EXHIBIT 10.17
AMENDED AND RESTATED
LETTER OF CREDIT, REIMBURSEMENT
AND GUARANTY AGREEMENT
(Xxxxxx)
Dated as of October 18, 1999
TABLE OF CONTENTS
Page
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ARTICLE I Definitions .......................................................2
ARTICLE II Representations and Warranties of the Guarantor .................10
2.1. Incorporation .................................................10
2.2. Power and Authority; No Conflicts; Enforceability .............11
2.3. Financial Condition ...........................................11
2.4. Title to Property and Assets ..................................11
2.5. Litigation ....................................................11
2.6. Taxes .........................................................12
2.7. Trademarks, Franchises and Licenses ...........................12
2.8. No Default ....................................................12
2.9. Governmental Authority ........................................12
2.10. ERISA Requirements ...........................................12
2.11. Pollution and Environmental Control; Hazardous Substances ....12
2.12. Capital Structure ............................................13
2.13. Solvent Financial Condition ..................................13
2.14. Restrictions .................................................13
2.15. Full Disclosure ..............................................13
2.16. Labor Relations ..............................................13
2.17. Compliance With Laws .........................................13
2.18. Brokers ......................................................14
2.19. Trade Relations ..............................................14
2.20. Investment Company Act .......................................14
ARTICLE III Representations and Warranties of the Borrower .................14
3.1. Incorporation .................................................14
3.2. Power and Authority ...........................................14
3.3. Governmental Authority ........................................15
3.4. Project Site ..................................................15
3.5 No Default ....................................................15
3.6. Survival of Representations and Warranties ....................15
ARTICLE IV Terms of Letter of Credit, Reimbursement, Other Payments and
Guaranty ........................................................16
4.1. Letter of Credit ..............................................16
4.2. Reimbursement and Other Payments ..............................16
4.3. Tender Advances ...............................................16
4.4. Commission and Fee ............................................17
4.5. Increased Costs ...............................................18
4.6. Computation ...................................................18
4.7. Payment Procedure .............................................18
4.8. Business Days .................................................18
4.9. Reimbursement of Expenses .....................................18
4.10. Expiration Date ..............................................19
4.11. Guaranty .....................................................19
4.12. Obligations Absolute .........................................20
4.13. Waiver of Guarantor's Rights .................................21
ARTICLE V Security; Insurance ..............................................21
5.1. Security ......................................................21
5.2. Casualty and Liability Insurance Required .....................21
5.3. Notice of Casualty or Taking ................................. 21
ARTICLE VI Affirmative Covenants ...........................................22
6.1. Financial Reports and Other Data and Information ..............22
6.2. Books, Records and Inspections ................................23
6.3. Maintenance of Property, Insurance ............................23
6.4. Corporate Franchises ..........................................24
6.5. Compliance with Statutes, etc. ................................24
6.6. ERISA .........................................................24
6.7. Performance of Obligations ....................................25
6.8. Taxes and Liens ...............................................25
6.9. Payment of Obligations ........................................25
6.10. Environmental Matters ........................................25
ARTICLE VII Negative Covenants .............................................26
7.1. Negative Pledge; Liens ........................................26
7.2. Consolidation or Merger .......................................27
7.3. Sale of Assets, Dissolution, Etc ..............................27
7.4. Loans and Investments .........................................27
7.5. Leverage Ratio ................................................27
7.6. Net Worth .....................................................27
7.7. Interest Coverage Ratio .......................................27
7.8. Fixed Charges Coverage Ratio ..................................27
7.9. Capital Expenditures ..........................................27
ARTICLE VIII Conditions to Release of Xxxxx; Conditions Precedent to Each
Tender Advance ................................................28
8.1. Conditions to Release of Xxxxx ................................28
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8.2. Conditions Precedent to Each Tender Advance ...................28
ARTICLE IX Default .........................................................29
9.1. Events of Default .............................................29
9.2. No Remedy Exclusive ...........................................31
ARTICLE X Miscellaneous ....................................................31
10.1. Indemnification ..............................................31
10.2. Transfer of Letter of Credit .................................32
10.3. Reduction of Letter of Credit ................................32
10.4. Liability of the Bank ........................................32
10.5. Successors and Assigns .......................................33
10.6. Notices ......................................................33
10.7. Amendment ....................................................34
10.8. Effect of Delay and Waivers ..................................34
10.9. Counterparts .................................................34
10.10. Severability ................................................34
10.11. Cost of Collection ..........................................34
10.12. Set-Off .....................................................34
10.13. Governing Law ...............................................34
10.14. References ..................................................35
10.15. Consent to Jurisdiction, Venue ..............................35
EXHIBIT A Form of Letter of Credit
EXHIBIT B Representations of the Guarantor
EXHIBIT C Liens
EXHIBIT D Insurance
EXHIBIT E Form of Opinion of Counsel
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AMENDED AND RESTATED
LETTER OF CREDIT, REIMBURSEMENT and
GUARANTY AGREEMENT
THIS AMENDED AND RESTATED LETTER OF CREDIT, REIMBURSEMENT AND GUARANTY
AGREEMENT, dated as October 18, 1999 by and among Xxxxxx Controls, Inc., a New
Jersey corporation ("the Borrower"), CIRCOR INTERNATIONAL, INC., a Delaware
corporation ("the Guarantor"), and FIRST UNION NATIONAL BANK, a national banking
association organized and existing under the laws of the United States with its
principal offices located in Charlotte, North Carolina (the "Bank");
W I T N E S S E T H:
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WHEREAS, pursuant to a Trust Indenture dated July 1, 1994 (the "Indenture")
between the Hillsborough County Industrial Development Authority (the "Issuer")
and The First National Bank of Boston, Boston, Massachusetts (the "Trustee"),
the Issuer issued and sold its Industrial Development Revenue Refunding Bonds
(Xxxxxx Controls, Inc. Project), Series 1994 in the original aggregate principal
amount of $4,765,000 (the "Bonds"); and
WHEREAS, in order to enhance the marketability of the Bonds, the Bank
issued an irrevocable direct pay letter of credit, a copy of which is attached
hereto as Exhibit A (such letter of credit or any successor or substitute letter
of credit issued by the Bank herein individually and collectively called the
"Letter of Credit"); and
WHEREAS, as a condition precedent to the issuance of the Letter of Credit,
Xxxxx Industries, Inc. the parent of the Borrower ("Xxxxx") agreed to
unconditionally guarantee the obligations of the Borrower as provided in the
Letter of Credit, Reimbursement and Guaranty Agreement dated as of July 1, 1994
among the Borrower, the Bank and Xxxxx (the "1994 Agreement"); and
WHEREAS, Xxxxx will spin off its subsidiaries comprising the industrial oil
and gas segment of its business, including the Borrower, to Guarantor, effective
October 18, 1999 (the "Spin-Off"), resulting in the Borrower being owned,
directly or indirectly, by Guarantor; and
WHEREAS, Xxxxx has requested that it be released from its obligations
pursuant to the 1994 Agreement in exchange for the Guarantor's undertaking the
obligations of this Agreement; and
WHEREAS, the Bank has agreed to release Xxxxx in exchange for the
Guarantor's undertaking the obligations of this Agreement; and
WHEREAS, certain other amendments to the 1994 Agreement are required on
account of the Spin-Off and the resulting capital structure of Guarantor;
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NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing, and to induce the Bank to release Xxxxx from the 1994
Agreement, the Borrower and the Guarantor do hereby covenant and agree with the
Bank as follows:
ARTICLE I
Definitions
All words and terms defined in Article I of the Loan Agreement shall have
the same meanings in this Agreement, unless otherwise specifically defined
herein. The terms defined in this Article I have, for all purposes of this
Agreement, the meanings specified hereinabove or in this Article, unless defined
elsewhere herein or the context clearly requires otherwise.
1.1. "Affiliate" means any person, corporation, association or other
business entity which directly or indirectly controls, or is controlled by, or
is under common control with the Borrower or the Guarantor.
1.2. "Agreement" shall mean this Amended and Restated Letter of Credit,
Reimbursement and Guaranty Agreement, as the same may from time to time be
amended, modified or supplemented in accordance with the terms hereof.
1.3. "Alternate Credit Facility" means any irrevocable direct pay letter of
credit, insurance policy or similar credit enhancement or support facility for
the benefit of the Trustee, the terms of which Alternate Credit Facility shall
in all respects material to the registered owners of the Bonds be the same
(except for the term set forth in such Alternate Credit Facility) as those of
the Letter of Credit.
1.4. "Bankruptcy Code" means 11 U.S.C. (S) 101 et. seq., as amended.
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1.5. "Bondholder" or "Bondholders" means the initial and any future
registered owners of the Bond or Bonds as registered on the books and records of
the Bond Registrar pursuant to Section 204 of the Indenture.
1.6. "Bond Documents" means, collectively, the Sale Agreement, the Note,
the Remarketing Agreement, the Tender Agency Agreement, the Indenture, the
Security Instruments and the Bonds, as the same may be amended, modified or
supplemented from time to time in accordance with their respective terms.
1.7. "Borrower" means Xxxxxx Controls, Inc., a New Jersey corporation.
1.8. "Capital Expenditures" means, for any period, expenditures (including,
without limitation, the aggregate amount of Capital Lease Obligations incurred
during such period) made by the Guarantor, the Borrower or any of their
Subsidiaries to acquire or construct fixed assets,
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plant and equipment (including renewals, improvements and replacements, but
excluding repairs) during such period computed in accordance with GAAP.
1.9. "Capital Lease Obligations" means, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
1.10. "Cash and Cash Equivalents" means as to any Person at a particular
date, the aggregate amount of all items categorized as "cash" and "cash
equivalents" on the balance sheet of such Person, as determined in accordance
with GAAP.
1.11. "Consistent Basis" means, in reference to the application of GAAP,
that the accounting principles observed in the period referred to are comparable
in all material respects to those applied in the preceding period, except as to
any changes consented to by the Bank.
1.12. "Consolidated Net Income" means the consolidated gross revenues of
the Guarantor and the Borrower and the Subsidiaries of each for such period less
all expenses and other proper charges for such period (including taxes on or
measured by income) determined in accordance with GAAP.
1.13. "Consolidated Net Worth" of the Guarantor and the Borrower and the
Subsidiaries of each shall mean at any time as of which the amount thereof is to
be determined, the sum of the Net Worth of such Persons.
1.14. "Consolidated Subsidiaries" means the Subsidiaries of the Guarantor
included in the audited consolidated financial statements of the Guarantor from
time to time. For purposes of the representation contained in Subsection 2.3
hereof, Consolidated Subsidiaries shall include the term "Combined Subsidiaries"
as used in the referenced financial statements.
1.15. "Consultant" means any third-party architect or engineer satisfactory
to the Bank.
1.16. "Credit Agreement" means the Credit Agreement dated as of October 18,
1999 among CIRCOR International, Inc., ING (U.S.) LLC as Agent, BankBoston, N.A.
as Syndication Agent and the Bank as Documentation Agent.
1.17. "Current Assets" means Cash and Cash Equivalents and all other assets
or resources of a Person which are expected to be realized in cash, sold in the
ordinary course of business, or consumed within one year, all determined in
accordance with GAAP.
1.18. "Current Liabilities" means the amount of all liabilities of a Person
which by their terms are payable within one year (including all indebtedness
payable on demand or maturing not
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more than one year from the date of computation and the current portion of
long-term debt), all determined in accordance with GAAP.
1.19. "Debt Service" means, for any period, the sum, for the Guarantor, the
Borrower and their Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all payments of
principal of Indebtedness (including, without limitation, the principal
component of any payments in respect of Capital Lease Obligations) scheduled to
be made during such period plus (b) all Interest Expense for such period.
1.20. "Default" means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an Event of
Default.
1.21. "Distribution" in respect of any corporation, means and includes: (i)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of its Securities unless made contemporaneously from the net
proceeds of the sale of its Securities.
1.22. "EBITDA" means, for any period, the sum, for the Guarantor, the
Borrower and their Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) Net Income
(calculated before taxes, Interest Expense, extraordinary or unusual items and
income or loss attributable to equity in Affiliates) for such period plus (b)
----
depreciation and amortization (to the extent deducted in determining Net Income)
for such period; provided that if, during any such period, the Borrower or any
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of its Subsidiaries shall have made one or more acquisitions pursuant to Section
9.05(b)(iv) of the Credit Agreement, EBITDA for such period shall be calculated
on a pro forma basis as if each such acquisition had been made on the first day
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of such period, giving pro forma effect to such acquisition to the extent
permitted under such Section 9.05(b)(iv) of the Credit Agreement.
1.23. "Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters, including, but not
limited to, the Resource Conservation and Recovery Act; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980; the Toxic
Substances Control Act, as amended; the Clean Water Act; the River and Harbor
Act; the Water Pollution Control Act; the Marine Protection Research and
Sanctuaries Act; the Deep Water Port Act; the Safe Drinking Water Act; the
Superfund Amendments and Reauthorization Act of 1986; the Federal Insecticide,
Fungicide and Rodenticide Act; the Mineral Lands and Leasing Act; the Surface
Mining Control and Reclamation Act; state and federal superlien and
environmental cleanup programs and laws; and U.S. Department of Transportation
regulations.
1.24. "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including any rules and regulations promulgated thereunder.
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1.25. "ERISA Affiliate" means a Person under common control with the
Guarantor within the meaning of Section 414(c) of the Internal Revenue Code of
1986, as amended, or Section 4001(b) of ERISA.
1.26. "Event of Default" means an Event of Default as defined in Section
9.1 hereof.
1.27. "Expiration Date" means August 4, 1997, the stated expiration date of
the Letter of Credit, as such date has been and may be extended in accordance
with the terms of Section 4.10 hereof.
1.28. "Fixed Charges Coverage Ratio" means, as at any date, the ratio of
(a)(x) EBITDA for the period of four consecutive fiscal quarters ending on or
most recently ended prior to such date minus (y) Capital Expenditures made
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during such period to (b) Debt Service for such period.
1.29. "GAAP" means those principles of accounting set forth in
pronouncements of the Financial Accounting Standards Board and its predecessors
or pronouncements of the American Institute of Certified Public Accountants or
those principles of accounting which have other substantial authoritative
support and are applicable in the circumstances as of the date of application,
as such principles are from time to time supplemented or amended. As to the
provisions of this Agreement, the applicable GAAP shall be determined as set
forth in the Credit Agreement.
1.30. "Guarantee" means a guarantee, an endorsement, a contingent agreement
to purchase or to furnish funds for the payment or maintenance of, or otherwise
to be or become contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) Property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of such debtor's
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a lender or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
but excluding endorsements for collection or deposit in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall have a
correlative meaning.
1.31. "Guarantor" means CIRCOR International, Inc., a Delaware corporation.
1.32. "Immaterial Subsidiary" means, as at any date, any Subsidiary of the
Guarantor that the Guarantor shall theretofore have designated as an "Immaterial
Subsidiary" in a notice to the Bank, provided that:
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(a) the following shall be true:
(x) the aggregate assets of all such Subsidiaries (calculated
both on a book value basis and a fair market value basis) does not
exceed 10% of the
5
aggregate assets (calculated on such respective bases) of the
Guarantor and its Subsidiaries as of the most recent fiscal
quarter-end of the Guarantor; and
(y) the aggregate EBITDA of all such Subsidiaries for the period
of four consecutive fiscal quarters most recently ended prior to such
date does not exceed 10% of the consolidated EBITDA of the Guarantor
and its Subsidiaries for such period; and
(b) the Guarantor may from time to time, by notice to the Borrower,
cause any Subsidiary that it had theretofore designated as an "Immaterial
Subsidiary" to be no longer treated as an "Immaterial Subsidiary"
1.33. "Indebtedness" means, for any Person: (a) obligations created, issued
or incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective indebtedness so secured
has been assumed by such Person; (d) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by lenders and other
financial institutions for account of such Person; (e) Capital Lease Obligations
of such Person; and (f) Indebtedness of others Guaranteed by such Person.
1.34. "Interest Coverage Ratio" means, as at any date, the ratio of (a)
EBITDA for the period of four consecutive fiscal quarters ending on or most
recently ended prior to such date to (b) Interest Expense for such period.
1.35. "Interest Expense" means, for any period, the sum, for the Guarantor,
the Borrower and their Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest in
respect of Indebtedness (including, without limitation, the interest component
of any payments in respect of Capital Lease Obligations) accrued or capitalized
during such period (whether or not actually paid during such period) plus (b)
the net amount payable (or minus the net amount receivable) under Interest Rate
Protection Agreements during such period (whether or not actually paid or
received during such period).
1.36. "Interest Rate Protection Agreement" means, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer of
mitigation of interest risks either generally or under specific contingencies.
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1.37. "Leverage Ratio" means, as at any date, the ratio of (a) the
aggregate amount of Indebtedness of the Guarantor, the Borrower and their
Subsidiaries outstanding on such date to (b) EBITDA for the four consecutive
fiscal quarters ended on or most recently prior to such date.
1.38. "Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including, but not
limited to, the security interest, security title or lien arising from a
security agreement, mortgage, deed of trust, deed to secure debt, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. For the purpose of this Agreement, the Borrower or the
Guarantor, respectively, shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
1.39. "Loan Agreement" means the Loan Agreement dated as of July 1, 1994
from the Borrower to the Issuer.
1.40. "Material Adverse Effect" means a material adverse effect on the
business, operations or financial condition of the Guarantor and its
Subsidiaries or if applicable, such other Person, taken as a whole.
1.41. "Money Borrowed" as applied to Indebtedness, means (i) Indebtedness
for borrowed money; (ii) Indebtedness, whether or not in any such case the same
was for borrowed money, (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii) Indebtedness
that constitutes a Capitalized Lease obligation; and (iv) Indebtedness under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof.
1.42. "Net Income" means for any period, the net operating income of the
Borrower, the Guarantor and their Subsidiaries for such period (determined on a
consolidated basis in accordance with GAAP).
1.43. "Net Worth" means, as at any date, the sum for the Borrower, the
Guarantor and their Subsidiaries (determined on a consolidated basis in
accordance with GAAP) of the following:
(a) the amount of capital stock, plus
----
(b) the amount of surplus and retained earnings (or, in the case of
a retained earnings deficit, minus the amount of such deficit).
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1.44. "Obligations" means all loans and all other advances, debts,
liabilities, obligations, covenants and duties owing, arising, due or payable
from the Borrower to the Bank of any kind or nature, present or future, whether
or not evidenced by any note, guaranty or other instrument, whether arising
under this Agreement or any of the other Bond Documents or Security Instruments
or otherwise, whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or to become due,
now existing or hereafter arising and however acquired. The term includes,
without limitation, all interest, charges, expenses, fees, attorney's fees and
any other sums chargeable to the Borrower under any of the Bond Documents or
Security Instruments.
1.45. "Officer's Certificate" means the Certificate of the Chief Financial
Officer or the Controller of the Borrower or the Guarantor, as the case shall
be, as approved by the Bank.
1.46. "Other Agreements" means any and all agreements, instruments and
documents (other than this Agreement and the Security Instruments), heretofore,
now or hereafter executed by the Borrower or the Guarantor or the Subsidiaries
of either or any of them and delivered to the Bank in respect to the
transactions contemplated by this Agreement.
1.47. "Permitted Encumbrances" means and includes:
(a) liens for taxes and assessments not delinquent or which are
being contested in good faith by appropriate proceedings and against which
adequate reserves have been provided for on the books of the Guarantor or
the Borrower, as applicable;
(b) worker's, mechanic's and materialmen's liens and similar liens
incurred in the ordinary course of business remaining undischarged or
unstayed for not longer than 60 days following Borrower's notice of the
attachment thereof;
(c) attachments remaining undischarged or unstayed for not longer
than 60 days from the making thereof;
(d) liens in respect of final judgments or awards remaining
undischarged or unstayed for not longer than 60 days from the making
thereof;
(e) liens in respect of pledges or deposits under worker's
compensation laws, liens to secure customs bonds, unemployment insurance or
similar legislation and in respect of pledges or deposits to secure bids,
tenders, contracts (other than contracts for the payment of money), leases
or statutory obligations, or in connection with surety, appeal and similar
bonds incidental to the conduct of litigation;
(f) any other liens, easements, encumbrances, rights of way and
clouds on title included within the term "Permitted Encumbrances" as
defined in the Credit Agreement.
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1.48. "Person" means an individual, partnership, corporation, trust, joint
venture, unincorporated organization, association, or a government, or agency or
political subdivision or instrumentality thereof.
1.49. "Plan" means a pension plan (other than a multiemployer pension plan
as defined in Section 3(37) of ERISA) that is subject to Title IV of ERISA.
1.50. "Pledge Agreement" means the Pledge Agreement of even date herewith
from the Borrower to the Bank.
1.51. "Prime Rate" means the interest rate publicly announced from time to
time by the Bank to be its prime rate, which may not necessarily be its best
lending rate. In the event the Bank shall abolish or abandon the practice of
announcing its Prime Rate or should the same be unascertainable, the Bank shall
designate a comparable reference rate which shall be deemed to be the Prime Rate
under this Agreement.
1.52. "Private Placement Memorandum" means the Private Placement Memorandum
dated August 4, 1994 relating to the Bonds.
1.53. "Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time.
1.54. "Project" means the manufacturing facility acquired, constructed and
installed with the proceeds of the Prior Bonds, owned and operated by the
Borrower in Hillsborough County, Florida.
1.55. "Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
1.56. "Reportable Event" means any of the events set forth in Section
4043(b) of ERISA other than those events for which the obligation to notify the
Pension Benefit Guaranty Corporation ("PBGC") has been waived under 29 C.F.R.
Part 2615.
1.57. "Security" means shall have the same meaning as in Section 2(l) of
the Securities Act of 1933, as amended.
1.58. "Security Instruments" means, collectively, the Pledge Agreement and
any and all Other Agreements.
1.59. "Solvent" means as to any Person, such Person (i) owns Property whose
fair saleable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay all of
its Indebtedness as such Indebtedness matures and (iii) has capital sufficient
to carry on its business and transactions and all business and transactions in
which it is about to engage.
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1.60. "Spin-Off" has the meaning assigned to that term in the fourth
"whereas" paragraph of this Agreement
1.61. "Subsidiary" or "Subsidiaries" means, as to any Person, any
corporation whether organized and existing under the laws of any state of the
United States, including the District of Columbia and Puerto Rico, or under the
laws of any foreign country, of which more than 50% of voting stock at any time
is owned or controlled directly or indirectly by the Borrower or the Guarantor,
as applicable.
1.62. "Tender Advance" has the meaning assigned to that term in Section 4.3
of this Agreement.
1.63. "Tender Draft" has the meaning assigned to that term in the Letter of
Credit.
1.64. "Termination Date" means the last day a drawing is available under
the Letter of Credit.
1.65. "Trustee" means any Person or group of Persons at the time serving as
corporate fiduciary under the Indenture.
1.66. "Uniform Customs and Practice" shall mean the Uniform Customs and
Practice for Documentary Credits, 1994 Revision, ICC Publication No. 500.
ARTICLE II
Representations and Warranties of the Guarantor
The Guarantor represents and warrants to the Bank (which representations
and warranties shall survive the delivery of the documents mentioned herein and
the issuance of the Letter of Credit) that:
2.1. Incorporation. Each of the Guarantor and its Consolidated Subsidiaries
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is a corporation, partnership or joint venture, respectively, duly organized,
existing and in good standing under the laws of its respective jurisdiction,
except where the failure to be in good standing would not have a Material
Adverse Effect and has the corporate or other power to own its respective
properties and to carry on its respective business as now or at such future time
being conducted, and is duly qualified as a foreign corporation or otherwise to
do business in every jurisdiction in which the failure to be so qualified would
have a Material Adverse Effect. On the date of the execution and delivery of
this Agreement, the Guarantor has the respective Consolidated Subsidiaries shown
on Exhibit B hereto, and no other Subsidiaries.
10
2.2. Power and Authority; No Conflicts; Enforceability. It is duly
-------------------------------------------------
authorized under all applicable provisions of law to execute, deliver and
perform this Agreement and the Other Agreements to which it is a party, and all
corporate action on its part required for the lawful execution, delivery and
performance hereof and thereof has been duly taken; and this Agreement and the
Other Agreements to which it is a party, upon the due execution and delivery
thereof, will be the valid, binding and legal obligation of the Guarantor
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors,
rights generally and to general principles of equity. Neither the execution of
this Agreement, nor the fulfillment of or compliance with the respective
provisions and terms hereof, will (A) conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a violation of or default
under any applicable law, regulation, judgment, writ, order or decree to which
the Guarantor or any Consolidated Subsidiary or any of their respective
properties are subject, or the charter or bylaws of the Guarantor or any
Consolidated Subsidiary, or any agreement or instrument to which the Guarantor
or any Consolidated Subsidiary is now a party and (b) create any lien, charge or
encumbrance upon any of the property or assets of the Guarantor or any
Consolidated Subsidiary pursuant to the terms of any agreement or instrument to
which the Guarantor or any Subsidiary is a party or by which they, or any of
them, or any of their respective properties, are bound except pursuant to the
Security Instruments.
2.3. Financial Condition. The consolidated (combined) and pro forma balance
-------------------
sheets of the Guarantor and its Consolidated Subsidiaries for the fiscal years
ended as of June 30, 1998 and June 30, 1999, and the related consolidated
(combined) and pro forma statements of operations, consolidated (combined)
statements of cash flows and consolidated (combined) statements of changes in
shareholder's equity for the period, copies of which have been furnished to the
Bank, are correct, complete and fairly present the financial condition of the
Guarantor and its Consolidated Subsidiaries in all material respects as at the
respective date of said balance sheets, and the results of its respective
operations for each such period. The Guarantor and its Consolidated Subsidiaries
do not have any material direct or contingent liabilities as of the date of this
Agreement which are not provided for or reflected in the balance sheet dated
June 30, 1999, or referred to in notes thereto or set forth in Exhibit B hereto.
There has been no material adverse change in the business, properties or
condition, financial or otherwise, of the Guarantor and its Consolidated
Subsidiaries since June 30, 1999.
2.4. Title to Property and Assets. It has good and marketable title to its
----------------------------
Property, including the properties and assets reflected in the financial
statements and notes thereto described in Section 2.3 hereof, except for such
assets as have been disposed of since the date of said financial statements in
the ordinary course of business or as are no longer useful in the conduct of its
business, and all such properties and assets are free and clear of all material
Liens, mortgages, pledges, encumbrances or charges of any kind except Liens
reflected in the financial statements or Exhibit B hereto or permitted under
Section 7.2 hereof.
2.5. Litigation. There are no pending or, to the best of its knowledge,
----------
threatened material actions, suits or proceedings before any court, arbitrator
or governmental or
11
administrative body or agency that may materially adversely affect the
properties, business or condition, financial or otherwise, of the Guarantor and
its Consolidated Subsidiaries on a consolidated basis, except as disclosed in
the financial statements and notes thereto described in Section 2.3 hereof or
Exhibit B hereto.
2.6. Taxes. It has filed all material tax returns required to be filed by
-----
it and all material taxes due with respect thereto have been paid, and except as
described in Exhibit B hereto, no controversy in respect of a material amount of
additional taxes, state, federal or foreign, of the Guarantor is pending, or, to
the knowledge of the Guarantor, threatened. No federal taxes have been due or
are currently due to be paid by the Guarantor as of the date hereof. Adequate
reserves have been established for the payment of all taxes (other than federal
taxes) for periods ended subsequent to June 30, 1994.
2.7. Trademarks, Franchises and Licenses. It owns, possesses or has the
-----------------------------------
right to use all necessary material patents, licenses, franchises, trademarks,
trademark rights, trade names, trade name rights and copyrights to conduct
business as now conducted, without known conflict with any patent, license,
franchise, trademark, trade name, or copyright of any other Persons.
2.8. No Default. It is not in default in the performance, observance or
----------
fulfillment of any of its material obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which it
may be bound, the effect of which default would allow any Person to cause such
obligation under the agreement or instrument to become due prior to its stated
maturity.
2.9. Governmental Authority. It has received the written approval of all
----------------------
federal, state, local and foreign governmental authorities, if any, necessary to
carry out the terms of this. Agreement, and no further governmental consents or
approvals are required in the making or performance of this Agreement by it.
2.10. ERISA Requirements. It has not incurred any material liability to the
------------------
PBGC established under ERISA (or any successor thereto under ERISA) in
connection with any Plan established or maintained by it or by any Person under
common control with it (within the meaning of Section 414(c) of the Internal
Revenue Code of 1986, as amended (the "Code"), or of Section 4001(b) of ERISA),
or in which its employees are entitled to participate. No such Plan has incurred
any material accumulated funding deficiency within the meaning of ERISA. No
Reportable Event in connection with any such Plan has occurred or is continuing.
2.11. Pollution and Environmental Control; Hazardous Substances. It has
---------------------------------------------------------
obtained all permits, licenses and other authorizations that are required under
any Environmental Laws, except to the extent that failure to have obtained any
such permit, license or authorization will not have a Material Adverse Effect,
and is in material compliance with, all federal, state, and local Environmental
Laws and regulations relating, without limitation, to pollution, reclamation or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or hazardous or
toxic materials or wastes into air, water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
12
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic substances, materials or wastes the failure to comply with
which would have a Material Adverse Effect. Neither any Guarantor, nor to
Guarantor's knowledge, any previous owner of the Project Site, has disposed of
any hazardous substances on any portion of the Project Site. As used in this
subparagraph, "hazardous substances" shall have the meaning set forth in the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
S 6901, et. seq., and the regulations adopted pursuant to such Act.
2.12. Capital Structure. Exhibit B attached hereto and made a part hereof
-----------------
states the correct name of each of the Consolidated Subsidiaries of the
Guarantor, the jurisdiction of organization or incorporation and the percentage
of its voting stock owned by the Guarantor. The Guarantor has good title to all
of the shares it purports to own of the stock of each Consolidated Subsidiary,
free and clear in each case of any Lien other than Permitted Liens. All such
shares have been duly issued and are fully paid and non-assessable.
2.13. Solvent Financial Condition. It is now, and after giving effect to
---------------------------
the transactions contemplated hereby, will be Solvent.
2.14. Restrictions. It is not a party or subject to any contract,
------------
agreement, or charter or other corporate restriction, which Guarantor believes
materially and adversely affects its business or the use or ownership of any of
its Properties. The Guarantor is not a party or subject to any contract or
agreement which restricts its right or ability to incur Indebtedness, other than
as set forth on Exhibit B attached hereto, none of which prohibit the execution
---------
of or compliance with this Agreement by the Guarantor.
2.15. Full Disclosure. The Financial Statements referred to in Section 2.3
---------------
above do not, nor does this Agreement or the Bond Documents or any Other
Agreement or written statement of the Guarantor to the Bank (including, without
limitation, the Guarantor's filings, if any, with the Securities and Exchange
Commission), taken as a whole, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which the Guarantor has failed to
disclose to the Bank in writing which materially affects adversely or, so far as
the Guarantor can now foresee, will materially affect adversely the Properties,
business, prospects, profits, or condition (financial or otherwise) of the
Guarantor or any of its Consolidated Subsidiaries or the ability of the
Guarantor or the Borrower to perform this Agreement or the Bond Documents.
2.16. Labor Relations. Except as described on Exhibit B attached hereto and
--------------- ---------
made a part hereof, there are no material grievances, disputes or controversies
with any union or any other organization of the Guarantor's employees, or
threats of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization which could have a Material
Adverse Effect.
2.17. Compliance With Laws. It has duly complied in all material respects
--------------------
with, and its Properties, business operations and leaseholds are in compliance
in all material respects with, the provisions of all federal, state and local
laws, rules and regulations applicable to the Guarantor,
13
its Properties or the conduct of its business, including, without limitation,
OSHA and all Environmental Laws, the failure to comply with which would have a
Material Adverse Effect.
2.18. Brokers. There are no claims for brokerage commissions, finder's fees
-------
or investment banking fees in connection with the transactions contemplated by
this Agreement, except for fees owed to the Bank and its affiliates.
2.19. Trade Relations. There exists no actual or threatened termination,
---------------
cancellation or limitation of, or any modification or change in, the business
relationship between the Guarantor and any customer or any group of customers
whose purchases individually or in the aggregate are material to the business of
the Guarantor, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially affect
adversely the Guarantor or prevent the Guarantor from conducting such business
after the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
2.20. Investment Company Act. The Guarantor is not an "investment company"
----------------------
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
ARTICLE III
Representations and Warranties of the Borrower
The Borrower represents and warrants to the Bank (which representations and
warranties shall survive the delivery of the documents mentioned herein and the
issuance of the Letter of Credit) as of the date of the 1994 Agreement, which
representations and warranties continue to be true as of the date of this
Agreement, except to the extent of changes resulting from transactions
contemplated or permitted by this Agreement (including the Spin-Off) and changes
occurring in the ordinary course of business that singly or in the aggregate are
not materially adverse and to the extent that such representations and
warranties relate expressly to an earlier date, that:
3.1. Incorporation. It is a corporation duly incorporated, existing and in
-------------
good standing under the laws of the State of its incorporation, and has the
corporate or other power to own its Property and to carry on its business as now
being conducted.
3.2. Power and Authority. It is duly authorized under all applicable
-------------------
provisions of law to execute, deliver and perform this Agreement and the Bond
Documents, and all action, corporate or otherwise, as applicable, on its part
required for the lawful execution, delivery and performance hereof has been duly
taken; and this Agreement and the Bond Documents, upon the due execution and
delivery hereof, will be its valid and binding obligation enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization,
14
moratorium, or similar laws affecting creditors' rights generally and to general
principles of equity. Neither the execution of this Agreement nor the Bond
Documents, nor the fulfillment of or compliance with their respective provisions
and terms, will (a) conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a violation of or default under any
applicable law, regulation, judgment, writ, order or decree to which it or any
of its properties is subject, or its charter or by-laws, or any agreement or
instrument to which it or any of its Subsidiaries is now a party or by which it
or any of it s Subsidiaries or any of their respective properties is bound or
affected, or (b) create any lien, charge or encumbrance upon any of its or any
of its Subsidiaries' property or assets pursuant to the terms of any agreement
or instrument to which it or any of its Subsidiaries is a party or by which it
or any of its Subsidiaries or any of their respective properties is bound except
pursuant to the Security Instruments.
3.3. Governmental Authority. It has received the written approval of all
----------------------
federal, state, local and foreign governmental authorities, if any, necessary to
carry out the terms of this Agreement, and no further governmental consents or
approvals are required in the making or performance of this Agreement and the
Bond Documents.
3.4. Project Site. The operation of the Project complies in all material
------------
respects with presently existing zoning and other land use restrictions
affecting the Project Site, including without limitation, any restrictive
covenants.
3.5. No Default. As of the date of this Agreement, there exists no default
----------
pursuant to the terms of the 1994 Agreement.
3.6. Survival of Representations and Warranties. It covenants, warrants and
------------------------------------------
represents to the Bank that all representations and warranties contained in this
Agreement are true at the time of its execution of this Agreement and the
representations contained in the Bond Documents or Other Agreements were true at
the time made and are true at the time of execution of this Agreement except to
the extent of changes resulting from transactions contemplated or permitted by
this Agreement (including the Spin-Off) and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse
and to the extent that such representations and warranties relate expressly to
an earlier date, and all of such representations and warranties shall survive
the execution, delivery and acceptance thereof by the Bank and the parties
thereto and the closing of the transactions described therein or related
thereto.
15
ARTICLE IV
Terms of Letter of Credit, Reimbursement,
Other Payments and Guaranty
4.1. Letter of Credit. The Parties agree that the terms and conditions
----------------
hereinafter set forth govern the Letter of Credit. The Bank agrees that any and
all payments under the Letter of Credit will be made with the Bank's own funds.
4.2. Reimbursement and Other Payments. The Borrower shall pay to the Bank:
--------------------------------
(a) on or before 3:00 P.M., EST, but after the honoring of a draw by
the Bank, on the date that any amount is drawn under the Letter of Credit,
a sum equal to such amount so drawn under the Letter of Credit;
(b) on demand, interest on any and all amounts remaining unpaid by the
Borrower when due hereunder from the date such amounts become due until
payment thereof in full, at a fluctuating interest rate per annum equal at
all times to the lesser of (i) the Prime Rate plus two percent (2%) or (ii)
the highest lawful rate permitted by applicable law;
(c) on demand, any and all reasonable expenses incurred by the Bank in
enforcing any rights under this Agreement and the Bond Documents; and
(d) on demand all charges, commissions, costs and expenses set forth
in Sections 4.4, 4.5 and 4.9 hereof.
4.3. Tender Advances. (a) If the Bank shall make any payment of that
---------------
portion of the purchase price corresponding to principal and interest of the
Bonds drawn under the Letter of Credit pursuant to a Tender Draft and the
conditions set forth in Section 8.2 all have been fulfilled, such payment shall
constitute a tender advance made by the Bank to the Borrower on the date and in
the amount of such (a "Tender Advance"); provided that if the conditions of said
Section 8.2 have not been fulfilled, the amount so drawn pursuant to the Tender
Draft shall be payable in accordance with the terms of Section 4.2(a) above.
Notwithstanding any other provision hereof, the Borrower shall repay the unpaid
amount of each Tender Advance, together with all unpaid interest thereon on the
earlier to occur of (i) such date as Bonds purchased pursuant to a Tender Draft
are resold as provided in paragraph 4.3(d) hereof, (ii) on the date 366 days
following the date of such Tender Advance, or (iii) the Termination Date.
The Borrower may prepay the outstanding amount of any Tender Advance in
whole or in part, together with accrued interest to the date of such prepayment
on the date such amount is prepaid. The Borrower shall notify the Bank prior to
11:00 A.M., EST on the date of such prepayment of the amount to be prepaid.
16
(b) The Borrower shall pay interest on the unpaid amount of each
Tender Advance from the date of such Tender Advance until such amount is
paid in full, payable monthly, in arrears, on the first day of each month
during the term of each Tender Advance and on the date such amount is paid
in full, at a fluctuating interest rate per annum in effect from time to
time equal to the Prime Rate, provided that the unpaid amount of any Tender
Advance which is not paid when due shall bear interest at the lesser of the
Prime Rate plus two percent (2%) or the highest rate permitted by
applicable law, payable on demand and on the date such amount is paid in
full.
(c) Pursuant to the Pledge Agreement the Borrower has agreed that, in
accordance with the terms of the Indenture, Bonds purchased with proceeds
of any Tender Draft shall be delivered by the Tender Agent to the Bank or
its designee to be held by the Bank or its designee in pledge as collateral
securing the Borrower's payment obligations to the Bank hereunder. Bonds so
delivered to the Bank or its designee shall be registered in the name of
the Bank, or its designee, as pledgee of the Borrower, as provided for in
Section 3 of the Pledge Agreement.
(d) Prior to or simultaneously with the resale of Pledged Bonds, the
Borrower shall prepay or cause the Tender Agent to prepay as provided below
the then outstanding Tender Advances (in the order in which they were made)
by paying to the Bank an amount equal to the sum of (a) the amounts
advanced by the Bank pursuant to the corresponding Tender Drafts relating
to such Bonds, plus (b) the aggregate amount of accrued and unpaid interest
on such Tender Advances. Such payment shall be applied by the Bank in
reimbursement of such drawings (and as prepayment of Tender Advances
resulting from such drawings in the manner described below), and, upon
receipt by the Bank of a certificate completed and signed by the Trustee in
substantially the form of Annex F to the Letter of Credit, the Borrower
irrevocably authorizes the Bank to rely on such certificate and to
reinstate the Letter of Credit in accordance therewith. Funds held by the
Tender Agent as a result of sales of the Pledged Bonds by the Remarketing
Agent shall be paid to the Bank by the Tender Agent to be applied to the
amounts owing by the Borrower to the Bank pursuant to this paragraph (d).
Upon payment to the Bank of the amount of such Tender Advance to be
prepaid, together with accrued interest on such Tender Advance to the date
of such prepayment on the amount to be prepaid, the principal amount
outstanding of Tender Advances shall be reduced by the amount of such
prepayment and interest shall cease to accrue on the amount prepaid.
4.4. Commission and Fee. (a) The Borrower shall pay to the Bank a
------------------
commission at the rate of .185 percent per annum (185 basis points) on the
undrawn amount available to be drawn under the Letter of Credit (computed on the
date that such commission is payable) from and including the date of issuance of
the Letter of Credit until the Termination Date, payable annually in advance in
full on the first day of each anniversary of the issuance of the Letter of
Credit. If the Letter of Credit is terminated or if there is a drawing under the
Letter of Credit to pay the principal of the Bonds during the year preceding
such anniversary date, the Bank will
17
refund to the Borrower the applicable unused portion of the commission
calculated on a pro rata basis.
(b) The Borrower shall pay to the Bank, upon each drawing under the Letter
of Credit in accordance with its terms, a fee of $150 per drawing.
(c) The Borrower shall pay to the Bank, upon transfer of the Letter of
Credit in accordance with its terms, a transfer fee of $1,000.
4.5. Increased Costs. In the event of any change in any existing or future
---------------
law, regulation, ruling or interpretation thereof affecting the Bank which shall
either (a) impose, modify or make applicable any reserve, special deposit,
capital requirement, assessment or similar requirement against the Letter of
Credit or (b) impose on the Bank any other condition regarding the Letter of
Credit, and the result of any event referred to in clause (a) or (b) above shall
be to increase the cost (including a reasonable allocation of resources) or
decrease the yield to the Bank of issuing or maintaining the Letter of Credit
(which increase in cost shall be the result of the Bank's reasonable allocation
of the aggregate of such cost increases or yield decreases resulting from such
events), then, upon demand by the Bank, the Borrower shall immediately pay to
the Bank, from time to time as specified by the Bank, additional amounts which
shall be sufficient to compensate the Bank for such increased cost or decreased
yield. A statement of charges submitted by the Bank, shall be conclusive, absent
manifest error, as to the amount owed.
4.6. Computation. All payments of interest, commission and other charges
-----------
under this Agreement shall be computed on the per annum basis, based upon a year
of 365 (or 366, as the case may be) days, and calculated for the actual number
of days elapsed.
4.7. Payment Procedure. All payments made by the Borrower under this
-----------------
Agreement shall be made to the Bank in lawful currency of the United States of
America and in immediately available funds at the Bank's offices described at
the beginning of this Agreement before 12:00 Noon, EST on the date when due,
except for payments made in accordance with the terms of Section 4.2(a).
4.8. Business Days. If the date for any payment hereunder falls on a day
-------------
which is not a Business Day, then for all purposes of this Agreement the same
shall be deemed to have fallen on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payments
of interest or commission, as the case may be.
4.9. Reimbursement of Expenses. The Borrower will pay all reasonable legal
-------------------------
fees (computed without regard to any statutory presumption) incurred by the Bank
in connection with the preparation, execution and delivery of this Agreement,
the Letter of Credit, the Bond Documents, and all transactions contemplated
hereby and thereby (including any amendments hereto or thereto or consents or
waivers hereunder or thereunder) and will also pay all fees, charges or taxes
for the recording or filing of Security Instruments. The Borrower will also pay
for all reasonable legal expenses of the Bank in connection with the
administration of the Letter
18
of Credit, this Agreement and the Bond Documents. The Borrower will, upon
request, promptly reimburse the Bank for all amounts expended, advanced or
incurred by the Bank to collect or satisfy any obligation of the Borrower under
this Agreement or any of the Bond Documents, or to enforce the rights of the
Bank under this Agreement or any of the Bond Documents, which amounts will
include, without limitation, all court costs, reasonable attorneys, fees, fees
of auditors and accountants and investigation expenses incurred by the Bank in
connection with any such matters.
4.10. Expiration Date. The Letter of Credit will expire on its currently
---------------
stated Expiration Date, unless the Bank notifies the Borrower in writing at
least 120 days prior to the Expiration Date that the Bank will extend such
applicable Expiration Date for an additional one-year period from the then
applicable Expiration Date.
4.11. Guaranty. (a) The Guarantor hereby absolutely and unconditionally
--------
guarantees, the full and timely payment when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of the Borrower now or hereafter
existing under this Agreement or any of the Security Instruments, whether for
principal, interest, fees, expenses or otherwise. The Guarantor further agrees
to pay any and all expenses (including without limitation reasonable attorneys'
fees and expenses) incurred by the Bank in enforcing or protecting its rights
against the Guarantor under this Agreement or any of the Security Instruments.
(b) This is a guaranty of payment and not of collection, and the
Guarantor expressly waives any right to require that any action be brought
against the Borrower or any other guarantor or to require that resort be
had to any security, whether held by or available to the Bank or to any
other guaranty. If the Borrower shall default in payment of the principal,
interest, or fees on or any other amount payable hereunder when and as the
same shall become due, whether by acceleration, call for prepayment, or
otherwise, or upon the occurrence of any other Event of Default hereunder,
the Guarantor, upon demand by the Bank or its successors or assigns, will
promptly and fully make such payments. All payments by the Guarantor shall
be made in immediately available coin or currency of the United States of
America which on the respective dates of payment thereof is legal tender
for the payment of public and private debts. Each default in payment of the
principal, interest, fees or any other amount payable hereunder, or the
occurrence of any other Event of Default hereunder, shall give rise to a
separate cause of action hereunder, and separate suits may be brought
hereunder as each cause of action arises. The Bank, or its successors or
assigns, in its sole discretion, shall have the right to proceed first and
directly against the Guarantor and its successors and assigns.
(c) The Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the obligations of
the Borrower under this Agreement or any requirement that the Bank protect,
secure, perfect or insure any security interest or lien or any property
subject hereto or to the Security Instruments or exhaust any right or take
any action against the Borrower or any other Person.
19
(d) The Guarantor will not exercise any rights that it may acquire by
way of subrogation under this Agreement, by any payment made hereunder or
otherwise, until all the obligations of the Borrower shall have been paid
or performed in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all the obligations of
the Borrower hereunder shall not have been paid or performed in full, such
amount shall be held in trust for the benefit of the Bank and shall
forthwith be paid to the Bank to be credited and applied upon the
obligations of the Borrower hereunder, whether matured or unmatured, in
accordance with the terms hereof.
(e) This guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the obligations of
the Borrower hereunder is rescinded or is otherwise returned by the Bank
upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, all as though such payment had not been made.
4.12. Obligations Absolute. The obligations of each of the Borrower and the
--------------------
Guarantor under this Agreement shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement, under
all circumstances whatsoever, including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of the Letter of Credit,
the Bonds, any of the other Bond Documents, any of the Security Instruments
or any other agreement or instrument related thereto;
(b) any amendment or waiver of or any consent to departure from the
terms of the Letter of Credit, the Bonds, any of the other Bond Documents,
any of the Security Instruments or any other agreement or instrument
related thereto;
(c) the existence of any claim, set-off, defense or other right which
any of the Borrower, the Guarantor or the Issuer may have at any time
against the Trustee, any beneficiary or any transferee of the Letter of
Credit (or any Person for whom the Trustee, any such beneficiary or any
such transferee may be acting), the Bank or any other Person, whether in
connection with this Agreement, the other Security Instruments, the Letter
of Credit, the Bond Documents, the Project or any unrelated transaction;
(d) any statement, draft or other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect, or any statement therein being untrue or inaccurate in any respect
whatsoever;
(e) the surrender, exchange or impairment of any security or the
performance or observance of any of the terms of this Agreement; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a Guarantor, except
subject to the qualification that
20
obligations may be reinstated upon bankruptcy, notwithstanding payment in
full of the Borrower's obligations to the Bank.
Notwithstanding the absolute obligations of the Borrower and the Guarantor
as provided above, the Bank shall be liable to the Borrower and the Guarantor as
provided in Section 10.4 hereof.
4.13. Waiver of Guarantor's Rights. The Guarantor hereby waives to the
----------------------------
fullest extent possible as and against the Borrower and its assets any and all
rights, whether at law, in equity, by agreement or otherwise, to subrogation,
indemnity, reimbursement, contribution, or any other similar claim, cause of
action or remedy that otherwise would arise out of the Guarantor's performance
of its obligations to the Bank under this Agreement. The preceding waiver is
intended by both the Guarantor and the Bank to be for the benefit of the
Borrower, and the waiver shall be enforceable by the Borrower or any of its
successors or assigns as an absolute defense to any action by the Guarantor
against the Borrower or its assets which arises out of the Guarantor's having
made any payment to the Bank with respect to any of the Borrower's liabilities
guaranteed hereunder.
ARTICLE V
Security; Insurance
5.1. Security. As security for the full and timely payment and performance
--------
by the Borrower and the Guarantor of their respective obligations hereunder, the
Borrower has delivered the Pledge Agreement to the Bank.
5.2. Casualty and Liability Insurance Required. The Borrower will keep the
-----------------------------------------
Project and its Properties continuously insured against such risks as are
customarily insured against by businesses of like size and type engaged in the
same or similar operations (other than business interruption insurance)
including, without limiting the generality of any other covenant contained
herein or in the Bond Documents, casualty insurance and general comprehensive
liability insurance against claims for bodily injury, death or property damage;
provided, however, that the insurance so required may be provided by blanket
policies now or hereafter maintained by the Borrower or the Guarantor.
5.3. Notice of Casualty or Taking. In case of any material damage to or
----------------------------
destruction of all or any part of the Project, the Borrower shall give prompt
notice thereof to the Bank. In case of a taking or proposed taking of all or any
material part of the Project or any right therein by Eminent Domain, the
Borrower shall give prompt notice thereof to the Bank. Each such notice shall
describe generally the nature and extent of such damage, destruction, taking,
loss, proceeding or negotiations.
21
ARTICLE VI
Affirmative Covenants
Until all the Obligations to be performed and paid shall have been
performed and paid in full, and for so long as the Letter of Credit shall be
outstanding, unless the Bank shall otherwise consent in writing, the Borrower
and the Guarantor will perform and observe all covenants and agreements
contained on its respective part in this Article VI.
6.1. Financial Reports and Other Data and Information.
------------------------------------------------
(a) Quarterly Statements. Within forty-five (45) days after the end of
--------------------
each fiscal quarter, a balance sheet of the Guarantor and its Consolidated
Subsidiaries at the end of that period and an income statement for that
period and for the portion of the fiscal year ending with such period on a
consolidated and consolidating basis, setting forth in comparative form the
figures for the same period of the preceding fiscal year, and certified by
the Chief Financial Officer or Controller of the Guarantor as complete and
correct in all material respects and prepared in accordance with GAAP,
except without footnotes and subject to normal year-end audit adjustments.
(b) Annual Statements. Within ninety (90) days after the end of each
-----------------
fiscal year, a detailed audited financial report of the Guarantor and its
Consolidated Subsidiaries on a consolidated and consolidating basis,
containing a balance sheet at the end of that period and an income
statement and statement of cash flows for that period, setting forth in
comparative form the figures for the preceding fiscal year, and containing
an unqualified opinion of independent certified public accountants
acceptable to the Bank that the financial statements were prepared in
accordance with GAAP, and that the examination in connection with the
financial statements was made in accordance with generally accepted
auditing standards and accordingly included tests of the accounting records
and other auditing procedures that were considered necessary in the
circumstances.
(c) SEC and Other Reports: Orders, Judgments, Etc. Promptly upon its
---------------------------------------------
becoming available, one copy of each regular or periodic report,
registration statement or prospectus filed by the Guarantor with any
securities exchange or the Securities and Exchange Commission or any
successor agency, and of any material order, judgment, decree, decision or
ruling issued by any governmental authority in any proceeding to which the
Guarantor is a party;
(d) Accountants' Statements. Within the period provided in paragraph
-----------------------
(b) above, a letter of the accountants who render the opinion on the
financial statements, stating that they reviewed this Agreement and that in
performing the examination necessary to render an opinion on the annual
financial statements they obtained no knowledge of any such Default or
Event of Default resulting from the Guarantor's failure to observe the
financial ratios under Sections 7.5 through 7.9, or, if the accountants
have
22
knowledge of a Default or Event of Default, a statement specifying to the
best of their knowledge the nature and period of existence of the Default
or Event of Default;
(e) Certificates. At the time of the delivery of the financial
------------
statements provided for in Section 6.1(a) and (b), an Officers' Certificate
of the Guarantor to the effect that to the best of his knowledge, no
Default or Event of Default has occurred and is continuing;
(f) Notice of Default or Litigation. Promptly, and in any event within
-------------------------------
three Business Days after the Chief Financial Officer or Controller of the
Guarantor obtains knowledge thereof, notice of (1) the occurrence of any
event which constitutes a Default or Event of Default, (2) any litigation
or governmental proceeding pending against the Guarantor which is likely to
materially and adversely affect the business, operations, property, assets,
condition (financial or otherwise) or prospects of the Guarantor and its
Subsidiaries on a consolidated basis;
(g) Environmental Matters. Promptly upon obtaining knowledge thereof,
---------------------
notice of any facts or circumstances known to the Borrower that the
Guarantor reasonably believes is likely to form the basis for the assertion
of any material claim against the Guarantor relating to environmental
matters including, but not limited to, any claim arising from past or
present environmental practices asserted under CERCLA, RCRA, or any other
federal, state or local environmental statute;
(h) Other Information. From time to time, such other information or
-----------------
documents (financial or otherwise) as the Bank may reasonably request.
6.2. Books, Records and Inspections. The Borrower and the Guarantor will
------------------------------
keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all requirements of law shall be made of all
dealings and transactions in relation to their businesses and activities. The
Borrower and the Guarantor will permit officers and designated representatives
of the Bank to visit and inspect, under guidance of officers of the Borrower and
the Guarantor as applicable, any of the properties of the Borrower and the
Guarantor and to examine the books of account of the Borrower and the Guarantor
and discuss the affairs, finances and accounts of the Borrower and the Guarantor
with, and be advised as to the same by, its and their officers, as applicable,
all at such reasonable times and intervals and to such reasonable extent as the
Bank may request.
6.3. Maintenance of Property, Insurance. Exhibit D sets forth a true and
---------------------------------- ---------
complete listing of all material insurance maintained by the Guarantor and the
Borrower as of the date hereof, with the amounts insured on the date hereof set
forth therein. Each of the Borrower and the Guarantor shall (i) keep all
property useful and necessary in their business in good working order and
condition, except for property which has become obsolete or is no longer useful,
(ii) maintain with financially sound and reputable insurance companies insurance
which provides substantially the same (or greater) coverage and, as to the
Borrower, against at least such risks as
23
are described in Exhibit D, and (iii) furnish to the Bank, upon written request,
---------
full information as to the insurance carried.
6.4. Corporate Franchises. The Borrower and the Guarantor will do or cause
--------------------
to be done, all things necessary to preserve and keep in full force and effect
their existence and their material rights, franchises, licenses and patents;
provided, however, that nothing in this Section 6.4 shall prevent the withdrawal
by the Borrower or the Guarantor of any qualification as a foreign corporation
in any jurisdiction where such withdrawal could not have a material adverse
effect on the business, operations, property, assets, condition (financial or
otherwise) or prospects of the Borrower or the Guarantor and nothing in this
Section 6.4 shall prevent the merger of the Borrower into the Guarantor or into
a Consolidated Subsidiary of the Guarantor.
6.5. Compliance with Statutes, etc. The Borrower and the Guarantor will
-----------------------------
comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of their businesses and their ownership of
property (including applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls), except such noncompliances as
could not, in the aggregate, have a material adverse effect on the business,
operations, property, assets, condition (financial or otherwise) or prospects of
the Borrower and the Guarantor or of the Borrower and the Guarantor taken as a
whole.
6.6. ERISA. As soon as possible and in any event within 10 days after the
-----
Borrower or the Guarantor knows that a Reportable Event has occurred with
respect to a Plan established or maintained by the Borrower, the Guarantor or
any ERISA Affiliate, that a material accumulated funding deficiency has been
incurred or an application is to be or has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization period
under Section 412 of the Code with respect to such a Plan, that a Plan has been
or will be terminated, reorganized, petitioned or declared insolvent under Title
IV of ERISA in a manner that has a Material Adverse Effect, that such a Plan has
an Unfunded Current Liability within the meaning of Title IV of ERISA giving
rise to a lien under ERISA, that proceedings will be or have been instituted to
terminate such a Plan under circumstances that will have a Material Adverse
Effect, or that the Borrower or the Guarantor or an ERISA Affiliate will incur
any material liability to or on account of such a Plan under Section 4062, 4063
or 4064, or which is a multiemployer plan under Section 515, 4201 or 4203 of
ERISA, the Borrower and the Guarantor will deliver to the Bank a certificate of
a financial officer thereof, setting forth details as to such occurrence and
action, if any, which the Borrower, the Guarantor or ERISA Affiliate is required
or proposes to take, together with any notices required or proposed to be given
to or filed with or by the Borrower, the Guarantor, the ERISA Affiliate, the
PBGC, a Plan participant or the Plan administrator with respect thereto. The
Borrower and the Guarantor will deliver to the Bank a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
Revenue Service or the PBGC, given to Plan participants or received by either
the Borrower or the Guarantor.
24
6.7. Performance of Obligations. The Borrower and the Guarantor will
--------------------------
perform all of their obligations under the terms of each mortgage, indenture,
security agreement and other agreement by which they are bound, except such
non-performances as could not in the aggregate, have a material adverse effect
on the business, operations, property, assets, condition (financial or
otherwise) or prospects of the Borrower and the Guarantor or of the Borrower and
the Guarantor taken as a whole.
6.8. Taxes and Liens. The Borrower and the Guarantor will promptly pay, or
---------------
cause to be paid, all material taxes, assessments or other governmental charges
that may lawfully be levied or assessed upon the income or profits of Borrower
or the Guarantor or upon any Property, real, personal or mixed, belonging to
Borrower or the Guarantor, or upon any part thereof, and also any lawful claims
for labor, material and supplies which, if unpaid, might become a lien or charge
against any such property; provided, however, neither Borrower nor the Guarantor
shall be required to pay any such tax, assessment, charge, levy or claim so long
as the validity thereof shall be actively contested in good faith by proper
proceedings and, against which the Borrower or the Guarantor, as the case may
be, shall have established reserves which are in amounts satisfactory to the
Borrower's or the Guarantor's, as the case may be, independent certified public
accountants.
6.9. Payment of Obligations. The Borrower and the Guarantor will pay, when
----------------------
due, all its material obligations and liabilities, except where the same (other
than Indebtedness) are being contested in good faith by appropriate proceedings
diligently prosecuted and appropriate reserves for the accrual of same are
maintained and, in the case of judgments, enforcement thereof has been stayed
pending such contest.
6.10. Environmental Matters. The Borrower and the Guarantor will obtain and
---------------------
maintain all licenses, permits, and approvals required in connection with the
Project with respect to Hazardous Materials (which shall mean all materials
defined as "hazardous substances," "hazardous waste" or "solid waste" in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
the Resource Conservation and Recovery Act or any similar environmental statute)
and the Borrower or the Guarantor, as applicable, will remain in full compliance
with such licenses, permits and approvals, except to the extent that failure to
so comply would not have a Material Adverse Effect. The Borrower and the
Guarantor will give the Bank copies of any citations, orders, notices or other
communications received with respect to violations or alleged violations of any
environmental laws in connection with the Project if such violation or alleged
violation is likely to have a Material Adverse Effect. The Borrower and the
Guarantor shall indemnify and hold the Bank and its directors, officers,
shareholders and employees harmless from and against any and all damages,
penalties, fines, claims, liens, suits, liabilities, costs (including clean-up
costs) judgments and expenses (including attorneys', consultants' or experts,
fees and expenses) of every kind and nature suffered by or asserted against the
Bank as a direct or indirect result of any warranty or representation made by
the Borrower and the Guarantor in this Section 6.10 being false or untrue in any
material respect or any requirement under any environmental law, which requires
the elimination or removal of any Hazardous Materials at the Project Site by the
Bank, the Borrower, the Guarantor or any
25
transferee of the Borrower, the Guarantor or the Bank, except to the extent that
any such damages, penalties, fines, claims, liens, suits, liabilities, costs,
judgments, or expenses result directly or indirectly from the actions of the
Bank or any of its directors, officers, shareholders or employees.
ARTICLE VII
Negative Covenants
Until all the Obligations to be performed and paid shall have been
performed and paid in full, and for so long as the Letter of Credit shall be
outstanding, unless the Bank shall otherwise consent in writing, the Borrower
and the Guarantor covenant and agree as follows:
7.1. Negative Pledge; Liens. The Borrower and the Guarantor and their
----------------------
Subsidiaries will not create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) constituting the Project or sell any such property or assets subject
to an understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to the
Borrower or the Guarantor), or assign any right to receive income or permit the
filing of any financing statement under the Uniform Commercial Code of any state
or any other similar notice of Lien under any similar recording or notice
statute or enter into any agreement containing a negative pledge other than this
Agreement and the Credit Agreement, that certain Amended and Restated Letter of
Credit, Reimbursement and Guaranty Agreement dated as of October 18, 1999 among
Xxxxxx Engineering Company, Inc.; CIRCOR International, Inc. and First Union
National Bank and those certain Note Purchase Agreements aggregating
approximately $75 million of 8.23% Senior Notes due October 18, 2006; provided
that the provisions of this Section 7.1 shall not prevent the creation,
incurrence, assumption or existence of:
(i) Liens in favor of the Bank;
(ii) Liens for taxes not yet due, or Liens for taxes being
contested in good faith and by appropriate proceedings for which
adequate reserves have been established;
(iii) Except as hereinafter set forth, Liens in respect of property
or assets of the Borrower or the Guarantor imposed by law, which were
incurred in the ordinary course of business, such as carriers',
warehousemen's and mechanics' liens and other similar Liens arising in
the ordinary course of business, not to exceed $10,000,000 as to the
Borrower, the Guarantor and their Subsidiaries in the aggregate, and
(x) which do not in the aggregate materially detract from the value of
such property or assets or materially impair the use thereof in the
operation of the business of the Borrower or the Guarantor or (y)
which are being contested in good faith by appropriate proceedings,
which
26
proceedings have the effect of preventing the forfeiture or sale of
the property or assets subject to any such Lien;
(iv) Liens in existence on the date hereof which are listed, and
the property subject thereto described in Exhibit C, with an
indication therein that such Liens are "Permitted Liens" hereunder,
provided that if in Exhibit C any Lien is listed as being a Permitted
Lien only for a designated time period, such Lien shall cease to be a
Permitted Lien after the expiration of such time period;
(v) Permitted Encumbrances;
(vi) Liens created pursuant to the Security Instruments; and
(vii) Utility deposits and pledges or deposits in connection with
worker's compensation, unemployment insurance and other social
security legislation;
7.2. Consolidation or Merger. The Guarantor will not enter into any
-----------------------
transaction of merger or consolidation, except for mergers in which the
Guarantor is the surviving entity.
7.3. Sale of Assets, Dissolution, Etc. The Guarantor will not, nor will it
--------------------------------
permit any of its Subsidiaries to, enter into any transaction in violation of
Section 9.05(c) of the Credit Agreement, as amended from time to time.
7.4. Loans and Investments. The Guarantor shall not, nor will it permit any
---------------------
of its Subsidiaries to, enter into any transaction in violation of Sections 9.07
and 9.08 of the Credit Agreement, as amended from time to time.
7.5. Leverage Ratio. The Guarantor will not permit the Leverage Ratio as at
--------------
the last day for any fiscal quarter of the Guarantor to exceed 3.50 to 1.
7.6. Net Worth. The Guarantor will not permit Net Worth as at the last day
---------
of any fiscal quarter of the Guarantor to be less than the sum of (a)
$160,000,000 plus (b) 50% of Net Income for each fiscal quarter of the Guarantor
ending after the date hereof for which Net Income is a positive number.
7.7. Interest Coverage Ratio. The Guarantor will not permit the Interest
-----------------------
Coverage Ratio as at the last day of any fiscal quarter of the Guarantor to be
less than 2.50 to 1.
7.8. Fixed Charges Coverage Ratio. The Guarantor will not permit the Fixed
----------------------------
Charges Coverage Ratio as at the last day of any fiscal quarter of the Guarantor
to be less than 1.50 to 1.
7.9. Capital Expenditures. The Guarantor will not permit the aggregate
--------------------
amount of Capital Expenditures by the Guarantor and its Subsidiaries in any
fiscal year of the Guarantor to
27
exceed an amount equal to 3% of the consolidated net revenues of the Guarantor
and its Subsidiaries for such fiscal year.
In those instances in the foregoing Article VII in which covenants are
referenced from the Credit Agreement, such covenants shall continue to be a part
of this Agreement as if fully set forth herein notwithstanding the termination
or expiration of the Credit Agreement.
ARTICLE VIII
Conditions to Release of Xxxxx; Conditions Precedent to Each Tender Advance
8.1. Conditions to Release of Xxxxx. On or prior to the date of the release
------------------------------
of Xxxxx from the 1994 Agreement, the Borrower and the Guarantor shall have
furnished to the Bank, in form satisfactory to the Bank, the following:
(a) two executed counterparts of this Agreement;
(b) evidence of compliance with the insurance requirements contained
in Article VI hereof;
(c) opinion(s) of counsel for the Borrower and the Guarantor dated the
date hereof addressed to, and substantially in the form attached hereto as
Exhibit E and otherwise in form and substance acceptable to, the Bank;
(d) certificates of the Borrower and the Guarantor, as applicable,
including references to (i) Articles of Incorporation, By-laws and other
charter documents as applicable, (ii) resolutions of the Board of
Directors, authorizing the execution, delivery and performance of this
Agreement, (iii) incumbency and specimen signatures of officers, and (iv)
such other matters as the Bank may require;
(e) (i) copies of the Articles of Incorporation, By-laws or other
charter documents, as applicable, of the Guarantor, certified as true and
correct by an authorized officer as of the date hereof; and (ii) as to any
corporations, certificates dated no earlier than 20 days prior to the date
of this Agreement of the Secretary of State of the applicable states as to
the good standing of the Borrower and the Guarantor;
(f) an opinion of Bond Counsel, in form and substance satisfactory to
the Bank and its Counsel;
(g) such other documents, instruments and certifications as the Bank
may reasonably require.
8.2. Conditions Precedent to Each Tender Advance. Each payment made by the
-------------------------------------------
Bank under the Letter of Credit pursuant to a Tender Draft shall constitute a
Tender Advance hereunder only if on the date of such payment no event has
occurred or would result from such
28
Tender Advance, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
Unless the Borrower or the Guarantor shall have previously advised the Bank
in writing or the Bank has actual knowledge that the above statement is no
longer true, the Borrower and the Guarantor shall be deemed to have represented
and warranted, on the date of payment by the Bank under the Letter of Credit
pursuant to a Tender Draft, that on the date of such payment the above statement
is true and correct.
ARTICLE IX
Default
9.1. Events of Default. Each of the following shall constitute an Event
-----------------
of Default under this Agreement, whereupon all obligations, whether then owing
or contingently owing, will, at the option of the Bank or its successors or
assigns, immediately become due and payable by the Borrower without
presentation, demand, protest or notice of any kind, all of which are hereby
expressly waived, and the Borrower will pay the reasonable attorneys' fees
incurred by the Bank, or its successors or assigns, in connection with such
Event of Default:
(a) Failure of the Borrower or the Guarantor to pay within five (5)
days of the date when due any payment of principal, interest, commission,
charge or expense referred to in Article IV hereof; or
(b) The occurrence of an "Event of Default" under any of the Security
Instruments or any of the Bond Documents or any revolving credit or term
loan facility between the Guarantor or the Borrower and the Bank including,
without limitation, the Credit Agreement; or
(c) The Guarantor or any of its Subsidiaries (other than any
Immaterial Subsidiary) shall default in the payment when due of any
principal of or interest on any of its other Indebtedness of the Guarantor
or any of its Subsidiaries (other than any Immaterial Subsidiary) having a
principal amount, individually or in the aggregate, in excess of
$10,000,000 or in the payment when due of any amount under any Interest
Rate Protection Agreement; or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such Indebtedness
or any event specified in any Interest Rate Protection Agreement shall
occur if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, such Indebtedness to become due, or to be prepaid in
full (whether by redemption, purchase, offer to purchase or otherwise),
prior to its stated maturity or, in the case of an Interest Rate Protection
Agreement, to permit the payments owing under such Interest Rate Protection
Agreement to be liquidated; or
29
(d) If any representation, warranty, certification or statement made
by the Borrower or the Guarantor herein, or in any writing furnished by or
on behalf of the Borrower or the Guarantor in connection with the loan by
the Issuer under the Sale Agreement or pursuant to this Agreement, or any
of the Security Instruments shall have been false, misleading or incomplete
in any material respect on the date as of which made; or
(e) If the Borrower or the Guarantor default in the performance or
observance of any agreement or covenant contained in Article VII hereof; or
(f) If the Borrower or the Guarantor default in the performance or
observance of any other agreement, covenant, term or condition contained
herein, and such default shall not have been remedied thirty (30) days
after written notice thereof shall have been received by it from the Bank;
or
(g) The Borrower or the Guarantor shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, have entered against
or in favor of it an order for relief under the Federal Bankruptcy Code or
similar law of any foreign jurisdiction, generally fail to pay its debts as
they come due (either as to number or amount), admit in writing its
inability to pay its debts generally as they mature, make a voluntary
assignment for the benefit of creditors, commence any voluntary assignment
for the benefit of creditors, commence any proceeding relating to it under
any reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, or by any act, indicate its consent to, approval of or acquiescence
in any such proceeding for the appointment of any receiver of, or trustee
or custodian (as defined in the Federal Bankruptcy Code) for itself, or any
substantial part of its property, or a trustee or a receiver shall be
appointed for the Borrower or for a substantial part of the property of the
Borrower or the Guarantor and such appointment remains in effect for more
than sixty (60) days, or a petition in bankruptcy or for reorganization
shall be filed against the Borrower or the Guarantor and such petition
shall not be dismissed within sixty (60) days after such filing; or
(h) A final judgment or judgments for the payment of money in excess
of $10,000,000 in the aggregate shall be rendered by one or more court,
administrative tribunals or other bodies having jurisdiction against the
Guarantor or any of its Subsidiaries (other than any Immaterial Subsidiary)
and the same shall not be discharged (or provision shall not be made for
such discharge), or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof and such Person shall not,
within said period of 30 days, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal;
then at any time thereafter, the Bank may (a) pursuant to Section 902 of the
Indenture, advise the Trustee that an Event of Default has occurred and instruct
the Trustee to declare the principal of all Bonds then outstanding and interest
thereon to be immediately due and payable, and (b)
30
proceed hereunder, and under the Security Instruments and, to the extent therein
provided, under the Bond Documents, in such order as it may elect and the Bank
shall have no obligation to proceed against any Person or exhaust any other
remedy or remedies which it may have and without resorting to any other
security, whether held by or available to the Bank.
9.2. No Remedy Exclusive. No remedy herein conferred upon or reserved to
-------------------
the Bank is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder and the Security Instruments or now or
hereafter existing at law or in equity or by statute.
ARTICLE X
Miscellaneous
10.1. Indemnification. (a) Each of the Borrower and the Guarantor, jointly
---------------
and severally, hereby indemnifies and holds the Bank harmless from and against
any and all claims, damages, losses, liabilities, costs or expenses whatsoever
which the Bank may incur (or which may be claimed against the Bank by any
Person) (i) by reason of or in connection with the execution and delivery or
transfer of, or payment or failure to pay under, the Letter of Credit, provided
that the Borrower and the Guarantor shall not be required to indemnify the Bank
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by (a) the gross negligence or willful misconduct
of the Bank in connection with paying drafts presented under the Letter of
Credit or (b) the Bank's willful failure to pay under the Letter of Credit
(other than in connection with a court order) after the presentation to it by
the Trustee or a successor corporate fiduciary under the Indenture of a sight
draft and certificate strictly complying with the terms and conditions of the
Letter of Credit or (c) any other failure of the Bank to conform to the Uniform
Customs and Practice; or (ii) by reason of or in connection with the execution,
delivery or performance of any of this Agreement, the Security Instruments or
any transaction contemplated by any thereof.
(b) Each of the Borrower and the Guarantor, jointly and severally,
hereby indemnifies and holds the Bank harmless from and against any and all
damages, penalties, fines, claims, liens, suits, liabilities, costs
(including clean-up costs), judgments and expenses (including attorneys',
consultants' or experts' fees and expenses) of every kind and nature
suffered by or asserted against the Bank as a direct or indirect result of
any warranty or representation made by the Borrower and the Guarantor in
Sections 2.11 hereof, respectively, being false or untrue in any material
respect or any requirement under any law, regulation or ordinance, local,
state, or federal, which requires the elimination or removal of any
hazardous materials, substances, wastes or other environmentally regulated
substances at the Project Site, except to the extent that any such damages,
penalties, fines, claims, liens, suits, liabilities, costs, judgments or
expenses result directly or indirectly from the actions of the Bank or any
of its directors, officers, shareholders or employees. The Borrower's and
the Guarantor's obligations hereunder to the Bank shall not be limited to
any extent by the term of this Agreement, and, as to any act or occurrence
prior to the termination of this Agreement which gives
31
rise to liability hereunder, shall continue, survive and remain in full
force and effect notwithstanding the termination of the Bank's obligations
hereunder.
Anything herein to the contrary notwithstanding, nothing in this Section 10.1 is
intended or shall be construed to limit the Borrower's reimbursement obligation
or the Guarantor's guaranty obligation contained in Article IV hereof. Without
prejudice to the survival of any other obligation of the Borrower or the
Guarantor, the indemnities and obligations of the Borrower and the Guarantor
contained in this Section 10.1 shall survive the payment in full of amounts
payable pursuant to Article IV and the Termination Date.
10.2. Transfer of Letter of Credit. The Letter of Credit may be transferred
----------------------------
and assigned in accordance with the terms of the Letter of Credit.
10.3. Reduction of Letter of Credit. (a) The Letter of Credit is subject to
-----------------------------
reduction pursuant to its terms.
(b) If the amount available to be drawn under the Letter of Credit
shall be permanently reduced in accordance with the terms thereof, then the
Bank shall have the right to require the Trustee to surrender the Letter of
Credit to the Bank and to issue on such date, in substitution for such
outstanding Letter of Credit, a substitute irrevocable letter of credit,
substantially in the form of the Letter of Credit but with such changes
therein as shall be appropriate to give effect to such reduction, dated
such date, for the amount to which the amount available to be drawn under
the Letter of Credit shall have been reduced.
10.4. Liability of the Bank. Neither the Bank nor any of its officers,
---------------------
directors, employees, agents or consultants shall be liable or responsible for:
(a) the use which may be made of the Letter of Credit or for any acts
or omissions of the Trustee or any beneficiary or transferee in connection
therewith;
(b) the validity, sufficiency or genuineness of documents, or of any
endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or
forged;
(c) payment by the Bank against presentation of documents which do
not comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of
Credit; or
(d) any other circumstances whatsoever in any way related to the
making or failure to make payment under the Letter of Credit;
except only that the Borrower and the Guarantor shall have a claim against the
Bank, and the Bank shall be liable to the Borrower and the Guarantor, to the
extent but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrower or the Guarantor which were caused by (i) the
gross negligence or willful misconduct of the Bank in determining
32
whether documents presented under the Letter of Credit complied with the terms
of the Letter of Credit or (ii) wrongful failure of the Bank to pay under the
Letter of Credit after the presentation to it by the Trustee or a successor
trustee under the Indenture of a sight draft and certificate strictly complying
with the terms and conditions of the Letter of Credit or (iii) any other failure
of the Bank to conform to the requirements of the Uniform Customs and Practice.
In furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
10.5. Successors and Assigns. This Agreement shall be binding upon the
----------------------
Borrower, the Guarantor and the Bank, their respective successors and assigns
and all rights against the Borrower or the Guarantor arising under this
Agreement shall be for the sole benefit of the Bank, its successors and assigns,
all of whom shall be entitled to enforce performance and observance of this
Agreement to the same extent as if they were parties hereto.
10.6. Notices. All notices, requests and demands to or upon the respective
-------
parties hereto shall be deemed to have been given or made when hand delivered or
mailed first class, certified or registered mail, postage prepaid, or by
overnight courier service, addressed as follows or to such other address as the
parties hereto shall have been notified pursuant to this Section 10.6:
The Bank: First Union National Bank
One First Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
with a copy to: First Union National Bank
International Trade Operations
0000 Xxxxxxxx Xxxxx - XXX0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
NCO 742
The Borrower: Xxxxxx Controls, Inc.
00000 Xxxxxxx Xxxxx
Xxxxx, XX 00000
Attention: Controller
The Guarantor: CIRCOR International, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
33
except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed,
in which event said notice, request or demand shall be effective only upon
receipt by the addressee.
10.7. Amendment. This Agreement may be amended, modified or discharged only
---------
upon an agreement in writing of the Borrower, the Guarantor and the Bank.
10.8. Effect of Delay and Waivers. No delay or omission to exercise any
---------------------------
right or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Bank to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this
Agreement should be breached by any party and thereafter waived by the other
party so empowered to act, such waiver shall be limited to the particular breach
hereunder. No waiver, amendment, release or modification of this Agreement shall
be established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties thereunto duly authorized by
this Agreement.
10.9. Counterparts. This Agreement may be executed simultaneously in
------------
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.10. Severability. The invalidity or unenforceability of any one or more
------------
phrases, sentences, clauses or Sections contained in this Agreement shall not
affect the validity or enforceability of the remaining portions of this
Agreement, or any part thereof.
10.11. Cost of Collection. Each of the Borrower and the Guarantor shall be
------------------
liable for the payment of all reasonable fees and expenses, including reasonable
attorneys' fees (computed without regard to any statutory presumption), incurred
in connection with the enforcement of this Agreement.
10.12. Set-Off. Upon the occurrence of an Event of Default hereunder, the
-------
Bank is hereby authorized, without notice to the Borrower or the Guarantor, to
set-off, appropriate and apply any and all monies, securities and other
properties of the Borrower or the Guarantor hereafter held or received by or in
transit to the Bank from or for the Borrower or the Guarantor, against the
obligations of the Borrower or the Guarantor irrespective of whether the Bank
shall have made any demand hereunder or any other Credit Security Instrument
under and although such obligations may be contingent or unmatured.
10.13. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York. The Guarantor hereby
acknowledge that the Letter of Credit shall be governed by and construed in
accordance with Uniform Customs and Practice.
34
10.14. References. The words "herein", "hereof", "hereunder" and other
----------
words of similar import when used in this Agreement refer to this Agreement as a
whole, and not to any particular article, section or subsection.
10.15. Consent to Jurisdiction, Venue. In the event that any action,
------------------------------
suit or other proceeding is brought against the Borrower or the Guarantor by or
on behalf of the Bank to enforce the observance or performance of any of the
provisions of this Agreement or of any of the Security Instruments, including
without limitation the collection of any amounts owing thereunder, each of the
Borrower and the Guarantor hereby (i) irrevocably consents to the exercise of
jurisdiction over the Borrower and the Guarantor and to the extent permitted by
applicable laws, their property, by the United States District Court, Southern
District of North Carolina, and by Supreme Court of North Carolina or the State
Court and (ii) irrevocably waives any objection it might now or hereafter have
or assert to the venue of any such proceeding in any court described in clause
(i) above.
35
IN WITNESS WHEREOF, the Borrower, the Guarantor and the Bank have
caused this Agreement to be executed in their respective names, as a sealed
Instrument all as of the date first above written.
THE BORROWER:
XXXXXX CONTROLS, INC.
By: /s/ Xxxxx X. Xxxxx, Xx.
---------------------------------
Title: President and Chief
Executive Officer
ATTEST: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Title: Secretary
(Corporate Seal)
36
THE GUARANTOR:
CIRCOR INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxx, Xx.
---------------------------------
Title: President and Chief
Executive Officer
ATTEST: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Title: Secretary
(Corporate Seal)
37
THE BANK:
FIRST UNION NATIONAL BANK
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Title: Senior Vice President
ATTEST:
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Title: Assistant Secretary
(Corporate Seal)
XXXXX INDUSTRIES, INC. consents to the Agreement
insofar as it relates to its release from the 1994 Agreement.
XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. XxXxxx
----------------------------
Name: Xxxxxxx X. XxXxxx
--------------------------
Title: Chief Financial Officer and Treasurer
--------------------------------------
38
