain (a) Advances in respect of the Revolving Loan from the Banks or (b) LCs
from NCB or (c) Bank Guaranties from a foreign branch of NBD during a period
(the "Revolving Period") commencing as of the Closing Date until (i) the
termination of the Commitments pursuant to any provision hereof or (ii) May 31,
2000, whichever shall first occur, whereupon the Commitments shall be terminated
and no longer be in effect. Each Advance shall be in an amount of not less than
$1,000,000, or multiples of $500,000 in excess thereof. For purposes of
satisfying requirements for minimum amounts in this Agreement, the aggregate
amount thereof (as opposed to any particular amount forwarded to any member of
the Borrowing Group by the Parent as agent for the Borrowing Group) shall be
used. The Borrowing Group shall give the Agent notice on or before 12:00 noon
Cleveland time on the date of an Advance, subject to Section 2.08. Subject to
the other provisions hereof, during the Revolving Period, Advances may be
borrowed, repaid (in accordance with Section 2.12) and reborrowed so long as the
Outstanding Amount outstanding at any one time does not exceed the Commitments.
Section 2.05 INTEREST ON THE REVOLVING LOAN. The Borrowing Group shall
pay interest on the Revolving Loan at the rate per annum determined on the basis
of either the (i) Base Rate and/or (ii) the Overall Libor Rate, as applicable in
accordance with the other provisions of this Agreement (the "Available Rates").
Section 2.06 ELECTION OF BASE RATE FOR REVOLVING LOAN. The minimum
principal amount of the Revolving Loan initially upon which interest may be
determined on the Base Rate shall be $1,000,000 and in multiples of $500,000 in
excess thereof.
Section 2.07 ELECTION OF OVERALL LIBOR RATE FOR REVOLVING LOAN. (i)
Subject to the terms and conditions stated in this Section 2.07 and otherwise in
this Article II, the Borrowing Group may elect to have interest on all or part
of the outstanding principal of that portion of the Revolving Loan to be
determined on the basis of an Overall Libor Rate applicable to the Revolving
Loan. Changes in the Overall Libor Rate based upon changes in the Libor Margin
shall become effective on each April 1, June 1, September 1 or December 1 (the
"Overall Libor Rate Change Dates") first following (by at least two (2) Business
Days) the delivery to the Agent pursuant to Section 6.06(i) or (ii) of the
financial
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statements of the Borrowing Group including, without limitation, the Covenant
Compliance Certificate (as defined in Section 6.06(ii) (z)), demonstrating the
computation of the Borrowing Group's Borrowed Debt/Net Worth and the Fixed
Charge Coverage Ratio (determined on an annualized basis by using the amount of
Cash Flow and Fixed Charges for the Quarter most recently concluded multiplied
by four (4)), provided that the Fixed Charge Coverage Ratio applicable as of
each April 1, shall be determined using the actual Cash Flow and Fixed Charges
for the Borrowing Group's most recently concluded fiscal year. In the event that
the Borrowing Group fails to provide the Agent with a Covenant Compliance
Certificate within at least two business days before the Overall Libor Rate
Change Dates then the Agent may adjust the Overall Libor Rate based on what it
determines to be the Borrowing Group's Borrowed Debt/Net Worth and the Fixed
Charge Coverage Ratio, all as determined in the Agent's sole discretion ("the
Discretional Libor Rate"). Once the Agent has received the financial statements
of the Borrowing Group, including, without limitation, the Covenant Compliance
Certificate, and can determine the actual change in the Overall Libor Rate based
upon changes reflected in such financial statements (the "Actual Overall Libor
Rate") then the Overall Libor Rate shall be adjusted to the Actual Overall Libor
Rate. In the event that the Actual Overall Libor Rate is lower than the
Discretional Overall Libor Rate the Borrowing Group shall not be entitled to any
refund based on the difference in the two rates. In the event that the Actual
Overall Libor Rate is higher than the Discretional Overall Libor Rate then the
Borrowing Group shall immediately pay to the Agent the difference in the two
interest rates for the period that any Advances were outstanding under the
Discretional Overall Libor Rate. In no event shall more than eight (8) Overall
Libor Rates be in effect for the Revolving Loan at any time. If no election is
made by the Borrowing Group as to the Interest Option for determination of
interest on any part of the outstanding principal amount of the Revolving Loan,
interest thereon will be determined at the Base Rate.
(ii) The minimum principal amount of the Revolving Loan initially upon
which interest may be determined on an Overall Libor Rate shall be $1,000,000.00
and in multiples of $500,000 in excess thereof or such lower amount such that
any Borrowing will result in the Bank with the smallest Commitment having at
least a Loan of $1,000,000. The Libor Rate Periods which the Borrowing Group may
elect for interest to be determined on an Overall Libor Rate are approximately
one month, two months, three months, or six months. No Libor Rate Period shall
end on a date after the maturity date of the Revolving Loan for which an Overall
Libor Rate is in effect. The Borrowing Group shall have no right to elect the
use of an Overall Libor Rate if any Event of Default or Possible Default shall
exist at the time of election or immediately upon the effectiveness thereof.
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(iii) Each election of an Overall Libor Rate shall be made by written
or telephonic notice (if telephonic, then promptly confirmed in writing) to the
Agent received by it not later than 11:00 a.m. Cleveland time three (3) Business
Days before the date the Borrowing Group desires to select as the Effective Date
for such Overall Libor Rate. The Borrowing Group, by giving a notice of
election, expressly accepts the particular Overall Libor Rate elected regardless
of any change in financial conditions or markets that may have affected such
Overall Libor Rate after the giving of notice but prior to the Effective Date
thereof. Each notice of election shall specify the principal amount of such
Revolving Loan to which such Overall Libor Rate is applicable and the period for
which such Overall Libor Rate shall be effective.
(iv) The Borrowing Group acknowledges and agrees that as of the date
hereof the Libor Margin is one hundred twenty five (125) basis points (Level 2
in the performance grid).
Section 2.08 NOTICE. The Agent shall give the Borrowing Group and the
Banks prompt notice of any Overall Libor Rate applicable to the Revolving Loan.
In making interest payments, the Borrowing Group shall be entitled to rely upon
the most recent such notice received by it; provided that if any interest
payment shall be made in the wrong amount by reason of the Borrowing Group's
failure to receive a timely notice for any reason or by reason of any error in
computation, the difference between the correct amount and the erroneous amount
shall be promptly paid by the Borrowing Group or promptly refunded to the
Borrowing Group (in either case with interest based on the amount of the
difference and computed at the rate or rates applicable to the principal in
question), whichever is applicable.
Section 2.09 LIMITS ON OVERALL LIBOR RATE ELECTIONS. The right of the
Borrowing Group to elect the use of an Overall Libor Rate for the purposes of
determining interest on the Revolving Loan shall at all times be subject to the
following:
(I) availability of funding or its functional equivalent
to the Banks to allow the election of such Overall
Libor Rate;
(II) that the basis for determining such Overall Libor
Rate will adequately and fairly reflect the cost to
the Banks of maintaining or funding the Overall Libor
Rate so elected; and
(III) the Banks do not reasonably believe that it is
prohibited from or otherwise restricted by applicable
law or regulatory requirement in allowing the Banks
to elect such Overall Libor Rate.
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Section 2.10 COMPENSATION; ILLEGALITY. (a) If, after the date hereof,
there shall be introduced or changed any treaty, statute, law, regulation or
other governmental requirement, or there shall be any change in the
interpretation or administration thereof by any governmental authority charged
with the administration or interpretation thereof, or there shall be made any
request from any central bank or other lawful governmental authority having
jurisdiction over a Bank, this Credit Agreement, the Revolving Loan or the
Revolving Notes, which introduction, change or compliance shall, upon becoming
effective, (i) impose, modify or deem applicable any reserve or special deposit
or other requirements against assets held by or deposits in or loans by a Bank
or (ii) subject a Bank to any tax, duty, fee, deduction or withholding or (iii)
change the basis of taxation of payments due from the Borrowing Group (otherwise
than by a change in taxation of the overall net income of the Banks) or (iv)
impose on a Bank any penalty in respect of any maintaining any Revolving Loan,
and any such event increases the cost to a Bank to maintain a Revolving Loan or
reduces the amount of principal or interest received by a Bank in respect of
this Credit Agreement or any Revolving Loan, then upon such Bank's demand, the
Borrowing Group shall pay to such Bank from time to time such additional amounts
as will compensate and reimburse such Bank for such increased cost or reduced
amount. Each demand for compensation shall be accompanied by such Bank's
certificate setting forth in reasonable detail the amount to be paid by the
Borrowing Group and the computations used in determining the amount, which
certificate shall be Conclusive. In determining any such amount, a Bank may use
any reasonable averaging and attribution methods.
(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 a Bank or any interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof, or compliance by a Bank with any guideline, request or directive of any
such authority (whether or not having the force of law), affects or would affect
the amount of capital required or expected to be maintained by a Bank or any
corporation controlling a Bank, as the case may be, and such Bank determines
that the amount of such capital is increased by or based upon the existence of a
Bank's obligations under this Agreement and such increase has the effect of
reducing the rate of return on a Bank's or such controlling corporation's
capital as a consequence of its obligations hereunder to a level below that
which such Bank or 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 such Bank to be material, then the Borrowing
Group shall pay to such Bank, from time to time, upon request by such Bank
additional amounts sufficient to compensate such Bank for any increase in the
amount of capital and reduced rate of return which such Bank reasonably
determine to be allocable to the existence of such Bank's obligations hereunder.
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(c) 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 the Banks, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by the Banks with any guideline, request
or directive of such authority (whether or not having the force of law),
including, without limitation, exchange controls, shall make it unlawful for the
Banks to maintain or offer a Revolving Loan under this Credit Agreement, the
Banks may, upon the occurrence of such an event, refuse to offer any Revolving
Loan to the Borrowing Group or to maintain any Revolving Loan and, in the event
that the part of the Revolving Loan that it is unlawful to maintain are only
that part of the Revolving Loan bearing interest at an Overall Libor Rate, the
Borrowing Group may convert such part of the Revolving Loan to bear interest at
the Overall Base Rate subject to the provisions of Section 2.13.
Section 2.11 INTEREST PAYMENT DATES. Interest on the Revolving Loan
that is being determined by an Overall Libor Rate shall be paid in arrears to
the Agent for the ratable benefit of the Banks at the end of each Libor Rate
Period, except that for any Libor Rate Period in excess of three months,
interest shall be paid at the end of three months and the end of the Libor Rate
Period. If any Libor Rate Period for an Overall Libor Rate would end on a date
that is not a Business Day then such Libor Rate Period shall end on the next
succeeding Business Day unless such next succeeding Business Day would occur in
the next succeeding calendar month in which case the Libor Rate Period will end
on the immediately preceding Business Day. Interest on the Revolving Loan that
is being determined on the Base Rate shall be paid in arrears to the Agent for
the ratable benefit of the Banks on the last day of Quarter or the next
succeeding Business Day if such date is not a Business Day, prior to the payment
in full of the Revolving Loan. All unpaid and accrued interest shall be due and
payable on the respective final maturity or acceleration of the Revolving Loan.
Section 2.12 VOLUNTARY PREPAYMENTS. Subject to the provisions contained
in this Section 2.12, the Borrowing Group, at its option, may prepay without
premium or penalty all or any part of the Revolving Loan upon which interest is
being determined at Base Rate. Upon any prepayment of part of any Revolving Loan
upon which interest is being determined in accordance with an Overall Libor
Rate, the Borrowing Group will pay to the Agent for the ratable benefit of the
Banks the Overall Libor Rate Indemnity. The Borrowing Group shall give the Agent
notice on or before 1:00 p.m. Cleveland time not less than one (1) Business Day
prior to any voluntary prepayment of the Revolving Loan. Any notice of payment
or payment made after 1:00 p.m. Cleveland time will be deemed made as of the
next following Business Day.
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Section 2.13 APPLICATION OF PAYMENTS TO REVOLVING LOAN. The payments of
principal required on the Revolving Loan will be applied in the following order
of priority:
(A) to each principal amount of such Revolving Loan upon which
interest is determined in accordance with an Overall Libor Rate having
a Libor Rate Period ending on the date such payment of principal is
due;
(B) to each principal amount of the Revolving Loan upon which
interest is being determined in accordance with the Base Rate; and
(C) lastly, any remaining amount shall be applied as a
prepayment to the principal amounts of the Revolving Loan upon which
interest is being determined in accordance with an Overall Libor Rate
that is in excess of the amounts specified in clause (A) above.
Section 2.14 OVERALL LIBOR RATE INDEMNITY. The Borrowing Group shall
jointly and severally compensate and pay to the Agent for the benefit of the
Banks for any costs and expenses (whether internal or external) (an "Overall
Libor Rate Indemnity"), as determined by the Banks in their sole discretion
(including, without limitation, loss of profit, any interest paid by the Banks
to lenders of funds borrowed by it to fund and carry the portion of the
Revolving Loan upon which interest is being determined on an Overall Libor Rate
and any loss sustained by the Banks in connection with the reemployment of such
funds), which the Banks may sustain if: (1) any payment or prepayment of that
portion of the Revolving Loan bearing interest at the Overall Libor Rate
(including, without limitation, as a consequence of any conversion of a
Revolving Loan bearing interest at an Overall Libor Rate to a Revolving Loan
bearing interest at an Overall Base Rate or any Event of Default or Possible
Default under this Agreement) occurs on a date which is not the last day of a
Libor Rate Period applicable thereto or (2) any repayment is not made on any
date specified in a notice of repayment given by the Borrowing Group.
Section 2.15 INTEREST CALCULATIONS. All of the interest payable on the
Revolving Loan shall be computed on a 360-day-per-year basis for the actual
number of days elapsed. All payments to be made by the Borrowing Group under
this Credit Agreement and the Revolving Notes shall be made in immediately
available funds by 1:00 p.m., Cleveland time, to the Agent for the ratable
benefit of the Banks and any payment received after such time shall be deemed
received on the next following Business Day. Except as set forth in Section 2.11
above, whenever any payment under this Credit Agreement and the Revolving Notes
shall be due on any day that is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day. If the due date for any
such payment is so
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extended or extended for any other reason, including operation of law, or any
payment is received after a due date, interest shall accrue and be payable on
demand for such extended time.
Section 2.16 LATE CHARGE; POST-DEFAULT RATE. In the event that any
payment of principal or interest on the Revolving Loan is not paid on the date
due (including any applicable grace period), the Borrowing Group agrees to pay a
late charge of $500. After the occurrence and during the continuance of any
Event of Default, the Revolving Loan shall bear interest at a rate equal to the
Post-Default Rate from and after the date of such Event of Default, which
interest shall be due on demand but paid not less frequently than monthly on the
first day of each calendar month.
Section 2.17 COMMITMENT FEE. The Borrowing Group shall pay to the
Agent for the ratable benefit of the Banks a commitment fee for the Commitments
as follows:
(i) the commitment fee will be based upon the average daily
difference between (A) the Outstanding Amount and (B) the Commitments
in effect;
(ii) the commitment fee will be computed at the rate of 3/8 of
1% per annum (computed on the basis of a 360 day year and the actual
number of days elapsed); and
(iii) the commitment fee will be paid quarterly in arrears
commencing on September 30, 1997, thereafter on the last day of each
Quarter and on the termination of the Commitments.
Section 2.18 REPAYMENT OF THE REVOLVING LOAN; THE REVOLVING NOTES. The
unpaid principal balance of the Revolving Loan shall be due and payable on the
last day of the Revolving Period but in any event no later than on June 30,
2000. In addition, at any time and from time to time, the Borrowing Group shall
no later than the next following Business Day repay the Revolving Loan to the
extent that the Outstanding Amount exceeds the Commitment. The joint and several
obligation of the Borrowing Group to pay the principal of and interest on the
Revolving Loan ratably to the Banks shall also be evidenced by the Revolving
Notes to be issued to the Banks and which shall be dated the Execution Date. The
unpaid principal balance of and interest accrued on the Revolving Loan shall be
determined by the ledgers and records of the Banks as accurately maintained in
accordance with the Banks' ordinary practices to reflect Advances and under this
Credit Agreement and shall be Conclusive.
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Section 2.19 LETTERS OF CREDIT.
(a) The Agent agrees that so long as all of the Commitments remain in
effect, the Agent will, in NCB's name but only as Agent for the Banks, issue
such letters of credit (each, an "LC") for the account of the Borrowing Group or
any subsidiary of the Borrowing Group, all as the Parent may from time to time
request subject, however, to the conditions of this Agreement.
(b) NBD agrees that so long as (i) all of the Commitments remain in
effect, and (ii) NBD has an affiliate(s) which issues Bank Guaranties, NBD's
affiliate will in NBD's name, issue such Bank Guaranties for the account of PSI
if PSI may from time to time request subject, however, to the conditions of this
Agreement.
Section 2.20 RATABLE PARTICIPATION IN LCS. Each issuance of a LC or a
Bank Guaranty shall, of itself, confer upon each Bank the benefits and
liabilities of a participation constituting an undivided interest in the LC or
Bank Guaranty to the extent of that Bank's ratable share.
Section 2.21 MAXIMUM.
(a) The Agent shall not issue any LC if, after giving effect
thereto,
(i) the aggregate undrawn balance of all then
outstanding LCs and Bank Guaranties would exceed Fifteen
Million Dollars ($15,000,000) or
(ii) the aggregate unpaid principal of the Revolving
Loans plus the aggregate undrawn balance of all then
outstanding LCs and Bank Guaranties would exceed the aggregate
Credit Exposure of all the Banks.
(b) NBD's affiliate shall not issue any Bank Guaranty if,
after giving effect thereto:
(x) the aggregate undrawn balance of all then
outstanding LCs and Bank Guaranties would exceed Fifteen
Million Dollars ($15,000,000) or
(y) the aggregate unpaid principal of the Revolving
Loans plus the aggregate undrawn balance of all then
outstanding LCs and Bank Guaranties would exceed the aggregate
Credit Exposure of all Banks.
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Section 2.22 TERM. No LC shall permit any draft to be drawn thereunder
on a date that is later than one (1) year after the date of the LC nor later
than the third (3rd) banking day immediately preceding the end of the Revolving
Period. No Bank Guaranty shall expire on the date that is later than one (1)
year after the date of that Bank Guaranty or later than the third (3rd) banking
day immediately preceding the end of the Revolving Period.
Section 2.23 FORM. Each LC shall be issued in such form as Agent may
reasonably require and may be either
(a) a commercial letter of credit issued for the importation
of goods in the ordinary course of the Borrowing Group's businesses; or
(b) a standby letter of credit issued for general corporate
purposes in the ordinary course of business.
Each Bank Guaranty shall be issued in substantially the form of
Schedule 2.23 hereto, with the blanks appropriately filled.
Section 2.24 FEES. The Borrowing Group agrees, in respect of each LC
and the drafts thereunder, (whether issued for the account of the Borrowing
Group or a subsidiary), to pay NCB for NCB's sole account such issuance,
amendment, negotiation, draw, acceptance, telex and similar transactional fees
as are generally charged by NCB under its standard fee schedule as in effect
from time to time. The Borrowing Group agrees, in respect of each Bank Guaranty
issued on behalf of PSI, to pay NBD or its affiliate for NBD's or such
affiliate's sole account such issuance, amendment, negotiation, telex and
similar transactional fees as are generally charged by NBD or its affiliate for
Bank Guaranties.
Section 2.25 COMMISSIONS. The Borrowing Group agrees to pay:
(a) to the Agent, in respect of each LC and the drafts
thereunder (whether issued for the account of the Borrowing Group or a
Subsidiary), for the ratable accounts of the Banks a commission which,
shall be based on the daily undrawn balance thereof, shall be computed
at the rate set forth in the performance grid contained in the
definition of Libor Margin, and shall be paid in arrears on the last
day of each Quarter and shall be non-refundable, and
(b) to NBD or its affiliate, in respect of each Bank Guaranty,
for the ratable account of the Banks, a commission which shall be based
on the daily undrawn balance thereof, shall be computed at the rate set
forth in the perormance grid contained in the definition of Libor
Margin, and shall be paid in arrears on the last day
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of each Quarter and shall be non-refundable. Such commission shall be
payable in Dollars or their equivalent as determined by NBD (or its
affiliate) based on the exchange rate then in effect.
Each of the Agent and NBD shall provide to each Bank within two
Business Days after each payment of commissions that Bank's ratable share of
commissions received by the Agent in respect of LCs or NBD in respect of Bank
Guaranties during the Quarter then ending.
Section 2.26 REIMBURSEMENT. The Borrowing Group agrees that whenever
the Agent pays any draft or other item pursuant to or otherwise in respect of
any LC and whenever NBD pays any amount pursuant to or otherwise in respect of
any Bank Guaranty, the Borrowing Group will reimburse the Agent or NBD, as
applicable, for the amount so paid immediately upon demand. In the event that
any such reimbursement is not made, then the Borrowing Group shall be deemed to
have made a Borrowing of a Revolving Loan in a principal amount equal to the
amount to be reimbursed, all subject to the terms and conditions of this
Agreement, except that a Borrowing made under this Section shall be made even if
an Event of Default or Possible Default shall then exist or immediately
thereafter exist. The Agent shall immediately disburse the proceeds of such
Borrowing to the Agent or NBD as applicable, to satisfy the aforesaid
reimbursement liability.
Section 2.27 FOREIGN CURRENCIES. Whenever a LC or Bank Guaranty is
denominated in any currency other than dollars, the provisions of this Section
2.27 shall apply:
(a) The fees and commissions referred to in Sections 2.24 and
2.25 shall be based on the dollar equivalent of the foreign currency on
the date of payment and shall be paid in dollars.
(b) The reimbursements referred to in subsection 2.25 shall be
made in the dollar equivalent of the foreign currency as determined on
the date of payment.
(c) The dollar equivalent of all outstanding LCs and Bank
Guaranties denominated in any currency other than dollars shall be
determined for purposes of this paragraph as of the first banking day
of each month. If, after giving effect to that determination, the
limits set forth in Section 2.21 shall be exceeded, the Borrowing Group
shall, in the case of a violation of subsections (a)(ii) and (b)(z) of
Section 2.21, immediately reduce the aggregate Credit Exposure of the
Banks first by making a prepayment in respect of the Revolving Loan in
an aggregate principal amount equal to that excess (or, if the then
aggregate principal balance of the Revolving Loan is less
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than the excess, equal to that aggregate principal balance); and if the
sum of the aggregate Credit Exposure shall still be in excess of the
aggregate amount of the subject Commitments, or in the case of a
violation of subsection (a)(i), (b)(x) or (b)(y) of Section 2.21, the
Borrowing Group shall, immediately upon the demand of the Agent or NBD,
as applicable, deposit with the party making the demand, as security
for the Borrowing Group's obligation to reimburse the Agent or NBD and
the Banks in respect of any LCs and Bank Guaranties then outstanding,
cash or Acceptable Marketable Securities having a fair cash value equal
to the amount by which the sum of the aggregate undrawn balance of any
then outstanding LCs and Bank Guaranties exceeds the limits in Section
2.21.
Section 2.28 PURPOSE OF THE REVOLVING LOAN.
(i) The proceeds of the Revolving Loan and LCs shall be used
by the Borrowing Group to finance the Cryenco Acquisition, to refinance
existing indebtedness and for working capital and general corporate
purposes in accordance with the provisions of this Credit Agreement.
The proceeds of the Bank Guaranties shall be used by PSI for working
capital and general corporate purposes in accordance with the
provisions of this Credit Agreement.
(ii) Each of the Borrowing Group hereby acknowledges that it
has equal and unrestricted right to obtain proceeds of the Revolving
Loan and/or LCs for its purposes as set forth in paragraph (i) of this
Section 2.28. The fact that the Parent will act in its capacity as
representative of all of the members of the Borrowing Group to request
from the Agent an Advance and/or an LC is merely administrative in
nature.
Section 2.29 EVENT OF DEFAULT OR POSSIBLE DEFAULT. The Borrowing Group
shall not be entitled to obtain the any Advances, LC or Bank Guaranty, or elect
an Overall Libor Rate if, at the time of so obtaining or requesting such
Advance, LC or Bank Guaranty or electing any Overall Libor Rate, any Event of
Default or Possible Default shall then exist or immediately thereafter exist.
Receipt by the Borrowing Group of any Advances, LC or Bank Guaranty, or election
by the Borrowing Group of an Overall Libor Rate shall, each in and of itself,
constitute a continuing representation and warranty by the Borrowing Group that
the representations and warranties in Article IV continue (except to the extent
given as of and limited to a specific date) to be accurate in all material
respects and that the Borrowing Group then is entitled under this Credit
Agreement to obtain the Advances, LC or Bank Guaranty or elect an Overall Libor
Rate, as the case may be.
Section 2.30 AGENT FEES. The Borrowing Group shall pay to the Agent
an annual
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agent fee stated in a separate letter agreement between the Agent and the
Borrowing Group, which fee is payable at closing and each June 30th thereafter.
ARTICLE III
-----------
INTERCOMPANY MATTERS
--------------------
Section 3.01 APPOINTMENT OF PARENT AS AGENT. Each of the Borrowing
Group, jointly and severally, hereby appoints the Parent as their respective
agent for the purpose of giving and receiving notice relating to this Agreement,
to receive the proceeds of any Advance, making any election of any Overall Libor
Rate, to request the issuance of an LC and to do other things that any of the
Borrowing Group may do under this Agreement. All references to the Parent in
this Agreement when the context so indicates that it is acting as agent for
itself and the Borrowing Group shall be deemed to be a reference to all of the
Borrowing Group. All of the Borrowing Group, jointly and severally, agree that
each shall be bound and obligated by the acts of the Parent with respect to the
exercise of the functions set forth in this Section 3.01 and hereby confirm and
ratify any such acts the Parent shall make in such capacity. No revocation or
modification of the foregoing appointment of the Parent as such agent for the
Borrowing Group, the revocation or acceptance of such appointment by the Parent
and the effect thereof, shall be effective as to the Banks without the prior
written consent of the Majority of the Banks thereto. Unless and until the Agent
accepts the revocation or modification of the foregoing appointment of the
Parent, the individual members of the Borrowing Group may not, except through
the Parent as their agent, perform or exercise any of the functions for which
the agency is created pursuant to this Section 3.01.
Section 3.02 INTERCOMPANY GUARANTY.
a) Each of the Borrowing Group hereby unconditionally and irrevocably,
jointly and severally guarantees to the Banks (a) the due and punctual payment
of each of the obligations of the other members of the Borrowing Group to the
Bank, including, but not limited to, the due and punctual payment of all
Obligations and of all other sums now or hereafter owed by any Borrower to the
Bank under this Agreement or any of the Loan Documents (whether by acceleration
or otherwise) and according to the terms hereof and thereof (the foregoing to be
collectively referred to as the "Guaranteed Obligations"); PROVIDED, HOWEVER
that the maximum amount of the Guaranteed Obligations of any of the Borrowing
Group under this Section 3.02(a) shall not at any time exceed the Maximum
Guaranteed Amount in respect of such member of the Borrowing Group.
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b) The Obligations of the Borrowing Group under this Section 3.02 shall
be joint and several, irrevocable, unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by (a) any extension, renewal, settlement, compromise, waiver
or release in respect of any obligation of any Revolving Loan under this
Agreement or any Loan Document by operation of law or otherwise; (b) any
modification or amendment of or supplement to this Agreement or any other Loan
Document; (c) any modification, amendment, waiver, release, non-perfection or
invalidity of any direct or indirect security, or of any guarantee or other
liability of any third party, for the Guaranteed Obligations of any of the
Borrowing Group (d) any change in the corporate existence, structure, or
ownership of, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any of the Borrowing Group or its assets or any resulting
release or discharge of any of the Guaranteed Obligations of any of the
Borrowing Group, the Banks or any other Person, whether or not arising in
connection with this Agreement or other Loan Document; PROVIDED, HOWEVER, that
nothing shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim; (f) any invalidity or unenforceability relating to or
against any of the Borrowing Group for any reason, of this Agreement or any
other Loan Document or any provision of applicable law or regulation purporting
to prohibit the payment by any of the Borrowing Group under this Agreement or
any other Loan Document; or (g) to the extent permitted by applicable law, any
other act or omission to act or delay of any kind by any of the Borrowing Group,
the Bank(s) or any other Person or any other circumstance whatsoever that might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of the Obligations of any of the Borrowing Group under this Section
3.02.
(c) Each of the Borrowing Group's Obligations under this Section 3.02
shall remain in full force and effect until all Commitments hereunder are
terminated and Revolving Loans and all amounts payable by any of the Borrowing
Group under this Agreement or any other Loan Document shall have been paid in
full. If at any time any payment of any amount payable by any of the Borrowing
Group under this Section 3.02 of this Agreement, any other section of this
Agreement or other Loan Document is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of any of the
Borrowing Group or otherwise, the obligations of the other members of the
Borrowing Group under this Section 3.02 with respect to such payment shall be
reinstated at such time as though such payment had become due but had not been
made at such time. This Section 3.02(c) shall survive the termination of this
Agreement and the payment in full of all amounts payable under the Revolving
Notes and in respect of this Agreement or other Loan Document.
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(d) No member of the Borrowing Group shall have any right of
subrogation, reimbursement or contribution and each member hereby waives any
right to enforce any remedy which the Banks now have or may hereafter have
against any of the Borrowing Group, any endorser or any other guarantor, of all
or any part of the Guaranteed Obligations, and each of the Borrowing Group
hereby waives any benefit of, and any right to participate in, any security or
collateral given to the Banks to secure payment of the Guaranteed Obligations or
any other liability of any other Borrowing Group to the Banks. Each member of
the Borrowing Group also waives all setoffs and counterclaims and all
presentments, demands of performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Guaranty. Each member of the Borrowing Group further waives all notices of the
existence, creation or incurring of new or additional indebtedness, arising
either from additional loans extended to any other member of the Borrowing Group
or otherwise, and also waives all notices that the principal amount, or any
portion thereof, and/or any interest on any instrument or document evidencing
all or any part of the Guaranteed Obligations is due, notices of any and all
proceedings to collect from the maker, any endorser or any other guarantor of
all or any part of the Guaranteed Obligations, or from anyone else, and, to the
extent permitted by law, notices of exchange, sale, surrender or other handling
of any security or other collateral given to the Banks to secure payment of the
Guaranteed Obligations.
(e) If acceleration of the time for payment of any amount payable by
any of the Borrowing Group under this Agreement or other Loan Document is stayed
upon the insolvency, bankruptcy or reorganization of any of the Borrowing Group
all such amounts otherwise subject to acceleration under the terms of this
Agreement shall nonetheless be payable by the other members of the Borrowing
Group hereunder forthwith on demand by the Banks.
Section 3.03 FURTHER ASSURANCES. Each Company in the Borrowing Group
agrees to execute and deliver such additional agreements, documents and
instruments as may be reasonably required to evidence their agreement pursuant
to this Article III. This Article III is intended for the respective benefit of
each Company in the Borrowing Group.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF THE BORROWING GROUP
-----------------------------------------------------
Each member of the Borrowing Group for itself and CHD represents and
warrants to the Banks and the Agent as follows:
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Section 4.01 ORGANIZATION OF THE COMPANIES; BUSINESS AND PROPERTY; CHD.
Each of the Companies is duly organized and validly existing corporations in
good standing under the laws of the states set forth in Schedule 4.01. Each of
the Companies has all requisite corporate power and authority to execute and
deliver the Loan Documents executed or to be executed by it and to carry out the
provisions thereof. each of the Companies has full corporate power, authority,
and legal right to own and operate its respective properties and to carry on the
business in which it engages and intend to engage. Each of the Companies is
qualified or otherwise entitled to do business and is in good standing in the
states set forth in Schedule 4.01 and no qualification is required in any other
jurisdiction by reason of the Companies's business, activities, or ownership of
property, other than such jurisdictions in which the failure to qualify would
not have a Material Adverse Effect. CHD is exempt from Delaware corporation
income tax by operation of Title 30 Delaware Code section 1902(b)(8).
Attached hereto as SCHEDULE 4.01 is a true and correct summary, as of
the date hereof, of the capital structure, including all capital stock and
Indebtedness for Borrowed Money (excluding the Revolving Loan) of the Companies,
which lists in Part I, each person owning or holding any Equity Interest in
excess of five percent (5%) and, lists in Part II, each Person (other than the
Banks) owning or holding any evidence of Indebtedness for Borrowed Money of the
Companies. Part I of SCHEDULE 4.01 shows the number of shares of preferred or
common stock which each Person holding Equity Interests in excess of five
percent (5%) owns or is entitled to own, the class thereof and the percentage
interest of such class and Part II of SCHEDULE 4.01 shows the face amount of
each evidence of Indebtedness for Borrowed Money, and the stated maturity
thereof.
Section 4.02 AUTHORIZATION; VALIDITY. The Borrowing Group have taken
all corporate action necessary to authorize the execution, delivery and
performance by it of the Loan Documents executed and to be executed by it. This
Credit Agreement is, and each of the other Loan Documents when executed and
delivered will be, legal, valid and binding upon the Borrowing Group and
enforceable against the Borrowing Group in accordance with their respective
terms. No consent, approval, or authorization of, or registration or declaration
with, any governmental authority or other Person is required in connection with
the execution, delivery and performance by the Borrowing Group of any of the
Loan Documents other than such as have been obtained and copies of which have
been furnished to the Banks.
Section 4.03 PERMITS. Each of the Companies has all permits, licenses
or authorizations from all federal, state or local governmental authority (a
"Governmental Authority") necessary to operate the Facilities and no default
exists under any such permit, license or authorization, which, either the
failure of the Companies to have or the default under, would have a Material
Adverse Effect. None of the Companies is subject to any
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outstanding or, to the knowledge of the Borrowing Group, threatened citation by
any Governmental Authority which would have a Material Adverse Effect.
Section 4.04 FINANCIAL STATEMENTS. The Consolidated balance sheet of
the Parent as of March 31, 1997 and the consolidating balance sheets of the
Companies as of March 31, 1997 and the related statements of revenues and
expenses and changes in financial position for the periods then ended and the
auditors' reports with respect to the fiscal year ended December 31, 1996,
copies of which have heretofore been furnished to the Banks, are complete and
correct and fairly present the consolidated financial condition, changes in
financial position and results of operations of the Companies at such dates and
for such period, and were prepared in accordance with GAAP.
Section 4.05 FINANCIAL CONDITION AT DATE OF CREDIT AGREEMENT. Except
for Liabilities created pursuant to this Credit Agreement and for the Cryenco
Acquisition, as of the Closing Date, the Companies have no material amount of
Liabilities, contingent or otherwise, whether or not required to be reflected in
accordance with GAAP, which are not reflected in the Balance Sheets, nor any
outstanding or existing commitments for the purchase of land, buildings,
equipment, materials, or supplies, or any contracts for services except for
those made in the ordinary course of business.
Section 4.06 NO ADVERSE CHANGES. Since March 31, 1997, there has been
no Material Adverse Effect in the condition, financial or otherwise, of the
Companies, and the business, operations, and properties, including the
Facilities, of any of the Companies have not been substantially and adversely
affected in any way as a result of any fire, explosion, earthquake, accident,
labor disturbance, requisition or taking of property by any governmental
authority, flood, riot, or act of God except where no Material Adverse Effect
resulted therefrom.
Section 4.07 TITLE TO PROPERTIES; PATENTS, TRADE MARKS, ETC. Each of
the Companies have good and marketable title to the Facilities and all of their
respective properties and assets. There are no Liens of any nature whatsoever on
any of the properties or assets of any of the Companies other than Permitted
Exceptions. Each of the Companies own or possess all the patents, trademarks,
service marks, trade names, copyrights, and licenses and rights with respect to
the foregoing necessary for the conduct of its business as it is now conducted,
without any known conflict with the valid rights of others which would be
inconsistent with the conduct of its business substantially as now conducted and
as currently proposed to be conducted and the failure of which to own or possess
would have a Material Adverse Effect.
Section 4.08 LITIGATION. There are no outstanding judgments against,
or actions, suits or proceedings pending, or to the best knowledge of the
Borrowing Group, threatened against
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or affecting any of the Companies, at law or in equity or before or by any
federal, state, local or other governmental department, commission, board,
bureau, agency or instrumentality, which, if adversely determined, involves the
possibility of any judgment or liability not fully covered by insurance or which
may result in any Material Adverse Effect.
Section 4.09 LIABILITIES. None of the Companies have any outstanding
Liabilities other than as expressly permitted pursuant to this Agreement.
Section 4.10 COMPLIANCE WITH OTHER INSTRUMENTS. None of the Companies
is in material default in the performance, observance, or fulfillment of any of
the material obligations, covenants, or conditions contained in (i) any evidence
of Indebtedness for Borrowed Money, or (ii) any agreement, document, lease or
other instrument which a default under, violation of which or a failure to
perform on the part of the Companies would have a Material Adverse Effect.
Neither the execution and delivery of this Credit Agreement or the other Loan
Documents, nor the consummation of the transactions contemplated thereby, nor
will compliance with the terms and provisions thereof violate the provisions of
any applicable law or of any material applicable order or regulations of any
governmental authority having jurisdiction of the parties (excluding the Banks)
to this Credit Agreement or the other Loan Documents, or, except where no
Material Adverse Effect would result therefrom, conflict with or result in a
breach of any agreement or instrument to which any of the Companies is now a
party, or, except where no Material Adverse Effect would result therefrom, will
constitute a default thereunder, or will result in the creation or imposition of
any lien, charge, or encumbrance of any nature whatsoever upon any of the
properties or assets of any of the Companies except in favor of the Agent for
the benefit of the Banks.
Section 4.11 MATERIAL RESTRICTIONS. Except for the Loan Documents, none
of the Companies is a party to any agreement or other instrument or subject to
any other restriction which causes a Material Adverse Effect.
Section 4.12 CORRECTNESS OF DATA FURNISHED. This Credit Agreement and
all Schedules and Exhibits hereto 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; and there is no fact not otherwise disclosed
in writing to the Banks which, to the knowledge of the Borrowing Group, would
cause a Material Adverse Effect.
Section 4.13 ERISA. Every employee pension benefit plan, if any,
maintained by any of the Companies which has been treated for federal tax
purposes as a qualified plan (if any) under Section 401(a) of the Code is so
qualified (or an application for such qualification is pending and the Companies
know of no reason why such plan will not receive such
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qualification), and its related funding vehicle is tax exempt to the extent
provided by the Code, except where such failure would not have a Material
Adverse Effect. None of the Companies has engaged in a transaction with respect
to any Plan, or any other employee benefit plan, which would or could subject
any of the Companies to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA, except where no Material Adverse Effect would
result therefrom. No Plan has had an accumulated funding deficiency, whether or
not waived, which would have a Material Adverse Effect. No Reportable Event,
which would have a Material Adverse Effect, has occurred with respect to any
Plan. No liability, which would have a Material Adverse Effect, to the PBGC has
been incurred and is unpaid, or is expected to be incurred, by the Companies
with respect to any Plan. No event or condition referred to in Section 4042(a)
of ERISA exists which presents a material risk of termination of any Plan by the
PBGC, which termination would result in a Material Adverse Effect. No proceeding
or other action, which would have a Material Adverse Effect, has been initiated
by the PBGC to terminate any Plan nor has written notice been given to any of
the Companies of an intention to commence or seek the commencement of any such
proceeding or action. None of the Companies has withdrawn nor do they expect to
withdraw from any multi-employer plan or multiple employer plan, excluding any
such withdrawal that may be accomplished without any liability, which would have
a Material Adverse Effect, or any such withdrawal as to which any resulting
liability has been paid in full. The total potential withdrawal liability to the
Companies under all multi-employer plans, less the aggregate Unfunded
Liabilities would not have a Material Adverse Effect. Under each employee
pension benefit plan (if any) maintained by any of the Companies which is
required to be funded under ERISA, as of the last day of the most recent plan
year, the then aggregate current value of all accrued benefits under each such
plan (as determined on the basis of the actuarial assumptions and methods
contained in the plan's most recent actuarial valuation of liabilities) did not
exceed the aggregate current value of the assets of such plan, except Unfunded
Liabilities which, in the aggregate, would not have a Material Adverse Effect.
Each employee benefit plan (if any) maintained by the Companies has been
administered in compliance with its terms, except where the failure to do so
would not have a Material Adverse Effect The term "current value" has the same
meaning as in Section 4062(b)(1) of ERISA (as in effect prior to the amendment
made by the Consolidated Omnibus Budget Reconciliation Act of 1985) and the term
"accrued benefit" has the same meaning specified in Section 3 of ERISA. As used
in this Agreement, (i) "accumulated funding deficiency" shall have the meaning
assigned to such term in Section 412 of the Code and Section 302 of ERISA; (ii)
"employee pension benefit plan," "employee benefit Plan," "multi-employer plan"
and "Plan Year" shall have the respective meanings assigned to such terms in
Sections 3 and 4001 of ERISA; (iii) "multiple employer plan" means a single
employer plan which has two or more contributing sponsors at least two of whom
are not under common control, within the contemplation of Sections 4063 and 4064
of ERISA; (iv)
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"single employer plan" shall have the meaning assigned to such term in Section
4001 of ERISA; and (v) "withdrawal liability" shall include the liabilities
established by Sections 4063, 4064 and 4201 of ERISA.
Section 4.14 TAXES. As of the date hereof, each of the Companies has
(a) timely filed all returns required to be filed by them with respect to all
Taxes, (b) paid all Taxes shown to have become due pursuant to such returns, and
(c) paid all other Taxes for which a notice of assessment or demand for payment
has been received by the Companies, except where the failure to do so would not
have a Material Adverse Effect. As of the date hereof, all tax returns of the
Companies have been prepared in accordance with all applicable laws and
requirements and accurately reflect the taxable income (or other measure of Tax)
of the Companies. As of the date hereof, each of the Companies has timely filed
all information returns or reports which are required to be filed and has
accurately reported all material information required to be included on such
returns or reports. As of the date hereof, there are no proposed assessments of
Taxes against the Companies nor any proposed adjustments to any Tax return
filed. As of the date hereof, none of the Companies has ever (i) filed any
consent or agreement under Section 341(f) of the Code, (ii) executed a waiver or
consent extending any statute of limitations for any Tax liability which remains
outstanding, (iii) joined in or been required to join in filing a consolidated
or combined Tax return, except that of the Parent, (iv) applied for a Tax ruling
other than a determination letter with respect to a qualified employee benefit
plan, (v) entered into a closing agreement with any taxing authority, or (vi)
filed an election under 338(g) or Section 338(h)(10) of the Code or caused or
permitted a deemed election under Section 338(e) thereof to occur.
Section 4.15 COMPLIANCE WITH LAWS. Each of the Companies is, and the
Facilities have been operated, in compliance in all material respects with all
material laws, rules, regulations, court orders and decrees, and orders of any
governmental agency which are applicable to the Companies or the Facilities,
except where the failure to do so would not have a Material Adverse Effect.
Section 4.16 ENVIRONMENTAL MATTERS. No Company has ever: (a) been
legally responsible for any release or threat of release of any Hazardous
Material, the effect of which responsibility would have a Material Adverse
Effect, or (b) except as otherwise disclosed in Schedule 4.16 attached hereto,
received notification of the incurrence of any expense in connection with the
assessment or Environmental Remediation of any Hazardous Material for which that
Company would be responsible and the effect of which would be a Material Adverse
Effect.
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Section 4.17 LEASES. Each of the Companies enjoys peaceful and
undisturbed possession under the leases and other agreements and documents to
which it is a party as lessee or holder of any other real property interest or
under which they are operating, except to the extent that no Material Adverse
Effect results therefrom.
Section 4.18 REGULATION U, ETC. None of the Companies owns, nor, except
for the Cryenco Acquisition, does any of them have any present intention of
acquiring, any "margin stock" within the meaning of Regulation U (12 CFR Part
221) of the Board of Governors of the Federal Reserve System (herein called
"margin stock"). None of the proceeds of any of the Revolving Loan will be used,
directly or indirectly, by any of the Companies for the purpose of purchasing or
carrying, or for the purpose of reducing or retiring any indebtedness or other
liability which was originally incurred to purchase or carry, any margin stock
(except for the Cryenco Acquisition) or for any other purpose which might cause
the transactions contemplated hereby to be considered a "purpose credit" within
the meaning of said Regulation U, and none of the proceeds of the Revolving Loan
will be used for any purpose which might cause this Credit Agreement to violate
Regulation G, Regulation U, Regulation T, Regulation X, or other regulation of
the Board of Governors of the Federal Reserve System or the Securities Exchange
Act of 1934. Upon request, each of the Companies will promptly furnish the Banks
with a statement in conformity with the requirements 1 Reserve Form U-I referred
to in said Regulation U.
Section 4.19 HOLDING COMPANY ACT. None of the Companies is a "Holding
Company" or a "Subsidiary Company" of a "Holding Company", or an "Affiliate" of
a "Holding Company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
Section 4.20 SECURITIES ACT, ETC. Neither the registration of any
security under the Securities Act of 1933, as amended, or any other federal,
state, or local securities laws, nor the qualification of the Loan Documents, as
amended, is required in connection with the Revolving Loan or the issuance and
delivery of the Revolving Notes pursuant hereto.
Section 4.21 SOLVENCY. Each of the Companies (except for Chart
Management) is solvent and has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has access to adequate capital for the conduct
of its business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
Section 4.22 NO DEFAULT. No Possible Default or Event of Default has
occurred and is continuing.
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Section 4.23 EMPLOYEE CONTROVERSIES. There are no controversies pending
or, to the best of the Borrowing Group's, threatened or anticipated between any
of the Companies and any of their employees that would have a Material Adverse
Effect.
Section 4.24 BROKERS, ETC. The Borrowing Group have not caused the
Banks to be under any obligation to pay any broker's fees, finder's fee or
commission in connection with the Revolving Loan or the transactions
contemplated by the Credit Agreement.
ARTICLE V
---------
CONDITIONS TO BORROWING
-----------------------
Part I
CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE REVOLVING LOAN. The
obligation of the Banks to make the first Advances or issue the first LC shall
be subject to the satisfaction of the following conditions prior to or
concurrently therewith.
Section 5.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article IV shall be true in all material respects on and
as of the time of the first Advance hereunder, with the same effect as if made
on and as of such date unless stated as of a specific date.
Section 5.02 NO DEFAULTS. There shall exist no condition or event
constituting an Event of Default or Possible Default.
Section 5.03 PERFORMANCE. The Borrowing Group shall have performed and
complied with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the first Advance.
Section 5.04 CLOSING CERTIFICATE. The Borrowing Group shall have
delivered to the Banks a certificate dated the date of the first Advance and
signed by an Authorized Fiscal Officer of the Borrowing Group, certifying to the
matters covered by the conditions specified in Sections 5.01, 5.02 and 5.03.
Section 5.05 INSURANCE REPORT. The Borrowing Group shall have delivered
to the Banks the insurance report required by Section 6.05.
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Section 5.06 REVOLVING NOTES/PLEDGE AGREEMENT. The Banks shall have
received the Revolving Notes and the Pledge Agreement, accompanied by all
documents and instruments required hereunder, duly executed and delivered by the
parties thereto.
Section 5.07 DISBURSEMENT INSTRUCTIONS. The Banks shall have received
disbursement instructions and supporting documentation from the Borrowing Group
evidencing that the proceeds of the first Advance are being applied in
accordance with Section 2.28.
Section 5.08 OPINIONS OF COUNSEL FOR THE BORROWING GROUP. The Banks
shall have received the favorable opinion of Calfee, Halter & Griswold, as
counsel for the Borrowing Group, in form attached as SCHEDULE 5.08.
Section 5.09 CORPORATE PROCEEDINGS. Each Company in the Borrowing Group
shall have delivered to the Banks, all dated as of the Closing Date (or as of a
date recent to the Closing Date):
(i) a copy of its certificate of incorporation, certified by
an authorized public officer of the state of its incorporation;
(ii) certificates of good standing from or authority to
transact business or similar certificates from each state referred to
in Section 4.01 where it has places of business or maintains records,
in all cases from the Secretary of State or comparable officer of such
jurisdiction;
(iii) a copy of its by-laws certified by its secretary;
(iv) resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Loan Documents (including,
without limitation, this Credit Agreement, and the Revolving Notes
issued pursuant hereto) and the consummation of the transactions
contemplated thereby, certified by its secretary; and
(v) an incumbency certificate certifying the names of its
officers and their signatures, certified by its secretary.
Section 5.10 PAYMENT OF EXPENSES. The Borrowing Group shall have paid,
or reimbursed the Banks for, the amounts required to be paid or reimbursed by
the Borrowing Group pursuant to Section 12.01 of this Credit Agreement,
including, without limitation, the fees and expenses of Kahn, Kleinman, Yanowitz
& Arnson Co., L.P.A.
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Section 5.11 SCHEDULES. The Banks shall have received and approved (in
their sole discretion) each of the Schedules attached hereto.
Section 5.12 OTHER DOCUMENTS. The Banks shall have received such other
certificates, opinions, agreements and documents as it shall reasonably request
and the Banks, in their sole discretion, shall be satisfied with the condition,
financial and otherwise, of the Borrowing Group.
Section 5.13 SOLVENCY CERTIFICATE. The Banks shall have received a
certificate executed by the Chief Financial Officer or Treasurer (or, with
respect to AI, the Assistant Secretary) for each of the Companies (except for
Chart Management) certifying that:
(a) To the best knowledge of such Company, the fair value of
the assets of each Company will exceed the debts and liabilities, direct,
subordinated, contingent or otherwise, of such Company;
(b) To the best knowledge of such Company, the present fair
salable value of the property of such Company will be greater than the amount
that will be required to satisfy any probable liability of such Company on its
debts and other liabilities, direct, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured;
(c) Such Company will be able to pay its debts and
liabilities, direct, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and
(d) Such Company will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business
is now conducted and is proposed to be conducted, in each case,
following the dates hereof.
Part II
CONDITIONS PRECEDENT TO THE SUBSEQUENT ADVANCES OR OVERALL LIBOR RATE
ELECTION. Subsequent to the first Advance, the obligation of the Banks to make
additional Advances, issue an LC or implement the election of an Overall Libor
Rate shall be subject to the satisfaction of the following conditions prior to
or concurrently with such action:
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Section 5.14 NO DEFAULTS. There shall exist no condition or event
constituting an Event of Default or Possible Default.
Section 5.15 PERFORMANCE. The Borrowing Group shall have performed and
complied with all material agreements and conditions contained herein required
to be performed or complied with by it prior to or at the time of such action.
Section 5.16 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article IV shall be true in all material respects on and
as of the time of such action, with the same effect as if made on and as of such
date, unless stated as of a specific date, after giving effect to such updated
information, reflecting transactions not prohibited by the terms of this Credit
Agreement, as is necessary to make such representations and warranties true in
all material respects as of such date.
Section 5.17 CERTIFICATE. If requested by the Agent, the Borrowing
Group shall have delivered to the Banks a certificate dated the date of such
action and signed by the chief financial officer of the Borrowing Group,
certifying to the matters covered by the conditions specified in Sections 5.13,
5.14 and 5.15.
Section 5.18 CRYENCO. Upon the consummation of the Cryenco Acquisition,
each of Cryenco and each of its subsidiaries, as one of the Companies and a
member of the Borrowing Group, shall have executed a counterpart of this Credit
Agreement and an allonge to each Revolving Note, and shall be bound by the terms
hereof, as if it shall have been an original signatory hereto. In addition, all
of the conditions contained in Part I of this Article V shall be required to be
satisfied with respect to Cryenco and such subsidiaries.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWING GROUP
Until all principal of and interest on the Revolving Loan and the
Revolving Notes and all other obligations, liabilities and indebtedness of the
Borrowing Group to the Banks under this Credit Agreement have been paid in full,
including, without limitation, reimburse any drawing made or that may be made on
any LC, and the Commitments have expired:
Section 6.01 PAYMENT OF AMOUNTS DUE. The Borrowing Group will, jointly
and severally, make all payments of the principal of and interest on the
Revolving Loan and the Revolving Notes promptly as the same become due under
this Credit Agreement and/or the Revolving Notes.
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Section 6.02 EXISTENCE, BUSINESS, ETC. Each Company will cause to be
done all things necessary to preserve and to keep in full force and effect its
corporate existence and rights. Each Company will comply in all material
respects with all federal, state, and local laws and regulations material to its
business now in effect or hereafter promulgated by any properly constituted
governmental authority having jurisdiction except to the extent that compliance
therewith is being contested in good faith by appropriate proceedings or where
the failure to comply would not have a Material Adverse Effect. In connection
with and without limiting the generality of the foregoing, each Company will
take all action which may be required to comply with all such laws and material
regulations now in effect or hereafter promulgated by any federal, state, and
local governmental organization having jurisdiction over the Facilities, except
to the extent that the failure to take such action would not have a Material
Adverse Effect.
Section 6.03 MAINTENANCE OF PROPERTIES. Each Company will at all times
maintain, preserve, protect, and keep its properties (except to the extent no
longer used or useful) used in the conduct of its business in good repair,
working order, and condition, ordinary wear and tear excepted, and, from time to
time, make all needful and proper repairs, renewals, replacements necessary
thereto, so that the business carried on in connection therewith may be properly
conducted, except where the failure to comply would not have a Material Adverse
Effect.
Section 6.04 PAYMENT OF TAXES, ETC. Each Company will pay and discharge
all lawful Taxes, assessments, and governmental charges or levies imposed upon
it, or upon its income or profits, or upon any of its properties, before the
same shall become in default, as well as all lawful claims for labor, materials,
and supplies which, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, no Company shall be required
to pay and discharge any such tax, assessment, charge, levy, or claim so long as
the validity thereof shall be contested in good faith by appropriate proceedings
and there shall be set aside on its respective books such reserves with respect
thereto as are required by GAAP. Each Company will in all events pay such tax,
assessment, charge, levy or claim before the property subject thereto shall be
sold to satisfy any lien which has attached thereto. Without limiting the
foregoing, each of the Companies will (a) timely filed all returns required to
be filed by them with respect to all Taxes, (b) pay all Taxes shown to have
become due pursuant to such returns, and (c) pay all other Taxes for which a
notice of assessment or demand for payment has been received by any Company, in
each case the failure of which would have a Material Adverse Effect; provided,
however, no Company shall be required to pay and discharge any such tax,
assessment, charge, levy, or claim so
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long as the validity thereof shall be contested in good faith by appropriate
proceedings and there shall be set aside on its respective books such reserves
with respect thereto as are required by GAAP. None of the Companies will (i)
file any consent or agreement under Section 341(f) of the Code, (ii) execute a
waiver or consent extending any statute of limitations for any Tax liability
which remains outstanding, (iii) enter into a closing agreement with any taxing
authority, or (vi) file an election under 338(g) or Section 338(h)(10) of the
Code or caused or permitted a deemed election under Section 338(e) thereof to
occur, which in each case would have a Material Adverse Effect.
Section 6.05 INSURANCE. Each Company will keep adequately insured, by
financially sound and reputable insurers, all properties of a character usually
insured by business entities engaged in the same or similar activities and
business against loss or damage resulting from fire or other risks insured
against by extended coverage and maintain in full force and effect public
liability insurance against claims for personal injury, death or property damage
occurring upon, in, or about any properties occupied or controlled by it, or
through the operation of any motor vehicles or aircraft by its agents or
employees, or arising in any manner out of the business carried on by it, all in
such amounts as the Agent may from time to time reasonably request. Each Company
will deliver to the Agent on or before the date of the first Advance hereunder
and at such other times as material changes may be effected in the insurance
coverage of each Company, certificates of the chief financial officer of the
Parent containing a statement of the policies of insurance covering the risks
described herein in effect on the date of such certificate and a statement that
such policies comply with the provisions of this subsection.
Section 6.06 ACCOUNTS AND REPORTS OF EACH COMPANY. Each Company will
maintain a standard system of accounting in accordance with GAAP and furnish to
the Banks the following reports:
(i) As soon as available, and in any event within ninety
(90) days after the end of each Fiscal Year of the
Parent, a complete audited accountant's report with
respect thereto (including without limitation, all
financial statements of the Companies, together with
all notes thereto, prepared in reasonable detail and
certified, as to the Consolidated statements only)
without qualification by independent certified public
accountants that are one of the "Big 6" national
firms (the "Accountant"), and certified by the chief
financial officer of Parent, which report shall
contain (x) a Consolidated and consolidating balance
sheet of the Companies, (y) a Consolidated and
consolidating statement of income and expense of the
Companies, and (z) a Consolidated statement of
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cash flow of the Parent. The Borrowing Group shall
also deliver or cause delivery to the Banks of copies
of any "management letters" issued by the Accountant
to the Borrowing Group, as soon as available, and in
any event within one hundred fifty (150) days after
the end of any Fiscal Year;
(ii) As soon as available, and in any event within
forty-five (45) days after the end of each Quarter,
an unaudited report for the most recently concluded
Quarter, certified by the chief financial officer of
the Parent, which report shall contain (v) a
Consolidated and consolidating balance sheet of the
Companies as at the end of such Quarter, (w) a
Consolidated income and expense statement of each
Company for such month, including a year to date
income and expense statement and a comparison to the
budget, all prepared in accordance with GAAP subject
to normal recurring year-end adjustments, (x) a
statement that the examination made in preparing and
certifying such report has not disclosed the
existence of any condition or event which constitutes
an Event of Default or Possible Default, or, if such
a condition or event exists, specifying the nature
thereof, (y) an accounts receivable aging by account
debtor for each of the Borrowing Group and (z) a
statement (a "Covenant Compliance Certificate) as to
compliance with certain covenants and containing
appropriate calculations, to be prepared in form and
detail satisfactory to the Majority of the Banks
(initially in the form of SCHEDULE 6.06 attached
hereto) and to which shall be attached a
jobs-in-progress report prepared in accordance with
GAAP for each of the Borrowing Group as at the end
of that Quarter, setting forth on a
percentage-of-completion basis all jobs that were in
progress during that Quarter and which are required
by GAAP to be accounted for on a
percentage-of-completion basis;
(iii) As soon as available, and in any event within fifteen
(15) days after the end of each Fiscal Year of each
Company, a good faith forecast, on a Consolidated and
consolidating basis, of the Companies' operations and
Capital Expenditures for the following Fiscal Year,
in form and substance reasonably satisfactory to
Majority of the Banks;
(iv) Promptly upon request, any other information
regarding the accounts receivable and the finished
goods, work in process and raw material inventories
of the Borrowing Group;
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(v) Immediately after any member of the Borrowing Group
knows of, or shall have knowledge of, the occurrence
of any condition or event which constitutes an Event
of Default or Possible Default, notice of such
condition or event and the action which the Borrowing
Group proposes to take with respect thereto;
(vi) Copies of all financial statements, audits, and
public reports which any of the Companies may have
made of or concerning their accounts, books, or
records, and which they have provided to any third
party, but excluding such items furnished solely to
an Affiliate;
(vii) Promptly after filing, a copy of each annual report
(and related schedules) filed by each Company with
any governmental authority or agency in respect of
any employee pension benefit plan subject to ERISA;
and
(viii) Promptly upon request, such other information
respecting the business, properties, operations or
condition (financial or otherwise) of each Company as
the Banks may from time to time reasonably request
(all such information to be in such form and detail
as the Banks shall reasonably request).
Section 6.07 INFORMATION AND INSPECTION. The Borrowing Group will
furnish to the Banks, from time to time, upon the request by the Banks, full
information pertinent to any covenant, provision, or condition of this Credit
Agreement or of any other loan document or to any matter in connection with its
activities and business, and at all reasonable times and, prior to the
occurrence of a Possible Default or Event of Default, upon not less than one
Business Day's notice but with no prior notice after the occurrence of a
Possible Default or Event of Default, and as often as the Banks may reasonably
request, permit any authorized representative designated by the Banks to visit
and inspect (which visits and inspections shall be at the Borrowing Group's sole
expense after the occurrence and during the continuance of any Possible Default
or Event of Default and at the Banks' sole expense at any other time) during
normal business hours any of its properties, including its books (and to take
extracts therefrom) and to discuss its affairs, finances, and accounts with its
officers and employees.
Section 6.08 NOTICE OF LITIGATION. The Borrowing Group will promptly
notify the Banks in writing of any litigation, legal proceeding or threat of
legal proceeding (i) with any Person, including, without limitation, the
Governmental Authorities and any member of the
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staff or any representative of any such Person, which involves the threat of
termination of any agreements or contracts which are material to the operations
of the Borrowing Group; or (ii) involving amounts in excess of $250,000,
affecting the Borrowing Group, unless fully covered by insurance without
reservation with deductibles of less than One Hundred Fifty Thousand Dollars
($150,000).
Section 6.09 PENSION PLANS. Each Company shall (i) keep in full force
and effect any plans which are presently in existence or may, from time to time,
come into existence under ERISA, unless such Plans can be terminated without a
Material Adverse Effect, (ii) make contributions to each of the plans and all
multi-employer plans in a timely manner and in a sufficient amount to comply
with the requirements of ERISA except where no Material Adverse Effect would
result therefrom, (iii) comply with all material requirements of ERISA which
relate to such Plans and multi-employer plans except where no Material Adverse
Effect would result therefrom, and (iv) notify the Banks immediately upon
receipt by any Company of any notice of the institution of any proceeding or
other action which may result in the termination of any Plan. The term
"multi-employer plan" shall have the meaning assigned to it in Section 5.13. For
purposes of this Credit Agreement, "ERISA liabilities" means the aggregate
liability (whether or not arising under ERISA) of the Companies, incurred as a
result of actions inconsistent with the covenants set forth in Section 8.17 or
that are or would be incurred following the termination of any Plan described in
Section 10.12.
Section 6.10 HAZARDOUS MATERIAL. Each Company shall: (a) dispose of any
Hazardous Material only in compliance with all Environmental Laws, and (b) not
have possession of any Hazardous Material other than in the ordinary course of
that Company's business and in compliance with all Environmental Laws, except
where no Material Adverse Effect would result therefrom.
Section 6.11 NET WORTH. The Borrowing Group will have and maintain a
Consolidated Net Worth in an amount not less than the aggregate of: (i)
$27,000,000, plus (ii) at the end of each Quarter, an amount equal to
twenty-five percent (25%) of the Borrowing Group's Consolidated Net Income (if a
positive number otherwise, 0) for all Quarters ending after the date hereof,
plus (iii) 100% of the amount of the proceeds received by the Companies from any
Equity Offering, as of the date of issuance or conversion of the applicable
Equity Interest.
Section 6.12 LEVERAGE. The Borrowing Group will have and maintain at
all times a Leverage Ratio of not more than 2.85 to 1.0.
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Section 6.13 PRETAX INTEREST COVERAGE RATIO. The Borrowing Group will
have and maintain at all times a Pretax Interest Coverage Ratio of not less than
3.5 to 1.0 for each Quarter (based on the cumulative results for the most
recently concluded Four-Quarter Period) until the end of the Revolving Period
and payment in full of the Outstanding Amount.
Section 6.14 FIXED CHARGE COVERAGE RATIO. The Borrowing Group will have
and maintain at all times a Fixed Charge Coverage Ratio of not less than 1.25 to
1.0, which will be calculated based on the cumulative results for the
most-recently concluded Four-Quarter Period.
Section 6.15 CURRENT RATIO. The Borrowing Group will have and maintain
at all times a ratio of Current Assets to Current Liabilities of not less than
1.15 to 1.0.
Section 6.16 CONTROL OF PARENT. Charles Holmes and Arthur Holmes shall
at all times own at least 25% of the common stock of Parent.
Section 6.17 POST-CLOSING ITEMS. The Borrowing Group will promptly
perform and complete to the satisfaction of the Banks each of the matters, if
any, set forth on SCHEDULE 6.17 attached hereto (the "Listed Matters") on or
before the date set forth on SCHEDULE 6.17 for the performance and completion
thereof (the "Satisfaction Date").
Section 6.18 FURTHER ASSURANCES. The Borrowing Group agrees to execute
and deliver to the Banks any agreements, documents and instruments, including,
without limitation, additional Revolving Notes as replacement or substitutions
as may be required by the Banks, and to take such other actions as reasonably
requested by the Banks to effect the transactions contemplated hereby.
ARTICLE VII
-----------
NEGATIVE COVENANTS OF THE BORROWING GROUP
-----------------------------------------
Until all principal of and interest on the Revolving Loan and the
Revolving Notes and all other obligations, liabilities, and indebtedness of the
Borrowing Group to the Banks under this Credit Agreement have been paid in full
including, without limitation, reimburse any drawing made or that may be made on
any LC, and the Commitments have expired:
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Section 7.01 LIMITATION OF INDEBTEDNESS. No Company will create, incur,
assume, become or be liable in any manner in respect of, any Liabilities except:
(i) Liabilities in respect of the Credit Facility;
(ii) unsecured current Liabilities for the purchase of
goods and services and deferred Liabilities, in each
case, incurred in the ordinary course of business
(excluding Indebtedness for Borrowed Money or
represented by bonds, notes, or other securities);
(iii) unsecured Liabilities in respect of performance
bonds, raw material purchase or futures contracts,
customer deposits, accrued commissions, salaries,
wages and other compensation, warranty obligations
and sales representative and distributor agreements,
in each case, to the extent incurred in the ordinary
course of business;
(iv) secured current Liabilities (other than Indebtedness
for Borrowed Money or represented by bonds, notes, or
other securities) incurred in the ordinary course of
business, but only if permitted to be secured
pursuant to clause (ii), (iii) or (iv) of Section
7.02;
(v) Liabilities for taxes, assessments, all charges,
liens, or similar claims to the extent that payment
thereof shall not yet be due or if the obligation to
pay is being contested in good faith by appropriate
proceedings and adequate reserves with respect
thereto shall have been set aside on the books of the
Companies but in any event only so long as the sale
of property subject to such Lien is not imminent by
reason of non-payment;
(vi) Secured Indebtedness for Borrowed Money, including
Capitalized Leases, incurred to acquire Capital or
Fixed Assets, so long as the amount thereof does not
exceed the purchase price of such Fixed or Capital
Assets and the aggregate outstanding amount does not
exceed $2,000,000;
(vii) Secured Indebtedness for Borrowed Money in respect of
Capitalized Leases existing on the date hereof and
described in SCHEDULE 7.01(VII) attached hereto but
no refinancing, extension, enlargement or increase
thereof;
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(viii) any indebtedness owing by a Company (except CHD,
unless the CHD Guaranty Documents shall have
theretofore been duly executed and delivered to the
Banks and the Agent) to a Company (except CHD, unless
the CHD Guaranty Documents shall have theretofore
been duly executed and delivered to the Banks and the
Agent);
(ix) any progress payment received in the normal course of
business;
(x) any Indebtedness for Borrowed Money described on
SCHEDULE 7.01 attached hereto.
Each of the foregoing types of indebtedness and liability being
referred to collectively as the "Permitted Indebtedness."
Section 7.02 LIMITATION ON LIENS. No Company will create, incur,
assume, or suffer to be created, or incurred, or assumed, or to exist, any Lien
of any kind on any of its properties or assets, or own or acquire, or agree to
acquire any property of any character subject to or upon any mortgage,
conditional sale agreement, or other title retention agreement; provided,
however, that the foregoing restrictions shall not prohibit:
(i) any tax lien, or any lien securing workers'
compensation or unemployment insurance obligations,
or any mechanic's carrier's or landlord's lien, or
any lien arising under ERISA, or any security
interest arising under article four (bank deposits
and collections) or five (letters of credit) of the
Uniform Commercial Code, or any similar security
interest or other lien, EXCEPT that this clause (i)
shall (A) apply only to security interests and other
liens arising by operation of law (whether statutory
or common law) and in the ordinary course of business
and shall not apply to any security interest or other
lien that secures any indebtedness for borrowed money
or any guaranty thereof or any obligation that is in
material default in any manner (other than any
default if it is contested in good faith by timely
and appropriate proceedings effective to stay
enforcement of the security interest or other lien in
question and if an appropriate reserve for the amount
of the liability in question shall have been
established) and (B) not apply to any security
interest or other lien upon any property of CHD,
unless the CHD Guaranty Documents shall have
theretofore been duly executed and delivered to the
Banks and the Agent;
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(ii) zoning or deed restrictions, public utility easements, minor
title irregularities and similar matters having no Material
Adverse Effect as a practical matter on the ownership or use
of any of the property in question, EXCEPT that this clause
(ii) shall not apply to any such restriction, easement, title
irregularity or similar matter encumbering or otherwise
affecting any property of CHD unless the CHD Guaranty
Documents shall have theretofore been duly executed and
delivered to the Banks and the Agent;
(iii) any lien securing or given in lieu of surety, stay, appeal or
performance bonds, or securing performance of contracts or
bids (other than contracts for the payment of money borrowed),
or deposits required by law or governmental regulations or by
any court order, decree, judgment or rule or as a condition to
the transaction of business or the exercise of any right,
privilege or license, EXCEPT that this clause (iii)
(A) shall apply only if and so long as the
aggregate unpaid balance or all obligations
so secured (except any referred to in clause
(vi)) does not exceed ten million dollars
($10,000,000) at any one time outstanding,
(B) shall not apply to any lien or deposit
securing an obligation that is in material
default in any manner (other than any
default contested in good faith by timely
and appropriate proceedings effective to
stay enforcement of the security interest or
other lien in question and if an appropriate
reserve for the amount of the liability in
question shall have been established, and
(C) shall not apply to any lien upon any
property of CHD, unless the CHD Guaranty
Documents shall have theretofore been duly
executed and delivered to the Banks and the
Agent;
(iv) any Lien in favor of the Agent for the ratable
benefit of the Banks;
(v) any mortgage, capitalized lease, security interest or
other lien (each, a "purchase money security
interest") which is created or assumed in purchasing,
constructing or improving any real property or
equipment (other than any property or equipment of
CHD, unless the CHD Guaranty Documents shall have
theretofore been duly executed and delivered to the
Banks and the Agent) or to which any such property is
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subject when purchased, PROVIDED, that (A) the
purchase money security interest shall be confined to
the aforesaid property, (B) the indebtedness secured
thereby (which may include a refinancing in whole or
in part of the original indebtedness) does not exceed
the total cost of the purchase, construction or
improvement, and (C) any such indebtedness, if repaid
in whole or in part, cannot be reborrowed;
(vi) any Lien disclosed on SCHEDULE 7.02 attached hereto;
and
(vii) any financing statement perfecting a security
interest that would be permissible under this Section
7.02.
Each of the foregoing Liens, exceptions, and charges being referred to
collectively as the "Permitted Exceptions."
Section 7.03 GUARANTEES. Except for Permitted Indebtedness and
Investments permitted pursuant to Section 7.05, no Company will Guarantee, or
otherwise become surety in respect of the obligations of, or lend its credit to,
any other person, or enter into any working capital maintenance or similar
agreement.
Section 7.04 LEASES. No Company will:
(i) lease any Fixed or Capital Assets where the lease
would be required to be capitalized under Statement
of Financial Accounting Standards No. 13, as from
time to time in effect except as permitted by clauses
(vi) or (vii) of Section 7.01;
(ii) lease any property from any Affiliate on terms less
favorable than such Person could obtain from another
Person who is not an Affiliate; or
(iii) any lease (other than any Capitalized Lease) so long
as the aggregate annual rentals of all such leases of
all the Companies do not exceed Nine Hundred Twenty
Five Thousand dollars ($925,000), EXCEPT that this
clause (iii) shall not apply to any lease to which
CHD is a party unless the CHD Guaranty Documents
shall have theretofore been duly executed and
delivered to the Banks and the Agent,
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Section 7.05 INVESTMENTS, REVOLVING LOAN, AND ADVANCES. No Company will
purchase or otherwise acquire, hold or make any Investment, or enter into any
arrangement for the purpose of making any Investment, except that this Section
7.05 shall not prohibit:
(i) any existing or future advance commission or
relocation payment, or other loan or advance made to
a director, officer or employee of any company
(except CHD, unless the CHD Guaranty Documents shall
have theretofore been duly executed and delivered to
the Banks and the Agent), PROVIDED that the aggregate
made to all directors, officers and employees shall
not exceed two hundred fifty thousand dollars
($250,000) at any one time outstanding;
(ii) any existing or future investment by any Company
(except CHD, unless the CHD Guaranty Documents shall
have theretofore been duly executed and delivered to
the Banks and the Agent) in Acceptable Marketable
Securities;
(iii) any LC or any Guarantee of any Liability of any
Company to the Banks and the Agent or any thereof if
the Guarantee is required by this Agreement;
(iv) any reimbursement obligation of any Company (except
CHD, unless the CHD Guaranty Documents shall have
theretofore been duly executed and delivered to the
Banks and the Agent) in respect of any surety or
performance bond securing the performance of a
contract (except any for the payment of money
borrowed), PROVIDED, that (A) each obligation is
entered into in the normal course of that Company's
business consistent with its past (or industry-wide)
practice and (B) the aggregate liability of the
Companies in respect of the foregoing (including,
without limitation, those referred to in clause (iii)
of Section 8.02) does not exceed Ten Million Dollars
($10,000,000) at any time outstanding;
(v) any Guarantee by Parent of (A) any current liability
owing by any of its Subsidiaries (except CHD, unless
the CHD Guaranty Documents shall have theretofore
been duly executed and delivered to the Banks and the
Agent), or (B) the performance or payment under any
contract or bid for contract by any of its
subsidiaries (except CHD, unless the CHD Guaranty
Documents shall have theretofore been duly executed
and
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delivered to the Banks and the Agent), if and to the
extent that the aggregate liabilities (including,
without limitation, contingent liabilities computed
at the maximum amount for which Parent may be liable
under each such Guarantee) under all Guarantees
permitted by this clause (B) does exceed an amount
equal to Ten Million Dollars ($10,000,000) at any
time;
(vi) any Investment by the Parent in stocks or equity
securities of existing Subsidiaries or any other
member of the Borrowing Group;
(vii) any Investment permitted pursuant to the provisions
of Sections 7.07 or 7.11;
(viii) any existing investment, advance, loan or guaranty
fully disclosed in SCHEDULE 7.05 attached hereto; and
(ix) any endorsement of a check or other medium of payment
for deposit or collection, or any similar transaction
in the normal course of business.
Section 7.06 ASSIGNMENT OR SALE OF ACCOUNTS OR REVOLVING NOTES
RECEIVABLE. No Company will assign, sell, discount, or otherwise dispose of any
accounts, accounts receivable, notes receivable or trade acceptances except for
credits to customers in the ordinary course of business.
Section 7.07 LIQUIDATION, MERGER, OR CONSOLIDATION. No Company will
dissolve or liquidate, or consolidate with or merge with or into any person,
firm, corporation or entity or otherwise effect any business combination with
any person, firm, corporation or entity except that this Section 7.07 shall not
prohibit:
(i) any
(A) merger or consolidation involving only
Subsidiaries (including, without limitation,
any acquired in a contemporaneous
transaction permitted by clause (ii) of this
Section 7.07), PROVIDED FURTHER, that a
Wholly-owned Subsidiary (other than CHD,
unless the CHD Guaranty Documents shall have
theretofore been duly executed and delivered
to the Banks and
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the Agent) shall be the surviving or
resulting entity in the case of any such
merger or consolidation involving a
Wholly-owned Subsidiary, or
(B) merger involving only the Parent and its
Subsidiaries in which the Parent is the
surviving corporation, or any dissolution
and liquidation of a Subsidiary (other than
ALTEC unless the CHD Guaranty Documents
shall have theretofore been duly executed
and delivered to the Banks and the Agent),
or any transfer of the assets of a
subsidiary to the Parent or to a
Wholly-owned Subsidiary (other than CHD,
unless the CHD Guaranty Documents shall have
theretofore been duly executed and delivered
to the Banks and the Agent).
(ii) any transaction (other than any to which CHD is a
party, unless the CHD Guaranty Documents shall have
theretofore been duly executed and delivered to the
Banks and the Agent) unless the aggregate of all
considerations received, paid or otherwise given, and
Liabilities assumed, by the Companies in all such
transactions and any transaction permitted as an
exception to Section 7.11 during any Four-Quarter
Period would exceed five hundred thousand dollars
($500,000); or
(iii) the Cryenco Acquisition.
Section 7.08 AMENDMENT OF CERTIFICATE OF INCORPORATION AND/OR BY-LAWS.
No Company will materially amend, modify, or supplement its certificate of
incorporation and/or its by-laws.
Section 7.09 DISTRIBUTIONS; PURCHASES OR REDEMPTION OF STOCK;
DIVIDENDS. (i) The Parent will not make or pay (or obligate itself to make or
pay) any dividend, Distribution or any other payment in respect of any of the
shares of its capital stock, or redeem, purchase, otherwise acquire for any
consideration (directly or indirectly) any of the shares of its capital stock
except for:
(a) the payment of an annual cash dividend which shall
not exceed Four Million Dollars ($4,000,000) in any
Fiscal Year, which may be declared and paid only so
long as no Possible Default or Event of Default
exists on the date of declaration or payment thereof;
and
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(b) purchases of common shares of the Parent's capital
stock (I) for purposes of (A) making contributions to
the Companies' 401(k) Plans, or (B) in connection
with employee stock option plans or (II) in an open
market transaction, but, in each case, only so long
as no Possible Default or Event of Default results
from such purchase; and
(ii) Unless and until the CHD Guaranty Documents shall have been duly executed
and delivered to the Banks and the Agent, ALTEC shall not make or commit itself
to make any Distribution to CHD except any Distribution that is
(a) made solely and exclusively for the purpose of
enabling CHD to pay any ordinary and necessary
business expense of CHD consistent with its status as
a tax exempt corporation under Title 30 Delaware Code
section 1902(b)(8) or any tax liability (except any
income tax liability to the State of Delaware or any
interest thereon or penalty in respect thereof) of
CHD consistent with its status as a tax exempt
corporation under Title 30 Delaware Code section
1902(b)(8) and
(b) actually used by CHD, within one banking day of CHD's
receipt thereof, solely and exclusively for the
purpose of paying the expense or liability for which
that distribution was made.
Any Distribution permitted pursuant to the provisions of subsections (i) and
(ii) of this Section 7.09 being herein referred to as a "Permitted
Distribution".
Section 7.10 DISPOSITION OF ASSETS. No Company will sell, lease or
otherwise dispose of any part of its Assets, including without limitation, any
Equity Interests, except for sales of inventory or other tangible personal
property in the ordinary course of business, and sales not in the ordinary
course of business in an amount not in excess of $200,000 in any Fiscal Year.
Section 7.11 ACQUISITION OF GOING CONCERN BUSINESS. No Company will
acquire property or assets of any character, real or personal, tangible or
intangible, constituting a going concern business, or the stock or partnership
or other equity interests of a corporation, or other business entity
constituting a going partnership or other business entity constituting a going
concern business except that Greenville may complete the Cryenco Acquisition and
except for any transaction (other than any to which CHD is a party, unless the
CHD Guaranty Documents shall have theretofore been duly executed and delivered
to the Banks and the Agent) unless the aggregate of all considerations received,
paid or otherwise given, and
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Liabilities assumed, by the Companies in all such transactions and any
transaction permitted as an exception to Section 7.07 during any Four-Quarter
Period would not exceed five hundred thousand dollars ($500,000).
Section 7.12 PURCHASE OF FIXED OR CAPITAL ASSETS. The Companies will
not, during any Fiscal Year make any Capital Expenditures (net after trade-ins,
if any) more than an amount equal to the sum of
(a) one hundred fifty percent (150%) of their allowable amortization,
depreciation and obsolescence charges for that year plus
(b) the excess, if any, of (i) an amount equal to one hundred fifty
percent (150%) of their allowable amortization, depreciation and
obsolescence charges for the immediately preceding fiscal year over
(ii) the amount of Capital Expenditures actually made during the
immediately preceding Fiscal Year,
all as determined on a Consolidated basis.
Section 7.13 FISCAL YEAR. The Parent will not change its Fiscal Year
except as required by law.
Section 7.14 ERISA. (i) No Company will permit, with respect to any
plan whose current value of benefits which are guaranteed by the PBGC under
Title IV of ERISA (determined on the basis of assumptions prescribed by the
PBGC) exceeds the then current value of the Plan's assets allocable to such
benefit(s):
(A) any Reportable Event which has a Material Adverse
Effect;
(B) the filing with the PBGC of a notice of intent to
terminate a Plan or the giving of a notice of such
termination to participants in anticipation of such
filing which has a Material Adverse Effect; or
(C) the adoption of an amendment to a Plan if, after
giving effect to such amendment, the Plan is a plan
described in Section 4021(b)(I) of ERISA which has a
Material Adverse Effect.
(ii) No Company shall (I) withdraw from one or more multiple employer plans
during a plan year for which any Company are substantial employers with respect
to such Plan if any Company would incur liability to the PBGC constituting a
Material Adverse Effect with
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respect to such Plan or Plans under Section 4063 of ERISA, or (II) withdraw from
one or more multi-employer plans if, pursuant to Section 4202 of ERISA, a
withdrawal liability constituting a Material Adverse Effect against any Company
would result, or (III) engage in a transaction or transactions which could
subject any Company, to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA constituting a Material Adverse Effect, or (IV)
allow one or more Plans, at any time to have an accumulated funding deficiency,
or fail to make any contributions when due to a Plan that is required to satisfy
the minimum funding standards under Section 412 of the Code constituting a
Material Adverse Effect. As used in this Section 7.14, (y) "accumulated funding
deficiency", multi-employer plan, "multiple employer plan", "plan year", and
"single employer plan" shall have the respective meanings assigned to such terms
in Section 4.13 and (z) "withdrawal liability" means the amount thereof as
determined in accordance with Section 4201 of ERISA.
Section 7.15 REGULATION U. The Borrowing Group shall not, directly or
indirectly, (a) apply any part of the proceeds of the Revolving Loan to the
purchasing or carrying of any "margin stock" within the meaning of Regulations
G, T, U or X of the Federal Reserve Board, or any regulations, interpretations
or rulings thereunder except for the Cryenco Acquisition, (b) extend credit to
others for the purpose of purchasing or carrying any such margin stock, or (c)
retire indebtedness which was incurred to purchase or carry any such margin
stock.
Section 7.16 PARTNERSHIPS AND JOINT VENTURES. No Company shall act or
participate as a general or limited partner in any partnership or a joint
venturer in any joint venture unless permitted pursuant to Sections 7.05 or
7.07.
Section 7.17 TRANSACTIONS WITH AFFILIATES. The Borrowing Group shall
not, directly or indirectly, pay (excluding in all cases salary, bonuses and
other similar compensation) any funds to or for the account of, make any
Investment in, purchase, acquire or lease any property from, or sell, transfer
or lease any property to, or otherwise deal with, in the ordinary course of
business or otherwise, any Affiliate except on terms that are no less favorable
to the Borrowing Group than those terms which might be obtained at the time from
unrelated third parties.
Section 7.18 TAX EXEMPTION OF CHD. The Parent will not at any time
(a) suffer or permit any company to take (or to fail or
omit to take) any action that is inconsistent with
CHD's exemption from income taxation pursuant to
Title 30 Delaware Code section 1902(b)(8), or
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(b) suffer or permit CHD to be or become subject to
income taxation by the State of Delaware
unless the CHD Guaranty Documents shall have theretofore been duly
executed and delivered to the Banks and the Agent. For purposes of
clause (b) of this Section 7.18, if the State of Delaware shall assert
that CHD is subject to income taxation by that State, then CHD shall be
deemed to be exempt from income taxation by the State of Delaware so
long as the assertion is contested in good faith and by timely and
appropriate proceedings which are effective to stay enforcement of the
assertion and the imposition of any mortgage, security interest or
other lien upon the property of CHD or any part thereof.
Section 7.19 GOODWILL/INTANGIBLES. The Borrowing Group agrees that at
no time will the Companies have goodwill and other Assets that are intangible
(as determined in accordance with GAAP on a Consolidated basis) in excess of
Eighteen Million Dollars ($18,000,000).
ARTICLE VIII
------------
WAIVERS
-------
Any of the acts which the Borrowing Group are required or prohibited
from doing by any of the provisions of this Credit Agreement may,
notwithstanding such provisions, be omitted or done, as the case may be, only if
consented to in writing by the Majority of the Banks or all the Banks, as
determined in accordance with the provisions of Sections 12.08 and 12.09 of this
Agreement.
ARTICLE IX
----------
DEFAULTS
--------
Each of the following events shall be termed "Events of Default":
Section 9.01 PRINCIPAL DEFAULT. Default shall be made in the payment of
any principal of any of the Revolving Notes or any of the Revolving Loan when
and as the same shall become due and payable, whether at maturity or otherwise;
or
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Section 9.02 INTEREST DEFAULT. Default shall be made in the payment of
any interest on or with respect to any of the Revolving Notes or any of the
Revolving Loan when the same shall become due and payable and such default shall
continue for three (3) consecutive Business Days; or
Section 9.03 OTHER PAYMENT DEFAULTS. Default shall be made in the
payment of any other amount when and as the same shall become due and payable
under the of this Credit Agreement or any of the Loan Documents and such default
shall continue for five (5) consecutive Business Days; or
Section 9.04 CERTAIN ARTICLE VI AND VII DEFAULTS. Default shall be made
in the due observance or performance of any covenant, agreement, or provision
contained in Section 6.05 (with respect to the first two sentences thereof),
6.10, 6.11, 6.12, 6.13, 6.14 or 6.15 or any provision of Article VII; or
Section 9.05 CERTAIN ARTICLE VI DEFAULTS. Default shall be made in the
due observance or performance of any covenant, agreement or provision contained
in Section 6.06(i), (ii) or (v).
Section 9.06 DEFAULTS UNDER ARTICLE VI. Default shall be made in the
due observance or performance of any covenant, agreement, or provision contained
in Section 6.02, 6.03, 6.04, 6.06 (with respect to subparagraphs (iii), (iv),
(vi), (vii) and (viii) only), 6.07, 6.08, 6.09 or 6.16, and such default shall
continue for ten (10) consecutive Business Days unless the Borrowing Group is
diligently pursuing a cure thereof and has advised the Banks of such cure and
only to the extent that such default has been cured within thirty (30)
consecutive days thereafter; or
Section 9.07 OTHER PROVISION DEFAULT. Default shall be made in the due
observance or performance of any other covenant, agreement, or provision of this
Credit Agreement, the Revolving Notes or any other Loan Document to be performed
or observed by the Borrowing Group and such default shall not be corrected or
cured within twenty (20) consecutive calendar days; or
Section 9.08 REPRESENTATION AND WARRANTY. Any material representation
or warranty made by the Borrowing Group under this Credit Agreement or in any
certificate, report, instrument, financial statement or other document furnished
pursuant to this Credit Agreement shall prove to have been false or incorrect in
any material respect as of the date on which made and such representation or
warranty shall continue to be material; or
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Section 9.09 FINANCIAL DIFFICULTIES. Any of the following events
evidencing the financial difficulties of any Company shall occur:
(i) any admission in writing of inability to pay debts as
they become due or the failure to pay debts generally
as such debts become due; or
(ii) the entry of an order for relief in the name of the
Company under Title 11 of the United States Code or
similar provisions of foreign law; or
(iii) a Company shall make an assignment for the benefit of
creditors; or
(iv) a Company shall consent to the appointment of a
trustee or receiver for all or a major part of its
property; or
(v) the commencement of a case by any Company under Title
11 of the United States Code or similar provisions of
foreign law; or
(vi) the commencement of a case under Title 11 of the
United States Code or similar provisions of foreign
law against any Company, which case shall not be
dismissed within 60 days from the date of
commencement; or
(vii) the entry of a court order appointing a receiver or a
trustee for all or a major part of any Company's
property without consent, which order shall not be
vacated, denied, set aside, or stayed within 60
calendar days from the date of entry; or
Section 9.10 ERISA TERMINATION. Any employee pension benefit plan of
any Company whose current value of benefits which are guaranteed by PBGC under
Title IV of ERISA (determined on the basis of assumptions prescribed by the
PBGC) exceeds the then current value of such plan's assets by more than
$500,000: (i) shall be terminated under Section 4041 of ERISA (unless the plan
is restored under Section 4047 of ERISA within ten (10) days of its
termination), (ii) shall be terminated under Section 4042 of ERISA, or (iii)
shall have a trustee appointed under Section 4042 of ERISA to administer the
Plan; or
Section 9.11 ACCUMULATED FUNDING DEFICIENCY. Any employee pension
benefit plan of any Company in the Borrowing Group which is a single employer
plan shall have an accumulated funding deficiency of more than $500,000, except
as set forth on SCHEDULE 4.13 attached hereto (as defined in Section 302 of
ERISA and Section 412 of the Code), as of the
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last day of any plan year (determined after the period during which employer
contributions may be deemed to have been made on such last day under Section
302(c)(10) of ERISA and Section 412(c)(10) of the Code); or
Section 9.12 OWNERSHIP. (i) If any "person" or "group" shall become the
"beneficial owner" (as those terms are respectively used in the Securities and
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
more than fifty percent (50%) of the outstanding voting stock of the Parent or
shall otherwise require the power (whether by contract, by proxy or otherwise)
to elect a majority of the Parent's board of directors; provided, that this
Section 9.12 shall not apply to any transaction receiving the prior approval by
a majority of the then members of the Parent's board of directors; (ii) the
Parent shall cease to own the Equity Interests in the Subsidiaries indicated as
owned by it on SCHEDULE 4.01 or an agreement for the sale of any part of such
Equity Interests shall have been entered into by the Parent; or
Section 9.13 CROSS-DEFAULT. Default, after the expiration of all
applicable grace periods, if any, shall be made by the Borrowing Group in the
payment when due of Liabilities, singly or in the aggregate in the amount of
$1,000,000 or more (whether principal, interest or premium) now or hereafter
owing by it (other than to the Banks under this Credit Agreement and other than
accounts payable to trade creditors for amounts incurred in the ordinary course
of business and not evidenced by promissory notes, bonds or similar instruments)
or default shall be made by the Borrowing Group in the performance of any
covenant or other obligation contained in any agreement, indenture, lease or
other instrument or document relating to, evidencing, or securing such
Liabilities if the effect of the default is to permit the holder of such
Liabilities (with or without the giving of notice or the lapse of time or both)
to accelerate the maturity thereof; or
Section 9.14 JUDGMENTS. Entry of a final judgment (a final judgment
being one from which all available appeals have been exhausted or the time for
taking such appeal has lapsed) against any Company in the amount of $250,000 or
more which is not fully covered by insurance (subject to normal deductibles)
without reservation of rights and the same is not discharged or satisfied within
thirty (30) consecutive calendar days from the date of entry; or
Section 9.15 MATERIAL ADVERSE CHANGE. A Material Adverse Effect in the
Consolidated business, operations, management, or financial condition of the
Companies, as reasonably determined by the Banks in good faith, shall have
occurred; or
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Section 9.16 RESTRAINT ON BUSINESS. Any court or administrative or
regulatory agency shall have issued an injunction or order that materially
restricts or enjoins any Company from conducting any material part of its
business as proposed to be conducted on the Closing Date and such injunction or
order has a Material Adverse Effect.
ARTICLE X
---------
REMEDIES
--------
Section 10.01 ACCELERATION. Upon (i) the occurrence of any Event of
Default described in Article X, excluding Section 9.10, the Majority of the
Banks may, at any time (unless all Events of Default shall theretofore have been
remedied or waived in accordance with the terms of this Credit Agreement),
terminate the Commitments and the right of the Borrowing Group to obtain
Advances in respect of the Revolving Loan and/or to obtain LCs, and/or declare
the unpaid principal amount of any or all of the Revolving Loan and/or Revolving
Notes, all interest accrued thereon and all other amounts owing by the Borrowing
Group to the Banks to be immediately due and payable and (ii) upon the
occurrence of any Event of Default under Section 9.10, without further action by
the Banks, the right of the Borrowing Group to obtain Advances in respect of the
Revolving Loan and/or LCs, and the Commitments shall be immediately terminated
and the Outstanding Amount, including the unpaid principal of the Revolving Loan
and/or Revolving Notes and interest accrued thereon and all other amounts owing
by the Borrowing Group to the Banks shall be immediately due and payable and, in
either case, such principal, interest and other amounts shall thereupon be
immediately due and payable, without presentment, demand, protest, notice of
protest, or other notice of any kind, all of which are hereby expressly waived
by the Borrowing Group.
Section 10.02 RECOVERY OF AMOUNTS. In case any one or more Events of
Default shall happen and be continuing, the Banks shall be entitled to recover
judgment against the Borrowing Group for the amount due. In case any one or more
Events of Default shall happen and be continuing the Majority of the Banks may
proceed to protect and enforce their rights by suit in equity, action at law,
and/or by any other appropriate proceeding, including, without limitation, for
the specific performance of any covenant or agreement or in aid of the exercise
of any power granted to the Banks, or may proceed to enforce payment of the
Revolving Notes or to enforce any other legal or equitable right.
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Section 10.03 LCs. If the maturity of the Revolving Loan shall be
accelerated pursuant to Section 11.01, the Borrowing Group shall immediately
deposit with the Agent, as security for the Borrowing Group's obligation to
reimburse the Agent and the Banks for any then outstanding LC, cash or
acceptable marketable securities having a fair cash value equal to the sum of
the aggregate undrawn balance of any then outstanding LCs.
Section 10.04 REMEDIES CUMULATIVE. Upon acceleration of the Obligations
pursuant to Section 11.01, the Banks may pursue their rights or remedies under
the Revolving Notes, this Credit Agreement or the other Loan Documents,
independently or concurrently. All rights, remedies, or powers herein conferred
upon the Banks shall, to the extent not prohibited by law, be deemed cumulative
and not exclusive of any other rights, remedies, or powers available to the
Banks. Without limiting the foregoing, the rights and remedies of the Banks
under this Credit Agreement, the Revolving Notes and the other Loan Documents
are cumulative, may be exercised simultaneously or in such order and at such
times as the Banks may elect and are in addition to their rights and remedies at
law or equity. No delay or omission of the Banks to exercise any right, remedy,
or power shall impair the same or be construed to be a waiver of any Event of
Default or an acquiescence therein. No waiver of any Event of Default shall
extend to or affect any subsequent Event of Default or shall impair any rights,
remedies, or powers available to the Banks. No single or partial exercise of any
right, remedy, or power shall preclude other or further exercise thereof by the
Banks.
Section 10.05 COST OF COLLECTION. The Borrowing Group agree that upon
and during the continuance of an Event of Default, they will jointly and
severally pay to the Banks such additional amount as shall be sufficient to
cover the cost and expenses of collection, including attorneys' fees, and any
expenses or liabilities incurred by the Banks in the collection thereof.
Section 10.06 NO ADVANCES, ETC. The Banks shall not be required to make
any Advances or issue any LC under this Credit Agreement if a Possible Default
or an Event of Default has occurred and is continuing.
ARTICLE XI
----------
AGENT
-----
Section 11.01 APPOINTMENT OF AGENT. Each Bank irrevocably appoints the
Agent to be its agent for the purpose of receiving and transmitting payments and
granting waivers and consents pursuant to this Agreement and for the other
purposes specified in this Agreement;
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PROVIDED, that this agency shall not extend to the giving of any notice pursuant
to Article X or XI, each Bank reserving to itself the right to give such
notices.
Section 11.02 COMPENSATION. The Agent shall receive compensation for
its services as referred to in Section 2.30.
Section 11.03 INDEPENDENT INVESTIGATION. Each Bank represents to the
Agent that such Bank is entering into this Agreement on the basis of its own
inquiry into the relevant facts and its own credit analysis. Each Bank
acknowledges that the Agent is acting as such solely as a convenience to the
Borrowing Group and to the Banks and not as a manager of the subject commitments
or subject indebtedness, that the Agent has no duties and no liabilities beyond
those expressly assumed by the Agent in this Agreement and the related writings,
and that the Agent shall lose no rights as a Bank by acting as the Agent.
Without limiting the generality of the foregoing, each Bank agrees NCB and its
affiliates may accept deposits from, make loans to, enter into trust indentures
with and generally transact business with the companies without notice to the
Banks and without prejudice to NCB's rights as a Bank under this Agreement and
the related writings and without prejudice to NCB's rights in respect of those
other business transactions. Each Bank agrees that it will not rely on any of
the other Banks or on the Agent for any future inquiry or analysis in respect of
this Agreement or any related writing.
Section 11.04 AGENT'S EXCULPATION. The Agent shall not be required to
make any inquiry concerning the Borrowing Group or any matter relating to this
Agreement or any related writing. The Agent shall not be liable for any
representation, warranty, agreement or obligation of any kind of the Borrowing
Group or anyone else, nor shall the Agent be deemed to have made any
representation or warranty of any kind to any Bank by reason of any notice or
any other communication pursuant to this Agreement or any related writing. The
Agent may consult with its counsel from time to time and shall not be liable for
any action taken or suffered in good faith by it in accordance with the advice
of its counsel. The Agent shall be entitled to rely on any communication to it
which it believes to be genuine and shall be under no duty to inquire into the
validity, effectiveness, genuineness or value of this Agreement or of any
related writing or of any such communication. Neither the Agent nor any of its
directors, officers, employees, attorneys and other agents shall be liable for
any action or omission on their respective parts except for gross negligence or
willful misconduct.
Section 11.05 DISBURSEMENTS. Whenever the Agent shall receive any funds
in respect of the subject indebtedness or otherwise in respect of this Agreement
or any related writing, whether from the Borrowing Group for the account of the
Banks or from the Banks for the
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account of the Borrowing Group, the Agent shall disburse the funds on the day
the funds shall be deemed to have been received. The Agent shall be entitled
(but not obligated) to make a timely disbursement of loan proceeds to the
Borrowing Group before actually receiving funds from the Banks (except if and to
the extent the Agent shall have received written instructions to the contrary
from any Bank or Banks) and to make a timely disbursement of payments to the
Banks before actually receiving funds from the Borrowing Group; PROVIDED, that
if any such disbursement is made and the funds in question are in fact not
received by the Agent, the disbursement shall be rescinded and the funds
returned to the Agent with interest computed thereon at the federal funds rate
incurred by the Agent.
Section 11.06 THE AGENT'S INDEMNITY. The Banks shall indemnify the
Agent (to the extent the Agent is not reimbursed by the Borrowing Group) from
and against any loss or liability (other than any caused by the Agent's gross
negligence or willful misconduct) incurred by the Agent as such in respect of
this Agreement or any related writing and from and against any out-of-pocket
expenses incurred in defending itself or otherwise related to this Agreement or
any related writing including, without limitation, reasonable fees and expenses
paid by the Agent to counsel of its own selection in the defense of any claim
against it or in the prosecution of its rights and remedies as the Agent;
PROVIDED, that each Bank shall be liable for only a ratable part of the whole
loss or liability according to the ratio that its subject commitment bears to
the aggregate of all of the subject commitments.
Section 11.07 ACTIONS AFTER A DEFAULT UNDER THIS AGREEMENT. In the
event that the Agent, pursuant to Section 6.01(v) shall have been notified of
any default under this Agreement, the Agent:
(i) shall promptly notify the Banks;
(ii) shall take such action and assert such rights
under this Agreement as it is expressly required to do
pursuant to the terms of this Agreement;
(iii) may take such other actions and assert such
other rights as it deems advisable, in its sole discretion,
for the protection of the interests of the Banks; and
(iv) shall inform all the Banks of the taking of
action or assertion of rights pursuant to this subsection.
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Each Bank agrees with the Agent and the other Banks that, with respect to the
decisions and determinations to be made by the majority of the Banks in
enforcing this Agreement and in guiding the Agent in those matters, such
decisions and determinations shall be binding upon all the Banks, including,
without limitation, authorizing the Agent at the pro rata expense of all the
Banks (to the extent not reimbursed by the Borrowing Group) to retain attorneys
to seek judgment on the subject loans. Each Bank similarly agrees with the other
Banks that it will not, without the consent of the majority of the Banks, seek
to separately institute any legal action on this Agreement.
Section 11.08 ACTIONS REQUIRING CONSENT OF A MAJORITY OF THE BANKS. The
approval of a Majority of the Banks is required to amend or waive any of the
provisions of Articles I, II (except as described in Section 11.09), III, IV, V,
VI, VII, VIII, IX, X, XI or XII (except Section 11.09) of this Agreement.
Section 11.09 ACTIONS REQUIRING CONSENT OF ALL BANKS. Notwithstanding
any other provisions of this Agreement, all of the Banks must approve any waiver
or amendment to this Agreement which would (i) extend the expiration date of the
Credit Facility; (ii) extend the date on which any Revolving Loan is due; (iii)
reduce any interest rate, commission, commitment fee or other amount payable by
Borrowing Group hereunder; (iv) increase any Bank's subject commitment; (v)
change the percentage of the Banks whose approval is required to take any action
hereunder; (vi) change any of the provisions of this Section 11.09.
ARTICLE XII
-----------
MISCELLANEOUS
-------------
Section 12.01 PAYMENT OF EXPENSES. If Taxes shall be payable, or ruled
to be payable, to any state, province or Federal authority, with respect to the
execution and delivery of this Credit Agreement, the Revolving Notes, or any
other Loan Document by reason of any existing or hereafter enacted Federal or
state statutes, the Borrowing Group will pay all such taxes in accordance with
such statutes, including interest and penalties thereon, excluding Taxes solely
on income of the Banks if any, and will indemnify and hold the Banks harmless
against any liability in connection therewith. The Borrowing Group will also
reimburse the Banks the fees and disbursements incurred by Messrs. Kahn,
Kleinman, Yanowitz & Arnson Co., L.P.A. for their services to the Banks in
preparing, reviewing, closing, or enforcing this Credit Agreement and the other
documents executed in connection herewith, and will reimburse the Banks for any
out-of-pocket expenses incurred in
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connection therewith. The Borrowing Group shall at all times protect, indemnify,
defend and save harmless the Banks from and against any and all claims, actions,
suits and other legal proceedings and liabilities, damages, costs, interest,
charges, reasonable counsel fees and other expenses and penalties but, prior to
the occurrence of and during the continuance of an Event of Default, excluding
the Banks' ordinary course of business internal and out of pocket costs and
expenses (the "Indemnified Liabilities"), which the Banks may, at any time,
sustain or incur by reason or in consequence of or arising out of the execution
and delivery of this Credit Agreement and the consummation of the transactions
contemplated hereby except for any such Indemnified Liabilities resulting from
the gross negligence or willful misconduct of the Banks. The Borrowing Group
acknowledges that it is the intention of the parties hereto that this Agreement
shall be construed and applied to protect and indemnify the Banks against any
and all risks involved in the execution and delivery of this Credit Agreement
and the consummation of the transactions contemplated hereby, all of which risks
are hereby assumed by the Borrowing Group, including, without limitation, any
and all risks of the acts or omissions, whether rightful or wrongful, or any
present or future, de jure or de facto government or governmental authority. All
amounts payable or reimbursable by the Borrowing Group under this Section 12.01
shall be due and payable on demand. The obligations imposed upon the Borrowing
Group by this Section 12.01 shall survive the payment of the Revolving Loan and
the Revolving Notes. No action shall be commenced by any of the Borrowing Group
for any claim against the Agent or the Banks under the terms of this Credit
Agreement unless a notice specifically setting forth the claim of the Borrowing
Group or any one of them shall have been given to the Agent within thirty (30)
days after the occurrence of the event which the Borrowing Group or any one of
them allege gave rise to such claim, and failure to give such notice shall
constitute a waiver of any such claim. If any Bank shall be in breach of such
Bank's obligations under this Credit Agreement by reason of failure to make an
Advance, or issue an LC or Bank Guaranty as such Bank is required to do under
the terms hereof, the sole remedy on account thereof shall be to compel such
Bank to make the Advance, or issue the LC or Bank Guaranty which is determined
wrongfully to have been withheld (upon the making of which the same shall be
treated as any other Advance or issuance of any other LC or Bank Guaranty
pursuant to the terms of this Agreement). In any event, neither the Agent or any
Bank shall be liable to any of the Borrowing Group for incidental or
consequential damages, whatever the nature of a breach by Agent or the Banks in
their obligations hereunder.
Section 12.02 NOTICES. Any notice to or demand upon the Borrowing Group
shall be deemed to have been sufficiently given or served for all purposes
hereof one day after being sent by overnight express courier, three days after
being mailed, certified mail, return receipt requested or, when received during
normal business hours, by electronic facsimile (confirmed by subsequent delivery
of "hard copy"), addressed to the Borrowing Group at c/o
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Chart Industries, 35555 Curtis Boulevard, Eastlake, Ohio 44095, Attn: Chief
Executive Officer, or to such other address as may be furnished in writing to
the Banks and the Agent for such purpose by the Borrowing Group. Any notice to
or demand upon the Banks and the Agent shall be deemed to have been sufficiently
given or served for all purposes hereof one day after being sent by overnight
express courier or hand delivered to the Account Officer of each Bank as
follows: If to NCB and the Agent, National City Bank, National City Center,
Cleveland, Ohio 44101-0756, Metro-Ohio Division, Attn: Anthony J. DiMare; if to
NBD, NBD Bank, 611 Woodward Avenue, Detroit, Michigan 48226, Midwest Banking
Division, Attn. Paul R. DeMelo, or to such other address as may be furnished in
writing to the Borrowing Group for such purpose by the Banks and the Agent. The
Borrowing Group agrees that the Banks and the Agent may rely and act upon,
without any investigation or inquiry as to the authority or power to give, or
accuracy or reasonableness of, and the Borrowing Group will be unconditionally
and irrevocably bound and obligated by, any instructions, notice, request,
report or other communications given by the Parent to the Banks.
Section 12.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein shall survive the execution and
delivery of this Credit Agreement, any investigation at any time made by the
Banks or the Agent, and the execution and delivery of the Revolving Notes and
shall continue in full force and effect so long as the Revolving Notes are
outstanding and unpaid.
Section 12.04 ENTIRE AGREEMENT; AMENDMENT. This Credit Agreement,
including all exhibits hereto, embodies the entire agreement and understanding
between the Borrowing Group, the Banks and the Agent and supersedes all other
prior agreements and understandings relating to the subject matter hereof. The
Borrowing Group, the Banks and the Agent may enter into further and additional
written agreements to amend or supplement this Credit Agreement and the terms
and provisions of such further and additional written agreements shall be deemed
a part of this Credit Agreement as though incorporated herein. Except as
provided herein, the Banks have no obligation to make loans or advances to the
Borrowing Group.
Section 12.05 PARTIES IN INTEREST; BANK'S PURPOSE. (i) All the terms
and provisions of this Credit Agreement shall inure to the benefit of and be
binding upon and be enforceable by the respective successors and assigns of the
parties hereto, whether so expressed or not and, in particular, shall inure to
the benefit of and be enforceable by any holder of the Revolving Notes. The
Borrowing Group shall not assign their rights under this Credit Agreement
without the prior written consent of the Banks. The Banks, without the prior
written consent of the Borrowing Group but with the prior consent of the Agent,
may assign,
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or sell participation in, all or part of the Revolving Loan and their rights
under the Credit Agreement and the other Loan Documents. The Banks agree that
they will give the Borrowing Group prompt written notice of any assignment of
all or part of the Revolving Loan.
(ii) Each Bank represents and warrants to the other Banks and to the
Borrowing Group that Bank is familiar with the Securities Act of 1933, as
amended, and the rules and regulations thereunder and that it is not entering
into this Agreement with any intention to violate that Act or any rule or
regulation thereunder, it being understood, however, that each Bank shall at all
times retain full control over the disposition of its assets subject only to
this Agreement and to all applicable law.
Section 12.06 WAIVER OF ASSERTION OF COUNTERCLAIMS; WAIVER OF JURY
TRIAL. Each and every right granted to the Banks hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of the Banks or any holder of the Revolving Notes to exercise, and
no delay in exercising, any right shall operate as a waiver thereof nor shall
any single or partial exercise of any right preclude any other or future
exercise thereof or the exercise of any other right. The due payment and
performance of the Borrowing Group's indebtedness, liabilities and obligations
under the Revolving Notes and this Credit Agreement shall be without regard to
any counterclaim or right of offset which the Borrowing Group may have against
the Banks and the Agent and without regard to any other obligation of any nature
whatsoever which the Banks and the Agent may have to the Borrowing Group, and no
such counterclaim or offset shall be asserted by the Borrowing Group in any
action, suit or proceeding instituted by the Banks for payment or performance of
the Borrowing Group's indebtedness, liabilities or obligations under the
Revolving Notes, this Credit Agreement, the Collateral Security Documents, or
any other Loan Documents.
THE BORROWING GROUP AND THE BANKS AND THE AGENT HEREBY WAIVE THEIR
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS
CREDIT AGREEMENT, THE REVOLVING NOTES OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS RELATED THERETO.
Section 12.07 SET-OFF PROVISION. As security for the due payment and
performance of all the Obligations, the Borrowing Group hereby grant to the
Banks a lien on and security interest in any and all deposits or other sums at
any time credited by or due from the Banks to the Borrowing Group, whether in
regular or special depository accounts or otherwise, and any and all monies,
securities and other property of the Borrowing Group, and the proceeds thereof,
now or hereinafter held or received by or in transit to the Banks from or for
the
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Borrowing Group, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and any such deposits, sums, monies, securities and
other property, may at any time after the occurrence and during the continuance
of any Event of Default be set-off, appropriated and applied by the Banks
against any of the Obligations, whether or not any of such Obligations is then
due or is secured by any collateral, or, if it is so secured, whether or not the
collateral held by the Banks is considered to be adequate.
Section 12.08 SEVERABILITY OF PROVISIONS. Any provision of this Credit
Agreement which is 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 of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 12.09 HEADINGS. Article and Section headings used in this
Credit Agreement are for convenience of reference only and are not a part of
this Agreement for any other purpose.
Section 12.10 CONSENT TO JURISDICTION. Each Company in the Borrowing
Group agrees that any action or proceeding to enforce or arising out of this
Credit Agreement or any of the other Loan Documents may be commenced in the
Common Pleas Court of Cuyahoga County, Ohio or in the District Court of the
United States for the Northern District of Ohio sitting in Cleveland, and the
Borrowing Group waive personal service of process and agree that a summons and
complaint commencing an action or proceeding in any such court shall be properly
served and shall confer personal jurisdiction if served to the persons and
addresses listed in Section 12.02 in accordance with the provisions of this
Section 12.10, or as otherwise provided by the laws of the State of Ohio or the
United States.
Section 12.11 GOVERNING LAW. This Credit Agreement, the Revolving Notes
and each other Loan Document are and will be contracts made under the laws of
the State of Ohio (without regard to the laws regarding conflicts of laws) and
together with the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and governed by the laws of such
State.
Section 12.12 COUNTERPARTS. This Credit Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
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Section 12.13 NATURE OF THE BORROWING GROUP'S OBLIGATIONS AND
MODIFICATION THEREOF. THE OBLIGATIONS OF THE BORROWING GROUP UNDER THIS
AGREEMENT, THE REVOLVING NOTES AND THE OTHER LOAN DOCUMENTS ARE JOINT AND
SEVERAL. The obligations of the Borrowing Group under this Agreement are
absolute and unconditional and shall be irrevocable. The Borrowing Group agree
that their obligations hereunder shall not be impaired, modified, changed,
released or limited in any manner whatsoever by any impairment, modification,
change, release or limitation of the liability of any member of the Borrowing
Group by any bankruptcy case or by any stay or other legal impediment in or
arising from the operation of any present or future provision of the Bankruptcy
Code or other similar state or federal statute, or from the decision of any
court or any perfection or failure to perfect any Lien upon any property of any
member of the Borrowing Group. The Borrowing Group agrees that the Banks may, in
their discretion, (i) release, discharge, compromise or settle with, or grant
indulgences to, refuse to proceed or take action against, any Company in the
Borrowing Group with respect to its respective obligations under this Agreement,
(ii) release, surrender, modify, impair, exchange, substitute or extend the
period or duration of time for the performance, discharge or payment of, refuse
to enforce, compromise or settle its respective lien, security interest, pledge
or assignment against, any and all deposits and other property or assets on
which the Bank may have a lien, security interest, pledge or assignment or which
secures any of the obligations of the Borrowing Group under this Agreement, and
(iii) amend, modify, alter or restate, in accordance with their respective
terms, this Agreement or any of the Loan Documents or otherwise, accept deposits
or other property from, or enter into transactions of any kind or nature with,
the Borrowing Group. Each of the Borrowing Group confirms that it will be
directly or indirectly benefitted by the Revolving Loan and any and all other
Advances under this Agreement or any of the Loan Documents.
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IN WITNESS WHEREOF, the parties have caused this Credit Agreement to be
executed as of the date first above written by their respective representatives
thereunto duly authorized.
CHART INDUSTRIES, INC. CHART MANAGEMENT COMPANY,
INC.
By: /s/ Don A. Baines By: /s/ Don A. Baines
----------------------------------- ---------------------------------
Don A. Baines, Treasurer and CFO Don A. Baines, Secretary and
Treasurer
ALTEC INTERNATIONAL LIMITED CHART INDUSTRIES FOREIGN SALES
PARTNERSHIP CORPORATION
By: CHART MANAGEMENT COMPANY, By: /s/ Don A. Baines
INC., its sole general partner ---------------------------------
Don A. Baines, Secretary and
Treasurer
/s/ Don A. Baines
- -------------------------------------- PROCESS SYSTEMS INTERNATIONAL, INC.
Don A. Baines, Secretary and Treasurer
By: /s/ Don A. Baines
---------------------------------
ALTEC, INC. Don A. Baines, Assistant Clerk
and Treasurer
By: /s/ Don A. Baines NATIONAL CITY BANK
-----------------------------------
Don A. Baines, Assistant Secretary By: /s/ Anthony J. DiMare
---------------------------------
Anthony J. DiMare, Vice President
GREENVILLE TUBE CORPORATION
NBD BANK
By: /s/ Don A. Baines
----------------------------------- By: /s/ Janet M. Cerra
Don A. Baines, Assistant Secretary ---------------------------------
Janet M. Cerra, Vice President
NATIONAL CITY BANK, as Agent
By: /s/ Anthony J. DiMare
New member of Borrowing Group as of ---------------------------------
July 31, 1997 Anthony J. DiMare, Vice President
CRYENCO SCIENCES, INC.
By: /s/ Don A. Baines, Secretary
--------------------------------
Don A. Baines, Secretary
and Treasurer
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