Exhibit 4.1
CREDIT AGREEMENT
----------------
This Credit Agreement (the "Agreement") is entered effective as of the 26th
day of February, 2008, by and between COHESANT INC., a Delaware corporation
("Borrower"), and REGIONS BANK, an Alabama banking corporation ("Bank").
Section 1. Definitions.
-----------
Certain capitalized terms have the meanings set forth on Exhibit 1 hereto.
All financial terms used in this Agreement but not defined on Exhibit 1 have the
meanings given to them by GAAP. All other undefined terms have the meanings
given to them in the Indiana Uniform Commercial Code.
Section 2. Loan.
----
2.1. Revolving Credit Loans. (a) Subject to the terms and conditions
hereof, Bank hereby extends to Borrower a revolving line of credit facility (the
"Facility") under which Bank may make loans (the "Revolving Loans") to Borrower
at Borrower's request from time to time during the term of this Agreement in an
aggregate amount not to exceed Two Million Five Hundred Thousand and No/100
Dollars ($2,500,000.00).
Bank may create and maintain reserves from time to time based on such
credit and collateral considerations as Bank may deem appropriate. Borrower may
borrow, prepay (without penalty or charge), and reborrow under the Facility,
provided that the principal amount of all Revolving Loans outstanding at any one
time under the Facility will not exceed Two Million Five Hundred Thousand and
No/100 Dollars ($2,500,000.00). If the amount of Revolving Loans outstanding at
any time under the Facility exceeds the foregoing limit, Borrower will
immediately pay the amount of such excess to Bank in cash. In the event Borrower
fails to pay such excess, Bank may, in its discretion, setoff such amount
against Borrower's accounts at Bank and declare an Event of Default.
(b) The Borrower agrees that the Bank may rely upon any written or
telephonic notice given by any person the Bank in good faith believes is an
authorized representative without the necessity of independent investigation
and, in the event any telephonic notice conflicts with the written confirmation,
such telephonic notice shall govern if the Bank has acted in reliance thereon.
Bank will make Revolving Loans by crediting the amount thereof to Borrower's
account at Bank. Loan proceeds will be used by Borrower for general working
capital purposes.
(c) On the date hereof, Borrower will duly issue and deliver to Bank a
Revolving Line of Credit Note in form and content acceptable to Bank (the
"Revolving Note"), in the principal amount of Two Million Five Hundred Thousand
and No/100 Dollars ($2,500,000.00), bearing interest as specified in the
Revolving Note.
(d) The term of the Facility will expire on April 30, 2009 and the
Revolving Note will become payable in full on that date. Bank's decision to
renew the term of the Facility will include, but not be limited to, a
consideration of whether any Event of Default has occurred and whether there has
been any material adverse change in Borrower's operations or business prospects.
2.2 Fees and Expenses. Either on or before closing, or promptly upon demand
thereafter, Borrower shall reimburse to Bank all reasonable costs and expenses
incurred by Bank associated with the extension of the Loan to the Borrower as
contemplated by this Agreement, including without limitation, recording costs,
attorneys' fees and other out-of-pocket expenses, in accordance with the terms
and requirements as set forth in Section 4.11 hereof. Failure to promptly pay
all amounts due under this subsection shall constitute an Event of Default under
this Agreement.
1
Section 3. Representations And Warranties.
------------------------------
Borrower hereby warrants and represents to Bank the following:
3.1 Organization and Qualification. Borrower is a duly organized and
validly existing corporation under the laws of the State of Delaware, its state
of organization, has the power and authority to carry on its business and to
enter into and perform this Agreement, the Revolving Note, and the other Loan
Documents to which it is a party, is qualified and licensed to do business in
each jurisdiction in which such qualification or licensing is required. All
information provided to Bank with respect to Borrower and its operations is true
and correct in all material respects.
3.2. Due Authorization. The execution, delivery and performance by Borrower
of this Agreement, the Revolving Note and the other Loan Documents to which it
is a party have been duly authorized by all necessary action, and will not
contravene any law or any governmental rule or order binding on Borrower, or the
Articles of Incorporation or By-Laws of Borrower, nor violate any agreement or
instrument by which Borrower is bound nor result in the creation of a Lien on
any assets of Borrower except the Lien granted to Bank herein. Borrower has duly
executed and delivered this Agreement, the Revolving Note, and the other Loan
Documents to which it is a party and they are valid and binding obligations of
Borrower enforceable according to their respective terms except as limited by
equitable principles and by bankruptcy, insolvency or similar laws affecting the
rights of creditors generally. No notice to or consent by any governmental body
is needed in connection with this transaction.
3.3. Litigation. There are no suits or proceedings pending or, to
Borrower's knowledge, threatened against or affecting Borrower, and no
proceedings before any governmental body are pending or, to Borrower's
knowledge, threatened against Borrower.
3.4 Margin Stock. No part of the Loan will be used to purchase or carry, or
to reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any margin stock. If requested by Bank,
Borrower will furnish to Bank statements in conformity with the requirements of
Federal Reserve Form U-1.
3.5 Business. Borrower is not a party to or subject to any agreement or
restriction which in the opinion of Borrower's management is so unusual or
burdensome that it might have a material adverse effect on Borrower's business,
properties or prospects.
3.6 Licenses, etc. To the best of Borrower's knowledge following all due
and reasonable inquiry, Borrower has obtained any and all licenses, permits,
franchises, governmental authorizations, patents, trademarks, copyrights or
other rights necessary for the ownership of its properties and the advantageous
conduct of its business. Borrower possesses adequate licenses, patents, patent
applications, copyrights, trademarks, trademark applications, and trade names to
continue to conduct its business as heretofore conducted by it, without any
conflict with the rights of any other person or entity. All of the foregoing are
in full force and effect and none of the foregoing are in known conflict with
the rights of others.
2
3.7 Laws and Taxes. To the best of Borrower's knowledge following all due
and reasonable inquiry, Borrower is in compliance with all laws, regulations,
rulings, orders, injunctions, decrees, conditions or other requirements
applicable to or imposed upon Borrower by any law or by any governmental
authority, court or agency in any respect material to Borrower's business,
assets or prospects. Borrower has filed all required tax returns and reports
that are now required to be filed by it in connection with any federal, state
and local tax, duty or charge levied, assessed or imposed upon Borrower or its
assets, including unemployment, social security, and real estate taxes. Borrower
has paid all taxes which are now due and payable. No taxing authority has
asserted or assessed any additional tax liabilities against Borrower which are
outstanding on the date of this Agreement other than real property taxes not yet
due and payable, and Borrower has not filed for any extension of time for the
payment of any tax or the filing of any tax return or report.
3.8 Financial Condition. All financial information relating to Borrower
which has been or may hereafter be delivered by Borrower or on its behalf to
Bank is true and correct in all material respects. Borrower has no material
obligations or liabilities of any kind not disclosed in that financial
information, and there has been no material adverse change in the financial
condition of Borrower nor has Borrower suffered any damage, destruction or loss
which has adversely affected its business or assets since the submission of the
most recent financial information to Bank.
3.9 Title. Borrower has good and marketable title to the assets reflected
on the most recent balance sheet submitted to Bank, free and clear from all
liens and encumbrances of any kind, except for Permitted Liens.
3.10 Defaults. Borrower is in compliance in all material respects with all
material agreements applicable to it and there does not now exist any default or
violation by Borrower of or under any of the terms, conditions or obligations of
(a) its Articles of Incorporation or By-Laws, or (b) any indenture, mortgage,
deed of trust, franchise, permit, contract, agreement or other instrument to
which Borrower is a party or by which it is bound, and the consummation of the
transactions contemplated by this Agreement will not result in such default or
violation.
3.11 Environmental Laws. To the best of Borrower's knowledge following all
due and reasonable inquiry:
(a) Borrower has obtained all permits, licenses and other authorizations or
approvals which are required under Environmental Laws and Borrower, to its
knowledge following all appropriate inquiry, is in compliance in all material
respects with all terms and conditions of the required permits, licenses,
authorizations and approvals, and is also in compliance in all material respects
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws.
(b) Borrower is not aware of, and has not received notice of, any past,
present or future events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent compliance or
continued compliance, in any material respect, with Environmental Laws, or may
give rise to any material common law or legal liability, or otherwise form the
basis of any material claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or waste.
3
(c) There is no civil, criminal or administrative action suit, demand,
claim, hearing, notice or demand letter, notice of violation, investigation or
proceeding pending or threatened against Borrower, relating in any way to
Environmental Laws.
3.12 Subsidiaries and Partnerships. Borrower has no subsidiaries (other
than Cohesant Materials Inc., CuraFlo Franchising Inc., CuraFlo Spincast
Services Inc., CuraFlo Services Inc., RLS Solutions Inc., (on and after March 1,
2008) and CuraFlo of British Columbia Ltd.) and is not a party to any
partnership agreement or joint venture agreement.
3.13 ERISA. Borrower and all individuals or entities along with Borrower
would be treated as a single employer under ERISA or the Internal Revenue Code
of 1986, as amended (an "ERISA Affiliate"), are in compliance with all of their
obligations to contribute to any "employee benefit plan" as that term is defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, and any
regulations promulgated thereunder from time to time ("ERISA"). Borrower and
each of its ERISA Affiliates are in full compliance with ERISA, and there exists
no event described in Section 4043(b) thereof ("Reportable Event").
3.14 USA Patriot Act. Borrower represents and warrants that neither
Borrower nor any of its affiliates is a country, individual or entity named on
the Specifically Designated National and Blocked Persons (SDN) list issued by
the Office of Foreign Asset Control of the Department of the Treasury of the
United States of America.
Section 4. Affirmative Covenants.
---------------------
4.1 Books and Records. Borrower will maintain proper books of account and
records and enter therein complete and accurate entries and records of all of
its transactions in accordance with generally accepted accounting principles and
give representatives of Bank access thereto at all reasonable times, including
permission to examine, copy and make abstracts from any such books and records
and such other information which might be helpful to Bank in evaluating the
status of the Loan as it may reasonably request from time to time. Borrower will
give Bank reasonable access to the Collateral and the other property of Borrower
securing the Obligations for the purpose of performing examinations thereof and
to verify its condition or existence.
4.2 Financial Statements. Borrower will maintain a standard and modern
system for accounting and will furnish to Bank or cause to be furnished to Bank:
(a) Within forty-five (45) days after the end of each quarterly period, the
internally-prepared financial statements of Borrower consisting of a balance
sheet and statement of income and expense prepared in accordance with GAAP
consistently applied and certified by the principal financial officer of
Borrower as being true and correct;
(b) Within one hundred twenty (120) days after the end of each fiscal year,
a copy of Borrower's audited financial statements for that year prepared by a
firm of independent certified public accountants acceptable to Bank, prepared in
accordance with GAAP;
(c) With the statements submitted under (a), and (b) above, a certificate
signed by the principal financial officer or other duly authorized
representative of Borrower, (i) stating he is familiar with all documents
relating to Bank and that no Event of Default specified in this Agreement, nor
any event which upon notice or lapse of time, or both would constitute such an
Event of Default, has occurred, or if any such condition or event existed or
exists, specifying it and describing what action Borrower has taken or proposes
to take with respect thereto, and (ii) setting forth, in summary form, figures
showing the financial status of Borrower in respect of the financial
restrictions/covenants contained in this Agreement;
4
(d) As soon as available, and in no event later than thirty (30) days
following the date of filing, copies of all tax returns filed by Borrower; and
(e) From time to time such other information concerning the Borrower as the
Bank may reasonably request.
If at any time Borrower has any additional subsidiaries which have
financial statements that could be consolidated with those of Borrower under
GAAP, the financial statements required by subsections (a), and (b) above will
be the financial statements of Borrower and all such subsidiaries prepared on a
consolidated and consolidating basis.
4.3 Condition and Repair. Borrower will maintain the Collateral in good
repair and working order and will make all appropriate repairs and replacements
thereof.
4.4 Insurance. Borrower covenants and agrees with Bank that, so long as
this Agreement remains in effect, Borrower will maintain fire and other risk
insurance, public, liability insurance, and such other insurance as Bank may
require with respect to Borrower's properties and operations, in form, amounts,
coverages and with insurance companies acceptable to Bank. Borrower, upon
request of Bank, will deliver to Bank from time to time the policies or
certificates of insurance in form and satisfactorily to Bank, including
stipulations that coverages will not be cancelled or diminished without at least
ten (10) days prior written notice to Bank. Each insurance policy also shall
include an endorsement providing that coverage in favor of Bank will not be
impaired in any way by any act, omission or default of Borrower or any other
person. In connection with all policies covering assets in which Bank holds or
is offered a security interest for the Loans, Borrower will provide Bank with
such Bank's loss payable or other endorsements as Bank may require.
Borrower covenants and agrees with Bank that, so long as this Agreement
remains in effect, Borrower will furnish to Bank, upon request of Bank, reports
on each existing insurance policy showing such information as Bank may
reasonably request, including without limitation the following: (1) the name of
the insurer; (2) the risks insured; (3) the amount of the policy; (4) the
properties insured; (5) the then current property values on the basis of which
insurance has been obtained, and the manner of determining those values; and (6)
the expiration date of the policy.
4.5 Taxes. Borrower will pay when due all taxes, assessments and other
governmental charges imposed upon it or its assets, franchises, business, income
or profits before any penalty or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which by law might be a lien or charge upon any of its
assets, provided that (unless any material item or property would be lost,
forfeited or materially damaged as a result thereof) no such charge or claim
need be paid if it is being diligently contested in good faith, if Bank is
notified in advance of such contest and if Borrower establishes an adequate
reserve or other appropriate provision required by generally accepted accounting
principles and deposits with Bank cash or bond in an amount acceptable to Bank.
4.6 Existence; Business. Borrower will (a) maintain its existence, (b)
engage primarily in business of the same general character as that now
conducted, (c) refrain from entering into any lines of business substantially
different from the business or activities in which Borrower is presently
engaged, (d) except as specifically consented to by the Bank, refrain from
liquidating, merging, transferring, acquiring or consolidating with any other
entity, changing its name, dissolving, or transferring or selling Collateral out
of the normal course of business, and (e) following the occurrence and during
the continuance of an Event of Default (or if an Event of Default will occur as
result of such distribution) refrain from making any distribution with respect
to any capital account, whether by reduction of capital or otherwise, except
that distributions solely for the payment of federal, state or local taxes shall
be permissible. Borrower agrees that, so long as this Agreement remains in
effect, Borrower will use of all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Bank in writing.
5
4.7 Environmental Studies. Borrower represents and warrants to Bank, as of
the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of the Loan,
and at all times any Indebtedness exists, that Borrower will promptly conduct
and complete, at Borrower's expense, all such investigations, studies, samplings
and testings as may be requested by Bank, limited to one such request per
calendar year, or any governmental authority relative to any substance, or any
waste or by-product of any substance defined as toxic or a hazardous substance
under applicable federal, state, or local law, rule regulation, order or
directive, at or affecting any property or any facility owned, leased or used by
Borrower.
4.8 Environmental Compliance and Reports. Borrower represents and warrants
to Bank, as of the date of this Agreement, as of the date of each disbursement
of loan proceeds, as of the date of any renewal, extension or modification of
the Loan, and at all times any Indebtedness exists, that Borrower shall comply
in all respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission on
Borrower's part or on the part of any third party, on property owned and/or
occupied by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in compliance
with the conditions of a permit issued by the appropriate federal, state or
local governmental authorities; shall furnish to Bank promptly and in any event
within thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional action or
omission on Borrower's part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural resource.
4.9 Compliance with Laws. Borrower will comply with all federal, state and
local laws, regulations and orders applicable to Borrower or its assets
including but not limited to all Environmental Laws, in all respects material to
Borrower's business, assets or prospects and shall furnish to Bank promptly and
in any event within ten (10) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any violation of any rule,
regulation, statute, ordinance, order or law relating to the public health or
the environment and of any complaint or notifications received by Borrower
regarding to any environmental or safety and health rule, regulation, statute,
ordinance or law.
4.10 Notice of Default. Borrower will, within three (3) days of its
knowledge thereof, give written notice to Bank of (a) the occurrence of any
event or the existence of any condition which would be, after notice or lapse of
applicable grace periods, an Event of Default and specifying the nature and
period of existence thereof and what action Borrower has taken or is taking or
proposes to take in respect thereof, and (b) the occurrence of any event or the
existence of any condition which would prohibit Borrower from continuing to make
the representations set forth in this Agreement.
4.11 Costs. Borrower will pay to Bank its fees, costs and expenses
including, without limitation, reasonable attorneys' fees, appraisal fees, title
fees, expert fees, court costs, litigation and other expense (collectively,
"Costs") incurred or paid by Bank in connection with the negotiating,
documenting, administering and enforcing the Facility, the Loan and the Loan
Documents evidencing or securing the Facility and the defense, preservation and
protection of Bank's rights and remedies thereunder, including without
limitation, its security interest in the Collateral or any other property
pledged to secure the Loan, whether incurred in bankruptcy, insolvency,
foreclosure or other litigation or proceedings or otherwise. Bank may hire or
pay someone else to help enforce this Agreement, and Borrower shall pay the
costs and expenses of such enforcement. Costs and expenses include Bank's
attorneys' fees and legal expenses whether or not there is a lawsuit, including
reasonable attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
shall pay all court costs and such additional fees as may be directed by the
court.
6
4.12 Other Amounts Deemed Loans. If Borrower fails to pay any tax,
assessment, governmental charge or levy or to maintain insurance within the time
permitted or required by this Agreement, or to discharge any Lien prohibited
hereby, or to comply with any other Obligation, Bank may, but shall not be
obligated to, pay, satisfy, discharge or bond the same for the account of
Borrower, and to the extent permitted by law and at the option of Bank, all
monies so paid by Bank on behalf of Borrower will be deemed a Loan and a part of
the Indebtedness.
4.13 Tangible Net Worth Ratio. Borrower shall maintain a ratio of total
liabilities to Tangible Net Worth of not greater than 2.00:1.00, tested
quarterly based upon Borrower's fiscal year.
4.14 Fixed Charge Ratio. Borrower shall maintain a minimum Fixed Charge
Coverage Ratio of 1.10:1.00, tested annually as of the end of each fiscal year
of Borrower.
4.15 Execution of Guaranty Documents by RLS Solutions Inc. Within five (5)
days of the formation of RLS Solutions Inc. ("RLS"), cause the duly authorized
officers of RLS to execute and deliver to Bank the following in form and content
reasonably acceptable to Bank:
(a) Continuing Guaranty Agreement;
(b) Security Agreement and Perfection Certificate;
(c) Certificate of Guarantor; and
(d) Patriot Act compliance certification and related documents.
Section 5. Negative Covenants.
------------------
5.1 Prepayments. After the occurrence and during the continuation of an
Event of Default, Borrower will not voluntarily prepay any indebtedness owing by
Borrower prior to the stated maturity date thereof other than (i) the
Obligations and (ii) indebtedness to trade creditors where the prepayment will
result in a discount on the amount due.
5.2 Indebtedness and Liens. Other than the Permitted Liens, Borrower shall
not, without the prior written consent of Bank: (1) Except for trade debt
incurred in the normal course of business and Indebtedness to Bank contemplated
by this Agreement or currently reflected on Borrower's most recent balance sheet
(which shall not be increased), create, incur or assume indebtedness for
borrowed money, (2) sell, transfer, mortgage, assign, pledge, lease, grant a
security interest in, or encumber any of Borrower's assets, or (3) sell with
recourse any of Borrower's accounts, except to Bank.
5.3 Guarantees and Loans. Borrower will not enter into any direct or
indirect guarantees other than by endorsement of checks for deposit or other
than in the ordinary course of business nor make any advance or loan other than
in the ordinary course of business as presently conducted, including, without
limitation, loans and advances to employees of Borrower.
7
5.4 Capital Stock; Dividends. Borrower will not issue any additional
capital stock, nor grant any warrants, options or other rights to purchase such
capital stock, the effect of which would create an Event of Default under this
Agreement. Following the occurrence and during the continuation of an Event of
Default (or if an Event of Default will occur as a result of such dividend),
Borrower will not (a) declare or pay any dividends on its capital stock other
than for the sole purpose of paying federal, state and local taxes related to
the Borrower's business, (b) make any payments of any kind to its shareholders
(including, without limitation, debt repayments, payments for goods or services
or otherwise, but excluding ordinary salary payments to shareholders employed by
Borrower) or (c) redeem any shares of its capital stock in any fiscal year.
5.5 Merger; Disposition of Assets. Without prior written consent of Bank,
Borrower will not (a) change its capital structure, (b) merge or consolidate
with any corporation, (c) amend or change its Articles of Incorporation or
By-Laws or (d) sell, transfer or otherwise dispose of all or any substantial
part of its assets, whether now owned or hereafter acquired.
5.6 Transactions with Affiliates. Borrower will not (a) except for certain
existing guaranty obligations relating to franchise obligations of CuraFlo
Franchising Inc. which have previously been disclosed to Bank, directly or
indirectly issue any guarantee for the benefit of any of its Affiliates except
with respect to Obligations of a Guarantor, (b) directly or indirectly make any
loans or advances to or investments in any of its Affiliates, (c) enter into any
transaction with any of its Affiliates, other than transactions entered into on
an arm's length basis in the normal course of Borrower's business, or (d) divert
(or permit anyone to divert) any of its business opportunities to any Affiliate
or any other corporate or business entity in which Borrower holds a direct or
indirect interest.
5.7 Investments. Borrower will not purchase or hold beneficially any stock,
securities or evidences of indebtedness of, or make any investment or acquire
any interest in, any other firm, partnership, corporation or entity other than
short term investments of excess working capital in one or more of the
following: (a) investments (of one year or less) in direct or guaranteed
obligations of the United States, or any agencies thereof; and (b) investments
(of one year or less) in certificates of deposit of banks or trust companies
organized under the laws of the United States or any jurisdiction thereof,
provided that such banks or trust companies are insured by the Federal Deposit
Insurance Corporation and have capital in excess of $250,000,000.00.
5.8 Government Regulation. Borrower shall not (a) be or become subject at
any time to any law, regulation or list of any government agency (including,
without limitation, the U.S. Office of Foreign Asset Control list) that
prohibits or limits Bank from making any advance or extension of credit to
Borrower or from otherwise conducting business with Borrower, or (b) fail to
provide documentary and other evidence of Borrower's identity as may be
requested by Bank at any time to enable Bank to verify Borrower's identity or to
comply with any applicable law or regulation, including, without limitation,
Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.
Section 6. Events of Default and Remedies.
------------------------------
6.1 Events of Default. Each of the following events shall constitute an
Event of Default ("Event of Default"):
8
(a) any change in ownership of twenty-five percent (25%) or more of the
common stock of Borrower; or
(b) the dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against
Borrower which is not dismissed within thirty (30) days; or
(c) Borrower defaults beyond any applicable grace and/or cure period under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower's property or
Borrower's ability to repay the Loan or perform its obligations under
this Agreement or any of the Loan Documents to which it is a party; or
(d) Borrower fails to make any payment within ten (10) days of when due
under the Loan; or
(e) Bank in good faith believes itself insecure; or
(f) Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in
any of the Loan Documents to which it is a party or to comply with or
to perform any term, obligation, covenant or condition contained in
any other agreement between Bank and Borrower; within fifteen (15)
days of the issuance of written notice by Bank; or
(g) any warranty, representation or statement made or furnished to Bank by
Borrower or on borrower's behalf under this Agreement or the Loan
Documents is knowingly false or misleading in any material respect,
either now or at the time made or furnished or becomes false or
misleading at any time thereafter; or
(h) this Agreement or any of the Loan Documents ceases to be in full force
and effect (including failure of any collateral document to create a
valid and perfected security interest or lien) at any time and for any
reason; or
(i) commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by
any creditor of Borrower or by a governmental agency against any
collateral securing the Loan which are not stayed or vacated within
sixty (60) days. This includes a garnishment of any of Borrower's
accounts, including deposit accounts, with Bank. However, this Event
of Default shall not apply if there is a good faith dispute by
Borrower as to the validity or reasonableness of the claim which is
the basis of the creditor or forfeiture proceeding and if Borrower
gives Bank written notice of the creditor or forfeiture proceeding and
deposits with Bank monies or a surety bond for the creditor or
forfeiture proceeding, in an amount determined by Bank, in its sole
discretion, as being an adequate reserve or bond for the dispute; or
(j) any Guarantor defaults under its Guaranty beyond any applicable grace
and/or cure period or any Guarantor revokes or disputes the validity
of, or liability under, any Guaranty of the Indebtedness.
9
6.2 Remedies. If any Event of Default occurs, Bank may (i) cease advancing
money hereunder, (ii) declare all Loans to be immediately due and payable,
whereupon such Loans will immediately become due and payable, (iii) exercise any
and all rights and remedies provided by applicable law and the Loan Documents,
(iv) proceed to realize upon the Collateral or any property securing the Loans,
including, without limitation, causing all or any part of the Collateral to be
transferred or registered in its name or in the name of any other person, firm
or corporation, with or without designation of the capacity of such nominee, all
without presentment, demand, protest, or notice of any kind, each of which are
hereby expressly waived by Borrower. Borrower shall be liable for any deficiency
remaining after disposition of any Collateral, and waives all valuation and
appraisement laws.
6.3 Setoff. To the extent permitted by applicable law, Bank reserves the
right of setoff in all Borrower's accounts with Bank (whether checking, savings,
or some other account). This includes all accounts Borrower holds jointly with
someone else and all accounts Borrower may open in the future. However, this
does not include any XXX or Xxxxx accounts, or any trust accounts for which
setoff would be prohibited by law. Borrower authorizes Bank, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Bank's option, to
administratively freeze all such accounts to allow Bank to protect Bank's charge
and setoff rights provided in this paragraph.
6.4 No Remedy Exclusive. No remedy set forth herein is exclusive of any
other available remedy or remedies, but each is cumulative and in addition to
every other remedy available under this Agreement, the Loan Documents or as may
be now or hereafter existing at law, in equity or by statute. Borrower waives
any requirement of marshaling of assets which may be secured by any of the Loan
Documents.
6.5 Effect of Termination. The termination of this Agreement will not
affect any rights of either party or any obligation of either party to the
other, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights created or Obligations incurred prior to such termination
have been fully disposed of, concluded or liquidated. The security interest,
lien and rights granted to Bank hereunder and under the Loan Documents will
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that no Loan is outstanding to Borrower, until all of the
Obligations, have been paid in full.
6.6 No Adequate Remedy at Law. Borrower recognizes that in the event
Borrower fails to pay, perform, observe or discharge any of its Obligations
under this Agreement, the Note or the other Loan Documents, no remedy at law
will provide adequate relief to Bank and Borrower agrees that Bank shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that it has incurred actual damages.
Section 7. Conditions Precedent.
--------------------
7.1 Conditions to Disbursement of the Loan. Bank will have no obligation to
make or advance the Loan until Borrower has delivered to Bank at or before the
closing date, in form and substance satisfactory to Bank:
(a) Execution and delivery of two (2) copies of this Agreement by the
Borrower.
(b) Execution and delivery of one (1) copy of the Revolving Note by the
Borrower, together with a request for advance under the Facility.
10
(c) Execution and delivery of two (2) copies of a Security Agreement and
Perfection Certificate by the Borrower.
(d) Execution and delivery of two (2) copies of a Security Agreement and
Perfection Certificate by each Guarantor.
(e) Receipt of a Borrower's Certificate, complete with exhibits, duly
executed by duly authorized officer or other representative of
Borrower.
(f) Receipt of a Guarantor's Certificate, complete with exhibits, duly
executed by duly authorized officer or other representative of each
Guarantor.
(g) Receipt of a Loss Payee Endorsement for Insurance relating to the
Collateral and copies of the insurance policies.
(h) Receipt of duly completed executed Patriot Act documentation by the
Borrower and each Guarantor.
(i) Execution and delivery of one (1) copy of the Continuing Guaranty
Agreement executed by each Guarantor.
(j) Evidence of the successful acquisition of Cohesant Technologies, Inc.
by Graco, Inc. and successful spin-off of all assets (with the
exception of GlasCraft, Inc. assets).
(k) Receipt of other documents, instruments or certificates which the Bank
in its sole and exclusive discretion may reasonably require which are
not inconsistent with the requirements of this Agreement.
(l) Payment by Borrower to Bank of the fees and expenses specified in
Section 2.2 hereof.
Section 8. Miscellaneous Provisions.
------------------------
8.1 Miscellaneous. This Agreement, the exhibits and the other Loan
Documents are the complete agreement of the parties hereto and supersede all
previous understandings relating to the subject matter hereof. This Agreement
may be amended only in writing signed by the party against whom enforcement of
the amendment is sought. This Agreement may be executed in counterparts. If any
part of this Agreement is held invalid, illegal or unenforceable, the remainder
of this Agreement will not in any way be affected. This Agreement is and is
intended to be a continuing agreement and will remain in full force and effect
until the Loan is finally and irrevocably paid in full and the Facility is
terminated.
8.2 Waiver by Borrower. Borrower waives notice of non-payment, demand,
presentment, protest or notice of protest of any Accounts or other Collateral,
and all other notices (except those notices specifically provided for in this
Agreement); consents to any renewals or extensions of time of payment thereof;
and generally waives any and all suretyship defenses and defenses in the nature
thereof.
8.3 Binding Effect. This Agreement will be binding upon and inure to the
benefit of the respective legal representatives, successors and assigns of the
parties hereto; however, Borrower may not assign or transfer any of its rights
or delegate any of its Obligations under this Agreement or any of the Loan
Documents, by operation of law or otherwise. Bank (and any subsequent assignee)
may transfer and assign any of its rights or delegate any of its duties under
this Agreement or may transfer or assign partial interests or participation in
the Loan to other persons. Bank may disclose to all prospective and actual
assignees and participants all financial, business and other information about a
Borrower which Bank may possess at any time.
11
8.4 Subsidiaries and Affiliates of Borrower. To the extent the context of
any provision of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as used
in this Agreement shall include all of Borrower's subsidiaries and affiliates.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Bank to make any Loan or other financial
accommodation to any of Borrower's subsidiaries or affiliates.
8.5 Security. The Obligations are secured as provided herein, in this
Agreement, the Security Agreement, in the Loan Documents and in each other
document or agreement which by its terms secures the repayment or performance of
the Obligations. Additionally, the Indebtedness shall be unconditionally
guarantied by the Guarantors.
8.6 Survival. All representations, warranties, covenants and agreements
made by Borrower herein and in the Loan Documents will survive the execution and
delivery of this Agreement, the Loan Documents and the issuance of the Note.
8.7 Delay or Omission. No delay or omission on the part of Bank in
exercising any right, remedy or power arising from any Event of Default will
impair any such right, remedy or power or any other right remedy or power or be
considered a waiver or any right, remedy or power or any Event of Default nor
will the action or omission to act by Bank upon the occurrence of any Event of
Default impair any right, remedy or power arising as a result thereof or affect
any subsequent Event of Default of the same or different nature.
8.8 Notices. Any notices under or pursuant to this Agreement will be deemed
duly sent when delivered in hand or when mailed by registered or certified mail,
return receipt requested, addressed as follows:
To Borrower: Cohesant Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx Xxxxxx
To Bank: Regions Bank
Xxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Either party may change such address by sending written notice of the
change to the other party.
8.9 No Partnership. Nothing contained herein or in any of the Loan
Documents is intended to create or will be construed to create any partnership,
joint venture or other relationship between Bank and Borrower other than as
expressly set forth herein or therein and will not create any joint venture,
partnership or other relationship.
12
8.10 Indemnification. If after receipt of any payment of all or part of the
Obligations, Bank is for any reason compelled to surrender such payment to any
person or entity, because such payment is determined to be void or voidable as a
preference, impermissible setoff, or diversion of trust funds, or for any other
reason, this Agreement will continue in full force and effect and Borrower will
be liable to, and will indemnify, save and hold Bank, its officers, directors,
attorneys, and employees harmless of and from the amount of such payment
surrendered. The provisions of this Section will be and remain effective
notwithstanding any contrary action which may have been taken by Bank in
reliance on such payment, and any such contrary action so taken will be without
prejudice to Bank's rights under this Agreement and will be deemed to have been
conditioned upon such payment becoming final, indefeasible and irrevocable. In
addition, Borrower will indemnify, defend, save and hold Bank, its officers,
directors, attorneys, and employees harmless of, from and against all claims,
demands, liabilities, judgments, losses, damages, costs and expenses, joint or
several (including all accounting fees and attorneys' fees incurred), that Bank
or any such indemnified party may incur arising out of this Agreement, any of
the Loan Documents evidencing or securing the Loan or any act taken by Bank
hereunder except for the willful misconduct or gross negligence of such
indemnified party. The provisions of this Section will survive the termination
of this Agreement.
8.11 Depository Account Acknowledgment. Borrower and Bank severally, each
for itself, acknowledges and agrees that, except as provided herein with respect
to Borrower's obligation to maintain depository account(s) (if any) with Bank,
the extension(s) of credit provided for herein are neither conditioned upon nor
have the interest rates and fees therefor been set based upon Borrower's
agreement to purchase any other product or service from Bank. Further, Borrower
and Bank severally, each for itself, acknowledges and agrees that Bank has not
offered these extension(s) of credit or offered to reduce the interest rate(s)
or fee(s) therefor except as provided herein.
8.12 Governing Law; Jurisdiction. This Agreement will be governed by,
construed and enforced in accordance with federal law and the laws of the State
of Indiana. This Agreement has been accepted by Bank in the State of Indiana.
Borrower agrees that the state and federal courts in Xxxxxx County, Indiana, or
any other court in which Bank initiates proceedings have exclusive jurisdiction
over all matters arising out of this Agreement, and that service of process in
any such proceeding will be effective if mailed to Borrower at its address
described in the Notices section of this Agreement. BANK AND BORROWER HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
8.13 Consent to Participation. Borrower agrees and consents to Bank's sale
or transfer, whether now or later, of one or more participation interests in the
Loan to one or more purchasers, whether related or unrelated to Bank. Bank may
provide, without any limitation whatsoever, to any one or more purchasers, or
potential purchasers, any information or knowledge Bank may have about Borrower
or about any other matter relating to the Loan, and Borrower hereby waives any
rights to privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loan and will have
all the rights granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives all rights of
offset or counterclaim that it may have now or later against Bank or against any
purchaser of such participation interest and unconditionally agrees that either
Bank or such purchaser may enforce Borrower's obligation under the Loan
irrespective of the failure or insolvency of any holder of any interest in the
Loan. Borrower further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or
defenses that Borrower may have against Bank.
13
8.14 Amendments and/or Modifications. Bank shall not be deemed to have
waived any rights under the Loan Documents unless such waiver is given in
writing and signed by the Bank. Notwithstanding any provision in this Agreement
to the contrary, this Agreement may be modified by mutual consent of the Bank
and Borrower. Bank shall send written notice of the amendment to Borrower at
Borrower's address set forth in Section 8.8 hereof. Any such amendment shall be
effective according to its terms; provided, however, the Borrower has the option
to pay the Note according to its terms and choose not to accept the amendment.
[REMAINDER OF THIS PAGE INTENTIONALLY BLANK - SIGNATURE PAGE FOLLOWS]
14
IN WITNESS WHEREOF, Borrower and Bank have executed this Agreement by their duly
authorized officers or other representatives as of the date first above written.
COHESANT INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Printed: Xxxxxx Xxxxxx
---------------------------
Title: Chief Financial Officer
------------------------------
REGIONS BANK
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx, Vice President
STATE OF INDIANA )
) SS:
COUNTY OF_____________ )
Before me the undersigned, a Notary Public in and for said County and
State, personally appeared __________________, the ___________________ of
Cohesant Inc., a Delaware corporation, who acknowledged the execution of the
above and foregoing instrument on behalf of said corporation in such capacity.
Witness my hand and Notarial Seal this ____ day of February, 2008.
My Commission Expires:
--------------------------------------------
------------------------- Notary Public
My County of Residence:
--------------------------------------------
------------------------- Printed
15
EXHIBITS
TO
CREDIT AGREEMENT
BETWEEN
COHESANT INC.
AND
REGIONS BANK
Exhibit 1 - Definitions
Exhibit 3.9 - Permitted Liens
16
EXHIBIT 1
---------
DEFINITIONS
-----------
o "Affiliate" means, as to Borrower, (a) any person or entity which, directly
or indirectly, is in control of, is controlled by or is under common
control with, Borrower, or (b) any person who is a director, officer or
employee (i) of Borrower or (ii) of any person described in the preceding
clause (a).
o "Collateral" has the meaning assigned to that term in the Security
Agreement and Perfection Certificates.
o "Default Rate" means that upon default, including failure to pay upon final
maturity, Bank at its option, may, if permitted under applicable law,
increase the interest rate on the applicable Note 3.000 percentage points.
In no event will the interest rate accruing under any Note be increased to
be in excess of the maximum interest rate permitted by applicable state or
federal usury laws then in effect.
o "EBITDA" means, as of any date of determination, with respect to Borrower,
the sum of (a) net income, plus (b) to the extent deducted in determining
net income, income taxes paid or accrued, plus (c) depreciation,
amortization and other non-cash charges shown as a charge against earnings
for such period, minus (d) distributions and dividends declared and paid by
Borrower, plus (e) interest expense; in each instance determined for the
trailing four (4) quarter period ending on the date of determination.
o "Environmental Laws" means all federal, state, local and foreign laws
relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial toxic or hazardous
substances or wastes into the environment (including without limitation
ambient air, surface water, ground water or land), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes, and any and all
regulations, codes, plans, orders, decrees, judgments, injunctions, notices
or demand letters issued, entered promulgated or approved thereunder.
o "ERISA" means the Federal Employee Retirement Income Security Act of 1974.
o "Event(s) of Default" will have the meaning set forth in Section 6.1 of the
Agreement
o "Fixed Charge Ratio" means EBITDA (adjusted for non-cash charges) less
unfunded capital expenditures less dividends less taxes divided by the sum
of principal payments plus interest expense.
o "GAAP" means generally accepted accounting principles as in effect from
time to time.
o "Guaranty" means the Continuing Guaranty Agreement executed by each
Guarantor for the benefit of the Bank.
o "Guarantor" means Cohesant Materials Inc., CuraFlo Franchising Inc.,
CuraFlo Spincast Services Inc., CuraFlo Services Inc., and, following its
incorporation on or about March 1, 2008, RLS Solutions Inc, individually
and collectively as applicable.
o "Indebtedness" means and includes without limitation all Loans, together
with all other obligations, any premiums, debts and liabilities of Borrower
to Bank, or any one or more of them, as well as all claims by Bank against
Borrower, or any one or more of them; whether now or hereafter existing,
voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as guarantor,
surety, or otherwise; whether recovery upon such indebtedness may be or
hereafter may become barred by any statute of limitations; and whether such
Indebtedness may be or hereafter may become otherwise unenforceable.
o "Lien" means any security interest, mortgage, pledge, assignment, lien or
other encumbrance of any kind, including interests of vendors or lessors
under conditional sale contracts and capitalized leases.
o "Loan" or "Loans" means the Revolving Loans and any and all loans and
financial accommodations from Bank to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those loans
and financial accommodations described herein or described on any exhibit
or schedule attached to this Agreement from time to time.
o "Loan Documents" means this Agreement, the Revolving Note, the Security
Agreements, the Guaranty and every other document or agreement executed by
any party evidencing, guarantying or securing any of the Obligations; and
"Loan Document" means any one of the Loan Documents.
o "Obligation(s)" means all loans, advances, indebtedness, liabilities and
obligations of Borrower owed to Bank of every kind and description whether
now existing or hereafter arising including without limitation, those owed
by Borrower to others and acquired by Bank, by purchase, assignment or
otherwise, and whether direct or indirect, primary or as guarantor or
surety, absolute or contingent, liquidated or unliquidated, matured or
unmatured, whether or not secured by additional collateral, and including
without limitation all liabilities, obligations and indebtedness arising
under this Agreement, the Revolving Note, and the other Loan Documents, all
obligations to perform or forbear from performing acts, all amounts
represented by letters of credit now or hereafter issued by Bank for the
benefit of or at the request of Borrower, and all expenses and attorneys'
fees incurred by Bank under this Agreement or any other document or
instrument related to any of the foregoing.
o "Permitted Liens" means those liens and encumbrances listed on Exhibit 3.9,
and (1) liens and security interests securing Indebtedness owed by Borrower
to Bank; (2) liens for taxes, assessments, or similar charges either not
yet due or being contested in good faith; (3) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in the
ordinary course of business and securing obligations which are not yet
delinquent; (4) purchase money liens or purchase money security interests
upon or in any property acquired or held by Borrower in the ordinary course
of business to secure indebtedness outstanding on the date of this
Agreement or permitted to be incurred under the paragraph of this Agreement
titled "Indebtedness and Liens"; (5) other liens and security interests
which, as of the date of this Agreement, have been disclosed to and
approved by the Bank in writing; (6) those liens and security interests
which in the aggregate constitute an immaterial insignificant monetary
amount with respect to the net value of Borrower's assets; and (7) liens
and encumbrances, if any, reflected or noted on Borrower's most recent
balance sheets submitted to Bank or notes thereto..
o "Facility" will have the meaning set forth in Section 2.1 of the Agreement.
o "Revolving Note" has the meaning assigned to that term in Section 2.1 of
the Agreement.
o "Security Agreement" means the Security Agreement and Perfection
Certificate executed by Borrower and the Security Agreement and Perfection
Certificate executed by each Guarantor of even date herewith.
o "Subsidiary" means any corporation or other business entity of which
Borrower directly or indirectly owns or controls at the time outstanding
stock or other equity interests having under ordinary circumstances (not
depending on the happening of a contingency) voting power to elect a
majority of the board of directors or other governing body of said
corporation or entity.
o "Tangible Net Worth" shall mean the total of the capital stock (less
treasury stock), paid-in surplus, general contingency reserves and retained
earnings (deficit) of Borrower and any Subsidiary as determined on a
consolidated basis in accordance with GAAP after eliminating all
inter-company items and all amounts properly attributable to minority
interests, if any, in the stock and surplus of any Subsidiary, minus the
following items (without duplication of deductions), if any, appearing on
the consolidated balance sheet of Borrower:
(i) all deferred charges (less amortization, unamortized debt
discount and expense and corporate organization expenses);
(ii) the book amount of all assets which would be treated as
intangibles under generally accepted accounting principles,
including, without limitation, such items as goodwill, trademark
applications, trade names, service marks, brand names,
copyrights, patents, patent applications and licenses, and rights
with respect to the foregoing;
(iii) the amount by which aggregate inventories or aggregate securities
appearing on the asset side of such consolidated balance sheet
exceed the lower of cost or market value (at the date of such
balance sheet) thereof; and
(iv) any write-up in the book amount of any asset resulting from a
revaluation thereof from the book amount entered upon acquisition
of such asset.
EXHIBIT 3.9
PERMITTED LIENS
N/A
