EXECUTION COPY
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of January 30, 1998
among
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
as Borrower,
XXX ACQUISITION CORP.
and
WEXFORD CAPITAL PARTNERS II, L.P.
WEXFORD OVERSEAS PARTNERS I, L.P.
as the Tranche A Lenders
and
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.
and
WEXFORD MANAGEMENT LLC
as Agent for the Lenders
INDEX OF EXHIBITS AND SCHEDULES
Exhibit A-1 - Tranche A Note
Exhibit A-2 - Tranche B Note
Exhibit B - First Amendment to Guaranty
Exhibit C-1 - First Amendment to Patent Assignment
of Wahlco Environmental Systems, Inc.
Exhibit C-2 First Amendment to Patents Assignment of Wahlco, Inc.
Exhibit C-3 First Amendment to Patent Assignment of Wahlco
International, Inc.
Exhibit D - First Amendment to Security Agreement
Exhibit E - First Amendment to Stock Pledge Agreement
Schedule 3.6 Defaults
Schedule 3.10 Taxes
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January 30, 1998
(the "1998 Credit Agreement"), among (a) WAHLCO ENVIRONMENTAL SYSTEMS, INC., a
Delaware corporation ("Borrower"); (b) XXX ACQUISITION CORP., a Delaware
corporation ("WESAC") and (c) WEXFORD CAPITAL PARTNERS II, L.P., a Delaware
limited partnership ("WCP"), WEXFORD OVERSEAS PARTNERS I, L.P., a Delaware
limited partnership ("WOSP") (WCP and WOSP collectively, the "Tranche A
Lenders"), 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 together with the Tranche A Lenders, the
"Lenders"); and WEXFORD MANAGEMENT LLC, a Connecticut limited liability
company, as administrative and collateral agent for the Lenders (the "Agent").
RECITALS
A. Borrower and WESAC have entered into a series of related credit
and collateral security agreements, starting with the Term Loan Agreement,
dated as of July 28, 1995, related collateral security instruments, the Side
Letter dated May 9, 1996 from the Borrower to WESAC, and the 1996 Financing
Letter dated August 28, 1996 from the Borrower to WESAC; such series, taken as
a whole and, as amended, supplemented or otherwise modified to date (the
"Existing Credit Lines").
B. Pursuant to a Restructuring Agreement of even date herewith (the
"Restructuring Agreement"), on the Closing Date, the Lenders have agreed, among
other things, to convert the Wexford Conversion Debt now outstanding under the
Existing Credit Lines into shares of the Borrower's Common Stock, par value
$.10 per share, at the rate of one share of Common Stock for each $1.00 of such
indebtedness.
C. The Lenders are now prepared to make Tranche A Loans and Tranche B
Loans to Borrower on the terms and conditions specified herein.
D. The Lenders require, among other conditions precedent, that
certain Collateral Documents by Borrower in favor of WESAC be amended and
restated to clarify and expressly state that (i) new advances hereunder shall
be fully secured under those Collateral Documents and (ii) all collateral
security interests previously granted to WESAC shall be assigned by WESAC to
the Agent for the benefit of WESAC and the Lenders.
E. It is one of several conditions precedent to such restructuring
that this 1998 Credit Agreement be executed and delivered, to novate the
Existing Credit Lines to replace WESAC as a Lender, and to substitute the Agent
for WESAC as named secured party for the benefit of the Lenders, all as more
fully set forth below.
1. DEFINITIONS
In addition to the defined terms appearing above, capitalized terms
used in this 1998 Credit Agreement shall have (unless otherwise provided
elsewhere in this 1998 Credit Agreement) the following respective meanings when
used herein:
1.1. "Account Debtor" shall mean any Person who is or who may become
obligated to Borrower or any of its Subsidiaries under, with respect to, or on
account of, an Account.
1.2. "Accounts" shall mean all accounts, accounts receivable, other
receivables, contract rights, chattel paper, instruments, documents, and notes,
whether now owned or hereinafter acquired by Borrower or any of its
Subsidiaries.
1.3. "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.
1.4. "Ancillary Agreements" shall mean all those agreements as to
which Borrower, 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 or the Restructuring Agreement.
1.5. "Borrower" shall mean Wahlco Environmental Systems, Inc., a
Delaware corporation having an office at 0000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx
Xxx, Xxxxxxxxxx 00000-0000.
1.6. "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.
1.7. "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.
1.8. "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 Borrower or a Subsidiary of Borrower, any such lease under which Borrower or
such Subsidiary is the lessor.
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1.9. "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.
1.10. "Cash Equivalents" shall have the meaning assigned to it in
Section 7.2 hereof.
1.11. "Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental (including, without limitation,
PBGC) taxes at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) Borrower's or any of its Subsidiaries' employees, payroll,
income or gross receipts, (iv) Borrower's or any of its Subsidiaries' ownership
or use of any of its assets, or (v) any other aspect of Borrower's or any of
the Subsidiaries' business.
1.12. "Chase" means The Chase Manhattan Bank.
1.13. "Chase Facility" means a non-committed line of credit, arranged
and guaranteed by the Lenders. As at the date hereof, Borrower had borrowings
outstanding aggregating $2.65 million (the "Chase Facility Baseline Amount").
1.14. "Chase Facility Tranche A Commitment Reduction Amount" means the
excess, if any, of (x) Borrower's aggregate borrowings under the Chase Facility
prior to the Restructuring Date, over (y) the Chase Facility Baseline Amount.
1.15. "Chase Facility Tranche B Commitment Reduction Amount" means the
excess, if any, of (x) Borrower's aggregate borrowings under the Chase Facility
from and after the Restructuring Date over (y) the amount of Borrower's
borrowings under the Chase Facility on the Restructuring Date.
1.16. "Closing Date" shall mean the date the Lenders make the initial
Tranche A Loan.
1.17. "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.
1.18. "Collateral" shall mean the collateral covered by the Security
Agreement, the Patent Assignments, and the Pledged Collateral covered by the
Stock Pledge Agreement (as such term is defined therein).
1.19. "Collateral Documents" shall mean the Security Agreement, the
Patent Assignments and the Stock Pledge Agreement.
1.20. "Commission" means the Securities and Exchange Commission or any
successor thereto.
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1.21. "Commitment Termination Date" shall mean June 30, 1998.
1.22. "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 Borrower to or
accrued for the account of such Person or otherwise for the direct or indirect
benefit of such Person.
1.23. "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.
1.24. "Due Date" shall mean the date on which payment is due with
respect to an Account, as indicated on the invoice or statement of Account
rendered to the Account Debtor.
1.25. "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.
1.26. "Event of Default" shall have the meaning assigned to it in
Section 9.1 hereof.
1.27. "Financials" shall mean the financial statements referred to in
Section 4.6(a) hereof.
1.28. "Fiscal Year" shall mean the calendar year. Subsequent changes
of the fiscal year of Borrower shall not change the term "Fiscal Year," unless
the Lenders shall consent in writing to such changes.
1.29. "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
1.30. "Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.31. "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
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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.
1.32. "Guarantor" shall mean each Subsidiary of Borrower, each of
which is executing and delivering to the Agent on behalf of the Lenders the
Guaranty.
1.33. "Guaranty" shall mean the existing Guaranty dated as of July 25,
1995, between Borrower and WESAC, as amended by the First Amendment thereto,
and as may be amended from time to time hereafter.
1.34. "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 assumed or become liable for the
payment of such Indebtedness, (vii) the Obligations, and (viii) all liabilities
under Title IV of ERISA.
1.35. "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 Borrower or any of its Subsidiaries, or in transit to Borrower
or any of its Subsidiaries, including such inventory as is on consignment to
third parties, leased to customers of Borrower or any of its Subsidiaries, or
otherwise temporarily out of the custody or possession of Borrower or any of
its Subsidiaries.
1.36. "IRC" shall mean the Internal Revenue Code of 1986, as amended,
and any successor thereto.
1.37. "IRS" shall mean the Internal Revenue Service, or any successor
thereto.
1.38. "Leases" shall mean all of those leasehold estates in real
property now owned or hereafter acquired by Borrower or any Subsidiary of
Borrower, as lessee.
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1.39. "Lenders" shall mean the initial Lenders defined in the
Preamble, but excluding WESAC (and the Borrower as successor by merger) from
and after the date the WESAC Merger is effected, and adding or substituting any
assignees or alternate Lender or Lenders the lenders may from time to time
nominate by written notice to the Borrower.
1.40. "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).
1.41. "Loan" or "Loans" shall mean the Tranche A and the Tranche B
Loans.
1.42. "Loan Documents" shall mean this 1998 Credit Agreement, the
Tranche A and Tranche B Notes, the Collateral Documents, the Guaranty, 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
Borrower or any of its Affiliates, or any employee of Borrower or any of its
Affiliates, and delivered to the Agent or any Lender in connection with this
1998 Credit Agreement or the transactions contemplated hereby, and all
amendments or supplements to any of the foregoing.
1.43. "Loan Party" shall mean Borrower and each Subsidiary of
Borrower.
1.44. "Material Adverse Effect" shall mean material adverse effect on
(i) the business, assets, operations, prospects or financial or other condition
of Borrower and its Subsidiaries taken as a whole, (ii) Borrower's and its
Subsidiaries' collective ability to pay the Obligations in accordance with the
terms thereof, or (iii) the Collateral or Lenders' Liens on the Collateral or
the priority of any such Lien.
1.45. "1998 Credit Agreement" shall mean this Agreement, and all
amendments, modifications and supplements hereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to this 1998 Credit
Agreement as the same may be in effect at the time such reference becomes
operative.
1.46. "Obligations" shall mean all loans, advances, debts,
liabilities, and obligations for monetary amounts (whether or not such amounts
are liquidated or determinable) owing by Borrower or any of its Subsidiaries or
all of them to any Lenders, or any Subsidiary or Affiliate of a Lender, and all
covenants and duties regarding such amounts, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other instrument,
arising under any of the Loan Documents. This term includes, without
limitation, the Wexford Conversion Debt (prior to the Restructuring Date), any
surviving obligations of Borrower under
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the Existing Credit Lines, the Tranche A and Tranche B Loans, and any amounts
payable to Chase or its affiliates on account of the Company's obligations under
the Chase Facility and any and all other, future advances, as well as all
interest, Commitment Fees, charges, expenses, attorneys' fees and any other sum
chargeable to Borrower or any or all of its Subsidiaries under any of the Loan
Documents.
1.47. "Patent Assignments" shall mean the existing Patent Assignments,
each dated as of July 25, 1995 between Borrower and WESAC, Wahlco, Inc. and
WESAC, and Wahlco International, Inc. and WESAC, in each case as amended by the
First Amendment thereto, substantially in the form of Exhibits C-1, C-2 and C-3
attached hereto and as may be amended from time to time hereafter.
1.48. "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 1998 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 leases to which Borrower or any of its Subsidiaries is a
party as lessee made in the ordinary course of business; (iv) deposits securing
public or statutory obligations of Borrower or any of its Subsidiaries; (v)
workers', mechanics', suppliers', carriers', warehousemen's or other similar
liens arising in the ordinary course of business and securing indebtedness
aggregating not in excess of $100,000 at any time outstanding, not yet due and
payable; (vi) deposits securing or in lieu of surety, appeal or customs bonds
in proceedings to which Borrower or any of its Subsidiaries is a party; (vii)
any attachment or judgment lien, unless the judgment it secures shall not,
within 60 days after the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall not have been discharged within 60 days
after the expiration of any such stay; (viii) zoning restrictions, easements,
licenses, or other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so long as the
same do not materially impair the use, value, or marketability of such real
property, leases or leasehold estates; and (ix) Liens on cash and Cash
Equivalents to secure Letter of Credit Obligations, and (x) prior to the
Restructuring Date, Liens in favor of Silicon Valley Bank.
1.49. "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).
1.50. "Plan" shall mean, with respect to Borrower or any ERISA
Affiliate, at any time, an employee benefit plan, as defined in Section 3(3) of
ERISA, which Borrower or any of its Subsidiaries maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
1.51. "Required Lenders" shall mean, as of any date, the holders of
Notes evidencing at least a majority of the aggregate unpaid principal amount
of the Loans; provided,
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however, that any amendment to, modification of or supplement to this 1998
Credit Agreement or waiver of a Default or an Event of Default hereunder that
would have the effect of reinstating the obligations to make Loans from and
after the date such obligations have been terminated or changing the terms of,
amount of or obligation to make Loans shall require the affirmative consent
thereto of each Lender whose obligations would be so increased.
1.52. "Reserves" shall mean such reserves for doubtful accounts,
returns, allowances and the like as may be established by Borrower or any
Subsidiary or as may otherwise be required in accordance with GAAP.
1.53. "Restricted Lease" shall mean, as at any date, any lease of
property (whether real, personal or mixed) other than Capital Leases.
1.54. "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 Borrower's Stock
or (ii) any payment on account of the purchase, redemption or other retirement
of Borrower's Stock or any other payment or distribution made in respect
thereof, either directly or indirectly.
1.55. "Restructuring Date" means the closing date under the
Restructuring Agreement.
1.56. "SEC Documents" means each report or filing made by Borrower
with the Commission.
1.57. "Security Agreement" shall mean the Security Agreement dated as
of July 25, 1995, between Borrower and WESAC, as amended by the First Amendment
thereto, and as may be amended from time to time hereafter.
1.58. "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).
1.59. "Stock Pledge Agreement" shall mean the Stock Pledge Agreement
dated as of July 25, 1995, between Borrower and WESAC, as amended by the First
Amendment thereto, and as may be amended from time to time hereafter.
1.60. "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
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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%.
1.61. "Termination Date" shall mean the date on which all Existing
Credit Lines and any other Obligations hereunder have been completely
discharged and Borrower shall have no further right to borrow any monies
hereunder.
1.62. "Tranche A Commitment" shall mean the Lenders' commitment to
make the Tranche A Loans under Section 2.2.
1.63. "Tranche A Commitment Termination Date" shall mean the earliest
of (a) the Restructuring Closing Date, (b) June 30, 1998, or (c) the date
Tranche A Commitment terminates pursuant to Section 8.2.
1.64. "Tranche A Loan" shall have the meaning assigned in Section
2.2(a).
1.65. "Tranche A Note" shall have the meaning assigned in Section
2.2(b).
1.66. "Tranche B Commitment" shall mean the Lenders' commitment to
make the Tranche B Loans under Section 2.2.
1.67. "Tranche B Commitment Termination Date" shall mean the earlier
of (a) December 31, 2000, or (b) the date the Tranche B Commitment is
terminated pursuant to Section 8.2.
1.68. "Tranche B Loan" shall have the meaning assigned in Section
2.2(a).
1.69. "Tranche B Note" shall have the meaning assigned in Section
2.2(b).
1.70. "Wexford Conversion Debt" shall mean all Obligations owed or
accrued as of the Closing Date under the Existing Credit Lines.
1.71. "Welfare Plans" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, which is maintained or contributed to by Borrower, any
of its Subsidiaries or any ERISA Affiliate.
1.72. "Withdrawal Liability" means, at any time, the aggregate amount
of the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase
in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
1.73. Accounting Terms. Any accounting term used in this 1998 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
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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 1998 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 1998 Credit
Agreement as a whole, including the Exhibits and Schedules hereto, as the same
may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this 1998 Credit
Agreement.
1.74. 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.
2. AMOUNT AND TERMS OF CREDIT
2.1. Wexford Conversion Debt. The Existing Credit Lines and all the
obligations of Borrower and each Loan Party with respect thereto shall continue
in full force and effect as regards the Wexford Conversion Debt, and shall
govern the amount and terms of the Wexford Conversion Debt, unless and until
the conversion thereof into Common Stock of Borrower is consummated pursuant to
Section 2.2 of the Restructuring Agreement, whereupon the Wexford Conversion
Debt shall be paid and discharged in accordance with the terms thereof, subject
to the survival of all existing indemnities of Borrower, which shall henceforth
run in favor of Agent on behalf of all the Lenders.
2.2. Trance A Line. (a) Upon and subject to the terms and conditions
hereof, the Tranche A Lenders agree to make available until the Tranche A
Commitment Termination Date, for Borrower's use one or more loans (each a
"Tranche A Loan") in an aggregate amount not to exceed (x) $3,000,000, minus
(y) the Chase Facility Tranche A Commitment Reduction Amount from time to time
in effect (the "Tranche A Line").
(b) Each Tranche A Loan made by the Tranche A Lenders shall be
evidenced by a promissory note to be executed and delivered by Borrower at the
time of the first Tranche A Loan, the form of which is attached hereto and made
a part hereof as Exhibit A-1 (the "Tranche A Note"). The stated maturity of the
Tranche A Note shall be the Restructuring Closing Date, provided that if the
Tranche A Loans are not prepaid in full from the proceeds of the Rights
Offering as set forth in Section 2.1 of the Restructuring Agreement, the unpaid
principal balance of the Tranche A Note shall have a stated maturity of
December 31, 2000.
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2.3 Trance B Line. (a) Upon and subject to the terms and conditions
hereof, the Lenders agree to make available, from the Restructuring Closing
Date to and including the Tranche B Commitment Termination Date, for Borrower's
use one or more advances (each a "Tranche B Loan") in an aggregate amount not
to exceed (x) $2,500,000, minus (y) the Chase Facility Tranche B Commitment
Reduction Amount from time to time in effect (the "Tranche B Line").
(b) Each Tranche B Loan made by the Lenders shall be evidenced by
a promissory note to be executed and delivered by Borrower at the time of the
first Tranche B Advance, the form of which is attached hereto and made a part
hereof as Exhibit A-2 (the "Tranche B Note"). The Tranche B Note shall have a
stated maturity of December 31, 2000.
2.4 Optional Prepayment. Borrower shall have the right at any time,
on ten days' prior written notice to Lenders, to prepay first the Tranche A
Loans, and then the Tranche B Loans, in minimum amounts of $50,000 and integral
multiples thereof, without premium or penalty. Amounts prepaid may not be
reborrowed. Each prepayment shall be accompanied by accrued but unpaid interest
on the amount prepaid.
2.5. Notice of Borrowing; Use of Proceeds. Each Tranche A Loan or
Tranche B Loan shall be made on not less than three Business Days' Notice to
the Agent, and shall be accompanied by a proposed use of proceeds, which use of
proceeds shall be reasonably acceptable to the Agent. Borrower shall use the
proceeds of the Tranche A and Tranche B Loans made hereunder for purposes
specified in the applicable notice of borrowing.
2.6. Interest. The unpaid principal balance of the Tranche A Loans and
the Tranche B Loans shall bear interest at the rate of 13% per annum until
maturity, and any amount not paid when due shall bear interest at the rate of
15% per annum, in either case based upon a year of 365 or 366, as the case may
be, days for actual days elapsed. Interest shall be payable semi-annually in
arrears on the last day of each June and January, commencing on June 30, 1998.
2.7. Assignment of Security Interest. Effective upon the execution and
delivery of this Agreement, WESAC hereby assigns to the Agent, for the benefit
of all the Lenders, all Liens and security interests held by WESAC as of the
date hereof. Borrower consents to such assignment and agrees that such Liens
and security interests shall secure all Obligations under the Existing Credit
Liens and under this 1998 Credit Agreement.
2.8. Receipt of Payments. Borrower shall make each payment under this
1998 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.
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2.9. Indemnity. Borrower 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 its having entered into any of the
Loan Documents or extended credit hereunder; provided, however, that Borrower
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.
2.10. 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 Borrower and
the Subsidiaries and to inspect, audit and make extracts from all of Borrower's
and such Subsidiaries' records, files and books of account. Borrower 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 Borrower or its Subsidiaries, and shall
maintain duplicate records or supporting documentation on paper or other media,
including, without limitation, computer tapes and discs owned by Borrower and
its Subsidiaries. Borrower shall instruct its and its 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.
3. REPRESENTATIONS AND WARRANTIES
To induce each Lender to make the Tranche A and Tranche B
Loans, as herein provided for, Borrower makes the following representations and
warranties to Lenders, each and all of which shall be true and correct as of
the date hereof, and shall survive the execution and delivery of this 1998
Credit Agreement:
3.1. Corporate Existence; Compliance with Law. Borrower and each
Subsidiary of Borrower (i) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation; (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 would not 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; (v) is in compliance with its certificate or articles of
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incorporation and by-laws; 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. The Borrower's Subsidiaries have been disclosed in
its SEC Documents.
3.3. Corporate Power; Authorization; Enforceable Obligation. The
execution, delivery and performance by Borrower and its Subsidiaries of the
Loan Documents, Ancillary Documents and all instruments and documents to be
delivered by Borrower and its 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 Borrower's and its Subsidiaries' corporate
power; (ii) have been, or by the Closing Date will be, duly authorized by all
necessary or proper corporate action; (iii) are not in contravention of any
provision of Borrower's or its Subsidiaries' respective certificates or
articles of incorporation or by-laws; (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 breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower or any of its Subsidiaries is a party or by which
Borrower or any of its 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 Borrower or any of its 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 Borrower or
its Subsidiaries, as the case may be, and each shall then constitute a legal,
valid and binding obligation of Borrower or its Subsidiaries, to the extent
they are parties thereto, enforceable against them in accordance with its
terms.
3.4. Financial Statements.
(a) All of the following balance sheets and statements of income,
retained earnings and cash flows of Borrower, copies of which have been
furnished to Lenders prior to the date of this 1998 Credit Agreement, have
been, except as noted therein, prepared in conformity with GAAP consistently
applied throughout the periods involved and present fairly the consolidated
financial position of Borrower 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 Borrower at
September 30, 1997, and the related consolidated statements of income,
retained earnings and cash flows for the three months ending on such date;
and
(ii) the audited consolidated balance sheet of Borrower as at
December 31, 1996, 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.
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(b) Borrower, as of September 30, 1997, 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 Borrower and its Subsidiaries and which would have a Material
Adverse Effect.
(c) There has been no material adverse change in the business, assets,
operations, prospects or financial or other condition of Borrower and its
Subsidiaries taken as a whole since September 30, 1997 (it being understood
that, subsequent to the Closing Date, this representation and warranty shall be
subject to the fact that Borrower shall have incurred the Obligations
hereunder). No dividends or other distributions have been declared, paid or
made upon any shares of capital Stock of Borrower or any of the Subsidiaries,
nor have any shares of capital Stock of Borrower or any of the Subsidiaries
been redeemed, retired, purchased or otherwise acquired for value by Borrower
or Subsidiaries since September 30, 1997.
3.5. Ownership of Property; Liens. Borrower or its Subsidiaries owns
good and marketable fee simple title to all of the Real Estate owned by it or
such Subsidiaries and Borrower or such Subsidiaries have good, valid and
marketable leasehold interests in the Leases to which the Borrower or any
Subsidiary is a party, and good and marketable title to, or valid leasehold
interests in, all of its other properties and assets, and none of the
properties and assets of Borrower and its Subsidiaries, including, without
limitation, the Real Estate and Leases, 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
Borrower and its Subsidiaries have duly effected all recordings, filings and
other actions necessary to establish, protect and perfect Borrower's and its
Subsidiaries' right, title and interest in and to all such property except
where the failure to have received such documents or effected such actions will
not, in the aggregate, have a Material Adverse Effect.
3.6. No Default. Except as set forth on Schedule 3.6, neither Borrower
nor any of its Subsidiaries is in default, nor to Borrower's knowledge, is any
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) would not have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
3.7. Burdensome Restrictions. No contract, lease, agreement or other
instrument to which Borrower or any of its Subsidiaries is a party or is bound
and no provision of applicable law or governmental regulation has a Material
Adverse Effect, or insofar as Borrower can reasonably foresee may have a
Material Adverse Effect.
3.8. Labor Matters. There are no strikes or other labor disputes
against Borrower or any of its Subsidiaries pending or, to Borrower's
knowledge, threatened which, if adversely determined, would have a Material
Adverse Effect. All payments due from Borrower or any of its Subsidiaries 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 Borrower or
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such Subsidiary. Neither Borrower nor any of its Subsidiaries has any
obligation under any collective bargaining agreement or any employment
agreement. There are no complaints or charges against Borrower or any of its
Subsidiaries 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 Borrower or any Subsfidiary of any individual.
3.9. Other Ventures. Except for the Borrower's 34% interest in
Bachmann India, Ltd., neither Borrower nor any Subsidiary has any equity
interest in, or is engaged in, any partnership with any other Person.
3.10. Taxes. Except as set forth on Schedule 3.10, all federal, state,
local and foreign tax returns, reports and statements required to be filed by
Borrower and its Subsidiaries 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. Each of Borrower and its
Subsidiaries has paid when due and payable all Charges required to be paid by
it. Proper and accurate amounts have been withheld by Borrower and its
Subsidiaries 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.
Neither Borrower nor any of its Subsidiaries are currently being audited by the
IRS or any other applicable Governmental Authority. Neither Borrower nor any of
its Subsidiaries has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. Neither
Borrower nor any of its Subsidiaries has filed a consent pursuant to IRC
Section 341(f) or agreed to have IRC Section 341(f)(2) apply to any
dispositions of subsection (f) assets (as such term is defined in IRC Section
341(f)(4)). None of the property owned by Borrower or any of its Subsidiaries
is property which such company is required to treat as being owned by any other
Person pursuant to the provisions of IRC Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended, and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of IRC Section 168(h). Neither Borrower nor any of its Subsidiaries
has agreed or has been requested to make any adjustment under IRC Section
481(a) by reason of a change in accounting method or otherwise. Neither
Borrower nor any of its Subsidiaries has any obligation under any written tax
sharing agreement.
3.11. ERISA. Neither the Company nor any Subsidiary has any Plan
subject to regulation under ERISA except for its 401(k) plan.
3.12. No Litigation. No action, claim or proceeding is now pending or,
to the knowledge of Borrower, threatened against Borrower or any of its
Subsidiaries, 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, if determined adversely, could have a Material
Adverse Effect, nor to the
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knowledge of Borrower 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.
3.13. Patents, Trademarks, Copyrights and Licenses. Borrower and its
Subsidiaries own 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 their knowledge, Borrower and its Subsidiaries conduct their respective
businesses 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 would not have a Material Adverse Effect. To Borrower'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 Borrower or any of its
Subsidiaries.
3.14. Liens. Except for Permitted Encumbrances, the Liens granted to
the Agent for the benefit of the Lenders pursuant to the Collateral Documents
will at the Closing Date be fully perfected first priority Liens in and to the
Collateral described therein.
3.15. Full Disclosure. No information contained in this 1998 Credit
Agreement, the other Loan Documents, the Financial Statements or any written
statement furnished by or on behalf of Borrower or its Subsidiaries pursuant to
the terms of this 1998 Credit Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which made.
4. CONDITIONS PRECEDENT
4.1. Conditions to Initial Tranche A Loan. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
the Agent or any Lender hereunder, Borrower 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 and until Borrower 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):
(a) The Tranche A Loan Note payable to the order of the Agent, duly
executed by Borrower.
(b) A favorable opinion of Xxxxx X. Xxxxxx, Esq., counsel to the
Borrower and its Subsidiaries (each a "Loan Party," and collectively, the "Loan
Parties"), in form and substance satisfactory to the Agent and its counsel;
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(c) 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 to execute and deliver this
Agreement and the other Loan Documents.
(d) 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.
(e) The Security Agreement, duly executed and delivered by borrower;
the Stock Pledge Agreement, duly executed and delivered by Borrower and each
Subsidiary owning Stock of other Subsidiaries or Borrower; the Patent
Assignments duly executed by Borrower and its Subsidiaries; and the Guaranty,
duly executed and delivered by each Guarantor; together with:
(i) acknowledgment copies of proper Financing Statements
(Form UCC-1) or Amendment to/Assignment of Financing Statements (Form UCC-3),
duly filed under the Uniform Commercial Code of each jurisdiction as may be
necessary or, in the opinion of the Agent, desirable to perfect the security
interests created by the Security Agreement;
(ii) certified copies of requests for Information or Copies (Form
UCC-11), or equivalent reports, listing the Financing Statements and
Amendment/Assignment thereof referred to in paragraph (i) above and all other
effective financing statement which name Borrower or any of its Subsidiaries
(under this present name and any previous name) as debtor and which are filed
in the jurisdictions referred to in said paragraph (i), together with copies of
such other financing statements (none of which shall cover the Collateral
purported to be covered by the Security Agreement);
(iii) evidence of the completion of all recordings and filing of the
Security Agreement and Patent Assignments as may be necessary or, in the
opinion of the Agent, desirable to perfect the security interests and liens
created by the Security Agreement and Patent Assignments;
(iv) evidence that all other actions necessary or, in the opinion
of the Agent, desirable to perfect and protect the security interests created
by the Security Agreement and Patent Assignments have been taken.
(f) A certificate of the chief executive officer and chief financial
officer of 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 a Tranche A Loan, which constitutes or would
constitute a Default or an Event of Default.
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(g) Certificates of the Secretary or an Assistant Secretary of each
Loan Party, dated the Closing Date, as to the incumbency and signatures of the
officers of such Loan Party executing this Agreement, the Tranche A Note, any
of the Loan Documents and any other certificate or other document to be
delivered pursuant hereto or thereto, together with evidence of the incumbency
of such Secretary or Assistant Secretary.
(h) 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.
4.2. Conditions Precedent to Tranche B Loans. Notwithstanding any
other provision of this 1998 Credit Agreement and without affecting in any
manner the rights of the Agent or any Lender, unless and until:
(a) the Restructuring Conditions, as defined in the Restructuring
Agreement, shall all have been fulfilled (or with the consent of the Agent)
duly waived, and the Agent shall have so confirmed by delivering to the
Borrower the Agent's Certificate in the form attached to the form of
Cross-Receipt attached to the Restructuring Agreement.
(b) The Borrower shall have delivered to the Agent, duly executed by
Borrower's Tranche B Note, payable to the order of the Agent; and
(c) If requested by the Agent, a favorable opinion of Xxxxx X. Xxxxxx,
Esquire, counsel to the Loan Parties, in form and substance satisfactory to the
Agent and its counsel.
4.3. Conditions Precedent to All Tranche A and Tranche B Loans.
(a) No default or Event of Default shall have occurred and be
continuing.
(b) All of Borrower's representations and warranties set forth in
Section 3 of this 1998 Credit Agreement, or those of any Loan Party elsewhere
in the Loan Documents, shall be true and correct in all material respects on
and as of the proposed disbursement date.
Each request for a Tranche A or Tranche B Loan shall be deemed an express
representation that each of the aforesaid conditions is met.
5. FINANCIAL STATEMENTS AND INFORMATION
5.1 Reports and Notices. Borrower covenants and agrees that it shall
deliver to the Agent, within thirty (30) days following the end of each month,
the financial statements and reports referred to as the "Monthly Reporting
Package," consistent with past practice. Borrower also agrees to provide Lender
with such other financial information concerning Borrower's results of
operations and financial condition as Lender may reasonably request from time
to time.
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5.2 Communication with Accountants. Borrower authorizes the Agent and
the Lenders to communicate directly with its 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 any management letter
with respect to the business, financial condition and other affairs of Borrower
and any of its Subsidiaries.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless the Lenders shall
otherwise consent in writing, from and after the date hereof and until the
Termination Date:
6.1. Maintenance of Existence and Conduct of Business. Borrower shall,
and shall cause each of its Subsidiaries to: (a) do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, and its rights and franchises; (b) continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; (c) 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; and (d) transact
business only in such names used as of the date hereof, or such other names as
Borrower or any Subsidiary of Borrower shall specify to Lender in writing not
less than thirty (30) days prior to the first date such name is used by
Borrower or any Subsidiary of Borrower.
6.2. Payment of Obligations. (a) Borrower shall, and shall cause each
of its Subsidiaries to: (i) pay and discharge or cause to be paid and
discharged all its Indebtedness, including, without limitation, all the
Obligations, as and when due and payable, and (ii) pay and discharge or cause
to be paid and discharged promptly all (A) Charges imposed upon it, its income
and profits, or any of its property (real, personal or mixed), and (B) lawful
claims for labor, materials, supplies and services or otherwise before any
thereof shall become in default.
(b) Borrower and its Subsidiaries may in good faith contest, by proper
legal actions or proceedings, the validity or amount of any Charges or claims
arising under Section 6.2(a)(ii), 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 Borrower 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) Borrower or such Subsidiary shall promptly pay or discharge such contested
Charges and all
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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 terminated or discontinued adversely to Borrower
or such Subsidiary; and (vii) Lender has not advised Borrower in writing that
Lender reasonably believes that nonpayment or nondischarge thereof would have
a Material Adverse Effect.
6.3. Lenders' Fees. Borrower shall pay to the Agent and the Lenders,
on demand, any and all fees, costs or expenses that the Agent or either Lender
shall pay to a bank or other similar institution arising out of or in
connection with the forwarding to Borrower or any other Person on behalf of
Borrower by any Lender of proceeds of the Tranche A or Tranche B Loans.
6.4. Books and Records. Borrower shall, and shall cause each of its
Subsidiaries 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 3.4(b) hereof.
6.5. Litigation. Borrower shall notify the Agent in writing, promptly
upon learning thereof, of any litigation commenced against Borrower and/or any
of the Subsidiaries, and of the institution against any of them of any suit or
administrative proceeding that may have a Material Adverse Effect.
6.6. Insurance. Borrower shall and shall cause each Subsidiary of
Borrower to maintain insurance covering, without limitation, fire, theft,
burglary, public liability, property damage, product liability, workers'
compensation, and insurance on all property and assets, all in amounts
customary for its industry and under policies issued by insurers and pursuant
to policies satisfactory to the Agent and in any event in compliance with any
insurance requirements under any Loan Documents and with a lender's loss
payable clause for the benefit of the Agent and the Lenders. Borrower shall,
and shall cause each of its Subsidiaries to, pay all insurance premiums payable
by them.
6.7. Compliance with Law. Borrower shall and shall cause each of its
Subsidiaries to comply with all federal, state and local laws and regulations
applicable to it, including, without limitation, ERISA, those regarding the
collection, payment and deposit of employees' income, unemployment and social
security taxes and those relating to environmental matters where the failure to
comply may have a Material Adverse Effect.
6.8. Agreements. Borrower shall and shall cause each of its
Subsidiaries to perform, within all required time periods (after giving effect
to any applicable grace periods), all of its obligations and enforce all of its
rights under each agreement to which it is a party, including, without
limitation, any leases to which any such company is a party, where the failure
to so perform and enforce would have a Material Adverse Effect. Borrower shall
not and shall cause each of its Subsidiaries not to terminate or modify in any
manner adverse to any such company any provision of any agreement to which it
is a party which termination or modification could have a Material Adverse
Effect.
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6.9. SEC Filings; Certain Other Notices. Borrower shall furnish to the
Agent (i) promptly after the filing thereof with the Securities and Exchange
Commission, a copy of each report, notice or other filing, if any, by Borrower
with the Securities and Exchange Commission and (ii) a copy of each written
communication received by Borrower from or delivered by Borrower to the
Securities and Exchange Commission.
6.10. Additional Security. If requested by the Agent, Borrower 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 first
priority security interest 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.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, without the Agent's prior
written consent, from and after the date hereof and until the Termination Date:
7.1. Mergers, Etc. Neither Borrower nor any Subsidiary of Borrower
shall directly or indirectly, by operation of law or otherwise, merge with,
consolidate with, acquire all or substantially all of the assets or capital
stock of, or otherwise combine with, any Person, or form any Subsidiary.
7.2. Investments; Loans and Advances. Except as otherwise permitted by
Section 7.3 or 7.4 hereof, Borrower shall not and shall not permit any
Subsidiary of Borrower 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; provided, however, that Borrower shall be permitted
hereunder and may permit hereunder its Subsidiaries to make one or more
investments in, or make or accrue loans or advances of money to, Borrower or
any other Subsidiary and provided, further, that Borrower and its Subsidiaries
may make and own investments in (i) direct obligations 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
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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-1 or P-1 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"). Notwithstanding
the foregoing, Wahlco, Engineer Products, Ltd. has pledged cash in the amount
of $700,000 U.K. pounds with London & International Mercantile, Ltd., which
pledge shall not be deemed a breach of this Section 7.2; provided, however,
that no further pledges may be made 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 1998 Credit Agreement, Borrower
shall not, nor shall it permit any of its Subsidiaries to, create, incur,
assume or permit to exist any Indebtedness, except (i) Indebtedness secured by
Liens permitted under Section 7.7 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) intercompany debt to any Guarantor or to
Borrower, and (vi) Indebtedness of Subsidiaries of Borrower created under the
Guaranty.
(a) Except as otherwise expressly permitted by Section 7.8 hereof,
Borrower shall not and shall not permit any Subsidiary of Borrower 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 Document or engage in any sale-leaseback or similar transaction
involving any of such assets.
7.4. Employee Loans. Borrower shall not, and shall not permit any
Subsidiary of Borrower to, make or accrue any loans or other advances of money
to any employee of Borrower or any Subsidiary in excess at any one time of
$50,000 in the aggregate for all such loans, provided that any such loans are
made only in the ordinary course of Borrower's or such Subsidiary's business.
7.5. Maintenance of Business. Borrower shall not and shall not permit
any Subsidiary of Borrower to engage in any business other than the business
currently engaged in by Borrower or such Subsidiary on the Closing Date.
7.6. Guaranteed Indebtedness. Borrower shall not and shall not permit
any Subsidiary of Borrower 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 Borrower
or such Subsidiary, and (ii) for Guaranteed Indebtedness incurred for the
benefit of Borrower or any Subsidiary of Borrower if the primary obligation is
permitted by this 1998 Credit Agreement.
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(a) Liens. Borrower shall not and shall not permit any Subsidiary of
Borrower to create or permit any Lien on any of its properties or assets
except: (a) presently existing or hereafter created Liens in favor of the Agent
or any Lender; and (b) Permitted Encumbrances.
7.7. Sales of Assets. Borrower shall not and shall not permit any
Subsidiary of Borrower to sell, transfer, convey or otherwise dispose of any
assets or properties; provided, however, that the foregoing shall not prohibit
(i) the sale of Inventory in the ordinary course of business, (ii) the sale of
surplus or obsolete equipment and fixtures, and (iii) transfers resulting from
any casualty or condemnation of assets or properties.
7.8. Cancellation of Indebtedness. Borrower shall not and shall not
permit any Subsidiary of Borrower to cancel any claim or debt owing to it,
except for reasonable consideration and in the ordinary course of business,
except that obligations of Wahlco Engineered Products Italiana SRC owed to
Wahlco Engineered Products Group Ltd. may be cancelled.
7.9. Events of Default. Borrower shall not and shall not permit any
Subsidiary of Borrower to take or omit to take any action, which act or
omission would constitute (i) a default or an event of default pursuant to, or
noncompliance with any of, the terms of any of the Loan Documents or the
Ancillary Agreements or (ii) a material default or an event of default pursuant
to, or noncompliance with any other contract, lease, mortgage, deed of trust or
instrument to which it is a party or by which it or any of its property is
bound, or any document creating a Lien, unless such default, event of default
or non-compliance would not have a Material Adverse Effect.
7.10. Hedging Transactions. Borrower shall not and shall not permit
any of its 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.
7.11. Restricted Payments. Borrower shall not and shall not permit any
Subsidiary of Borrower to make any Restricted Payments nor shall Borrower
permit any Subsidiary to make such payments with respect to Borrower's Stock.
7.12. Compensation. Except with the approval of the Board of Directors
of the Borrower, Borrower shall not and shall not permit any Subsidiary of
Borrower to, increase the salary and bonus in any year of the ten highest paid
employees of Borrower and its Subsidiaries, if as a result of such increase,
any such employee's total cash Compensation would increase by more than five
percent (5%) of his total cash Compensation for the prior year.
7.13. ERISA. Neither Borrower nor any of its Subsidiaries shall
establish or become obligated to any new Plan.
-23-
8. TERM
8.1. Termination. Subject to the provisions of Section 2 hereof, the
financing arrangement contemplated hereby in respect of the Tranche A and
Tranche B Loans shall be in effect until the Commitment Termination Date.
8.2. Survival of Obligations Upon Termination of Financing
Arrangements. 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 1998 Credit Agreement shall in any way affect
or impair the powers, obligations, duties, rights and liabilities of Borrower
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 been paid in full in accordance
with the terms of the agreements creating such Obligations, at which time the
same shall terminate.
8.3. Termination Prior to Closing Date. Borrower hereby covenants and
agrees with the Agent and each Lender that Borrower will: (a) use its best
efforts to satisfy, and to cause to be satisfied, fully and promptly each of
the conditions set forth in Sections 4.1, 4.2 and 4.3 hereof and to consummate
each of the transactions contemplated by this 1998 Credit Agreement; and (b)
refrain from taking, or permitting to be taken, any action, of any nature
whatsoever, which shall impede, preclude or otherwise interfere with the
satisfaction of any such condition,
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
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) Borrower shall fail to make any payment of principal of, or
interest on or any other amount owing in respect of, the Loans or any of the
other Obligations when due and payable or declared due and payable, except that
with respect to expenses payable under this 1998 Credit Agreement, or other
Obligations owing under any Loan Document other than this 1998 Credit
Agreement, such failure shall have remained unremedied for a period of ten (10)
days after Borrower has received notice of such failure from the Agent or any
Lender.
(b) Borrower shall fail or neglect to perform, keep or observe any of
the provisions of Section 6 or 7 of this 1998 Credit Agreement.
(c) Borrower shall fail or neglect to perform, keep or observe any
other provision of this 1998 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
-24-
Loan Document and the same shall remain unremedied for a period ending on the
first to occur of ten (10) days after Borrower shall receive written notice of
any such failure from the Agent or any Lender or thirty (30) days after
Borrower shall become aware thereof.
(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 an aggregate amount exceeding
$25,000, or (ii) causes (or permits any holder of such Indebtedness or a
trustee to cause) such Indebtedness or a portion thereof in an aggregate amount
exceeding $25,000, 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) Any of the assets of any Loan Party 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 and shall remain unstayed or undismissed for thirty
(30) consecutive days; 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 and shall remain unstayed or undismissed for thirty (30)
consecutive days; or any Loan Party shall 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 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 any substantial part of its or their properties, or (iii)
ordering the winding-up or liquidation of the affairs of such Loan Party and
such case or proceeding shall remain undismissed or unstayed for thirty (30)
consecutive days or such court shall enter a decree or order granting the
relief sought in such case or proceeding.
(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 Borrower
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or such Loan Party or of any substantial part of its properties, (iii)
fail generally 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 $25,000 in the
aggregate shall be rendered against Borrower or any of its Subsidiaries and the
same shall not be (i) fully covered by insurance in accordance with Section 6.6
hereof, or (ii) vacated, stayed, bonded, paid or discharged for a period of
fifteen (15) days.
(j) Any other event shall have occurred which would have a Material
Adverse Effect and the Agent or any Lender shall have given Borrower at least
ten (10) days notice thereof.
(k) Any provision of any Security Agreement or Pledge Agreement
(collectively, the "Collateral Documents") Collateral Document or the Guaranty
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 first priority security interest or Lien
(except as otherwise stated therein) in any of the Collateral purported to be
covered thereby.
9.2. Remedies. If any Event of Default shall have occurred and be
continuing, the Agent shall at the request, or may with the consent, of the
Required Lenders, without notice, (i) terminate this facility with respect to
further Loans, whereupon no Loan may be made hereunder, and/or (ii) 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 Lender. Lender shall take such action with
respect to any Default or Event of Default as shall be directed by the Required
Lenders; provided that, unless and until Lender shall have received such
directions, Lender may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders taken
as a whole, including any action (or the failure to act) pursuant to the Loan
Documents.
9.3. Waivers by Borrower. Except as otherwise provided for in this
1998 Credit Agreement and applicable law, Borrower waives (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 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
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remedies, and (iii) the benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that it has been advised by counsel of its choice with
respect to this 1998 Credit Agreement, the other Loan Documents and the
transactions evidenced by this 1998 Credit Agreement and the other Loan
Documents.
10. MISCELLANEOUS
10.1. Complete Agreement; Modification of Agreement. (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 Borrower, the Agent and each Lender in
accordance with Section 10.1(d) hereof. Borrower may not sell, assign or
transfer any of the Loan Documents or any portion thereof, including, without
limitation, Borrower's rights, title, interests, remedies, powers and duties
hereunder or thereunder.
(a) In the event any Lender assigns or otherwise transfers all or any
part of any Note, Borrower shall, upon the request of such Lender, issue new
Notes to effectuate such assignment or transfer.
(b) Each Lender may sell, assign, transfer or negotiate to one or more
other lenders, commercial banks insurance companies, other financial
institutions or any other Person all or a portion of its rights and obligations
under any Note held by Lender and this 1998 Credit Agreement. From and after
the effective date of such an assignment, the assignees thereunder shall, in
addition to the rights and obligations hereunder held by it immediately prior
to such effective date, have the rights and obligations hereunder that have
been assigned to it pursuant to such assignment, relinquish its rights and be
released from its obligations under the Agreement (and, in the case of an
assignment and acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this 1998 Credit Agreement, such Lender
shall cease to be a party hereto).
(c) No amendment or waiver of any provision of this 1998 Credit
Agreement or any Notes or any other Loan Document, nor consent to any departure
by Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each Lender affected thereby do any of the
following: (i) increase the amount of Lender's commitment to make Loans
hereunder or subject such Lender to any additional obligations, (ii) reduce the
principal of, or interest on, any Note or other amounts payable hereunder,
(iii) postpone any date fixed for any payment of principal of, or interest on,
any Note or other amounts payable hereunder, (iv) change the aggregate unpaid
principal amount of any Note, or the number of Lenders which shall be required
for the Lenders or any of them to take any action hereunder, (v) release or
discharge any Person liable for the performance of any obligations of any Loan
Party hereunder or under any of the Loan Documents, or (vi) amend this Section
10.1(c); and provided, further, however, that no amendment, waiver or consent
shall, unless in writing and signed by all Lenders holding Notes,
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increase the amount of the commitment to make Loan. hereunder; and provided,
further, however, that no amendment, waiver or consent shall unless in writing
and signed by any such Lender in addition to the Required Lenders required
above to take such action, affect the rights or duties of any such Lender under
this 1998 Credit Agreement, any Term Note or any Loan Document.
10.2. Fees and Expenses. Borrower shall pay all reasonable
out-of-pocket expenses of the Agent and the Lender 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). 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 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;
(ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the Agent, a Lender, Borrower, any Subsidiary of
Borrower or any other Person) in any way 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
Borrower, any Subsidiary of Borrower or any other Person, that may be
obligated to any Lender by virtue of any of the Loan Documents;
(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 Borrower to the
Agent or the relevant Lender and shall be additional Obligations secured under
this 1998 Credit Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
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.
-28-
10.3. No Waiver by Lender. No 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 1998 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 1998 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 1998 Credit Agreement or any of the other Loan Documents and
no Event of Default by Borrower under this 1998 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. Wexford Management is appointed as the
lawful agent and attorney-in-fact by each Lender, as more fully set forth in
Section 6 of the Restructuring Agreement of even date herewith, which
provisions are incorporated herein as though fully set forth in this 1998
Credit Agreement.
10.5. Remedies. The rights and remedies of the Agent and each Lender
under this 1998 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 1998
Credit Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this 1998 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 1998 Credit Agreement.
10.8. Parties. This 1998 Credit Agreement and the other Loan Documents
shall be binding upon, and inure to the benefit of, the successors of Borrower,
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 1998
Credit Agreement or any of the other Loan Documents by specific reference to
the applicable provisions of this 1998 Credit Agreement, if any provision
contained in this 1998 Credit Agreement is in
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conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this 1998 Credit Agreement shall govern
and control.
10.10. Authorized Signature. Until Lender shall be notified by
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of Borrower listed in Schedule 10.10
hereto shall bind Borrower and be deemed to be the act of Borrower affixed
pursuant to and in accordance with resolutions duly adopted by Borrower's Board
of Directors.
10.11. Governing Law. Except as otherwise expressly provided in any of
the Loan Documents, in all respects, including all matters of construction,
validity and performance, this 1998 Credit Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York applicable to contracts made
and performed in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of America. The
Agent, each Lender and Borrower agree to submit to personal jurisdiction and to
waive any objection as to venue in the County of New York, State of New York.
Service of process on Borrower, the Agent and each Lender in any action arising
out of or relating to any of the Loan Documents shall be effective if mailed to
such party at the address listed in Section 10.12 hereof. Nothing herein shall
preclude the Agent, any Lender or Borrower from bringing suit or taking other
legal action in any other jurisdiction.
10.12. 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 1998 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:
Wexford Management LLC, as Agent
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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With a copy to:
Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to Borrower, at:
Wahlco Environmental Systems, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: C. Xxxxxxx Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (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 affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
10.13. Survival. The representations and warranties of Borrower in
this 1998 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.
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10.14. Section Titles. The Section titles and Table of Contents
contained in this 1998 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.
10.15. Counterparts. This 1998 Credit Agreement may be executed in any
number of separate counterparts, each of which shall, collectively and
separately, constitute one agreement.
IN WITNESS WHEREOF, this 1998 Credit Agreement has been duly
executed as of the date first written above.
WAHLCO ENVIRONMENTAL STYSTEMS, INC.
By: /s/ A. Xxxx XxXxxxxx
---------------------------------------
Name:
Title:
XXX ACQUISITION CORP.
By:
---------------------------------------
Name:
Title:
WEXFORD CAPITAL PARTNERS II, L.P.
By:
---------------------------------------
Wexford Capital II, L.P.
Its General Partner
By:
---------------------------------------
Wexford Capital II, L.P.
Its General Partner
By:
---------------------------------------
Name:
Title:
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WEXFORD OVERSEAS PARTNERS I, L.P.
By:
---------------------------------------
Wexford Capital Overseas II, L.P.
The General Partner
By:
---------------------------------------
Wexford Capital Limited
Its General Partner
By:
---------------------------------------
Name:
Title:
WEXFORD SPECIAL SITUATIONS 1996, L.P.
By:
---------------------------------------
Name:
Title:
WEXFORD SPECIAL SITUATIONS 1996
INSTITUTIONAL, L.P.
By:
---------------------------------------
Name:
Title:
WEXFORD SPECIAL SITUATIONS 1996
LIMITED
By:
---------------------------------------
Name:
Title:
-00-
XXXXXXX-XXXXX SPECIAL SITUATIONS
1996, L.P.
By:
---------------------------------------
Name:
Title:
WEXFORD MANAGEMENT LLC, As Agent
By:
---------------------------------------
Name:
Title:
-00-
Xxxxxxx X-0
to 1998 Credit Agreement
TRANCHE A NOTE
$3,000,000 Santa Ana, California
_______ __, 1998
FOR VALUE RECEIVED, WAHLCO ENVIRONMENTAL SYSTEMS, INC., a Delaware
corporation (hereinafter referred to as "Borrower"), hereby unconditionally
PROMISES TO PAY to the order of WEXFORD MANAGEMENT LLC, a Connecticut limited
liability company, as agent (the "Agent"), at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 or at such other place as the holder of this Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of THREE
MILLION DOLLARS ($3,000,000) or such lesser amount as may be outstanding
hereunder, together with interest on the unpaid principal amount of this Note
outstanding from time to time at the rate provided in the 1998 Credit Agreement
(as hereinafter defined).
This Note is issued pursuant to that certain Amended and Restated Credit
Agreement dated as of January 30, 1998 among Borrower, the Lenders named therein
and the Agent, as agent (the "1998 Credit Agreement"), and is entitled to the
benefit and security of the Loan Documents provided for therein, to which
reference is hereby made for a statement of all of the terms and conditions
under which the loan evidenced hereby is made. All capitalized terms, unless
otherwise defined herein, shall have the meanings ascribed to them in the 1998
Credit Agreement or in the Loan Documents.
The principal amount of the indebtedness evidenced hereby shall be payable
in the amounts and on the dates specified in the 1998 Credit Agreement and, if
not sooner paid in full, on December 31, 2000. Interest thereon shall be paid
until such principal amount is paid in full at such interest rates and at such
times as are specified in the Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
Upon and after the occurrence of an Event of Default, this Note may, as
provided in the Loan Agreement, and without demand, notice or legal process of
any kind, be declared, and immediately shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
This Note has been executed, delivered and accepted at Santa Ana,
California and shall be interpreted, governed by, and construed in accordance
with, the laws of the State of New York.
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
By: ______________________________
Name:
Title:
-2-
Exhibit A-2
to 1998 Credit Agreement
TRANCHE B NOTE
$2,500,000 Santa Ana, California
__________ __, 1998
FOR VALUE RECEIVED, WAHLCO ENVIRONMENTAL SYSTEMS, INC., a Delaware
corporation (hereinafter referred to as "Borrower"), hereby unconditionally
PROMISES TO PAY to the order of WEXFORD MANAGEMENT LLC, a Connecticut limited
liability company, as agent (the "Agent"), at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 or at such other place as the holder of this Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of TWO MILLION
FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) or such lesser amount as may be
outstanding hereunder, together with interest on the unpaid principal amount of
this Note outstanding from time to time at the rate provided in the 1998 Credit
Agreement (as hereinafter defined).
This Note is issued pursuant to that certain Amended and Restated Credit
Agreement dated as of January 30, 1998 among Borrower, the Lenders named therein
and the Agent, as agent (the "1998 Credit Agreement"), and is entitled to the
benefit and security of the Loan Documents provided for therein, to which
reference is hereby made for a statement of all of the terms and conditions
under which the loan evidenced hereby is made. All capitalized terms, unless
otherwise defined herein, shall have the meanings ascribed to them in the 1998
Credit Agreement or in the Loan Documents.
The principal amount of the indebtedness evidenced hereby shall be payable
in the amounts and on the dates specified in the 1998 Credit Agreement and, if
not sooner paid in full, on December 31, 2000. Interest thereon shall be paid
until such principal amount is paid in full at such interest rates and at such
times as are specified in the Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
Upon and after the occurrence of an Event of Default, this Note may, as
provided in the Loan Agreement, and without demand, notice or legal process of
any kind, be declared, and immediately shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
This Note has been executed, delivered and accepted at Santa Ana,
California and shall be interpreted, governed by, and construed in accordance
with, the laws of the State of New York.
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
By: ______________________________
Name:
Title:
-2-
Exhibit B
to 1998 Credit Agreement
FIRST AMENDMENT TO GUARANTY
FIRST AMENDMENT TO GUARANTY, dated as of January 30, 1998 among the
Guarantors identified as such on the signature page hereof (individually a
"Guarantor" and collectively, the "Guarantors"), XXX Acquisition Corp., a
Delaware corporation ("WESAC"); the 1998 Lenders (as hereinafter defined;
together with WESAC, collectively, the "Lenders"); and Wexford Management LLC, a
Connecticut limited liability company, as administrative and collateral agent
for the Lenders (the "Agent").
W I T N E S S E T H :
WHEREAS, WAHLCO ENVIRONMENTAL SYSTEMS, INC., a Delaware Corporation
("Borrower") and WESAC entered into that certain Term Loan Agreement dated as of
July 28, 1995 (the "1995 Loan Agreement"); and
WHEREAS, Guarantors and Borrower are members of the same consolidated group
of companies and are engaged in related business; and
WHEREAS, to induce WESAC to make the Loans (as such term is defined in the
1995 Loan Agreement), Guarantors entered into that certain Guaranty dated as of
July 25, 1995 (the "Guaranty"); and
WHEREAS, to amend and supplement the 1995 Loan Agreement, and to provide
for additional credit facilities to Borrower, each of the Lenders and the Agent,
as agent, have entered into that certain Amended and Restated Loan Agreement
dated as of January 30, 1998 (the "1998 Credit Agreement"), pursuant to which
the Lenders have agreed to make loans to Borrower for the benefit of Borrower
and the Guarantors; and
WHEREAS, Lenders have determined to appoint the Agent as their agent for
admimnistrative and collateral purposes, including exercising all rights under
the Guaranty, as amended hereby;
WHEREAS, in connection with the execution and delivery of the 1998 Credit
Agreement and as a condition precedent thereto, the Lenders are requiring that
each Guarantor shall have executed and delivered this Guaranty;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce the Lenders and the Agent to enter into the
1998 Credit Agreement, and to make the loans provided for therein, it is agreed
as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the 1998
Credit Agreement are used as therein defined, and as following shall have
(unless otherwise provided
elsewhere in this Agreement or the Security Agreement) the following respective
meanings (such meanings being equally applicable to both the singular and plural
form of the terms defined):
"Agreement" shall mean this First Amendment to the Security Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Existing Obligations" shall mean any Obligations now existing or
hereafter arising under the 1995 Loan Agreement or any Loan Document.
"1995 Lender" shall mean WESAC.
"1998 Lenders" shall mean all of the parties named as Lenders in the
1998 Credit Agreement.
2. Assignment to Agent; Guaranty of Obligations of Borrower. WESAC hereby
assigns to the Agent, for the benefit of all the Lenders, the unconditional
Guaranty of payment and performance and not collection, held by WESAC as of the
date hereof. Guarantors hereby consent to such assignment. Each Guarantor
acknowledges, confirms and agrees that this Agreement unconditionally guarantees
to the Lenders, and their successors, endorsees, transferees and assigns, the
prompt payment (whether at stated maturity, by acceleration or otherwise) and
performance, in full, of the Obligations.
3. Effect of Amendment. Each Guarantor hereby confirms and agrees that,
Texcept as specifically amended hereby, the Guaranty continues in full force and
effect.
4. Waiver. No delay on the part of the Agent to enforce this Agreement or
any other Loan Document or the waiver of consent by any Lender with respect to
any of the provisions thereof shall constitute a waiver thereof or impair the
Agent's rights to such Lender with respect to any of the provisions thereof
shall constitute a waiver thereof or impair the Agent's rights to seek
satisfaction from the Guarantors, jointly and severally, prior or subsequent to,
or simultaneously with, the enforcement of the Lenders' rights hereunder, to
exercise any right or remedy which either may have against any property, real or
personal, as a result of any lien it may have as security for all or any portion
of the Obligations.
5. Assignment. Each Lender may assign, endorse or transfer this Agreement
as provided in, and in accordance with, the 1998 Credit Agreement, and the
assignee of this Agreement shall be entitled to all the benefits hereof.
6. Further Assurances. Each Guarantor agrees, upon the written request of
the Agent, to execute and deliver to the Agent, any additional instruments or
any documents reasonably considered necessary by any Lender to cause this
Agreement to be, become or remain valid and effective in accordance with its
terms.
-2-
7. Miscellaneous.
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning all
matters pertaining to its duties hereunder.
(b) Each Guarantor jointly and severally agrees to promptly reimburse
the Agent for actual out-of-pocket expenses, including, without limitation,
reasonable counsel fees, incurred in connection with the administrator and
enforcement of this Agreement.
(c) Neither the Agent nor any of its respective officers, directors,
employees, agents or counsel shall be liable for any action lawfully taken or
omitted to be taken by it of them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.
(d) The Agreement shall be binding upon the Guarantors and their
successors and assigns, and shall inure to the benefit of, and be enforceable
by, the Agent, and its successors and assigns, and shall be governed by and
construed and enforced in accordance with, the internal laws in effect in the
State of New York without giving effect to principles of conflict of laws, and
none of the terms or provisions of this Agreement may be waived, altered,
modified or amended except in writing duly signed for on behalf of the Agent and
the Guarantors.
8. Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
inability shall not impair the operation of or effect those portions of this
Agreement which are valid.
9. Notice. Whenever it is provided herein that any notice, demand, request,
consent, approval or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given as provided in Section
10.11 of the 1998 Credit Agreement.
10. Section Titles. The section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of this Agreement.
11. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one document.
-3-
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to the Security Agreement to be executed and delivered by its duly
authorized officer on the date first set forth above.
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
By:_________________________
Name:
Title:
BACHMANN COMPANIES, INC.
By:_________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS GROUP, LTD.
By:_________________________
Name:
Title:
WAHLCO, INC.
By:_________________________
Name:
Title:
FIELD SERVICE ASSOCIATES, INC.
By:_________________________
Name:
Title:
-4-
WAHLCO POWER PRODUCTS, INC.
By:_________________________
Name:
Title:
XXX TECHNOLOGY, INC.
By:_________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS, INC.
By:_________________________
Name:
Title:
LAGUNA SERVICE CORPORATION
By:_________________________
Name:
Title:
WAHLCO GAS FLOW TECHNOLOGIES, INC.
By:_________________________
Name:
Title:
WAHLCO SERVICE CORPORATION
By:_________________________
Name:
Title:
-5-
WAHLCO ENGINEERED PRODUCTS PTY., LTD.
By:_________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS CANADA, INC.
By:_________________________
Name:
Title:
FLOWRITE DAMPERS, LTD.
By:_________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS, LTD.
By:_________________________
Name:
Title:
WAHLCO ENGINEERED INTERNATIONAL, LTD.
By:_________________________
Name:
Title:
PENTNEY ENGINEERING, LTD.
By:_________________________
Name:
Title:
-0-
XXXXXXXXXX BELLOWS (HOLDINGS), LTD.
By:_________________________
Name:
Title:
TRESTE PLAN HIRE, LTD.
By:_________________________
Name:
Title:
WAHLCO INTERNATIONAL, INC.
By:_________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS ITALIANA SRL.
By:_________________________
Name:
Title:
TEDDINGTON BELLOWS, LTD.
By:_________________________
Name:
Title:
BACHMANN H&T, GmbH
By:_________________________
Name:
Title:
-7-
EXERGETIC SYSTEMS, INC.
By:_________________________
Name:
Title:
CORONA PROPERTIES
By:_________________________
Name:
Title:
BACHMANN INDUSTRIES INDIA, LTD.
By:_________________________
Name:
Title:
Accepted and acknowledged by:
WEXFORD MANAGEMENT LLC
By:_________________________________
Name:
Title:
-8-
Exhibit C-1
to 1998 Credit Agreement
FIRST AMENDMENT TO PATENT ASSIGNMENT
FIRST AMENDMENT TO PATENT ASSIGNMENT, dated as of January 30, 1998 (the
Agreement") among WAHLCO ENVIRONMENTAL SYSTEMS, INC., a Delaware corporation
("Borrower"); XXX ACQUISITION CORP., a Delaware corporation ("WESAC"): the 1998
Lenders (as hereinafter defined); and WEXFORD MANAGEMENT LLC, a Connecticut
limited liability company, as administrative and collateral agent for the
Lenders (the "Agent").
W I T N E S S E T H
WHEREAS, Borrower is the sole and exclusive owner of the Letters of Patent
identified on Schedule I hereto, and of the patent applications in the United
States Patent and Trademark Office identified on such Schedule I (all of the
foregoing, collectively, the "Patents"), and of the inventions described and
claimed therein; and
WHEREAS, Borrower and WESAC entered into that certain Term Loan Agreement
dated as of July 28, 1995 (the "1995 Loan Agreement"); and
WHEREAS, to secure Borrower's obligations under the 1995 Loan Agreement,
Borrower and WESAC entered into that certain Security Agreement dated as of July
25, 1995 (the "Security Agreement") and Borrower granted a security interest in
the Collateral described therein to WESAC; and
WHEREAS, pursuant to the Security Agreement, Borrower executed a Patent
Assignment in favor of WESAC as of December 28, 1995 (the "Existing
Assignment"), whereby Borrower assigned all right, title and interest in and to
the Patents to WESAC; and
WHEREAS, to amend and supplement the 1995 Loan agreement, and to provide
for additional credit facilities to Borrower, Borrower, each of the Lenders
named therein and the Agent, as agent, have entered into that certain Amended
and Restated Loan Agreement dated as of January 30, 1998 (the "1998 Credit
Agreement"), pursuant to which the Lenders have agreed to make loans to Borrower
and its Subsidiaries; and
WHEREAS, in connection with the execution and delivery of the 1998 Credit
Agreement and as security for all the obligations of Borrower thereunder, the
Lenders and the Agent are requiring that Borrower shall have executed and
delivered this Agreement and granted and confirmed the security interests in the
Patents contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce the Lenders and the Agent to enter into the
1998 Credit Agreement, and to make the loans provided for therein, it is agreed
as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the 1998
Credit Agreement are used as therein defined and shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):
"Agreement" shall mean this First Amendment to the Patent Assignment,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Existing Obligations" shall mean any Obligations now existing or
hereafter arising under the 1995 Loan Agreement or any Loan Document;
"1998 Lenders" shall mean all the parties named as Lenders in the 1998
Credit Agreement.
2. Assignment. WESAC hereby assigns to the Agent, for the benefit of all
the Lenders, the Existing Assignment of the Patents held by WESAC as of the date
hereof. Borrower hereby consents to such assignment.
3. Security for Obligation. Borrower acknowledges, confirms and agrees that
this Agreement sercures, and the assignment of the Patents is security for, the
prompt payment in full when due, whether at stated maturity, by acceleration or
otherwise, and performance of the Obligations, whether for principal, premium,
interest, fees, costs and expenses, and all obligations of Borrower now or
hereafter existing under this Agreement and under the First Amendment to the
Security Agreement (collectively, the "Secured Obligations") including the
Existing Obligations, and any and all other future advances, as well as all
interest, fees, charges expenses, attorneys' fees and any other sum chargeable
to borrower of any or all of its subsidiaries under any of the Loan Documents.
Concurrently with the execution and delivery of this Agreement, each of the
UCC-1 financing statement listed on Schedule I attached hereto shall be amended
to assign the security interests represented thereby to the Agent.
4. Effect of Amendment. Borrower hereby confirms and agrees that, except as
specifically amended hereby, the Existing Assignment continues in full force and
effect.
5. Waiver. No delay on the part of the Agent in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon Borrower by the Agent with request to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair the
-2-
Agent's rights to take any action or to exercise any power of sale, Lien,
option, or any other rights as against Borrower in any respect.
6. Assignment. Each Lender may assign, endorse or transfer any instrument
evidencing all or any part of the Secured Obligators as provided in, and in
accordance with, the 1998 Credit Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
7. Miscellaneous
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning all
matters pertaining to its duties hereunder;
(b) Borrower agrees to promptly reimburse the Agent for actual
out-of-pocket expenses, including, without limitation, reasonable counsel fees,
incurred in connection with the administrator and enforcement of this Agreement.
(c) Neither the Agent nor any of its respective officers, directors,
employees, agents or counsel shall be liable for any action lawfully taken or
omitted to be taken by it of them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.
(d) The Agreement shall be binding upon Borrower and its successors
and assigns, and shall inure to the benefit of, and be enforceable by, the
Agent, and its successors and assigns, and shall be governed by and construed
and enforced in accordance with, the internal laws in effect in the State of New
York without giving effect to principles of conflict of laws, and none of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except in writing duly signed for on behalf of the Agent and Borrower.
8. Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
inability shall not impair the operation of or effect those portions of this
Agreement which are valid.
9. Notice. Whenever it is provided herein that any notice, demand, request,
consent, approval or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given as provided in Section
10.11 of the 1998 Credit Agreement.
10. Section Titles. the section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of this Agreement.
-3-
11. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one document.
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to the Patent Agreement to be executed and delivered by its duly
authorized officer on the date first set forth above.
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
By: ___________________________
Name:
Title:
XXX ACQUISITION CORP.
By: ___________________________
Name:
Title:
The foregoing First Amendment to the Patent Assignment is hereby accepted
by the Agent:
WEXFORD MANAGEMENT, LLC.
By: __________________________
Name:
Title:
-4-
SCHEDULE I
TITLE: Hot Side Electrostatic Precipitator
PATENT NO.: 5,300,270
FILE DATE: 08/20/92
SN: 933,489
ISSUE DATE: 04/05/94
EXPIRATION DATE: 04/05/11
ABSTRACT: A process for reducing the NOx in flue gas, comprising the
steps of: furnishing a flow of gas containing particular
matter and NOx; providing an electrostatic precipitator having
therein collecting surfaces coated with a catalyst for the
reduction of NOx in the flue gas by reaction with a
nitrogeneous compound, the electrostatic being positioned in
the flue gas flow at a location such that the temperature of
the flue gas is no less than about 450 degrees F at the point
of flue gas from the electrostatic precipitator; and operating
an electrostatic precipitator to remove particulate from the
flue gas, the NOx from the flue gas reacting with the
nitrogeneous compound in the presence of the catalyst to
reduce the NOx content of the flue gas.
SCHEDULE I
TITLE: Temperature Stabilized Heat Exchanger
PATENT NO.: 5,323,842
FILE DATE: 06/05/92
SN: 894,438
ISSUE DATE: 06/28/94
EXPIRATION DATE: 06/28/11
ABSTRACT: A heat exchange module comprises a rotating-wheel type
regenerative heat exchanger unit having a plurality of heat
exchange elements mounted in baskets through the volume of the
heat exchanger wheel. The heat exchanger wheel rotates about
its axis so that the heat exchange elements are heated by a
hot gas flow over a portion of the rotation, and transfer the
heat to an air flow over another portion of the rotation. At
least some of the heat exchange elements include phase change
materials, such as salts, that absorb heat while maintaining a
constant temperature. The phase change materials narrow the
range of temperatures reached by the heat exchange elements
located at various positions of the heat exchanger wheel. The
phase change materials prevent excessively low temperatures
that can result in condensation of corrosive acids on the
surfaces of the heat exchange elements in particularly
desirable temperature ranges for the operation of catalysts
coated onto the heat exchange elements.
SCHEDULE I
TITLE: Catalytic Sulfur Trioxide FGC
PATENT NO.: 5,320,052
FILE DATE: 03/01/93
SN: 25,034
ISSUE DATE: 06/14/04
EXPIRATION DATE: 06/14/11
ABSTRACT: A sulfur trioxide conditioning system includes a catalytic
converter that converts a portion of the sulfur trioxide. The
catalytic converter includes a catalyst support, which is
disposed across at least a portion of the cross section of a
main duct from a burner to a heat recovery apparatus, and a
catalyst on the catalyst support. The amount of the catalyzed
surface exposed to the flow of flue gas is selectively varied
to control the conversion of sulfur dioxide to sulfur
trioxide.
SCHEDULE I
TITLE: Method and Apparatus for Reducing NOx Emissions
PATENT NO.: 5,237,939
FILE DATE: 08/20/92
SN: 933,487
ISSUE DATE: 08/24/93
EXPIRATION DATE: 08/24/10
ABSTRACT: Apparatus for reducing NOx from a flue gas stream produced
from a burner, comprising: means for reacting a flow of flue
gas with a nitrogeneous compound in the presence of a catalyst
to react and reduce NOx in the flue gas, the means for
reacting exhibiting a variation of temperature therein; means
for adding a spatially controllably variable flow of a
nitrogeneous compound to the flow of flue gas prior to the
entry of the flue gas into the means for reacting; and means
for adjusting the spatial distribution of the flow of the
nitrogeneous compound responsive to the variation of
temperature within the means for reacting.
SCHEDULE I
TITLE: Control of NOx Reduction In Flue Gas Flows
PATENT NO.: 5,233,934
FILE DATE: 08/20/92
SN: 933,488
ISSUE DATE: 08/10/93
EXPIRATION DATE: 08/10/10
ABSTRACT: The NOx content in a flow of gas is reduced by passing the
flue gas through a first treatment zone and a second treatment
zone. A nitrogeneous treatment agent is introduced into the
first treatment zone for the selective non-catalytic reduction
of part of the NOx, and the flue gas is thereafter passed
through the second treatment zone which includes a catalyst
for further selective catalytic reduction of NOx. Optionally,
a second nitrogeneous treatment agent is added to the flue gas
in the second treatment zone. The quantity of NOx in the flue
gas is detected intermediate the first and second treatment
zones and, optionally, after the flue gas has left the second
treatment zone. The quantity of ammonia in the flue gas
exiting from the second treatment zone is also detected. The
amounts of the treatment agents exiting from the second
treatment zone added to the flue gas are controlled responsive
to the variations and absolute levels determined by these
measurements.
Exhibit C-2
to 1998 Credit Agreement
FIRST AMENDMENT TO PATENT ASSIGNMENT
FIRST AMENDMENT TO PATENT ASSIGNMENT, dated as of January 30, 1998 (the
Agreement") among WAHLCO INC., a California corporation ("Assignor"); WAHLCO
ENVIRONMENTAL SYSTEMS, INC., a Delaware Corporation ("Borrower"); XXX
ACQUISITION CORP., a Delaware corporation ("WESAC"): the 1998 Lenders (as
hereinafter defined); and WEXFORD MANAGEMENT LLC, a Connecticut limited
liability company, as administrative and collateral agent for the Lenders (the
"Agent").
W I T N E S S E T H
WHEREAS, Assignor is the sole and exclusive owner of the Letters of Patent
identified on Schedule I hereto, and of the patent applications in the United
States Patent and Trademark Office identified on such Schedule I (all of the
foregoing, collectively, the "Patents"), and of the inventions described and
claimed therein; and
WHEREAS, Assignor is a wholly-owned subsidiary of Borrower, and Borrower
and WESAC entered into that certain Term Loan Agreement dated as of July 28,
1995 (the "1995 Loan Agreement"); and
WHEREAS, to secure Borrower's obligations under the 1995 Loan Agreement,
Assignor, Borrower and WESAC entered into that certain Security Agreement dated
as of July 25, 1995 (the "Security Agreement") and Assignor and Borrower granted
a security interest in the Collateral described therein to WESAC; and
WHEREAS, pursuant to the Security Agreement, Assignor executed a Patent
Assignment in favor of WESAC as of December 28, 1995 (the "Existing
Assignment"), whereby Assignor assigned all right, title and interest in and to
the Patents to WESAC; and
WHEREAS, to amend and supplement the 1995 Loan agreement, and to provide
for additional credit facilities to Borrower, Borrower, each of the Lenders
named therein and the Agent, as agent, have entered into that certain Amended
and Restated Loan Agreement dated as of January 30, 1998 (the "1998 Credit
Agreement"), pursuant to which the Lenders have agreed to make loans to Borrower
and its Subsidiaries; and
WHEREAS, in connection with the execution and delivery of the 1998 Credit
Agreement and as security for all the obligations of Borrower thereunder, the
Lenders and the Agent are requiring that Assignor shall have executed and
delivered this
Agreement and granted and confirmed the security interests in the Patents
contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce the Lenders and the Agent to enter into the
1998 Credit Agreement, and to make the loans provided for therein, it is agreed
as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the 1998
Credit Agreement are used as therein defined and shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):
"Agreement" shall mean this First Amendment to the Patent Assignment,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Existing Obligations" shall mean any Obligations now existing or
hereafter arising under the 1995 Loan Agreement or any Loan Document;
"1998 Lenders" shall mean all the parties named as Lenders in the 1998
Credit Agreement.
2. Assignment. WESAC hereby assigns to the Agent, for the benefit of all
the Lenders, the Existing Assignment of the Patents held by WESAC as of the date
hereof. Assignor hereby consents to such assignment.
3. Security for Obligation. Each of Assignor and Borrower acknowledges,
confirms and agrees that this Agreement sercures, and the assignment of the
Patents is security for, the prompt payment in full when due, whether at stated
maturity, by acceleration or otherwise, and performance of the Obligations,
whether for principal, premium, interest, fees, costs and expenses, and all
obligations of Borrower now or hereafter existing under this Agreement and under
the First Amendment to the Security Agreement (collectively, the "Secured
Obligations") including the Existing Obligations, and any and all other future
advances, as well as all interest, fees, charges expenses, attorneys' fees and
any other sum chargeable to borrower of any or all of its subsidiaries under any
of the Loan Documents. Concurrently with the execution and delivery of this
Agreement, each of the UCC-1 financing statement listed on Schedule I attached
hereto shall be amended to assign the security interests represented thereby to
the Agent.
4. Effect of Amendment. Assignor hereby confirms and agrees that, except as
specifically amended hereby, the Existing Assignment continues in full force and
effect.
5. Waiver. No delay on the part of the Agent in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon Assignor by the Agent with request to any power of
sale, Lien,
-2-
option or other right hereunder, shall constitute a waiver thereof, or limit or
impair the Agent's rights to take any action or to exercise any power of sale,
Lien, option, or any other rights as against Assignor in any respect.
6. Assignment. Each Lender may assign, endorse or transfer any instrument
evidencing all or any part of the Secured Obligators as provided in, and in
accordance with, the 1998 Credit Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
7. Miscellaneous
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning all
matters pertaining to its duties hereunder;
(b) Assignor agrees to promptly reimburse the Agent for actual
out-of-pocket expenses, including, without limitation, reasonable counsel fees,
incurred in connection with the administrator and enforcement of this Agreement.
(c) Neither the Agent nor any of its respective officers, directors,
employees, agents or counsel shall be liable for any action lawfully taken or
omitted to be taken by it of them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.
(d) The Agreement shall be binding upon Assignor and its successors
and assigns, and shall inure to the benefit of, and be enforceable by, the
Agent, and its successors and assigns, and shall be governed by and construed
and enforced in accordance with, the internal laws in effect in the State of New
York without giving effect to principles of conflict of laws, and none of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except in writing duly signed for on behalf of the Agent and Assignor.
8. Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
inability shall not impair the operation of or effect those portions of this
Agreement which are valid.
9. Notice. Whenever it is provided herein that any notice, demand, request,
consent, approval or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given as provided in Section
10.11 of the 1998 Credit Agreement.
10. Section Titles. the section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of this Agreement.
-3-
11. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one document.
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to the Patent Agreement to be executed and delivered by its duly
authorized officer on the date first set forth above.
WAHLCO, INC.
By: _______________________________
Name:
Title:
WAHLCO, ENVIRONMENTAL SYSTEMS, INC.
By: _______________________________
Name:
Title:
XXX ACQUISITION CORP.
By: _______________________________
Name:
Title:
The foregoing First Amendment to the Patent Assignment is hereby accepted
by the Agent:
WEXFORD MANAGEMENT, LLC.
By: _______________________________
Name:
Title:
-4-
SCHEDULE I
TITLE: Gas Conditioning Apparatus
PATENT NO.: 4,466,815
FILE DATE: 05/03/82
SN: 374,516
ISSUE DATE: 08/21/84
EXPIRATION DATE: 08/21/01
ABSTRACT: A gas conditioning apparatus for conditioning flue gases and
more particularly an improved means for purging a gas
conditioning system of latent or residual sulfur trioxide
which is normally produced by the gas conditioning system for
conditioning of flue gases.
SCHEDULE I
TITLE: Apparatus for Preheating Combustion Air, etc.
PATENT NO.: 4,602,673
FILE DATE: 10/03/84
SN: 637,394
ISSUE DATE: 07/29/86
EXPIRATION DATE: 07/29/03
ABSTRACT: An apparatus for preheating air for combustion for a
combustion process while simultaneously reducing the NOx
content of hot flue gases utilized to effect said preheating,
said apparatus comprising: a regenerative revolving air heater
which includes heat exchange elements having surfaces which
are exposed to said hot flue gases, and a coating which acts
as a catalyst for the reduction of NOx and is only on those
heat exchange surfaces which are contacted by flue gas having
a temperature greater than the condensation temperature of
reaction produces resulting from material contained in said
flue gas and from the added reducing agent.
SCHEDULE I
TITLE: Gas Conditioning Means for a Plurality of Boilers
PATENT NO.: 4,333,746
FILE DATE: 04/24/81
SN: 257,343
ISSUE DATE: 06/08/82
EXPIRATION DATE: 06/08/99
ABSTRACT: A gas conditioning means for a plurality of boilers and more
particularly improved means for providing a contitioning
mixture of sulfur trioxide (SO3), from a single system, for
injection into the flues gas streams of a plurality of
bolilers for the conditioning thereof.
SCHEDULE I
TITLE: Apparatus for Preheating Combustion Air, etc.
PATENT NO.: 4,739,826
FILE DATE: 07/07/86
SN: 882,245
ISSUE DATE: 04/26/88
EXPIRATION DATE: 04/26/05
ABSTRACT: An apparatus for preheating air for combustion for a
combustion process while simultaneously reducing the NOx
content of hot flue gas utilized to effect said preheating to
attain advantages which relate to combustion and which result
from higher combustion chamber tempearatures, such as
accelerated ignition and more complete combustion, comprising:
a recuperative air heater which includes heat exchange
elements having surfaces which are exposed to said hot flue
gases, and a coating which acts as a catalyst for the
reduction of NOx, said coating being provided only with those
heat exchange surfaces which are contacted by flue gases
having a temperature greater than the condensation temperature
of the reaction products resulting from the material contained
in said flue gas and from added reducing agent in order to
avoid formation of deposits on catalyst contact surfaces such
as a result of flue gas, which is cooled off as it flows
through the heat exchanger, falling below the condensation
temperature.
SCHEDULE I
TITLE: Removal of Participate Matter From Combustion Gas Streams
PATENT NO.: 4,987,839
FILE DATE: 05/14/90
SN: 523,312
ISSUE DATE: 01/29/91
EXPIRATION DATE: 01/29/08
ABSTRACT: Unburned particulate matter is removed from a combustion gas
stream by adding a conditioning agent to modify the
resistivity of the particulate matter and passing the
conditioning combustion gas stream through an electrostatic
precipitator whose precipitating elements are energized with
an intermittent applied voltage. The addition of conditioning
agent and the precipitating voltage signal are mutually
optimized. A controller receives measurement signals from
sensors that monitor the total flow rate of the particulate
matter in the gas stream before the electrostatic precipitate
treatment, and the concentration of particulate matter in the
gas stream after the treatment. Performance of the system may
be optimized according to selected combinations of variables.
SCHEDULE I
TITLE: Apparatus for Preheating Combustion Air, etc.
PATENT NO.: 4,903,755
FILE DATE: 04/25/88
SN: 185,861
ISSUE DATE: 02/27/90
EXPIRATION DATE: 07/29/03
ABSTRACT: An apparatus for preheating air combustion for a combustion
process while simultaneously reducing the NOx content of hot
flue gases utilized to effect said perheating, said apparatus
comprising: a revolving regenerative air heater that includes
heat exchange elements having surfaces that are exposed to
said hot flue gases, with said surfaces having a coating that
acts as a catalyst for the reduction of NOx, whereby said
regenerative air heater is a revolving drum that is divided in
a radial direction into individual xxxxxxxx that contain said
heat exchange elements, which are in the form of a heat
storage mass comprised of a plurality of movable individual
elements that are respectively provided with said catalyst
coating.
SCHEDULE I
TITLE: Conditioning of Gas Streams Containing Particulate
PATENT NO.: 4,966,610
FILE DATE: 06/05/89
SN: 361,272
ISSUE DATE: 10/30/90
EXPIRATION DATE: 10/30/07
ABSTRACT: A method for precipating particulate matter from a flowing gas
stream, comprising the steps of: furnishing a flowing gas
stream containing particulate matter entrained therein;
pretreating the particulate matter of the gas stream, by
supplying to the gas stream a conditioning agent selected from
the group consisting of sulfur trioxide, a gaseous compound
containing ammonia, and water vapor, and substantially
simultaneously, establishing an electrostatic potential
between the conditioning agent and the particulate matter
whereupon the conditioning agent deposits upon the particulate
matter; and electrostatically precipating the particulate
matter from the conditioned gas stream.
SCHEDULE I
TITLE: Reduction of Acidic Emissions From Combustion of Sulfur, Etc
PATENT NO.: 5,024,171
FILE DATE: 03/19/90
SN: 496,872
ISSUE DATE: 06/18/91
EXPIRATION DATE: 06/18/08
ABSTRACT: The sulfer trioxide in the combustion stream of a power plant
is reactered with injected ammonia to produce a solid ammonia
sulfate that is captured, and not released to the atmosphere.
A feedforward signal indicative of the total mass flow os
sulfur trioxide is determined as the product of the measured
boiler and measured prior to the addition of ammonia. The
ammonia mass flow injection rate is preferably at a normal
stoichiometric ratio of from about 1.0 to 1.1 relative to the
sulfur dioxide mass flow rate (that is, from about 2.0 to 2.2
times the molar mass flow rate of the sulfur trioxide),
avoiding the production of ammmonia bisulfate. The ammonia
content of the combustion gas stream is added. Based upon this
feedback measurement, the amount of ammonia added is adjusted
to be just sufficient to react with all of the sulfur
trioxide, but not in such excess as to be environmentally
detrimental.
SCHEDULE I
TITLE: Control of Addition of Conditioning Agents to Flue Gas
PATENT NO.: 5,029,535
FILE DATE: 05/14/90
SN: 523,311
ISSUE DATE: 07/09/91
EXPIRATION DATE: 07/09/08
ABSTRACT: Additions of contitioning agents to a particulate containing
flue gas stream are controlled by a controller operating from
feedforward and feedback signals received from sensors in the
combustion and gas cleanup system, and, optionally, from the
power consumption level of the electrostatic precipitator. The
flow rates of the conitator poditioning agents, such as sulfur
trioxide and ammonia, are thereby balanced to achieve an
optimal remolval of particulate matter and also sulfur and
sulfur compounds from the gas stream before it is exhausted to
the atmosphere. A typical feedforward signal is the boiler
loading, and typical feedback signals include residual sulfur
trioxide and ammonia levels and stack gas opacity.
SCHEDULE I
TITLE: Control System for Flue Gas Conditioning
PATENT NO.: 5,122,162
FILE DATE: 03/19/90
SN: 496,873
ISSUE DATE: 06/16/92
EXPIRATION DATE: 06/16/09
ABSTRACT: The volumetric flow rate for the addition of a flue gas
conditioning agent, such as sulfur trioxide, is established by
maintaining the deriative of the electrostatic precipitator
power with respect to flow rate within a preselected operating
range. The derivative of the precipatator power with respect
to time and the derivative of the flow rate with respect to
time are measured, and then the deriatives are divided to
determine the derivative of precipitator power with respect to
flow rate. This calculated value is compared with a
preselected operating range. If the calculated value is
greater than the preselected operating range, the flow rate is
reduced, until a steady state calculated derivative value
within the operating range is reached.
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
I, ______________, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that ________________, personally known to me to be
the _________ of Wahlco, Inc., a corporation organized under the laws of the
State of California, and personally known to me to be the same person whose name
is subscribed to the foregoing Patent Assignment, appeared before me this day in
person and acknowledged that (he)(she) signed and delivered the said Assignment
as (his)(her) free and voluntary act, and as the free and voluntary act and deed
of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and seal this ______ day of December, 1995.
Notary Public
[NOTARIAL SEAL
My Commission Expires:
Exhibit C-3
to 1998 Credit Agreement
FIRST AMENDMENT TO PATENT ASSIGNMENT
FIRST AMENDMENT TO PATENT ASSIGNMENT, dated as of January 30, 1998 (the
Agreement") among WAHLCO INTERNATIONAL, INC., a California corporation
("Assignor"); WAHLCO ENVIRONMENTAL SYSTEMS, INC., a Delaware Corporation
("Borrower"); XXX ACQUISITION CORP., a Delaware corporation ("WESAC"): the 1998
Lenders (as hereinafter defined); and WEXFORD MANAGEMENT LLC, a Connecticut
limited liability company, as administrative and collateral agent for the
Lenders (the "Agent").
W I T N E S S E T H
WHEREAS, Assignor is the sole and exclusive owner of the Letters of Patent
identified on Schedule I hereto, and of the patent applications in the United
States Patent and Trademark Office identified on such Schedule I (all of the
foregoing, collectively, the "Patents"), and of the inventions described and
claimed therein; and
WHEREAS, Assignor is a wholly-owned subsidiary of Borrower, and Borrower
and WESAC entered into that certain Term Loan Agreement dated as of July 28,
1995 (the "1995 Loan Agreement"); and
WHEREAS, to secure Borrower's obligations under the 1995 Loan Agreement,
Assignor, Borrower and WESAC entered into that certain Security Agreement dated
as of July 25, 1995 (the "Security Agreement") and Assignor and Borrower granted
a security interest in the Collateral described therein to WESAC; and
WHEREAS, pursuant to the Security Agreement, Assignor executed a Patent
Assignment in favor of WESAC as of December 28, 1995 (the "Existing
Assignment"), whereby Assignor assigned all right, title and interest in and to
the Patents to WESAC; and
WHEREAS, to amend and supplement the 1995 Loan Agreement, and to provide
for additional credit facilities to Borrower, Borrower, each of the Lenders
named therein and the Agent, as agent, have entered into that certain Amended
and Restated Loan Agreement dated as of January 30, 1998 (the "1998 Credit
Agreement"), pursuant to which the Lenders have agreed to make loans to Borrower
and its Subsidiaries; and
WHEREAS, in connection with the execution and delivery of the 1998 Credit
Agreement and as security for all the obligations of Borrower thereunder, the
Lenders and the Agent are requiring that Assignor shall have executed and
delivered this
Agreement and granted and confirmed the security interests in the Patents
contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce the Lenders and the Agent to enter into the
1998 Credit Agreement, and to make the loans provided for therein, it is agreed
as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the 1998
Credit Agreement are used as therein defined and shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):
"Agreement" shall mean this First Amendment to the Patent Assignment,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Existing Obligations" shall mean any Obligations now existing or
hereafter arising under the 1995 Loan Agreement or any Loan Document;
"1998 Lenders" shall mean all the parties named as Lenders in the 1998
Credit Agreement.
2. Assignment. WESAC hereby assigns to the Agent, for the benefit of all
the Lenders, the Existing Assignment of the Patents held by WESAC as of the date
hereof. Assignor hereby consents to such assignment.
3. Security for Obligation. Each of Assignor and Borrower acknowledges,
confirms and agrees that this Agreement sercures, and the assignment of the
Patents is security for, the prompt payment in full when due, whether at stated
maturity, by acceleration or otherwise, and performance of the Obligations,
whether for principal, premium, interest, fees, costs and expenses, and all
obligations of Borrower now or hereafter existing under this Agreement and under
the First Amendment to the Security Agreement (collectively, the "Secured
Obligations") including the Existing Obligations, and any and all other future
advances, as well as all interest, fees, charges expenses, attorneys' fees and
any other sum chargeable to borrower of any or all of its subsidiaries under any
of the Loan Documents. Concurrently with the execution and delivery of this
Agreement, each of the UCC-1 financing statement listed on Schedule I attached
hereto shall be amended to assign the security interests represented thereby to
the Agent.
4. Effect of Amendment. Assignor hereby confirms and agrees that, except as
specifically amended hereby, the Existing Assignment continues in full force and
effect.
5. Waiver. No delay on the part of the Agent in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon Assignor by the Agent with request to any power of
sale, Lien,
-2-
option or other right hereunder, shall constitute a waiver thereof, or limit or
impair the Agent's rights to take any action or to exercise any power of sale,
Lien, option, or any other rights as against Assignor in any respect.
6. Assignment. Each Lender may assign, endorse or transfer any instrument
evidencing all or any part of the Secured Obligators as provided in, and in
accordance with, the 1998 Credit Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
7. Miscellaneous
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning all
matters pertaining to its duties hereunder;
(b) Assignor agrees to promptly reimburse the Agent for actual
out-of-pocket expenses, including, without limitation, reasonable counsel fees,
incurred in connection with the administrator and enforcement of this Agreement.
(c) Neither the Agent nor any of its respective officers, directors,
employees, agents or counsel shall be liable for any action lawfully taken or
omitted to be taken by it of them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.
(d) The Agreement shall be binding upon Assignor and its successors
and assigns, and shall inure to the benefit of, and be enforceable by, the
Agent, and its successors and assigns, and shall be governed by and construed
and enforced in accordance with, the internal laws in effect in the State of New
York without giving effect to principles of conflict of laws, and none of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except in writing duly signed for on behalf of the Agent and Assignor.
8. Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
inability shall not impair the operation of or effect those portions of this
Agreement which are valid.
9. Notice. Whenever it is provided herein that any notice, demand, request,
consent, approval or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given as provided in Section
10.11 of the 1998 Credit Agreement.
10. Section Titles. the section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of this Agreement.
-3-
11. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one document.
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to the Patent Agreement to be executed and delivered by its duly
authorized officer on the date first set forth above.
WAHLCO INTERNATIONAL, INC.
By: _______________________________
Name:
Title:
WAHLCO, ENVIRONMENTAL SYSTEMS, INC.
By: _______________________________
Name:
Title:
XXX ACQUISITION CORP.
By: _______________________________
Name:
Title:
The foregoing First Amendment to the Patent Assignment is hereby accepted
by the Agent:
WEXFORD MANAGEMENT, LLC.
By: ______________________________
Name:
Title:
-4-
SCHEDULE I
TITLE: Gas Conditioning Apparatus
PATENT NO.: 4,466,815
FILE DATE: 05/03/82
SN: 374,516
ISSUE DATE: 08/21/84
EXPIRATION DATE: 08/21/01
ABSTRACT: A gas conditioning apparatus for conditioning flue gases and
more particularly an improved means for purging a gas
conditioning system of latent or residual sulfur trioxide
which is normally produced by the gas conditioning system for
conditioning of flue gases.
-5-
SCHEDULE I
TITLE: Apparatus for Preheating Combustion Air, etc.
PATENT NO.: 4,602,673
FILE DATE: 10/03/84
SN: 637,394
ISSUE DATE: 07/29/86
EXPIRATION DATE: 07/29/03
ABSTRACT: An apparatus for preheating air for combustion for a
combustion process while simultaneously reducing the NOx
content of hot flue gases utilized to effect said preheating,
said apparatus comprising: a regenerative revolving air heater
which includes heat exchange elements having surfaces which
are exposed to said hot flue gases, and a coating which acts
as a catalyst for the reduction of NOx and is only on those
heat exchange surfaces which are contacted by flue gas having
a temperature greater than the condensation temperature of
reaction produces resulting from material contained in said
flue gas and from the added reducing agent.
-6-
SCHEDULE I
TITLE: Gas Conditioning Means for a Plurality of Boilers
PATENT NO.: 4,333,746
FILE DATE: 04/24/81
SN: 257,343
ISSUE DATE: 06/08/82
EXPIRATION DATE: 06/08/99
ABSTRACT: A gas conditioning means for a plurality of boilers and more
particularly improved means for providing a contitioning
mixture of sulfur trioxide (SO3), from a single system, for
injection into the flues gas streams of a plurality of
bolilers for the conditioning thereof.
-7-
SCHEDULE I
TITLE: Apparatus for Preheating Combustion Air, etc.
PATENT NO.: 4,739,826
FILE DATE: 07/07/86
SN: 882,245
ISSUE DATE: 04/26/88
EXPIRATION DATE: 04/26/05
ABSTRACT: An apparatus for preheating air for combustion for a
combustion process while simultaneously reducing the NOx
content of hot flue gas utilized to effect said preheating to
attain advantages which relate to combustion and which result
from higher combustion chamber tempearatures, such as
accelerated ignition and more complete combustion, comprising:
a recuperative air heater which includes heat exchange
elements having surfaces which are exposed to said hot flue
gases, and a coating which acts as a catalyst for the
reduction of NOx, said coating being provided only with those
heat exchange surfaces which are contacted by flue gases
having a temperature greater than the condensation temperature
of the reaction products resulting from the material contained
in said flue gas and from added reducing agent in order to
avoid formation of deposits on catalyst contact surfaces such
as a result of flue gas, which is cooled off as it flows
through the heat exchanger, falling below the condensation
temperature.
-8-
SCHEDULE I
TITLE: Removal of Participate Matter From Combustion Gas Streams
PATENT NO.: 4,987,839
FILE DATE: 05/14/90
SN: 523,312
ISSUE DATE: 01/29/91
EXPIRATION DATE: 01/29/08
ABSTRACT: Unburned particulate matter is removed from a combustion gas
stream by adding a conditioning agent to modify the
resistivity of the particulate matter and passing the
conditioning combustion gas stream through an electrostatic
precipitator whose precipitating elements are energized with
an intermittent applied voltage. The addition of conditioning
agent and the precipitating voltage signal are mutually
optimized. A controller receives measurement signals from
sensors that monitor the total flow rate of the particulate
matter in the gas stream before the electrostatic precipitate
treatment, and the concentration of particulate matter in the
gas stream after the treatment. Performance of the system may
be optimized according to selected combinations of variables.
-9-
SCHEDULE I
TITLE: Apparatus for Preheating Combustion Air, etc.
PATENT NO.: 4,903,755
FILE DATE: 04/25/88
SN: 185,861
ISSUE DATE: 02/27/90
EXPIRATION DATE: 07/29/03
ABSTRACT: An apparatus for preheating air combustion for a combustion
process while simultaneously reducing the NOx content of hot
flue gases utilized to effect said perheating, said apparatus
comprising: a revolving regenerative air heater that includes
heat exchange elements having surfaces that are exposed to
said hot flue gases, with said surfaces having a coating that
acts as a catalyst for the reduction of NOx, whereby said
regenerative air heater is a revolving drum that is divided in
a radial direction into individual xxxxxxxx that contain said
heat exchange elements, which are in the form of a heat
storage mass comprised of a plurality of movable individual
elements that are respectively provided with said catalyst
coating.
-10-
SCHEDULE I
TITLE: Conditioning of Gas Streams Containing Particulate
PATENT NO.: 4,966,610
FILE DATE: 06/05/89
SN: 361,272
ISSUE DATE: 10/30/90
EXPIRATION DATE: 10/30/07
ABSTRACT: A method for precipating particulate matter from a flowing gas
stream, comprising the steps of: furnishing a flowing gas
stream containing particulate matter entrained therein;
pretreating the particulate matter of the gas stream, by
supplying to the gas stream a conditioning agent selected from
the group consisting of sulfur trioxide, a gaseous compound
containing ammonia, and water vapor, and substantially
simultaneously, establishing an electrostatic potential
between the conditioning agent and the particulate matter
whereupon the conditioning agent deposits upon the particulate
matter; and electrostatically precipating the particulate
matter from the conditioned gas stream.
-11-
SCHEDULE I
TITLE: Reduction of Acidic Emissions From Combustion of Sulfur, Etc
PATENT NO.: 5,024,171
FILE DATE: 03/19/90
SN: 496,872
ISSUE DATE: 06/18/91
EXPIRATION DATE: 06/18/08
ABSTRACT: The sulfer trioxide in the combustion stream of a power plant
is reactered with injected ammonia to produce a solid ammonia
sulfate that is captured, and not released to the atmosphere.
A feedforward signal indicative of the total mass flow os
sulfur trioxide is determined as the product of the measured
boiler and measured prior to the addition of ammonia. The
ammonia mass flow injection rate is preferably at a normal
stoichiometric ratio of from about 1.0 to 1.1 relative to the
sulfur dioxide mass flow rate (that is, from about 2.0 to 2.2
times the molar mass flow rate of the sulfur trioxide),
avoiding the production of ammmonia bisulfate. The ammonia
content of the combustion gas stream is added. Based upon this
feedback measurement, the amount of ammonia added is adjusted
to be just sufficient to react with all of the sulfur
trioxide, but not in such excess as to be environmentally
detrimental.
-12-
SCHEDULE I
TITLE: Control of Addition of Conditioning Agents to Flue Gas
PATENT NO.: 5,029,535
FILE DATE: 05/14/90
SN: 523,311
ISSUE DATE: 07/09/91
EXPIRATION DATE: 07/09/08
ABSTRACT: Additions of contitioning agents to a particulate containing
flue gas stream are controlled by a controller operating from
feedforward and feedback signals received from sensors in the
combustion and gas cleanup system, and, optionally, from the
power consumption level of the electrostatic precipitator. The
flow rates of the conitator poditioning agents, such as sulfur
trioxide and ammonia, are thereby balanced to achieve an
optimal remolval of particulate matter and also sulfur and
sulfur compounds from the gas stream before it is exhausted to
the atmosphere. A typical feedforward signal is the boiler
loading, and typical feedback signals include residual sulfur
trioxide and ammonia levels and stack gas opacity.
-13-
SCHEDULE I
TITLE: Control System for Flue Gas Conditioning
PATENT NO.: 5,122,162
FILE DATE: 03/19/90
SN: 496,873
ISSUE DATE: 06/16/92
EXPIRATION DATE: 06/16/09
ABSTRACT: The volumetric flow rate for the addition of a flue gas
conditioning agent, such as sulfur trioxide, is established by
maintaining the deriative of the electrostatic precipitator
power with respect to flow rate within a preselected operating
range. The derivative of the precipatator power with respect
to time and the derivative of the flow rate with respect to
time are measured, and then the deriatives are divided to
determine the derivative of precipitator power with respect to
flow rate. This calculated value is compared with a
preselected operating range. If the calculated value is
greater than the preselected operating range, the flow rate is
reduced, until a steady state calculated derivative value
within the operating range is reached.
-00-
XXXXX XX XXXXXXXXXX )
) ss.:
COUNTY OF ORANGE )
I, ________________, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that ________________, personally known to me to be
the _________ of Wahlco, Inc., a corporation organized under the laws of the
State of Delaware, and personally known to me to be the same person whose name
is subscribed to the foregoing Patent Assignment, appeared before me this day in
person and acknowledged that (he)(she) signed and delivered the said Assignment
as (his)(her) free and voluntary act, and as the free and voluntary act and deed
of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and seal this ______ day of December, 1995.
Notary Public
[NOTARIAL SEAL
My Commission Expires:
Exhibit D
to 1998 Credit Agreement
FIRST AMENDMENT TO SECURITY AGREEMENT
FIRST AMENDMENT TO SECURITY AGREEMENT, dated as of January 30, 1998, among
WAHLCO ENVIRONMENTAL SYSTEMS, INC., a Delaware corporation ("Borrower"), each
subsidiary of Borrower listed on the signature pages hereof (Borrower and each
such subsidiary being individually a "Grantor" and collectively, the
"Grantors"); XXX Acquisition Corp., a Delaware corporation ("WESAC"); the 1998
Lenders (as hereinafter defined); and Wexford Management LLC, a Connecticut
limited liability company, as administrative and collateral agent for the
Lenders (the "Agent").
W I T N E S S E T H :
WHEREAS, Borrower and WESAC entered into that certain Term Loan Agreement
dated as of July 28, 1995 (the "1995 Loan Agreement"); and
WHEREAS, to secure Borrower's obligations under the 1995 Loan Agreement,
Borrower, each Grantor and WESAC entered into that certain Security Agreement
dated as of July 25, 1995 (the "Security Agreement") and Borrower and each
Grantor granted a security interest in the Collateral described therein to
WESAC; and
WHEREAS, to amend and supplement the 1995 Loan Agreement, and to provide
for additional credit facilities to Borrower, Borrower, each of the Lenders
named therein and the Agent, as agent, have entered into that certain Amended
and Restated Loan Agreement dated as of January 30, 1998 (the "1998 Credit
Agreement"), pursuant to which Lenders have agreed to make loans to Borrower and
its Subsidiaries; and
WHEREAS, Lenders have determined to appoint the Agent as their agent for
administrative and collateral purposes, including holding the Collateral and
exercising all rights under the Security Agreement, as amended hereby; and
WHEREAS, in connection with the execution and delivery of the 1998 Credit
Agreement and as security for all the obligations of Borrower thereunder,
Lenders and the Agent are requiring that Grantors shall have executed and
delivered this Agreement and granted and confirmed the security interests
contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce the Lenders and the Agent to enter into the
1998 Credit Agreement, and to make the loans provided for therein, it is agreed
as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the 1998
Credit Agreement are used as therein defined, and shall have (unless otherwise
provided elsewhere in this Agreement or the Security Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Agreement" shall mean this First Amendment to the Security Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Existing Obligations" shall mean any Obligations now existing or
hereafter arising under the 1995 Loan Agreement or any Loan Document;
"1998 Lenders" shall mean all the parties named as Lenders in the 1998
Credit Agreement.
2. Delivery of Collateral. WESAC hereby assigns to the Agent, for the
benefit of all the Lenders, all Liens and Security Interests in the Collateral
held by WESAC as of the date hereof. Grantors hereby consent to such assignment.
3. Security for Obligation. Each Grantor acknowledges, confirms and agrees
that this Agreement serves, and the collateral is security for, the prompt
payment in full when due, whether at stated maturity, by acceleration or
otherwise, and performance of the Obligations, whether for principal, premium,
interest, fees, costs and expenses, and all obligations of Grantors now or
hereafter existing under this Agreement and under the First Amendment to the
Guaranty (collectively, the "Secured Obligations") including the Existing
Obligations, and any and all other future advances, as well as all interest,
fees, charges expenses, attorneys' fees and any other sum chargeable to borrower
of any or all of its subsidiaries under any of the Loan Documents. Concurrently
with the execution and delivery of this Agreement, each of the UCC-1 financing
statement listed on Schedule I attached hereto shall be amended to assign the
security interests represented thereby to the Agent.
4. Effect of Amendment. Each Grantor hereby confirms and agrees that,
except as specifically amended hereby, the Security Agreement continues in full
force and effect.
5. Waiver. No delay on the part of the Agent in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon Grantors by the Agent with request to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair the Agent's rights to take any action or to exercise any
power of sale, Lien, option, or any other rights as against Grantors in any
respect.
6. Assignment. Each Lender may assign, endorse or transfer any instrument
evidencing all or any part of the Secured Obligators as provided in, and in
accordance with, the 1998 Credit Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
-2-
7. Miscellaneous
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning all
matters pertaining to its duties hereunder;
(b) Each Grantor jointly and severally agrees to promptly reimburse
the Agent for actual out-of-pocket expenses, including, without limitation,
reasonable counsel fees, incurred in connection with the administrator and
enforcement of this Agreement.
(c) Neither the Agent nor any of its respective officers, directors,
employees, agents or counsel shall be liable for any action lawfully taken or
omitted to be taken by it of them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.
(d) The Agreement shall be binding upon the Grantors and their
successors and assigns, and shall inure to the benefit of, and be enforceable
by, the Agent, and its successors and assigns, and shall be governed by and
construed and enforced in accordance with, the internal laws in effect in the
State of New York without giving effect to principles of conflict of laws, and
none of the terms or provisions of this Agreement may be waived, altered,
modified or amended except in writing duly signed for on behalf of the Agent and
the Grantors.
8. Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
inability shall not impair the operation of or effect those portions of this
Agreement which are valid.
9. Notice. Whenever it is provided herein that any notice, demand, request,
consent, approval or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given as provided in Section
10.11 of the 1998 Credit Agreement.
10. Section Titles. the section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of this Agreement.
11. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one document.
-3-
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to the Security Agreement to be executed and delivered by its duly
authorized officer on the date first set forth above.
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
By: ______________________________
Name:
Title:
SUBSIDIARIES:
BACHMANN COMPANIES, INC.
By: ______________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS GROUP, LTD.
By: ______________________________
Name:
Title:
WAHLCO, INC.
By: ______________________________
Name:
Title:
FIELD SERVICE ASSOCIATES, INC.
By: ______________________________
Name:
Title:
-4-
WAHLCO POWER PRODUCTS, INC.
By: ______________________________
Name:
Title:
XXX TECHNOLOGY, INC.
By: ______________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS, INC.
By: ______________________________
Name:
Title:
LAGUNA SERVICE CORPORATION
By: ______________________________
Name:
Title:
WAHLCO GAS FLOW TECHNOLOGIES, INC.
By: ______________________________
Name:
Title:
WAHLCO SERVICE CORPORATION
By: ______________________________
Name:
Title:
-5-
WAHLCO ENGINEERED PRODUCTS PTY., LTD.
By: ______________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS CANADA, INC.
By: ______________________________
Name:
Title:
FLOWRITE DAMPERS, LTD.
By: ______________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS, LTD.
By: ______________________________
Name:
Title:
WAHLCO ENGINEERED INTERNATIONAL, LTD.
By: ______________________________
Name:
Title:
PENTNEY ENGINEERING, LTD.
By: ______________________________
Name:
Title:
-0-
XXXXXXXXXX XXXXXXX (HOLDINGS), LTD.
By: ______________________________
Name:
Title:
TRESTE PLAN HIRE, LTD.
By: ______________________________
Name:
Title:
WAHLCO INTERNATIONAL, INC.
By: ______________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS ITALIANA SRL.
By: ______________________________
Name:
Title:
TEDDINGTON BELLOWS, LTD.
By: ______________________________
Name:
Title:
BACHMANN H&T, GmbH
By: ______________________________
Name:
Title:
-7-
EXERGETIC SYSTEMS, INC.
By: ______________________________
Name:
Title:
CORONA PROPERTIES
By: ______________________________
Name:
Title:
BACHMANN INDUSTRIES INDIA, LTD.
By: ______________________________
Name:
Title:
WAHLCO ENVIRONMENTAL SERVICES, INC.
By: ______________________________
Name:
Title:
XXX ACQUISITION CORP.
By: ______________________________
Name:
Title:
-0-
XXXXXXX CAPITAL PARTNERS II, L.P.
By: ______________________________
Wexford Capital II, L.P.
Its General Partner
By: ______________________________
Wexford Capital II, L.P.
Its General Partner
By: ______________________________
Name:
Title:
WEXFORD OVERSEAS PARTNERS I, L.P.
By: ______________________________
Wexford Capital Overseas II, L.P.
The General Partner
By: ______________________________
Wexford Capital Limited
Its General Partner
By: ______________________________
Name:
Title:
WEXFORD SPECIAL SITUATIONS 1996, L.P.
By: ______________________________
Name:
Title:
-0-
XXXXXXX SPECIAL SITUATIONS 1996 INSTITUTIONAL, L.P.
By: ______________________________
Name:
Title:
WEXFORD SPECIAL SITUATIONS 1996 LIMITED
By: ______________________________
Name:
Title:
WEXFORD-EURIS SPECIAL SITUATIONS 1996, L.P.
By: ______________________________
Name:
Title:
WEXFORD MANAGEMENT LLC, As Agent
By: ______________________________
Name:
Title:
-10-
SCHEDULE I
FILINGS
1. Bachmann Companies, Inc. UCC-1 financing statement number 114530 filed with
the Maine Secretary of State on September 18, 1995
2. Wahlco Engineered Products, Inc. UCC-1 financing statement number 114531
filed with the Maine Secretary of State on September 18, 1995
3. Wahlco, Inc. UCC-1 financing statement number 9526460275 filed with the
California Secretary of State on September 18, 1995
4. XXX Technology, Inc. UCC-1 financing statement number 9526460337 filed with
the California Secretary of State on September 18, 1995
5. Wahlco Environmental Systems, Inc. UCC-1 financing statement number 952460286
filed with the California Secretary of State on September 18, 1995
Exhibit E
to 1998 Credit Agreement
FIRST AMENDMENT TO STOCK PLEDGE AGREEMENT
FIRST AMENDMENT TO STOCK PLEDGE AGREEMENT, dated as of January 30, 1998,
among XXX ACQUISITION CORP., a Delaware corporation, WAHLCO ENVIRONMENTAL
SYSTEMS, INC., a Delaware corporation (the "Borrower"), and BACHMANN COMPANIES,
INC., a Delaware corporation, WAHLCO, INC., a California corporation, WAHLCO
ENGINEERED PRODUCTS GROUP LIMITED, a United Kingdom corporation, and TEDDINGTON
BELLOWS (HOLDINGS), LTD., a United Kingdom corporation, each a subsidiary of
Borrower (individually as a "Pledgor" and collectively as "Pledgors"); in favor
of (a) the 1995 Lender (as hereinafter defined), (b) the 1998 Lenders (as
hereinafter defined, and together with the 1995 Lender, the "Lenders"), and (c)
Wexford Management LLC, a Connecticut limited liability company, as
administrative and collateral agent for the Lenders (the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower and WESAC entered into that certain Term Loan
Agreement dated as of July 28, 1995 (the "1995 Loan Agreement"); and
WHEREAS, to secure Borrower's obligations under the 1995 Loan Agreement,
the Borrower and the Pledgors entered into that certain Stock Pledge Agreement
dated as of July 28, 1995 (the "Stock Pledge Agreement") and pledged the Pledged
Collateral described therein to WESAC; and
WHEREAS, to amend and supplement the 1995 Loan Agreement, and to provide
for additional credit facilities to the Borrower, the Borrower, each of the
Lenders named therein and the Agent, as agent, have entered into that certain
Amended and Restated Loan Agreement dated as of January 30, 1998 (the "1998
Credit Agreement"), pursuant to which the Lenders have agreed to make loans to
the Borrower and its subsidiaries; and
WHEREAS, the Lenders have determined to appoint the Agent as their agent
for administrative and collateral purposes, including holding the Pledged
Collateral and exercising all rights under the Stock Pledge Agreement; and
WHEREAS, in connection with the execution and delivery of the 1998 Credit
Agreement and as security for all of the obligations of Borrower thereunder, the
Lenders and the Agent are requiring that Pledgors shall have executed and
delivered this Agreement and granted and confirmed the security interest
contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce the Lenders and the Agent to enter into the
1998 Credit Agreement, and to make the loans provided for therein, it is agreed
as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the 1998
Credit Agreement are used herein as therein defined, and the following shall
have (unless otherwise provided elsewhere in this Agreement or the Stock Pledge
Agreement) the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined):
"Agreement" shall mean this First Amendment Stock Pledge Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Existing Obligations" shall mean any Obligations now existing or
hereafter arising under the 1995 Loan Agreement or any Loan Document.
"1995 Lender" shall mean XXX Acquisition Corp., a Delaware
corporation.
"1998 Lenders" shall mean the parties named as Lenders in the 1998
Credit Agreement.
2. Delivery of Pledged Collateral. WESAC hereby delivers to the Agent the
Pledged Collateral, the receipt of which is hereby acknowledged.
3. Security for Obligations. Each Pledgor acknowledges, confirms and agrees
that this Agreement secures, and the Pledged Collateral is security for, the
prompt payment in full when due, whether at stated maturity, by acceleration or
otherwise, and performance of the Obligations, whether for principal, premium,
interest, fees, costs and expenses, and all obligations of Pledgors now or
hereafter existing under this Agreement and under the Amended Guaranty
(collectively, the "Secured Obligations") including the Existing Obligations,
and any and all other, future advances, as well as all interest, fees, charges,
expenses, attorneys' fees and any other sum chargeable to Borrower or any or all
of its Subsidiaries under any of the Loan Documents.
4. Effect of Amendment. Each Pledor hereby confirms and agrees that, except
as specifically amended hereby, the Stock Pledge Agreement continues in full
force and effect.
5. Waiver. No delay on the part of the Agent in exercising any power of
sale, Lien, option or other right hereunder, and no notice or demand which may
be given to or made upon Pledgors by the Agent with respect to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair the Agent's, right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice any of their rights as against Pledgors in any respect.
6. Assignment. Each Lender may assign, endorse or transfer any instrument
evidencing all or any part of the Secured Obligations as provided in, and in
accordance with, the 1998 Credit Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
-2-
7. Miscellaneous.
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning all
matters pertaining to its duties hereunder.
(b) Each Pledgor jointly and severally agrees to promptly reimburse
the Agent for actual out-of-pocket expenses, including, without limitation,
reasonable counsel fees, incurred in connection with the administration and
enforcement of this Agreement.
(c) Neither the Agent nor any of its respective officers, directors,
employees, agents or counsel shall be liable for any action lawfully taken or
omitted to be taken by it or them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.
(d) This Agreement shall be binding upon Pledgors and their successors
and assigns, and shall inure to the benefit of, and be enforceable by, the
Agent, and its successors and assigns, and shall be governed by, and construed
and enforced in accordance with, the internal laws in effect in the State of New
York without giving effect to principles of conflict of laws, and none of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except in writing duly signed for and on behalf of the Agent and the
Pledgors.
8. Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or effect those portions of this
Agreement which are valid.
9. Notices. 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 any other party, or whenever any
of the parties desires to give or serve upon any other a communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be given
as provided in Section __ of the 1998 Credit Agreement.
10. Section Titles. The section titles contained in this 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.
11. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one
agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-3-
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Stock Pledge Agreement to be duly executed as of the date first written above.
XXX ACQUISITION CORP.
By:_________________________
WAHLCO ENVIRONMENTAL SYSTEMS, INC.
By:_________________________
Name:
Title:
BACHMANN COMPANIES, INC.
By:_________________________
Name:
Title:
WAHLCO, INC.
By:_________________________
Name:
Title:
WAHLCO ENGINEERED PRODUCTS GROUP LIMITED
By:_________________________
Name:
Title:
TEDDINGTON BELLOWS (HOLDINGS), LTD.
By:_________________________
Name:
Title:
Accepted and Acknowledged by:
WEXFORD MANAGEMENT LLC, as Agent
By:_________________________________
Name:
Title:
-4-
xxxxxx
Schedule 3.6
Defaults
1/30/98
Description
Amount
London International Mercantile Bank (LIM) is in $459,812
default of deposits owed to WEP Ltd. These
deposits were originally restricted by LIM as
collateral for outstanding letters of credit. Due to
LIM's Financial problems/reorganization, they will
not allow WEP Ltd. to withdraw these funds.
( 280,544 @ 1.639 = $459,812)
--------------------------------------------------------------------------
Total
459,812
Schedule 3.10
Taxes
1/30/98
None
