EXHIBIT 10.45
THIS GUARANTY IS SUBJECT TO AN INTERCREDITOR AGREEMENT, DATED AS OF DECEMBER 21,
2001, AMONG FLEET CAPITAL CORPORATION, A RHODE ISLAND CORPORATION, PETROCON
ENGINEERING, INC., AND EQUUS II INCORPORATED, A DELAWARE CORPORATION, ET AL.
THIS GUARANTY IS SUBORDINATED IN RIGHT AND TIME OF PAYMENT TO THE PRIOR PAYMENT
IN FULL IN CASH OF ALL SENIOR DEBT (AS DEFINED IN THE INTERCREDITOR AGREEMENT)
IN ACCORDANCE WITH, AND TO THE EXTENT SPECIFIED IN, SUCH INTERCREDITOR AGREEMENT
AND EACH HOLDER OF THIS GUARANTY, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES
TO BE BOUND BY THE TERMS AND PROVISIONS OF SUCH INTERCREDITOR AGREEMENT.
GUARANTY
THIS GUARANTY dated as of December 21, 2001, between EACH OF THE
UNDERSIGNED, (each, a "Guarantor"), in favor of and for the benefit of EQUUS II
INCORPORATED, a Delaware corporation ("Lender").
RECITALS
A. Pursuant to that certain Settlement Agreement and Plan of
Reorganization dated as of July 31, 2001, by and among INDUSTRIAL DATA SYSTEMS
CORPORATION, a Nevada corporation ("IDS"), PETROCON ENGINEERING, INC., a Texas
corporation ("PEI"), PEI ACQUISITION, INC., a Texas corporation, and a wholly
owned and indirect subsidiary of IDS ("Sub"), and Lender (the "Settlement
Agreement"), Equus has agreed to renew, rearrange and extend $3,000,000 of its
existing loan to PEI (the "Loan") as evidenced by that certain Promissory Note
from PEI to Lender in the principal amount of $3,000,000 of even date herewith
(the "Note").
B. IDS, IDS Engineering Management LC, a Texas limited liability company
("LC"), Sub, and PEI have entered into that certain Agreement and Plan of Merger
on or about July 31, 2001, whereby Sub will merge with and into PEI and PEI will
be the surviving corporation (the "Plan of Merger"; PEI as the surviving
corporation of the Plan of Merger is the "Successor Corporation").
C. Successor Corporation is an indirect, wholly owned subsidiary of IDS,
IDS Engineering, Inc. and LC (the "Parent Guarantors"). The Parent Guarantors
will receive direct and indirect benefits from the Loan in an amount at least
equal to the obligations of the Parent Guarantors under this Guaranty, and the
proceeds of the Loan will produce direct and indirect financial benefits to the
Parent Guarantors.
D. Thermaire, Inc. d/b/a Thermal Corp., a Texas corporation, Constant
Power Manufacturing, Inc., a Texas corporation and Industrial Data Systems,
Inc., a Texas corporation are wholly owned subsidiaries of IDS (the "IDS
Guarantors"). The IDS Guarantors will receive direct and indirect benefits from
the Loan in an amount at least equal to the obligations of the
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IDS Guarantors under this Guaranty, and the proceeds of the Loan will produce
direct and indirect financial benefits to the IDS Guarantors.
E. Triangle Engineers & Constructors, Inc., Petrocon Systems, Inc.
Petrocon Technologies, Inc., Petrocon Engineering of Louisiana, Inc., RPM
Engineering, Inc., Alliance Engineering Associates, Inc. and Petrocon
Construction Resources, Inc. (the "Subsidiary Guarantors") are wholly owned
subsidiaries of Successor Corporation. The Subsidiary Guarantors will receive
direct and indirect benefits from the Loan in an amount at least equal to the
obligations of the Subsidiary Guarantors under this Guaranty, and the proceeds
of the Loan will produce direct and indirect financial benefits to the
Subsidiary Guarantors.
F. It is a condition of the Note that Successor Corporation's obligations
thereunder be guaranteed by each Guarantor and that the obligations of each
Guarantor under the Guaranty be secured by the Security Agreement of even date
herewith (the "Security Agreement"), executed by each Guarantor in favor of
Lender.
G. Each Guarantor is willing irrevocably and unconditionally to guaranty
such obligations of Successor Corporation subject to the terms and provisions
hereof.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lender to make the Loan, each Guarantor hereby agrees as
follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. Capitalized terms not otherwise defined herein
shall have the meanings as such terms in the Note and in Appendix A attached
hereto.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Guaranty unless otherwise
specifically provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Note, the terms, conditions and provisions of this
Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guaranteed Obligations. Subject to the provisions of
subsection 2.2(a), each Guarantor hereby irrevocably and unconditionally
guarantees, as a primary obligor and not merely as a surety, the due and
punctual payment in full of all Guaranteed Obligations when the same shall
become due, whether at stated maturity, by required prepayment, acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S) 362(a)), as amended. The term "Guaranteed Obligations" is used
herein in its most
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comprehensive sense and includes any and all obligations of Successor
Corporation now or hereafter made, incurred or created, whether absolute or
contingent (including contingent obligations in respect of underwriters of
credit or any other guaranty), liquidated or unliquidated, whether due or not
due, and however arising under or in connection with the Note.
2.2 Limitation on Amount Guaranteed; Contribution by Each Guarantor. (a)
Anything contained in this Guaranty to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum principal
amount equal to $3,000,000 and a maximum aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code, as amended, or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer laws"), in each case after giving effect
to all other liabilities of Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer laws (specifically excluding, however,
any liabilities of each Guarantor (x) in respect of intercompany indebtedness to
Successor Corporation or other subsidiaries or affiliates of Successor
Corporation to the extent that such indebtedness would be discharged in an
amount equal to the amount paid by each Guarantor hereunder and (y) under any
guaranty of Senior Debt which guaranty contains a limitation as to maximum
amount similar to that set forth in this subsection 2.2(a), pursuant to which
the liability of each Guarantor hereunder is included in the liabilities taken
into account in determining such maximum amount) and after giving effect as
assets to the value (as determined under the applicable provisions of the
Fraudulent Transfer laws) of any rights to subrogation or contribution of each
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among each Guarantor and other subsidiaries or affiliates
of Successor Corporation of obligations arising under guaranties by such
parties.
2.3 Liability of Each Guarantor Absolute. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guaranteed Obligations. "Payment in full" or "paid in full" means the final and
indefeasible payment in full in cash or such other type of payment or
satisfaction as Lender may approve. In furtherance of the foregoing and without
limiting the generality thereof, Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Lender may enforce this Guaranty upon the occurrence of and during
the continuation of an Event of Default under the Note notwithstanding the
existence of any dispute between Lender and Successor Corporation with
respect to the existence of such Event of Default.
(c) The obligations of each Guarantor hereunder are independent of the
obligations of Successor Corporation under the Note and the obligations of
any other guarantor of the obligations of Successor Corporation under the
Note, and a separate action or actions may be brought and prosecuted
against each Guarantor whether or not
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any action is brought against Successor Corporation or any of such other
guarantors and whether or not Successor Corporation is joined in any such
action or actions.
(d) Any Guarantor's payment of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge
such Guarantor's liability for any portion of the Guaranteed Obligations
that has not been paid. Without limiting the generality of the foregoing,
if Lender is awarded a judgment in any suit brought to enforce any
Guarantor's covenants to pay a portion of the Guaranteed Obligations, such
judgment shall not be deemed to release such Guarantor from its covenant to
pay the portion of the Guaranteed Obligations that is not the subject of
such suit.
(e) Subject to the terms of the Note, Lender, upon such terms as it
deems appropriate, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any
reduction, limitation, impairment, discharge or termination of any
Guarantor's liability hereunder, and from time to time, may (i) renew,
extend, accelerate, increase the rate of interest on, or otherwise change
the time, place, manner or terms of payment of the Guaranteed Obligations;
(ii) settle, compromise, release or discharge, or accept or refuse any
offer of performance with respect to, or substitutions for, the Guaranteed
Obligations or any agreement relating thereto and/or subordinate the
payment of the same to the payment of any other obligations; (iii) request
and accept other guaranties of the Guaranteed Obligations and take and hold
security for the payment of this Guaranty or the Guaranteed Obligations;
(iv) release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration, any
security for payment of the Guaranteed Obligations, any other guaranties of
the Guaranteed Obligations, including, without limitation, any Related
Guaranties or any other obligation of any person with respect to the
Guaranteed Obligations; (v) enforce and apply any security now or hereafter
held by or for the benefit of Lender in respect of this Guaranty or the
Guaranteed Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that Lender may have against any such
security, as Lender in its discretion may determine consistent with the
Note and any applicable security agreement, including foreclosure on any
such security pursuant to one or more judicial or nonjudicial sales, even
though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor
against Successor Corporation or any security for the Guaranteed
Obligations; and (vi) exercise any other rights available to it under the
Note.
(f) This Guaranty and the obligations of each Guarantor hereunder
shall be valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
payment in full of the Guaranteed Obligations), including without
limitation the occurrence of any of the following, whether or not each
Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Note, at
law, in equity or otherwise) with respect to the Guaranteed Obligations or
any agreement relating thereto, or with respect to any other guaranty of or
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security for the payment of the Guaranteed Obligations; (ii) any waiver,
amendment or modification of, or any consent to departure from, any of the
terms or provisions (including without limitation provisions relating to
events of default) of the Note; (iii) the Guaranteed Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid
or unenforceable in any respect unless due to the gross negligence or
willful misconduct of Lender; (iv) the application of payments received
from any source (other than payments received pursuant to the Note pursuant
to this Guaranty, or from the proceeds of any security for the Guaranteed
Obligations, except to the extent such security also serves as collateral
for indebtedness other than the Guaranteed Obligations and such payments
are applied to such other indebtedness) to the payment of indebtedness
other than the Guaranteed Obligations, even though Lender might have
elected to apply such payment to any part or all of the Guaranteed
Obligations; (v) Lender's consent to the change, reorganization or
termination of the corporate structure or existence of Successor
Corporation or any of its subsidiaries and to any corresponding
restructuring of the Guaranteed Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral which secures
any of the Guaranteed Obligations; and (vii) any defenses, set-offs or
counterclaims which Successor Corporation may allege or assert against
Lender in respect of the Guaranteed Obligations, including but not limited
to failure of consideration, breach of warranty, statute of frauds, statute
of limitations, accord and satisfaction and usury, but excluding any
defense based upon Lender's gross negligence or willful misconduct.
2.4 Waivers by Each Guarantor. Each Guarantor hereby waives, for the
benefit of Lender:
(a) any right to require Lender, as a condition of payment or
performance by Guarantor, to (i) proceed against Successor Corporation, any
other guarantor of the Guaranteed Obligations or any other person, (ii)
proceed against or exhaust any security held from Successor Corporation,
any other guarantor of the Guaranteed Obligations or any other person,
(iii) proceed against or have resort to any balance of any deposit account
or credit on the books of Lender in favor of Successor Corporation or any
other person, or (iv) pursue any other remedy in the power of Lender
whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Successor Corporation including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Guaranteed Obligations or any
agreement or instrument relating thereto or by reason of the cessation of
the liability of Successor Corporation from any cause other than payment in
full of the Guaranteed Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
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(d) any defense based upon Lender's errors or omissions in the
administration of the Guaranteed Obligations, except behavior which amounts
to gross negligence or willful misconduct as determined by a court of
competent jurisdiction;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of such Guarantor's obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor's
liabilities hereunder or the enforcement hereof, (iii) any rights to set-
offs, recoupments and counterclaims, and (iv) promptness, diligence and any
requirement that Lender protect, secure, perfect or insure any security
interest or lien or any property subject thereto; and
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under the Note or any
agreement or instrument related thereto, notices of any renewal, extension
or modification of the Guaranteed Obligations or any agreement related
thereto.
2.5 Payment by Each Guarantor: Application of Payments. Subject to the
provisions of subsection 2.2(a), each Guarantor hereby agrees in furtherance of
the foregoing and not in limitation of any other right which Lender or any other
person may have at law or in equity against such Guarantor by virtue hereof,
that upon the failure of Successor Corporation to pay any of the Guaranteed
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)),
Guarantor will forthwith pay, or cause to be paid, in cash, to Lender, an amount
equal to the sum of the unpaid principal amount of all Guaranteed Obligations
then due as aforesaid, accrued and unpaid interest on such Guaranteed
Obligations (including, without limitation, interest which, but for the filing
of a petition in bankruptcy with respect to Successor Corporation, would have
accrued on such Guaranteed Obligations, whether or not a claim is allowed
against Successor Corporation for such interest in any such bankruptcy
proceeding) and all other Guaranteed Obligations then owed to Lender as
aforesaid. All such payments shall be applied promptly from time to time by
Lender:
First, to the payment of the reasonable costs and expenses of any
collection or other realization under this Guaranty and the Security
Agreement, including reasonable attorney's fees, and all expenses,
liabilities and advances made or incurred by Lender in connection
therewith;
Second, to the payment of all other Guaranteed Obligations; and
Third, after payment in full of all Guaranteed Obligations, to the
payment to each Guarantor, or its successors or assigns, or to whomsoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such payments.
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2.6 Subrogation. If any Guarantor shall make any payment pursuant to this
Guaranty, then such Guarantor shall be subrogated to the rights of Lender to
receive payments or distributions of assets of Successor Corporation; provided,
however, until the Guaranteed Obligations shall have been paid in full, such
Guarantor shall withhold exercise of (a) any right of subrogation, (b) any right
of contribution such Guarantor may have against any other guarantor of the
Guaranteed Obligations, (c) any right to enforce any remedy that Lender now has
or may hereafter have against Successor Corporation or (d) any benefit of, and
any right to participate in, any security now or hereafter held by Lender. Each
Guarantor further agrees that, to the extent the withholding of the exercise of
its rights of subrogation and contribution as set forth herein is found by a
court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation such Guarantor may have against Successor Corporation or
against any collateral or security, and any rights of contribution Guarantor may
have against any other such Guarantor, shall be junior and subordinate to any
rights Lender may have against Successor Corporation, to all right, title and
interest Lender may have in any such collateral or security, and to any right
Lender may have against such other guarantor; provided, however, that such
Guarantor may take any action necessary to preserve any right of subrogation or
contribution that such Guarantor may have. Lender, may use, sell or dispose of
any item of collateral or security as it sees fit without regard to any
subrogation rights any Guarantor may have. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all Guaranteed
Obligations shall not have been paid in full, such amount shall be held in trust
for Lender and shall forthwith be paid over to Lender to be credited and applied
against the Guaranteed Obligations, whether matured or unmatured, in accordance
with the terms of the Note or any applicable security agreement.
2.7 Subordination of Other Obligations of Successor Corporation. Any
indebtedness of Successor Corporation now or hereafter held by any Guarantor is
hereby subordinated in right of payment to the Guaranteed Obligations, provided
prior to an Event of Default, any Guarantor may receive ordinary course or
regularly scheduled payments of such indebtedness. Any such indebtedness of
Successor Corporation to such Guarantor collected or received by suchGuarantor
after an Event of Default has occurred and is continuing shall be held in trust
for Lender and shall forthwith be paid over to Lender to be credited and applied
against the Guaranteed Obligations but without affecting, impairing or limiting
in any manner the liability of such Guarantor under any other provision of this
Guaranty.
2.8 Expenses. Each Guarantor agrees to pay, or cause to be paid, and to
save Lender harmless against liability for, any and all reasonable costs and
expenses (including reasonable fees and disbursements of counsel and allocated
costs of internal counsel) incurred or expended by Lender in connection with the
enforcement of or preservation of any rights under this Guaranty.
2.9 Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in effect until all of the Guaranteed Obligations shall have been paid in
full.
2.10 Financial Condition of Successor Corporation. Lender shall have no
obligation to disclose or discuss with any Guarantor Lender's assessment of the
financial condition of Successor Corporation. Each Guarantor has adequate means
to obtain information from
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Successor Corporation on a continuing basis concerning the financial condition
of Successor Corporation and its ability to perform its obligations under the
Note, and each Guarantor assumes the responsibility for being and keeping
informed of the financial condition of Successor Corporation and of all
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations.
Each Guarantor hereby waives and relinquishes any duty on the part of Lender to
disclose any matter, fact or thing relating to the business, operations or
conditions of Successor Corporation now known or hereafter known by Lender.
2.11 Rights Cumulative. The rights, powers and remedies given to Lender
by this Guaranty are cumulative and shall be in addition to and independent of
all rights, powers and remedies given to Lender by virtue of any statute or rule
of law or in the Note. Any forbearance or failure to exercise, and any delay by
any Lender in exercising, any right, power or remedy hereunder shall not impair
any such right, power or remedy or be construed to be a waiver thereof, nor
shall it preclude the further exercise of any such right, power or remedy.
2.12 Bankruptcy: Post-Petition Interest: Reinstatement of Guaranty.
(a) So long as any Guaranteed Obligations remain outstanding, no
Guarantor shall, without the prior written consent of Lender, commence or
join with any other person in commencing any bankruptcy, reorganization or
insolvency proceedings of or against Successor Corporation. The
obligations of each Guarantor under this Guaranty shall not be reduced,
limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Successor
Corporation or by any defense which Successor Corporation may have by
reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guaranteed Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guaranteed Obligations ceases to accrue by operation of law
by reason of the commencement of said proceeding, such interest as would
have accrued on such portion of the Guaranteed Obligations if said
proceedings had not been commenced) shall be included in the Guaranteed
Obligations because it is the intention of each Guarantor and Lender that
the Guaranteed Obligations which are guaranteed by each Guarantor pursuant
to this Guaranty should be determined without regard to any rule of law or
order which may relieve Successor Corporation of any portion of such
Guaranteed Obligations. Each Guarantor will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Lender, or allow the claim of Lender in
respect of, any such interest accruing after the date on which such
proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed Obligations
are paid by Successor Corporation, the obligations of each Guarantor
hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such
payment(s) are rescinded or recovered directly or indirectly from Lender
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as a preference, fraudulent transfer or otherwise, and any such payments
which are so rescinded or recovered shall constitute Guaranteed Obligations
for all purposes under this Guaranty.
2.13 Notice of Events. As soon as any Guarantor obtains knowledge
thereof, and to the extent Successor Corporation had such knowledge, such
Guarantor shall give Lender written notice of any condition or event which has
resulted or might reasonably be expected to result in (a) a material adverse
change in the financial condition of any Guarantor and Successor Corporation,
taken as a whole, or (b) a breach of or noncompliance with any term, condition
or covenant contained herein or in the Note, or (c) a material breach of, or
material noncompliance with, any material term, condition or covenant of any
material contract to which any Guarantor or Successor Corporation is a party or
by which any Guarantor or Successor Corporation or any Guarantor's or Successor
Corporation's property may be bound.
2.14 Set Off. In addition to any other rights Lender may have under law
or in equity, if any amount shall at any time be due and owing by any Guarantor
to Lender under this Guaranty from and after the occurrence of an Event of
Default and during the continuation thereof, Lender is authorized at any time or
from time to time, without notice (any such notice being hereby expressly
waived), to set off and to appropriate and to apply any and all deposits
(general or special, including but not limited to indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness of Lender owing to any Guarantor and any other property of any
Guarantor held by Lender to or for the credit or the account of any Guarantor
against and on account of the Guaranteed Obligations and liabilities of any
Guarantor to Lender under this Guaranty. After exercising any right to set off,
appropriate or apply any deposits or other indebtedness of such Guarantor,
Lender exercising such right shall endeavor to provide notice of such set off,
appropriation or application to such Guarantor promptly, but any failure to do
so shall not affect the validity of any such set off, appropriation or
application.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to accept this Guaranty and to make the Loan,
each Guarantor hereby represents and warrants to Lender that the following
statements are true and correct:
3.1 Corporate Existence. Each Guarantor is duly organized, validly
existing and in good standing under the laws of the state of its incorporation
or organization, has the power to own its assets and to transact the business in
which it is now engaged and 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.
3.2 Corporate Power: Authorization: Enforceable Obligations. Each
Guarantor has the power, authority and legal right to execute, deliver and
perform this Guaranty and the Security Agreement (collectively referred to as
the "Guarantor Agreements") and all obligations required under the Guarantor
Agreements, each Guarantor has taken all necessary action to authorize the
Guarantor Agreements on the terms and conditions of such agreements and to
authorize such Guarantor's execution, delivery and performance of the Guarantor
Agreements and all obligations required under such agreements. No consent of
any other person including,
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without limitation, stockholders and creditors of each Guarantor, and no
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required by any Guarantor in connection with the Guarantor Agreements or the
execution, delivery, performance, validity or enforceability of the Guarantor
Agreements and the obligations required under such agreements except for (i)
such consents which have been validly obtained, or (ii) in the case of any
leasehold interest of any Guarantor, such Guarantor has used commercially
reasonable efforts to obtain any such consent and the failure of such Guarantor
to obtain any such consent is the result of the exercise by a landlord of such
landlord's existing contractual right to withhold such consent. The Guarantor
Agreements have been, and each instrument or document required in connection
with such agreements will be, executed and delivered by a duly authorized
officer of such Guarantor, and the Guarantor Agreements constitute, and each
instrument or document required in connection therewith when executed and
delivered will constitute, the legally valid and binding obligation of each
Guarantor, enforceable against such Guarantor in accordance with its respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws or equitable
principles relating to or limiting creditors' rights generally.
3.3 No Legal Bar to this Guaranty. The execution, delivery and
performance of the Guarantor Agreements and the documents or instruments
required in connection therewith, and the use of the proceeds of the borrowings
under the Note, will not violate any provision of any existing law or regulation
binding on any Guarantor, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on any Guarantor, or the
certificate of incorporation or bylaws or certificate of formation or operating
agreement of any Guarantor or any securities issued by any Guarantor, or any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which any Guarantor is a party or by which any Guarantor or any
of its assets may be bound, the violation of which would have a material adverse
effect on the business, operations, assets or financial condition of such
Guarantor and will not result in, or require, the creation or imposition of any
lien on any of its property, assets or revenues pursuant to the provisions of
any such mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
3.4 Benefit to Each Guarantor. Successor Corporation is an indirect
subsidiary of IDS, and IDS's board of directors has determined, as evidenced by
resolution duly adopted and in full force and effect on the date hereof, that
IDS will receive direct and indirect benefit from the transactions contemplated
by the Loan in an amount at least equal to the obligations of IDS under this
Guaranty, and that the Loan will produce direct and indirect financial benefits
to IDS. Therefore, the value of the consideration received and to be received
by IDS as a result of IDS's entering into this Guaranty is reasonably worth at
least as much as the liability and obligations of IDS hereunder and may
reasonably be expected to benefit IDS directly or indirectly.
SECTION 4. COVENANTS
4.1 Each Guarantor covenants and agrees that, unless and until all of the
Guaranteed Obligations shall have been paid in full, unless Lender shall
otherwise consent in writing:
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(a) Corporate Existence, Etc. Each Guarantor shall at all times
preserve and keep in full force and effect its corporate existence and all
rights and franchises material to its business.
(b) Compliance with Laws, Etc. Each Guarantor shall comply in all
material respects with all applicable laws, rules, regulations and orders,
such compliance to include, without limitation, paying when due all taxes,
assessments and governmental charges imposed upon it or upon any of its
properties or assets or in respect of any of its franchises, businesses,
income or property before any penalty or interest accrues thereon unless
such tax, assessment or charge is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and
each Guarantor has established such reserve or other appropriate provision,
if any, as shall be required in conformity with general accepted accounting
principals; provided that each Guarantor shall in any event pay such taxes,
assessments and governmental charges not later than five (5) days prior to
the date of any proposed sale under any judgment, writ or warrant of
attachment entered or filed against any Guarantor as a result of the
failure to make such payment.
(c) Financial Statements. Each Guarantor shall keep, and cause each
of its Subsidiaries to keep, adequate records and books of account with
respect to its business activities in which proper entries are made in
accordance with GAAP reflecting all its financial transactions; and cause
to be prepared and furnished to Lender the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless any Guarantor's
certified public accountants concur in any change therein and such change
is disclosed to Lender and is consistent with GAAP):
(i) as soon as available but not later than one hundred twenty
(120) days after the close of each fiscal year of each Guarantor,
unqualified audited financial statements of each Guarantor and its
Subsidiaries as of the end of such year, on a Consolidated basis,
consisting of a balance sheet, income statement and statement of cash
flows, certified by a firm of independent certified public accountants
of recognized standing selected by each Guarantor but reasonably
acceptable to Lender (except for a qualification for a change in
accounting principles with which the accountant concurs);
(ii) as soon as available but not later than thirty (30) days
after the end of each month hereafter, including the last month of each
Guarantor's fiscal year, unaudited interim financial statements of each
Guarantor and its Subsidiaries as of the end of such month and of the
portion of such Guarantor's financial year then elapsed, on a
Consolidated basis, consisting of a balance sheet, income statement and
statement of cash flows certified by the principal financial officer of
Guarantor as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of such
Guarantor and its Subsidiaries for such month and period subject only to
changes from audit and year-end adjustments and except that such
statements need not contain notes;
11
(iii) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which each Guarantor has made available to its shareholders and copies
of any regular, periodic and special reports or registration statements
which such Guarantor and/or its Subsidiaries files with the Securities
and Exchange Commission or any governmental authority which may be
substituted therefor, or any national securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Plan; and
(v) such other data and information (financial and otherwise) as
any Guarantor, from time to time, may reasonably request, bearing upon
or related to the Collateral or Guarantor's and each of its
Subsidiaries' accounts payable, accounts receivable, financial condition
or results of operations.
(d) Projections. Each Guarantor shall, no later than thirty (30) days
prior to the end of each fiscal year of such Guarantor, beginning December
31, 2001, deliver to Lender projections of such Guarantor (consisting of
Consolidated balance sheets, income statements and cash flow statements,
together with appropriate supporting details and underlying assumptions)
for the forthcoming fiscal year, month by month, the form of which shall be
consistent with those furnished by such Guarantor to Lender prior to the
date of this Guaranty.
(e) Mergers, Consolidations, Acquisitions. No Guarantor shall (i)
except for the Merger, merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any Person; nor (ii) acquire,
nor permit any of its Subsidiaries to acquire, all or any substantial part
of the Properties of any Person (provided, however, that notwithstanding
clauses (i) and (ii) above, one or more Subsidiaries of any Guarantor may
merge with or into such Guarantor or any other Subsidiary of such
Guarantor).
(f) Total Indebtedness. No Guarantor shall create, incur, assume, or
suffer to exist, or permit any of its Subsidiaries to create, incur or
suffer to exist, any Indebtedness, except:
(i) Senior Debt and Indebtedness permitted by the provisions
of the documentation governing the Senior Debt;
(ii) Indebtedness of any Guarantor and/or its Subsidiaries
which is subordinated to the Guaranteed Obligations in a manner
satisfactory to Lender;
(iii) Indebtedness evidenced by the Note and any guaranty
thereof;
(iv) Indebtedness of any Subsidiary of Borrower to Borrower
or between any Subsidiary of Borrower;
12
(v) Accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not aged
more than 90 days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless
the same are being Properly Contested;
(vi) Obligations to pay Rentals;
(vii) Permitted Purchase Money Indebtedness;
(viii) Contingent liabilities arising out of endorsements
of checks and other negotiable instruments for deposit or collection
in the ordinary course of business;
(ix) Indebtedness existing on the date hereof and described
on Exhibit A hereto, and any extensions, renewals or refinancings
thereof so long as (i) the principal amount thereof does not exceed
the then outstanding principal amount of the Indebtedness being so
extended, renewed or refinanced, and (ii) the amortization of
principal on any such refinancings shall be for no shorter period, and
for no greater annual amounts, than the original amortization
established for such Indebtedness; and
(x) contingent obligations under any guarantee by any
Guarantor or its Subsidiaries of any of the obligations of any other
Subsidiary as lessee under any lease which is otherwise permitted
under this Agreement;
(xi) Indebtedness constituting deposits to secure the
performance of bids, trade contracts (other than for Money Borrowed),
leases, statutory obligations, surety and appeal bonds and performance
bonds under other obligations of a like nature that are incurred in
the ordinary course of business, not to exceed Five Hundred Thousand
Dollars ($500,000) in the aggregate at any time outstanding;
(xii) indemnities arising under agreements entered into by
Guarantor or any of its Subsidiaries in the ordinary course of
business;
(xiii) Indebtedness arising on account of deferred taxes,
deferred workers' compensation liabilities, or deferred employee
medical liabilities; and
(xiv) Indebtedness not included in paragraphs (i) through
(xiii) above which does not exceed at any time, in the aggregate, the
sum of One Hundred Thousand Dollars ($100,000).
(g) Affiliate Transactions. No Guarantor shall enter into, or be a
party to, or permit any of its Subsidiaries to enter into or be a party to,
any transaction with any Affiliate or stockholder except (i) those in
existence on the closing date of the Merger
13
and fully disclosed to Lender, or (ii) in the ordinary course of and
pursuant to the reasonable requirements of any Guarantor's or such
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate or
stockholder of such Guarantor or such Subsidiary.
(h) Limitation on Liens. No Guarantor shall create or suffer to
exist, or permit any of its Subsidiaries to create or suffer to exist, any
Lien upon any of its Property, income or profits, whether now owned or
hereafter acquired, except:
(i) Liens at any time granted in favor of the holders of
Senior Debt or their representative;
(ii) Liens at any time granted in favor of Lender;
(iii) Liens for Taxes (excluding any Lien imposed pursuant
to any of the provisions of ERISA) not yet due, or being Properly
Contested;
(iv) Liens arising in the ordinary course of its business by
operation of law or regulation in favor of materialmen, mechanics,
carriers, warehousemen, landlords and similar Persons, but only if (a)
payment in respect of any such Lien is not at the time required or (b)
the Indebtedness secured by such Lien is being Properly Contested and
such Lien does not materially detract from the value of the Property
or materially impair the use thereof in the operation of its business;
(v) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(vi) Liens securing Indebtedness of one of Guarantor's
Subsidiaries to Guarantor or another such Subsidiary;
(vii) such other Liens as appear on Exhibit B hereto;
(viii) with respect to any real Property of Borrower or any
of its Subsidiaries, such other easements or encumbrances or other
imperfections of title to the extent they do not materially affect the
value of, interfere with the use of, or materially impair the business
or operations of, Borrower or any of its Subsidiaries;
(ix) Liens permitted by the documentation governing the
Senior Debt; and
(x) such other Liens as Lender may hereafter approve in
writing.
14
(i) Distributions. No Guarantor shall declare or make any
Distributions, except (i) Distributions to employees of such Guarantor or
its Subsidiaries consisting of the purchase of such Guarantor Common Stock
upon the termination of the employment of any such employee, and (ii)
Distributions consisting of dividends paid-in-kind on the Series A
Preferred Stock, .001 par value per share of Guarantor, and (iii)
Distributions permitted by the provisions of the documentation governing
the Senior Debt.
4.2 Indemnity. From and after the date hereof and notwithstanding the
payment in full of the Guaranteed Obligations and termination of this Guaranty,
each Guarantor hereby indemnifies and holds harmless Lender and its
predecessors, successors, parents, subsidiaries, affiliates, past and present
officers, directors, partners, stockholders, trustees, employees, attorneys,
accountants, insurers, consultants, agents and servants (collectively, the
"Equus Parties") from any and all liability, damage, cost and expenses incurred
(including reasonable attorneys fees) should any Person (other than Xxxx Xxxxx,
Xxxx Xxxxx or any relative or affiliate of Xxxx Xxxxx or Xxxx Xxxxx) assert any
claim, demand, action or cause of action of any nature or character, by, through
or under, either PEI or Successor Corporation with respect to the matters
released pursuant to Section 6.2(a) of that certain Settlement Agreement and
Plan of Reorganization, dated July 31, 2001, among PEI, IDS, Sub and Lender (the
"Equus Settlement Agreement") or should any PEI Shareholder assert any claim,
demand, action or cause of action of any nature or character with respect to the
matters released or intended to be released pursuant to Section 6.2(a) of the
Equus Settlement Agreement. "PEI Shareholder" means any Person (other than Xxxx
Xxxxx, Xxxx Xxxxx or any relative or affiliate of Xxxx Xxxxx or Xxxx Xxxxx) who
owned any capital stock of PEI prior to the Closing Date (as defined in the Plan
of Merger).
SECTION 5. MISCELLANEOUS
5.1 Survival of Warranties. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Guaranty.
5.2 Notices. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile, and
unless otherwise expressly provide herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, three
days after deposit in the mail, or one day after delivery to an overnight
courier or, in the case of a facsimile notice when sent, addressed to the
address on the signature pages or to such other addresses as each such party may
in writing hereafter indicate.
5.3 Severability. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
5.4 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, or consent to any departure by any
Guarantor therefrom, shall in any event be effective unless in writing and
signed by Lender and each Guarantor. Any
15
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
5.5. Headings. Section and subsection headings in this Guaranty are
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
5.6 Applicable Law. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF EACH
GUARANTOR AND LENDER HEREUNDER AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED TO
BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE.
5.7 Successors and Assigns; Reliance by Lender. This Guaranty is a
continuing guaranty and shall be binding upon each Guarantor and its successors
and assigns. This Guaranty shall inure to the benefit of Lender and their
respective successors and assigns, including, without limitation, any subsequent
holder of all or any part of the Obligations. No Guarantor shall assign this
Guaranty nor any of the rights or obligations of any Guarantor hereunder without
the prior written consent of Lender. Lender may assign its interest in this
Guaranty in whole or in part as part of a sale or other transfer of all or any
portion of its interest in the Note (whether by direct transfer, transfer of a
participation interest, or otherwise). The terms and provisions of this
Guaranty shall inure to the benefit of any assignee or transferee of any
interest in the Note, and in the event of such transfer or assignment the rights
and privileges herein conferred upon Lender shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof.
5.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION LOCATED IN XXXXXX COUNTY, TEXAS AND BY EXECUTION AND DELIVERY OF
THIS GUARANTY EACH GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
GUARANTY AND/OR THE NOTE. Each Guarantor hereby agrees that service of process
sufficient for personal jurisdiction in any action against such Guarantor in the
State of Texas may be made by registered or certified mail, return receipt
requested, to each Guarantor in accordance with subsection 5.2, and each
Guarantor hereby acknowledges that such service shall be effective and binding
in every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Lender to bring
proceedings against Guarantor in the courts of any other jurisdiction.
16
5.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, LENDER HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
GUARANTY, THE SECURITY AGREEMENT OR THE NOTE. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each Guarantor and, by its acceptance of
the benefits hereof, Lender (i) acknowledges that this waiver is a material
inducement for each Guarantor and Lender to enter into a business relationship,
that each Guarantor and Lender have already relied on this waiver in entering
into this Guaranty and the Security Agreement or accepting the benefits thereof,
as the case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE SECURITY AGREEMENT
AND THE NOTE. In the event of litigation, this Guaranty may be filed as a
written consent to a trial by the court.
5.10 No Other Writing. This writing is intended by each Guarantor and
Lender as the final expression of this Guaranty and is also intended as a
complete and exclusive statement of the terms of their agreement with respect to
the matters covered hereby. No course of dealing, course of performance or
trade usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
5.11 Further Assurances. At any time or from time to time, each Guarantor
shall execute and deliver such further documents and do such other acts and
things as Lender may reasonably request in order to effect fully the purposes
of this Guaranty.
[Signature pages follow]
17
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty by its duly
authorized officer as of the date first above written.
INDUSTRIAL DATA SYSTEMS
CORPORATION, a Nevada corporation
By:
----------------------------------------
Xxxxxxx X. Xxxxxx, President
Address: 000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxx 00000-0000
IDS ENGINEERING, INC.,
a Texas corporation
By:
----------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
IDS ENGINEERING MANAGEMENT, LC,
a Texas limited liability company
By:
----------------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
THERMAIRE, INC. d/b/a THERMAL CORP., a Texas
corporation
By:
----------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
CONSTANT POWER MANUFACTURING, INC., a Texas
corporation
By:
----------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
18
INDUSTRIAL DATA SYSTEMS, INC., a Texas corporation
By:
----------------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
PETROCON ENGINEERING, INC.,
a Texas corporation
By:
----------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
TRIANGLE ENGINEERS & CONSTRUCTORS,
INC., a Texas corporation
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
PETROCON SYSTEMS, INC.,
a Texas corporation
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
PETROCON TECHNOLOGIES, INC.,
a Texas corporation
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
19
PETROCON ENGINEERING OF LOUISIANA,
INC., a Louisiana corporation
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
R.P.M. ENGINEERING, INC.,
a Louisiana corporation
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
ALLIANCE ENGINEERING ASSOCIATES,
INC., a Texas corporation
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
PETROCON CONSTRUCTION RESOURCES,
INC., a Texas corporation
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Secretary
Accepted by:
EQUUS II INCORPORATED,
as Lender
By:
-------------------------------
Xxxxxxx X. Xxxx, Vice President
Address: 0000 Xxxxx Xxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
20
APPENDIX A
GENERAL DEFINITIONS
When used in the Guaranty by and between the Guarantors and Equus II
Incorporated, the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):
Affiliate - means, as to any specified Person, any other Person who,
directly or indirectly through one or more intermediaries or otherwise,
controls, is controlled by or is under common control with the specified Person.
As used in this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person (whether through ownership of capital stock of the Person,
by contract, or otherwise).
Capitalized Lease Obligations - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Collateral - all of the Property and interests in Property described in the
Security Agreements of even date herewith in favor of Guarantor, and all other
Property and interests in Property that now or hereafter secure the payment and
performance of any of the Guaranteed Obligations.
Consolidated - the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.
Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
Indebtedness - as applied to a Person means, without duplication: (i) all
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined, including Capitalized
Lease Obligations; (ii) all obligations of other Persons which such Person has
guaranteed; (iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such Person; and
(iv) in the case of Guarantor or any of its Subsidiaries (without duplication),
the Senior Debt and the Guaranteed Obligations.
21
Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Guaranty, each Guarantor and its
Subsidiaries shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement or other arrangement
pursuant to which title to the Property has been retained by or vested in some
other Person for security purposes.
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any person to any Guarantor or any of its Subsidiaries, (ii) Indebtedness,
whether or not in any such case arising from the lending by any Person of money
to any Guarantor or any of its Subsidiaries, (A) which is represented by notes
payable or drafts accepted that evidence extensions of credit, (B) which
constitutes obligations evidenced by bonds, debentures, notes or similar
instruments, or (C) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment for
Property; (iii) Indebtedness that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of any Guarantor or any of its
Subsidiaries under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if owed
directly by any Guarantor or any of its Subsidiaries.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of any
Guarantor or any of its Subsidiaries incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the principal
amount of all other such Indebtedness and Capitalized Lease Obligations of
Guarantor and its Subsidiaries at the time outstanding, does not exceed Two
Hundred Thousand Dollars ($200,000). For the purposes of this definition, the
principal amount of any Purchase Money Indebtedness consisting of capitalized
leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.
Property Contested - in the case of any Indebtedness of any Guarantor or
any of its Subsidiaries (including any Taxes) that is not paid as and when due
or payable by reason of such Person's bona fide dispute concerning its liability
to pay same or concerning the amount thereof, that (i) such Indebtedness and any
Liens securing same are being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, (ii) such Person has
established appropriate reserves as shall be required in conformity with GAAP,
(iii) the non-payment of such Indebtedness will not have a material adverse
effect and will not result in a forfeiture of any assets of such Person; (iv) no
Lien is imposed upon any of such Person's assets
22
with respect to such Indebtedness unless such Lien is at all times junior and
subordinate in priority to the Liens in favor of Lender (except only with
respect to property taxes that have priority as a matter of applicable state law
and Liens securing Senior Debt); (v) if the Indebtedness results from the entry,
rendition or issuance against any Guarantor or any of its Subsidiaries or any of
their respective assets of a judgment, writ, order or decree, such judgment,
writ, order or decree is stayed or bonded pending a timely appeal or other
judicial review; and (vi) if such contest is abandoned, settled or determined
adversely to such Person, such Person forthwith pays such Indebtedness and all
penalties and interest in connection therewith.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than Senior Debt or the Guaranteed Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness (other
than Senior Debt or the Guaranteed Obligations) incurred at the time of or
within ten (10) days prior to or after the acquisition of any fixed assets for
the purpose of financing all or any part of the purchase price thereof, and
(iii) any renewals, extensions or refinancings thereof, but not any increases in
the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.
Rentals - payments which a lessee is required to make by the terms of any
operating lease.
Security - shall have the same meaning as in Section 2(l) of the Securities
Act of 1933, as amended.
Taxes - any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including, without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
23
EXHIBIT A
EXISTING INDEBTEDNESS
HOLDER OF INDEBTEDNESS DESCRIPTION OF INDEBTEDNESS MATURITY DATE
-----------------------------------------------------------------------------------------------------------------------
Chase Bank of Texas, N.A. Mortgage loan on Thermaire, Inc. land and 2-28-02 (balloon of
building--debt to be paid off at closing $362,432.63)
-----------------------------------------------------------------------------------------------------------------------
HOLDER OF INDEBTEDNESS DESCRIPTION OF INDEBTEDNESS MATURITY DATE
-----------------------------------------------------------------------------------------------------------------------
Wall Street Financial, LP $190,916.47 owed to Wall Street 6/30/2002
Financial, LP by Petrocon Engineering,
Inc. pursuant to a finance agreement
dated October 16, 2001, related to
premiums for commercial insurance for the
period from September 30, 2001 to
September 30, 2002.
-----------------------------------------------------------------------------------------------------------------------
Petrocon Arabia, Ltd. $937,230.00 Non-Negotiable Subordinated 6/1/2004
Promissory Note from Petrocon Engineering
to Petrocon Arabia, Ltd. dated March 9,
2000.
-----------------------------------------------------------------------------------------------------------------------
CNA Insurance Companies $193,180.56 owed to CNA by Petrocon
pursuant to a finance agreement dated
October 26, 2001 related to premiums for
commercial insurance for the period from
September 30, 2001 to September 30, 2002.
-----------------------------------------------------------------------------------------------------------------------
Xxxxx Seldford Vehicle Financing, Ford F-150 12/2003
VIN: 0XXXX00000XX00000
-----------------------------------------------------------------------------------------------------------------------
CARLTECH, INC. $1,759,881.24 owed to subcontractors on 05/2002
CPW, INC. the ARAMCO project pursuant to Debt
GAS UNLIMITED, INC. Restructure Agreement dated August 11,
PETROTECH SERVICES, INC. 1999
TACI
-----------------------------------------------------------------------------------------------------------------------
ABB AUTOMATION $1,435,351.90 owed to equipment supplies 05/2002
YOKOGAWA ELECTRIC CORP. on the ARAMCO project pursuant to Debt
Restructure Agreement dated June, 2000.
-----------------------------------------------------------------------------------------------------------------------
24
EXHIBIT B
PERMITTED LIENS
IDSC and its Subsidiaries have the following capitalized leases:
LESSEE LESSOR TERMS OF LEASE PROPERTY COVERED
----------------------------------------------------------------------------------------------------------------
Thermal Citicapital 60 months Press Brake
----------------------------------------------------------------------------------------------------------------
Thermal Unicapital 60 months Flexspander
----------------------------------------------------------------------------------------------------------------
Constant Power Great American Leasing 60 months Phone System
----------------------------------------------------------------------------------------------------------------
Thermal CIT Group Equipment 36 months Fork Lift
----------------------------------------------------------------------------------------------------------------
Constant Power ______________ _____________ CADD Plodder
----------------------------------------------------------------------------------------------------------------
IDSC and its Subsidiaries have the following operating leases:
LESSEE LESSOR TERMS OF LEASE PROPERTY COVERED
-------------------------------------------------------------------------------------------------------------------------
IDS-Eng Houston G E Capital 48 Months Eff 09/01 Xerox Printing System
-------------------------------------------------------------------------------------------------------------------------
IDS-Eng Houston Panasonic 48 Months Eff 05/01 Panasonic Copier FP 60552
-------------------------------------------------------------------------------------------------------------------------
IDS-Eng Houston G E Capital 48 Months Toshiba Copier 5550
-------------------------------------------------------------------------------------------------------------------------
Industrial Data System G E Capital 36 Months Eff 02/00 Toshiba Copier 6550
-------------------------------------------------------------------------------------------------------------------------
Constant Power Mfg. Xxxxxxx 36 Months Toshiba Copier
-------------------------------------------------------------------------------------------------------------------------
Real Estate Leases:
1. Lease dated August 18, 1997, and all amendments thereto, between 000
Xxxxxxx Xxxxx Associates, Ltd. and Industrial Data Systems, Inc.
2. Lease dated September 1, 1998, and all amendments thereto, between 600 C.C.
Business Park Ltd. and Industrial Data Systems, Inc.
3. Business Park Lease dated September 1, 2000, between Wilshire Square and
IDS Engineering, Inc.
4. Master Lease Agreement dated January 3, 2001, between Citicorp Capital and
Thermaire, Inc.
Standard Industrial Lease Agreement between Constant Power Manufacturing, Inc.
and Houston Industrial Assets, L.P.
25
FILING JURISDICTION: IOWA SECRETARY OF STATE
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
Petrocon Construction Resources, None of Record
Inc.
--------------------------------------------------------------------------------------------------------------------
FILING JURISDICTION: ILLINOIS SECRETARY OF STATE
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
Petrocon Construction Resources, None of Record
Inc.
--------------------------------------------------------------------------------------------------------------------
FILING JURISDICTION: LOUISIANA STATEWIDE SEARCH
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
AMEC Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx & Xxxxx Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Petrocon Construction Resources, None of Record
Inc.
--------------------------------------------------------------------------------------------------------------------
IBM Credit Corporation R.P.M. Engineering, Inc. IBM Equipment lien
--------------------------------------------------------------------------------------------------------------------
IBM Credit Corporation R.P.M. Engineering, Inc. IBM Equipment lien
--------------------------------------------------------------------------------------------------------------------
FILING JURISDICTION: CALCASIEU PARISH, LOUISIANA
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
Petrocon Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Petrocon Engineering of Louisiana, None of Record
Inc.
--------------------------------------------------------------------------------------------------------------------
FILING JURISDICTION: EAST BATON ROUGE PARISH, LOUISIANA
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
AMEC Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx & Xxxx Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
26
FILING JURISDICTION: NORTH DAKOTA SECRETARY OF STATE
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
AMEC Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx & Xxxx Engineering None of Record
--------------------------------------------------------------------------------------------------------------------
R.P.M. Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
FILING JURISDICTION: TEXAS SECRETARY OF STATE
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
Sunbelt National Bank Alliance Engineering Associates, PMSI in custom computer network
Inc. (also Alliance Engineering, system.
Inc.)
--------------------------------------------------------------------------------------------------------------------
AMEC Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx & Xxxx Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Petrocon of Arabia, Ltd. None of Record
--------------------------------------------------------------------------------------------------------------------
Texas Commerce Bank - National Petrocon Construction Resources, 1995 Ford F150
Association Inc.
--------------------------------------------------------------------------------------------------------------------
Sanwa Leasing Corp. Petrocon Engineering, Inc. Sharp duplicator and copiers.
--------------------------------------------------------------------------------------------------------------------
Lease Partners, Inc. Petrocon Engineering, Inc. Equipment lease for phone system
--------------------------------------------------------------------------------------------------------------------
Lease Partners, Inc. Petrocon Engineering, Inc. Equipment lease for routers and voice
mail
--------------------------------------------------------------------------------------------------------------------
Sharp Electronic Credit Co. Petrocon Engineering, Inc. Sharp copier systems
--------------------------------------------------------------------------------------------------------------------
Tokai Financial Services, Inc. Petrocon Engineering, Inc. Royal copier systems
--------------------------------------------------------------------------------------------------------------------
Xxxxx Leasing Company Petrocon Engineering, Inc. Xerox equipment
--------------------------------------------------------------------------------------------------------------------
Technology Integration Financial Petrocon Engineering, Inc. Computer equipment and accessories
Services, Inc.(Assigned to under lease
NationsCredit Commercial Corp.)
--------------------------------------------------------------------------------------------------------------------
Petrocon FSC, Ltd. None of Record
--------------------------------------------------------------------------------------------------------------------
R.P.M. Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
27
FILING JURISDICTION: XXXXXX COUNTY, TEXAS
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
Alliance Engineering, Inc. None of Record
--------------------------------------------------------------------------------------------------------------------
Alliance Engineering Associates, None of Record
Inc.
--------------------------------------------------------------------------------------------------------------------
Technology Integration Financial Petrocon Engineering, Inc. Computer equipment and accessories
Services, Inc.(Assigned to under lease
NationsCredit Commercial Corp.)
--------------------------------------------------------------------------------------------------------------------
FILING JURISDICTION: JEFFERSON COUNTY, TEXAS
--------------------------------------------------------------------------------------------------------------------
Secured Party Debtor Nature of Lien
--------------------------------------------------------------------------------------------------------------------
Technology Integration Financial Petrocon Engineering, Inc. Computer equipment and accessories
Services, Inc. (Assigned to under lease
NationsCredit Commercial Corp.)
--------------------------------------------------------------------------------------------------------------------
28
