Exhibit 10.1
Second Amended And Restated Credit Agreement
Dated as of February 25, 1999
among
Wahlco Environmental Systems, Inc.
and
Thermatrix Inc.
as Borrowers,
and
Wexford Capital Partners II, L.P.
Wexford Overseas Partners I, L.P.
Wexford Special Situations 1996, L.P.
Wexford Special Situations 1996 Institutional, L.P.
Wexford Special Situations 1996 Limited
Wexford-Euris Special Situations 1996, L.P.
as Lenders
and
Wexford Management LLC
as Agent for the Lenders
Table of Contents
Article I
Definitions
Article II
Amount and Terms of Credit
2.1. The Thermatrix Assumption ......................................................... 13
2.2. Wahlco Confirmation of Obligations ................................................ 13
2.3. The Loans ......................................................................... 13
2.4. Thermatrix Security Interest ...................................................... 13
2.5. Wahlco Security Interest .......................................................... 14
2.6. Guaranty .......................................................................... 14
2.7. Issuance of Warrants .............................................................. 14
2.8. Subordination Agreement ........................................................... 14
2.9. Optional Prepayment ............................................................... 14
2.10. Mandatory Prepayment .............................................................. 14
2.11. Application of Mandatory Prepayments .............................................. 15
2.12. Payments .......................................................................... 15
2.13. Receipt of Payments ............................................................... 16
2.14. Indemnity ......................................................................... 16
2.15. Access ............................................................................ 16
2.16. Taxes ............................................................................. 16
Article III
Representations and Warranties
3.1. Corporate Existence: Compliance with Law .......................................... 18
3.2. Subsidiaries ...................................................................... 18
3.3. Corporate Power: Authorization: Enforceable Obligations ........................... 18
3.4. Owned Real Property ............................................................... 19
3.5. No Material Adverse Change ........................................................ 19
3.6. Financial Statements .............................................................. 19
3.7. Ownership of Property: Liens ..................................................... 20
3.8. No Default ........................................................................ 20
3.9. Burdensome Restrictions ........................................................... 20
3.10. Labor Matters ..................................................................... 20
3.11. Taxes ............................................................................. 20
3.12. ERISA ............................................................................. 21
3.13. No Litigation ..................................................................... 21
3.14. Patents, Trademarks, Copyrights and Licenses ...................................... 21
3.15. Liens ............................................................................. 22
3.16. Business Locations: Agent for Process ............................................. 22
3.17. Brokers ........................................................................... 22
3.18. Trade Relations ................................................................... 22
3.19. Senior Obligations ................................................................ 22
3.20. No Power of Attorney .............................................................. 22
Article IV
Conditions Precedent to Effectiveness
4.1. Conditions to Loan ................................................................ 22
Article V
Financial Statements and Information
5.1. Reports and Notices ............................................................... 24
5.2. Communication with Accountants .................................................... 24
Article VI
Affirmative Covenants
6.1. Maintenance of Existence and Conduct of Business .................................. 25
6.2. Information Covenants ............................................................. 25
6.3. Payment of Obligations and Charges and Filing of Returns and Reports .............. 28
6.4. Books and Records ................................................................. 29
6.5. Litigation ........................................................................ 29
6.6. Compliance with Law ............................................................... 29
6.7. Maintenance of Insurance .......................................................... 29
6.8. Additional Security ............................................................... 30
6.9. Elimination of Liens .............................................................. 30
Article VII
Negative Covenants
7.1. Mergers Etc. ...................................................................... 30
7.2. Investments: Loans and Advances ................................................... 31
7.3. Indebtedness ...................................................................... 32
7.4. Limitation on Modifications of Indebtedness; Cancellation of Indebtedness ......... 33
7.5. Maintenance of Business ........................................................... 33
7.6. Guaranteed Indebtedness ........................................................... 33
7.7. Hedging Transactions .............................................................. 34
7.8. Restricted Payments ............................................................... 34
7.9. ERISA ............................................................................. 34
7.10. Limitations on Transactions with Affiliates ....................................... 34
Article VIII
Term
8.1. Survival of Obligations Upon Termination of Financing Arrangement ................. 34
Article IX
Events Of Default: Rights And Remedies
9.1. Events of Default ................................................................. 35
9.2. Remedies .......................................................................... 37
9.3. Waivers by Borrowers .............................................................. 37
9.4. Other Remedies .................................................................... 37
Article X
Miscellaneous
10.1. Complete Agreement: Modification of Agreement; Assignment by Lenders ............. 38
10.2. Fees and Expenses ................................................................ 38
10.3. No Waiver by Lender .............................................................. 39
10.4. Agency Provisions ................................................................ 40
10.5. Remedies ......................................................................... 41
10.6. WAIVER OF JURY TRIAL ............................................................. 41
10.7. Severability ..................................................................... 41
10.8. Parties .......................................................................... 41
10.9. Conflict of Terms ................................................................ 41
10.10. Authorized Signature ............................................................. 41
10.11. GOVERNING LAW .................................................................... 41
10.12. CONSENT TO JURISDICTION .......................................................... 42
10.13. Notices .......................................................................... 42
10.14. Consent of Agent ................................................................. 44
10.15. Sophisticated Borrowers .......................................................... 44
10.16. WAIVERS BY BORROWERS ............................................................. 44
10.17. Survival ......................................................................... 45
10.18. Section Titles ................................................................... 45
10.19. Counterparts ..................................................................... 45
Index of Exhibits and Schedules
Exhibit A Environmental Laws
Exhibit B Form of General Release
Exhibit C Form of Guaranty
Exhibit D Form of Mortgage
Exhibit E Form of Note
Exhibit F Form of Registration Rights Agreement
Exhibit G Form of Wahlco Security Agreement
Exhibit H Form of Thermatrix Security Agreement
Exhibit I Form of UK Security Agreement
Exhibit J Form of Stock Pledge Agreement
Exhibit K Form of Subordination Agreement
Exhibit L Form of Warrant
Exhibit M Form of Opinion
Exhibit N Form of Officers' Certificate
Exhibit O Form of Compliance Certificate
Exhibit P Xxxxxxxx Transaction Memorandum
Schedules
Schedule 1.5 Business Payables of Wahlco
Borrowers' Disclosure Letter
Schedule 1.68 Existing Liens
Schedule 3.2 Significant Subsidiaries
Schedule 3.4 Owned Real Property
Schedule 3.7 Leased Real Property
Schedule 3.16 Business Locations: Agent for Process
Schedule 6.7 Insurance
Schedule 7.2 Existing Investments
Schedule 7.3 Existing Indebtedness
Schedule 10.10 Authorized Signatures
Schedule 3(B) License Agreements Prohibiting Security
Interest
Second Amended And Restated Credit Agreement, dated as of February 25,
1999 (the "Credit Agreement"), among Wahlco Environmental Systems, Inc., a
Delaware corporation ("Wahlco") and Thermatrix Inc., a Delaware corporation
("Thermatrix", and together with Wahlco, the "Borrowers") and Wexford Capital
Partners II, L.P., a Delaware limited partnership, Wexford Overseas Partners I,
L.P., a Cayman Islands exempted limited partnership, Wexford Special Situations
1996, L.P., a Delaware limited partnership, Wexford Special Situations 1996
Institutional, L.P., a Delaware limited partnership, Wexford Special Situations
1996 Limited, a Cayman Islands exempted company, and Wexford-Euris Special
Situations 1996, L.P., a Delaware limited partnership (collectively, the
"Lenders"); and Wexford Management LLC, a Connecticut limited liability company,
as administrative and collateral agent for the Lenders (the "Agent").
Recitals
A. Wahlco, the Agent and the Lenders are party to an amended and
restated credit agreement, dated January 30, 1998 (the "1998 Credit Agreement"),
under which Wahlco has borrowed funds from time to time in the total principal
amount of $1,571,232.88.
B. Wahlco also has borrowed funds through a non-committed line of
credit with The Chase Manhattan Bank ("Chase"), arranged, guaranteed and fully
collateralized by the Lenders (the "Chase Facility") and is obligated to repay
amounts owing under note numbers: 10 in the principal amount of $150,000, 11 in
the principal amount of $3,125,000, and 12 in the principal amount of $100,000
(the "Chase Notes"), issued to Chase by the Company under the Chase Facility.
C. On January 13, 1999, pursuant to an Agreement and Plan of Merger,
dated November 9, 1998 (the "Merger Agreement"), among Wahlco, Thermatrix and
TMX Acquisition Sub I, Inc., a wholly owned subsidiary of Thermatrix ("Merger
Sub"), Merger Sub merged with and into Wahlco (the "Merger"), and Wahlco became
a wholly owned subsidiary of Thermatrix at the effective time of the Merger (the
"Effective Time").
D. In connection with the Merger, Thermatrix agreed to guaranty to
the Lenders and the Agent the obligations of Wahlco to the Lenders and to Chase
under the 1998 Credit Agreement and the Chase Facility (the "Thermatrix
Guaranty") and to grant to the Lenders a security interest in all existing and
future Assets of Thermatrix (the "Original Thermatrix Security Agreement").
E. On January 22, 1999, the Agent, on behalf of the Lenders,
purchased the Chase Notes from Chase, including the right to receive all accrued
and unpaid interest thereon.
F. The parties now wish to replace the Thermatrix Guaranty, the 1998
Credit Agreement and the Chase Notes by amending and restating all of the terms
thereof in this Credit Agreement, pursuant to which Thermatrix will become a co-
obligor with Wahlco (who shall remain jointly and severally liable) for all of
such obligations.
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G. As a further condition to the Lenders' execution and delivery of
this Credit Agreement, Thermatrix has agreed to amend and restate the Original
Thermatrix Security Agreement to confirm its grant to the Lenders of a security
interest in all existing and future Assets of Thermatrix (the "Thermatrix
Security Agreement"), Wahlco has agreed to amend and restate the Original Wahlco
Security Agreement to confirm its grant to the Lenders of a security interest in
all existing and future Assets of Wahlco (the "Wahlco Security Agreement"), and
Thermatrix and Wahlco have agreed to cause their Significant Subsidiaries to
enter into the Guaranty and to grant and/or to cause the Significant
Subsidiaries to grant to the Lenders additional security interests and mortgages
in all existing and future Assets of the Borrowers and the Significant
Subsidiaries.
Now, Therefore, all of the parties hereto agree that the 1998 Credit
Agreement, the Chase Notes and the Thermatrix Guaranty are hereby amended and
restated in their entirety upon the following terms and conditions:
Article I
Definitions
In addition to the defined terms appearing above, capitalized terms
used in this Credit Agreement shall have the following respective meanings when
used herein:
1.1. Intentionally Left Blank.
1.2. "Affiliate" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the Stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person, or (iii) each of such Person's officers,
directors, joint venturers and partners. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
1.3. "Ancillary Agreements" shall mean all those agreements as to
which Borrowers, the Lenders or the Agent is a party or a beneficiary on the
Closing Date with respect to any of the transactions contemplated by the Loan
Documents; provided that the Merger Agreement and the documents executed in
connection with the transactions contemplated thereby are not Ancillary
Agreements.
1.4. "Assets" means all of the assets of the Borrowers and the
Significant Subsidiaries as of and from time to time after the Closing Date.
1.5. "Asset Restoration Amount" shall have the meaning set forth in
Section 2.10(c).
1.6. "Asset Sale" means the sale, transfer or other disposition, to
the extent consummated after the Closing Date, by the Borrower or any of the
Significant Subsidiaries to
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any Person other than the Borrower or any of its wholly owned subsidiaries of
any Asset of the Borrower or such Subsidiary, except for (a) transactions
included in the definition of Net Financing Proceeds and (b) sales of inventory
in the ordinary course of business.
1.7. "Borrowers" shall mean Wahlco Environmental Systems, Inc., a
Delaware corporation having an office at 0000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx Xxx,
Xxxxxxxxxx 00000-0000 and Thermatrix Inc., a Delaware corporation having an
office at 000 Xxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000.
1.8. "Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
1.9. "Capital Expenditures" shall mean all payments for any fixed
assets or improvements or for replacements, substitutions or additions thereto,
that have a useful life of more than one year and which are required to be
capitalized under GAAP.
1.10. "Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet, other than, in the case of
a Borrower or a Subsidiary, any such lease under which a Borrower or such
Subsidiary is the lessor.
1.11. "Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.
1.12. "Cash" means currency or a credit balance in an Account.
1.13. "Cash Equivalents" shall have the meaning assigned to it in
Section 7.2 hereof.
1.14. "Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental (including, without limitation,
PBGC) taxes, levies, assessments, charges, liens, claims or encumbrances, as
well as, in each case, all liabilities (including, without limitation, penalties
and interest) that may arise with respect thereto, that are imposed in
connection with or otherwise relate to (i) the Collateral, (ii) the Obligations,
(iii) either Borrowers' or any of their respective Subsidiaries' employees,
payroll, income and profits or gross receipts, (iv) either Borrowers' or any of
their respective Subsidiaries' ownership or use of any of its Assets, or (v) any
other aspect of either Borrowers' or any of the Subsidiaries' business.
1.15. "Chase" means The Chase Manhattan Bank.
1.16. "Chase Facility" has the meaning set forth in recital paragraph
B.
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1.17. "Chase Notes" has the meaning set forth in recital paragraph B.
1.18. "Closing Date" shall mean February 25, 1999 or such later date
as all of the conditions to effectiveness set forth in Section 4.1 hereof have
been satisfied or waived.
1.19. "Code" shall mean the Uniform Commercial Code of the
jurisdiction with respect to which such term is used, as in effect from time to
time.
1.20. "Collateral" shall mean the collateral covered by the Security
Agreements, the Mortgages and the Pledged Collateral covered by the Stock Pledge
Agreements (as such term is defined therein).
1.21. "Collateral Documents" shall mean the Security Agreements, the
Mortgages and the Stock Pledge Agreement.
1.22. "Commission" means the Securities and Exchange Commission or
any successor thereto.
1.23. "Commitment Termination Date" shall mean the Closing Date.
1.24. "Compensation" shall mean, with respect to any Person, all
payments and accruals commonly considered to be compensation, including, without
limitation, all wages, salary, deferred payment arrangements, bonus payments and
accruals, profit sharing arrangements, payments in respect of stock option or
phantom stock option or similar arrangements, stock appreciation rights or
similar rights, incentive payments, pension or employment benefit contributions
or similar payments, made by Borrowers to or accrued for the account of such
Person or otherwise for the direct or indirect benefit of such Person.
1.25. "Credit Agreement" shall mean this Second Amended and Restated
Credit Agreement, and all amendments, modifications and supplements hereto and
any appendices, exhibits or schedules to any of the foregoing, and shall refer
to this Credit Agreement as the same may be in effect at the time such reference
becomes operative.
1.26. "Default" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
1.27. "Effective Time" shall have the meaning set forth in recital
paragraph C.
1.28. "Environmental Laws" shall mean any and all federal, State,
local and foreign statutes, laws (including case law), regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, whether now or hereafter in effect, relating to human health, the
environment or to emissions, discharges, migrations or releases of pollutants,
contaminants, Hazardous Substances or wastes (including solid wastes) into the
environment, including ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, generation, processing, distribution,
use, treatment, storage, disposal, transport or handling of
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pollutants, contaminants, Hazardous Substances or wastes (including solid
wastes) or the clean-up or other remediation thereof, including, without
limitation, as listed on Exhibit A hereto.
1.29. "Environmental Liabilities" means all liabilities, whether
vested or unvested, contingent or fixed, actual or potential, known or unknown,
arising from or in connection with any actual or asserted Release or other
violation of any Environmental Law by any Loan Party.
1.30. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
1.31. "Event of Default" shall have the meaning assigned to it in
Section 9.1 hereof.
1.32. "Extension Fee" shall have the meaning set forth in Section
1.56.
1.33. "Financials" shall mean the financial statements referred to in
Section 3.6 hereof.
1.34. "Financing Proceeds" means the Cash or Cash Equivalents (other
than Net Cash Proceeds) received by either Borrower or any Subsidiary, directly
or indirectly, from any financing transaction of whatever kind or nature,
including without limitation from any incurrence of Indebtedness from any
mortgage or pledge of an Asset or interest therein (including any transaction
which is the substantial equivalent of a mortgage or pledge), from any lease to
a third party and a pledge of the lease payments due thereunder to secure
Indebtedness, from any joint venture arrangement, from any exchange of Assets
and a sale of the Assets received in such exchange, and any arrangement or
technique whereby either Borrower and its Subsidiaries obtains Cash in respect
of an Asset, net of direct costs associated therewith. Financing Proceeds shall
not include any amounts received by Borrowers or any Subsidiary in respect of
(a) the Loans, (b) transactions between any of either Borrower and its wholly
owned Subsidiaries, (c) up to $1.5 million of subordinated or unsecured
Indebtedness of either Borrower or any Subsidiary or (d) any sale of Stock of,
or any equity interest in, either Borrower or any Subsidiary.
1.35. "Fiscal Year" shall mean the calendar year. Subsequent changes
of the fiscal year of either Borrower shall not change the term "Fiscal Year,"
unless the Agent shall consent in writing to such changes.
1.36. "GAAP" shall mean generally accepted accounting principal in
the United States of America as in effect from time to time.
1.37. "General Release" shall mean the general release, dated
February 25, 1999, substantially in the form of Exhibit B hereto.
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1.38. "Governmental Authority" shall mean any nation or government,
any state or other policy subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.39. "Guaranteed Indebtedness" shall mean as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner including, without limitation, any obligation or
arrangement of such Person (a) to purchase or repurchase any such primary
obligation, (b) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) to indemnify the owner of such
primary obligation against loss in respect thereof.
1.40. "Guarantor" shall mean each of parties identified as a
"Guarantor" in the Guaranty.
1.41. "Guaranty" shall mean the Guaranty, dated as of the date hereof
and substantially in the form of Exhibit C hereto, by the Guarantors in favor of
the Lenders and the Agent.
1.42. "Hazardous Materials" means all pollutants, contaminants or
chemical, industrial, hazardous or toxic materials, substances, constituents or
wastes, including, without limitation, asbestos, or asbestos-containing
materials, polychlorinated biphenyls and petroleum, oil, or petroleum or oil
products, derivatives or constituents, including, without limitation, crude oil
or any fraction thereof, or any other material, waste, chemical, substance or
constituent subject to regulation under any Environmental Law.
1.43. "Indebtedness" of any Person shall mean (i) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (iv) all Capital Lease Obligations,
(v) all Guaranteed Indebtedness, (vi) all Indebtedness referred to in clause
(i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not
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assumed or become liable for the payment of such Indebtedness, (vii) the
Obligations, and (viii) all liabilities under Title IV of ERISA.
1.44. "Initial Interest Payment" shall have the meaning set forth in
Section 2.12(b).
1.45. "Inventory" shall mean any and all now owned or hereafter
acquired inventory, goods, merchandise, and other tangible personal property
intended for sale or lease, in the custody or possession, actual or
constructive, of either Borrower or any of the Significant Subsidiaries, or in
transit to either Borrower or any of the Significant Subsidiaries, including
such inventory as is on consignment to third parties, leased to customers of
either Borrower or any of the Significant Subsidiaries, or otherwise temporarily
out of the custody or possession of either Borrower or any of the Significant
Subsidiaries.
1.46. "IRC" shall mean the Internal Revenue Code of 1986, as amended,
and any successor thereto.
1.47. "IRS" shall mean the Internal Revenue Service, or any successor
thereto.
1.48. "Leased Real Property" shall mean each parcel of real property
and any interest therein (together with any structures, improvements, easements
and other rights on or appurtenant thereto) that either Borrower or any
Subsidiary occupies, uses or otherwise has rights to pursuant to a lease,
license, occupancy agreement or other agreement, each accurately identified and
described on Schedule 3.7 of the Disclosure Letter.
1.49. "Lenders" shall mean the initial Lenders defined in the
Preamble, and adding or substituting any assignees or alternate lender or
lenders the Lenders may from time to time nominate by written notice to the
Borrowers in accordance with Section 10.1(b).
1.50. "Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).
1.51. "Loans" shall mean the sum of (i) borrowings previously made
under the 1998 Credit Agreement or the Chase Facility in the amount of
$4,946,232.88, (ii) the obligation in respect of the Initial Interest Payment in
the amount of $70,433.40, (iii) the obligation in respect of the payables of
Wahlco listed on Schedule 1.51 hereto in the amount of $84,747.03 (iv) the
obligation in respect of the transaction fee in the amount of $100,000 (the
"Transaction Fee"), (v) the obligation in respect of the expense reimbursement
payment in the amount of $325,000, and (vi) the obligation in respect of all
accrued and unpaid interest due and payable under the 1998 Credit Agreement and
the Chase Notes in the amount of $194,172.33, all of which are now outstanding
principal amounts hereunder as of the date hereof and are collectively
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evidenced by the Note issued and delivered under the terms and conditions of
this Credit Agreement.
1.52. "Loan Documents" shall mean this Credit Agreement, the Note,
the Guaranty, the Collateral Documents, the Registration Rights Agreement, the
Warrant, those other Ancillary Agreements as to which the Lenders or the Agent
is a party or a beneficiary on the Closing Date, and all other agreements,
instruments, documents and certificates, including, without limitation, pledges,
powers of attorney, consents, assignments, contracts, notices, and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
either Borrower or any of their respective Affiliates, or any employee of either
Borrower or any of their respective Affiliates, and delivered to the Agent or
any Lender in connection with this Credit Agreement or the transactions
contemplated hereby, and all amendments or supplements to any of the foregoing.
1.53. "Loan Party" shall mean each of the Borrowers and/or each
Significant Subsidiary.
1.54. "Loss Proceeds" shall have the meaning set forth in 2.10(c).
1.55. "Material Adverse Effect" shall mean material adverse effect on
(i) the condition (financial or otherwise), operations, performance, properties,
Assets, business or prospects of the Borrowers and the Significant Subsidiaries
taken as a whole, (ii) Borrowers' and the Significant Subsidiaries' collective
ability to pay or perform the Obligations in accordance with the terms thereof
or (iii) the Liens on the Collateral or the priority of any such Lien.
1.56. "Maturity Date" shall mean August 24, 1999, or if Borrowers
shall have provided notice to the Agent in writing at least three business days
before such time, and shall have paid a fee of $100,000 (the "Extension Fee"),
November 22, 1999.
1.57. "Merger", "Merger Sub" and "Merger Agreement" shall have the
meanings set forth in recital paragraph C.
1.58. "Mortgages" means the mortgages or deeds of trust, security
agreements and fixture filings creating and evidencing a Lien on each parcel of
Owned Real Property described therein dated as of the date thereof and made by
the owner of the applicable Owned Real Property for the benefit of the Agent, as
mortgagee, assignee and secured party, as the same may at any time be amended or
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof, substantially in the form of the Mortgage attached as
Exhibit D hereto.
1.59. "1998 Credit Agreement" shall have the meaning set forth in
recital paragraph A.
1.60. "Net Cash Proceeds" means with respect to any Asset Sale or
multiple Asset Sales to one Person or a group of related Persons, any aggregate
payments of Cash or Cash Equivalents in excess of $1,000.00 received by either
Borrower and/or any Subsidiary, as the
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case may be, from any such Asset Sales, net of direct expenses of such sales,
net of taxes (including income taxes and transfer taxes) and net of repayment of
Indebtedness or Capital Leases in each case secured by a Lien on the Asset
subject to such Asset Sale; provided, however, that with respect to taxes,
expenses shall only include taxes to the extent that taxes are payable in cash
with respect to the current year; and provided, further, that Net Cash Proceeds
shall not include any amounts or items included in the definition of Financing
Proceeds or Net Financing Proceeds; and provided, further, that no sales
commissions or other fees shall be paid to any Affiliate of either Borrower or
any Subsidiary.
1.61. "Net Financing Proceeds" means Financing Proceeds, net of
direct expenses (including underwriting discounts and commissions, and other
costs and expenses directly associated therewith paid to any unaffiliated third
party) of the transaction and net of taxes (including income taxes) paid or
payable in cash with respect to the current year as a result of the transaction
generating such Financing Proceeds.
1.62. "Note" shall mean the promissory note, substantially in the
form of Exhibit E hereto, evidencing the obligations of the Borrowers hereunder.
1.63. "Obligations" shall mean all loans, advances, debts,
liabilities, and other obligations for monetary amounts (whether or not such
amounts are liquidated, contingent or otherwise determinable) owing by either
Borrower or any of their respective Subsidiaries or all of them to the Agent or
any Lender, or any Subsidiary or Affiliate of the Agent or a Lender, and all
covenants, duties and obligations regarding such amounts, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, arising under this Credit Agreement or any of the other Loan
Documents, whether at maturity or by prepayment, acceleration, declaration of
default or otherwise, including, without limitation, the principal amount of the
Loans, as well as all interest thereon (including all amounts owed in respect of
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of any Loan
Party), and all charges, costs, expenses, attorneys' fees and any other sum
chargeable to either Borrower or any or all of their respective Subsidiaries
under any of the Loan Documents.
1.64. "Original Thermatrix Security Agreement" shall have the meaning
set forth in recital paragraph D.
1.65. "Original Wahlco Security Agreement" shall have the meaning set
forth in Section 1.78.
1.66. "Overdue Rate" shall have the meaning set forth in Section
2.12(b).
1.67. "Owned Real Property" shall mean each parcel of real property
and any interest therein (together with any structures, improvements, easements
and other rights on or appurtenant thereto owned by either Borrower or any
Subsidiary) owned by either Borrower or any Subsidiary, identified and described
on Schedule 3.4 of the Disclosure Letter.
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1.68. "Permitted Encumbrances" shall mean the following encumbrances:
(i) Liens for taxes or assessments or other governmental charges or levies,
either not yet due and payable or to the extent that nonpayment thereof is
permitted by the terms of this Credit Agreement; (ii) pledges or deposits
securing obligations under workmen's compensation, unemployment insurance,
social security or public liability laws or similar legislation; (iii) pledges
or deposits securing bids, tenders, contracts (other than contracts for the
payment of money) or equipment or leases to which either Borrower or any of
their respective Subsidiaries is a party as lessee made in the ordinary course
of business; (iv) deposits securing public or statutory obligations of either
Borrower or any of their respective Subsidiaries; (v) deposits securing or in
lieu of surety, appeal or customs bonds in proceedings to which either Borrower
or any of their respective Subsidiaries is a party, (vi) Liens (1) upon or in
any equipment acquired or held by Borrowers to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (2) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired, accessions thereto, replacements thereof, substitutions therefor and
improvements thereon, and the proceeds of such equipment; (vii) leases or
subleases and licenses and sublicenses granted to others in the ordinary course
of business, and any interest or title of a lessor or licensor under any such
lease or license, in each case which do not have or could not reasonably be
expected to have an Material Adverse Effect; (viii) Liens on assets (including
the proceeds thereof and accessions thereto) that existed at the time such
assets were acquired by Borrowers; provided such Liens are not granted in
contemplation of or in connection with the acquisition of such asset by
Borrowers; (ix) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
existing as of the date hereof affecting real property; provided that the same
do not have or could not reasonably be expected to have a Material Adverse
Effect; (x) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payments of customs duties in connection with the
importation of goods; (xi) Liens which constitute rights of set-off of a
customary nature or banker's Liens with respect to amounts on deposit, whether
arising by operation of law or by contract, in connection with arrangements
entered into with banks in the ordinary course of business; (xii) Liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the types described above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; and (xiii) Liens existing on the date
hereof set forth in Schedule 1.68 of the Disclosure Letter.
1.69. "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
1.70. "Plan" shall mean, with respect to either Borrower or any ERISA
Affiliate, at any time, an employee benefit plan, as defined in Section 3(3) of
ERISA, which either Borrower or any of their respective Subsidiaries maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
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1.71. "Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated the date hereof, between the Agent and Thermatrix,
substantially in the form of Exhibit F hereto, as it may be amended from time to
time.
1.72. "Release" means the intentional or unintentional spilling,
leaking, disposing, discharging, emitting, depositing, injecting, leaching,
escaping, or any other release or threatened release, however defined, of any
Hazardous Materials, except in compliance with all applicable Environmental
Laws.
1.73. "Reserves" shall mean such reserves for doubtful accounts,
returns, allowances and the like as may be established by either Borrower or any
Subsidiary or as may otherwise be required in accordance with GAAP.
1.74. "Responsible Officer" shall mean the Chief Executive, Chief
Operating or Chief Financial Officer of Thermatrix or Wahlco, as applicable.
1.75. "Restricted Lease" shall mean, as at any date, any lease of
property (whether real, personal or mixed) other than Capital Leases.
1.76. "Restricted Payment" shall mean (i) the declaration of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or Assets in respect of either Borrower's
Stock or (ii) any payment on account of the purchase, redemption or other
retirement of either Borrower's Stock or any other payment or distribution made
in respect thereof, either directly or indirectly.
1.77. "SEC Documents" means each report or filing made by either
Borrower with the Commission.
1.78. "Security Agreements" shall mean the Wahlco Security Agreement,
dated February 25, 1999, attached as Exhibit G hereto, which amends and restates
the Security Agreement dated as of July 25, 1995, between Wahlco and WESAC, as
amended by the First Amendment thereto (the "Original Wahlco Security
Agreement"), the Thermatrix Security Agreement, dated as of February 25, 1999,
attached as Exhibit H hereto, which amends and restates the Original Thermatrix
Security Agreement, and the Debentures, each dated as of February 25, 1999, a
form of which is attached as Exhibit I hereto (the "UK Security Agreement").
1.79. "Significant Subsidiaries" shall mean the entities set forth on
Schedule 3.2.
1.80. "Stock" shall mean all shares, options, warrants, general or
limited partnership interests, participations or other equivalents (regardless
of how designated) of or in a corporation, partnership or equivalent entity
whether voting or nonvoting, including, without limitation, common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended).
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1.81. "Stock Pledge Agreement" shall mean the Stock Pledge Agreement,
dated February 25, 1999, attached hereto as Exhibit J, which amends and restates
the stock pledge agreement dated as of July 25, 1995, between Wahlco and WESAC,
as amended by the First Amendment thereto dated January 30, 1998.
1.82. "Subordination Agreement" shall mean the Agreement, dated
February 25, 1999, between the Agent and Venture, substantially in the form of
Exhibit K hereto.
1.83. "Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than 50%.
1.84. "Transaction Fee" shall have the meaning set forth in Section
1.51.
1.85. "Thermatrix Guaranty" shall have the meaning set forth in
recital paragraph D.
1.86. "Thermatrix Security Agreement" shall have the meaning set
forth in recital paragraph G.
1.87. "Venture" shall mean the Venture Banking Group, a division of
Cupertino National Bank
1.88. "Wahlco Security Agreement" shall have the meaning set forth in
recital paragraph G.
1.89. "Warrant" means a warrant to purchase 450,000 shares of
Thermatrix common stock, par value $.001 per share substantially in the form
attached hereto as Exhibit L.
1.90. Accounting Terms. Any accounting term used in this Credit
----------------
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP consistently applied. That certain terms or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. All other undefined terms
contained in this Credit Agreement shall, unless the context indicates
otherwise, have the meanings provided for by the Code as in effect in the State
of New York to the extent the same are used or defined therein. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Credit Agreement as a whole, including the Exhibits and Schedules hereto,
as the
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same may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Credit Agreement.
1.91. Gender. Wherever from the context it appears appropriate, each
------
term stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
Article II
Amount and Terms of Credit
2.1. The Thermatrix Assumption. Effective upon the execution and
-------------------------
delivery of this Credit Agreement, Thermatrix hereby assumes and agrees to
perform, pay, discharge and comply with, as a joint and several obligor with
Wahlco, all of the covenants, conditions, agreements, terms, obligations and
restrictions to be performed or complied with on the part of Wahlco under (a)
the 1998 Credit Agreement and (b) the Chase Notes (in each case as amended and
restated and now set forth in this Credit Agreement) and (c) all other
Obligations under this Credit Agreement now existing or hereafter arising, and
agrees to pay and perform such obligations in accordance with the terms hereof.
2.2. Wahlco Confirmation of Obligations. Wahlco acknowledges,
----------------------------------
agrees and confirms that notwithstanding the agreements of Thermatrix under
Section 2.1, Wahlco remains fully liable for, and shall hereafter be a joint and
several obligor with Thermatrix of, all of the obligations under (a) the 1998
Credit Agreement and (b) the Chase Notes (in each case as amended and restated
and now set forth in this Credit Agreement), and (c) all other Obligations under
this Credit Agreement now existing or hereafter arising, and agrees to pay and
perform such obligations in accordance with the terms hereof.
2.3. The Loans. Upon the terms and subject to the conditions
---------
hereof, the Lenders shall cancel any notes representing obligations under the
1998 Credit Agreement and the Chase Notes as of the Closing Date, which loans,
together with the other Obligations described in Section 1.51 hereof, shall be
represented from and after the Closing Date by the Note. The Agent shall
deliver such canceled Notes to the Borrowers on the Closing Date and shall
deliver the canceled Chase Notes to the Borrowers promptly after the Agent
receives the Chase Notes from Chase in accordance with the terms of the Note
Purchase Agreement dated January 22, 1999 between the Agent and Chase.
2.4. Thermatrix Security Interest. To secure its prompt payment
----------------------------
and performance to the Agent and the Lenders of the Obligations, on the Closing
Date, (a) Thermatrix shall execute and deliver to the Agent the Thermatrix
Security Agreement, (b) Thermatrix shall execute and deliver to the Agent and
cause the Significant Subsidiaries that are party thereto to execute and deliver
to the Agent the UK Security Agreements and (c) Thermatrix shall execute and
deliver to the Agent the Stock Pledge Agreement, granting to the Agent and the
Lenders, a continuing security interest and Lien in all of the present and
future property of
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Thermatrix and its Significant Subsidiaries, each effective upon the execution
and delivery of this Credit Agreement.
2.5. Wahlco Security Interest. To secure prompt payment and
------------------------
performance to the Agent and the Lenders of the Obligations, on the Closing
Date, (a) Wahlco shall execute and deliver to the Agent the Wahlco Security
Agreement, (b) Wahlco shall cause the Significant Subsidiaries that are party
thereto to execute and deliver to the Agent the UK Security Agreement and the
Mortgages and (c) Wahlco shall execute and deliver to the Agent and cause the
Significant Subsidiaries that are party thereto to execute and deliver to the
Agent the Stock Pledge Agreement, granting to the Agent and the Lenders, a
continuing security interest and Lien in all of the present and future property
of Wahlco and its Significant Subsidiaries, each effective upon the execution
and delivery of this Credit Agreement
2.6. Guaranty. On the Closing Date, the Borrowers shall cause each
--------
Significant Subsidiary to execute and deliver to the Agent the Guaranty,
guaranteeing the Obligations of the Borrowers hereunder, effective upon the
execution and delivery of this Credit Agreement.
2.7. Issuance of Warrant. On the Closing Date, Thermatrix shall
-------------------
execute and deliver the Registration Rights Agreement and issue the Warrant to
the Agent on behalf of the Lenders, effective upon the execution and delivery of
this Credit Agreement.
2.8. Subordination Agreement. On the Closing Date, Venture and the
-----------------------
Agent shall enter into the Subordination Agreement, effective upon the execution
and delivery of this Credit Agreement.
2.9. Optional Prepayment. Borrowers shall have the right at any time
-------------------
to prepay the Loans.
2.10. Mandatory Prepayment. (a) At any time that the Borrowers
--------------------
and/or any Subsidiary shall have received Net Cash Proceeds that, together with
all other Net Cash Proceeds previously received by Borrowers and/or any
Subsidiary and not remitted to the Agent, equal or exceed $25,000, the Borrowers
shall immediately remit to the Agent an amount equal to 100% of all such Net
Cash Proceeds; provided, however, that with respect to any Net Cash Proceeds
from any damage to, or loss, destruction or condemnation of Assets, Section
2.10(c) will govern.
(b) Immediately upon receipt by either Borrower and/or any
Significant Subsidiary of any Financing Proceeds, the Borrowers shall remit to
the Agent an amount equal to 100% of the Net Financing Proceeds.
(c) As promptly as practicable, but in any event within two Business
Days of the date of receipt by either Borrower and/or any Significant
Subsidiaries of any proceeds due to damage to, or loss, destruction or
condemnation of Assets net of actual out-of-pocket costs of recovery
(collectively, "Loss Proceeds"), the Borrower shall remit to the Agent an
amount equal to 100% of such Loss Proceeds, excluding such portion, if any, of
such proceeds (such portion, the "Asset Restoration Amount") that the Borrowers
represent to the Agent in writing will be
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used within 90 days of receipt of such Loss Proceeds (or such longer period as
may be consented to by the Agent) for rebuilding, repairing or replacing the
damaged, destroyed or condemned Assets with productive assets of a kind then
used or usable in the business of Borrowers and their Subsidiaries; provided,
however, that if such property constituted Collateral, any such replacement
property shall be made subject to the Lien of the Security Documents; and
provided further that if such proceeds are not put to such use within such 90-
day period, the Borrower shall remit to the Agent an amount equal to 100% of
such Loss Proceeds not so utilized.
(d) As promptly as possible, but in any event within two Business
Days following receipt by either Borrower and/or any Significant Subsidiary of
any tax refund which is not required to be promptly applied by the Borrower
and/or any of its Subsidiaries to the payment of future tax liabilities, the
Borrower shall remit to the Agent an amount equal to 100% of the aggregate
amount of such tax refunds in excess of $100,000.
2.11. Application of Mandatory Prepayments. Prepayments under
------------------------------------
Section 2.9 and 2.10 shall be applied without penalty or premium, in the
following manner: first, to any unpaid fees and expenses due to the Agent or
Lenders hereunder, second to accrued and unpaid interest on the Loans and last
to the outstanding principal amount of the Loans.
2.12. Payments. The Obligations shall be payable as follows: (a)
--------
Principal. Subject to the terms of subsection 2.9 and 2.10 hereof, all
---------
principal shall be due and payable upon the earliest of (a) the occurrence of an
Event of Default in consequence of which the Agent elects to accelerate the
maturity and payment of the Obligations, or (b) the Maturity Date.
(b) Interest. The unpaid principal balance of the Loans shall bear
--------
interest at the rate of 13% per annum until maturity, and any Obligation not
paid when due shall bear interest at the rate of 16% per annum (the "Overdue
Rate"), in either case based upon a year of 365 days for actual days elapsed.
Interest shall be payable monthly in advance. The amount of the initial
interest payment for the period from the Closing Date through March 31, 1999 in
the amount of $70,433.40 (the "Initial Interest Payment") will be included in
outstanding principal amount of the Loans represented by the Note as of the
Closing Date.
(c) Costs, Fees and Charges. Costs, fees and Charges payable
-----------------------
pursuant to this Agreement shall be payable by Borrowers as and when provided in
Section 10.2 hereof, to the Agent.
(d) Other Obligations. The balance of the Obligations requiring the
-----------------
payment of money, if any, shall be payable by Borrower to the Agent as and when
provided in this Credit Agreement or any Loan Document, or on demand, whichever
is later.
(e) No Right of Set Off. The Borrowers shall have no right to set off
-------------------
any amounts owed, under this Credit Agreement against any amounts, if any, owed
or claimed to be owed, now or in the future to either of the Borrowers or any
Subsidiary, Affiliate or other person by the Agent or any Lender or any of their
Affiliates resulting from any claims, rights, damages, demands, causes of action
or liabilities of any nature whatsoever, known or unknown, contingent or fixed,
whether due or to become due, that any Borrower has had, now has or may have at
any
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future time by reason of any cause, matter or thing whatsoever, directly or
indirectly, including, without limitation, relating to the Merger Agreement or
the transactions contemplated thereby. Borrowers jointly and severally agree
that, as of the date of this Credit Agreement, their obligations under this
Credit Agreement are not subject to defenses against the Agent or the Lenders
other than defenses that may arise under this Credit Agreement or any other Loan
Document. Borrowers further jointly and severally agree that their obligations
under this Credit Agreement shall not be subject to any counterclaims against
the Agent or the Lenders of any kind except a compulsory counterclaim; provided,
however, that notwithstanding the foregoing, nothing contained in this Credit
Agreement shall be construed as a waiver of Thermatrix's right to raise claims
or seek damages or other remedies, if any, arising under the Merger Agreement.
2.13. Receipt of Payments. Borrowers shall make each payment under
-------------------
this Credit Agreement not later than 3:00 p.m. (New York City time) on the day
when due in lawful money of the United States of America in immediately
available funds to Lenders' depository bank as designated by the Agent on behalf
of the Lenders from time to time for deposit in Lenders' depository account. For
purposes only of computing interest hereunder, all payments shall be applied by
Lenders on the day payment has been credited by Lenders' depository bank to
Lenders' account in immediately available funds.
2.14. Indemnity. Borrowers shall indemnify and hold Lenders and
---------
the Agent harmless from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable attorneys' fees and disbursements, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any of them as the result of either of them having entered into any
of the Loan Documents or extended credit hereunder; provided, however, that
Borrowers shall not be liable for such indemnification to any Lender or the
Agent to the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from such Lender's or the Agent's gross negligence
or willful misconduct.
2.15. Access. The Agent, the Lenders and any of their officers,
------
employees and/or agents shall have the right, exercisable as frequently as the
Agent or the Lenders reasonably determine to be appropriate, during normal
business hours (or at such other times as may reasonably be requested by the
Agent and the Lenders), to inspect the properties and facilities of Borrowers
and the Subsidiaries and to inspect, audit and make extracts from all of
Borrowers' and such Subsidiaries' records, files and books of account. Borrowers
shall deliver any document or instrument reasonably necessary for the Agent and
the Lenders, as any of them may reasonably request, to obtain records from any
service bureau maintaining records for Borrowers or their respective
Subsidiaries, and shall maintain duplicate records or supporting documentation
on paper or other media, including, without limitation, computer tapes and discs
owned by Borrowers and their respective Subsidiaries. Each Borrower shall
instruct its and their respective Subsidiaries' banking and other financial
institutions to make available to the Agent and the Lenders such information and
records as the Agent and Lenders may reasonably request.
2.16. Taxes. (a) Any Lender that is organized in a jurisdiction
-----
other than the United States and that expects to receive a payment under this
Credit Agreement (including,
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initially, Wexford Overseas Partners I and Wexford Special Situations 1996
Limited) (each a "Non-U.S. Lender") shall provide a properly completed IRS Form
W-8 (or any applicable substitute or successor form) to the Borrowers and the
Agent. In addition, each Non-U.S. Lender that is a partnership shall cause the
partners of such Non-U.S. Lender, in accordance with applicable Treasury
Regulations promulgated pursuant to the IRC, to provide a properly completed IRS
Form W-8 or Form W-9 (or, in each case, any applicable substitute or successor
form), as appropriate, to the Borrowers and the Agent.
(b) The Agent, the Lenders and the Borrowers agree that interest
payments made under this Credit Agreement and received by Non-U.S. Lenders are,
as of the date hereof, eligible for the "portfolio interest exception" set forth
under IRC Section 871(h) provided that (1) each such Non-U.S. Lender satisfies
the documentation requirements set forth in Section 2.16(a) above, (2) no Non-
U.S. Lender is a "10-percent shareholder" within the meaning of IRC Section
871(h)(3) and each Non-U.S. Lender hereby represents that it is not such a
shareholder, (3) no Non-U.S. Lender is a controlled foreign corporation which is
related to the Borrowers (within the meaning of IRC Section 864(d)(4)) and each
Non-U.S. Lender hereby represents that it does not have such status, and (4) no
Non-U.S. Lender is considered to be a bank where this Credit Agreement would
constitute an extension of credit made pursuant to a loan agreement entered into
in the ordinary course of its trade or business within the meaning of IRC
Section 881(c)(3)(A) and each Non-U.S. Lender hereby represents that it does not
have such status.
(c) The Borrower shall maintain a registry, in accordance with United
States Treasury Regulation Section 5f.103-1(c)(1) and (2), evidencing its
obligation to pay principal and interest to the Lender pursuant to the Loan
Agreement. Such registry shall represent the record of ownership and right to
receive principal and interest pursuant to the Credit Agreement and the Notes.
Subject to the other restrictions and limitations of this Credit Agreement and
the Notes, each Lender shall (in accordance with Section 10.1(b) of this Credit
Agreement) notify the Borrowers in writing of any transfer or assignment of the
right to receive principal and interest under this Credit Agreement and the
Notes and such transfer or assignment shall be effected by the Borrower only
through an appropriate entry in the registry. In the event of any such
transfer, the Borrowers hereby covenant to make the appropriate entry in the
registry.
Article III
Representations and Warranties
To induce each Lender to make the Loans, as herein provided for, except as
set forth in the Disclosure Letter, Borrowers make the representations and
warranties to Lenders set forth in 3.1, 3.2, 3.3 and 3.4 hereof, and Thermatrix
makes the representations and warranties to Lenders set forth in Sections 3.5
through 3.23, each and all of which shall be true and correct as of the date
hereof, and shall survive the execution and delivery of this Credit Agreement;
provided,
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however, that with respect to representations and warranties regarding Wahlco
and its direct or indirect Subsidiaries, such representations and warranties are
to the knowledge of Borrowers.
3.1. Corporate Existence: Compliance with Law. Each Borrower and
----------------------------------------
each Significant Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of the state or other jurisdiction
of its incorporation or organization; (ii) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification (except for jurisdictions in which such failure to so qualify or
to be in good standing could not reasonably be expected to have a Material
Adverse Effect); (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore and proposed to be conducted; (iv) has all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct except for such licenses, permits, consents or approvals
as to which the failure to obtain could not reasonably be expected to have a
Material Adverse Effect; (v) is in compliance with its certificate or articles
of incorporation and by-laws or other constitutive documents; and (vi) is in
compliance with all applicable provisions of law where the failure to comply
would have a Material Adverse Effect.
3.2. Subsidiaries. Each of the Significant Subsidiaries is
------------
disclosed on Schedule 3.2.
3.3. Corporate Power: Authorization: Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by Borrowers and the Significant
Subsidiaries of the Loan Documents, Ancillary Agreements and all instruments and
documents to be delivered by Borrowers and the Significant Subsidiaries, to the
extent they are parties thereto, hereunder and thereunder and the creation of
all Liens provided for herein and therein: (i) are within Borrowers' and the
Significant Subsidiaries' corporate power; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) are not in contravention of any
provision of Borrowers' or the Significant Subsidiaries' respective certificates
or articles of incorporation or by-laws or other constitutive documents; (iv)
will not violate any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result in the
material breach or termination of, constitute a material default under or
accelerate any performance required by, any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Borrowers or any of the
Significant Subsidiaries is a party or by which Borrowers or any of the
Significant Subsidiaries or any of their property is bound; (vi) will not result
in the creation or imposition of any Lien upon any of the property of Borrowers
or any of the Significant Subsidiaries other than those in favor of the Agent
and the Lenders, all pursuant to the Loan Documents; and (vii) do not require
the consent or approval of any Governmental Authority or any other Person. At
or prior to the Closing Date, each of the Loan Documents shall have been duly
executed and delivered for the benefit of or on behalf of Borrowers or the
Significant Subsidiaries, as the case may be, and each shall then constitute a
legal, valid and binding obligation of each Borrower or the Significant
Subsidiaries, to the extent they are parties thereto, enforceable against them
in
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accordance with its terms except (i) as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally, and (ii) as such enforceability may be
limited by general principles of equity, regardless of whether asserted in a
proceeding in equity or law.
3.4. Owned Real Property. As indicated on Schedule 3.4 of the
-------------------
Disclosure Letter, one of the Borrowers or a Significant Subsidiary owns and
holds good and marketable fee simple title to each parcel of Owned Real
Property.
3.5. No Material Adverse Change. Since January 13, 1999, there has
--------------------------
not been any change in the condition (financial or otherwise), operations,
performance, properties, Assets, business or prospects of Wahlco and the
Significant Subsidiaries, taken as a whole, has had, or could reasonably be
expected to have, a Material Adverse Effect.
3.6. Financial Statements. (a) All of the following balance
--------------------
sheets and statements of income, retained earnings and cash flows of Thermatrix,
copies of which have been furnished to Lenders prior to the date of this Credit
Agreement, have been, except as noted therein, prepared in conformity with GAAP
consistently applied throughout the periods involved and present fairly,
respectively, the consolidated financial position of Thermatrix in each case at
the dates thereof, and the results of operations and cash flows for the periods
then ended (as to the unaudited interim financial statements, subject to normal
year-end audit adjustments):
(i) the unaudited consolidated balance sheet of Thermatrix at
November 30, 1998, and the balance sheet, consolidated statements of
income, retained earnings and cash flows for the nine months ending
September 30, 1998 as set forth in the Thermatrix Quarterly Report on Form
10Q for the period ended September 30, 1998; and
(ii) the audited consolidated balance sheet of Thermatrix as at
December 31, 1997, and the related consolidated statements of income,
retained earnings and cash flows for the year then ended with the opinion
thereon of Xxxxxx Xxxxxxxx & Co., LLP.
(b) Thermatrix, as of September 30, 1998 had no obligations,
contingent liabilities or liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the consolidated
financial statements of Thermatrix and which would have a Material Adverse
Effect.
(c) There has been no change in the business, Assets, operations,
prospects or financial or other condition of Thermatrix since September 30, 1998
that has or could reasonably be expected to have a Material Adverse Effect (it
being understood that, as of the Closing Date, this representation and warranty
shall be subject to the fact that Thermatrix shall have incurred the Obligations
hereunder). No dividends or other distributions have been declared, paid or
made upon any shares of Stock of Thermatrix, nor have any shares of Stock of
Thermatrix been redeemed, retired, purchased or otherwise acquired for value by
Thermatrix since September 30, 1998.
-19-
3.7. Ownership of Property: Liens. Thermatrix has a good, valid and
----------------------------
marketable leasehold estate, as tenant in each parcel of Leased Real Property
pursuant to the leases described on Schedule 3.7 of the Disclosure Letter. In
addition, Thermatrix owns and holds good and marketable title to, or valid
leasehold interests in, all of its other properties and Assets. None of the
properties and Assets of Thermatrix, including, without limitation, the Leased
Real Property, is subject to any Liens, except (i) Permitted Encumbrances and
(ii) from and after the Closing Date, the Lien in favor of the Agent and the
Lenders pursuant to the Collateral Documents; and Thermatrix has duly effected
all recordings, filings and other actions necessary to establish, protect and
perfect Thermatrix's right, title and interest in and to all such property
except where the failure to have received such documents or effected such
actions could not reasonably be expected to, in the aggregate, have a Material
Adverse Effect. Thermatrix does not own or lease or otherwise have rights or
interests to or in any real property other than the Leased Real Property.
3.8. No Default. Thermatrix is not in default and no event has
----------
occurred and no event exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute a default in the payment
of any Indebtedness to any Person for money borrowed. To Thermatrix's
knowledge, no third party in default, under or with respect to any contract,
agreement, lease or other instrument to which it is a party, except for any
default which (either individually or collectively with other defaults arising
out of the same event or events) could not reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
3.9. Burdensome Restrictions. No contract, lease, agreement or
-----------------------
other instrument to which Thermatrix is a party or is bound and no provision of
applicable law or governmental regulation has a Material Adverse Effect, or
insofar as Thermatrix can reasonably foresee, could reasonably be expected to
have a Material Adverse Effect.
3.10. Labor Matters. There are no strikes or other labor disputes
-------------
against Thermatrix pending or, to Thermatrix's knowledge, threatened which,
would have a Material Adverse Effect. All payments due from Thermatrix on
account of employee health and welfare insurance which would have a Material
Adverse Effect if not paid have been paid or accrued as a liability on the books
of Thermatrix. Thermatrix has no obligation under any collective bargaining
agreement. There are no complaints or charges against Thermatrix pending or
threatened to be filed with any federal, state, local or foreign court,
governmental agency or arbitrator based on, arising out of in connection with,
or otherwise relating to the employment or termination of employment by
Thermatrix which could reasonably be expected to have a Material Adverse Effect.
3.11. Taxes. All material federal, state, local and foreign tax
-----
returns, reports and statements required to be filed by Thermatrix have been
filed with the appropriate Governmental Authority and all Charges and other
impositions shown thereon to be due and payable have been paid prior to the date
on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, or any such fine, penalty, interest, late charge or loss has
been paid. Thermatrix has paid when due and payable all Charges required to be
paid by it. Proper and
-20-
accurate amounts have been withheld by Thermatrix from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective governmental agencies. Thermatrix is not currently being audited by
the IRS or any other applicable Governmental Authority. Thermatrix has not
agreed or has been requested to make any adjustment under IRC Section 481(a) by
reason of a change in accounting method or otherwise. Thermatrix has no any
obligation under any written or other tax sharing agreement.
3.12. ERISA. Thermatrix has no Plan subject to regulation under
-----
ERISA except for its 401(k) plan.
3.13. No Litigation. No action, claim or proceeding is now pending
-------------
or, to the knowledge of Thermatrix, threatened against Thermatrix at law, in
equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators, which
could reasonably be expected to have a Material Adverse Effect, nor to the
knowledge of Thermatrix does a state of facts exist which is reasonably likely
to give rise to such proceedings. None of the matters set forth therein
questions the validity of any of the Loan Documents or any action taken or to be
taken pursuant thereto, or would have either individually or in the aggregate a
Material Adverse Effect.
3.14. Patents, Trademarks, Copyrights and Licenses. (i)
--------------------------------------------
Thermatrix owns all material licenses, patents, patent applications, copyrights,
service marks, trademarks, trademark applications, and trade names necessary to
continue to conduct their business as heretofore conducted by them, now
conducted by them and proposed to be conducted by them. To the best of its
knowledge, Thermatrix conducts its business without infringement or claim of
infringement of any license, patent, copyright, service xxxx, trademark, trade
name, trade secret or other intellectual property right of others, except where
such infringement or claim of infringement could not reasonably have a Material
Adverse Effect. To Thermatrix's knowledge, there is no infringement or claim of
infringement by others of any material license, patent, copyright, service xxxx,
trademark, trade name, trade secret or other intellectual property right of
Thermatrix.
(ii) Thermatrix has conducted a preliminary review of its products
and internal computer systems to identify the systems that could be
affected by the Year 2000 issue. Thermatrix believes its products and most
of its management information systems are already Year 2000 compliant.
However, its existing accounting system is not. Thermatrix plans to
upgrade to a Year 2000 compliant version of its accounting system by the
end of 1999 and does not anticipate that the cost of such a conversion will
be material. While Thermatrix currently expects the Year 2000 issue will
not pose significant operational problems, failure to fully identify all
Year 2000 dependencies in Thermatrix's systems could have a Material
Adverse Effect. In addition, Thermatrix cannot be sure that systems of
other companies on which the Company relies will be
-21-
converted in a timely manner. The failure of other companies to convert
systems on which Thermatrix relies may have a Material Adverse Effect.
3.15. Liens. Except for Permitted Encumbrances, the Liens granted
-----
to the Agent by Thermatrix for the benefit of the Lenders pursuant to the
Collateral Documents will at the Closing Date be fully perfected Liens subject
only to Permitted Encumbrances in and to the Collateral described therein.
Thermatrix is not obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
other Person.
3.16. Business Locations: Agent for Process. The chief executive
-------------------------------------
office and other places of business of Borrowers are as listed on Schedule 3.16
of the Disclosure Letter. During the preceding one-year period, Thermatrix has
not had an office, place of business or agent for service of process other than
as listed thereon.
3.17. Brokers. There are no claims for brokerage commissions,
-------
finder's fees or investment banking fees in connection with the transactions
contemplated by this Credit Agreement.
3.18. Trade Relations. There exists no actual or threatened
---------------
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Thermatrix and any customer or any group of
customers of Thermatrix, the absence of whose purchases individually or in the
aggregate would likely have a Material Adverse Effect, or with any material
supplier of Thermatrix. There exists no present condition or state of facts or
circumstances which would have a Material Adverse Effect or prevent Thermatrix
from conducting its business after the consummation of the transaction
contemplated by this Agreement in substantially the same manner in which it has
heretofore been conducted.
3.19. Senior Obligations. The Obligations for the payment of money
------------------
of Thermatrix under this Credit Agreement and the other Loan Documents rank
senior in right of payment to all other obligations for the payment of borrowed
money of Thermatrix.
3.20. No Power of Attorney. Thermatrix has not granted power of
--------------------
attorney to any Person that would allow such Person to sign or file any
financing statement, mortgage, indenture, document, agreement or other
instrument that grants or creates a Lien on any Collateral owned by Thermatrix,
nor, since the Effective Time, has any other Loan Party granted any such power
of attorney with respect to any other Collateral.
Article IV
Conditions Precedent to Effectiveness
4.1. Conditions to Loan. Notwithstanding any other provision of
------------------
this Agreement and without affecting in any manner the rights of the Agent or
any Lender hereunder, Borrowers shall have no rights under this Agreement (but
shall have all applicable obligations hereunder), and no Lender shall be
obligated to make any Loan hereunder, unless:
-22-
(a) Each of the representations and warranties of each Borrower in
this Credit Agreement shall be true and correct in all respects as of the date
hereof and as of the Closing Date with the same effect as though such
representations and warranties had been made at and as of such time, other than
representations and warranties that speak as of a specific date or time (which
need only be true and correct in all respects as of such date or time);
(b) Borrowers and each Loan Party shall have performed and complied
with each agreement, covenant and obligation required to be performed or
complied with by them under this Credit Agreement or any other Loan Document at
or prior to the Closing Date;
(c) Borrowers shall have delivered to the Agent, in form and
substance satisfactory to the Agent and each Lender and (unless otherwise
indicated, each dated the Closing Date):
(i) The Note payable to the order of the Agent, duly executed by
Borrowers;
(ii) A favorable opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
counsel to the Borrowers, in form and substance satisfactory to the Agent
and its counsel substantially in the form set forth in Exhibit M;
(iii) Resolutions of the board of directors of each Loan Party,
certified by the Secretary or Assistant Secretary of such Loan Party, as of
the Closing Date, to be duly adopted and in full force and effect on such
date, authorizing (i) the consummation of each of the transactions
contemplated by the Loan Documents and (ii) specific officers of each
Borrower to execute and deliver this Agreement and the other Loan
Documents;
(iv) Governmental certificates, dated the most recent practicable
date prior to the Closing Date, showing that each Loan Party is organized
and in good standing in the jurisdiction of its organization and is
qualified as a foreign corporation and in good standing in all other
jurisdictions in which it is qualified to transact business;
(v) The Security Agreements, duly executed by the parties thereto,
together with an opinion of local counsel with respect thereto, in form and
substance satisfactory to the Agent and its counsel;
(vi) The Stock Pledge Agreement, duly executed by the parties
thereto and each Subsidiary owning Stock of other Subsidiaries or either
Borrower;
(vii) The Mortgages, duly executed by the owners of the Owned Real
Property, together with an opinion of local counsel with respect thereto,
in form and substance satisfactory to the Agent and its counsel;
(viii) The Guaranty, duly executed by the Significant Subsidiaries;
(ix) The Warrant, duly executed and issued by Thermatrix;
(x) The Registration Rights Agreement, duly executed by Thermatrix;
-23-
(xi) The Acknowledgment;
(xii) The Subordination Agreement, duly executed by the parties
thereto;
(xiii) The General Release, duly executed by the Borrowers;
(xiv) Evidence in form and substance satisfactory to the Agent that
the Agent has been named as loss payee on each of the insurance policies
set forth in Schedule 6.7 of the Disclosure Letter;
(xv) Each document (including without limitation, any Uniform
Commercial Code financing statement) required by this Agreement, any Loan
Document or under law or reasonably requested by the Agent to be filed,
registered or recorded in order to create, in favor of the Agent, a
perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required or requested,
and the Agent shall have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or recordation and
satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;
(xvi) A certificate substantially in the form of Exhibit N hereto of
the chief executive officer and chief financial officer of each Borrower,
satisfactory in form and substance to the Agent, stating that all of the
representations and warranties of the Loan Parties contained herein or in
any of the Loan Documents are correct on and as of the Closing Date as
though made on and as of such date, and no event has occurred and is
continuing, or would result from the Loans, which constitutes or would
constitute a Default or an Event of Default; and
(xvii) Such additional information and materials as the Agent may
reasonably request, including, without limitation, copies of any debt
agreement, security agreements and other material contracts; and
Article V
Financial Statements and Information
5.1. Reports and Notices. Borrowers covenant and agree that they
-------------------
shall promptly deliver to the Agent the financial statements and reports
required to be delivered hereby. Borrowers also agree to provide the Agent with
such other financial information concerning Borrowers' results of operations and
financial condition as Lender may reasonably request from time to time.
5.2. Communication with Accountants. Borrowers authorize the Agent
------------------------------
and the Lenders to communicate directly with their independent certified public
accountants and tax advisors and authorizes those accountants to disclose to the
Agent or any Lender any and all financial statements and other supporting
financial documents and schedules including copies of
-24-
any management letter with respect to the business, financial condition and
other affairs of either Borrower and any of their respective Subsidiaries.
Article VI
Affirmative Covenants
Borrowers covenant and agree that, unless the Lenders shall otherwise
consent in writing, from and after the date hereof and until all of the
Obligations hereunder have been satisfied:
6.1. Maintenance of Existence and Conduct of Business. Each
------------------------------------------------
Borrower shall, and shall cause each Significant Subsidiary to: (a) at all times
maintain, preserve and protect all of its material trademarks and trade names,
and preserve all the remainder of its property, in use or useful in the conduct
of its business and keep the same in good repair, working order and condition
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all needful and proper repairs, renewals and replacements,
betterments and improvements thereto consistent with applicable industry
practices, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect; (b)
transact business only in such names used as of the date hereof, or such other
names as either Borrower or any Significant Subsidiary shall specify to Lender
in writing not less than ten days prior to the first date such name is used by
either Borrower or any Significant Subsidiary; and (c) preserve its
relationships with clients, suppliers, distributors, licensors, licensees, and
others having business dealings with it, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
6.2. Information Covenants. The Borrowers will furnish to the
---------------------
Agent:
(a) Monthly Reports. As soon as available and in any event within
---------------
25 days after the end of each fiscal month of the Borrowers, commencing with the
fiscal month ending February 28, 1999 the consolidated statement of operations,
consolidated balance sheet, and consolidated statements of cash flow of the
Borrowers and their respective Subsidiaries for each such fiscal month.
(b) Quarterly Financial Statements. As soon as available and in any
------------------------------
event within 45 days after the end of each of the first three fiscal quarters of
the Borrowers in each Fiscal Year, the consolidated balance sheet of the
Borrowers and their respective Subsidiaries as at the end of such fiscal quarter
and the related consolidated statements of operations, stockholders' equity and
cash flows of the Borrowers and their respective Subsidiaries for such fiscal
quarter and for the period commencing at the end of the previous Fiscal Year and
ending with the end of such fiscal quarter, in each case setting forth in
comparative form the consolidated figures for the corresponding period in the
immediately preceding Fiscal Year, and duly certified by a senior financial
officer of each of the Borrowers as (i) fairly presenting, in all material
respects, subject to normal year-end audit adjustments and inclusion of
footnotes, the consolidated financial condition, results of operations and cash
flows of the Borrowers and their
-25-
respective Subsidiaries for such fiscal quarter and (ii) having been prepared in
accordance with generally accepted accounting principles in effect for such
fiscal quarter covered thereby and consistently applied.
(c) Annual Financial Statements. As soon as available and in any
---------------------------
event within 90 days after the close of each Fiscal Year, the consolidated
balance sheet of the Borrowers and their respective Subsidiaries as at the end
of such Fiscal Year and the related consolidated statements of operations,
stockholders' equity and cash flows of the Borrowers and their respective
Subsidiaries for such Fiscal Year, in each case setting forth in comparative
form the consolidated figures for the immediately preceding Fiscal Year, audited
by independent accountants of recognized national standing reasonably acceptable
to the Agent together with:
(i) an opinion of independent accountants of recognized
national standing (A) to the effect that such financial statements have
been prepared in accordance with generally accepted accounting principles
in effect for the Fiscal Year covered thereby and consistently applied and
(B) that is not limited as to the scope of the audit or qualified as to the
status of the Borrowers and their respective Subsidiaries as a going
concern or otherwise qualified in any manner not reasonably acceptable to
the Agent; and
(ii) management's discussion and analysis of the important
operational and financial developments of the Borrowers and their
respective Subsidiaries during such Fiscal Year;
provided that the delivery of Thermatrix's Annual Report on Form 10-K shall
satisfy the requirement set forth in this Section 6.2(c).
(d) Compliance Certificate. At the time of delivery of the
----------------------
consolidated financial statements of the Borrowers and their respective
Subsidiaries provided for in this Section 6.2, a compliance certificate of the
Borrowers, in substantially the form of Exhibit O hereto, duly certified by a
Senior Financial Officer thereof, (i) stating that, to the best of such Senior
Financial Officer's knowledge after due inquiry, no Default or Event of Default
has occurred and is continuing or, if a Default or an Event of Default has
occurred and is continuing, a statement as to the nature thereof and the action
that the Borrowers have taken and propose to take with respect thereto, and (ii)
setting forth a description in reasonable detail of all of the changes, if any,
from GAAP in the generally accepted accounting principles applied in the
preparation of such financial statements.
(e) Auditor's Reports. Promptly upon receipt thereof, copies of all
-----------------
"management letters" or other written reports submitted to any of the Borrowers
or any of the Significant Subsidiaries by Xxxxxx Xxxxxxxx or any other
independent accountants of the Borrowers or any of their respective Subsidiaries
in connection with each annual, interim or special audit of its financial
statements made by such accountants (including, without limitation, any comment
letter submitted by such accountants to management of any such Borrower or any
such Subsidiary in connection with their annual audit and any reports addressing
internal accounting controls of any such Borrower or any such Subsidiary
submitted by such
-26-
accountants), and all responses of the management of any such Borrower or such
Subsidiary thereto.
(f) SEC and Other Reports. Promptly upon transmission or receipt
---------------------
thereof, (i) copies of any filing and registrations with, and any reports or
notices to or from, the Securities and Exchange Commission or any successor
agency thereto, and copies of all financial statements, proxy statements,
notices and reports that any Borrower or any of their Subsidiaries shall send to
any holder of Indebtedness owed by any Borrower or any Significant Subsidiary
pursuant to the terms of the documentation governing such Indebtedness or to any
trustee, agent or other representative therefor and (ii) copies of all press
releases and other statements made available by any Borrower or any of their
respective Subsidiaries to the public.
(g) Notice of Default, Etc. Promptly, and in any event within three
----------------------
Business Days after any Responsible Officer of either Borrower obtains knowledge
thereof, notice of the occurrence of (i) each Default or Event of Default, or
any event, development or occurrence that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect,
setting forth in reasonable detail the nature of such Default or Event of
Default or event, development or occurrence and the action that the Borrowers
have taken and propose to take with respect thereto, (ii) any actual or
threatened revocation, termination, cancellation, denial or impairment of, or
refusal to renew or extend, or modification or other change to, any consent or
approval of any Governmental Authority necessary or desirable for any Borrower
or any Significant Subsidiary to own or lease and operate their respective
property and Assets or to conduct their respective businesses as conducted or as
proposed to be conducted, in each case that could reasonably be expected to have
a Material Adverse Effect and (iii) a change of control or any change in the
members of the board of directors of, or any material change in the management
of Thermatrix.
(h) Mandatory Prepayment. Promptly, and in any event three Business
--------------------
after any Responsible Officer of either Borrower obtains knowledge thereof, but
in no event later than three Business Days prior to such event, notice of the
intent of either Borrower or any Subsidiary to engage in any event or
transaction that would require mandatory prepayment of the Obligations in
accordance with Section 2.10 hereof.
(i) Environmental Matters. Promptly and in any event within three
---------------------
Business Days after any Responsible Officer of either Borrower obtains knowledge
thereof, notice of the occurrence of one or more of the following:
(i) any pending or threatened claim that could reasonably be
expected to result in an Environmental Liability against any Borrower
or any of their respective Subsidiaries or any of the property owned
or operated by any such Borrower or any such Subsidiary;
(ii) any condition or occurrence on or arising from any
property owned or operated by any Borrower or any of their respective
Subsidiaries that (A) results or is alleged to have resulted in
noncompliance by such Borrower or any such Subsidiary with any
applicable Environmental Law or (B) could reasonably be
-27-
expected to form the basis of any Environmental Liability against such
Borrower or any such Subsidiary or any of their respective property;
and
(iii) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
property owned or operated by any Borrower or any of their respective
Subsidiaries as required by any Environmental Law or any Governmental
Authority.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence, removal or remedial action and such
Borrower's or such Subsidiary's response thereto. In addition, the Borrowers
will provide the Agent with copies of all reports, notices and written
information to and from the United States Environmental Protection Agency or any
state or local agency responsible for environmental matters, all communications
with any Person (other than its attorneys) relating to any Environmental Action
of which notice is required to be given pursuant to this subsection (i), and
such detailed reports of any such Environmental Action as the Agent may from
time to time reasonably request.
(j) Indebtedness Documents. Promptly after the occurrence thereof or
----------------------
the request therefor, copies of any amendment, waiver or other modification of
the terms of any of the Indebtedness of any Borrower or any of their respective
Subsidiaries outstanding in an aggregate amount of at least $100,000, or any
notice of default delivered thereunder.
(k) Requested Information. With reasonable promptness, such other
---------------------
information and documents relating to the condition (financial or otherwise),
business, operations, results of operations, performance, property, Assets or
liabilities of any Borrower or any Significant Subsidiary as may from time to
time be reasonably requested by the Agent.
6.3. Payment of Obligations and Charges and Filing of Returns and
------------------------------------------------------------
Reports. (a) Each Borrower shall, and shall cause each of their respective
-------
Subsidiaries to pay and discharge or cause to be paid and discharged promptly
all Charges. In addition, each Borrower shall, and shall cause each of its
Subsidiaries to, properly file all required returns and reports (including,
without limitation, tax returns and reports) that arise out of or are otherwise
related to the imposition and payment of any Charges.
(b) Borrowers and their respective Subsidiaries may in good
faith contest, by proper legal actions or proceedings, the validity or amount of
any Charges, provided that at the time of commencement of any such action or
proceeding, and during the pendency thereof (i) no Default or Event of Default
shall have occurred; (ii) adequate Reserves with respect thereto are maintained
on the books of Borrowers or such Subsidiary, in accordance with GAAP; (iii)
such contest operates to suspend collection of the contested Charges or claims
and is maintained and prosecuted continuously with diligence; (iv) none of the
Collateral would be subject to forfeiture or loss or any Lien by reason of the
institution or prosecution of such contest; (v) no Lien shall exist for such
Charges or claims during such action or proceeding; (vi) such Borrower or such
Subsidiary shall promptly pay or discharge such contested Charges and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Lender evidence acceptable to Lender of such compliance, payment or
discharge, if such contest is
-28-
terminated or discontinued adversely to such Borrower or such Subsidiary; and
(vii) neither the Agent nor any Lender has advised such Borrower in writing that
it reasonably believes that nonpayment or nondischarge thereof would have a
Material Adverse Effect.
6.4. Books and Records. Each Borrower shall, and shall cause each
-----------------
Significant Subsidiary to, keep adequate records and books of account with
respect to its business activities, in which proper entries, reflecting all of
their financial transactions, are made in accordance with GAAP and on a basis
consistent with the Financials referred to in Section 3.6(a) hereof.
6.5. Litigation. Each Borrower shall notify the Agent in writing,
----------
promptly upon a Responsible Officer learning thereof, of any litigation
commenced against either Borrower and/or any of the Subsidiaries, and of the
institution against any of them of any suit or administrative proceeding that
could reasonably be expected to have a Material Adverse Effect.
6.6. Compliance with Law. (a) Each of the Borrowers will and will
-------------------
cause each of their respective Subsidiaries to (i) comply in all material
respects with all requirements of law to which each of them and their respective
property and Assets are subject and all applicable restrictions imposed on each
of them and their property and Assets are subject and all applicable
restrictions imposed on each of them and their property and Assets by any
Governmental Authority (including, without limitation, ERISA and all
Environmental Laws) except to the extent that such non-compliance could
reasonably be expected to have a Material Adverse Effect, and (ii) obtain and
maintain in effect all consents or approvals of any Governmental Authority that
are necessary (A) to own or lease and operate their respective property and
Assets to conduct their respective businesses as presently conducted, except
where and to the extent that the failure to obtain or maintain in effect any
such consents or approvals of any Governmental Authority, either individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, or (B) for the due execution, delivery, recordation, filing or
performance by any Loan Party or any of the other Loan Documents to which it is
or is to be a party, or for the consummation of the transactions contemplated
hereby.
(b) None of the Borrowers nor any of their respective Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment storage, release or disposal of hazardous materials
on any property now or hereafter owned or operated by such Borrower or any such
Subsidiary, or transport or permit the transportation of Hazardous Materials to
or from any such property, except in compliance with all applicable
Environmental Laws and reasonably required in connection with the operation, use
and maintenance of any such property in the ordinary course of such Borrower's
or any such Subsidiary's business.
6.7. Maintenance of Insurance. (a) Each of the Borrowers will and
------------------------
will cause each of their respective Subsidiaries to maintain property, liability
and other insurance with respect to themselves and their respective Assets with
the insurer, having the deductibles and covering the matters described on
Schedule 6.7 of the Disclosure Letter, or such additional insurance as may
otherwise be required by applicable law, or by the Mortgages, including, without
limitation, workers' compensation insurance, liability insurance, casualty
insurance and
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business interruption insurance. The Agent shall be named as a loss payee on
each such insurance policy.
(b) At least 30 days prior to the expiration of each existing
insurance policy, the Borrowers shall deliver a certificate of such insurance
(with a true copy of each applicable policy) required to be maintained in
accordance with subsection (a) of this Section 6.7 (or the underlying policies,
in the case of blanket insurance) to the Agent, with premiums paid, evidencing
the effectiveness thereof together with a report summarizing all insurance
coverage maintained by the Borrowers and the Significant Subsidiaries,
specifying therein the type, carrier, amount, deductibles and co-insurance
requirements and expiration date thereof and containing such additional
information as the Agent may from time to time reasonably request. In no event,
and whether or not a default or Event of Default hereunder has occurred, shall
the Agent or any Lender, by the fact of approving, accepting or obtaining such
insurance, incur any liability for the amount of such insurance, the form or
legal sufficiency of insurance contracts, solvency of insurers or payment of
losses by insurers or otherwise, and the Borrowers hereby expressly assume full
responsibility therefor and liability, if any, thereunder.
6.8. Additional Security. If requested by the Agent, each Borrower
-------------------
shall and shall cause any Subsidiary designated by the Agent to enter into a
security agreement and/or one or more mortgages for the benefit of the Agent,
pursuant to which security agreement and mortgages such Subsidiary shall grant
the Agent a security interest subject only to Permitted Encumbrances in
substantially all of such Subsidiary's real and personal property Assets. In
connection therewith, if the Agent shall so request, such Subsidiary shall
execute and deliver security agreements, mortgages and such further documents
and instruments and make such filings as the Agent shall request to enable the
Agent to perfect its security interest and Liens in such Subsidiary's Assets.
6.9. Elimination of Liens. Borrowers covenant and agree to use
--------------------
their best efforts to remove or cause to be removed, as soon as practicable
after the date hereof, each UCC-1 financing statement that exists as of the date
hereof with respect to either Borrower or any Subsidiary that was filed in
connection with Indebtedness of any such Loan Party which is no longer
outstanding as of the date hereof.
Article VII
Negative Covenants
Borrowers covenant and agree that, without the Agent's prior written
consent, from and after the date hereof and until all of the Obligations
hereunder have been satisfied:
7.1. Mergers, Etc. Neither of the Borrowers shall nor shall they
------------
permit any Subsidiary to directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, acquire all or substantially all of the
Assets or Stock of, or otherwise combine with, any Person, or form any
Subsidiary, to wind up, liquidate or dissolve itself (or suffer any liquidation
or dissolution), to enter into any transaction or merger or consolidation, or to
convey, sell, lease or sublease (as lessor or sublessor), transfer or otherwise
dispose of, whether in one transaction
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or a series of related transactions, all or substantially all of its business,
property or Assets, or the Stock of any Subsidiary, whether now owned or
hereafter acquired (or agree to do any of the foregoing at any future time), or
to purchase or otherwise acquire, whether in one transaction or a series of
related transactions, substantially all of the property, Assets or business of
any other Person (or agree to do any of the foregoing at any future time);
provided, however, that for the purposes of this Section 7.1, the Subsidiaries
of Borrowers shall not be included in the definition of Person; and provided,
further, that Thermatrix may engage in the transaction with Xxxxxxxx
International, Inc. described in the memorandum, dated February 23, 1999,
attached hereto as Exhibit P.
7.2. Investments: Loans and Advances. Except as otherwise permitted
-------------------------------
by Section 7.3 or 7.4 hereof, neither Borrower shall and shall not permit any
Subsidiary to make any investment in, or make or accrue loans or advances of
money to any Person, through the direct or indirect holding of securities or
otherwise other than advances to employees and vendors in the ordinary course of
business consistent with past practice and not in excess of $10,000 with respect
to employees, and $100,000 with respect to vendors; provided, however, that
Borrowers and their respective Subsidiaries may make and own investments in (i)
direct obligation of the United States of America (including obligations issued
or held in book-entry form on the books of the Department of the Treasury of the
United States of America) or obligations the timely payment of the principal of,
or interest on, which are fully guaranteed by the United States of America; (ii)
obligations, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following: Export-Import Bank of the United States,
Federal Housing Administration or other agency or instrumentality of the United
States; (iii) repurchase agreements with financial institutions or savings and
loan associations having a combined capital surplus of at least $500,000,000
fully secured by collateral security described in clauses (i) or (ii) of this
definition and continuously having a market value of at least equal to the
amount so invested; (iv) interest-bearing demand or time deposits (including
certificates of deposit) which are either (i) insured by the Federal Deposit
Insurance Corporation, or (ii) held in banks and savings and loan associations,
having general obligations rated at least "AA" or equivalent by S&P or Xxxxx'x,
or if not so rated, secured at all times, in the manner and to the extent
provided by law, by collateral security described in clauses (i) or (ii) of this
definition, of a market value of no less than the amount of moneys so invested;
(v) commercial paper rated (on the date of acquisition thereof at least A-l or
P-l or equivalent by S&P or Xxxxx'x, respectively (or an equivalent rating by
another nationally recognized credit rating agency of similar standing if
neither of such corporations is then in the business of rating commercial
paper), maturing not more than 90 days from the date of creation thereof; and
(f) any corporate evidence of indebtedness rated at least "A-" or equivalent by
S&P or Xxxxx'x, maturing not more than 90 days from the date of creation thereof
(the investments described in the preceding clauses (i)-(v) being hereinafter
referred to as "Cash Equivalents") (vii) any investments, loans, or advances of
money ("Investments") permitted by Thermatrix's investment policy, as amended
from time to time, provided that such investment policy (and any such amendment
thereto) has been approved by the Agent; (viii) Investments consisting of the
endorsement of negotiable instrument for deposit or collection or similar
transaction in the ordinary course of business; (ix) Investments (whether
consisting of the purchase or securities, loans, capital contribution, or
otherwise) of Thermatrix in or to Subsidiaries and of Subsidiaries in or to
other Subsidiaries or in or to
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Thermatrix; (x) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business; (xi) Investments pursuant
to or arising under currency agreements or interest rate agreements entered into
in the ordinary course of business; (xii) Investments consisting of notes
receivable of, or prepaid royalties and other credit extensions, to customers
and suppliers who are not Affiliates, in the ordinary course of business; (xiii)
deposit accounts of Thermatrix; and (xiv) Investments existing on the Closing
Date set forth on Schedule 7.2 of the Disclosure Letter. Notwithstanding the
foregoing, Wahlco Engineered Products Ltd. has pledged certain cash described in
Schedule 1.68 of the Disclosure Letter to London International and Mercantile,
Ltd., which pledge shall not be deemed a breach of this Section 7.2; provided,
however, that no further pledges may be made to London International and
Mercantile, Ltd. without the consent of the Agent.
7.3. Indebtedness. (a) Except as otherwise expressly permitted by
------------
this Section 7.3 or by any other section of this Credit Agreement, neither
Borrower shall, nor shall it permit any of their respective Subsidiaries to,
create, incur, assume or permit to exist any Indebtedness, except (i)
Indebtedness secured by Liens permitted under Section 7.3(b) hereof, (ii) the
Obligations, (iii) all deferred taxes, (iv) all unfunded pension fund and other
employee benefit plan obligations and liabilities but only to the extent they
are permitted to remain unfunded under applicable law, (v) Indebtedness of
Subsidiaries created under the Guaranty; (vi) Indebtedness existing on the
Closing Date set forth on Schedule 7.3 of the Disclosure Letter; (vii)
Indebtedness to with respect to surety bonds and similar obligations incurred in
the ordinary cause of business; (viii) Indebtedness of Thermatrix to any
Subsidiary, and Indebtedness of any Subsidiary to Thermatrix or any other
Subsidiary; (ix) Indebtedness secured by Permitted Encumbrances; (x) Capital
leases or indebtedness incurred solely to purchase equipment which is not in
excess of the lesser of the purchase price of such equipment or the fair market
value of such equipment on the date of acquisition; and (xi) extensions,
refinancings, modifications, amendments and restatements of any of items of
Permitted Indebtedness above, provided that the principal amount thereof is not
increased.
(b) Borrowers shall not and shall not permit any Subsidiary to
create or permit any Lien on any of its properties or Assets or suffer to exist
under the Uniform Commercial Code or any similar law or statute of any
jurisdiction, a financing statement (or the equivalent thereof) that names such
Borrower or any of its Subsidiaries as debtor, to sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof), to sell any of its property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable with
recourse to income, except: (a) presently existing or hereafter created Liens in
favor of the Agent or any Lender, and (b) Permitted Encumbrances.
(c) Except as otherwise expressly permitted by Section 7.3(b)
hereof or in conformity with the provisions of Section 2.10(c) hereof, neither
Borrower shall nor shall it permit any Subsidiary to sell or transfer, either
with or without recourse, any Assets, of any nature whatsoever, in respect of
which a Lien is granted or to be granted pursuant to any Loan
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Document, except sales or transfers (i) of inventory in the ordinary course of
business, (ii) of licenses and similar arrangements for the use of Assets in the
ordinary course of business, (iii) of worn-out or obsolete equipment or (iv)
sales or transfers otherwise permitted under this Section 7, or engage in any
sale-leaseback or similar transaction involving any of such Assets (other than
sale-leaseback of equipment owned by Borrower or any of its Subsidiaries for
less than 90 days, provided that such sale-leaseback transaction was entered
into with the intent of financing such equipment with a third party lessor).
7.4. Limitation on Modifications of Indebtedness; Cancellation of
------------------------------------------------------------
Indebtedness. Neither Borrower shall nor shall it permit any of its
------------
Subsidiaries (a) to amend, modify or otherwise change (or permit the amendment,
modification or other change in any manner of) any of the provisions of any
Indebtedness of such Borrower or any of its Subsidiaries or of any instrument or
agreement (including, without limitation, any purchase agreement, indenture,
loan agreement or security agreement) relating to any such Indebtedness if such
amendment, modification or change would shorten the final maturity or average
life to maturity of, or require any payment to be made earlier than the date
originally scheduled on, such Indebtedness, would increase the interest rate
applicable to such Indebtedness, or would change the subordination provision, if
any, of such Indebtedness, or would otherwise be adverse to the issuer of such
Indebtedness in any respect, (b) except for the Loans and the other Obligations
of the Borrowers and their respective Subsidiaries under or in respect of the
Loan Documents, to make any voluntary or optional payment, prepayment,
redemption or other acquisition for value of any Indebtedness of any Borrower or
any of its Subsidiaries (including, without limitation, by way of depositing
money or securities with the trustee therefore before the date required for the
purpose of paying any portion of such Indebtedness when due), or to refund,
refinance, replace or exchange any other Indebtedness for any such Indebtedness,
or to make any prepayment, redemption or repurchase of any outstanding
Indebtedness a result of any Asset Sale, change of control, issuance and sale of
debt or equity securities or similar event, or give any notice with respect to
any of the foregoing. Neither Borrower shall nor shall it permit any Subsidiary
to cancel any claim or debt owing to it, except for reasonable consideration and
in the ordinary course of business.
7.5. Maintenance of Business. Neither Borrower shall nor shall it
-----------------------
permit any Subsidiary to engage in any business other than the business
currently engaged in by such Borrower or such Subsidiary on the Closing Date or
any businesses incidental or reasonably related thereto.
7.6. Guaranteed Indebtedness. Neither Borrower shall nor shall it
-----------------------
permit any Subsidiary to incur any Guaranteed Indebtedness (excluding the
Guaranteed Indebtedness pursuant to the Guaranty) except (i) by endorsement of
instruments or items of payment for deposit to the general account of such
Borrower or such Subsidiary, and (ii) for Guaranteed Indebtedness incurred for
the benefit of such Borrower or any Subsidiary if the primary obligation is
permitted by this Credit Agreement.
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7.7. Hedging Transactions. Neither Borrower shall nor shall it
--------------------
permit any of their respective Subsidiaries to engage in any speculative
interest rate hedging swaps, caps or similar derivatives transaction other than
currency hedging in the ordinary course of business.
7.8. Restricted Payments. Neither Borrower shall nor shall it
-------------------
permit any Subsidiary to make any Restricted Payments nor shall Borrowers permit
any Subsidiary to make such payments with respect to Borrowers' Stock; provided,
that (i) Thermatrix may declare and make any dividend payment or other
distribution payable in its equity securities and any Subsidiary may make
distributions to Thermatrix or other Subsidiaries, (ii) Thermatrix or its
Subsidiaries may convert any of its convertible securities into other securities
pursuant to the terms of such convertible securities or otherwise in exchange
therefor.
7.9. ERISA. Neither Borrower nor any of their respective
-----
Subsidiaries shall establish or become obligated to any new Plan; provided,
however, that any of the Subsidiaries may become obligated under the existing
Plan.
7.10. Limitations on Transactions with Affiliates. Neither Borrower
-------------------------------------------
will nor will it permit any of its Subsidiaries to directly or indirectly enter
into, renew, extend or engage in any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease, transfer
or exchange of property or assets of any kind or the rendering of services of
any kind) with any of its Affiliates, except upon fair and reasonable terms no
less favorable to such or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate thereof
except that for the purposes of this Section 7.10, "Affiliate" shall not include
Subsidiaries of Borrowers.
Article VIII
Term
8.1. Survival of Obligations Upon Termination of Financing
-----------------------------------------------------
Arrangement. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Credit Agreement shall in any way affect or
impair the powers, obligations, duties, rights and liabilities of Borrowers or
the rights of the Agent or any Lender relating to any transaction or event
occurring prior to such termination. Except as otherwise expressly provided
herein or in any other Loan Document, all undertakings, agreements, covenants,
warranties and representations contained in the Loan Documents shall survive
such termination or cancellation and shall continue in full force and effect
until such time as all of the Obligations have become paid in full in accordance
with the terms of the agreements creating such Obligations, at which time the
same shall terminate.
Article IX
Events of Default: Rights and Remedies
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9.1. Events of Default. The occurrence of any one or more of the
-----------------
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) (i) Borrowers shall fail to make any payment of principal
of or interest on the Loans or any of the other Obligations when due and payable
or declared due and payable, or (ii) any other Loan Party shall fail to make any
payment (other than principal or interest) owing under any other Loan Document
within 10 days of the date such other payment is due and payable.
(b) Borrowers shall fail or neglect to perform, keep or
observe any of the provisions of Section 6 or 7 of this Credit Agreement and in
the case of a failure to perform, keep or observe any provision of Sections 6.1,
6.2(b),(c),(d),(e),(k), 6.3, 6.4, 6.5, and 6.7, such failure shall continue
unremedied for 30 days, and in the case of sections 6.2(a),(f),(g) and 6.8, such
failure shall continue unremedied for 10 days, in each case following such
failure.
(c) Borrowers shall fail or neglect to perform, keep or
observe any other provision of this Credit Agreement or of any of the other Loan
Documents, or any other Loan Party shall fail or neglect to perform, keep or
observe any of the provisions of any other Loan Document and, unless some other
cure period is specified, in which case such other cure period shall apply, such
failure shall continue unremedied for 30 days, in each case following such
failure.
(d) A default shall occur under any other agreement, document
or instrument to which any Loan Party is a party or by which any Loan Party or
any Loan Party's property is bound, and such default (i) involves the failure to
make any payment (whether of principal, interest or otherwise) due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) in
respect of any Indebtedness of any Loan Party in excess of $100,000, or (ii)
causes (or permits (with or without notice, lapse or time or both) any holder of
such Indebtedness or a trustee to cause) such Indebtedness or a portion thereof,
to become due prior to its stated maturity or prior to its regularly scheduled
dates of payment.
(e) Any representation or warranty herein or in any Loan
Document or in any written statement pursuant thereto or hereto, report,
financial statement or certificate made or delivered to the Agent or any Lender
by any Loan Party shall be untrue or incorrect in any material respect, as of
the date when made or deemed made (including those made or deemed made.
(f) Assets of the Loan Parties having an aggregate value in
excess of $10,000 shall be attached, seized, levied upon or subjected to a writ
or distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Loan Party; provided,
however, if such seizure, levy or other similar process results from a fact,
circumstance or occurrence that (x) existed with respect to Wahlco or any of its
Subsidiaries before the Effective Time, (y) of which Thermatrix became aware
since the Effective Time and (z) the Borrowers have used their best efforts,
since the Effective Time, to prevent, then so long as (1) the Borrowers continue
to use their best efforts to halt or reverse such attachment, seizure, levy or
other similar process, and (2) such seizure, levy or other similar process could
not
-35-
reasonably be expected to cause or result in a Material Adverse Effect, such
attachment, seizure, levy or other similar process shall not constitute an Event
of Default hereunder; or any Person other than any Loan Party shall apply for
the appointment of a receiver, trustee or custodian for any of the Assets of any
Loan Party; or Thermatrix shall at any time, or any other Loan Party shall after
the Effective Time, have concealed, removed or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
or the incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced (and not
dismissed within 60 days) against any Loan Party in a court having competent
jurisdiction seeking a decree or order in respect of such Loan Party (i) under
title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of such Loan Party or of my substantial part
of its or their properties, or (iii) ordering the winding-up or liquidation of
the affairs of such Loan Party.
(h) Any Loan Party shall (i) file a petition seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of either Borrower or such Loan Party or of any substantial part of
its properties, (iii) fail generality to pay its debts as such debts become due,
or (iv) take any corporate action in furtherance of any such action.
(i) Final judgment or judgments (after the expiration of all
times to appeal therefrom) for the payment of money in excess of $50,000 in the
aggregate shall be rendered against either Borrower or any of their respective
Subsidiaries and the same shall not be (i) fully covered by insurance in
accordance with Section 6.7 hereof, or (ii) vacated, stayed, bonded, paid or
discharged for a period of fifteen days.
(j) Any Collateral Document or any material provision thereof
shall for any reason cease to be valid or enforceable in accordance with its
terms, or any security interest created under any Collateral Document shall
cease to be a valid and perfected security interest or Lien subject only to
Permitted Encumbrances (except as otherwise stated therein) in any of the
Collateral purported to be covered thereby; provided, however that the
Collateral affected by such defect or lapse of such security interest shall have
an aggregate value of at least $250,000.
(k) any consent or approval of any Governmental Authority
necessary in order to permit any Borrower or any of its Subsidiaries to fully
own or lease and operate their respective property and assets or to properly
conduct their respective businesses shall cease to be in effect or such Borrower
or such Subsidiary shall cease to have the full intended benefit thereof or
rights thereunder, unless the revocation, termination, cancellation, denial,
impairment or
-36-
modification of such consent or approval, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
provided, however, that if the loss of such consent or approval results from a
fact, circumstance or occurrence that (x) existed with respect to Wahlco or any
of its Subsidiaries before the Effective Time, (y) of which Thermatrix became
aware since the Effective Time and (z) the Borrowers have used their best
efforts, since the Effective Time, to prevent, then so long as (1) the Borrowers
continue to use their best efforts to remedy such occurrence or circumstance and
(2) such occurrence or circumstance could not reasonably be expected to cause or
result in a Material Adverse Effect, then no such fact, circumstance or
occurrence, or combination or further development thereof, shall constitute an
Event of Default hereunder.
9.2. Remedies. If any Event of Default shall have occurred, the
--------
Agent may declare all Obligations to be forthwith due and payable, whereupon all
Obligations shall become and be due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower; provided, however, that upon the occurrence of an Event of Default
specified in Section 9.1(f), (g) or (h) hereof, the Obligations shall become due
and payable without declaration, notice or demand by the Agent.
9.3. Waivers by Borrowers. Except as otherwise provided for in this
--------------------
Credit Agreement and applicable law, upon the occurrence of an Event of Default,
Borrowers waive (i) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by the Agent or any
Lender on which either Borrower may in any way be liable and hereby ratifies and
confirms whatever the Agent or such Lender may do in this regard, (ii) all
rights to notice and a hearing prior to the Agent or such Lender's taking
possession or control of, or to the Agent or such Lender's replevy, attachment
or levy upon, the Collateral or any bond or security which might be required by
any court prior to allowing Lender to exercise any of its remedies, and (iii)
the benefit of all valuation, appraisal and exemption laws. Borrowers
acknowledge that it has been advised by counsel of its choice with respect to
this Credit Agreement, the other Loan Documents and the transactions evidenced
by this Credit Agreement and the other Loan Documents.
9.4. Other Remedies. If one or more Defaults or Events of Default
--------------
shall occur and be continuing, and irrespective of whether the Loans have become
or have been declared immediately due and payable under Section 9.2, the Agent
may proceed to protect and enforce the rights of the Lenders by an action at
law, suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained wherein or in any of the other Loan
Documents, or for an injunction against a violation of any of the terms hereof
or thereof or in aid of the exercise of any power granted hereby or thereby or
by applicable law or otherwise.
Article X
Miscellaneous
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10.1. Complete Agreement: Modification of Agreement; Assignment by
------------------------------------------------------------
Lenders. (a) The Loan Documents constitute the complete agreement between the
-------
parties with respect to the subject matter hereof and may not be modified,
altered or amended except by an agreement in writing signed by both Borrowers,
the Agent and each Lender in accordance with Section 10.1(d) hereof. Borrowers
may not sell, assign or transfer any of the Loan Documents or any portion
thereof, including, without limitation, Borrowers' rights, title, interests,
remedies, powers and duties hereunder or thereunder.
(b) No Lender shall assign or otherwise transfer all or any
portion of the Note to any Person, other than any Affiliate of the Lenders or
the Agent, without the advance written consent of Borrowers. In the event any
Lender assigns or otherwise transfers all or any part of any Note (including an
assignment or transfer to an Affiliate of the Lenders or the Agent), such Lender
shall provide written notice of such assignment or transfer to the Borrowers and
the Borrowers shall register such transfer or assignment in accordance with
Section 2.16(c) and, upon the request of such Lender, issue new notes to
effectuate such assignment or transfer.
(c) No amendment or waiver of any provision of this Credit
Agreement or the Note or any other Loan Document, nor consent to any departure
by Borrowers therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
10.2. Fees and Expenses. (a) Thermatrix shall pay all reasonable
-----------------
out-of-pocket expenses of the Agent and the Lenders in connection with the
preparation of the Loan Documents (including the reasonable fees and expenses of
all of its counsel and advisors retained in connection with the Loan Documents
and the transactions contemplated thereby and advice in connection therewith)
provided, however that such expenses and fees shall not exceed $325,000.
Thermatrix shall separately pay, in accordance with any provision in any of the
other the Loan Documents, the costs and expenses associated with the of taking
and perfecting the security interests being granted thereby, and such expenses
shall not be included in the up to $325,000 expense cap provided that such
expenses were incurred on or before March 19, 1999. If, at any time or times,
regardless of the existence of an Event of Default (except with respect to
paragraphs (iii) and (iv), which shall be subject to an Event of Default having
occurred and be continuing), the Agent or any Lender shall employ in-house and
outside counsel or other advisors for advice or other representation or shall
incur reasonable legal or other costs and expenses in connection with:
(i) any amendment, modification or waiver, or consent with respect
to, any of the Loan Documents or advice in connection with the
administration of the loans made pursuant hereto or its rights hereunder or
thereunder initiated at the request of either Borrower;
(ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the Agent, a Lender, either Borrower, any Subsidiary
or any other Person) in any way
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relating to the Collateral, any of the Loan Documents or any other
agreements to be executed or delivered in connection herewith;
(iii) any attempt to enforce any rights of any Lender against either
Borrower, any Subsidiary or any other Person, that may be obligated to any
Lender by virtue of any of the Loan Documents; or
(iv) any attempt to verify, protect, collect, sell, liquidate or
otherwise dispose of the collateral;
then, and in any such event, the attorneys' and other parties' fees arising from
such services, including those of any appellate proceedings, and all expenses,
costs, charges and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or actions
described in this Section 10.2 shall be payable, on demand, by Borrowers to the
Agent and shall be additional Obligations secured under this Credit Agreement
and the other Loan Documents and the up to $325,000 expense limitation set forth
above shall not apply to any such fees and expenses. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees of in-house counsel, paralegal fees, costs and expenses; accountants' and
investment bankers' fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses, court reporter fees, costs and expenses;
long distance telephone charges; air express charges, telegram charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.
(b) The Agent and the Lenders hereby acknowledge that,
notwithstanding anything to the contrary in Section 6.16 and 8.3(b) of the
Merger Agreement, and in consideration of the Lenders' and Agent's agreement to
enter into this Credit Agreement, at the Effective Time, Thermatrix paid, or
caused Wahlco to be reimbursed for, expenses incurred by Wahlco in connection
with the Merger in the amount of $300,000, exclusive of the $50,000 fee paid to
Hera, LLC, and the Agent and the Lenders further acknowledge that such
reimbursement did not reduce the Initial Payment (as defined in the Merger
Agreement). Borrowers acknowledge and agree that nothing in this Section 10.2(b)
shall be construed to reduce or mitigate the Borrower's Obligations hereunder,
including, without limitation, the Obligation for the expense reimbursement set
forth in Section 10.2(a) hereof.
10.3. No Waiver by Lender. The failure of the Agent or any Lender,
-------------------
at any time or times, to require strict performance by any Loan Party of any
provision of this Credit Agreement and any of the other Loan Documents shall not
waive, affect or diminish any right of the Agent or any Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
the Agent or any Lender of an Event of Default by any Loan Party under the Loan
Documents shall not suspend, waive or affect any other Event of Default by any
Loan Party under this Credit Agreement and any of the other Loan Documents
whether the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants and
representations of any Loan Party contained in this Credit Agreement or any of
the other Loan Documents and no Event of Default by either
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Borrower under this Credit Agreement and no defaults by any Loan Party under any
of the other Loan Documents shall be deemed to have been suspended or waived by
the Agent or any Lender, unless such suspension or waiver is by an instrument in
writing signed by an officer of the Agent and directed to such Loan Party
specifying such suspension or waiver.
10.4. Agency Provisions. (a) Appointment. Each of the Lenders
----------------- -----------
hereby appoints Wexford Management LLC as its lawful agent and attorney-in-fact,
with full power of substitution, for all purposes under this Credit Agreement,
the Note and each of the other Loan Document. This appointment is coupled with
an interest, and the Borrowers as well as the Lenders will rely upon the
irrevocable nature of such appointment. Each of the Lenders also agrees to each
of the provisions of each of the other Loan Documents applicable to the Lenders
and governing the relative rights and obligations among the Lenders or between
the Lenders and the Agent, as if each Lender was a signatory to such Loan
Document.
(b) Acceptance of Appointment. The Agent hereby accepts such
-------------------------
appointment, and agrees to exercise the powers granted hereunder and pursuant to
the Loan Documents with the same degree of care it would use if the entire risks
and rewards were for its own account.
(c) Application of Funds. In the event any monies received
--------------------
from the Borrowers directly or pursuant to any Loan Document is in an amount
insufficient to pay all sums due to every Lender, the Agent shall first apply
the sum received to its own out-of-pocket costs reasonably reimbursable under
the terms of the Loan Documents, and shall pay the balance to the Lenders pro
rata in accordance with the amounts then due and owing to each of them.
(d) Agent's Liability. The Agent shall not be liable, except
-----------------
for its own gross negligence or willful misconduct, and except with respect to
claims based upon such negligence or misconduct, that are successfully asserted
against the Agent, the Borrowers and the Lenders shall severally indemnify and
hold harmless the Agent, and any Person acting as the successor to the Agent,
from and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out of
or in connection with the Agent's good faith acceptance of or performance of its
duties and obligations under this Credit Agreement and/or the Loan Documents.
The Agent shall be under no duty to institute any suit, or to take any remedial
procedures or to enter any appearance or in any way defend any suit in which it
may be made a defendant hereunder until it shall be indemnified as provided
herein. The Agent may act pursuant to the advice of counsel with respect to any
matter relating to this Credit Agreement and/or the Loan Documents, and shall
not be liable for any action taken or omitted in accordance with such advice.
(e) Resignation of Agent. The Agent (or any successor Agent)
--------------------
may at any time resign as such by delivering to the Lenders at least fifteen
days' written notice of such resignation. Within fifteen days after the giving
of such notice, the Agent shall effect a transfer of all funds still held in
such Agent's possession to any successor Agent jointly designated by the Lenders
in writing, or in the event no such successor has been designated within such
fifteen day period, to any court of competent jurisdiction, whereupon the Agent
shall be discharged of and from any and all further obligations arising in
connection with this Credit Agreement and/or the
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Loan Documents. The Agent's sole responsibility following the delivery of a
notice of resignation and prior to the delivery of the funds still under the
Agent's control to a successor Agent or to a court of competent jurisdiction
shall be to safeguard such funds until delivery thereof as aforesaid or pursuant
to a joint written disposition instruction by all other parties hereto or a
final order of a court of competent jurisdiction.
10.5. Remedies. The rights and remedies of the Agent and each
--------
Lender under this Credit Agreement shall be cumulative and nonexclusive of any
other rights and remedies which the Agent or any Lender may have under any other
agreement, including without limitation, the Loan Documents, by operation of law
or otherwise. Recourse to the Collateral shall not be required.
10.6. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO
--------------------
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THE LOAN DOCUMENTS.
10.7. Severability. Wherever possible, each provision of this Credit
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Credit Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Credit Agreement.
10.8. Parties. This Credit Agreement and the other Loan Documents
-------
shall be binding upon, and inure to the benefit of the successor of Borrowers,
the Agent and the Lender and the assigns, transferees and endorsees of each
Lender.
10.9. Conflict of Terms. Except as otherwise provided in this
-----------------
Credit Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Credit Agreement, if any provision contained in
this Credit Agreement is in conflict with, or inconsistent with, any provision
in any of the other Loan Documents, the provision contained in this Credit
Agreement shall govern and control.
10.10. Authorized Signature. Until Lender shall be notified by
--------------------
Borrowers to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of either Borrower listed in Section
10.10 of the Disclosure Letter shall bind Borrowers and be deemed to be the act
of such Borrower affixed pursuant to and in accordance with resolutions duly
adopted by such Borrower's Board of Directors.
10.11. GOVERNING LAW. ALL MATTERS RELATING TO THE INTERPRETATION,
-------------
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)
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THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
10.12. CONSENT TO JURISDICTION. EACH BORROWER, EACH OF THEIR
-----------------------
SUBSIDIARIES, EACH OF THE LENDERS AND THE AGENT IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF (i) THE SUPREME COURT OF THE STATE OF NEW YORK, NEW
YORK COUNTY AND (ii) THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH BORROWER,
EACH OF THEIR SUBSIDIARIES, EACH OF THE LENDERS AND THE AGENT FURTHER AGREES
THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENTS BY UNITED STATES
REGISTERED MAIL TO SUCH PARTY'S RESPECTIVE ADDRESS FOR NOTICES SET FORTH IN
SECTION 10.13 SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR
PROCEEDING IN NEW YORK WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO
JURISDICTION IN THIS SECTION 10.12. EACH BORROWER, EACH OF THEIR SUBSIDIARIES,
EACH OF THE LENDERS AND THE AGENT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT
OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN (a) THE SUPREME
COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY AND (b) THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. BORROWERS ACKNOWLEDGE ON THEIR OWN
BEHALF AND ON BEHALF OF EACH OF THE SUBSIDIARIES, THAT IN ANY ACTION OR
PROCEEDING TO ENFORCE PAYMENT OF THE OBLIGATIONS OR ANY OTHER RIGHT OF THE AGENT
OR THE LENDERS UNDER THIS CREDIT AGREEMENT, THEY WAIVE THE RIGHT TO ASSERT ANY
COUNTERCLAIM OF ANY KIND OTHER THAN A COMPULSORY COUNTERCLAIM.
10.13. Notices. Except as otherwise provided herein, whenever it is
-------
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Credit Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and either shall be delivered in person with receipt
acknowledged or by registered or certified mail, return receipt requested,
postage prepaid, or telecopied and confirmed by telecopy answerback addressed as
follows:
(a) If to the Lenders or to the Agent, at:
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Xxxxxxx Management
LLC 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
and
Attention: Xxx X. Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxx & Xxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Borrowers, at:
Thermatrix Inc.
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxxx, Esq.
Attention: Xxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback or
three (3) Business Days after the same shall have been deposited in the United
States mail. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely
-43-
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
10.14. Consent of Agent. Whenever the consent of the Agent is
----------------
required for the taking of any action by any party under this Credit Agreement
or any other Loan Document, the Agent may give or withhold such consent as the
Agent determine in its sole and absolution discretion.
10.15. Sophisticated Borrowers. The parties acknowledge that this
-----------------------
Agreement was initially prepared by the Agent and the Lenders and that all
parties have read and negotiated the language used in this Agreement. The
parties agree that, because all of them participated in the negotiating and
drafting of this Agreement, no rule of construction shall apply to this
Agreement which construes ambiguous language in favor of or against any party by
reason of that party's role in drafting this Agreement. The parties acknowledge
and agree that both parties were represented and had the advice of independent
counsel prior to reaching agreement on any of the terms of this Agreement.
10.16. WAIVERS BY BORROWERS. EACH BORROWER WAIVES (i) TO THE
--------------------
FULLEST EXTENT PROVIDED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY (WHICH
LENDERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS
OR THE COLLATERAL; (ii) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN,
PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON
PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY
OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS,
CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY THE AGENT OR ANY LENDER ON
WHICH ANY BORROWER OR ANY SUBSIDIARY MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER THE AGENT OR ANY LENDER MAY DO IN THIS REGARD;
(iii) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, NOTICE PRIOR TO TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING THE AGENT TO EXERCISE ANY OF LENDERS'
REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS;
AND (v) NOTICE OF ACCEPTANCE HEREOF, EACH BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDERS' ENTERING INTO THIS
AGREEMENT AND THAT LENDERS ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR
FUTURE DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS
-44-
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
10.17. Survival. The representations and warranties of Borrowers in
--------
this Credit Agreement shall survive the execution, delivery and acceptance
hereof by the parties hereto and the closing of the transactions described
herein or related hereto.
10.18. Section Titles. The Section titles and Table of Contents
--------------
contained in this Credit Agreement are and shall be without substantive meaning
or content of any kind whatsoever and are not a part of the agreement between
the parties hereto.
10.19. Counterparts. This Credit Agreement may be executed in any
------------
number of separate counterparts, each of which shall, collectively and
separately, constitute one agreement.
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In Witness Whereof, this Credit Agreement has been duly executed as of
the date first written above.
Wahlco Environmental Systems, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and Chief
Financial Officer
Thermatrix Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and Chief
Financial Officer
Wexford Capital Partners II, L.P.
By: Wexford Capital II, L.P., As General Partner
By: Wexford Capital Corp., As General Partner
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
Wexford Overseas Partners I, L.P.
By: Wexford Capital Overseas II, L.P., As
General Partner
By: Wexford Capital Limited, As General Partner
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
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Wexford Special Situations 1996, L.P.
By: Wexford Advisors LLC, As General Partner
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
Wexford Special Situations 1996,
Institutional, L.P.
By: Wexford Advisors LLC, As General Partner
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
Wexford Special Situations 1996 Limited
By: Wexford Advisors LLC, As Investment Manager
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
Wexford-Euris Special Situations 1996, L.P.
By: Wexford Euris Advisors LLC, As General
Partner
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
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Wexford Management LLC, As Agent
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President and General
Counsel
-48-
